The recent spike in energy prices has highlighted just how reliant Japan still is on imported energy. Renewable energy production will need to be ramped up significantly to shield the economy from future energy price shocks, but the price of renewable energy in Japan is high and there remain major obstacles to a rapid rise in renewables capacity. And while Japanese financial stability won’t be threatened by the invasion of Ukraine, Japan’s Russian LNG imports from nearby Sakhalin could face disruption, though we still think power shortages are unlikely.
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