Japan has unveiled a sweeping energy security package called POWERR GX aimed at shielding the country from future disruptions in the Strait of Hormuz, pledging government-backed financing for new bypass pipelines, expanded nuclear power and diversified crude oil procurement.
Prime Minister Sanae Takaichi announced the plan at a meeting of the Green Transformation Implementation Council on August 26, calling it a response to what she described as a fundamental shift in global energy dynamics. The dynamics surrounding energy have fundamentally shifted, upending the assumptions underpinning government policy and corporate activity, Takaichi told reporters.
Hormuz Crisis Exposes Structural Vulnerability
Before the U.S.-Iran conflict erupted in late February, Japan relied on the Middle East for more than 90 percent of its crude oil imports, with roughly 80 percent arriving from just two countries, the United Arab Emirates and Saudi Arabia. The ensuing disruptions through the Strait of Hormuz, which normally carries about 20 million barrels per day of seaborne crude, forced Japanese refiners to scramble for alternative suppliers and draw heavily on national strategic reserves.
POWERR GX stands for Policy Package for Wide Energy and Resources Resilience through GX, the government said in official documents. It consolidates six months of emergency measures into a single strategic framework, covering pipeline infrastructure, crude diversification, shipping insurance and nuclear expansion.
Pipeline Financing and Alternative Routes
A central pillar of the plan is direct government support for pipeline projects that bypass the Strait of Hormuz entirely. Before the crisis, Saudi Arabia east-west pipeline could carry up to 5 million barrels per day to the Red Sea port of Yanbu, while the UAE Habshan-Fujairah line provided access to the Gulf of Oman. Both routes have seen increased utilization since February, but capacity constraints have left buyers scrambling for alternatives.
Under the new strategy, the Japan Organization for Metals and Energy Security, known as JOGMEC, will see its risk-financing capabilities enhanced to encourage Japanese companies to invest in new pipeline construction abroad. JOGMEC already provides financial and liability guarantees for overseas resource development, and the expansion would allow it to underwrite larger infrastructure commitments in the Middle East and beyond.
The government will also subsidize refiners that use alternative procurement routes to offset the higher shipping and logistics costs associated with Hormuz bypass. Japan oil processors have already begun sourcing crude from the United States and West Africa since the crisis began, but the premium on non-Middle Eastern supply has squeezed margins across the refining sector.
Japan dependence on a single maritime chokepoint for over 90 percent of its crude has become an existential energy security risk that demands structural reform.
Nuclear Power and Long-Term Self-Sufficiency
POWERR GX also includes measures to expand Japan nuclear energy capacity, building on the government earlier decision to shift from reducing to maximizing atomic power use. Before the 2011 Fukushima disaster, Japan 54 reactors generated roughly 30 percent of the country electricity. The latest energy plan targets 20 percent nuclear share by 2040, up from about 8.5 percent in 2023.
Takaichi government is pushing to rebuild between two and five reactors by the 2040s and 11 to 14 reactors by the 2050s at existing nuclear sites, according to NucNet. The plan also promotes next-generation solar cells and energy storage to reduce overall fossil fuel dependence.
The nuclear expansion faces significant headwinds. Public opinion remains divided, decommissioning of the Fukushima Daiichi plant continues, and the question of permanent spent fuel storage has yet to be resolved. Japan cost assessments have shown nuclear as more expensive than solar power, and regulators have yet to approve most of the reactor restarts needed to meet current targets.
Supply Security in an Era of Disruption
The energy crisis has already reshaped Japan procurement landscape. Refiners have drawn down strategic oil reserves to cover shortfalls, and the government has secured emergency insurance coverage for tanker shipments through high-risk zones. The plan also calls for bolstering crude reserves to cover domestic naphtha production, a critical feedstock for the petrochemical industry.
Japan is not alone in rethinking energy security. The European Union, India and South Korea have all announced measures to reduce Hormuz dependence since the conflict began. But Japan heavy reliance on seaborne Middle Eastern crude makes it among the most exposed of the major importing nations, and the POWERR GX package represents the most comprehensive policy response to date.
The situation demands that we fundamentally reassess our approach, Takaichi said, adding that her government aims to finalize a broader energy strategy by year-end, with legislative changes as necessary.
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