Japan uses “environmental” fund to finance Vietnamese coal-fired power station
Japan Bank for International Cooperation Approves Loan to Controversial Vung Ang 2 Coal Project for “Environmental Preservation” Facility
A Japanese state bank is using a green fund to finance a Vietnamese coal-fired power plant, prompting accusations of “blatant green laundering”.
The Japanese Bank for International Cooperation (JBIC) announced last month it would invest $ 636 million in the controversial Vung Ang 2 project, through its Growth Investment Facility.
In response to questions from opposition MP Mizuho Fukushima, seen by Climate Home News, the finance ministry revealed that the loan came from part of the facility intended for “environmental preservation”.
Upon launching the facility in May 2018, Japanese Finance Minister Taro Aso told a meeting of Asian Development Bank governors that he would “provide support for a variety of infrastructure projects that contribute to the preservation of the environment “such as public transport and wind power.
However, the bank’s press releases show that the “development of quality infrastructure for the preservation of the environment and sustainable growth” (QI-ESG) fund has supported five gas-fired electricity projects, compared to two in wind power and one in the manufacture of solar panels. A total of 220 billion yen ($ 2 billion) had been allocated to 11 projects as of November 2020, the finance ministry said in Fukushima.
A policy presentation dated August 2020 by a senior JBIC official, high-efficiency gas and coal-fired power generation is eligible for “environmental” funding, despite the fact that fossil fuel combustion is the main driver of global warming climate.
Vung Ang 2 is a 1,200 MW planned power plant in central Vietnam. It will be built next to the existing Vung Ang factory. According to local media, in 2017, residents blocked the coal trucks leading to this plant to protest against the pollution and the damage they cause on the roads.
The plant will emit several times more sulfur dioxide, nitrogen oxides and fine particles than would be allowed if it were in Japan, according to analysis of the Energy and Clean Air Research Center.
Ayumi Fukakusa, an activist from Friends of the Earth Japan, said: “It is, in the first place, unacceptable that JBIC is supporting new coal projects, moreover with the fund which has been advertised as’ green and quality infrastructure. ‘”. She said there was a “double standard”, with Japan committing to achieve net zero national emissions by 2050 but by financing coal abroad.
JBIC finances its activities in part by issuing bonds, which are guaranteed by the Japanese government, making them a safe investment.
Ulf Erlandsson, a former pension fund manager who created the Anthropocene Fixed Income Institute as a climate watchdog for international bond markets, called on investors to boycott JBIC.
He told Climate Home News: “We have already advocated for JBIC to be excluded from international bond portfolios because of its coal funding. With the information that JBIC explicitly uses funds marked as “ESG” to provide such funding, we are comfortable placing JBIC in a leadership position for the “Most Blatant Green Laundering of the Decade” award. .
Zsolt Lengyel, secretary of the Institute for European Energy and Climate Policy, said the “scandalous” case showed the need for greater accountability of sovereign issuers to bond buyers.
“Financial flows must show real impacts, including their climate impacts. These should be independently verifiable and verified. This transaction is proof that we lack such systems. If we don’t build them quickly, we will cripple the energy transition and be swept away by gargantuan greenwashing, ”said Lengyel.
Analyst Simon Nicholas of the Institute for Energy Economics and Financial Analysis said Vietnam does not need more coal. “JBIC is crowding Vietnam with old energy technologies at a time when the country is focusing less on coal and seeing renewable energy facilities skyrocket,” he said. “Vietnam installed nearly 5 GW of large-scale solar power in 2019 and an astonishing 9 GW of rooftop solar power in 2020. Wind power is also growing rapidly in Vietnam. Such growth in renewables undermines the rationale for further development of coal power. “
Japanese state-owned banks have already counted coal-fired power projects in the country’s climate finance pledges. Japan International Cooperation Agency (JICA) loaned $ 1.4 billion to support a coal-fired power plant in Bangladesh, claim this funding “Helped mitigate climate change” because the plant was less polluting than other coal-fired plants.
Japanese “climate finance” has also supported coal-fired power stations in India, Indonesia and Vietnam, Associated press revealed in 2014. The Japanese Foreign Ministry at the time defended itself from using climate funds in this way. “We have nothing to hide or disguise,” the official said.
A JBIC spokesperson declined to comment.