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Examining Energy Sector Best Practices in the U.S. and Japan

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IVLP Group, "Advancing the Culture of Safety and Risk Management in the Energy Sector" in Washington, D.C.
IVLP Group, "Advancing the Culture of Safety and Risk Management in the Energy Sector" in Washington, D.C.

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Examining Energy Sector Best Practices in the U.S. and Japan

Shizuka Sugiura

Shizuka Sugiura works in the International Affairs Office at the Tokyo Electric Power Company (TEPCO). In her role as officer, she develops TEPCO’s communication strategy, participates in overseas consulting projects, and helps build relationships between energy companies and governmental agencies of other countries. In November of 2019, she traveled to the U.S. through the International Visitor Leadership Program (IVLP) to study risk management best practices and safety culture of the energy sector in the U.S. The IVLP is an initiative funded by the Department of State’s Office of International Visitors (OIV) to foster mutual understanding between the U.S. and other countries through professional and cultural international exchanges.

“Through [my] IVLP trip, I became a big fan of the U.S. Especially I love people there. Everyone I met was kind and willingly shared their experiences with us. Also, I realized that many non-profit organizations and volunteers support IVLP and try to make the program fruitful and successful. This is not so often seen in Japan since volunteering is not as common as the U.S. IVLP inspired me a lot, and now I am thinking to do some volunteer work in Japan for international cooperation and/or cultural exchange."

~ Shizuka Sugiura, alumna of the International Visitor Leadership Program (IVLP)

While Ms. Sugiura was in the United States, she made a series of observations about some of the differences between American and Japanese practices in the energy sector.

At the beginning of my visit, I learned about the American culture’s resistance to being controlled by others, rooted in the country’s history of being established by people who opposed the regulated society in Europe at the time. From what I observed, it appears that this history continues to impact the American energy sector, which is designed to instill self-regulatory practices in private companies. For example, U.S. regulators provide effective incentives and penalties to encourage companies and contractors to improve safety measures on their own. The Department of Energy (DOE) indemnifies contractors for financial liabilities caused by extraordinary incidents up to $12 billion while imposing civil penalties in the form of fines to contractors who do not comply with outlined safety standards.

The improvement of contractor safety is one of the challenges Japanese companies face today. In Japanese industrial culture, it is not common for private companies to impose financial penalties on contractors as punishment for their misconduct. Japanese companies rather tend to improve safety measures through non-financial factors, such as awards and meetings. Considering the growing labor decline, however, I think positive incentives like DOE’s reimbursement to contractors may be applicable to Japanese industrial corporations as well.

The Nuclear Regulatory Commission (NRC) displays another efficient risk management strategy in the way its regulators communicate with local residents. When the NRC drafts new safety regulations, it must seek the opinions of industry workers and gather feedback from the general public. Japanese regulators, on the other hand, do not have an official obligation to listen to the opinions of industry individuals, or so it seems. Instead, energy power stations tend to take the ideas of Japanese regulators as resolute. I believe there is room for improvement within the relationship between regulators and industry workers. Recently, Japanese nuclear energy companies set up the Atomic Energy Association (ATENA), which is similar to the Nuclear Energy Institute (NEI) in the U.S., to develop policy on key legislative and regulatory issues affecting the industry and to convey opinions to the regulators. It is new and still has room to grow.

In general, when an accident happens in the energy sector, Japanese law enforcement officials tend to implement stricter standards and strengthen the role of the regulators to prevent similar incidents in the future. Considering Japan’s declining workforce population, however, it may be necessary to promote self-regulation among companies. There are many things we can learn from the U.S. in this arena. 

Community Engagement

Community Engagement is a difficult challenge for both the U.S. and Japanese energy industries. However, I found some differences in how American companies approach their communities: 

Direct communication: While Japanese utilities play a major role in relaying information to the community, I think the energy sector in the U.S. takes this level of transparency one step further by engaging with the public directly through regulators.

The significant role of non-profit organizations and academic institutions: In Texas, academic and non-profit organizations play a key role in protecting the environment of the Gulf of Mexico. Many academic institutions are recognized as neutral in their stances on nuclear energy and act as facilitators to connect members from the government, industry, and local community. In Japan, there are not many neutral organizations, so it is rare for all stakeholders to collaborate and come to a consensus. In South Carolina, we visited Citizens for Nuclear Technology Awareness (CNTA), a non-profit grassroots organization that aims to educate school children and the public on the benefits and risks of nuclear technologies with respect to the country’s health, economy, environment, and national security.  From these two visits, I believe it would be interesting for nuclear utilities to collaborate with anti-nuclear organizations to provide a more comprehensive view of the subject.

Individualist culture: Compared with Japan, American energy corporations prioritize the opinions of local communities before those of the nation or Washington, DC. Meanwhile, the Japanese industrial sector values opinions from Tokyo and across the nation, in addition to those of the local media and community stakeholders. This difference in individualist versus collectivist culture may stem from the characteristic that each state in the U.S. is more independent and less affected by nation-wide trends. For example, when the U.S. nuclear industry talks about the advantages of building a nuclear power plant, they firstly present the positive impact it will have on “job creation.” In Japan, we do not point out “job creation” as a merit of a nuclear power station because it only directly affects the local community, but not all of Japan.

"This difference in individualist versus collectivist culture may stem from the characteristic that each state in the U.S. is more independent and less affected by nation-wide trends." 

Measures Taken by American Companies to Improve Safety Culture

Ms. Sugiura's group visited American Electric Power (AEP) Texas and Exxon Mobil to analyze best practices in abiding by high safety, security, health, and environmental guidelines and policies; addressing safety concerns with local residents; and communication strategies for response and restoration efforts.

I found the following safety and regulatory measures taken in AEP and Exxon Mobil quite impressive:

  • Safety minutes at the start of every meeting
  • Co-visits
  • Safety performance and Hazard Hunting

The "Co-Visit"  program brings management to visit the field and speak with first-line workers. It is not done to evaluate employees’ performance, but rather to build the facility’s safety culture. Although Japanese executives also host meetings at branch offices, they often lack the honest opinions of staff, as employees hesitate to speak frankly about safety regulations or concerns in a room of sometimes more than 100 people, including their colleagues and bosses. At AEP Texas, management meets with a small group of fewer than four people at once and sometimes even works as an extra workforce to encourage employees to voice their concerns.

AEP Texas also told us that they found an inverse correlation between relationships among colleagues and labor accident rates. When visiting a workplace that has been free of labor accidents, employees say they think of their colleagues as their family.

We also visited Exxon Mobil’s training center at a construction site. I found one big difference between Japan’s training centers and Exxon Mobil’s – humor. “Hazard Hunt,” an initiative in which teams search for safety and regulation hazards within a certain time, is a very useful program. Japanese trainings are designed for people who take training seriously, regardless of whether it is fun or not. Since not everyone takes the training seriously however, this is another practice we could learn from our American counterparts.

The U.S. may have more financial incentives for private companies to improve workers’ safety because the country has many lawsuits and advanced insurance compared with Japan. However, Exxon Mobil maintained that improving workers’ safety is a matter of “moral.” I think that is the most important worldwide.

Upon my return to Japan, I held a meeting at my company to share what I learned through my time with the IVLP. The overall reactions from my colleagues were positive, which has inspired me to continue to share best practices not only at TEPCO but throughout the Japanese energy industry.