Page 5 - AsiaElec Week 41
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AsiaElec COMMENTARY AsiaElec
In August, a widely reported study by Greenpeace warned that Japan’s state funding agencies, such as Japan International Co-oper- ation Agency (JICA) and Japan Bank for Inter- national Co-operation (JBIC), had invested $16.7bn from 2013 to 2019 in coal projects and abroad, especially in India, Bangladesh, Viet- nam and Indonesia.
This makes Japan the second biggest G20 investor in coal behind China.
But the picture is more nuanced. In May, Mizuho Financial Group and Mitsubishi UFJ Financial Group announced that they would tighten lending to coal-fired power projects in a bid to combat climate change. Some of Japan’s influential trading houses such as Marubeni are also divesting from coal across Asia.
Domestic regulations
At home, coal’s role, while still persistent, is diminishing. In July, the US-based Institute for Energy Economics and Financial Analysis (IEEFA) claimed that Japanese coal plants that are currently being built would be offset by clo- sures of old plants in the medium term.
It forecasts that Japan’s coal-fired power capacity will go into irreversible decline. This will reduce Japan’s coal imports from Australia, its biggest source.
The IEEFA said that Japan’s coal-fired power capacity would go into decline from 2023, with the trend accelerating in the long term. The insti- tute also said that Japan’s pipeline of new coal- fired power plants had collapsed by 45% between 2015 and 2019.
Coal’s worrying prospects come as Japan has put in place a legal framework to promote renewables and reduce its fossil fuel consump- tion and greenhouse gas (GHG) emissions.
The recent Strategic Energy Plan (SEP) set out
that renewables should become the main source of power, setting a target of 2050 for decarbonis- ing the energy sector.
Meanwhile, the Long-term Strategy for Decarbonisation LTSD), which was approved by the cabinet and submitted to the UNFCCC in June 2019, states: “The Government will work to reduce CO2 emissions from thermal power gen- eration to realize a decarbonised society consist- ent with the long-term goals set out in the Paris Agreement.”
Market reforms
Debates over feedstock in Japan come as the power retail sector is being deregulated. Incum- bents such as TEPCO, Kansai Electric Power and Chubu Electric Power have lost 5.7mn retail power customers since April 2016, as consumers can now choose their electricity.
Other reforms include wholesale power trading later in 2019, which would also provide trading in derivatives and other energy-based products.
One of the aims of liberalisation is to force regional incumbents to innovate at all levels of the electricity value chain by investing in new solar and wind projects and cutting retail tariffs.
Looking ahead
Japan’s position comes about as up to 124 GW of coal-fired generation capacity is under devel- opment across Southeast Asia and South Asia. Japan itself plans to build 12.6 GW of new coal capacity by 2030.
On the other side of the coin, Japanese util- ities are stepping up investment in renewables, partly in response to pressure from investors and environment activists to divest from coal. Key customers in the newly liberalised retail market are also insisting on green energy.
Week 41 15•October•2019 w w w . N E W S B A S E . c o m P5
