Japan nuclear energy: quake rattles Fumio Kishida’s faulty logic

An earthquake has hit Japan just when the country is debating whether to restart nuclear power plants. Prime Minister Fumio Kishida believes it is crucial to resume operations. Fresh concerns over nuclear safety will weaken his case and weigh down utilities stocks.

Four people died on Wednesday night after a magnitude-7.4 earthquake struck northern Japan near the Fukushima prefecture. It is in this region that a 9.0-magnitude earthquake and tsunami unleashed a nuclear crisis 11 years ago.

Shares of Japan East Railway fell 2 per cent, one of the worst performers on a day when the benchmark Nikkei 225 index rose 3.5 per cent. The railway operator suspended bullet train operations to Fukushima and other regions after a shinkansen derailed during the earthquake. Power outages shut down plants in industries ranging from automakers to refiners, including Japan’s biggest Eneos Corp

Local utilities are most likely to sustain long-term damage. Shares of Tepco, the electric utility that operated the devastated Fukushima Daiichi nuclear power plant, were unmoved by the most recent earthquake. They have been strengthening this year, ending a two-year long losing streak of more than 60 per cent

Kishida remains intent on restarting nuclear plants. He responded to earlier safety concerns triggered by Russian attacks on Ukrainian nuclear facilities with plans for a police unit to protect Japan’s nuclear plants.

But opposition from locals is strong, show opinion polls. That is understandable given the dire consequences of the Fukushima meltdown. More than 1mn tonnes of contaminated water is planned to be released into the Pacific Ocean. The clean-up and damages bill is more than ¥22tn ($185bn).

Earthquakes typically occur in the same area and in repetitive cycles as stress accumulates along a well-defined fault line. The risk of an earthquake larger than magnitude 8.8 occurring off the east coast is up to 40 per cent in the next 30 years, according to Japan’s Earthquake Research Committee. Nuclear plants are back on the agenda in Europe, which is energy starved and seismically stable. But they remain risky — operationally and financially — when sited on the Japanese fault zone.

The Lex team is interested in hearing more from readers. Please tell us if you think Japan will restart its nuclear power plants in the comments section below.