Japan’s Green Energy Failures Serve as a Warning to the US: Don’t Fall for the Climate Agenda

by Yoshihiro Muronaka

In August 2025, Japanese media revealed that Mitsubishi Corporation was preparing to withdraw from three offshore wind projects off the coasts of Chiba and Akita prefectures. In 2021, Mitsubishi had won these sites with remarkably low bids of 8-11 cents/kilowatt-hour (kWh), hailed as proof of Japan’s corporate strength and renewable ambition.

But reality was harsh. Costs for steel, turbines, and logistics surged. The yen weakened, interest rates rose, and certification processes faced delays. By 2025, Mitsubishi had already booked over $350 million in impairment losses, with more likely if the projects continued. The retreat is not just a corporate failure; it exposes apparent self-contradictions in Japan’s energy policy.

Across the Atlantic, offshore facilities have faced similar headwinds. On the U.S. East Coast, Ørsted cancelled two large projects in New Jersey, absorbing billions in losses. BP and Equinor abandoned contracts in New York after costs rose by 40% beyond estimates. In some cases, companies chose to pay hefty penalties rather than commit to losing ventures.

Europe, the pioneer of offshore wind, has also stumbled. In the U.K., Vattenfall halted its Norfolk Boreas project citing a 40% cost increase. Even Denmark, often celebrated as a leader, has delayed new tenders.

Market signals in these regions were clear: When economics fail, projects are scaled back or canceled. Japan, however, continues to treat offshore wind as a central pillar of its 2040 roadmap, aiming for 45 gigawatts of capacity. Why the difference?

Once designated a national project, policies in Japan are difficult to reverse. Offshore wind has been tied to three goals at once: decarbonization, energy security, and industrial revitalization. Billions in subsidies through the Green Innovation Fund are already committed, while local governments and industries expect contracts and jobs.

In effect, offshore wind has become a new type of public works project. Ports, construction companies, heavy industry, and trading houses all benefit from government support. For politicians, it delivers regional development; for bureaucrats, it provides visible progress. Under these conditions, corporate withdrawal is treated as a temporary setback and prompts no policy review.

The debate over energy costs often centers on the Levelized Cost of Electricity (LCOE), which narrowly focuses on the cost of generating a kilowatt-hour of electricity. However, this metric fails to capture the broader economic realities encapsulated by the Full Cost of Electricity (FCOE). FCOE provides a more comprehensive assessment by incorporating additional factors such as the expense of backup power from fossil or nuclear plants to address the intermittency of renewable sources, the costs associated with grid expansion and balancing services to maintain stability, as well as subsidies, premiums, and public support schemes that often prop up certain energy technologies. Furthermore, FCOE accounts for the long-term costs of decommissioning, recycling, and environmental restoration, ensuring a more accurate reflection of the true economic and environmental impact of electricity production.

When these are included, offshore wind’s cost can be double or triple its LCOE.

Offshore wind’s LCOE is around 12–16 ¢/kWh, but when the full cost of electricity (FCOE) is considered, it rises to 20–30 ¢/kWh. Nuclear and gas remain much lower, at roughly 12–14 ¢/kWh and 10–12 ¢/kWh, respectively.

OECD studies confirm that as “renewables” such as wind and solar rise from 10% to 30% of the grid, FCOE escalates sharply. Yet Japan highlights falling LCOE while downplaying FCOE, creating an illusion of competitiveness.

Because fixed-bottom projects face difficulties, Japanese policymakers increasingly promote floating offshore wind as a unique advantage. Japan’s deep coastal waters, they argue, make floating turbines more suitable.

Globally, however, floating wind remains at the developmental stage. Norway’s Hywind Scotland and France’s Provence Grand Large provide valuable data, but their costs remain far higher than fixed-bottom projects. Commercial viability has not yet been proven. Betting on floating wind as a “game-changer” risks repeating the same error: political enthusiasm without economic grounding.

Japan’s offshore wind experience is not just about Japan. It illustrates how energy policy everywhere can drift into policy inertia, selective cost reporting, technological optimism, and entrenched interests.

The lesson is clear. Policymakers should always assess the full costs, not just partial figures. They should heed market signals and adjust policy accordingly. Most importantly, they should avoid turning energy policy reliant on unproven technology into political patronage.

Mitsubishi’s retreat shows that even giants cannot overcome flawed policy frameworks. If Japan, with its formidable industrial base, struggles to make offshore wind viable, others should pay attention.

Japan’s offshore wind setback is more than a domestic issue. It is a global reminder of the dangers of ignoring full costs and clinging to illusions. Ambitious targets and political inertia can mask reality, but economics will always reassert itself.

For policymakers worldwide, Japan’s case should not be seen as an embarrassment, but as a warning and an opportunity: Energy transitions must be guided by facts, not hopes, if they are to be sustainable.

This commentary was first published by The Western Journal on October 6, 2025.

Yoshihiro Muronaka has extensive experience in energy and technology sectors, including R&D projects commissioned by Japan’s national research agency and others. He is a Professional Engineer (Japan) in environmental systems and a member of the CO₂ Coalition. He has a master’s in chemical engineering from Osaka University and studied at Massachusetts Institute of Technology.