CashNews.co
Copublished with Kiko Network
6 November 2024 – The Japanese government, with the support of Japan’s megabanks, has been betting on a seriously flawed strategy to extend the lifespan of coal power for decades to come, according to a new report from Reclaim Finance and Kiko Network (1). Japan is the only G7 member without a clear coal phase-out plan, and instead pursues a misguided climate strategy of retrofitting coal plants with carbon capture and ammonia co-firing technology that is unlikely to reduce emissions. Reclaim Finance and the Kiko Network are urging the new Japanese government to reset its priorities and focus on a coal phaseout and rapid transition to renewables in the upcoming revision of its Strategic Energy Plan.
Despite the G7 commitment to phase out coal, Japan remains the only G7 country without a commitment to phaseout coal power and has only agreed to end “unabated” coal by 2035 (2). Coal is used to generate almost one third of Japan’s electricity and is expected to still generate 19% by 2030 (3). This is despite both the International Energy Agency and the Intergovernmental Panel on Climate Change projecting that coal use must be phased out in Organization for Economic Cooperation and Development (OECD) countries by 2030 to stay under 1.5°C (4).
In line with the government’s policies, Japanese banks have pumped US$23.5 billion into the thermal coal sector since 2021, making them the third largest banker of the coal industry after Chinese and US banks. Eighty percent of Japanese banks’ coal finance comes from the country’s three biggest banks, Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group, and Sumitomo Mitsui Banking Corporation (SMBC). This includes finance for J-Power for example, a corporation that is planning a coal gasification facility at its Matsushima plant that will test co-firing ammonia and biomass with coal and eventually implement a CCS system with hydrogen power generation (5).
These megabanks have much weaker coal policies than many of their global peers and have included high-carbon technologies that extend the lifespan of coal plants within their definition of “transition financing”.