Role of energy finance in geothermal power development in Japan

Taghizadeh-Hesary, Farhad and Mortha, Aline and Farabi-Asl, Hadi and Sarker, Tapan ORCID: and Chapman, Andrew and Shigetomi, Yosuke and Fraser, Timothy (2020) Role of energy finance in geothermal power development in Japan. International Review of Economics & Finance, 70. pp. 398-412. ISSN 1059-0560


The Fukushima nuclear disaster in March 2011 drastically changed the energy consumption pattern of Japan. Not being able to rely on nuclear energy, the country turned to fossil fuels and attempted to increase the share of renewable energy in its electricity generation mix. This paper will explore why geothermal energy is stagnating in Japan, despite the availability of resources and technologies. The paper first analyzes the various barriers to geothermal energy deployment in Japan from social, legal, economic, financial and technical viewpoints. The major contribution of this study is the quantification of the magnitude each barrier and supportive policy has on the development of geothermal power, with a special focus given to energy finance measures. The analysis is performed using a Vector Error Correction Model (VECM) using data from 1974 to 2017 and identifies the existence of a long-term relationship between variables, public research and development expenditures and the Feed-in-Tariff scheme. The latter appears to be the most efficient stimuli to foster geothermal power generation. Subsidies in their current form, on the other hand, have mixed results both in the long and short term. Environmental concerns and social opposition appear to be among the major barriers in both the short and long term.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Files associated with this item cannot be displayed due to copyright restrictions.
Faculty/School / Institute/Centre: No Faculty
Faculty/School / Institute/Centre: No Faculty
Date Deposited: 27 Apr 2022 03:37
Last Modified: 31 May 2022 03:31
Uncontrolled Keywords: Energy finance; Geothermal energy; Vector error correction model
Fields of Research (2020): 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350201 Environment and climate finance
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350299 Banking, finance and investment not elsewhere classified
Socio-Economic Objectives (2020): 17 ENERGY > 1705 Environmentally sustainable energy activities > 170599 Environmentally sustainable energy activities not elsewhere classified
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