Putting the brakes on climate change
TOKYO: It’s been less than a month since world leaders pledged to tackle climate change at the COP26 summit in Glasgow, but Japan is already showing signs of curbing fossil fuel divestment.
Government officials have quietly urged trading houses, refiners and utilities to slow down their shift away from fossil fuels, and even encouraged new investment in oil and gas projects, according to people in government and the industry. Japanese industry, who requested anonymity as the interviews are private.
Officials worry about the long-term supply of traditional fuels as the world ramps up to renewables, the people said. The import-dependent nation wants to head off a possible fuel shortage this winter, as well as in future cold spells, after a shortfall last year sparked fears of nationwide blackouts.
Japan joined nearly 200 countries last month in pledging to step up the fight against climate change, including phasing out coal power and tackling emissions.
However, the actions taken by officials show the struggle to deliver on those promises, especially for countries like Japan, which depend on imports for almost 90% of its energy needs, with prices soaring in part due to the abandonment global investment in fossil fuels.
The nation has been slow to make concrete commitments to phase out coal in the short term and has often been criticized for funding overseas power plants that use the dirtiest fossil fuels.
The government has also avoided joining the efforts of developed countries to reduce natural gas consumption.
Japan’s Ministry of Economy, Trade and Industry declined to comment directly on whether it encouraged industries to boost investment in upstream energy supply, and instead pointed to a cabinet-approved strategic energy plan. of Prime Minister Fumio Kishida on October 22.
This plan states that “no compromise is acceptable to ensure energy security, and it is the obligation of a nation to continue to secure the necessary resources”.
The latter strategy calls for the share of oil and natural gas produced domestically or under the control of Japanese companies overseas to rise from 34.7% in fiscal year 2019 to more than 60% in 2040. .
Japanese officials plan to convey to other nations the importance attached to continued investment in upstream supply, the sources added.
While Japan is likely to avoid blackouts or gasoline rationing this winter when energy demand peaks in the region, the global energy crisis is leaving many in government thinking about how to prepare for the… ‘to come up.
Japan is still expected to be heavily dependent on fossil fuels over the next decade, as the space available to significantly expand solar power is limited and the country’s wind sector is slowly growing. He is also struggling to restart nuclear reactors following the Fukushima disaster.
To reach net zero emissions by 2050, the world must stop developing new gas, oil and coal deposits, the International Energy Agency said in May.
Japanese officials are echoing concerns expressed by Australia last month, which said the squeezing of gas supplies to Europe is proof that nations must continue to increase production. Japanese trading houses including Sumitomo Corp and Marubeni Corp are aggressively divesting from fossil fuels amid uncertain future for energy sources and pressure from shareholders.
These companies, officially known as “Sogo Shosha”, have traditionally been among the biggest investors in oil and gas assets to bring fuel to resource-poor Japan.
Oil prices hit their highest level since 2014 in October, which many Japanese government officials say was exacerbated by a lack of investment in new supplies, the sources said.
Meanwhile, liquefied natural gas prices hit a record high due to a global shortage, helping to push Japan’s wholesale electricity tariff to the highest level for this time of year. —Bloomberg