Episode 2 – Market report Q3 2021
Coronavirus
The COVID-19 situation has sharply deteriorated in Japan over the summer. Until then, Japan was often hailed as an example of good management and control of the pandemic despite relatively soft measures. However, the indicators for the 5th wave of contaminations turned out to be one order of magnitude above the previous ones and the situation in Japan finally started to resemble the one in Europe. Things are looking better since the end of August, with 50 % of the population being vaccinated and having received two doses by mid-September. For reference, this figure was still negligible at the end of March and less than 15 % at the end of June, but has been increasing rapidly over the last few months. It is in this context that the Japanese government launched in September the study of a roadmap aimed at gradually lifting the restrictions in place impacting the economy, among which those pertaining to the food and catering industry, the travel industry and the gathering of people.
This roadmap could result in a partial lifting of the current restrictions barring entry into the country for professional purposes towards the end of 2021. This is still however quite speculative and will depend on the criteria and targets set by the government for lifting the restrictions.
Fukushima Daiichi NPP
TEPCO announced in April that it would discharge the water decontaminated through the ALPS process (Advanced Liquid Processing System) into the sea. Following this, the company presented in August its technical and organisational roadmap with the objective of guaranteeing the safety of the operations and minimising the damage to TEPCO’s reputation. Among the technical highlights, the company presented a system to control the composition and homogeneity of the released water which would include a 1-km-long underwater pipe. The target tritium level at the time of release has been set to 1,500 Bq/l, but TEPCO thinks it could manage to lower it all the way down to 440 Bq/l*. The International Atomic Energy Agency (IAEA) has agreed to provide some technical support to these operations through controls and inspections aimed at guaranteeing the safety and transparency of the water release plan. The kick-off of the IAEA’s mission took place on September 8th at the Fukushima Daiichi NPP.
The announcement by TEPCO that the decontaminated water would be released into the sea elicited a very emotional reaction from the Japanese population (and that of neighbouring countries). The Japanese company and official authorities still have a lot of PR work ahead of them in order to win over the general public. It may be noted that in this context, the Japanese media compared the total activity of the tritium currently in storage at the Fukushima Daiichi NPP to one month of release by the French facility in La Hague! It is quite unlikely that the decision to release the water would be overturned on safety grounds, even though TEPCO still has to submit its roadmap to the Nuclear Regulatory Authority (NRA). The release is expected to begin in spring 2023 and may, after the initial testing phase is complete, continue for decades.
*For comparison, the WHO recommendation for drinking water is 10,000 Bq/l.
Restarting the nuclear fleet
Japan’s Nuclear Regulatory Authority (NRA) announced in August that it would stop its inspection of the Tsuruga 2 NPP, operated by JAPC (Japan Atomic Power Co.). This inspection is a mandatory requirement for restarting the power plant and comes as a direct consequence of an incident from February 2020. The experts appointed by the NRA had, at the time, found discrepancies in data submitted by JAPC, which aimed at picturing the seismic fault located below the plant as less active than in previous versions of the reports. This geological data is pivotal for deciding whether to restart the NPP or not and JAPC shall, following this announcement, provide the NRA with the necessary updated documentation as well as proposed modifications to its management system.
After a safety incident (physical protection) earlier this year at the Kashiwazaki-Kariwa 7 reactor operated by TEPCO, it is now JAPC’s turn to make the front page of the newspapers in a country where the general public’s trust of the nuclear operators is already quite low. For the Japanese press, this data is likely to have been intentionally tampered with, despite JAPC’s explanations to the contrary. Plus, the newspapers are quick to point out that JAPC might not have the necessary skills to remain a nuclear operator, as it is a nuclear energy joint-venture created by six Japanese nuclear operators, including TEPCO. This sadly is one more rock that the Japanese companies stumbled on on the long path leading to a restart of the nuclear fleet.
France and Japan
Veolia is one of the few French companies with a strong foothold in Japan, having created its Japanese subsidiary almost 20 years ago, in 2002. Now about 3,600 people strong and very active in its field (its core business of water, energy and waste management), Veolia kicked things up one gear over the summer by winning a 20-year franchise agreement for managing water in the Miyagi prefecture. Veolia is the leader of a consortium of companies (Veolia plus 9 local partners) which is tasked with providing close to 2 million people with drinking water as well as providing water for industrial activities and managing wastewater. This franchise agreement is unprecedented in Japan and was made possible by a new legislation allowing for water services to be subcontracted to private companies.