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As Japan gears up to host the G7 Climate, Energy and the Environment ministerial on April 15-16 in Sapporo, Japan is pushing for increased financing and support for LNG, ammonia, and hydrogen investments. This will prolong the use of fossil fuels at a time when governments should be taking strong action to phase them out.
This is a critical moment to renounce Japan’s misguided energy strategy. Japan is using its diplomatic might to promote fossil fuel-based technologies at the G7 and within the Association of Southeast Asian Nations (ASEAN) and to provide “appropriate support” to deploy its strategy in developing countries. Letting Japan push through its agenda threatens to derail Asia’s energy transition.
“Green Transformation (GX)” is not green at all
In February 2023, the Kishida administration approved Japan’s new GX policy, which outlines how Japan intends to achieve carbon neutrality by 2050 and support the energy transition across Asia. The strategy aims to deploy JPY 150 trillion (over USD 1.1 trillion) in public and private capital over the next ten years to overhaul industrial sectors in Japan and provide partner countries with Japanese technology and finance.
However, the GX policy is a greenwashing exercise made to benefit Japanese corporate interests. Japan’s strategy relies heavily on fossil fuel-based technologies, including liquefied natural gas (LNG); co-firing of ammonia at coal power plants; fossil hydrogen; and carbon capture, utilization and storage (CCUS).
What these technologies actually entail
While advocates claim that these technologies emit zero emissions when burned or aid decarbonization, they are all based on fossil fuels. These technologies would prolong the use of fossil fuels at a time when renewable energy solutions are reliable, available, cleaner, and cheaper.
Japan is working to create more LNG demand in Asia to grow and maintain its influence in international markets. Japan was the world’s largest provider of international public finance for gas, spending USD 4.3 billion on average each year between 2020-2022, and the world’s top funder of LNG export terminals, spending nearly USD 40 billion between 2012-2022.
- LNG produces heavy emissions throughout its lifecycle since methane is vented throughout the fuel’s supply chain. Extra energy is also required to process it. LNG can be just as polluting as coal.
- Where companies drill and transport the fuel, gas infrastructure also harms local communities and the environment.
- Countries investing in gas infrastructure face the risk of stranded assets.
Co-firing ammonia and hydrogen with fossil fuels
Japan is investing heavily in technology to burn ammonia with coal and hydrogen with fossil gas in existing fossil-fueled power plants and is eager to export this approach to South and Southeast Asian nations.
- Burning coal and ammonia in equal amounts – an impossible feat with today’s technology – would still emit about as much CO2 as a gas-fired combined cycle power station.
- Ammonia released into the air becomes a base for nitrous oxide, a potent greenhouse gas.
- Most ammonia and hydrogen are produced from fossil fuels, which generate substantial emissions, including methane emissions vented throughout the gas lifecycle.
- Japan is also incentivizing the co-firing of wood biomass at coal plants. Both biomass co-firing with coal and biomass-only power plants produce greater greenhouse gas emissions than burning coal.
Carbon capture, utilization and storage (CCUS) is supposed to capture CO2 from burning oil, gas, or coal before it can enter the atmosphere and bury it deep underground or convert it into other products.
- The majority of projects in operation worldwide have failed or are underperforming. Current commercial CCUS facilities are capturing only 3.5% of what is required to meet IEA’s Net Zero Scenario.
- Without suitable geological storage sites, Japan also has contentious plans to export its CO2 emissions to Southeast Asia.
What does this all mean for Asia?
Japan is using the GX Basic Policy to play a more dominant role in driving Asia’s energy transition. Japan’s energy businesses are searching for new export markets, and emerging economies in Southeast Asia saddled with debt are prime targets.
Asian countries are rejecting Japan’s support
Despite Japan’s efforts to promote these technologies and expand the use of fossil fuels, civil society groups across Asia are rising up and rejecting Japan’s plans.
- The Japan Bank for International Cooperation is a shareholder of Atlantic Gulf and Pacific Company (AG&P), which is developing the Philippines’ first LNG import terminal. In October 2022, civil society groups and fisherfolk filed a complaint before the Environmental Management Bureau against AG&P for violating environmental laws.
- The Japan International Cooperation Agency (JICA) is advising Bangladesh on the country’s energy and power sector master plan, promoting both LNG and ammonia co-firing. More than half of Bangladesh’s LNG-to-power projects in the pipeline are in the Chattogram region. In May 2022, activists in Chattogram mobilized to pressure Japanese firms to end support for these projects.
- JICA developed Indonesia’s decarbonization roadmap for its power sector, which deems ammonia, hydrogen, and LNG (with carbon capture and storage) “desirable” as main fuels. In November 2022, civil society groups submitted a petition to the Japanese Government, calling for an end to prolonging the lifespan of fossil fuels and destroying the environment and livelihoods in Indonesia.
As the host of this year’s G7, we expect Japan to keep last year’s pledge to end direct public funding of the international unabated fossil fuel energy sector. Moreover, we strongly urge Japan to take the climate and energy crises seriously and earnestly, and to support a clean and just energy transition instead of wasting time and resources on expensive, ineffective, and unproven technologies. The world is watching, and groups around the world are planning to mobilize around the G7 and at upcoming international moments until Japan stops financing dirty energy and shifts financing to renewable energy.