The Trans-Pacific Partnership as a Pathway for U.S. Energy Exports to Japan

Two of the most important developments affecting world energy markets in recent years—the Fukushima nuclear accident in March 2011 and the shale gas boom that has made the United States the world’s largest producer of oil and gas—have put a spotlight on future trends in U.S.–Japan energy trade. These developments have led to considerable speculation about the opportunities and obstacles for increased energy trade between the United States and Japan, and what role the Trans-Pacific Partnership (TPP) might have in expanding their energy relationship.

For Japan, the decision to shut down its nuclear plants after Fukushima and forgo nuclear power resulted in record levels of coal and liquefied natural gas (LNG) imports. Meanwhile, the United States has suddenly pivoted from being a major net energy importer to an emerging exporter of oil and gas as well as coal. This has led to an intense policy debate in the United States over energy exports and an even more heated debate in Japan over the future role of nuclear power.

The premise of this essay is that Japan’s import dependence and the prospect for growing U.S. energy exports have the potential to take the U.S.-Japan trade relationship in energy to a new level. This essay provides an overview of Japan’s energy scenario as well as examines the current status and future prospects for increased U.S.-Japan trade in coal, oil, and LNG. It concludes with an assessment of the potential impact of a TPP agreement on increased energy trade between Japan and the United States.

Tom Cutler is President of Cutler International, LLC, and was previously Director of the Office for European and Asia Pacific Affairs at the U.S. Department of Energy.