Expanding Japan’s Coal Fleet: Financial Risk and Climate Disaster

cool japan or coal japan

In the past year, Japan’s electricity demand has declined by 2.7 percent, while new solar developments have added 8,000 MW of new capacity to the system, the equivalent of 16 medium-sized coal-fired power plants.

With costs for solar power continuing to drop worldwide, Japan is likely to see continued growth in the proportion of its electricity demand supplied by solar power. In addition, Japan has the potential for 144,000 MW of onshore wind power and 608,000 MW of offshore wind power, according to a 2014 study by General Electric Co. The most recent levelized cost analysis by Lazard, the world’s leading financial advisory firm, shows the cost of onshore wind power to be US$32-US$77 per kWh, compared to US$65 for new supercritical coal power without carbon capture and storage.

Despite the growth of renewables, Japan’s power companies are planning to build 48 new coal plants with a total capacity of 23,500 MW, according to Kiko Network’s Japan Coal Plant Tracker. Based on the International Energy Agency’s cost estimates for coal plant construction in Japan, these proposed plants represent US$59 billion in capital investment. Decision makers responsible for these investments should recognize them as highly risky expenditures, for two reasons. First, the growth of ever-cheaper renewable alternatives and the decline of demand due to increased efficiency presents the likelihood that new coal capacity will see a low rate of utilization. Second, growing global pressure to reduce carbon emissions may force the early retirement of highly polluting facilities such as coal plants. Both developments raise the risk that owners and investors will be left with “stranded assets,” i.e. expensive but unusable capital investments placing a drag on balance sheets.

Japan’s move to expand its coal fleet runs counter to trends in other developed economies. Both Europe and North America are experiencing a rapid shrinkage in coal-fired capacity, with retirements of older coal plants exceeding new construction. From 2003 to 2015, retirements in the EU and U.S. exceeded new coal plant capacity by 36,000 MW, the equivalent of 72 medium-sized coal plants, according to Boom and Bust 2016: Tracking the Global Coal Pipeline. Given that trend in other developed economies, Japan’s push to expand its coal fleet appears misguided.

Recent research by Climate Action Tracker indicates that decarbonization of the global power sector must take place quickly if global warming is to be held below 2°C. By 2030, electricity production from coal must decline by approximately 2/3 from current levels. Such a reduction cannot occur if new coal-fired capacity continues to be built. Instead, the transition to renewable power must be accelerated, and existing coal-fired plants must be placed on a retirement schedule. Failure by the global community to achieve rapid decarbonization threatens human survival itself. According to an April 27, 2016, letter by James Hansen, former director of climate research at NASA, “continued high fossil fuel emissions will lock in sea level rise of at least 6-9 meters,” causing the loss of all coastal cities. Although these impacts may not begin for several decades, “delayed response of the ponderous climate system spells danger … we can pass a point of no return, where it becomes impossible to avoid future Antarctic ice sheet disintegration and loss of coastal cities.”

Given the stakes, it is essential for Japan to do its part to achieve the carbon reductions necessary to prevent climate disaster.

Author: Ted Nace, Director of CoalSwarm

Image credit: Chris Lewis on Flickr

Japan’s G7 Coal Shame

cool japan or coal japan

At the end of May, the eyes of the world will turn to Japan as it hosts the G7.

One would expect Japan to use this opportunity to step up as a leader on climate after the global agreement in Paris. Instead, barring a drastic change in government policy, the G7 will be a showcase in the many ways Japan is stagnating while the rest of the world moves forward on energy, climate and the economy.

Even as the United States, Europe and China are burning less coal, imports are up in Japan, and an additional 23,000 MW of new capacity is proposed or under construction. Not content to limit its backward position to its own borders, Japan is also the world’s number one financier of overseas coal, subsidizing US$20 billion abroad between 2007 and 2014. Next up is the $4 billion Batang coal plant in Indonesia, a notorious project plagued by human rights violations, which is under consideration at the Japan Bank  for International Cooperation.

Conversely, the United States is rapidly reducing its dependence on coal. One third of the coal fleet has announced retirement since 2010. Two realities underpin this rapid shift away from coal. First, coal kills. Nothing can make a coal plant clean, and air pollution from coal plants led to an estimated 13,000 deaths in the United States in 2010. Second, coal is a bad investment. We see it in projects like Mississippi’s Kemper plant and its ballooning costs, which currently sit at $6.5 billion. We also see it in the many coal companies, most recently Peabody, that have declared bankruptcy. Meanwhile, global clean energy investments outpace coal and gas two to one.

The story is the same in Europe, where many countries are not only reducing coal use, but have announced plans to phase it out all together, including the United Kingdom, Austria and Finland. The Nordic countries, Netherlands, United Kingdom, France and Germany also joined the United States in pledging to end financing for overseas coal except in rare circumstances, leading to new OECD restrictions on export-credit agency finance for coal, which Japan grudgingly agreed to. Perhaps most notable, however, is Norway, where parliament voted to divest the country’s $900 billion pension fund, the world’s largest sovereign wealth fund, from coal.

Even China, where analysts once predicted a never ending, insatiable demand for coal, is now reducing its coal consumption. Coal plants now operate at less than 50%. The government announced the closure of over 1,000 mines a suspension of new coal plant approvals. China also agreed to limit financial support for high carbon projects overseas along the lines of President Obama’s ban on support for coal projects with public money except in the world’s poorest countries when no alternative exists.

It is embarrassing that Japan will host the G7 when its energy policies are so clearly behind the times. While other countries are boosting public health and their economies by investing in cutting edge renewable energy technology and simultaneously ramping down coal, Japan continues to prop up a dying industry. Last year in Paris, the world’s leaders added their voices the call to fight climate disruption. If Japan wants to be a global leader, it must show it is ready to turn those words into action.

Nicole Ghio, Sierra Club

Coal is a climate killer, whatever its efficiency

The argument that high-efficiency coal-fired power plants are a viable solution for reducing CO2 emissions, the main cause of climate change, is still defended with vigour by the coal industry – and by governments that have a stake in the coal industry, in particular Japan, Germany, South Korea, Australia and Poland. Japan even goes as far as to counting public finance for coal plants as ‘climate finance’.

Research by consultancy Ecofys, commissioned by WWF, completely discredits these claims.

It shows that in order to achieve the emissions reductions needed to keep temperature rise under 2 degrees – an international commitment confirmed in Paris in December – power production from coal needs to reduce drastically as from today, and be completely phased out by the middle of this century. This is based on data from the Intergovernmental Panel on Climate Change (IPCC).

An even more rapid decline will be needed in order to achieve the commitment taken at the UN climate summit in Paris in December 2015 to ‘pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels’.
Coal development still continues, however.

There are currently plans to build no fewer than 2,300 new coal plants globally, equivalent to a capacity of 1,400GW. If all these plants were to be built, CO2 emissions from existing and new plants in 2030 would amount to 11 gigatonnes: this is six times higher than what a 1.5°C carbon budget would allow. According to the report equipping all new plants with even the most efficient technologies would only lead to marginal emission reductions of approximately 1 gigatonne, keeping the 1.5°C target far out of reach.

wwf coal 2

While governments prepare to come together and officially sign the global climate Paris Agreement, it is time for them to start taking their climate change commitments seriously. They should recognise what research demonstrates: that the global carbon budget and the time remaining to reduce greenhouse gas emissions simply do not allow for the replacement of retired coal plants with new more efficient coal plants, let alone capacity extensions.

Rich countries should lead the effort to phase out coal. The G7 summit to be held on 26–28 May in Japan – whose government is one of the biggest coal supports worldwide – offers an opportunity to do so. The G7 countries – Canada, France, Germany, Great Britain, Italy, Japan, and the United States – should commit to putting their money where their mouth is, and immediately end all public financial support for any type of coal plant technology, whatever its efficiency. They should also publicly commit to phase out coal plants in their country by 2035 at the latest, as a precursor to the global phase-out needed by 2050.

The Ecofys research rebuts once and for all that high-efficient coal can be a solution to climate change. As a result, it makes clear that in a post-Paris world, there is simply no role for coal anymore. More renewable energy, more energy efficiency and a giving a more central role to power consumers are the solutions we need.

Jan Vandermosten is the Sustainable Finance Policy Officer for WWF’s European Policy Office. He is based in Brussels. jvandermosten@wwf.eu

Coal is not cool and here’s ten reasons why

 

12793650333_e2cf4a9f28_k (1)

  1. Coal is climate change and climate change is catastrophe. Japan would be one of the world’s most affected countries by sea-level rise, with 7.5 million people – 30 percent of Tokyo’s population – affected by the sea level rise under the 4 C scenario. A rise by 2 C would leave 4.2 million people’s homes underwater.
  2. There are viable alternatives to coal. Renewable energy drives energy sector transformation and brings down consumer bills. In fact, in 2015, Japan was the third largest solar installation market globally. Smart governments embrace the Rising Sun, and dump dirty coal.
  3. Solar is now cheaper than coal according to the Indian Energy Minister. And he should know, given that India is the 4th largest energy user on the planet.
  4. Clean coal has a dirty secret. Even new High Efficiency Low Emissions (HELE) coal is incompatible with limiting temperature rises to 2C (a rise no longer considered ‘safe’).
  5. Air pollution from coal currently causes an estimated 800,000 premature deaths annually, and planned coal plants would increase such deaths by 130,000 people per year.

  6. The future outlook for the coal market is bleak, according to financial experts such as Goldman Sachs who said the decline of coal is irreversible.
  7. Coal is a bad financial bet. Sumitomo bought half of an Australian coal mine in for $430 million in 2011, then sold it for $1 in 2015. Whoops.

  1. Coal is the most polluting fossil fuel. Even the most advanced coal plant produces around 30 times more CO2 than wind and hydro, twenty times more than solar and geothermal, and 50% more than natural gas. Estimates of the costs of ignoring climate change exceed the costs of addressing climate change by trillions of dollars by 2100, globally.

  1. Coal Pollutes Seafood and Freshwater Fish: 49 U.S. states have issued fish consumption advisories due to high mercury concentrations in freshwater bodies throughout the country. Coal-fired power plants are a major source of human-generated mercury pollution. Mercury in mothers’ blood and breast milk can interfere with the development of babies’ brains and neurological systems and can lead to learning disabilities, attention deficit disorder, problems with coordination, lowered IQ and even mental retardation. Coal-fired power plant emissions also contain many other toxic elements and compounds, including sulfur dioxide (SO2), nitrous oxides (NOx), particulate matter, hydrogen chloride (HCl), hydrogen fluoride (HF), arsenic, and heavy metals like chromium and cadmium.

  1. Japan imports all of its coal from abroad, spending billions every year and posing a major risk to energy security. Renewable energy mean investment in jobs and industry at home.

 

The Clean Coal Myth

4897768842_844606f35e_zClean coal is not Cool!

Japan is the worst offender for financing coal plants abroad – it has spent over US$20 billion on this since 2007 doing just this and it is currently considering spending billions more.

Japan, though, says that coal is cheap and people need electricity, and they are going to get it somehow. So, goes the premise, if Japan won’t finance coal plants, someone else will.

But that’s a poor excuse. For one, Japan’s technology is no longer more efficient than what is being built elsewhere in the world, according to Ted Nace, the founder of CoalSwarm. (China has long been portrayed as ready to swoop in with cheaper, less-efficient power plants, if Japan backs off the international scene).

“What’s being built in China is as efficient as anything else in the world,” Nace told ThinkProgress:

“[The Japanese] sort of bought into this idea that their coal plants are so efficient,” Nace said. “But you can’t build efficient coal plants and solve the climate problem.”

The reality is that ‘clean’ coal is never clean.

Recent research by consultancy Ecofys shows that in order to achieve the emissions reductions needed to keep temperature rise under 2 degrees – an international commitment confirmed in Paris in December – power production from coal needs to reduce drastically as from today. Even if all planned coal plants were fitted with the most ‘efficient’ technology the 2 degree goal would still not be within reach.

An even more rapid decline will be needed in order to achieve the commitment taken at the UN climate summit in Paris in December 2015 to ‘pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels’.

The G7 summit offers an opportunity to do so. So far, the US, the UK and France have already pledged to restrict coal finance. All G7 countries should commit to putting their money where their mouth is, and immediately end all public financial support for any type of coal plant technology, whatever its efficiency.

The UK is also showing leadership be pledging to phase out coal by 2025. In the US, New York State will phase out by 2020 and Alberta province in Canada will end coal use by 2030. All G7 countries should publicly commit to phase out coal plants in their country by 2030 at the latest, as a precursor to the global phase-out.

Image credit: Babbltrish on Flickr

Sea level rise in Japan

8055416453_2abb879212_oRising carbon emissions through 2100 could lock in 14 to 33 feet of long-term global sea level rise.

The impact would be huge for each of the countries in the G7, but japan would be particularly badly affected.

Extreme carbon cuts could decrease these threats by more than half, reducing the damage.

However, the emissions reductions required for this degree of benefit are far deeper than would be achieved from current Japanese and worldwide national pledges.

Breaking promises

Right now, there are five coal plants under construction and another 41 under development in Japan.

And it is unclear how those plans will fit with the world’s recent pledge in Paris to keep global warming under 2°C. In Paris, Japan was a poor performer – electing to keep its weak emission reduction target of 26% from 2013 by 2030, which is inconsistent with 2 degrees and with Japan’s long term goal of an 80% reduction in emissions by 2050.

Moreover, building new coal also means breaking the pledge held in Bavaria in 2015 where leaders committed themselves to the need to “decarbonise the global economy in the course of this century”, which requires immediate action to limit temperature rise as far below 2 degrees as possible.

Image credit: Danny Choo on Flickr

Japan is Isolated in the G7 on coal

CoalJapan_Slide3_NoText

Japan is isolated among its G7 peers as the sole country still investing in new coal plants, let alone retire existing plants.

It is also a negative force abroad through its financial support for dirty coal power plant construction.

Out of the seven countries in the G7, Japan is ranked at #7

Japan has been found to be the worst performer among the G7 across every category. This calls into question Japan’s place among the G7, given its unwillingness to use its position to help set the global norms on fossil fuel use and financing required to drive broader structural shifts in the international energy system over the coming decades. Despite its history as a technology innovator and an advanced economy, Japan is continuing to pursue a dirty high-carbon pathway in the face of global trends.

Risk of new coal power plants

Japan is the only G7 country persisting in seeking to build new coal power plants, leaving itself isolated among its G7 peers. Japan currently still has 22.5GW of new coal capacity under development but not yet under construction – it is not too late for it to avoid locking itself into expensive stranded assets. Even in Japan, market dynamics are ahead of policy makers; Japan’s monopoly utilities are holding back the deployment of renewables and continuing to prioritise coal. As of May 2015 more than 88GW of renewable generation (over 90% of which is solar) had been consented but less than 23% had been connected to the grid.

Retirement of existing coal power plants

Japan is again isolated in not recognising that a coal phase out is required, despite its commitments at the G7 summit in June 2015. A tiny amount of existing coal capacity may be closed by 2020 as new plants are commissioned. Reforms to electricity markets, increased interconnection between islands, and accelerated renewables deployment will all help enable future coal retirements as well as avoiding the need for new coal plants. But these options all challenge incumbent interests in government and the monopoly utilities which remain committed to coal.

International impact

Once again, Japan is the worst performer among the G7. Perversely, Japan counts support for coal power towards its international climate finance contributions, and has adopted a hardline position against restrictions on coal finance for multilateral development banks or export credit support. Japanese public and private banks, equipment suppliers and construction companies are all promoters of new coal power plants in other countries. However, the US-China agreement to limit finance for high-carbon projects and the OECD-wide pledge to restrict coal funding further undermines Japanese arguments defending its promotion of coal as a ‘clean’ energy source.

Actions required

Japan needs to start with the most fundamental action first: it must act to turn off the tap of new coal power plants. It must ensure that renewables are prioritised for investment and that the impending market liberalisation reforms act as a catalyst for the accelerated decarbonisation of the electricity sector.

Japan must also change its position and cooperate with G7 partners to strengthen OECD conditions on export credits ahead of the Paris talks. This should end financing of unabated coal plants and shift support to accelerate the deployment of renewables. This should be accompanied by restrictions on coal financing via bilateral development finance and the multilateral development banks.

You can click here to read a detailed review of the coal situation in Japan [PDF].

Image credit: MacQ on Flickr

Cool vs Coal Japan

coolWhat’s Cool?

The G7 is moving away from coal. The USA is rapidly retiring old coal plants. Over 200 have been shut in the last five years. And more are shutting every week.

So is the world. In China, coal use fell 3.7% in 2015 compared to 2014 levels, according to a report from China’s National Bureau of Statistics (NBS). The drop follows a 2.9% decrease in 2014. China is cleaning up.

In fact, coal lost the race to renewables back in 2013, when the world added 143 gigawatts of renewable electricity capacity, compared with 141 gigawatts in new plants that burn fossil fuels. According to Bloomberg, ‘the question is no longer if the world will transition to cleaner energy, but how long it will take.’

12793650333_d2e97f6f30_z (1)What’s Coal?

Japan is the odd one out as only country in the G7 building new coal-fired power stations, despite promising the rest of the world to do the opposite. And despite having to import all it’s coal from abroad, mainly from Australia and Indonesia. Not cool.

Coal is climate change and climate change is catastrophe. Japan would be one of the world’s most affected countries by sea-level rise, with 7.5 million people — 30 percent of Tokyo’s population- affected by the sea level rise under the 4 C scenario. A rise by 2 C would leave 4.2 million people’s homes underwater.

In Osaka, 6.2 million people — a staggering 38 percent of its population — would be affected under the 4 C rise.

As for clean coal? Even new High Efficiency Low Emissions (HELE) coal is incompatible with limiting temperature rises to 2C (a rise no longer considered ‘safe’).

Coal-fired power plants are not clean, pumping out a large amount of particulate matter (PM2.5) that is now recognized as a severe health risk. Air pollution from coal currently causes an estimated 800,000 premature deaths annually, and planned coal plants would increase such deaths by 130,000 people per year.

The future outlook for the coal market is bleak, according to financial experts such as Goldman Sachs who said the decline of coal is irreversible.

Sumitomo bought half of an Australian coal mine in for $430 million in 2011, then sold it for $1 in 2015. Whoops.

Not surprising, since, according to the Indian Energy Minister, solar is now cheaper than coal.

But Japan doesn’t seem to have noticed. In fact Japan is also the leading financier of coal overseas. From 2007 to today, Japan provided over US$20 billion in coal financing abroad and it is considering spending billions more. While the US, the UK, France and other countries have placed limitations on its financing of coal projects abroad, Japan remains the world’s number one supporter of overseas coal.

But Japan has a choice. Stay cool, invest in renewable energy, improve energy security and keep its head above water. Or become a dirty coal country relying on expensive, out-dated technology.

Now’s the time to decide.

Do something. Help Japan stay cool (LINK to do something cool page).

Image credit: Rich on Flickr.

Will Japan’s President Shinzo Abe be a Green Hero?

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam ut semper ligula. Integer nec risus iaculis, sagittis ex quis, laoreet libero. Pellentesque quis purus semper, faucibus enim sit amet, rutrum augue. Aliquam vitae sapien sit amet massa commodo feugiat scelerisque quis purus. Aenean tincidunt nibh ac enim euismod malesuada non ac massa. Vestibulum venenatis at urna eu porttitor. Aliquam dictum mi nec justo dapibus sodales ut quis neque.

Donec convallis consequat dui vitae euismod. Praesent elit purus, viverra feugiat dui a, suscipit ultrices tellus. Donec mi nisl, gravida a mauris quis, vehicula vulputate metus. Cras sed euismod diam. Nunc nec cursus erat, quis fermentum purus. Nulla id dui sed sem dignissim bibendum eget non sapien. Nulla cursus eget lorem a luctus. Vivamus libero sem, tempus ac pellentesque vel, ultrices ac leo. Nulla consequat facilisis tincidunt. Praesent tincidunt est ac massa molestie, ac placerat magna varius. Praesent vestibulum libero sit amet euismod vestibulum. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Integer malesuada blandit sollicitudin. Nulla aliquam, ligula ornare viverra eleifend, arcu lectus gravida dui, in lacinia magna sapien et metus.