Japan intends to stop using nuclear power by the 2030s, the government says.
Japan joins countries such as Germany and Switzerland in turning away from nuclear power after last year's earthquake unleashed a tsunami that swamped the Fukushima Daiichi plant, causing the worst nuclear crisis since Chernobyl in 1986. Japan was the third-biggest user of atomic energy before the disaster.
In abandoning atomic power, Japan aims to raise the share of renewable power to 30 per cent of its energy mix but will remain a top importer of oil, coal and gas for the foreseeable future.
Prime Minister Yoshihiko Noda's unpopular government, which could face an election this year, had faced intense lobbying from Japan's main business federation to maintain atomic energy and also concerns from its major ally, the United States, which supplied it with nuclear technology in the 1950s.
The government announced the policy after a meeting of key ministers finalised the decision.
All but two of Japan's nuclear 50 reactors are idled for safety checks and the government plans to allow restarts of units taken off line after the disaster if they are deemed safe by a new atomic regulator.
Japan's growing anti-nuclear movement, which wants an immediate end to the use of atomic power, is certain to oppose any such proposal to secure electricity supplies by restarting reactors.
By applying a strict 40-year limit on the lifetime of reactors, most will be shut down by the 2030s.
A shift from nuclear means Japan should remain the world's biggest importer of liquefied natural gas (LNG) and third-largest purchaser of oil to feed its power stations. The company is also a major importer of coal and is likely to increase reliance on it.
The government estimated last week it will need to spend about 3.1 trillion yen more on fuel imports a year if it abandons nuclear power immediately.
Japan's hunger for energy has helped sustain an investment boom in gas projects from Australia to new export terminals in the US, where a shale gas revolution is in full swing. LNG prices also soared earlier this year as Japan scoured the world for supplies.
The new policy was adopted 18 months after the earthquake and tsunami devastated Tokyo Electric Power Co's Fukushima Daiichi plant, triggering meltdowns, spewing radiation and forcing some 160,000 people to flee.
The new strategy also calls for a push to reduce energy consumption through efficiency and other measures to at least 10 per cent less than 2010 levels.
Noda's decision is unlikely to resolve fierce debate over whether reducing atomic power's role will do more harm or good to the economy. Nuclear power provided 30 per cent of Japan's electricity before the Fukushima disaster crippled the sector.
And with Noda's Democratic Party expected to lose the general election, there is no guarantee that the next government would stand by the policy.
Japan's powerful business lobbies also argue that exiting nuclear energy in favour of fossil fuels and renewable sources such as solar and wind power will boost electricity prices, making industry uncompetitive and complicating efforts to reduce greenhouse gas emissions. The shift also threatens the financial viability of Japan's nine nuclear operators.
Anti-nuclear advocates counter that warnings of economic damage are exaggerated. They say the policy shift will create new openings for corporate profits in areas such as renewable energy that will spark innovation and give the economy a boost.
"A total exit from nuclear is positive for the economy, on balance," said Andrew Dewit, a professor at Rikkyo University who studies energy policy.
"It incentivises Japan's political economy to focus on efficiency and renewables. Japan lags in both these areas and they offer the greatest opportunities for growth."
Surveys show that a majority of voters favour exiting nuclear power sooner or later.
Noda's decision to restart two units to avoid potential outages this summer galvanised anti-nuclear protests. Last week, the government ended voluntary power savings for parts of the country, with no blackouts during the hot summer months.
Investments in renewable energy are already ramping up since the July 1 introduction of a generous feed-in-tariff system that requires utilities to buy the electricity generated and allows them to pass on extra costs to consumers.
Renewable energy excluding hydro-electric dams currently accounts for a slim 1 per cent of Japan's electricity supply.