Ep105: Nobuo Tanaka "The Race for Clean Energy Dominance"

Click Here for Edited Highlights

Michael Liebreich So, Tanaka-san, thank you so much for joining us here on Cleaning Up. It's always an enormous pleasure to see you again.

Nobuo Tanaka You're most welcome, Michael, I'm really delighted to come back and to have a chat with you. This is a great opportunity. I really respect what you have done before, and I learned a lot from you. So, this is a great revival of our meeting and our communication.

ML Well, exactly. It's been too long since, well before the pandemic that we last met and interacted. What I'd like to do is can we start, if I might, by asking you to give a thumbnail of your bio, the short version, because we have an audience, a very diverse audience. Some will know you; some are great old friends of both of ours, but there's also a lot of people who are perhaps relatively new to the energy sector. So, give the short version,

NT Okay, well, after I graduated the University of Tokyo, I joined METI, Ministry of Trade and Industry, so I am a career industrial policy-related government official, by exercise, but my career is staying outside of Japan, half of my career is abroad. So many of my colleagues back in METI is calling me a foreigner. And once, twice in Washington DC in the Japanese embassy, trade war front with the United States, semiconductors, steel, whatever. And then, three times in Paris, twice in OECD, Organization for Economic Cooperation and Development. I was the Director in charge of science, technology and industry for industrial policy, technology policy. But the second time, in 2007, I was asked to go for the candidacy, for the running as a candidate for the Executive Director of the IEA. I was very luckily elected and stayed in Paris four years more as the Executive Director of the IEA. I retired in 2011. and working in, coming back to Japan and becoming a kind of opinion leader in energy, security, sustainability in the University of Tokyo, IEEJ. And now I am working as the chairman of Innovation for Cool Earth Forum, which you see here, which was created in 2014, I think by the former Prime Minister, the late Prime Minister Shinzo Abe as a global forum to get experts in the sustainability to talk about innovation, technology, new technologies, or innovation for the policy itself sometimes. So, we have an annual meeting in Tokyo. And these two, three, we are on the web and hybrid meeting. But we are actively engaged, myself as opinion leader in Japan, are talking about sustainability, energy security. And thanks to the Russian invasion to Ukraine, I'm very busy.

ML Very good. And it's an appropriate moment to offer condolences, even though it was now a few months ago, for the tragic assassination of Shinzo Abe.

NT Thank you very much, Michael. Yes, I miss him a lot. He is a very unique Japanese politician with global identity - he had so many friends in the global world, leaders everywhere, so many leaders joined the state funeral for him. But, you know, this kind of situation, very much a crisis in a geopolitical sense, he could have played a very important intermediary for the discussion among the leaders. So, I really miss him at this moment. Yeah, thank you for your condolences, Michael.

ML The world certainly needs those figures, which can bridge cultures like Shinzo Abe, and in our world, you have certainly played that role, for which I very much thank you. I would remind you the first time we actually I think, met in person or really interacted, was the 2009 New Energy Finance, it was not Bloomberg at that time, it was the New Energy Finance Summit in London, in the midst of the crisis. And we had to downgrade the whole thing, we couldn't afford a big hotel and to do everything very plush, we were in a wine cellar, if you remember. In this strange location with arched brick ceilings, and I was enormously honored that you came over to London and you spoke at the New Energy Finance Summit. And that was when we first met.

NT I remember that was your headquarters, right? New Energy Finance office in London, I guess?

ML No, it was a venue for rental. It was actually something called Vinopolis. So, all these years, you thought we operated from a subterranean cellar! It wasn't quite as bad as that during New Energy Finance, we did actually have a normal office, although it was incredibly cramped at that point.

NT We met there. And we have often met together at the World Economic Forum in Davos, discussing sustainability issues, IEA at the same time. So, you know, this is the long years of discussion of energy security.

ML And then, of course, as I transitioned out of the CEO role and became chair of Bloomberg New Energy Finance, you served on our advisory board for a number of years. So, it's been a long history of interaction all of it very positive. What I would like to do is, I want to start if I could on the state of the world, and we've already touched on it. You've already mentioned the Russian invasion of Ukraine, there is this incredible energy price spike, which was already starting as economies came out of the COVID lockdown, we already saw the prices going crazy. Have you ever seen in your time working on energy, an analogous situation? How can we learn from history?

NT Well, very good question, Michael. I joined METI in 1973 when the first oil crisis happened, an Arab embargo of oil and the oil price went very high. And you know, Japan was in a total panic about the possible shortage of the oil supply to us. We were so heavily dependent on oil at the time from Middle East especially. When I joined METI the international division, or department, which takes care of the global issues including energy, it was 1979, the second oil crisis happened. The Iranian revolution happened, and oil prices went very high, almost tripled from the level before. That disruption of oil was the largest in history. And then, when I joined IEA, it was 2008, the oil price started rising to $147. It wasn't a crisis in a way, the supply disruption didn't happen. But because of the Chinese economy growth and the demand for oil, or energy, was rapidly growing, and supply cannot match. So, the price went as high as $147. And then suddenly, the Lehman shock, the financial crisis happens, and oil price went down toward $30 to the end of the year, so this up and down was an enormous shock. But, you know, the current crisis is much more than that. Fatih Birol said it's not the oil crisis, it's the first global energy crisis. Fatih is right, because it's not only an oil shock, oil crisis, which created the IEA, it's not only coal, it's not only gas, it's electricity. So, this is a total energy crisis, very complicated, connected. And the Russian invasion of Ukraine, of course, that triggered this crisis. The IEA released a stockpile of oil twice, after Ukraine shock. But the oil price is, as you said, it's getting higher, the gas prices went high, even before the crisis, it's because of Russia. Russia tried to test the European resilience by reducing the supply and oil price, gas price went very high, just before his invasion. And I think, you know, the Crimea invasion by Russia into the Crimea in 2014, was the turning point because Europe, suddenly reacted with sanctions, but that wasn't enough, even after Crimea, let's say, integration to Russia, the gas dependency of Europe increases. And even after that the discussion about let's say, the Nord Stream 2 continued. So, I think Europe sent a terrible message to Russia, this is a mistake of Angela Merkel. And she made a lot of mistakes, but this one, she phased out the nuclear power after Fukushima and too much dependency on the gas from Russia, and reducing coal, of course, I mean, it's necessary politically at that moment, probably. But this triggered, her decision triggered this geographical, geopolitical crisis of the current situation. So we are now in a very difficult situation, especially Europe is suffering a lot because of facing the cold winter, that Europe has enough gas for the future. Because pipeline gas is very difficult to alleviate the alternative, because there is no... LNG capacity is not enough. So how can Europe get supply of gas if pipeline gas from Russia cannot come? So now Europe is agonizing... I remember the IEA said the golden age of natural gas is coming in 2011 thanks to the shale revolution of North America, it happened. But maybe it's now the gas is the golden age of not natural gas but the golden age of LNG has happened, thanks to the Russian invasion. And the thing is getting more interesting because a couple of days ago, IEA World Energy Outlook 2022, this year's outlook, says that the golden age of natural gas is closing. This surprised me a lot, very interesting. The price of gas is very high, but because of the acceleration of Europe, you know, moving away from gas from Russia means Russian, I would say, importance in the gas trade will decline dramatically, the demand for gas even may eventually level off toward 2030. And peak demand for total fossil fuel, including oil, gas, and coal will be, let's say, level off or decline, maybe even in a few years’ time, towards 2030 the peak of the fossil fuel will happen in... Well, the famous scenario, the stated policy scenario - that means a likely scenario - though will tell us that peak of fossil fuel is coming in very soon. So, in a sense, I think, you know ... this energy crisis will probably subside when Russian gas finds an alternative destination by enhanced gas pipeline to China, or more LNG facilities to move gas from Russia to Asia, you know. By these kinds of things, maybe gas... the energy crisis will subside gradually, in the next decade or so. But the climate crisis, together with European independence from Russia will create a huge energy structural change that is what... Even the turning point mentioning about Russia or carbon dioxide, or fossil fuel peak, you know, these things are happening currently, that is the current IEA's analysis. And I cannot agree more, this is a huge energy restructuring.

ML You've just given a fantastic synopsis, not just of the IEA's output, with which you agree, but also of my views. And I wrote something, my most recent piece for Bloomberg, which was called After Ukraine: The Great Clean Energy Acceleration. And actually, it was released also on Cleaning Up, as an audio episode. And it's exactly this scenario, that what you've got is this very traumatic time with huge energy prices. And it's very difficult across Europe and even beyond in terms of the impact on people who are more vulnerable and less wealthy. But what you've got is now, the energy trilemma, sustainability, affordability of clean energy, and now security, all pushing in the same direction. And then we see these enormous programs of support in Europe, Fit for 55, RepowerEU, hydrogen strategy, we see the Inflation Reduction Act in the US. And then in China, we see plans to build enormous amounts of clean energy, India as well. And then Japan, the Green Transformation Plan, the 1 trillion-yen Green Transformation Plan... So, everything starts to kind of line up to accelerate green energy. Could you talk about the Japanese part of that matrix?

NT Yeah, well, before doing that, let me say that in this great competition of the global energy crisis and climate crisis, I think there will be winners and losers, Michael. And Europe as a leader of this transformation, and really accelerated by this, you know, Russian situation to Ukraine, I think Europe can be a winner. Also, Europe is really putting the resources to that and also making a standard setting, because of this Carbon Border Adjustment Mechanism is forcing other countries to play the same rule, same game with Europe. So, Europe can be a good winner. And the United States, US could be, because I am really surprised to see their new Inflation Reduction Act and also Infrastructure Act, gives a huge subsidy to CCS for example. $85 per tonne of co2 for CCS is amazing. And also, huge support to the electric vehicle, and hydrogen infrastructures. You name it. This is really revolutionary US activity and I think this will make a big difference. And also, US can be a winner because the major, mega tech firms are trying to, you know, decarbonize their operation totally, including the supply chains. For example, Apple announced that they are going to decarbonize, carbon neutral by 2030, much earlier than the governments claiming 2050 as a target. And all the supply chain companies are requested to do the same. So... I was told that there are more than 200 companies accept Apple's request to go renewable energy 100%, and among them 28 Japanese companies, famous [companies:] Sony, Murata, KIOXIA, that's Toshiba's semiconductor company, they have to live with these with this request if they want to continue in a supply chain to Apple. So, this demand side-driven transformation is happening, led by American companies. Auto sector is doing the same, Mercedes, or GM, they are forcing the same thing. Japan is not yet going that far, with Toyota, but this, this leaves US definitely the winner. And China? We'll see. Because China tries to make itself a kind of renewable superpower, you know, natural energies superpower. So, Xi Jinping tried to his best to make it - I don't know if it works or not - but they may try their best. So, if Japan can compete with these countries. Even Saudi Arabia, try to use their renewables and also the CCS and to make their oil or gas for the blue hydrogen or blue ammonia. So, they are trying to avoid the stranded assetization of their natural resources. So, good luck, but they are trying with these new technologies. So, how Japan can compete with these countries? That is the question and that is what I try to prescribe now. Because Japan studied hydrogen economy when Toyota Mirai is coming to the road in 2014. And we discussed a lot about hydrogen, hydrogen, hydrogen at that time. But probably we focussed too much on the transportation, with a fuel cell vehicle, the Mirai, and how to add the number of the refueling stations. But the number of the car I mean, the Mirai is not increasing. At this moment, it's about 20,000 Mirai and 159 refueling station, but that's too small for the hydrogen economy to really materialize? Toyota should go to commercial fleets of taxis, vans, trucks or buses, which China did. And China overtook us.

ML But can I come in? Because there's so much going on there. I want to come in because there's so much going on, you're raising so many questions, and I want to sort of I want to ... because when you get on to fuel cell vehicles, it's a completely different discussion, because most of the rest of the world has figured out that they're not going to happen. Taxis, vans, buses, because it's, you know, it's such a, but then we go down the hydrogen sort of rabbit hole, which I think maybe we'll do a little bit later. I want to come back to this question of competition between the blocs if I might, just before we get on to some of the sort of sectoral stuff, because, you know, the paradigm that we've spent the last 20 years in is we must address climate change, it's a global problem, therefore we must cooperate. Therefore, we must cooperate. The way to do this is the UNFCCC, the way to do this is the Clean Energy Ministerial, the way to do this is... all has to be hand in hand cooperation. But what you've outlined is maybe, and I put this out as a thesis for the audience and for us, are we entering a period where we're going to address climate change really through two different things, which is competition, great bloc competition, right? Europe, US, Asia - or Asia may be broken into different countries - and also through the integration of the supply chain. So, the combination of competition and supply chain pressures, achieving what frankly, 20 years of diplomacy, in fact, 30 or 40 years of diplomacy has really failed to do?

NT Right. Yeah, well, very important point Michael, because I remember that, back in IEA, and I participated in many meetings, like even at G7, at the summit meeting in Hokkaido, and there was the invitation... it was the Prime Minister Fukuda was the Chair. And George Bush was there, Sarkozy was there, Merkel was there, and they invited the Chinese leader Hu Jintao, the former General Secretary, and he mentioned to us in the meeting that, you know, they are trying to use as renewable energy as possible, yes, because it is necessary, but they're doing it not for the global community, or global sustainability, they do it for energy, security and efficiency of the economy. So, I was really surprised. And it's quite clever to say that, to reduce the dependency of oil and gas, and imported oil and gas, replacing it by more endogenous renewable energy, makes very good sense for energy security, even at that time. So, the game is now starting much more obvious and conspicuous because of the Russian invasion to Ukraine. Now, we try to use endogenous energy sources like renewables, together with nuclear, for the sake of energy security, and this trend is much more strengthened, thanks to the Russian invasion, and thanks to the great competition between nations, US, China, US, Russia, etc. So, Europe is now making a good alliance and making up one unified energy market covering gas, oil, together with renewables and grid connectivity, gas pipelines, and making that unified policy of carbon pricing and forcing others to do the same. So, this standardization of Europe, in terms of sustainability, and security is a really great power to make other countries to do the same, Japan is isolated out. Unfortunately, you know, we try to make the leadership in hydrogen, but not really because we are overtaken by China, overtaken by Europe. And now we are going to be overtaken by United States. Can we really match? But what Japan is now trying to do, I go back to your original question, is that we have to make, again, investing into the new technologies of hydrogen to the industrial sector, just like Europe is doing. Steelmaking, or cement, and by co-firing clean ammonia to the coal power plant or gas, starting with green hydrogen, and making a global supply chain of hydrogen or ammonia. Japan started liquid natural gas 50 years ago, now we are trying to build the hydrogen supply as soon as possible. That's what the Japanese policy is all about now.

ML Yeah, but can I come in on that? Because I'm doing a lot of work on hydrogen transportation, and there's a fundamental problem. And I want to know, whether you... how do you deal with this? Because the problem with importing hydrogen is, because of the physics of hydrogen, it's probably three to five times as expensive as LNG, right? Very simple. Liquid hydrogen is three times the volume of LNG, right? In fact, it's even more than that. So, instead of having, if you have one Q-Max, one big LNG carrier, you're going to need for the same amount of energy, three hydrogen carriers - liquid hydrogen carriers - and liquefying hydrogen means that you've already wasted two Q-Maxes liquefying it, you've then wasted another two Q-Maxes turning it from electricity into hydrogen, then you've got boil-off - the fact that when it's that cold, you have hydrogen that's being lost during the journey - and then you want to get it... That's fine, if you want to use the hydrogen as heat, you get that hydrogen, higher heat value, you get to use it. But if you want to use that hydrogen then to power your grid, you then have more loss, because you turn the hydrogen back into electricity, which of course you would have with LNG as well. But and then you can say, oh, well, we're going to do liquid organic storage of hydrogen for imports. Forget it! It's just as bad as liquid hydrogen, because it only has 54, 60 kilos per cubic meter of hydrogen. So, my worry... let me turn this into a question. Are you worried that you can do ammonia importation, and then you can co-fire it with your coal, but it's going to generate, Bloomberg says, $260 per megawatt hour electricity. You can import liquid hydrogen, you can import liquid oxide, liquid organic compounds with hydrogen. But fundamentally, you're going to make Japan's energy three to five times higher than its competitors. Do you agree with that? And if so, how do you compete?

NT Yeah, well, you're right. At this moment, the price of clean hydrogen, ammonia is very expensive. So, can we, can Japan compete? Well, I mean, if we replace the current energy by these resources, no way. How Japan start liquid natural gas importation? Because 50 years ago, liquid natural gas cost was very high, because the first stage initial investment was huge. But Japan started to replace old gas with cleaner source, as LNG, and 50 years... And then we built a big power in the transportation vessel, we started this technology. And Japan can do that, because even with this high cost, Japan has a regulated market of electricity and gas. So, we accommodate these high prices in the industrial competitiveness. And gradually, the volume of the trade increase, so the cost of LNG is getting lower and lower. Of course, still, LNG is expensive relative to gas, pipeline gas. So, we have suddenly suffered. Still Japanese cost of electricity is much higher than other OECD countries, for example. But we are covering it by the competitiveness of the industry by other elements. Can we start like this for hydrogen or ammonia, or MCH? This is our great trial. I mean, we need the Contract for Difference type of arrangement by UK, or we need H2Global type of procurement policy of Germany. Some kind of, you know, deployment subsidy is definitely necessary. I mean, that is what now....

ML Tanaka-san I'm the biggest believer in the world in experience curves and in cost reductions, but the physics of hydrogen, you can't get round. The density of hydrogen is the density if hydrogen.

NT I know! But Michael, I mean, if we have to move to the hydrogen economy, for the sake of, you know, sustainability, I think there's no other way. The cost of carbon will be high enough to legitimize the use of hydrogen, nobody will...

ML Except that there are alternatives.

NT I know. I mean, you know, so I think, you know, renewable will generate green hydrogen as such. So, the, the marginal cost of renewable is zero. So eventually, the marginal cost of gas or marginal cost of fossil fuels should be zero to compete with green hydrogen. So, the gas is very high at this moment, but if nobody buys it, because of this decarbonisation, I think gas, oil or coal has no value, as such. But it is, it could be valued, when with CCS, blue hydrogen has a value. So, this kind of situation will come with the competition to the green hydrogen from the electrolyzer. So, I think this is a great transformation and what oil producing countries or gas producing can take care of this is selling the service of CCS. I mean, they take out the carbon dioxide and put it back to the oil and gas field. And this has a value. The gas inside, you know, the well does not have any value, but taking out co2 and put it back to the well, has a value. So, CCS has a value. So, this is the way the oil producing country can survive. This is when the real decarbonisation or carbon neutral world happens. And that is a new value system in that kind of situation, I think carbon, I mean, hydrogen may have a huge way of the fuel, and could help the electricity. I mean, if I think electricity, renewable electricity could be much more competitive, but, you know, exporting renewable energy, maybe hydrogen is the possible way, and Japan needs... I mean, our renewable energy situation is not so strong, we are trying to increase as much as possible still, our power market structure prohibits the expansion of renewable energy. So, I'm arguing for the sake of competition domestically in Japan with renewable energy, imported green hydrogen or green ammonia or blue ammonia, or blue hydrogen, may really help us to achieve that. I don't know if this goes or not, but this is the kind of carbon neutral world of energy if it happens.

ML I think what's fascinating there is the assumption that it's the only way, that hydrogen is the only route, or largely the only route for Japan. But then you came back to talk about the renewable... I don't know, if you've seen my hydrogen ladder. You know, I believe that hydrogen, clean hydrogen, blue and green, will be used for industrial processes, feedstocks and so on. I have no belief that hydrogen will be used in land transportation, space heating, even industrial heat, and certainly bulk power generation. It's so uncompetitive, and you know, I do think they can play a role in long duration storage. So, lots of renewables, Japan can do huge amounts of floating offshore wind for sure. And probably much more geothermal, but then maybe the hydrogen is needed for long duration storage. So, when there's no wind and you have to have something, and it doesn't matter what it costs at that point.

NT That's true. Especially for the storage, liquid organic substances like MCH, could help because MCH is liquid under normal pressure, under normal temperature, so that it can be stored in an oil tanker. So, oil will no longer be... Let's say, in the net-zero world, oil trade will be declined substantially. So, there are plenty of oil tanks, oil fields be kind of empty. So MCH could replace oil as a strategic stockpile for the security, because it's normal liquid in under current temperature or pressure. So, for storage’s sake, yes, hydrogen is very good. But, Michael, one way to use hydrogen is going through the pipeline. I think Germany thinking about the hydrogen pipeline as a kind of backup, or you know, let's say second network... Pipeline hydrogen can generate heat and electricity with a stationary fuel cell and if that technology moves ahead, that is the way.

ML Right, but the problem with the pipeline, the pipeline is great, as long as what you need out the other end is hydrogen. If what, if the homework question... and this is where, you know, where it comes to for Germany; if you've got lots of renewable energy in North Africa, right, you've got cheap wind, cheap solar, and you need renewable energy in Germany, the problem is that you by the time you go from wind and solar, to hydrogen to the pipeline, and then back in the fuel cell - and by the way, I'm an investor in Xlinks, I did a fabulous episode with the CEO, that's Moroccan wind and solar and a few batteries into the UK, affordable, half the price of nuclear, frankly. And I'm also an investor in Ceres power, which is exactly that fuel cell, which can turn the hydrogen back into power. The problem is the cycle efficiency is so low, that high-voltage DC beats the pipeline for electricity. But let me just switch to one other area, which is very concerning to me for countries like Germany, the UK, Japan, Korea. If you start importing hydrogen for the steel industry, then what we're really saying is we're going to import already the ore, iron ore, then we're going to import this very expensive hydrogen for the steel industry. And then we're going to make steel, in competition with Brazil, in competition with Australia, maybe, in competition with China. And this is clean steel. They'll be making clean steel. You can't keep it out with a carbon border adjustment.

NT Yes, as Nippon Steel Corporation are thinking about investing into Australia, where they have the very clean hydrogen or clean, let's say electricity, as well as iron ore, so it's much better for them to invest into Australia and bring back or import back the green steel. That's true. That's true. So, can we continue to maintain the steel industry in Japan? This is a huge question, under the carbon neutral wall. Can we do it? Because Japan lost the aluminium industry, totally because of the very high electricity price. We had a very good smelters of aluminium before, but they've gone, totally disappeared the aluminium industry some time ago. The same thing could happen to the steel industry, then can we continue as the industrial state as such or just lose all the steel industry? Can we maintain the auto company? Maybe, maybe not, or we are moving to the service industry as such. This is a really challenging thing for the industrial strategy of Japan. You're right.

ML I had Patrick Graichen on Cleaning Up, and I asked him the same question about deindustrialization. And he said, and we talked about the fact that all these energy models, including the IEA models, they sort of assume that energy demand continues, you know, is kind of extrapolated out... What those models don't do is say well, all the steel industry might go to countries, which are what I call renewable energy superpowers, and there might be huge changes in the location of industry that's not modelled.

NT Exactly. I agree with you. Yeah, I mean, this kind of big, global industrial restructuring may happen. Because of this climate shock. Yes, you're right.

ML So, then let me ask a question about what a politician should do, what should we be saying what would you say to your Prime Minister about the risks associated with the hydrogen strategy?

NT Well, hydrogen strategy... Well, we have to, I mean, as for the hydrogen strategy, we have to make ... as much as possible reduce the cost of renewable energy in Japan by total restructure of the power market, for example. We have the nine regional monopolies who do not want the competition among each other, so they separate the grid lines and much less connectivity among each other. So, this is a problem for Japan, to expand the use of renewables for example. So, this kind of very dynamic, drastic market change is necessary for the power sector. The gas sector, for example, is asking for the so-called methanation, kind of synthetic gas with recycled carbon. They are thinking because this is the only way to use their infrastructure, current infrastructure. But it doesn't make sense, because if nobody is emitting carbon dioxide in 2050, how could we recycle the carbon? I mean, there could be clean hydrogen, but there is no carbon. So, they say, well, Mr. Tanaka, we will do the direct air capture! How can we do that very high cost of renewable energy in in Japan? They say, well, we will go to the Direct Air Capture in Saudi Arabia, Australia... This is nonsense, right? So, there are lots of nonsense stories about... ideas we have. So, we have to change our mindset and try to restructure the big energy vision, including the nuclear power. I mean, you mentioned about nuclear, Kishida-san is trying to restart it, that's fine. But we need a big vision, sustainable nuclear is different.

ML Sure. Can I... let's come on to nuclear, because, nobody has worked harder, I don't think in Japan, or globally, on the bounce back after the Fukushima disaster, the Fukushima accident, than you. You have been the leading voice, at least in my view, saying, you know, we have to get the nuclear back online. There are no alternatives, there are no sensible alternatives for that amount of clean electricity in Japan. It also relates, I also thought, by the way, just as an aside, when Fukushima happened, I thought that that might be the spur for the restructuring that you talked about of the nine sort of monopoly areas of grids in Japan, and I'm very disappointed that we're now, 11 years later, still talking about that same issue. Talk to me about, or talk to us, about where does nuclear sit in Japan? Is the public now on board with a large scale return of the remaining plants? I don't know how many you've got, a few plants working, still a lot in mothball... Where is society? Where is the sector?

NT Good point, Michael. We have 33 reactors operable, and out of that, 17 reactors are already given the license to restart, among them 10 restarted in these two three years. And Kishida-san announced recently that we have to restart the 17 already licensed reactors to the end of next year. Public opinion of restarting is very positive. I think there's about 60% of population is supporting restarting. This is really amazing. I mean, after Fukushima, the support for the nuclear power never goes more than 50%, but because of this Ukraine situation, the Japanese public think nuclear is very important for the energy security. And also the shortage of electricity was experienced... because of the you know, in March, before summer this year, a very hot time and Tokyo Electric almost had a shortage and blackout could have happened. So, the shortage because of the Russian situation, we may lose the gas from Sakhalin and then you know, who knows, that blackout could happen. So, nuclear is very important to maintain the security supply. So that is fine, but can we... replacing is fine, maybe extending the life of these reactors, also fine, from 40 years to 60, just as it happened in UK or US, Japan is thinking about extension of life. But replacing the old reactor with a new one, building the new reactor is still a very high hurdle, because of the you know, utilities have a private contract with governors of the host community, and without permission, or okay from the governor, we cannot build any nuclear reactor, we cannot restart any nuclear reactor. So, to convince the governors, we need the different narrative than only the safety, only carbon dioxide reduction, emission reduction. The sustainability of the nuclear power in Japan after Fukushima, there are three additional conditions that I mentioned. The first one is safety, of course, and minimizing the risk because the current big light-water reactor paradigm has a problem, because after Fukushima, you know, I mean, it's obvious we have a big risk and evacuation of 20 kilometers radius in certain places is impossible. So, we have to move from the big, large reactor, light-water reactor paradigm to the small modular reactor. We can restrict the evacuation zone within a plant to one, two kilometers radius. If that possible, it's much easier to convince the public that the safety concern should be accommodated. The second condition is the high-level waste disposal. Without the concrete program for that, public will not accept. France has Bure, Finland has Onkalo. We don't have any good idea where to dispose the high-level waste. So, without clear technology to reduce the toxicity or reduce the volume of the waste and convince some localities to take care of the waste. I mean, I think there's no way to proceed to the next generation. The third condition is the proliferation risk. After Ukraine small countries, non-weapons state, wants to have a weapon, not only North Korea or Iran. To have a weapon is the best defense against Russia, against China. So, to make the nuclear power, Saudi Arabia wants to have nuclear power because Iran could have a weapon. So, this proliferation risk is so easy, and especially the big light-water reactor is very proliferation-prone, because they need, this system needs enrichment, and to reduce the waste, reprocessing is the way to produce plutonium. So light-water reactor has, you know, a genuine risk of proliferation. So, I'm arguing, maybe we should forget about this large light-water reactor paradigm, but move to the small modular fast reactor, which can take care of the waste, which can take care of the risk of proliferation, and small enough to minimize risk. And these are the three additional questions. And small reactor is very much easy to change the operation level and stop and go, stop and go. So, that means it is much easier and friendly to coexist with renewable energy sources in a locality. So, it's more a decentralized system, and more flexible use of the nuclear; the small size is a way. And the cost... People say, big light-water reactor guys, say that the cost of small modular is too high. I don't think so. The cost of big light-water reactor is too high! The history shows. In Vogtle in Georgia, United States, in Flamanville in France, Olkiluoto in Finland, yeah, the cost is three times three times more than originally planned, because of the extension, because of the strength and safety regulation. You name it! Big light-water reactor is too costly... You know, maybe Japan can do another one or two, but to spend trillions of yen, just for one or two reactors doesn't make any sense. So go to the new system, which is more sustainable and put money into it. Otherwise, there is no future for nuclear power. That is what I'm saying.

ML Are there companies in Japan working on the small modular reactors? Is that an active program? it's very active in the UK, very active in the US, I know China, India and others.

NT Yeah, Japanese companies have some designs, but not any of them are really engaged themselves to develop the technology. They have the ideas, and they are interested in if the trend is moving that way. But still, they think some improved, big light-water reactor is easy to the business. So, Mitsubishi and Kansai Electric, they try to you know, convince the public this is a way, because this is easy. But there is no easy future for nuclear power. This is a difficult sector, so without changing drastically the narrative and technology and innovation, [there's] no way for the future. I created in the Canon Institute of Global Studies a panel with only women, except me, and let them discuss about the future vision of nuclear power for Japan. If these ladies accept the future of the nuclear power, then we can sell it to the public, probably. Men in the nuclear sector, or nuclear village, are too conservative, and they don't have any guts to break up old concepts and start a new one. So, I think women should be promoted in Japan, for the politics, for the government, for the private sector, but especially for the nuclear power. I believe that if the president of the Tokyo Electric at 2011 [was a woman], she could have avoided that tragic accident, because women is much more concerned about safety and security. So, I am testing this hypothesis. And I'm very much convinced if Tokyo Electric really wants to restart nuclear power plants in Kashiwazaki and Kariba, make the President a woman and move the headquarters to that village. And then Governor of Niigata will accept to restart the nuclear power for TEPCO.

ML Very interesting what you say there, because I've had two nuclear experts on Cleaning Up, Kirsty Gogan and Julia Pyke, both brilliant, and both women. There's somebody else that we're going to get on at some point is Isabelle Boemeke from Brazil. And all together in this climate and energy leadership space. incredible numbers of impressive women... Women have certainly, you know, showed their mettle throughout, whether it's the climate negotiations, whether it's in finance, and in fact, also, technology. We just had a fantastic episode with an expert on industrial heat, Silvia Madeddu. We've had bio-technologist Jennifer Holmgren. So, I'm with you, I definitely think we need to give the microphone more to women.

NT The Innovation for Cool Earth Forum found about three years ago that there is a positive correlation between climate change mitigation and gender balance: in countries, in business, etc. So, promoting gender balance means much better sustainability for the future.

ML Absolutely. I want to finish if I might, by asking you about that forum. And you've got... there's a really key word in there which is innovation. And that's something that you have been very consistently supportive of. Even when you talk about nuclear, you talk about that it has to be the new because it solves problems. You talk about the hydrogen, we have to get the costs down, it is... Direct Air Capture. So, innovation has been a huge theme of all of your work. What are you doing with that forum? Give us a plug just to finish this fabulous conversation.

NT Thank you very much, Michael for inviting me. This Innovation for Cool Earth Forum, in short ICEF, created by the late Prime Minister Abe, and he believed that innovation is necessary for the technology. So many new technologies like recycling, carbon recycling, and also renewable energies, hydrogen, DAC and emission... But not only technology, but policy also needs innovation. The regulation is back to the technological innovation. So, without changing the system, this innovation cannot really materialize and the deployment of a new system. So, innovation of regulation is one thing. I mean, this power market regulation is definitely one of them, which I try my best, or hydrogen the safety regulation for hydrogen must be reviewed to make hydrogen economy possible. So, government policy should be innovative. And I am now very much surprised to find many discussions here, then even [inaudible] is saying that we need new industrial policy. Industrial policy was very much a dirty word when I was in the United States for the trade negotiation. Japanese METI is using this industrial policy and making Japan a very strong competitive country. So, this is exactly the reason for the Japanese competitiveness, and we should stop it by the market economy. That is what US trade policy was all about. But now, the story is very different for the sake of sustainability and decarbonisation, we need a very strong industrial policy, of subsidy for the electric vehicle, tax credit for CCS, hydrogen infrastructure building. This is the huge industrial policy for the sustainability at the time of great competition. And I think Russia is least prepared for this big shock, because technology is now moving out from West, its function stops it coming in, the investment is moving out. They need huge money for continuing the war. And brain drain is happening. So, Russia is least prepared for this competition. And Japan should learn the lesson that we need that strong, innovative industrial policy to be back as a winner in this game, and hydrogen is a test. And the nuclear sector revitalization is a test for us. That is my message in this ICEF meeting about a month ago.

ML That's fascinating, particularly putting it in the context of the history of METI and your own bio, your own career. Because of course, my view of why we don't like industrial strategy, in the Anglo-Saxon world, is because we were really bad at it. You know, we didn't do METI and become brilliantly competitive. What we did was British Leyland, and Minitel. And you know, all sorts of failed industrial strategies. And then we do have to be fair, the Department of Business, Energy and Industrial Strategy, BEIS, so it's kind of coming back into fashion, even here. And we had on that, if any listeners are interested, we had a fascinating session of Cleaning Up with Mariana Mazzucato, who's the lefty economist who's been pushing industrial strategy very hard through the corridors of power, and certainly in Europe. But I need to thank you for the time that you spent with us, it has been absolutely fascinating. It's always a great pleasure to see you. And I wish you the best of luck with your forum.

NT Thank you very much, Michael, I will keep in touch with you. And this is a very interesting moment, and I maybe spoke too much. I spoke too much. But well, I really appreciate you providing me the opportunity to tell you about what I'm thinking, what I'm doing back in Japan. Thank you, Michael.

ML Very good. It's always a pleasure to listen to you. Thanks very much, Tanaka-san. Thank you.