Andrew DeWit, a Professor of the Political Economy of Public Finance at the School of Policy Studies, Rikkyo University and an Asia-Pacific Journal Coordinator, discusses how Japan's powerful nuclear village is struggling to regain control of the nation's feed-in tariff (FIT) after a legislative bill passed August 26, 2011 shifted control of the pricing structure of the FIT from the nuclear-sympathetic Ministry of Trade Economy to a newly formed committee publicly tasked with expanding investment in renewable energies.

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II. Article by Andrew DeWit

-“Japan’s Nuclear Village Wages War on Renewable Energy and the Feed-in Tariff”

by Andrew DeWit

The effects of the Fukushima shock continue to spread. Throughout the eventful summer, one of those consequences was the turn away from nuclear power with a dramatic emphasis on renewable power and the feed-in tariff (FIT) to deploy it fast. The FIT policy was championed by former Prime Minister Kan Naoto as well as the CEO of Softbank, Son Masayoshi. They and others in the political, business, non-profit, and academic communities strongly endorsed a legislative bill to expand Japan’s handicapped FIT to geothermal, wind, biomass and small hydro. The bill was passed on August of 26 with explicit constraints on the Ministry of Economy Trade and Industry’s (METI) capacity to hamstring renewables in favour of nuclear power and on behalf of the nuclear village. Notably, the bill took price setting out of METI's hands. But now METI and its allies in the nuclear village are trying to get that clout back in their hands.

The price-setting mechanism is of signal importance because the role of the FIT is to provide incentives for the adoption of renewable energy. At present most renewable energy produces power that is more expensive than conventional forms of energy, especially coal. The cost of renewable energy is rapidly declining, however, with solar module prices falling by 40% within this year alone. We can see a quickly changing cost profile wherein prices for conventional power are rising while renewable power costs are declining at an accelerating rate. The point of crossover, where a given renewable source’s cost drops below the average for conventional power, depends on the speed of these movements. The FIT helps to accelerate renewables’ cost reduction by purchasing their currently more expensive power at a guaranteed price and for a guaranteed period of time, with the cost borne by the consumer and the price support ratcheted down with the falling cost of energy production. Thus the FIT gives renewable power producers, such as households, farmers, large and small businesses, local governments, and other actors the pecuniary incentive to install renewable energy power generation. (军控协会)