Reversing Japan's decades-long advocacy of nuclear power is popular with the public, though it faces opposition from powerful business interests. The new policy calls for greater reliance on renewable energy, more conservation and sustainable use of fossil fuels and would see Japan joining Germany in turning its back on nuclear energy.
The proposal requires endorsement by the entire Cabinet, which Japanese news reports say has already agreed to the changes.
Prime Minister Yoshihiko Noda said the new policy was just the beginning of a long and difficult process.
"We are only at the starting line," Noda said. "Now we are going to begin an extremely difficult challenge. No matter how difficult it is, we can no longer put it off."
The phase-out of nuclear power by the 2030s is to be achieved mainly by retiring aging reactors and not replacing them.
Japan began reviewing its energy policy following last year's disaster at the Fukushima Dai-ichi nuclear power plant, which was set off by a massive earthquake and tsunami. Before the accident, the resource-poor country relied on nuclear power for one-third of its energy and had planned to raise that to 50 percent by 2030.
"Based on facing the reality of this grave accident and by learning
Growing anti-nuclear sentiment and mass protests made it difficult for the government and plant operators to restart reactors idled for inspections. Imports of oil and gas for electricity generation have surged as a result and Japan's trade balance has swung into deficit.
The new policy is just a rough outline and further details will have to be decided later, National Policy Minister Motohisa Furukawa told a news conference.
But it reflects "the country's commitment to overcome the harsh reality of the aftermath of the Fukushima accident," he said.
He and officials acknowledge many questions remain unanswered, among them how to pay for the costly expansion of renewable energy and how to minimize the environmental impact of a return to heavier use of natural gas and other fossil fuels.
The proposed new policy calls for adhering to a 40-year lifespan for each reactor and for building no more new reactors. It leaves open the possibility of restarting reactors before they are eventually phased out, but only if they have passed strict safety tests and won approval by a newly formed regulatory commission.
An allowed exception of a 20-year extension to the 40-year cap, as well as the ongoing construction of two new reactors, raised a question of whether Japan is serious about abandoning nuclear energy.
"We will launch all possible policy measures to achieve a nuclear-free society by the 2030s," it said. "Until the total phase-out we will only use nuclear reactors that are confirmed safe."
The new policy delays a decision on spent fuel processing and radioactive waste disposal, leaving open the questions of how Japan will handle its spent nuclear fuel and avoid accumulating stockpiles of plutonium.
The new policy delays a decision on spent fuel processing and radioactive waste disposal, leaving open the questions of how Japan will handle its spent nuclear fuel and avoid accumulating stockpiles of plutonium. The new policy allows Japan to continue its fuel recycling program, despite the nuclear phase-out. The contradiction prompted U.S. Deputy Secretary of Energy Daniel Poneman to raise concerns about Japan's ability to reduce plutonium stockpiles, said senior Japanese ruling lawmaker Seiji Maehara, who met with Poneman in Washington this week.
Japan initially imported nuclear power technology from the U.S., while its fuel reprocessing relies heavily on Britain and France.
"The road to a nuclear-free society is not easy," it says, forecasting economic growth at a modest rate of 0.8 percent annually under a nuclear-free scenario.
Following Japan's 2011 Fukushima disaster, Germany decided to speed up phasing out its nuclear power plants, shutting them down within a decade and betting on renewable energies instead. Nuclear power had accounted for a little more than 20 percent of Germany's needs but has since fallen well below that level.
Even France, an energy exporter heavily reliant upon atomic power, is scaling back its nuclear program. On Friday, President Francois Hollande announced he would close the country's oldest nuclear plant, Fessenheim, by the end of 2016. He said France will scale back its dependence on nuclear energy from 75 percent to 50 percent by 2025.
Energy experts note that relying more on renewable energy is easier for European countries that can draw on surplus power from neighboring countries when volatile wind and solar power fall short. As an island nation Japan lacks that option.
Still, the new policy calls for Japan to increase use of renewable energy by eight-fold over the 2010 level by 2030.
Noda allowed two of Japan's 50 working reactors to restart in July to avoid power shortages during the hot summer months. At the time, Noda stressed that the restarts were crucial for Japan's economy and energy needs.
His government faces strong resistance to changes in the nuclear policy from business leaders worried by surging energy costs and from utility operators. Towns hosting the reactors—usually poor, remote fishing villages hungry for subsidies—also have complained of a loss of income and jobs.
The head of Tokyo Electric Power Co., the Japanese utility that owns the tsunami-hit Fukushima nuclear power plant, has said handling last year's meltdowns ate up money the utility might have used to switch to alternative energy.
Makoto Yagi, chairman of the Federation of Electric Power Companies of Japan, criticized the new policy as being too vague. He vowed to stick to nuclear as crucial energy source and achieve a reliable fuel cycle.
To encourage investment in and use of green energy, the government has eased restrictions on land use for solar and wind power and relaxed regulations on small hydropower plants and on drilling for geothermal energy in national parks. It also has approved tariffs for producers meant to spur investment by guaranteeing higher returns for renewable than for conventional energy.
But daunting obstacles remain, including a power grid ill-suited to accommodating volatile solar and wind energy and steep upfront costs for building solar or geothermal plants.