No Clear Exit: Japan’s resistance to a real coal phaseout
Japan’s recent general election and the upcoming revision of its Strategic Energy Plan offer the important opportunity for Japan’s governments and banks to reset their current misguided direction on coal. Japan is the only G7 country without a coal power phaseout deadline. Instead of transitioning from coal to renewables, the Japanese government is promoting, both domestically and internationally, expensive and likely ineffective technologies that aim to extend the lifespan of coal plants.
This report by Reclaim Finance and Kiko Network, endorsed by 24 organizations, shows how the Japanese government’s misguided coal policies have influenced the financing practices of the country’s three megabanks and risks derailing Asia’s energy transition.
Key findings:
Japanese banks provided
in coal finance between 2021 and 2023.
- Japan lacks a clear and credible coal phaseout plan or deadline. This contradicts the global trend of governments committing to phasing out coal power. Instead, the government is promoting the retrofitting of coal plants with carbon capture and storage and co-firing with ammonia. These technologies are aimed at extending the life of coal plants and carry significant doubts regarding their technical feasibility, ability to reduce emissions, and economic viability.
- Without government pressure to exit coal, Japanese corporations and financiers remain heavily invested in the industry. Japan’s banking sector was the world’s third largest financier to the thermal coal industry after US banks from 2021 and 2023. Eighty percent of this financing was provided by Japan’s three megabanks — Mizuho Financial Group (US$8.1 billion), Mitsubishi UFJ Financial Group (MUFG) (US$6.1 billion) and Sumitomo Mitsui Banking Corporation (SMBC) (US$4.7 billion).
- The megabanks’ coal policies are ineffective and incomplete, especially because they set no restrictions on corporate financing for existing coal company clients. This allows Japanese banks to continue their financing relationships with Japanese coal companies as well as major non-Japanese miners and power producers like Adani and Glencore.
- Japan can achieve a full coal phaseout by 2030 through a massive scale-up in investments in clean and renewable energy, energy efficiency, and grid infrastructure improvements.
Reclaim Finance and Kiko Network are highlighting the opportunity of the recent general election and the revision of the Strategic Energy Plan to set an urgent course correction. Japan must commit to a coal phaseout by 2030, and to dismantle policies and market incentives that prop up coal, while Japan’s megabanks must adopt robust coal exclusion policies and redirect their resources towards sustainable power.