China, Japan, South Korea Fund Coal Plants Elsewhere, But Not in Their Own Back Yards
China, Japan, and South Korea are financing dozens of new coal plants in the developing countries of southeast Asia and Africa, while more than 100 of the region’s financial institutions back away from supporting similar projects on their home turf.
“Even as they take steps to promote renewable energy at home, these three countries are facing growing scrutiny for financing dozens of new coal-fired power plants in foreign countries,” the Los Angeles Times reports, in a dispatch republished by the Institute for Energy Economics and Financial Analysis. “Most of the plants are being built in Southeast Asia and Africa, in emerging economies where the growing demand for cheap, reliable electricity is most easily met by coal, the single largest source of the greenhouse gas emissions blamed for warming the planet.”
The motivation, IEEFA says, is to protect domestic manufacturers of components like steam turbines and boilers that won’t fare well in an economy increasingly dominated by stunningly affordable solar and wind energy systems.
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“The Chinese, Japanese, and Koreans have a lot of coal-fired power equipment that will not have a great deal of international value in another three to five years,” IEEFA energy finance consultant Melissa Brown told the Times. “So they’re looking to partner with countries that can move forward quickly to put new coal-fired power capacity in place.”
It’s working so far, the Times writes, because governments in places like Indonesia, Vietnam, South Africa, and Bangladesh “for now appear more concerned with building their economies and expanding access to electricity than with the environmental impact of burning more coal,” the Times writes. That activity helped drive global carbon emissions up by nearly 2% in the last year, the International Energy Agency recently reported. Of the 67 gigawatts of new coal capacity on track to receive foreign funding, EndCoal.org says the three countries will underwrite more than 80%, and IEEFA reports China alone will account for US$36 billion in investment in 23 countries.
But not in their own back yards, IEEFA’s Tim Buckley wrote yesterday. “Five major financial institutions in Asia have over the past six weeks announced plans to move away from financing coal-fired power plants, signalling an accelerating trend across the region out of coal towards renewables,” he notes. “Echoing what was originally a largely European phenomenon, the recent Asian financial exodus highlights growing regional concerns over the increasing risks of stranded assets and environmental costs in the thermal coal power industry.”
Leading Asian economies are also taking a stronger interest in “increasingly cheaper, domestic, sustainable alternatives that meet the growing energy needs of their burgeoning populations,” he adds.
With 112 (and counting) of the region’s major financial institutions exiting coal, Buckley cites Singapore-based DBS Group Holdings, United Overseas Bank, and Oversea-Chinese Banking Corporation as three that have announced their plans in recent weeks. “This builds on ground-breaking moves by State Development & Investment Corporation (SDIC), the first major domestic Chinese financial institution to completely exit the coal industry in March 2019, and Japan’s Mitsubishi UFJ Financial Group (MUFG), the biggest bank in the world outside China, that announced a coal exit in April 2019,” he writes.