Updated as of October 2005

Better Living Boosts Demand for Power and Oil.

Japan's total energy demand for 2002 was estimated at 22,977 PJ (peta joule--1,000,000,000,000,000 joule), up 0.5 percent from 22,867 PJ in 2001 and up about 14.1 percent from 20,144 PJ in 1990.

Energy demand has been gradually rising at an average of 1.5 percent annually over the past 10 years. This slow, but steady increase in energy demand is the result of rising living standards in Japan and has occurred in spite of vigorous energy-saving measures adopted since the oil crises of the late 1970s and early 1980s.

For the past few decades, about 82 percent of Japan's total energy supply has come from energy sources imported from abroad. But the dependence on oil, which has the largest share of Japan's energy supply and is almost 100 percent imported, has been gradually reduced to 52 percent from 77 percent in 1973, due primarily to an increase in other sources-- nuclear power (1 percent in 1973 to 13 percent in 2000) and liquefied natural gas (10 percent in 1990 to 13 percent in 2000) as well as to a conservation effort for fossil-based fuel in order to comply with international calls under the Kyoto Protocol to stem environmental heating by reducing CO₂ emissions.

The Japanese petroleum industry, the major supplier of Japan's energy, consists of 4 major companies, which are engaged in the import of crude oil, refining, and the wholesaling of petroleum products. Three import/distributors, 16 refiners, and 25 oil exploration companies, which are producing oil in overseas oil fields, are engaged in supplying oil and petroleum products in Japan. In 2002, Japan's crude oil supply was 241.9 million kiloliters, 0.9 percent up from 239.8 million kiloliters in 2001.

As a result of deregulation of the import and distribution of petroleum products (including gasoline), which went into effect in March 1996, large trading firms (Sogo Shosha), retail chains and other business concerns have begun importing and distributing gasoline and secondary petroleum products, such as jet fuel, from overseas refineries. Keen competition generated by deregulation in these products characterizes the Japanese market today.

Total electricity generated in 2002 was 1,097.2 billion kilowatt hours (kwh), up 2 percent from 1,075.9 billion kwh in 2001 and up 28 percent from 857.3 billion kwh in 1990.

The sources of energy used for electric power generation in 2002 were:

Hydro sources contributed 92 billion kwh of electricity or 8.4 percent of total power generated; thermal fuel sources, including coal and heavy fuel oil, contributed 706 billion kwh or 64.4 percent of the total; nuclear fuel with 295 billion kwh or 26.9 percent; and other new sources, such as geothermal or solar energy contributed 3.8 billion kwh or 0.2 percent of total electricity generated.

The electric utility industry of Japan includes 10 major general electric utility companies, which generate electric power at their own electric power plants and distribute it to end-users within their designated service territories. There are also 44 minor, private and public electric power generating organizations, which generate electric power and sell it to general electric utility companies which resell it their customers. Since the Electric Utility Industrial Law became effective in December 1995, independent power producers (IPP) no longer need state licenses or approval to sell electricity to the major electric utility companies which since then have implemented power purchasing systems by tender, and resell them to their customers.

The total utility gas produced and sold in Japan in 2002 was 1,110 PJ (peta joule), up 4.3 percent from 1,064 PJ in 2001, and up 76.8 percent from 628 PJ in 1990. The breakdown of demand for utility by user sectors as of 2002 is 35.7 percent for residential households, 15.9 percent for commercial customers, 39.8 percent for industrial customers, and other miscellaneous categories accounting for 8.6 percent.

There was a total of 229 city gas utility companies in Japan as of 2005. This is a reduction of 19 companies since 1980. Until the 1950s, energy sources for utility gas were primarily coal. Coal's share, which was 90 percent in 1952, has decreased to less than 1.3 percent since 1997; it has been replaced by liquefied natural gas (LNG) and petroleum-based fuels.

While oil prices have risen rapidly since 2005 in the aftermath of the war in Iraq and rapidly growing industrial demand in China and India, supply is restrained because of limited production capacity worldwide. Consequently, Japan has been feeling the pain in securing supplies needed to rekindle economic recovery.