Japan Uses of Climate Funds to Build New Coal Power Stations

Japan has spent about $1 billion of funding earmarked to tackle global warming on three new coal plants in Indonesia. The projects are entirely legal as there are no guidelines or rules on what constitutes climate finance.

Japan has argued that, as the new plants are more efficient than old coal plants, they contribute towards efforts to reduce CO₂ emissions. But UN environmental chiefs are unhappy as they want to see investment in renewables given priority.

Japan is a major contributor of climate funds, contributing half of the $30 billion pledged by rich countries to be spent over the next three years. An analysis of the top 300 projects financed through the funds shows that Japan is the only country to finance coal plants, including a $729 million loan for a “thermal power plant” in East Java, which was used to construct an 815 megawatt coal plant.

Japan’s Bank for International Co-operation (JCIB) also made a loan of $214 million to finance the Cirebon power station in West Java, providing energy to half a million homes. A dozen smaller coal power stations in India, Indonesia and Vietnam were described to the UN as “coal plants” by Japan whereas the larger projects were described as “thermal power plants”, but a spokesman for the Japanese Foreign Ministry said that there was no reason for that. “We don’t have anything to hide or disguise”, he said.

The newly launched Climate Green Fund, which will be a key vehicle for climate finance in years to come, has no guidelines on how the money should be spent. Board member Jan Cedergren said that no decision had yet been made, although he indicated it was unlikely that the funds would be available for fossil fuel plants.

“Climate finance is such a mess. It needs to get straightened out,” said Karen Orenstein of Friends of the Earth. “It would be such a shame if those resources went to fossil fuel-based technologies. It would be counterproductive.”

Christina Figueres, the climate chief agreed, telling AP “Unabated coal has no room in the future energy system. Over time, what we should be seeing is a very, very clear trend of investment into clean renewable energy.”

Japan, however, is unrepentant. “There are countries … that cannot afford to have other methods than coal,” Japanese Foreign Ministry spokeswoman Takako Ito said. “For these countries, we’d like to provide the best method of reducing carbon dioxide.”