OSLO – Following the abdication of Emperor Akihito, Japan announced that its new imperial era would be called Reiwa (“Beautiful harmony”). But if the Reiwa the era is to live up to its name, the Japanese government must follow the lead of the country’s energy investors and utilities, and start to coal outlet and switch to renewable energies.

The choice between continuing to waste capital on environmentally destructive coal for decades to come and ushering in a new era of clean energy that harnesses Japan’s enormous solar and wind power potential should be a no-brainer. Carbon capture technology has been shown time and time again to be far where it needs to be to deliver ‘clean’ coal power. Even with the most efficient coal-fired power plants, we to blow internationally agreed emission targets, with devastating consequences for the planet and human well-being.

But powerful Japanese pressure groups linked to the Keidanren business group continue to fight for coal. And the Japanese government seems to be giving in to the pressure: it is currently the only G7 country that is increasing its national capacity for coal-fired electricity production, with around 45 new coal-fired power stations in the pipeline from 2017. In addition, Japan, along with China and South Korea, is among the biggest financiers of foreign coal projects.

Yet even as the Japanese government continues to plan for a coal-based future and touts the myths of clean coal, its private investors are increasingly rejecting coal. Corporate giants Mitsui & Co. and Sojitz led the way: in 2016, they started to limit their new investments in coal, citing considerations of long-term commercial sustainability and environmental concerns. More recently, Sojitz announced his intention to divest from coal projects.

As the Institute for Energy Economics and Financial Analysis has show, this abandonment of coal accelerated considerably last year. Three of Japan’s biggest insurance companies – Dai-ichi Life, Nippon Life and Meiji Yasuda Life – have announced that they will no longer write policies for coal projects. Sumitomo Mitsui Trust Bank became the first Japanese bank to stop lending for new coal-fired power plants around the world, while other major banks introduced new restrictions on this funding. And, in December, Mitsubishi Corporation sold its stake in two Australian coal mines, completely withdrawing from upstream thermal coal.

Since then, several utilities – including Chugoku Electric Power, JFE Steel, Kyushu Electric Power, Tokyo Gas, Idemitsu Kosan and, most recently, Osaka Gas – have canceled their plans to build coal-fired power plants. Of the 50 new units planned for 2012, 13 were discarded over the past two years.

According to Yukari Takamura, professor at the Institute for Future Initiatives at the University of Tokyo, this combination of tighter limits on the funding of coal from Japanese mega-banks and calls from large industrial companies for greener energy has put pressure on investors. This process creates a powerful snowball effect.

Meanwhile, the Japanese government is falling further and further behind. To catch up, he would do well to draw inspiration from Norway, which, like Japan, has a leading government pension fund with assets exceeding $ 1,000 billion.

The Norwegian Ministry of Finance recently announcement that it will divest an additional $ 4 billion of coal assets, which it began to abandon for good in 2015, and that it will invest up to 2% of its global portfolio, or more than $ 20 billion, in solar, wind and other renewable projects. This decision is based on a government-commissioned project analysis indicating that the global renewable energy infrastructure market will reach approximately $ 4.2 trillion by 2030, primarily driven by solar and wind power.

Rather than leaving Japan behind, the country’s government pension investment fund should follow a similar path. Given the size of their pension funds and the scope of their international connections, Japan and Norway could help shape energy policies around the world.

Politically, the momentum for such a change is already building, exemplified by a growing push for a Green New Deal – a package of economic reforms and public works projects that form the basis of a new economy. sustainable. In the United States, progressive lawmakers like freshman Congressman Alexandria Ocasio-Cortez are working hard to get their ambitious proposals high on the political agenda. The idea is also gaining ground in Europe, particularly in the UK and Spain.

It is a response to the growing demands of citizens – at the ballot box and in the streets – to accelerate the abandonment of fossil fuels. Not so long ago, groups engaged in direct action, such as Extinction Rebellion, would have been dismissed as climate “extremists”. But last month, activists stopped traffic during protests moving across the city of London to call attention to the financial sector’s role in climate change – a display of peaceful disobedience that was widely welcomed. public acceptance.

People have heard the warnings published by the Intergovernmental Panel on Climate Change and others. They fear climate chaos and will continue to look for new ways to hold their leaders to account. Between their demands and market forces, the pressure on governments to pursue genuine decarbonization efforts will continue to intensify.

Japan is a global investment giant and a prominent member of the international community. As we approach the G20 next month Mountain peak in Osaka, it should break free from entrenched pressure groups and establish itself as a world leader in the transition from coal to renewable energy.

Jan Erik Saugestad is CEO of Storebrand Asset Management.

Copyright: Project Syndicate, 2019.
www.project-syndicate.org

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