The Japan coal market is expected to grow at a CAGR of more than 3% during the forecast period of 2020-2025. Factors such as plans to increase the power generation capacity and increasing electricity demand owing to rapidly increasing industrial and infrastructural development activities in the country are expected to drive the market during the forecast period. However, the uses of coal are squeezed out of the energy mix in many developed nations, the reason being the generation of air pollutants due to coal combustion. Moreover, power from coal is getting mixed up with other alternative sources, like renewables and natural gas, which help to reduce the environmental impact as compared to coal. These factors, in turn, are expected to restrain the growth of the Japanese coal market.
Key Highlights
- Coal is extensively used in the country to fire the thermal power stations and, in turn, meet the demand for various sectors, such as industry, transport, residential, commercial, and public services. Hence, the power stations segment is expected to dominate the market during the forecast period.
- With the growing demand for electricity, coal power plants in Japan is expected to be a significant consumer of coal. Upcoming coal power plants are expected to create an opportunity for the market players in the coming years.
- Rising environmental concerns over greenhouse gas emissions and global warming are expected to restrain the growth of the coal market in Japan during the forecast period.
Key Market Trends
Power Stations Segment to Dominate the Market
- In 2019, Japan accounted for more than 3.1% of the global share in the total coal consumption, and about 26% of primary energy consumption in the country came from coal.
- The country closed down all of its nuclear-based power plants after the Fukushima Nuclear disaster in 2011, this led to an extra load on the already existing power plants.
- The country s actively building new coal-fired plants to meet its energy needs. The country is planning to build at least 22 new coal-based power plants, at 17 different sites in the next five years.
- Japan is an energy-poor country that relies on imports for the bulk of its energy needs. This is another factor for the rise of coal consumption in the country, as coal is cheap and easily available.
- Although there are several restraints in Japan, leading to decreased use of coal, the construction of coal power plants is still going on and is bolstering the market growth in the country.
Rising Environmental Concerns to Restrain the Market
- Japan has witnessed high rates of demand for electricity, owing to the growth of the economy, coupled with factors such as the closing down of all nuclear reactors in the country. This has led to a high growth rate in the usage of coal in recent years. Over 87% share of Japan’s primary energy comes from oil, natural gas, and coal, while renewables, hydropower, and nuclear energy combined only account for only 12.5% of the country’s primary energy.
- In recent times, Japan has been facing severe pollution problems, especially in summer, leading to extreme temperatures and heatwaves. This has forced the citizens and the government to think and act on the problem.
- Japan has witnessed heat waves repeatedly in recent years. In 2018, the heatwave was estimated to have killed over 1,000 people in the country. In the summer of 2019, the heatwave led to the death of over 57 people and hospitalized around 18,000 people.
- With the rising environmental concerns over pollution and greenhouse gas emissions from coal-based power plants and Japan's huge steel industry, the growth rate has slowed down. The country witnessed a rapid growth in its renewable sector in recent years, which is expected to outpace the expansion of its coal-power fleet in the current decade, given the country's broader plan to cut its dependence on the thermal fuel.
- The decrease in the growth rate of coal consumption due to environmental policies and increasing renewable share, the market for coal in Japan is expected to hamper the growth of the market during the forecast period.
Competitive Landscape
The Japan coal market is partially fragmented. Some of the key players are Chiyoda Corp, Itochu Corp, Mitsubishi Heavy Industries Ltd, Toshiba Corp, and Electric Power Development Co., Ltd.
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