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The Japan Bank for International Cooperation (JBIC) has come under fire after its governor said in an interview that the bank will no longer back coal projects, but the Japanese export credit agency has yet to change its policy on the matter.

JBIC’s Tadashi Maeda was quoted as saying the bank “will no longer accept loan applications for coal-fired power generation projects”, in an interview with Japan’s Diamond Online at the end of April.

JBIC has reportedly supported eight coal plants since the 2015 Paris Agreement, a global pact to reduce the effects of climate change, reveals a joint statement by five non-governmental organisations (NGOs), and has not revealed any official plans to curtail funding for such projects.

In fact, the ECA, together with other Japanese banks, is reportedly considering supporting the Vung Ang 2 coal project in Vietnam. In an open letter by the same five NGOs to Japan’s Prime Minister Shinzo Abe, they call for the government to “immediately determine and announce that there will be no public support” for the project.

Commenting on whether JBIC will indeed back coal projects in the future, a spokesperson for the bank tells GTR that JBIC continues to follow policy as outlined by the government of Japan and take appropriate actions on a “case-by-case” basis.

They add: “In general it takes a long time – 10 years in some cases – to make a loan decision for large infrastructure project and even today’s state-of-the-art technology may become obsolete after, say, 10 years. So, it is important to lead the host country’s policy towards latest technologies such as renewables energy or gas-fired power, which generates less CO2 than coal-fired.”

While JBIC’s stance on supporting coal projects still remains unclear, a report published earlier this year by Oil Change International, a US-based research organisation, revealed that Japan topped the list of governments providing the most export credit support to oil, gas and coal around the world, closely followed by China, Korea and Canada.

“Japan and China are the worst offenders, providing US$7.8bn and US$7.7bn annually to fossil fuels, followed by Korea and Canada with US$5.3bn and US$4.3bn, respectively,” it says.

In 2017, restrictions on coal financing for Organisation for Economic Co-operation and Development (OECD) ECAs went into effect. This prohibits ECAs that follow OECD guidelines, which includes those in Japan, Korea and Canada, from supporting coal plants unless they use “ultra-supercritical” technology or are smaller plants in the poorest countries.

The report adds: “The annual average support for coal by G20 ECAs from 2016 to 2018 increased by US$1.4bn annually compared to the time period of 2013 to 2015.”

 

An unclear agenda

“Globally, there is an overlooked issue here where export credit agencies are seen as being semi-independent government agencies that give collectively billions of pounds a year to the fossil fuel industry. A lot of what they do doesn’t match up with what governments say they’re doing on the climate crisis,” Adam McGibbon, senior campaigner at Global Witness, an international NGO focused on exposing conflict, corruption and environmental issues, tells GTR.

A lack of transparent reporting from ECAs continues to make it difficult to get a clear picture of the amount and type of energy projects being supported, and as such, Oil Change International says that the “levels of fossil fuel finance could be much higher than shown in this report”.

It could be seen as hypocritical if governments say they are leading climate change efforts while at the same time supporting overseas fossil fuel projects, known to be a contributor to climate change, through their ECAs and not clearly disclosing it.

McGibbon points to UK Export Finance (UKEF), the UK’s export credit agency, as a possible culprit. Over a five-year period UKEF spent £2.6bn supporting the UK’s global energy exports, of which 96% went to fossil fuel projects, according to an independent report by the Environmental Audit Committee (EAC), a cross-party group of MPs, published last June.

EAC chair Mary Creagh said at the time: “The government claims that the UK is a world leader on tackling climate change, but behind the scenes the UK’s export finance schemes are handing out billions of pounds of taxpayers money to develop fossil fuel projects in poorer countries.”

“It undermines the UK globally. If we’re going to host the UN climate conference next year, how can the UK be a credible host?” says McGibbon.

In January, UK Prime Minister Boris Johnson announced an end to UK government support for overseas coal projects in a speech at the UK-Africa Investment Summit. However, the UK hasn’t funded an overseas coal plant since 2002.

The Powering Past Coal Alliance (PPCA), created by the British and Canadian government in 2017, is a group of countries, regions and organisations aiming to accelerate the phasing out of coal-fired power stations.

“It’s actually been hugely successful,” says McGibbon. “They’ve done it because they’re trying to create a new global norm where countries phase out coal because it is the dirtiest fossil fuel. If you get 20 or 30 countries to say they will, you start to build up momentum. In the same way, the British government could, if it so wanted, say, ‘we’re not going to give export credit for fossil fuels’, and it would see other countries follow.”

UKEF tells GTR: “This government is committed to tackling climate change and UKEF is helping to drive UK content into overseas renewables projects across the globe,” adding that: “We are proactively developing our support for low-carbon sectors, with £2bn recently allocated to our direct lending facility to support clean growth projects.”

Some governments are putting an unequivocal stop to fossil fuel funding. Sweden’s state-owned Svensk Exportkredit (SEK) has joined the Fossil Free Sweden Initiative and has limited lending to oil, gas, and coal to – at most – 5% of its total lending. The Swedish government has further banned export credits to fossil fuel exploration and extraction by 2022. Elsewhere, France last year prohibited any export credits for coal, shale oil and gas.