Japan is considering ramping up coal-fired power generation amid a liquefied natural gas crunch that has led to significantly higher prices.
Per a proposal drafted by the economy ministry, the 50% utilization rate cap on coal-fired power plants could be removed in the new fiscal year that begins in April, Reuters reported, adding that this could reduce consumption of LNG by half a million tons annually. For context, Japan imports around 4 million tons of liquefied gas annually from the Middle East.
This also happens to be the amount of LNG that the country has in storage, the report also said. Japan is the world’s second-largest importer of liquefied natural gas due to its energy commodity scarcity. These imports last year came into the spotlight after the United States stepped up the pressure on Russia’s energy industry and buyers of Russian energy commodities, urging them to switch to U.S. energy instead.
In November 2025, unnamed sources from the economy ministry told Reuters Tokyo was going to start buying LNG for its strategic reserve, at a monthly rate of at least 70,000 tons. The buying was scheduled to begin this January, which means the buyers did not have a lot of time to add any meaningful volumes of liquefied gas to the reserve before QatarEnergy declared force majeure on its exports following Iranian strikes on its infrastructure.
As a way of boosting its supply of liquefied natural gas, Japan’s largest buyer of the fuel, JERA. A month before the war erupted, JERA signed a long-term LNG sale and purchase agreement with QatarEnergy to secure the supply of 3 million tons per year for a period of 27 years, with deliveries expected to commence in 2028. Now, the Japanese utility expects the start of deliveries to be delayed, prompting a search for alternatives.
By Irina Slav for Oilprice.com
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