METI Minister: Strait of Hormuz Crisis Would Seriously Impact Japanese Economy

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On July 22, Yoichi Miyazawa, head of Japan's Ministry of Economy, Trade and Industry (METI), spoke in Tokyo about the country's growth strategy, energy needs and circumstances. He then reaffirmed that the government's policy was to gradually restart nuclear power plants as soon as their safety was confirmed.

In terms of growth strategy, Miyazawa emphasized the importance of small and medium enterprises (SMEs), not just large companies, as they rise to the challenges they face with ingenuity and originality.

The METI minister said that the Japanese government would implement support measures for such companies, highlighting 200 examples of successful and failed SMEs — that is, showing what to do and what not to do.

He also said that research institutes and consultants would be enlisted to motivate SMEs and boost their growth. In addition, he urged them to develop new business models and produce small quantities of high-value-added products for the global market.

Japan’s long-term outlook for energy supply and demand through fiscal 2030, issued on July 17 following deliberations from the start of the year, calls for the conservation of 50 million oil-equivalent kiloliters of energy. Describing that goal as “quite ambitious,” Miyazawa said that a roadmap should be created for actions in each area to FY2030 (April 2030 to March 2031), adding that it would be released by the end of this year or the beginning of the next.

He then indicated three targets beyond energy conservation, as follows:

Increasing Japan’s energy self-sufficiency, which fell to about 6% after the earthquake in March 2011, to 25%, or the same level as Spain and Italy.
Lowering power rates, which have increased by some 38% for industrial users and 25% for residential users in Japan.
Presenting reduction targets for CO2 emissions equivalent to those of major Western countries, at COP21 to be held this December in Paris.

Miyazawa also referred to the adverse effects that an emergency in the Strait of Hormuz in the Middle East would have on the Japanese economy of. Currently, 80% of Japan’s crude oil imports and 25% of its LNG imports arrive via there.

In particular, the Chubu Electric Power Co., sited in the region around Nagoya, including the city where the Toyota Motor Corporation is based, derives some 40% of its power sources from shipments made through the strait. He pointed out the possibility that an emergency might cause power sources for a key center of Japan’s automotive industry to be lost.

From an energy security point of view, the METI minister stressed the importance of nuclear power, saying, “Japan’s Nuclear Regulation Authority (NRA) established very strict regulatory standards, and those NPPs recognized as meeting those standards will be restarted one by one.”