Australia’s largest export customer for thermal coal is scrapping plans to build power plants
Major Japanese investors, including those most indebted to coal, are seeking to back large-scale renewables projects across Asia, marking a “monumental” shift that energy market analysts say is “the start of the end for thermal coal”.
At the same time, Japanese banks and trading houses are walking away from coal investments, selling out of Australian mines and scrapping plans to build coal-fired power.
Japan is Australia’s largest export customer for thermal coal. Of the proposed pipeline of coal power projects in Japan in 2015, figures from the Global Coal Plant tracker show three-quarters are now unlikely to proceed.
The most recent proposal likely to be shelved, a 1.3GW coal-fired power station in Akita, in Japan’s north-west coastal region, follows the cancellation of two others earlier this year. Sojitz Corporation this week announced further divestment from thermal coal, following Itochu announcing a coal exit last month, and Mitsui in November.
Sources in the Asian renewable and energy finance sectors say Japanese banks, trading houses and two prominent state-backed enterprises – the Japan Bank for International Cooperation and Japan International Cooperation Agency – have in recent months expressed their intention to invest more heavily in the renewables sector.
The increased interest in renewables comes, notably, from investors and companies with existing exposure to coal. Demand for electricity in Japan is declining, as the population declines. In that market, coal appears to be crowded out by additional capacity provided by nuclear restarts, solar and other renewables.
Other developers have their eyes on Akita, which is next to the Sea of Japan, as a site for offshore wind developments.
Across Japan, 13 offshore wind projects are undergoing environmental impact assessments, with the total investment opportunities worth up to 2 trillion yen (A$25bn), according to Mizuho Bank estimates published this week.
Kimiko Hirata, the international director of Japan’s Kiko Network, a climate action campaign group, said she had noticed a shift in sentiment among several big players in the Japanese business world.
