Joint NGO statement: Itochu Corp. must revise coal power policies
to be consistent with the Paris Climate Agreement

February 20, 2019
FoE Japan
Japan Center for Sustainable Environment and Society (JACSES)
350.org Japan
Kiko Network

On February 14, 2019 Itochu Corporation, one of Japan’s largest trading houses, released an announcement of its “Coal-related Business Policy (Policy on the coal thermal power generation business and general coal mine business)” [Note 1].

It states that this current release follows the May 2018 announcement [Note 2] of Itochu’s priority topics (“materiality”) for sustainability and says, “We recognize that, among other things, our coal-related business is one of the issues which we have to promptly address as its impact on our business and our surrounding stakeholders will be significant, and we therefore hereby commit ourselves, as our policy, to neither develop any new coal-fired power generation business nor to acquire any new thermal coal mining interest.”

Itochu’s statement that it will not develop new coal power plants and thermal coal mining interests goes with the flow of the times toward decarbonization, and we welcome the step Itochu has taken in this direction. However, we must point out that Itochu’s announcement did not provide further details about its coal power business, and in fact other media reports are saying that ongoing Itochu projects will continue to be proceeding.

Itochu is investing in a large coal power plant (1,000 MW x 2 units) currently under construction in Indonesia (Batang Regency, Central Java Province). Communities have been protesting strongly since before the start of construction, fearing damage to their health and negative impacts on their livelihoods, including farming and fishing. The project has been criticized domestically and internationally for serious human rights violations committed against residents who raised their voices of concern about the social and environmental impacts of the project. Itochu has invested in the local company Bhimasena Power Indonesia (BPI) and also signed a post-construction 25-year power purchase agreement (PPA) in this project. By doing so, not only is Itochu further implicating itself in serious livelihood impacts on local communities, it is also locking Indonesia into greenhouse gas emissions long into the future.

According to a July 2017 announcement [Note 3], Itochu has signed an engineering, procurement and construction contract with PLN, Indonesia’s stated-owned power company, to build a coal power plant (100 MW x 2 units) in South Kalimantan Province, and construction is proceeding, with the aim of starting operations in 2020. Continuing with the construction of plants like this is a major negative influence on the climate change mitigation efforts Indonesia should be undertaking.

In Japan as well, Itochu is involved in coal power plant construction and operation. Itochu Enex (a so-called “partial power supplier”) is engaged in electricity generation as owner of the Sendai Power Station (Sendai City) and Hofu Energy Service (Hofu City). In Sendai, the local community has launched a protest campaign and is preparing a legal challenge. For these power plants as well, we call upon Itochu to prepare and implement plans to stop operating these plants, to strengthen their coal exit policies, and to get serious about taking action.

New construction of coal plants is not consistent with the Paris Climate Agreement. This has been pointed out by many bodies including United Nations agencies and the International Energy Agency (IEA). The IPCC’s “Global Warming of 1.5ºC” special report points out that more rapid action is needed to decarbonize. In that context, if Itochu fails to consider the projects that are still under construction plants as “new” plants and proceeds with their development, its newly announced coal policy fails to address the reality of the problem and falls completely short as an attempt to address climate change. As part of its new policy, both in Japan and internationally, Itochu should make the decision to cancel those projects. That includes projects under construction such as the Batang coal power plant, which has not yet started operating.

We call upon Itochu to be consistent with the Paris Agreement, withdraw from all coal mining businesses and to promptly cancel the development and construction of coal-fired power plants that are currently planned or under construction.

Notes

1. “Coal-related Business Policy”
* here we translated Japanese title as “Policy on the coal thermal power generation business and general coal mine business” (February 14, 2019). To make the sentence more precise, we translated Japanese to English and didn’t directly reflect original English release. (Japanese) (English)

2. “Material Sustainability Issues (Materiality)” (May 2, 2018)  (Japanese)  (English)

3. “ITOCHU Announces EPC Agreement for Coal Fired Power Plant in Indonesia” (July 31, 2017)
(Japanese)  (English)

Contacts

Hozue Hatae: Development and Environment Team Leader, Friends of the Earth Japan (hatae@foejapan.org)
Yuki Tanabe: Program Director, Japan Center for Sustainable Environment and Society (tanabe@jacses.org)
Kimiko Hirata: International Director, Kiko Network (khirata@kikonet.org)