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Japan’s aggressive new plan to champion clean energy is shaking up the liquefied natural gas market that it helped pioneer 60 years ago.
The country, the world’s top LNG importer, called for more renewables such as wind and solar to replace natural gas in a revised plan released last week. The shift aims for LNG-fired power generation to fall by roughly half this decade, creating upheaval for Japanese utilities as well as suppliers from Qatar to Australia to the U.S.
The stricter guidelines will see Japan imports drop by a third by the end of the decade, according to traders and analysts. It will force domestic utilities to abandon long-term LNG deals, which have been the backbone of the nation’s imports, while increasing dependence on the more turbulent spot market.
The policy was a surprise to suppliers around the world. Natural gas — once widely seen as the bridge to a green future — has been falling out of favor with some governments as they boost efforts to slow climate change and the cost of renewables drops drastically. Until recently, Japan had been touting the super-chilled fuel as a cleaner alternative to coal.
