Oil continues to make up the largest share of Japan’s primary energy supply because of the lack of substitutes for gasoline and diesel available at competitive prices. In electricity, on the other hand, for six decades energy planning has operated under the assumption that nuclear power, in conjunction with efforts to reduce the energy intensity of economic activity, provides the safest, most secure and most cost-effective way of powering the economy.

The most coherent statement of this policy prior to the 11 March disaster is the June 2010 Strategic Energy Plan (SEP) produced within the Ministry of Economy, Trade and Industry. It established a series of targets focused on expanding the role of nuclear power in electricity generation by building 14 new nuclear units by 2030, increasing the use of renewable energy, and subsidising the deployment of low-carbon technologies through the commercial, residential and transport sectors.

It was estimated that this would lead to a substantial reduction in aggregate energy demand, as well as a shift away from the consumption of coal, oil and natural gas to a lesser degree, in favour of nuclear power and renewable energy. Nuclear power represented the largest increase in projected energy supply by far, rising from 10 per cent to 24 per cent of total primary energy supply and 50 per cent of electricity generated. This was estimated to require a total investment of 5.6 trillion yen (US$57.5 billion).

It is safe to say that the 2010 SEP is a snapshot of a future world that will now never come about. Instead, the focus on how to promote nuclear power has been replaced with a series of questions. What should be the mix of electricity supply that will make up for the shortfall in the expected increase in nuclear power? How much of this shortfall can be made up through more aggressive demand management? And who will have a voice in deciding the answers to these questions?

It remains to be seen how these questions will be answered. Nevertheless, clarity is emerging in three key areas.

First, despite differences in rhetoric, there is a surprising degree of continuity in the approaches taken by the Liberal Democratic Party (LDP) and the former government (the Democratic Party of Japan, or DPJ) towards the energy mix. DPJ officials adopted strong language against the nuclear industry and initially proposed aggressive targets for banishing nuclear power from Japan’s electricity generation. Final legislation showed they were willing to accept a longer-term role for nuclear power; however, ordinances allowed the operating life of nuclear units to be extended by up to 20 years if approved by the safety regulator.

The DPJ also extended generous returns for investments in renewable sources of energy beyond the solar sector, which was the traditional focus of public investment through a feed-in-tariff (FIT) scheme. This has led to a boom in investment in renewable generation. It has also been retained by the LDP, although the government is considering reducing benefits for the solar portion of the FIT.

Second, the LDP has decided to move ahead with a deeper restructuring of Japan’s system of regional electricity monopolies. In April 2013 the Cabinet approved a plan to fully liberalise the electricity retail market, free electricity rates, and, most importantly, force structural separation of the transmission and distribution segments of electricity supply from generation.

This goes substantially further than the changes implemented between 2000 and 2005 that led to some falls in electricity prices but did not reduce the monopoly status of the regional electricity monopolies. The hope is that it will also enable greater uptake of renewable energies onto the grid and that competition will also help limit electricity price increases caused by the rise in fuel costs, although the evidence from international experience is mixed. However, the decision also has implications for how Japan would go about expanding nuclear power once again, should sentiment towards it change in the future.

Third, the establishment of a Nuclear Regulation Agency (NRA), which is charged with ensuring the safety of the nuclear industry, is fundamentally changing energy policy making. Japan has historically not placed great emphasis on independent regulatory agencies. This began to change with the creation of the Financial Supervisory Agency in 1998, following an outcry over the Ministry of Finance’s performance in regulating the banks. The NRA is a second experiment with using an independent authority to regulate industry. It is housed within the Ministry of Environment, which did not have a role promoting Japan’s nuclear energy program or in regulating nuclear power plant safety. The new agency has already inserted itself into the process of determining the restarting of Japan’s nuclear units by choosing to draft new safety standards covering a range of new areas.

Taken together these changes represent a radical incrementalism that over time promises to alter Japan’s energy mix substantially. The long-term fate of nuclear power in the energy mix is likely to be influenced by the decision to restructure the industry. And in addition to the increased interest of local communities, the range of decision makers involved in planning for Japan’s energy mix has also broadened.

The precise mix of fuels and demand-side changes that will account for the reduction of nuclear power remains unclear. It is also unclear how the public policy goals of environmental stewardship, security and cost management will be pursued in this new environment. Japan’s CO2 emissions have risen as fast as its fuel import bill, for example, as fossil fuels have replaced nuclear power in the provision of base-load power, an effect worsened as the yen falls. But what is certain is that new investment patterns and regulatory complexity are already ensuring that nuclear power is set to play a reduced role in Japan’s energy supply picture moving forward.

Llewelyn Hughes is Assistant Professor of Political Science at the George Washington University, and a Social Science Research Council Abe Fellow. He was recently Japan Studies Visiting Fellow at the East-West Center, Washington. His book Globalizing Oil: The Politics of Oil Market Governance in France, Japan, and the United States is due out from Cambridge University Press in early 2014.

This article was originally published by the Japan Chair Platform at the Center for Strategic and International Studies (CSIS) in Washington DC.