A top Japanese public financier of foreign development projects has said it will stop accepting loan applications for coal power plants, as global pressure ramps up on the world's third largest economy to do more to fight climate change.
The Japan Bank for International Cooperation (JBIC) has been called names like "coal peddler" and "coal store" by environmentalists taking aim at the ongoing Vung Ang 2 coal power plant in Vietnam.
Standard Chartered is among the foreign banks to have yanked financing support for the Japan-led project, which is worth an estimated US$2.2 billion (S$3.1 billion) and expected to start operations in 2024.
JBIC governor Tadashi Maeda told the Diamond Online socioeconomic magazine last week that the name-calling was upsetting, and that it was "absolutely untrue" that the bank deliberately sets out to finance coal projects.
"Going forward, it is necessary to lead to technologies that reduce the environmental load," he said. "We will no longer accept loan applications for coal-fired power generation projects."
In response to follow-up queries from The Sunday Times, the bank said it was not a straightforward matter of pulling the rug out from under the project, for which an agreement was signed in 2007.
The national energy policy states that four conditions must be met for the export of coal energy:
• The foreign nation must have no other reasonable options;
• The request is made through official channels;
• The foreign nation's energy policy involves climate change measures; and
• The latest, most green technology is used.
GREENER TECH NEEDED
Going forward, it is necessary to lead to technologies that reduce the environmental load... We will no longer accept loan applications for coal-fired power generation projects.
JBIC GOVERNOR TADASHI MAEDA, who said that the name-calling directed at the bank by environmentalists was upsetting.
But even the most highly efficient coal power technology is a major source of global warming, and Japan's Environment Minister Shinjiro Koizumi has said that these conditions must be reviewed.
Japan's top three banks - Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group - have also said they would no longer make new investments in coal-fired thermal power plants.
A JBIC spokesman said: "We take appropriate measures after carefully assessing the suitability of each project, taking into account the policies of the Japanese government and the energy policy of the partner country."
She noted that the Vung Ang 2 case showed the speed of technological progress in the considerable time lapse since the loan decision.
Mr Maeda had, in the interview with Diamond Online, said Japan's focus is on helping to lift countries out of poverty, and therefore has long focused on delivering the cheapest possible energy solutions.
Pulling out of Vung Ang 2, in this regard, would leave a diplomatic hole. But he stressed his belief that Vietnam must change its energy policy as its power consumption grows.
Mr Maeda noted that JBIC is offering a liquefied natural gas thermal power solution, which is less pollutive, to complement unstable renewable energy sources in Indonesia.