Last Friday, Japan announced it was phasing out nuclear power by 2040, confirming a year of discussion about a retreat from nuclear power since the Fukushima disaster in March last year.

How would you like to be an Australian state government putting your faith and some political capital in the health of the global nuclear industry? Well, with exquisite timing, there was NSW on Friday, telling the world that it was opening up to uranium explorers after a 26-year ban. Mind you, just looking, no mining or export at the moment.

And South Australia, with a reduced credit rating (like Queensland), is still reeling from BHP’s deferment of the expansion at Olympic Dam. That expansion was always based on a significant increase in uranium production, as well as copper and gold.

Crikey pointed out last May that Fukushima spelt trouble for uranium miners, despite the then-optimism of the sector. Japan will join Germany, which is phasing out its nuclear power business by around 2030, while Switzerland and Italy have revealed plans to either reduce their programs or abandon them completely.

Japan’s decision will reverberate through the energy and commodities markets. It is the world’s third biggest nuclear power generator. The plan will slowly reduce demand for uranium and boost consumption of commodities including crude oil, thermal coal and liquefied natural gas over the long term. Before Fukushima, Japan had gotten 30% or so of its electricity from nuclear power, and the previous long-term energy strategy had called for the ratio to be increased to 50%.

All but a couple of Japan’s 50 reactors have been shut for much of this year followingt the surge in safety concerns after Fukushima. Many plants were closed for routine maintenance and then not re-opened because of rising opposition from voters. That has seen Japan forced to boost imports of other energy, especially LNG. It is now the biggest importer of LNG and close to the biggest for thermal coal. Australia is benefiting from that increased demand with exports of LNG in particular up sharply in the past year.

Prices have also soared for LNG, despite the fall in gas prices in the US because of the shale gas boom. The government has estimated that it will need to spend about ¥3.1 trillion ($US40.03 billion) more on fuel imports a year if it abandoned nuclear power immediately.

That huge extra cost is already being paid because of the current shutdown. That has seen power companies putting up their charges, upsetting business.

But before the final closure, the government wants existing plants to be re-opened, a move that is opposed by close to half the electorate, according to some polls. Japan will still keep its nuclear fuel re-processing business going. But by the 2030s the plan is that most of the nuclear power stations will have shut. The specific measures in the new policy include a 40-year limitation on the lifespan of nuclear power plants, no new plant construction and no expansion of the existing ones. It wants the re-opening of the existing stations to start as soon as a new nuclear regulatory commission (to be start this week) says the plants are safe.

Uranium prices in the spot market last week fell on expectations the new policy would be announced. They dropped to their lowest level since October 2010: $US48 per pound, down 10% in the past year and 65% since the record high set in 2007.

But the move is opposed by the power business lobby and right-wing political groups. With an election expected in the next six months, its likely the Democratic Party of Japan government could be defeated and the Liberal Democratic Party regain office, with the support of an emerging party (called Japan Restoration) headed by the new emerging political power in Japan, Osaka mayor Toru Hashimoto. He is a conservative and is not a supporter of the move, from some media reports.

It could very well be that a new government reverses this decision and reinstates the old policy of 50% of electricity from nuclear power by the 2030s. But that will run into the increased scepticism about the safety of nuclear power since Fukushima, as shown by weekly protests in Tokyo and other cities this year.

State governments and investors here would be wise to not expect any surge in the uranium industry any time soon.