JAKARTA (RambuEnergy.com) – A Japanese major diversified group ITOCHU announces its new coal policy, in which the company will not develop a new coal-fired power plant nor acquire other thermal coal plants, as a move to gradually move away from fossil fuel energy.
The announcement by a Japanese company came as a surprise given that the Japanese financial companies have been actively developing or finance the development of coal-fired power plants in Asia, including Indonesia.
The move also follows the move by some western countries which have announced a long-term plan to exit from coal business, which is considered to have played a part in damaging the environment and climate.
The company said it recognizes that, among other things, its coal-related business has become an issue which the company has to promptly address given its significant impact on its business and its stakeholders.
“We therefore hereby commit ourselves, as our policy, to neither develop any new coal-fired power generation business nor to acquire any newthermal coal mining interest,” ITOCHU said in a statement.
The announcement follows the company’s policy issued in May 2018, entitled, “Address climate change (contribute to the realization of low-carbon society)” as one of the material sustainability issues (Materiality) that incorporated an ESG perspective.
Based on the policy, ITOCHU declared its commitment to strive to adapt to the impact of climate change on business and at the same time working to promote business activities aimed at contributing to the realization of a low-carbon society and reduce greenhouse gas emissions.
Based on the said Materiality, ITOCHU has already established and announced our sustainability action plans.
These include the company’s decision to sell its interest in the Rolleston thermal coal mine held through its wholly-owned subsidiary in Australia, ITOCHU Minerals & Energy Australia Pty Ltd.
This is the second such sale by ITOCHU of one of its thermal coal mine interests in recent years following the sale of its interest in the NCA joint venture in September 2016.
“Regarding the existing thermal coal mining business, we will continue to review it and contribute to the development of a sustainable society while responding to the social demands of stable supply of energy to domestic and overseas customers,” the company noted.
Institute for Energy Economics and Financial Analysis (IEEFA) sees this as a major policy pivot for ITOCHU, a company with an equity market capitalisation of US$29 billion, clearly acknowledging the need for urgent action on climate change.
Tim Buckley, Director of Energy Finance Studies with the Institute for Energy Economics and Financial Analysis (IEEFA) says the company is redirecting its capital allocations to thermal coal mining and coal-fired power plants and proposing to instead prioritise investment in low-carbon industries of the future.
“Over the last two decades Itochu has been one of the top 10 investors in the Australian coal industry,” Buckley said.
“This change in policy direction builds on a number of policy developments by corporate and financial institutions announced in Japan since May 2018 including by Dai-ichi Life, Sumitomo Mitsui Trust Bank, Marubeni Corp, Mitsui & Co as well as Mitsubishi Corp.
“Collectively, IEEFA views these announcements as increasingly significant given Japanese financial institutions have been at the top of the list in terms of global financial institutions funding new coal-fired power plant developments globally.”
Japan’s export credit agencies have been the leading providers of state-subsidized capital underwriting coal-fired power plants in most of the major emerging markets like Pakistan, Bangladesh, Vietnam and Indonesia, as well as across Africa.
Japan’s globally significant trading houses have leveraged Japanese public and private financial capital to underwrite new projects, taking equity stakes and using this provision of debt and equity capital to win engineering, procurement and construction (EPC) contracts.
“This latest move by ITOCHU looks like an important endorsement of Japan moving away from coal financing,” Buckley said.
Written by Roffie Kurniawan (Email: email@example.com)