Chairman’s Message

Shigeru Ishiba recently won the presidential race of the LDP and, as of October 1, he became the new Prime Minister of Japan. In this month’s Message, I would like to explore the extent of his energy policy.

<Main Points>

1. Background of PM Ishiba: Strong in defense, less in energy/economic policies.

On September 27, Shigeru Ishiba emerged as the winner in the presidential race of the LDP, the currently ruling party of Japan. Among the nine candidates in the race, he came in second position in the first round in which half of the votes were cast by local party members. In the second and final round he emerged as president between the two finalists. To the surprise of many, he defeated the frontrunner Sanae Takaichi in the final vote. The expectations were that he would not win in the final round, which was decided mostly by LDP Diet members, as he was not considered to be in the mainstream of the LDP. In the final round, according to press reports, he received support from two former prime ministers, Fumio Kishida and Yoshihide Suga.
　PM Ishiba, 67 years old, served twice as the Defense Minister. He is considered as the leading expert on defense policies within the LDP. He has been quite vocal in defense issues arguing for strengthening Japan’s Self Defense Forces as well as deepening the alliance with the USA.
　He also served as the Minister responsible for regional development. As his district is in rural Japan, the promotion of rural areas has also been one of his priority issues and he is advocating for more spending for rural development.
　He has been proposing the establishment of an agency responsible for disaster response. As a major flood happened during the presidential race, such proposal must have won him more votes.
　On the other hand, he has not been deeply involved in economic or energy policies. Not being in the mainstream of the LDP, he does not seem to have the same strong relationship with the business community as usually enjoyed by mainstream LDP politicians. Those are the reasons why his views on economic/energy policies have been little known.

2. Succeeding former PM Kishida’s economic/energy policies

Just before the voting for the LDP Presidency, he made it clear that he would continue the economic policy of PM Kishida who had previously announced that he would not seek reelection for the LDP Presidency, the term of which was scheduled to finish by the end of last month. It is widely believed that this commitment to continue PM Kishida’s Policies helped him win the former PM’s support and was vital for his surprise victory in the final round.
　While he did not specifically mention that he would pursue PM Kishida’s energy policy, many seem to believe that the energy policy included in the economic policy of PM Kishida will continue to be in place.

3. GX policy and AZEC will be followed up

The GX policy, or Green Transformation, is considered as one of the most significant legacies of PM Kishida’s policies. In fact, in PM Ishiba’s first speech to the Diet, on October 4, he made it clear that he would accelerate GX. For the readers not familiar with GX, please refer to my Message for September which described the legacy of former PM Kishida.
　In his first speech, he referred to raising Japan’s energy self-sufficiency ratio while accelerating decarbonization. To meet the expected increase in power demand due to the expansion of AI, he suggested the enhancement of energy efficiency and the expansion of renewable energy (specifically citing geothermal).
　He also stated that he would support the energy transition among Asian countries with Japan’s technology and finance. It is understood that he will build upon the progress made under AZEC, or Asia Zero Emission Community, that was promoted by former PM Kishida. In his very busy schedule between the dissolution of the Diet and the general election process, he decided to participate in the East Asia Summit to be held in Lao on October 10 & 11, where a meeting on AZEC is expected to take place as a side event. His decision to make the trip to Lao demonstrates his strong interest in South East Asia, including AZEC.

4. Utilizing nuclear power but “replacement” remains a question.

In his first speech, he also clearly stated that based on confirmed safety, he intends to continue utilizing nuclear power. Nuclear power is positioned to help meeting the increase in demand while accelerating decarbonization and improving Japan’s energy self-sufficiency.
　In his first speech, PM Ishiba did not touch upon former PM Kishida’s explicit endorsement of “replacement” of nuclear power plants, which implies the construction of new nuclear reactors as replacements. In fact, during the campaign for the LDP Presidency, he did not make any explicit comment on this point, while the other eight candidates endorsed “replacement”.
　In the very early days of the campaign, comments were reported that he intended to lower Japan’s dependence on nuclear making it as close to zero as possible. Later, after meeting with business leaders who expressed concerns about his reported comment, he explained that the comment did not well reflect his true intentions.
　With his first speech to the Diet, he washed away most of the concerns surrounding his position on nuclear power to the relief of the business sector. But on the point of “replacement”, a question mark still remains. This is the only issue in his energy policy which may differ from his predecessor.

5. Two points to watch: “replacement” and the next NDC

It has only been several days since PM Ishiba came into power and it may be too early to judge on his energy policy. He announced that he will dissolve the Diet on October 9 to hold a general election on October 27. The next several weeks will be focused on the campaign with policies to be further developed after the general election.
　Despite the possibility of losing some seats, the current ruling coalition is expected to win the next general election with PM Ishiba coming back into power. From then onwards, the process to develop the 7th Strategic Energy Plan will be accelerated with a draft of the Plan to be ready by the end of this year or by early next year. Whether or not the “replacement” of nuclear power plants will be stipulated in the Plan should be closely watched. Considering the controversial nature of this issue, this point would most likely be consulted with PM Ishiba himself. The “encouragement” from former PM Kishida, who helped him win the LDP Presidential election, and the “interests” of the business leaders will probably play important roles in his consideration.
　Japan is expected to submit its next NDC (Nationally Determined Contributions) early next year. The target year is expected to be 2035 this time. The previous NDC submitted by Japan was a 46% GHG reduction goal for 2030 while the new NDC goal to be submitted will most likely result from direct consultations with PM Ishiba. In this process, former PM Suga, who also helped PM Ishiba win in the LDP Presidential election, may have an influence. One of former PM Suga’s main legacies of his tenure as the Prime Minister was his declaration to achieve carbon neutrality by 2050 and he may encourage PM Ishiba to come up with a new NDC that would be consistent with the path towards carbon neutrality. PM Ishiba will have to decide on the GHG reduction for Japan based on what will be the possible level of GHG reduction for Japan in light of the next Strategic Energy Plan. He will also pay attention to the NDCs submitted by other countries, taking into account that the actual GHG emissions by the major economies, including the US and EU, are significantly larger than the level to be on track to realize their respective NDC for 2030. This will be another very difficult judgment to make and his decision on these matters will also have to be closely watched.