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Environmental groups in Japan and Australia are calling on Japan’s export credit agency not to offer support for a proposed liquefied natural gas (LNG) project near Darwin, as the fossil-fuel reliant nation pledges to become a global leader on fighting climate change alongside the new US administration. 

Much of the gas from the proposed Barossa LNG project, being developed by Adelaide-based energy company Santos, is earmarked for export to Japan. The Japan Bank for International Cooperation (JBIC) disclosed in February that it is considering some form of support for the development. 

Japanese behemoth Mitsubishi has already struck an agreement with Santos to buy 1.5 million tonnes of gas per annum from the project, and Japanese power company JERA will eventually have a 12.5% stake in the enterprise.  

However, in a submission to JBIC last month, three Australian non-governmental organisations (NGOs) argued the bank should withhold any support for the development, saying it is “significant, controversial and high-risk” and “fundamentally incompatible with a safe climate”. 

“The greenhouse gas emissions from this project are likely to significantly increase Australia’s emissions profile. It could be amongst the most polluting LNG projects in the world,” the groups – think tank the Australia Institute, research group Jubilee Australia and the Northern Territory Environment Centre – said in a statement following Santos’s final decision to proceed with the project on March 30. 

Japan uses natural gas to meet around a quarter of its energy demand, according to the US Energy Information Administration, and relies on coal and oil for the vast bulk of its energy production. 

The Barossa field sits off the north coast of the Tiwi Islands, a sparsely populated territory about 85km north of Darwin, and will be linked to an LNG processing facility in the city by a pipeline. 

Barossa’s gas deposits are estimated to have a 16-20% carbon dioxide component, which the plan’s environmental impact assessment concedes is much higher than other LNG projects in Australia. The development will discharge an average of 3.38 million metric tonnes of carbon dioxide per year, according to the assessment. 

As part of Santos’ supply agreement with Mitsubishi, the two companies signed a memorandum of understanding “to jointly investigate opportunities for carbon neutral LNG from Barossa”, including possible carbon and capture and storage (CCS) measures at another Santos site in central Australia, which is awaiting final investment approval. 

“We are not totally against CCS. It depends on the situation and if there is no other alternative,” Yuki Tanabe, the sustainable development and aid program coordinator with NGO the Japan Centre for a Sustainable Environment and Society (JACSES), tells GTR. But he adds that for electricity generation, “an alternative clearly exists, so it’s not good to use CCS for the power sector”.

Tanabe’s group has met with representatives from JBIC twice to discuss the Barossa project. The meetings have focused on disclosure of documents and JBIC’s assessments of the project so far, but the bank has not yet given an indication of which way it is swaying. It did not respond to questions from GTR.   

JBIC undertook two virtual site surveys in December last year in which the agency met with Santos, Parks Australia and the country’s offshore energy regulator, it told JACSES in the meetings. Australia is currently closed to almost all international visitors due to the coronavirus pandemic. 

The Australian NGO submission also took aim at the consultation process with traditional owners and residents of the Tiwi Islands, which it described as “severely lacking”, saying “there is no evidence of the proponents visiting the three main communities or providing information that is presented in an easily accessible way to an audience which does not have English as their first language”. 

The Tiwi Land Council, the local authority, did not respond to a request for comment. Santos did not respond to written questions. In 2019 the company bought out the original proponent of the development, ConocoPhillips, who led the initial consultation and regulatory approval process. 

Both JACSES and the Australian groups also claim that the gas field’s pipeline could harm endangered sea turtles whose nesting grounds it is planned to traverse, and contradict a recovery plan designed to replenish their numbers.

The environmental impact assessment, written in 2017, argues that pipelaying will take only one to two months and will be completed outside of peak nesting periods.  

Japan’s greenhouse bind

JBIC’s mulling of the LNG proposal comes as the Japanese government vows to join the US at the helm of global efforts to curb greenhouse gas emissions. 

At a meeting last week with US President Joe Biden, Japanese Prime Minister Yoshihide Suga said he would unveil new 2030 emissions reduction targets this week. The country’s current target is to trim emissions by 26% by 2030 and achieve net-zero by 2050. 

Suga said that during the climate leaders summit to be convened by Biden on April 22-23, “Japan and the US will lead the global decarbonisation in order to further strengthen cooperation in areas such as the implementation of the Paris Agreement, clean energy technologies, or decarbonisation transition of developing countries”. 

“I agreed with President Biden to launch [a] climate partnership on ambition decarbonisation and clean energy.”

The plans are at odds with JBIC’s track record on support for emissions-intensive energy sources. Japan tops the list of export credit providers for fossil fuels, according to a 2020 report by campaign group Oil Change International, although its backing for renewables has grown. 

Earlier this month JBIC announced a US$53mn co-financed loan to the Sojitz Corporation to fund exports of steel-making coal from an Australian mine to Japan, although last year the bank said it would no longer provide support for overseas coal plants if the country did not have a decarbonisation policy.  

Just three days after Suga and Biden’s talks, US Secretary of State Anthony Blinken delivered a blunt message to US allies on climate change: “When countries continue to rely on coal for a significant amount of their energy, or invest in new coal factories, or allow for massive deforestation, they will hear from the United States and our partners about how harmful these actions are.”

JACSES’s Tanabe says he expects the Japanese government to place new restrictions on fossil fuel financing by JBIC in the “near future”.  

“It depends on the international pressure, but the policy is changing quickly at the moment.”