Swimming against the current: Japan remains the only G7 country still pursuing new coal power plants domestically and internationally making it an outlier among the economically developed nations
Coal exit gathers pace, setting a point of no return for the use of coal in the power sector. However, Japan, for the fifth year running, ranked the worst performer in phasing out coal among the G7 countries (Fig 1). It is the only G7 country still pursuing new coal power plants domestically and internationally. Japan continues to support the expansion of coal power generation, in particular in South East Asia, which has vast potential for renewables, and is the second biggest financier of overseas coal after China. This puts Japan’s international reputation for being a high tech and environmentally conscious country at risk.
Yet, private sector dynamics continue to run ahead of Japan’s government policy, with close to 4 GW of coal power plants proposed domestically being cancelled over the past year. This is a global trend, and, in particular across G7 countries. There are now 115 globally significant financial institutions with coal exit policies. In the course of last year, at least 30 new or improved policies limiting coal finance have been announced from both public and private institutions. These announcements demonstrate the increasing geographical diversity and size of institutions exiting coal, including across the G7. They include the Export Credit Agencies (ECAs) of Canada and Germany, US insurer Chubb, Italian insurer Generali, and the Japanese trading houses Marubeni and Sumitomo, and the Japanese banks, such as MUFG. As a result of these market trends, we expect more countries to present domestic policy frameworks that enable a managed phase-out of coal power generation.
The UN Climate Action Summit in September 2019 and 2020 Tokyo Olympics are opportunities for Japan to join its progressive peers by increasing its climate ambition and take decisive action on coal in line with the latest science and Paris Agreement.
Figure 1. G7 Coal Scorecard
Notes: The G7 Coal Scorecard 2019 tracks how the G7 countries are meeting the challenge of phasing out coal use for electricity generation. It ranks the status of market drivers and government policies in each country to provide a comparable assessment of performance. It considers: whether there is a risk of new coal power plants being constructed; whether existing plants are being retired; and whether a country’s actions have a positive international impact. For the full report in English press here and summary in Japanese press here.