Over 23,000 hospitalizations, outdoor pools too hot for swimming, construction workers wearing battery-powered fans to avoid heatstroke, and the deaths of 1,032 people—these were the direct consequences of the July 2018 heatwave in Japan, when temperatures reached 106 degrees Fahrenheit (41.1 degrees Celsius). New scientific research from the Meteorological Society of Japan provides clear evidence that the July 2018 heatwave “event would never have happened without anthropogenic global warming.” The consequences of climate change, in Japan and around the world, are clear, present and dangerous. At this year’s G20, the Abe government has a choice to make: take meaningful action on climate change by ending taxpayer support for domestic and overseas coal plants, or continue to fund the energy source most responsible for climate change.
If Prime Minister Abe were to reverse course on Japan’s public financing, promotion and export of outdated coal technology, he would be joining leaders from Canada, UK, France and Germany who have committed to phase-out dates for all domestic coal plants, and restrictions on financing overseas coal plants. If instead Prime Minister Abe continues using Japan’s taxpayer money to subsidize inefficient Japanese coal equipment manufacturers, then he risks being branded a hypocrite who writes platitudes in the Financial Times about Japan’s climate commitments, while financing dirty coal plants all over the world.
Japan’s domestic coal plant oversupply
Even though Japan’s environment minister has announced opposition to new coal plants, the Abe government and the Ministry of Economy, Trade and Industry (METI) continue to pursue a costly agenda that brings dirtier air to Japan and undermines the Paris Climate Agreement. Many new-coal fired power plants are planned or under construction in Japan, despite lawsuits from citizens about the health and climate impacts. According to Kiko Network in Japan, 50 new coal-fired power units have been proposed since 2012. So far, 13 of them have been canceled while 12 were built, and 25 remain in the pipeline.
Instead of building new coal plants, Japan should be retiring coal plants and phasing out of thermal coal by 2030 along with the rest of the OECD. Many of the coal plants already cancelled thus far are because the coal plants cannot offer sufficient profitability, due to increasing competition from lower-cost renewables, as well as vastly overestimated electricity demand. As renewable energy deployment rises in Japan and energy efficiency improvements are made, coal plants could be running at less than 50% capacity compared to the projected 70% capacity required for profitability.
According to research from Oxford University, the competition from other technologies like nuclear and renewables which have lower marginal costs means that there is likely to be “significant asset stranding of coal generation assets” in Japan. The cost of stranded assets could be between $61 billion and $80 billion–about 23-29% of the current market capitalization of Japan’s power utilities, or about 4.5% to 6% of their total assets. Tokyo Electric Power Co. has the highest exposure to asset stranding, while J-Power has the highest risk of asset stranding relative to total assets, at over 20 percent. Ultimately, the risky bets on coal fall on the public, either through higher prices for power consumers or costly subsidies to the companies. A feasible and science-based coal phase-out timeline for Japan already exists, but it’s up to the Abe government to take the lead on this initiative.
Japan private finance for coal
Japanese government subsidization of the capital costs and de-risking of coal plant construction overseas encourages Japan’s private banks to get in on the action, even though these projects are likely to become stranded assets. Japan’s big banks such as MUFG, Mizuho and SMBC are among the biggest lenders to global coal developers, diverting billions on coal plants instead of on clean energy sources. While the banks have created policies on lending for coal plants, gaping loopholes in the policies for MUFG, Mizuho and SMBC still allow construction of new, only marginally less polluting coal projects.
Japan’s public finance for coal overseas
Japanese companies are building more coal plants overseas as the option of building such plants domestically declines. Based on NRDC’s tracking of international public financing for coal plants, in the five years from 2013 to 2018, the Japanese government has provided $15 billion in financing for coal plants and mines, through loans or guarantees. This financing is provided by the Japan Bank for International Cooperation (JBIC), Japan International Cooperation Agency (JICA) and Nippon Export and Investment Insurance (NEXI). Groups from Vietnam, Japan and around the world have asked for the Japanese government to stop funding these projects, such as the highly controversial Van Phong I project in Vietnam, which is opposed by civil society groups in Vietnam, Japan and globally.
Japan’s financing for dirty coal plants extends to Indonesia, Vietnam, Bangladesh, India and as far away as Morocco and Chile. The government intends to support construction of even more coal plants in Mongolia, Vietnam and Indonesia, despite the negative impact the coal plants will have on air quality and public health in these countries.
https://www.nrdc.org/experts/han-chen/g20-japan-time-pm-abe-end-support-coal-plants