The cabinet's move came despite public support for a no-nuclear stance. Some 90% of comments received from the general public during a two-month consulting phase favoured the total abolition of nuclear power.
The cabinet merely said at a meeting in mid-September that it would take the proposal into consideration. It said it would be listening to the nuclear industry, along with businesses and local communities that supply goods, services and labour to nuclear power plants.
Along with the country's major business organisation - the Keidanren - these groups are part of the "nuclear village" that has promoted nuclear power for more than 50 years since Japan first budgeted Yen230 million ($3 million) for nuclear in 1954.
"You can already see the Democratic Party of Japan (DPJ) backing off the nuclear pull-out phase, under intense artillery assault from the nuclear village, the Keidanren, and all their friends," said Andrew DeWit, professor in the School of Policy Studies at Rikkyo University in Tokyo.
The proposal came from the government's National Policy Unit, which was created after the DPJ came to power in 2009 to take back the policy initiative that had previously been delegated to bureaucrats.
Its report was intended to act as a guideline for an energy plan to be drawn up by the Ministry of Economy, Trade and Industry (METI), as early as the end of September. But it is now unclear how events will unfold, especially given the volatile political situation.
Prime minister Yoshihiko Noda won re-election as head of the ruling DPJ on 21 September, but his party faces defeat at the general elections, which are likely to take place later this year.
"There is a strong possibility that in its present format, the DPJ will lose power at the next election," said Yoshinori Ueda, leader of the international committee of the Japan Wind Power Association and the Japan Wind Energy Association. "When the new government comes to power there is a likelihood the report will be reviewed."
The centrist conservative Liberal Democratic Party is emerging as the largest single party, which does not bode well for wind power as the history of the party has closely tracked the expansion of nuclear power in Japan.
Ministries at odds
Nor is everything working smoothly at ministerial level. Responsibilities for wind straddle two ministries - METI and the Ministry of the Environment - with each having a different target, Ueda said.
Based on a total phase-out of nuclear power by the fiscal year 2030, METI is calling for 60GW of wind power, compared with a highest estimate of 32.5GW from the environment ministry. And despite the introduction of feed-in tariffs, wind is lagging behind solar. As of 31 August, METI had approved only 14 wind projects against 69,258 household solar initiatives.