More power to a greener Japan

The wider catastrophe, in which 19,000 died or went missing, meant total shutdown of an advanced "fleet" of 56 nuclear power stations, concluding on May 5 with the Tomari 3 plant in Hokkaido. More drastically still the disgrace of Fukushima plant operator TEPCO prised open big energy's grip on political-industrial Japan, a fact of life since the 1960s.

For Japan's anti-nuclear campaigners Fukushima came as a blessing in (heavy) disguise. In a different way, the same might also be said for Scotland. That was certainly the feeling at last week's renewable-dominated All-Energy conference in Aberdeen, when a session on the Japanese opportunity was added to the programme. Scotland's international profile in green technologies, assiduously promoted by the current Scottish Government, suggests new trading possibilities with our oldest friends in the Far East. In the aftermath of Fukushima, as Japan races to adopt renewable technologies, and reaches out to countries which have by choice, not necessity, prioritised green power. Scotland is at the leading edge.

In Aberdeen last week, Richard Oppenheim, head of energy policy at the British Embassy in Tokyo, was kept "pretty busy" responding to unprecedented interest from Scottish and UK companies alert to the new opportunities.

"Although the situation in Japan will only come clear when the energy plan is formulated in September and subsequent energy market reform, there is a lot of interest. The terrible tragedy of March 11, 2011 has changed the game on renewables and there are plenty of niche areas for expertise and components that only UK companies are producing.

"Japan is an advanced industrial economy and their technologies will probably take the lead, but significant opportunities that didn't exist before do exist now, for the UK and particularly Scottish companies in wind, tidal and wave."

Craig Jones, Glasgow-based head of energy for UK Trade & Investment also refers to "high-value services" such as "consulting engineering, strategic business planning, matching demand with capacity, environmental issues and planning, as well as nuclear decommissioning and waste management."

In Japan, the change in the climate of opinion is dramatic. "Public sentiment in Japan has consistently opposed nuclear power since the scale of the disaster and the lies told by the power company became clear," says Andrew deWit, professor of public finance at Tokyo's Rikkyo University, whose anticipation of the 2008 financial crisis make him an influential commentator on future trends in Japan.

A Canadian academic, DeWit is also a disinterested cheerleader for the Scottish approach that "Japan could learn from Scotland about how to be a first-mover, rather than doing its usual thing of waiting around for others to act. Scotland is seeking to evolve its extant fossil-fuel industry. Japan could learn from that, especially in finding new means to redeploy human and physical capital from a nuclear economy. This economy will almost certainly shrink, if not disappear – apart from the clean-up crews who will be toiling into eternity at Fukushima".

John Swinney MSP, the Cabinet Secretary for Finance and Sustainable Growth who visited Japan and South Korea in April, is in no doubt that new thinking is prevalent in Japan and that it plays to Scotland's strengths.

"There was a clear vision articulated by everyone I spoke to in Tokyo or Osaka, whether it was government ministers, public authorities or the company base that Japan was taking a different course," Swinney told the Sunday Herald. "All of that leads to opportunities for Scottish companies and organisations.

"In a number of different elements of renewables we have a lot to offer in terms of the R&D carried out in Scotland in sectors that will make the most difference in Japan. We are in a strong position to work with projects under way there and to reap a benefit of Japanese companies' involvement in R&D with Scottish institutions.

"[On this visit] I found there was an added urgency in these discussions. There is a fundamentally changed perspective within Japanese society and a very substantial shift in focus. As part of that there is a very clear recognition that Scotland is in a leading position, and already examples like the partnership of the [Orkney-based] European Marine Energy Centre (EMEC) to advise on and support the Japanese Marine Energy Centre (JMEC), Japan's first test centre."

Japanese politicians are not known for bold initiatives, but Swinney hints that the Japanese may be taking policy lessons from Scotland.

"In my conversations with officials from [tsunami-hit] Iwate Prefecture where we were offering to facilitate contacts within Scotland, it was clear that they acknowledged that we have got into such a strong position because we have had a clear policy focus on renewables.

"Because whether or not people agree with our policy, no-once can say the direction we have set has lacked certainty. We have had utter clarity on the subject since 2007. There was a strong sense that they could learn [from us]."

Japan's root-and-branch energy policy review, due out in the next few weeks, is likely to increase renewables targets and formally abandon plans to increase the current 30% of energy generated by nuclear power to 60% by 2100. The figure now is 0% one of the most drastic U-turns in industrial history anywhere. But wind, geo-thermal and solar power are not much more than that at 1%. Room for growth, and for restoring the country's shattered carbon emissions targets, is almost infinite.

Not only have ballooning oil and gas imports driven up Japan's balance of payments to a record £20 billion, it has undermined a political order in which vested interests in Japan's respective power sectors, expressed through the Keidanren – a kind of Japanese CBI – loomed large over a cosy political-industrial order.

Thus rethinking energy policy is one part of a wider revolution in Japanese thinking engendered by notoriously prolonged economic underperformance, worrying demographics and a loss of dominance in high-value manufacturing to rivals China and South Korea. But there is a general sense that what needs to be done to increase competitiveness and arrest economic decline, and what political consensus will allow, are entirely different things:

Things are changing fast. Says deWit: "Japan might run into permanent trade deficits if it's stupid enough not to ramp up efficiency and renewables as well as storage, smart grid and other technologies. Japan may be a lot of things, but it's not stupid. The flow of resources into the alternatives to nuclear is already reshaping the Japanese political economy. If this continues, then the country will likely end up with a more diverse and innovative economy in the biotech, IT and energy nexus – energy is roughly 20% of an industrialized economy – representing the core of the contemporary industrial revolution.

"Prior to the earthquake on 3/11, Japan had little hope of getting to the cutting-edge of this revolution, as the "nuclear village" was deliberately slowing down the deployment of renewables, smart grids and other innovations to keep its monopoly. The power economy alone is worth ¥16 trillion (£124bn) a year, so you get some idea of their incentive to do that".

Dr Stephen Baker, the former Sony research scientist who heads up Scottish Development International's office in Tokyo, is fully alert to the opportunities for Scottish companies in refashioning a new order in Japan.

"First is the opportunity for inward investment [in Scotland] by Japanese companies – as renewable energy project activity in Scotland and the UK is well advanced (especially in the field of off-shore wind) many Japanese companies are looking at the opportunity to participate in the Scottish supply chain and apply their significant development and manufacturing expertise to the production of next generation turbine technology as a chance to prepare for the coming deployment in Japan.

"Second is the opportunity for Scottish companies to supply these large inward investors with parts, product and service, a significant opportunity as the component base for wind-turbines is as vast as that of the automotive industry.

"Third is the opportunity for Scottish companies to supply expertise or goods to the programmes in Japan – EMEC is an example of this. But the opportunities are broad from consultative services such as EMEC's to technologies in any of the renewable areas such as wind, solar, bio-fuels, smart grid and energy management technologies."

Last week's UK draft energy review, praised by trade group Scottish Renewables for increasing the proportion of green energy, was also criticised for seeming to favour nuclear power and disrupting the established order of carbon reduction incentivisation. Japan's situation, although not immune from the country's impenetrable political dynamics, is fundamentally much less ambiguous. Nuclear power is dead, and big prizes await Scottish and UK entrepreneurs whose technology and commercial know-how can impress the rising technocracy of a nascent cleaner, greener Japan.

Prior to the nuclear shutdown of 2011-12, Japan's total power generation of one trillion kWh broke down as follows: Thermo power 60%; nuclear power 30%; Hydro power 9%; and others 1%.

All has changed since the disaster. For example, although the Ministry of Economy, Trade & Industry (METI) had earmarked some ¥580 billion for technological research in its initial fiscal 2011 budget, only about ¥30bn, or 5%, was to go to renewable energy. METI has scrambled to change this by reallocating R&D funding or securing additional funding in supplementary budgets.

Tokyo also acted fast to change regulations restricting the deployment of renewable energy. In July, the government will introduce a feed-in-tariff programme requiring utilities to buy electricity generated from renewable energy sources.

The Environment Ministry has said it will approve tapping geo-thermal resources in regulated areas of this volcanic region.

Apart from Scotland's strong renewable focus, the ties of history count for much when seeking fertile territory for Japanese-Scottish collusion. Although mismatched in population and economic weight in the world, Scotland and Japan go back a long way in mutually useful technology transfer, dating from the 1860s when young Japanese technocrats studied at Anderson's College, precursor of Strathclyde University, the Victorian world's equivalent of MIT.

In the present day more than 65 mostly high-tech Japanese firms continue to invest in Scotland and buy up Scottish companies, including Terumo Vascutek, Terasaki Electric, OKI Data, Mizuno, Mitsubishi Electric and Teijin Dupont.