The Hindu: Published on 20th June 2025:
Why in News?
Japan is returning to long-term LNG (liquefied natural gas) deals after a decade of reduced imports due to nuclear restarts and renewables. The sudden surge in AI-driven energy demand, high costs of green fuels (like hydrogen/ammonia), and Japan’s new Strategic Energy Plan have collectively brought LNG back to focus as a key transition fuel.
Background:
Post-Fukushima disaster (2011), Japan had increased LNG imports, which declined over time due to renewable energy and restarting nuclear plants.
LNG importers hesitated signing long-term contracts due to prior energy policies centered on decarbonization.
7th Strategic Energy Plan (Feb 2024) now identifies LNG as essential even beyond carbon neutrality targets.
Key Issues:
Surge in power demand due to rapid growth of AI-driven data centers.
Hydrogen and ammonia once seen as cleaner alternatives have become less economically viable.
Energy security concerns and price volatility have pushed Japan to secure stable long-term LNG contracts.
Strategic Shifts:
Japan is now actively:
Replacing coal with gas-fired power plants (7 GW auctioned capacity).
Increasing LNG-fired capacity to 85.75 GW by 2034.
Projecting data center power consumption to rise 80% by 2030.
Encouraging public-private partnerships to lock long-term LNG supply deals.
Economic and Energy Impact:
LNG imports expected to rise to 78 million tonnes by 2030, per Morgan Stanley.
Ensures power reliability during digital expansion (especially AI/data centers).
Supports smooth energy transition, avoiding economic disruptions from premature green shifts.
Promotes investor confidence via regulatory clarity and contract stability.
Geopolitical Implications:
Japan is diversifying suppliers:
15-year deal with Abu Dhabi’s ADNOC (Osaka Gas).
First U.S. long-term deal by Kyushu Electric with Energy Transfer.
JERA signs 4 major 20-year deals with U.S. LNG producers.
Strengthens energy ties with U.S. and Middle East, reducing over-dependence on any single region.
Environmental & Policy Angle: