Report Release: FoE US and OCI's New report shows Japan, Korea, and US among worst fossil fuel financiers 

Japan blocks clean energy transition with outsized fossil fuel support 

• From 2020 – 2022 support for fossil fuels from G20 countries international finance institutions and MDBs averaged at least $47 billion a year, almost 1.4 times their support for clean energy in the same period. 
• Japan ($6.9 Billion) was the third largest fossil fuel financier. Together with Canada and Korea, the three countries account for 64% of all fossil finance among G20 countries between 2020 and 2022.
• Japan and Korea are the two major laggards. While Japan is part of a G7 Commitment to end their international public finance for fossil fuels, their current policy includes three circumstances where they can continue financing fossil fuel projects, which have served as loopholes for Japan to continue its fossil fuel financing. Further, Japan appears to be pursuing new plans to increase fossil support through CCS. 
• Just 8% of all G20 and MDB international finance for energy went to low income countries, and, of that, 71% was for fossil fuels, and delivered virtually no energy access, despite this argument being used frequently to justify continued fossil fuel finance. 
• Japan is the leading supporter of upstream fossil fuel projects, providing $2.5 billion annually, which accounts for nearly half (49%) of all upstream fossil fuel finance between 2020 and 2022."

9 April 2024 – Despite seeing the single biggest year increase in G20 and Multilateral Development Bank (MDB) international finance for clean energy in 2022, a report published today reveals that a handful of bad actors, including Japan, are blocking a just transition to renewable energy with continued outsized financial support for fossil fuels.

This new report by Oil Change International and Friends of the Earth United States, highlights the alarming disparity in international energy finance, with a staggering $142 billion total of known G20 and MDB international public finance for energy between 2020 and 2022 directed towards fossil fuels, while $104 billion supported clean energy projects. Japan provided an annual average of $6.9 billion for fossil fuels compared to $2.3 billion for clean energy.

To limit warming to 1.5°C in line with international climate agreements, 60% of already-developed fossil fuel reserves must stay in the ground. In light of these limits, the IEA has sent a clear message that there should not be any new oil and gas field or LNG investments — public or private — beyond what was already committed as of 2021.

The findings reveal that the wealthiest G20 nations are the primary culprits behind continued investments in fossil fuels, with Japan emerging as one of the worst offenders. Support for fossil fuels decreased from an average of $68 billion in 2017-2019 to $47 billion in 2020-2022. This progress, however, could be threatened if Japan continues to break its G7 commitment to end its international finance for fossil fuels. Loopholes in Japan’s policies continue to enable fossil fuel financing. The Japanese government approved roughly one billion dollars in financing for a gas field in Australia and the San Luis Potosi and Salamanca gas plants in Mexico last month.

The report also highlights where there has been momentum to shift finance out of fossil fuels. It shows that coal exclusion policies have worked to nearly eliminate international public finance for coal. Japan provided an annual average of $665 million for coal. Seven G20 countries are signatories to the Clean Energy Transition Partnership (CETP) to end their international public finance for fossil fuels, but Japan has failed to sign on; the G7 has a near identical commitment. 

Ayumi Fukakusa, Climate change and Energy campaigner / Deputy Executive Director of Friends of the Earth Japan, said: 

“Despite the G7 commitment to end international public financing for fossil fuel project, Japan keeps financing new fossil infrastructure and several projects are in their pipeline. For example, Nippon Export and Investment Insurance (NEXI) is currently considering to support Cameron LNG terminal expansion where local fisherfolks are suffering from loss of fish catches and people are devastated by the hurricanes intensified by climate change. The project will put burdens on local people and further worsen the climate crisis. Japan must stop financing fossil infrastructure and also stop promoting false solutions like co-firing of ammonia or CCS.”

Kate DeAngelis, Senior International Finance Program Manager at Friends of the Earth United States, said:

“Japan and the United States have proven themselves to be two of the worst laggards in the world. These two countries continue to pour billions into fossil fuel infrastructure globally despite their climate commitments and hinder progress at every turn, including at the OECD. Unfortunately, Japan and the U.S. have continued this destructive fossil fuel finance in 2023 and 2024 with more likely to come. As Prime Minister Kishida is set to visit President Biden in the U.S., both leaders should discuss how they can live up to their pledges and end their support for fossil fuels internationally.”

Makiko Arima, Senior Finance Campaigner at Oil Change International said: 

“Japan is derailing the transition to renewable energy across Asia and globally. Despite its G7 commitment to end fossil fuel financing, its public financial institutions like the Japan Bank for International Cooperation (JBIC) continue to support new fossil fuel projects, including the Scarborough gas field in Australia and gas power plants in Mexico. JBIC is currently investigating a claim that it failed to follow its social and environmental safeguards in developing the Philippines’ first LNG import terminal in Batangas. Japan needs to put people and planet over profit, and shift its finances from fossil fuels to renewables.”

Claire O’Manique, Public Finance Analyst at Oil Change International, said: 

“While rich countries continue to drag their feet and claim they can’t afford to fund a globally just energy transition, countries like Canada, Korea, Japan, and the US appear to have no shortage of public funds for climate-wrecking fossil fuels. We must continue to hold wealthy countries accountable for their role in funding the climate crisis, and demand they move first and fastest on a fossil fuel phaseout, to stop funding fossil fuels, and that they pay their fair share of a globally just transition, loss and damage and adaptation finance.” 

Notes:

• The Clean Energy Transition Partnership (CETP) was launched at the 2021 UN COP26 climate conference in Glasgow. The 41 signatories (full list here) aim to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022” and instead “prioritise our support fully towards the clean energy transition.” This implementation tracker outlines country-level progress on implementation of the CETP, which is regularly updated.
• The IPCC’s AR6 report highlights public finance for fossil fuels as ‘severely misaligned’ with reaching the Paris goals, but that if shifted, it could play a critical role in closing the mitigation finance gap, enabling emission reductions and a just transition. More background on the role international public finance plays in shaping energy systems is available in this Oil Change International briefing.
• A legal opinion by Professor Jorge E Viñuales from the University of Cambridge and Barrister Kate Cook of Matrix Chambers argues that governments and public finance institutions that continue to finance fossil fuel infrastructure are potentially at risk of climate litigation.

Contacts:
Ayumi Fukakusa, fukakusa@foejapan.org / +818069170794
Makiko Arima, makiko@priceofoil.org / +818035342812
Nicole Rodel, nicole@priceofoil.org / +27842570627 (GMT+2)
Shaye Skiff, kskiff@foe.org, +12703004980