GET OIL OUT OF TRANSPORTATION
Turning those one-off statistics into sustained flows won’t be easy. But if history serves as any guide, Japan has demonstrated it can shift its oil consumption when it senses its national security is at stake.
Back in the late 1970s, the country consumed more than 5.5 million barrels a day, generating more than 60 per cent of its electricity burning crude and fuel-oil. Betting heavily on coal, nuclear and liquefied natural gas, it pushed oil out of its power industry almost entirely. By 2025, Japanese oil consumption had fallen to a 55-year low of less than 3 million barrels a day.
Reducing dependency on the Middle East would be easier if overall Japanese oil demand drops further. The fewer barrels it needs to buy, the easier it is to shift purchases. If the mantra in the 1970s and 1980s was “get oil out of electricity”, the next objective should be more radical: get oil out of transportation.
It was Japan that gave the world the first mass-produced hybrid car, Toyota’s Prius. Hybrids have made huge inroads since then, helping to reduce gasoline consumption by about half over the last two decades.
But Japan, the world’s fourth-largest car market by sales totals, lags in adoption of pure electric vehicles. Having developed hybrids first, its car manufacturers didn’t push nearly as hard as China’s into full electrification.
The result is that today only about 2 per cent of new cars sales in Japan are full EVs, well below the 28 per cent average in Europe, and even trailing the US and Canada. The International Energy Agency believes the high share of the population living in apartments with limited access to private parking, in combination with a limited charging network, are constraining EV sales in Japan.
That makes EVs an important lever for reducing oil imports, which would make diversification easier. So alongside its plans to finance pipelines to bypass the Strait of Hormuz, Tokyo should work harder to boost EV sales, with a focus on expanding its EV charging infrastructure.