Japan maintains coal export support policy

Market: Coal, Electricity
10/07/20

Japan has tightened some conditions but is maintaining its policy to back infrastructure exports for overseas coal-fired power developments.

Japan's environment, trade and industry (Meti), foreign affairs and finance ministries completed the policy review yesterday. The revised infrastructure export policy specifies technology subject to government funding. It also mandates Japan to set decarbonaisation strategies for importing countries.

The new policy enables the government to only finance firms' projects involving cutting-edge technology such as ultra-supercritical (USC) with more than 43pc generating efficiency, integrated coal gasification combined cycle (IGCC), biomass or ammonia co-firing, carbon dioxide capture and storage (CCUS) and carbon recycling that can contain CO2 emissions as much as IGCC.

The new policy also mandates Japan and importing countries to set long-term strategies towards decarbonaisation. But the policy does not specify details of such strategies.

Japan aims to maintain its competitiveness against China and South Korea by fulfilling the coal-fired technology demand of importing countries until they eventually decarbonise their power generation. But the environment ministry does not clarify whether the decarbonaisation goal indicates a complete shift to other fuels such as LNG and renewables, or continuous use of coal-fired units with CCUS or carbon recycling technologies.

The policy continues to limit funding for exports to countries, whose financial situation requires Japanese coal-fired power generation for stable energy supplies.

The old policy enabled Japanese firms to receive government funds for exporting USC or unspecified, more advanced coal technology to countries in dire need of it. It also required Japan to suggest methods to lower CO2 emissions and provide necessary support based on choices of importing countries.

Premier Shinzo Abe's government has been backing overseas investment in coal-fired power projects under an energy policy to tap growth potential in emerging economies.

But Japan has been moving away from coal-fired power generation amid rising global and domestic criticism including environment minister Shinjiro Koizumi's opposition. Japanese banks Mizuho and Sumitomo Mitsui Banking have toughened coal financing policies. Meti announced on 3 July moves to scrap inefficient coal-fired power units in Japan.

By Nanami Oki

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