To recap, the revised plan sees LNG use fall from the previous 2030 estimate of 27% of the electricity mix to just 20%, compared to 37% in 2019.
Renewables share in the power generation mix will grow from 18% today to 36-38% by 2030, compared to the previous estimate of 22-24%, while nuclear generation will remain at 20-22%.
The plan means 57-61% of the country's mix will come from non-fossil fuel sources if it is successfully implemented.
Hydrogen/ammonia is expected to make up just 1% of the energy mix, while coal will fall from 32% in 2019 to 19% by 2030. oil will fall from 7% to 2% by the end of the decade.
Japan's energy sector accounts for 80% of the country's greenhouse gas emissions, which it is looking to slash to meet updated reduction targets as it aims to reach net-zero emissions by 2050.
It is currently the world's largest LNG importer, importing some 77 million tonnes in 2019, coming primarily from Australia and Qatar.
If its energy road map were to be achieved Japan would import some 34MMtpa less of LNG per year. Australia supplied 29.1MMt of LNG to Japan in 2020.
Wood Mackenzie Asia-Pacific power and renewables research head Alex Whitworth told Bloomberg public opposition and safety regulations around nuclear energy would make it "incredibly challenging" for the island nation to hit its 20% target.
The rise in the country's nuclear generation remains uncertain, with only nine out of 33 reactors gaining approval to restart since the Fukushima nuclear accident in 2011.
"Our outlook is that nuclear power could only hit 9% of generation by 2030," Whitworth said.
"Over-optimism on nuclear power makes the plan look unrealistic and could undermine plans to reduce coal and gas share."
The outlook also assumes energy efficiency technologies will ensure power demand falls by some 10% over the next decade - with Japan generating 930 terawatt hours of electricity in 2030, 13% less than what was expected in the government's previous outlook.
Back home, the Australian Petroleum Production and Exploration Association argued LNG will still be needed in Japan to power its large manufacturing industry, and Australian producers were already working to develop a future hydrogen industry paired with carbon-capture and storage.
"Australia's LNG industry has enjoyed a long and stable trading relationship with Japan and we expect that to continue," APPEA CEO Andrew McConville told Energy News.
"Australia's LNG export success means the Australian upstream oil and gas industry has the technology, expertise, commercial and trade relationships to further develop CCS and make hydrogen exports a reality."
EnergyQuest CEO Dr Graeme Bethune wrote in a LinkedIn post last week that it was important to note the difference between its power generation demand versus total primary energy, and in that scenario LNG demand goes from 22% of the primary energy mix to 20%.
"Accordingly, the draft Japanese plan is not as large a threat to the Australian-Japanese LNG trade as many commentators have claimed. The bigger threat to Australian LNG exports to Japan is likely falling Australian LNG supply as the legacy fields feeding the North West Shelf in particular start to decline," he said.
However the Climate Council energy expert Dr Madeline Taylor said the plan creates risks for Australian LNG exports, which represent 82% of Australian gas production.
"The government has allocated tens of millions of dollars into opening up new gas basins like the Beetaloo basin in the NT and the Bowen and Galilee basins in Queensland, but it's not clear this spending is necessary, given the growing uncertainty around having buyers for this gas," she said.
The latest Resources and Energy Quarterly released last month noted that while Japan is currently Australia's biggest LNG customer, China is set to overtake it as early as next year.
China's imports in 2020 surged by 12% reaching 67 million tonnes as a result of demand from industrial and residential sectors and ongoing coal-to-gas switching.
Australia has a 40% share of the Chinese market and initially it would appear any tapering off of LNG demand by Japan could be picked up by China, however it too has its own decarbonisation goal to reach, albeit a decade later than Japan.
Whether Australia can ride the next, and probably final, LNG demand wave remains to be seen, with the REQ noting a lack of FIDs on new developments in Australia, while global projects like Qatar's North Field expansion are likely to move ahead.