Japan Research Institute Releases Report on Reducing Oil Dependence through Domestic Resource Utilization

Japan Research Institute, Ltd. (Headquarters: Shinagawa-ku, Tokyo; President and CEO: Atsushi Uchikawa; hereinafter "JRI") has formulated and announced a report titled 'Reducing Oil Dependence as Economic Security and Utilizing Mountain Resources' (hereinafter "the Report"). This report presents original calculations on potential power generation from enhanced hydropower and outlines strategies for its effective utilization.

The Report focuses on the effective use of "mountain resources"—such as hydropower, biomass, and geothermal energy—abundantly available from forests and rivers in Japan's mountainous regions. It was created as a policy proposal to reduce oil dependence and shift toward utilizing domestic resources, amid renewed awareness of crude oil supply risks.

The full report is available at:

'Reducing Oil Dependence as Economic Security and Utilizing Mountain Resources: An Energy Strategy to Revitalize Regional Economies in Mountainous Areas' https://www.jri.co.jp/MediaLibrary/file/pdf/company/release/2026/0616.pdf

Background of the Report

The risk of disrupted crude oil supplies has re-emerged due to the closure of the Strait of Hormuz amid tensions between Israel, the U.S., and Iran. Japan, which depends on the Middle East for 93% of its crude oil imports (Note 1), faces renewed exposure to supply disruptions. Since the U.S. embargo on oil exports to Japan in 1941, Japan has experienced several oil crises, including the oil shocks of 1973 and 1979, and remains vulnerable to similar crises in the future. Additionally, the United Nations projects the global population to reach 10 billion by 2060, suggesting that global crude oil demand will continue to rise.

Given the intensifying global competition for crude oil, this report was created under the premise that reducing oil dependence and utilizing domestic resources are essential to mitigate medium- to long-term supply disruption risks.

Potential of 'Mountain Resources' with a Focus on Hydropower

To reduce oil dependence and shift toward domestic resource utilization, it is necessary to simultaneously replace 'transportation fuels' used in automobiles with electricity—through initiatives such as promoting EV adoption—and to use domestic resources for power generation.

Japan, surrounded by sea and with approximately three-quarters of its land covered by mountains, can broadly categorize its domestic energy resources into two directions: sea-based and mountain-based. One is 'ocean resources,' which utilize the vast maritime space through offshore wind, tidal and wave power, nuclear fusion, and space-based solar power. The other is 'mountain resources,' which extract energy from forests and rivers, such as hydropower, biomass, and geothermal. This report focuses on the prioritized utilization of 'mountain resources' centered on hydropower, analyzing its potential from the perspectives of improving investment efficiency by leveraging existing infrastructure and sustaining livelihoods in mountainous and rural areas.

Hydropower, the flagship of mountain resources, accounted for only 7.4% (73.5 billion kWh) of Japan's total power generation in FY2024. Even under the Seventh Strategic Energy Plan, the target for FY2040 is only 8–10% (Note 2), indicating its limited current impact. Therefore, this report proposes enhancing power generation capabilities at existing flood-control dams. Unlike power generation dams, which ideally remain full, flood-control dams are designed to store minimal water during normal periods and are inherently unsuitable for power generation. However, this report's original calculations reveal that through advanced dam operations—such as high-efficiency power generation and hybrid dam conversion—and infrastructure improvements like raising dam heights, it is possible to achieve power generation levels comparable to or exceeding Japan's current total hydropower output.

(Figure) Simulation of Increased Power Generation from Existing Flood-Control Dams

※ (Note) 'Power generation ratio' in the chart is calculated as 'power generation ÷ effective storage capacity.' Simulations were conducted assuming all flood-control dams achieve either the highest efficiency ratio observed among existing dams (10.56) or the average ratio of the top 10 dams (5.89).

※1: Flood-control dams (under the jurisdiction of the Ministry of Land, Infrastructure, Transport and Tourism) include 588 dams with flood regulation functions, based on the 'National Spatial Data Infrastructure Portal Site Dam Data 2014 (Heisei 26) Edition.' This differs from the 573 dams listed in the MLIT's 'Current Status and Challenges of Dams.'

Recommendations

- The national government should promote cross-sectoral projects linking electricity with regional industry, society, and transportation infrastructure

Utilizing 'mountain resources' involves infrastructure construction, transportation, and management costs, raising concerns that, if viewed solely as power development, overall costs may be prohibitively high. Therefore, it is crucial to create mechanisms that use generated energy to foster new industries and improve social life, thereby creating benefits for local communities that exceed costs.

For example, establishing local battery storage hubs for electricity generated by hydropower can create integrated contributions to regional transportation, industry, employment, and disaster prevention. Specific applications include operating EV community buses, attracting industries such as data centers and aquaponics, and using the stored power as emergency backup during grid outages.

The national government is urged to promote such cross-sectoral projects across the country, simultaneously advancing energy and economic security alongside regional revitalization.

- Local governments should utilize National Strategic Special Zones to advance regional revitalization and industrial policy in an integrated manner

Local governments are urged to promote regulatory reforms through National Strategic Special Zones, harmonized with local environments, and to advance regional revitalization and industrial policy in an integrated manner, for example through 'Regional Future Strategies.' Specifically, it is important to create a virtuous cycle that promotes employment and settlement by developing automated transportation, attracting businesses to industrial hubs, supporting startups, fostering growth of local SMEs, and establishing educational institutions for young talent.

(Note 1) Calculated by JRI based on the Ministry of Finance's 'General Trade Statistics' (https://www.customs.go.jp/toukei/srch/index.htm?M=15&P=0)

(Note 2) 'Seventh Strategic Energy Plan (February, Reiwa 7)' (Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry / February 18, Reiwa 7) https://www.enecho.meti.go.jp/category/others/basic_plan/

For inquiries regarding this report:

【Media Inquiries】Yamaguchi, Public Relations Department, Phone: 080-7154-5017

【General Inquiries】Takiguchi, Creative Strategy Center, Phone: 090-5508-2658

*This document is distributed to the Economic Affairs Press Club and the Ministry of Land, Infrastructure, Transport and Tourism Press Club.