Japan to oppose new or expanded coal-fired power plants in blow to Australian exports | Environment
Japan’s environment minister has announced he will “in principle” oppose any new plans to build or expand coal-fired power stations, as further signs emerge of a dramatic energy pivot by Australia’s top export market for thermal coal.
Guardian Australia reported in March that Japan had cancelled a large percentage of planned investments in coal-fired power, while Japanese investment vehicles were ditching coal projects and instead seeking to back large-scale renewable projects across Asia.
Market analysts expect the price of thermal coal will remain dictated by China, whose recent restrictions on Australian exports have already tempered near-record prices, and would likely continue to reduce its value.
Late last week, three separate announcements added to a growing belief that a renewed, positive focus on the Paris goals is emerging in Japan, among government and large corporations.
The Japanese environment minister, Yoshiaki Harada, announced a “policy initiative” to oppose new or expanded coal-fired power plants, the national newspaper Asahi Shimbun reported.
The environment minister does not have the final say on new power generation projects, but his opinion is considered a fundamental part of the planning process.
On Friday, Japan’s largest utility, Kansai Electric Power, announced it would expand its renewable energy portfolio to 6GW by 2030, earmarking US$5bn in capital expenditure for clean power projects in the next two years.
Marubeni announced last year it was exiting coal. Its divestment decision was followed by fellow conglomerates Mitsui, Mitsubishi, Itochu and Sojitz. Three coal-fired power plant projects have already been cancelled in Japan this year.
Observers in Japan remain cautious, as the country has coal-fired power projects under construction and some already approved. The prime minister, Shinzo Abe, has signalled he wants to show global leadership on climate change, ahead of the next G20 summit in June in Osaka.
The speed with which Japanese government and industry have shifted focus is significant, market analysts say. It comes as global financial institutions are increasingly exiting coal. On Saturday, Australia’s largest insurer, QBE, said it would stop insuring new thermal coal projects – including mines and power generation – from July this year, and underwrite no thermal coal projects by 2030.
Australian coalminers might not feel the direct impacts of these pivots for a decade or more, as most recent announcements relate to new projects, or offer staged exit commitments.
Tim Buckley, the director of energy finance studies for the Institute of Economics and Financial Analysis, said the next decade would be critical for those most heavily dependant on thermal coal.
Buckley said the Australian economy, mining communities and workers would be at greater risk if governments failed to understand the changing sentiment of global financial markets, particularly Japan, and ignored the need to implement effective transition strategies.
“We have a decade to prepare, and that’s the decade that is critically important to building the industries of the future,” Buckley said.