Japan, the world’s top LNG importer, has pioneered the global market for the fuel since the 1960s. However, the country now has an aggressive plan to pivot away from fossil fuel and instead champion clean energy sources. The shift is expected to shake up the global LNG market and create turmoil for suppliers such as Qatar, Australia, and the US.
The Japanese government has drafted an energy policy that aims to increase the share of renewable energy in the country’s electricity mix to 36%-38% by 2030. This is higher than the country’s current target of 22%-24%. The country also plans to cut its LNG use to 20% of electricity generation by 2030. It implies that Japan’s annual imports should drop to around 25 million-40 million tons by 2030 from 74.5 million tons in 2020.
It is unclear whether Japan could manage to hit such targets. Analysts said the country would have to restart all of its nuclear reactors, which would likely face strong public opposition. For now, Japanese LNG buyers have refrained from signing contracts of more than ten years. Last year, Japan’s oldest LNG contract with Indonesia ended after being in place for about five decades due to the COVID-19 uncertainties.
