The Global Effects of Fukushima

In a recent post, I predicted that Japan is likely to turn from nuclear to coal in the wake of the Fukushima Daiichi disaster. This would have global ramifications, as Japan would become a major importer of coal at the very moment that China’s burgeoning demand for coal was creating export opportunities in the United States and Australia. For major coal companies, the global coal market is looking strong to quite strong.

In addition to being a boon for the international coal industry, there are repercussions in other energy markets. In Europe, where anti-nuclear sentiment already was high before the Japanese crisis, the nuclear industry is reeling. Plans for future nuclear power plants are being shelved; existing plants are being decommissioned. According to EUractiv,

“Since the Fukushima disaster on 11 March, Italy has shelved plans to relaunch nuclear power—which was banned in a referendum in 1987—and Switzerland has recommended decommissioning five of its nuclear reactors. European leaders agreed on 25 March to set the “highest standards” of nuclear safety and submit all plants to “stress tests.”

Of course, something has to replace the electricity generation that is lost to environmentalist overreaction, and it’s not going to be renewable energy. That’s because nuclear power, like coal and hydro, is used for steady “baseload” power generation. Intermittent renewable energy like solar and wind power is incapable of supplying this type of reliable electricity.

Well, if it’s not going to be nuclear power, and it can’t be renewable power, that leaves hydrocarbons. An unidentified diplomat told EUractiv,

“In general we need a number of new power plants—preferably gas—probably also coal and these will have to be built in a relatively short period of time. For this reason, a Planning Acceleration Law will prepare the way for the new conventional power plants, which will balance out the nuclear energy, as fast as possible.”

The diplomat’s most telling words were “preferably gas.” As I explained in a previous post, Central and Eastern Europe are bullish on “fracking,” a.k.a. hydraulic fracturing, the American-made technological miracle in natural gas production that has roughly doubled known North American gas reserves in only the last 5 years.These countries see fracking as the antidote to increasing reliance on Gazprom, the state-owned Russian gas company that Moscow has used as a diplomatic cudgel in the past.

Poland, in particular, has been solicitous of this U.S. technological breakthrough. From the west, the European Union’s cap-and-trade threatens Polish coal power; to the east sits the alternative, dependence on Russia. The Poles see fracking as a God-send that could solve a tricky international dilemma. During President Barack Obama’s recent visit to Warsaw, fracking was a major topic of discussion.