Briefly: what was decided
According to Nikkei, the Japanese government plans to temporarily allow full operation of older and less efficient coal-fired power plants for one year — starting in April. The aim is to reduce the risk of an energy shortfall after disruptions to oil and gas supplies caused by the blockade of the Strait of Hormuz.
"The authorities will allow full operation of older and less efficient coal-fired power plants... for one year — starting in April."
— Nikkei (citing government sources)
Why this is happening
The blockade of the Strait of Hormuz following the escalation of conflict in the Middle East has complicated supplies of crude oil and some consignments of LNG. Japan imports about 90% of its crude oil from the region and some LNG under long-term contracts, so the risks of fuel shortages are rising. Faced with a real threat of shortages, the government is opting for a short-term increase in energy supply reliability — even if that means a temporary rise in emissions.
Energy balance structure and supply logistics
Currently roughly 30% of Japan's electricity is produced from LNG and another 30% — from coal, while oil provides less than 10%. Overall thermal generation accounts for about 70% of the energy mix. At the same time, the main suppliers of coal — Australia (74.8%), Indonesia (12.8%) and Canada (4.1%) — are not dependent on the Strait of Hormuz, so Tokyo seeks to quickly shift loads to available resources.
Consequences for global markets
An increase in coal demand among major importers could push prices up. Already the spot price for coal at Australia's Newcastle has risen to $135 per tonne — 16% higher than before the attacks on Iran. Higher coal prices and increased demand for fuel oil and diesel are creating an additional inflationary wave for the energy sector and industry in the region.
What this means for Ukraine
The direct physical impact on supplies to Ukraine is geographically limited, but the economic channel is real. Rising global prices for oil, petroleum products and coal increase the cost of energy carriers within the global logistics network. Prices at Ukrainian petrol stations began to rise already at the start of March — this is connected to global trends. For Ukraine this means a risk of additional pressure on inflation, industrial costs and budget spending on energy support.
Who will be harmed, who will benefit
Consumers and sectors that depend on diesel and fuel oil will suffer: shipping, heavy industry, utilities and transport. Examples are already emerging from Japan — shutdowns of generating units at JFE Steel, reduced sailings by shipping companies and heating problems at local hot springs. The winners are large coal suppliers and those energy companies that can quickly ramp up production.
What to do next (analytical conclusion)
Japan's decision is an example of how geopolitics quickly transforms into energy policy. For Ukraine it is important to monitor not only prices but also changes in supply routes and logistics, strengthen strategic reserves and seek diversification of fuel supplies. Short-term policies by major importers push global prices — and this affects every wallet and every factory, including Ukrainian ones.
"If the blockade continues for three to four months, it will have a serious impact on supply and fuel prices in global markets."
— sources from industry agencies and analysts, compiled using data from Nikkei and LIGA.net
