Impact of Fukushima Nuclear Disaster on Oil-Consuming Sectors of Japan

Farhad Taghizadeh-Hesary (), Naoyuki Yoshino () and Ehsan Rasoulinezhad
Additional contact information
Ehsan Rasoulinezhad: Asian Development Bank Institute

No 659, ADBI Working Papers from Asian Development Bank Institute

Abstract: The Fukushima Daiichi nuclear disaster was an accident at the Fukushima I Nuclear Power Plant in Fukushima, Japan, which resulted primarily from the tsunami following the Tohoku earthquake on 11 March 2011, and which led to a year-long nuclear shutdown in the country. During the shutdown, Japan substituted fossil fuels for nuclear power and became more dependent on the import and consumption of fossil fuels including oil, gas, and coal. We try to shed light on the elasticity of oil consumption to crude oil price before and after the Fukushima disaster in Japan’s various economic sectors. To do so, we apply a cointegration analysis and perform a vector error correction (VEC) variance decomposition by using quarterly data in two separate subperiods from Q1 1981 to Q4 2010 and from Q1 2011 to Q4 2015. Our findings reveal that the absolute value of elasticities of oil consumption by some economic sectors, such as the industry, non-energy, and transportation sectors to oil prices, was reduced after the disaster because of increased dependency on oil consumption, which endangered energy security in the country. To raise energy self-dependency and energy security, Japan needs to diversify its energy supply resources. For instance, the share of renewable energy in Japan’s energy basket needs to increase. Because renewable energy projects are mainly considered risky and banks are reluctant to finance them, we introduce an innovative form of financing these projects: Hometown Investment Trust Funds, which has been introduced and applied in Japan and other parts of Asia.

Keywords: oil price; energy consumption; Fukushima disaster; nuclear power; Hometown Investment Trust funds; energy security (search for similar items in EconPapers)
JEL-codes: C32 O49 Q43 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2017-02-06
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://www.adb.org/sites/default/files/publication/227346/adbi-wp659.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbiwp:0659

Access Statistics for this paper

More papers in ADBI Working Papers from Asian Development Bank Institute Kasumigaseki Building 8F, 3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan. Contact information at EDIRC.
Bibliographic data for series maintained by ADB Institute ().