* PM Kan says Japan needs fundamental rethink
* Kan stops short of declaring a clean break from nuclear power
* Will allow plants to restart if safety standards met (Adds comments, details)
By Shinichi Saoshiro
TOKYO, May 18 (Reuters) - Prime Minister Naoto Kan said on Wednesday Japan must rethink how nuclear power is regulated and explore other energy sources after a crisis at a tsunami-crippled plant, but sidestepped the question of how big a role atomic energy would play in the country’s future.
Kan, battling low support rates, a feisty opposition and rebels in his own party, has pledged a blank-slate review of Japan’s current energy policy that aims to boost nuclear power to more than 50 percent of electricity supply by 2020 from about 30 percent now. But whether he can break the grip of the politically powerful utilities remains in doubt.
“We need to fundamentally review the way nuclear policy has been administrated,” Kan told a news conference, noting the nuclear safety agency was under the jurisdiction of the trade ministry, which has long promoted nuclear power as a way to reduce Japan’s reliance on imported fossil fuels.
Engineers are still battling to control the crisis at Tokyo Electric Power Co’s Fukushima Daiichi plant, where a massive March 11 earthquake and tsunami knocked out cooling systems, causing radiation leaks and starting the world’s worst nuclear crisis in 25 years.
Kan, under fire of his handling of the nuclear crisis, faces a tough time implementing any policies given a divided parliament where opposition parties control the upper house and can block legislation.
Tokyo Electric said on Tuesday it would stick to its goal of bringing the damaged reactors under control by January, despite admitting it faced bigger challenges than first disclosed, including a large leak in the plant’s No.1 reactor due to a fuel rod meltdown.
On Wednesday, workers went into the No. 2 reactor building at the plant for the first time since March 11, but could only stay for 10 minutes because of extremely high temperatures.
Kan reiterated that Japan should promote renewable energy sources such as those generated by wind, solar and biomass but stopped short of declaring a clean break from nuclear power and said reactors shut down for regular inspections could restart if they met emergency safety rules implemented after the accident.
“Nuclear reactors that are deemed safe will be put into use,” Kan said, adding, “We need to fully consider what needs to be done to enhance the safety of nuclear power.”
The disaster has prompted criticism of the cosy ties between utilities and government regulators as well as the lack of competition in the industry.
Kan forecast future debate on whether to deregulate Japan’s power industry, dominated by nine regional utilities which both generate and distribute electricity, but said understanding the cause of the current crisis came first.
“We need to consider how nuclear power policy is regulated and how electricity is supplied. We had similar discussions in telecom industries and regional monopolies in that area have disappeared. We will reach a stage where we will discuss such issues for the power industry,” Kan said.
Some experts have called for a split in the two functions to boost competition and make it easier for new entrants including providers of renewable energy, but others say a breakup would cause instability in power supply.
“Debate will turn to separating the generation and distribution of power as we discuss the country’s energy policy,” Kan said.
Trade minister Kaieda Banri, whose ministry oversees the nuclear power industry, sounded a cautious note.
”Debate over the separation of power generation and distribution at Tokyo Electric, or maybe including other electric utilities as well, has been running for a long time,“ he told a separate news conference. What Tokyo Electric needs to do is to make sure that compensation will be paid to those affected by the accident and fulfill its responsibility to supply electricity to the capital and 8 prefectures,” he added. “We will likely be taking our time to discuss this issue.”
Japan last week announced a plan to help Tokyo Electric compensate victims of the crisis at its plant without going broke. The plan allayed investors’ fears that a collapse would roil financial markets, but has come under fire from opposition parties, which control parliament’s upper house and whose backing is needed to enact implementing legislation. (Additional reporting by Yoko Nishikawa, Linda Sieg, Kiyoshi Takenaka and Mari Saito; Editing by Daniel Magnowski)