By Yuka Obayashi
TOKYO (Reuters) – Japanese utilities are turning away from new coal-fired power projects in the country amid tighter environmental regulations and increasing demand for greener energy from their key customers.
Osaka Gas last week pulled out of plans to build a 1.2 gigawatt coal-fired project, which followed the cancellation in January of a 2 GW coal power station by Kyushu Electric Power, Tokyo Gas and Idemitsu Kosan.
In December, Chugoku Electric Power and JFE Steel scrapped plans to build a 1.07 GW station.
These moves come as renewable energy is on the rise in Japan and elsewhere, and as the government brings in stricter regulations on new coal-fired power plants.
They also come as some investors around the world have been pressuring companies to divest coal-related assets and pushing banks to stop financing such projects.
“Utilities are increasingly feeling that it may not make economic sense to build a new large coal power station when electricity demand is falling and operation costs may rise due to carbon taxes or other costs related to tighter regulations,” said Shin Furuno, head of the 350.org Japan environmental group.
A Japanese government panel this month urged the country to aim to be carbon-neutral as soon as possible after 2050.
Osaka Gas said last week that potentially stricter rules on coal power after 2030 were one of the reasons for its withdrawal from the 1.2 GW project.
Of Japan’s plans in 2012 to build 50 new coal-fired power units with total capacity of 23.23 GW, 13 units, or 7.03 GW, have been scrapped since 2017, according to data from environment group Kiko Network.
“Stronger policy by Japanese mega banks over coal finance and growing voices from major industrial companies seeking greener energy also added to pressure,” said Yukari Takamura, professor of the Institute for Future Initiatives at the University of Tokyo.
Sumitomo Mitsui Financial Group is now providing finance only to so-called highly-efficient ultra-super critical (USC) coal-fired power plants, while Mitsubishi UFJ Financial Group assesses projects in line with the rules of the Organisation for Economic Cooperation and Development (OECD).
A total of 19 Japanese companies, including Sony Corp and Fujifilm Holdings, have joined RE100, an organisation whose members commit to move to 100 percent renewable electricity.
Under the government’s energy outlook, Japan’s coal power generation is expected to fall to 281 billion kilowatt hours (kWh) in the 2030 financial year, down from 346 billion kWh in 2017.
The series of cancellations of new coal power stations may hit demand for thermal coal in the long-term, forcing Japan’s biggest supplier of the fuel, Australia, to look for alternative customers.
(Reporting by Yuka Obayashi; Editing by Joseph Radford)