San Francisco, USA – Japan announced on the eve of the Leaders Summit on Climate that it intends to step up its financial support for LNG projects abroad, with an emphasis on Asian markets.
Japan’s doubling down on LNG funding is at odds with Japanese Prime Minister Suga’s pre-summit announcement that Japan is strengthening its emissions reduction commitments by aiming to reduce greenhouse gas emissions by 46% by 2030 compared with 2013. In addition to carbon dioxide produced by combustion of gas, the long supply chain from extraction sites to liquefaction, transport, and regasification of LNG produces numerous points of emission of methane. New LNG investments will lock in emissions long past mid-century.
Both the Japanese Ministry of Economy, Trade and Industry (METI) and the state-owned Japan Oil, Gas and Metals National Corporation (Jogmec) have recommitted to Japan’s long-standing support for overseas LNG, with METI mandating a further US$10 billion in financing to be delivered by Jogmec and other agencies.
A July 2020 report from Global Energy Monitor assessing Japanese financial support for LNG infrastructure overseas found that Japan’s concerted policy turn towards LNG in 2014 resulted in over US$23 billion in financing from Jogmec, the Japanese Bank for International Cooperation (JBIC), and a range of Japanese commercial banks and investment houses. The report questioned the energy security, climate and economic rationales underpinning this financing across ten countries, and cited a METI official who commented in April 2020: “It is highly unbalanced to depend for close to half of our energy on LNG alone.”
Japan’s increased commitment to LNG comes as the International Energy Agency (IEA) warns that 2021 may produce the second largest rise in global carbon dioxide emissions ever. According to the IEA’s Executive Director Fatih Birol, demand for fossil fuels in 2021 is growing rapidly, with gas set to rise the most above its 2019 level. Birol has called for “major policy changes” to alter these trends.
At the same time, it has been reported this week that Total’s massive US$20 billion Mozambique LNG project, for which JBIC is one of the biggest financiers with a US$3 billion loan , is unlikely to recommence construction work for at least a year due to severe security issues close to the project site.
Greig Aitken, finance researcher at Global Energy Monitor, said:
“Japan’s love story with LNG would appear to have no end, based on this week’s announcements from METI and Jogmec, but it is completely out of sync with the need to move toward decarbonising its economy. Moreover, this latest funding drive threatens to lock in other Asian economies to a fossil gas future just as the tumbling costs of renewables are giving governments in the region all the more reason to opt for fossil free futures. Doubling down on greenhouse gas-intensive LNG is no way to enter into and engage in high-level discussions aimed at solving the climate crisis.”
Notes for editors:
1. See: Bloomberg journalist’s Stephen Stapczynsji’s Tweet (April 19, 2021) and ‘Japan backs LNG project financing ahead of Biden climate change summit’, S&P Global Platts, April 21, 2021
2. ‘Japan PM Suga: Japan aims to cut greenhouse gas emissions by 46% by 2030 from 2013 levels‘, Reuters, April 22, 2021
3. ‘Gambling on Gas: Risks Grow for Japan’s $20 Billion LNG Financing Spree’, Global Energy Monitor report, June 2020
4. Fatih Birol Twitter account, April 20, 2021
6. ‘Disaster for Business as Mozambique Gas Boom Turns to Bust’, Bloomberg, April 21, 2021