…there has been strong backing for a return to nuclear energy from Japan’s most influential business lobbies, which say the nation’s reactors must be brought back online to ease a crippling energy crunch. Before the 2011 accident, Japan was one of the world’s largest generators of nuclear power, relying on atomic energy for about 30 percent of its electricity needs. Since then, Japan has made up for the shortfall by increasing imports of oil and gas, which has caused energy prices to rise in Japan and weighed on its trade balance.

And nationally, organized opposition to nuclear power — which erupted in the months following the Fukushima accident into mass street rallies — has failed to materialize. In a closely watched gubernatorial race in Tokyo this month, a fractured field of antinuclear candidates appeared to split the opposition vote, helping to return a pro-nuclear, governing party candidate to office. That victory has given momentum to Mr. Abe’s push for a return to nuclear power.

Mr. Kan, the former prime minister who led the country’s response to the Fukushima crisis, blasted the government’s nuclear turn.

“This government has not learned the lessons of Fukushima,” he said by telephone. “Japan was on the brink. But now, we want to go back to nuclear for economic reasons. But what happens to the economy if another disaster hits?”

Japan’s new energy plan calls nuclear power an important “baseload” electricity source — one that can produce energy at a constant rate and lower cost than alternatives like solar or wind power. Renewable energy proponents have argued that safety risks and the costs of handling nuclear waste ultimately make nuclear power less reliable and more expensive than other clean energy options.

The plan also says that Japan will ultimately decide on the appropriate size of its nuclear program after taking into account its future energy needs, as well as the country’s commitments to reducing greenhouse gas emissions, which have surged with the decline of nuclear power. The wording, Japanese news outlets noted, left the door open for Japan to add to its current nuclear system.

David Fuller's view

Energy remains Japan’s biggest problem and it is unlikely to be resolved in the near term.  Nevertheless, post-deflationary funk Japan has the ability to run safely its nuclear power stations which are not positioned near obvious tectonic plate fault lines, as was the case with Fukushima.  

Shinzo Abe is obviously having to tread cautiously but he has a ‘needs must’ case to make; Japan’s manufacturing sector is on his side, and Japan’s environmentalists will not be happy that their country’s CO2 emissions have soared following the shutdown of all their nuclear reactors.  

I expect a gradual nuclear power restart programme for Japan, hopefully within the next two years.  Additionally, Japan is progressing with its own solar energy development programme which should begin to reduce its dependence on fossil fuels in 2015.

I think Japan’s stock market (weekly & daily) will remain one of the better performers among developed countries over the medium to longer term, despite its high energy costs at this time relative to the USA. Japan’s valuations are competitive and it is a recovery candidate supported by a big monetary tailwind.