Policy For The Stable Supply Of Overseas Coal

INTRODUCTION Since the occurrence of the first oil crisis, coun-tries of the world, especially oil-importing countries have made sustained and vigorous efforts to lessen the dependency on oil as a source of energy supply. The adoption of "Principles of Coal Policy" by the IEA Ministerial Governing Board Meeting in May, 1979 was the first formal action taken by major energy consuming countries. At the Venice Summit in June, 1980, it was agreed that production and use of coal should be doubled over the next ten years. In fact, the world coal use in 1980 showed around a 10 percent increase over the previous year. Recently, we have seen an indication that the balance of oil supply and demand in the short term have eased. But I believe that it remains vital that we continue to encourage the development and introduction of alternative energy sources. Because, from the medium and long range viewpoint the recovery of the worldwide economy will lead us to increased oil requirements and thus we will be faced with the cyclical, structural tightening situation between the supply and demand of oil. Moreover, we are still convinced that the constraint of the supply capabilities of the Middle-East nations may be increasing in the long-term, since there still remains political uncertainties among these nations. Consequently, above all, coal is viewed as an alternative energy resource available for immediate expansion of use and is given as high a priority as nuclear power. In Japan, we regard coal as the most reliable alternative energy resource to replace oil. According to the "Alternative Energy Supply Targets" approved by the Cabinet in November, 1980, the level of coal imports is estimated to approximately double by 1990, while our domestic coal production will remain nearly at the same level. The transition from oil to coal is found in the recent import levels of coal---73 mil¬lion tons in 1980, a 23 percent increase over the 59 million tons imported in 1979. There was an upsurge in steaming coal imports, reflecting the transition in feedstocks---7.2 million tons in 1980, four times over the previous year's amount. Henceforth, from the medium to long range view, the demand for coal, especially that of steaming coal is forecast to continue to grow. The timely expansion of supply capabilities is our utmost concern and should be one of the most significant goals of our comprehensive policy. The Overseas Coal Investigative Committee, a privately organized advisory panel to the Director-General of the Natural Resources and Energy Agency of the Ministry of International Trade and Industry (MITI), investigated means to secure a stable supply of overseas coal. The panel presented its interim proposals in August, 1981, recommending the diversification of coal import sources, extensive use of low rank coal, as well as enhanced international cooperation between coal producing and importing countries. THE CONTENTS OF THE COMMITTEE'S REPORT Four Points for Major Consideration In order to ensure a stable supply of overseas coal, Japan needs adequate policy measures consistent with the characteristics of coal resources and environmental requirements, giving consideration to Japan's status and the role she is expected to play in the areas. From the above, great importance should be attached to the following four points: All the components of the "Coal Chain" (Namely, the development of mine sites, construction of railroads, port loading facilities, coal shipping vessels, port receiving facilities, including coal centers and international transport facilities etc.) should be reviewed and reformed with steps taken to assure efficiency consistent with the entire coal chain system. The complete formation of a coal chain system requires such lengthy lead times and huge amounts of investment that necessary measures should be undertaken well in advance utilizing long-range projections of future demands and various economic surveys. Policy planning should be conducted taking into account of harmonizing stability and economics of the supply structure. For ensuring the long-term stability and expansion of the coal trade, international cooperation on a bilateral and multi-national basis should be encouraged. Mutual understanding and close relationships are essential to facilitate the formation of the supply system and to promote the extensive use of coal. Direction and Problems Related to Supply Stability Expansion of Supply Capabilities. World coal imports in 1979 amounted to 229 million tons, of which Japan's share amounted to 59 million tons, or one fourth of the entire amount. The imports of European and Asian countries accounted for 83 million tons and 7 million tons respectively. According to the examination of the Investigative Committee, Japan's coal requirement is estimated to be between 140-150 million tons by 1990, nearly the same level as announced in the Provisional Long-Term Energy Supply and Demand Outlook in 1979. This fore¬cast is-to be revised in April, 1982. Japan's demand is expected to be met through fiscal 1985; however, by 1990, the supply is estimated to fall short of demand, particulary, in the field of steaming coal. For the expansion of supply capability, first, mine development should be accelerated. The proposed