$71 billion in Japanese coal assets at risk from cheaper renewables

Japanese utilities turn away from coal plans amid a green energy boom. (Reuters/File)
Updated 06 October 2019

$71 billion in Japanese coal assets at risk from cheaper renewables

  • Offshore wind and large-scale solar PV could be cheaper than the long-run marginal cost of existing coal plants by 2025 and 2027 for onshore wind, the report says

LONDON: As much as $71 billion in Japanese coal assets could be at risk as the economic viability of plants is undermined by cheaper renewable energy, research by the University of Tokyo, Carbon Tracker and the Carbon Disclosure Project showed on Sunday.

The report, called Land of the Rising Sun and Offshore Wind, used project financial models to analyze the economics of new and existing coal plants in Japan.

It found that Japan’s planned and existing coal capacity could be jeopardized by low utilization rates and cheaper renewable energy, namely onshore and offshore wind and large-scale solar photovoltaics (PV). Offshore wind, solar PV and onshore wind could be cheaper than new coal plants by 2022, 2023 and 2025 respectively.

Added to that, offshore wind and large-scale solar PV could be cheaper than the long-run marginal cost of existing coal plants by 2025 and 2027 for onshore wind, the report said.

To meet a globally agreed goal of limiting temperature rise to below 2 degrees Celsius this century, planned and operational coal capacity would need to be shut down and Japanese consumers could face $71 billion in higher power prices as the cost of stranded coal assets is passed on.

Of this amount, $29 billion could be avoided if the Japanese government reconsidered the development of planned and under construction capacity straight away, according to the report.

Coal generation

Coal-fired power generation is a major contributor to carbon dioxide and other pollutants that contribute to global warming, which is causing heat waves, rising sea levels, droughts and other extreme weather events.

The Japanese government has said renewables should be the main source of power and the country should aim to be carbon-neutral as soon as possible after 2050, to meet the Paris global climate agreement.

However, the Fukushima nuclear plant disaster in 2011 and shutdown of Japan’s reactors increased its fossil fuel import dependence to nearly 95 percent in 2016, from 80 percent in 2010, and resulted in carbon emissions from power generation rising by a quarter, according to the International Energy Agency.

According to a Reuters survey, Japan plans to build nearly 12.6 gigawatts (GW) of new coal capacity in the next decade.

Japan’s coal generation capacity totalled around 43 GW at the end of March and is expected to reach 52 GW in 2023, according the country’s grid monitor.

Globally, previous research by Carbon Tracker has calculated that 42 percent of coal plants in operation were likely unprofitable last year and at least 72 percent could be unprofitable by 2040.


Malaysia to study impact of India’s planned trade action

A truck carrying oil palm fruits passes through Felda Sahabat plantation in Lahad Datu in Malaysia's state of Sabah on Borneo island, February 20, 2013. (REUTERS)
Updated 14 October 2019

Malaysia to study impact of India’s planned trade action

  • Malaysia’s key imports from India include petroleum products, live animals and meats, metals, chemicals and chemical products

KUALA LUMPUR: Malaysia’s Prime Minister Mahathir Mohamad said his government will monitor the trade situation with India, which is reported to be considering trade curbs on the Southeast Asian nation over his criticism of actions in Kashmir, news wire Bernama reported.
Government and industry sources told Reuters last week that New Delhi is looking for ways to limit palm oil imports and other goods from Malaysia, in retaliation for Mahathir’s speech at the United Nations in September when he said India had “invaded and occupied” Jammu and Kashmir. Malaysia had said it did not receive “anything official” from India.
Mahathir said on Sunday his government will “study the impact of the action taken by India,” the government-owned Bernama said.
“They are exporting goods to Malaysia too. It’s not just one-way trade, it’s two-way trade,” Mahathir was quoted as saying in the report.
India is the world’s biggest importer of edible oils, and is the biggest buyer of Malaysian palm oil. It bought 3.9 million tons of Malaysian palm oil in the first nine months of 2019, according to data compiled by the Malaysian Palm Oil Board.
Malaysia’s key imports from India include petroleum products, live animals and meats, metals, chemicals and chemical products.