Japan tightens rules on support for overseas coal-fired plants

TOKYO (Reuters) - The Japanese government on Thursday said it will tighten state-backed financing criteria for overseas coal-fired power plants after facing criticism over its support for the dirtiest fossil fuel

FILE PHOTO: Japan's Environment Minister Shinjiro Koizumi attends a news conference at Prime Minister Shinzo Abe's official residence in Tokyo, Japan September 11, 2019. REUTERS/Issei Kato

The move marks a partial shift away from Japan’s strong official backing for coal but includes exemptions, leaving some non-governmental organizations sceptical about how much impact the new approach will have.

“As a principle, the government will not provide assistance for new coal projects to those countries where Japan is not fully aware of the local energy situation and challenges or policies for decarbonisation,” the government said in a statement.

It has received criticism from many quarters over its support, usually through Japan’s export credit agency, for the construction of coal-fired plants in countries such as Indonesia and Vietnam, as well as new plants at home.

The government said it was “essential” to cut carbon emissions under the Paris Agreement to combat climate change, which is already affecting many countries including Japan.

U.N. Secretary-General Antonio Guterres on Thursday urged countries to stop financing for coal and to make a commitment not to build new coal-fired power plants to enable a shift to clean energy.

Japan’s latest move includes exemptions, however, such as when there are no alternatives to coal for the energy stability of a country seeking to build a coal-fired station provided it uses so-called clean coal technology from Japan.

The exemptions suggest little change to existing policies and indicate that environment minister Shinjiro Koizumi has had scant effect on Japan’s powerful Ministry of Economy, Trade and Industry, which strongly backs coal.

Koizumi said in December that global criticism of his country’s “addiction to coal” was hitting home, but warned he had yet to win wider support to reduce support for fossil fuels.

Japan’s private banks and companies have been tightening coal policies or cutting investments.

That partly reflects the fact that renewable energy and natural gas are getting cheaper, with many countries turning away from coal, one analyst said.

“The economics have moved so far and this is just Japan catching up with the economics,” said Tim Buckley, director of energy finance studies Australia/South Asia at the Institute Economics and Financial Analysis.

Reporting by Aaron Sheldrick and Yuka Obayashi; Additional reporting by Ritsuko Shimizu; editing by Sherry Jacob-Phillips and Jason Neely