Before the nuclear disaster at Fukushima in 2011, Japan was intent on developing greater use of nuclear power as a reliable, clean and relatively cheap energy source. It also fitted with Japan's goal of greater energy self-sufficiency given the global abundance of uranium. The idea was to increase nuclear's share of power generation from just over 30 per cent to 50 per cent by 2030 with renewables moving up to 20 per cent.
Under that scenario, combined with flat or declining demand in Japan, the use of coal would have inevitably decreased from its current share of about one quarter of power generation – much of it Australia's higher-quality black coal.
But with Japan's nuclear industry only just getting started again – with only two nuclear plants now operating under strict new rules – and severe political constraints over the industry's future, the country is readjusting the balance between security, cost and emissions.
That includes taking plenty of LNG from Australia. But in a country that imports 95 per cent of its energy needs, imported coal is considered the cheapest option – cheaper than gas and certainly cheaper than renewables. It also helps Japan's traditional concerns about energy security by avoiding relying too heavily on one option.
So the Abe government and utilities are planning on building dozens more modern high-efficiency, low emission (HELE) or what are known as ultra-supercritical coal-fired plants to help replace the loss of nuclear power. This is despite Japan's international commitment to reduce its emissions by 26 per cent by 2030.
These new plants will still have relatively high emissions but they are sharply reduced compared to older facilities owing to their greater energy efficiency or emissions per megawatt hour. That involves a technology combination which allows for burning coal at higher temperatures and using a different mix of gases in the combustion chamber. And unlike Australia, the politics of energy in Japan means these plants will have little problem attracting finance.