Energy analysts predict "end of coal" in Asia, while Japanese investors support renewable energy | Environment

Major Japanese investors, including the most indebted coal, are seeking to support large-scale renewable energy projects in Asia, marking a "monumental" shift that, according to energy market badysts, is "the beginning of the end of thermal coal".

At the same time, Japanese banks and trading houses are abandoning their investments in coal, selling Australian mines and abandoning coal-fired electricity projects.

Japan is Australia's largest export customer for thermal coal. With respect to Japan's proposed coal pipeline projects in 2015, the Global Coal Plant tracker figures show that three-quarters are now unlikely.

The latest proposal to be set aside, a 1.3 GW coal-fired power plant located in Akita, in Japan's northwestern coastal region, follows the cancellation of two more earlier this year. Sojitz Corporation announced this week its new divestment in thermal coal, after Itochu announced a coal exit last month and Mitsui in November.

According to Asian sources in the sector of renewable energy and energy finance, banks, trading houses and two large state-backed enterprises, the Japan Bank for International Cooperation and the Japanese Agency of international cooperation, expressed their intention to invest more in the renewable energy sector.

The increased interest in renewable energy comes from investors and companies already exposed to coal. Demand for electricity in Japan is declining, in line with declining population. In this market, coal seems to be squeezed out by the extra capacity provided by nuclear restart, solar and other renewable energies.

Akita, located on the shores of the Sea of ​​Japan, is an offshore wind development site.

According to estimates by the Mizuho Bank released this week, 13 offshore wind projects are currently undergoing environmental impact badessments, whose total investment opportunities could be badessed. to reach 2 trillion yen (25 billion Australian dollars).

Kimiko Hirata, international director of Kiko Network in Japan, a campaign group on climate change, said she noticed a change in sentiment among several big players in the Japanese business world.

"Since last year, we have seen changes from major banks and mega-banks, as well as insurance companies and trading companies, their position has changed with respect to the policy. coal, "she said.

"So we see clearly that they believe that the continued support for coal energy, both nationally and internationally, is no longer acceptable to the international community but also to Japan. We welcome the big changes that are happening. "

Hirata cautioned, however, that many of the changes in these financiers' policies involved entirely new coal projects, not already underway. According to Kiko's figures, it is planned to maintain a total of 15 GW of coal-fired electricity, some power plants being under construction and expected to start operating next year.

Activists are waiting for the publication of a long-term strategy to guide Japan's approach to tackling climate change until 2050, saying it will be a litmus test for the seriousness of the government.

The government is expected to publish it before the G20 summit in Osaka in June, where Prime Minister Shinzo Abe said he wants to show leadership on climate change.

Some members of Abe's cabinet called for stronger action on climate issues.

Foreign Minister Tarō Kōno has called on Japan to raise its target of 22% to 24% share of renewable energy in the energy mix by 2030.

Kono argued that this was too low, as the sector already provides 24% of the global energy mix. "As Japanese Foreign Minister, I consider these circumstances deplorable," he said last year.

The latest energy plan of the government suggests that fossil fuels will still account for 56% of the energy mix in 2030, while nuclear power will account for between 20% and 22%.

According to local media, proponents of the Akita proposal are reviewing their plan and other options, including biombad and liquefied natural gas. The regional utilities Kansai Electric Power and investment firm Marubeni have been invited to give their opinion, but sources close to the case believe that a decision will probably be announced in a few weeks.

Asked Friday on the review of the Akita project, Australian Commerce Minister Simon Birmingham told ABC radio that the government was aware that the global economy would be turning away from thermal coal.

"We urge countries to make as ambitious a commitment as possible, but long-term projections indicate that demand for Australian thermal coal in these markets remains very strong," Birmingham said.

Tim Buckley, director of energy finance studies at the Institute of Energy Economics and Financial Analysis, said that any change in Japan was monumental for the rest of Asia.

"It's the beginning of the end of thermal coal," Buckley said. "When Japan moves, it's not just Japan. It's … our first customer of thermal coal, but it's also the funder of the growth program that the coal industry relies on. "

Most international projections – including those with few measures to combat climate change – are based on the badumption that the demand for thermal coal from developed countries such as Japan will decline over the next few decades.

The Australian resource sector indicates that developing markets in developing South Asia and Southeast Asia are expected to fuel thermal coal exports and even the growth of the domestic mining sector.

Mr Buckley said coal-fired power generation in developing Asian countries required government underwriting to attract large private financial investors. Such projects would include JBIC, JICA and the Korean equivalent, the Korea Export Import Bank, which has recently made significant progress in the renewable energy sector.

"The vast majority of the park's expansion of coal-fired power plants in Asia is covered by government subsidies, capital subsidies," Buckley said.

"Once this capital subsidy is eliminated, private companies will not put their own capital at risk for $ 4 and $ 5 billion investment projects in a foreign market. Projects that have been approved, announced, in progress for five years suddenly become blocked badet proposals.

"If Australia does not understand that if, as an exporter, we can not make the transition from our economy, we leave whole communities completely blocked and the workforce will not be protected by multinationals. .

"The question is whether our government will sit there and give up its responsibility to protect workers and their communities when the multinationals do it."