Renewable has been the buzzword in the pop language of the energy sector. Two decades have passed since we were first told that weather-dependent wind turbines and solar panels would eclipse long-dependable and readily available coal, oil and natural gas as primary energy sources.
But the global market tells a different story. Successful economies are realizing that “transitioning” to faddish technologies to address a fabricated climate emergency does nothing to meet real-world energy demand. Japan’s liquified natural gas (LNG) market is an example.
Japan’s biggest challenge is its population decline. However, improvements in labor productivity and structural reforms are expected to maintain economic growth, although modest compared to other Asian countries.
Despite relatively slow growth, reports suggest that the manufacture of transportation equipment, semiconductors and other products will remain a key contributor, with manufacturing sales projected to increase a healthy 2–3% annually through 2030.
A Wood Mackenzie analysis notes that Japanese electricity demand is forecast to be between 1,100 and 1,200 terawatt-hours in 2040, up from less than 1,000 in 2023. AI data centers and a general increase in electrification will drive this demand.
Ever since a 2011 earthquake and tsunami induced radiation releases at a Fukushima nuclear power plant, Japan has been heavily reliant on fossil fuels. Japan knows that fossil fuels are the only practical alternatives to nuclear fission – unlike wind and solar – for meeting the country's baseload power requirements.
Coal and LNG currently contribute around 60% of all electricity generated in the country. Despite projections of a nuclear expansion, LNG and coal are set to dominate the energy mix for the time being.
“With slower-than-expected growth in renewables, thermal power will remain in the generation mix for longer,” says Wood Mackenzie. “Japan’s new energy plan now expects coal and gas to contribute as much as 40% of the generation mix by 2040.”
Japan’s LNG market is thriving and set to register a compound annual growth rate of more than 4% between 2025 and 2032. This robust trajectory translates into an estimated market value of more than $63 billion by 2032.
Japan’s efforts to consolidate LNG supply since 2020 is no secret. As an import-dependent nation with limited indigenous hydrocarbons, securing stable energy supplies is paramount for economic stability and growth. Japanese corporations have been extending investments in LNG facilities across Asia-Pacific with the aim of increasing energy security.
In April, Japan's leading power generator, JERA, announced that it was considering Alaska as a source for LNG. This move aims to enhance energy security and diversify supply options, coinciding with tariff negotiations between Japan and the United States.
The Alaska LNG project, championed by President Donald Trump, is a linchpin in this partnership. The $44 billion initiative would transport natural gas from the state's North Slope fields through an 800-mile pipeline for domestic consumption and for conversion to LNG and export to Asian markets, avoiding the Panama Canal.
With a projected capacity of 20 million tons of LNG per year – roughly 30% of Japan’s annual imports – the project could transform the U.S. into a top supplier, rivaling Australia and Qatar. In 2024, the U.S. accounted for 10% of Japan’s LNG imports, or nearly 6 million metric tons, a figure set to grow with Alaskan product.
Japan's approach can be seen as "energy realpolitik," where national interests of economic stability and energy security favor technologically achievable pathways over impractical climate mandates.
The Japanese approach may be more subtle than India’s and China’s open defiance of the climate industrial complex’s rulebook, yet it is establishing a similar hydrocarbon supremacy.
