Japan envisions renewable energy contributing up to half of its power supply by the fiscal year 2040, as part of efforts to bolster clean energy while meeting growing power consumption, Reuters reported, citing a draft of the country's updated energy policy.

This represents nearly a twofold increase from 22.9% recorded in FY2023 and surpasses the previous target ranging 36-38% set for 2030, according to the policy draft released by the industry ministry on December 17. Meanwhile, nuclear energy is expected to complement renewables, constituting around 20% of the energy mix.

The revised draft expected thermal power usage, especially at inefficient coal-fired power plants, to reduce to 30-40% of the energy mix by 2040, down from 68.6% in 2023.

Japan, the world's second-largest importer of liquefied natural gas (LNG) and a key consumer of Middle Eastern oil, is garnering international attention from fossil fuel producers due to its energy strategy.

The document stresses the importance of LNG-fired power as a practical transition solution. It advocates for securing long-term LNG contracts to mitigate risks associated with price rallies and supply interruptions.

While the earlier energy strategy primarily emphasized decarbonization, recent geopolitical uncertainties, including the Russia-Ukraine conflict, have redirected the focus toward ensuring energy security.

The draft for Japan's 2040 energy policy maintains its nuclear power goals within the range set for 2030 – between 20% and 22% of the total power supply, despite challenges faced by the nuclear sector following the Fukushima disaster in 2011. In 2023, nuclear power contributed only 8.5% of Japan's power generation.

The new plan does not prioritize minimizing reliance on nuclear power but instead boosts the construction of advanced next-generation reactors at sites where operators are decommissioning older facilities.

Projections for 2040 anticipated electricity consumption to increase by 12-22% compared to 2023 levels, mainly driven by the semiconductor sector and data centers. All outlined goals remain subject to adjustments.

Analysts suggested that this new proposal is more pragmatic than previous targets set for 2030, pointing out the government's intention to stimulate investment in renewable energy projects, including battery storage while maintaining LNG as a transitional energy source.

Naomi Oshita, a power market associate, noted that the government has acknowledged the importance of nuclear power in supplying affordable and reliable energy, especially for data centers requiring uninterrupted power availability. She remarked that nuclear power aligns well with the operational needs of data centers.

Although the current energy plan for 2030 expects hydrogen and ammonia to account for about 1% of the power mix, the revised one does not specify goals for these alternative fuels.

A collaborative session between the industry and environment ministries held last month presented a draft strategy targeting a reduction in greenhouse gas emissions by 60% by 2035 and 73% by 2050.