Coal Fired Power Sector

Thursday, June 1, 2017

Japan - There are several surveys regarding the specific amount of Japanese private financial institutions’ coal-related investments. However, as the subjects of these surveys are financial institutions’ investment in coal extraction and power generation company itself, these previous surveys do not focus on the specific amount of individual projects’ investments. In our report, therefore, we survey the amount of large Japanese private financial institutions’ investments in individual previously-contracted overseas coal-fired power generation projects, based on the press releases of the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI), etc.

Our survey’s conclusion is written below (Table 1). Mitsubishi UFJ Financial Group (FG) gave the largest loan (2.1 billion USD), followed by Sumitomo Mitsui FG (1.6 billion USD), Mizuho FG (800 million USD), Sumitomo Mitsui Trust Holdings (600 million USD) and the Norinchukin Bank (400 million USD).

Table 1: List of the Amount of Japanese Private Financial Institutions’ Overseas Coal-fired Power Generation Projects (Unit: Million USD)

Date of

Press Release

Project Name

(Country)

Mitsubishi UFJ

Mizuho

Sumitomo

Mitsui

Sumitomo

Mitsui Trust

The Norinchukin Bank

November 15, 2005

Hai Phong Units 1-2 (Vietnam)

 

13

 

 

 

March 29, 2007

Hai Phong Units 3-4 (Vietnam)

 

13

 

 

 

December 20, 2007

Barh Units 1-3

(India)

48

48

48

48

 

December 30, 2008

Tanjung Jati B Units 3-4

(Indonesia)

292

 

292

 

 

March 8, 2010

Paiton 3

(Indonesia)

76

76

76

76

 

March 8, 2010

Cirebon Unit 1

(Indonesia)

76

76

76

 

 

March 23 2010

Pacifico (Petacalco) Unit 1 (Mexico)

169

 

169

 

 

April 1, 2011

Jaypee Nigrie Units 1-2 (India)

55

 

 

 

 

August 12, 2011

Vung Ang 1 Units 1-2 (Vietnam)

 

 

38

 

 

December 28, 2011

Rajpura Units 1-2

(India)

54

 

 

 

 

March 28, 2013

Cochrane Units 1-2 (Chile)

100

100

100

 

 

August 22, 2013

Thai Binh 2 Units 2-3 (Vietnam)

19

19

 

 

 

January 27, 2014

Kudgi Units 1-3 (India)

 

 

140

 

 

July 17, 2014

Vinh Tan 4 Units 1-2 (Vietnam)

136

 

 

 

 

September 2, 2014

Meja Units 1-2 (India)

60

 

 

 

 

September 19, 2014

Safi Units 1-2 (Morocco)

59

59

59

59

 

March 31, 2015

Duyen Hai 3 Unit 3 (Vietnam)

 

 

27

27

 

March 16, 2016

Lontar (Banten) Unit 4 (Indonesia)

 

 

130

 

 

June 3, 2016

Batang (Central Java) Units 1-2 (Indonesia)

304

152

152

152

152

February 27, 2017

Tanjung Jati B Units 5-6

(Indonesia)

536

268

268

268

268

April 11, 2017

Vinh Tan 4 Unit 3 (Vietnam)

34

 

 

 

 

Unpublished

Cirebon Unit 2

(Indonesia)

Unknown

Unknown

Unknown

Unknown

Unknown

June 21, 2017

Kalselteng 2

Units 5-6

(Indonesia)

97

 

 

 

 

 

Total[1]

2,115

824

1,575

582

420

 

We also surveyed the JBIC and private financial institutions' joint projects. Two of which (Batang and Cirebon) were already financed while four others (Darlipali, Tanda, Morupule, and Ulaanbaatar) were under consideration. The major ESG issues related to these projects are written below:

  • Defectiveness of EIA research

-         Insufficiency of examination of alternative project options and impact prediction (Cirebon)

-         Insufficiency of baseline survey and impact prediction (Morupule and Ulaanbaatar)

  • Defectiveness of Environmental Certification

-         The violation of Spatial Planning Law (Cirebon)

-         Illegal blasting, deforestation, and sediment dumping (Darlipali)

  • Defectiveness of prevention and mitigation policy

-         Insufficiency of compensation and livelihood restoration plan (Batang and Ulaanbaatar)

-         Insufficiency of environmental mitigation policy (Cirebon, Darlipali, Tanda, Morupule, and Ulaanbaatar)

-         Insufficiency of compensation and livelihood restoration support (Cirebon)

  • Defectiveness of public involvement

-         Irrelevant resident discussion (Batang)

-         Violation of Human rights cause by policy or parties (Batang, Cirebon, and Tanda)

 

Although Japan signed on to the Paris Agreement, these surveys indicate that large Japanese private financial institutions continue to provide loans to a number of coal-fired power generation projects, resulting in inconsistency with the Agreement’s targets. In addition, Japanese private financial institutions’ investment activities regarding coal-fired power generation projects have resulted in a host of ESG issues. Thus, Japanese private financial institutions should:

  1. Calculate coal-fired power generation projects’ CO2 emissions based in their portfolios and set a target for low carbonization,

  2. Formulate policies that prevent lending to new coal-fired power generation project in order to comply with the Paris Agreement,

  3. Not lend to projects that (potentially) violate law and human rights or cause environmental destruction, and stop loan payment to previously contracted projects.

  4. Work on the operators to disclose information and have discussions with residents of each project under consideration or in financing, who express their concerns about projects or compensation.

Edited by Japan Center for a Sustainable Environment and Society (JACSES)

Published in Fair Finance Guide Japan, Pacific Asia Resource Center Freedom School (PARC), Japan Center for a Sustainable Environment and Society (JACSES), and A SEED JAPAN

This report has been subsidized by the Swedish International Development Cooperation Agency (Sida)

READ THE FULL REPORT

 

[1]In the case of that the amount of JBIC’s investment was unknown while the total amount was clear, we estimated 50 percent as the amount of JBIC’s investment. In the case of that the amount of each bank’s investment was unknown, while the total amount of the private financial institutions became clear, we divided the amount equally by the number of banks. In the case of that the amount of a loan contract was not USD, we converted it to USD at TTM of the date of each press release.

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