Trading Houses

Japan is still constructing new coal-fired power plants at home and involved in coal and other fossil-fuel related projects in oversea countries. Not only electric power utilities such as TEPCO, Chubu Electric Power and J-POWER, but also heavy electrical machinery manufacturers such as Hitachi, Toshiba and Mitsubishi Heavy Industries, as well as major trading houses such as Marubeni, Mitsubishi Corporation, Sumitomo Corporation, and ITOCHU Corporation are involved in various fossil-fuel projects. Developing new coal-fired power plants clearly goes against the global push to “decarbonize” and achieve the goals of the Paris Agreement. Such Japanese activities are being watched with scrutiny by the international community. Here, we focus on Japanese general trading houses and their coal-related business around the world.

Marubeni

Marubeni Corporation (Marubeni) in September 2018 has stated in its “Business Policies Pertaining to Sustainability (In Relation to Our Coal-Fired Power Generation Business and Renewable Energy Generation Business)” that there may be exceptions but as a general principle, it will no longer enter into any new coal-fired power generation business. Despite this, the company did not re-consider Vietnam’s Nghi Son 2 coal-fired power generation project which the financial closure came only four months ago and went on with its construction.

In the same Policies, Marubeni stated to halve the net power generation capacity of coal-fired power generation by 2030, from the approximately 3GW at the FY ending March 2019. In March 2021, it released “The Marubeni Long-Term Vision on Climate Change: Towards Net-Zero GHG Emissions” and announced to move up this timetable from 2030 to 2025, taking into account the progress made so far in pulling out of coal-fired power generation after its’ policy announcement in September 2018. However, a concrete plan on how to reduce this large capacity of approximately 3GW on project by project basis is not announced.

Problems with Marubeni’s coal projects

Marubeni’s coal-fired power plant projects pose various problems, including significant impacts on local environments and local communities. A few have been delayed due to strong opposition from local residents. Some project plans have been or are being fought over in courts. Now,some European and American banks are proceeding moving to divest from Marubeni. Please see the factsheet for more information on each project.

	Country name	Location	Project name	Capacity	Status	Plan to operate
1	Indonesia	West Java	Cirebon 1	660MW	Operation	2012
2	Indonesia		Cirebon 2	1000MW	Under construction	2022
3	South Africa	Limpopo province	Thabametsi*	630MW	Planning	2021
4	Botswana	Palapye area	Morupule B	300MW	Canceled	（2020）
5	Viet Nam	Thanh Hóa Province	Nghi Son 2**	600MW, 2 units	Under construction	2022
6	Japan	Akita***	Akita-port 1&2	1300MW	Canceled	2024

Supplement:

* Marubeni pulled out of the Thabametsi coal-ired power plant project in South African in November 2011. In same month, the High Court in Pretoria set aside the environmental approval for the Thabametsi project that would have been built in Limpopo province.

** Construction of Nghi Son 2 in Vietnam has already started, but its schedule for operation commencement has been delayed.

*** In August 2019, project developers announced postponement of the construction start date for the Akita Port Thermal Power Plant (tentative name) and Kanden Energy Solution (Kenes) announced that Kenes and Marubeni Clean Power Corporation would end their consideration of this project in April, 2021.

Reference

Summary sheet: “Why Marubeni: Why and how investors should divest from and/or exclude Marubeni”
Fact sheets: 1. Cirebon (Indonesia), 2. Pagbilao (Philippines), 3. Thabametsi (South Africa), 4. Morupule B (Botswana), 5. Nghi Son 2 (Vietnam), 6. Akita Port (Japan)

Marubeni’s coal policy

Document	Integrated Report 2021
Summary of Marubeni’s coal policy	Not entering any new coal-fired power generation business. Cut coal-fired power net generation capacity from around 3GW at March 2019 in half by 2025, approximately 1.3 GW in 2030, and zero by 2050. Will not acquire equity interests in thermal coal in the future.

Marubeni has been engaged in renewable energy projects such as solar and offshore wind power generation. Nonetheless, if it does not promptly withdraw from coal-fired power generation and coal-related business, its risk of being divested by banks and investors will likely increase.

Published Documents

From Japanese NGOs

Japanese trading houses and the coal exit: Comments on Marubeni coal policy update (Link) 2019/10/12
Open Letter to Marubeni Corporation: Fix your loophole-filled new decarbonization policies (PDF) 2018/12/13
Marubeni’s Announcement on Pulling Out of Coal-Power: A Significant Step Forward, but Need to Close Loopholes to Meet Paris Goal (PDF) 2018/9/18
Press Release: Groups call for divestment from Marubeni Corporation, a major global supporter of coal-fired power plant construction (PDF) 2018/7/31

From International NGOs

Rapel（Rakyat Penyelamat Lingkungan: People Environment Safer）sent letter (PDF)
350.org (Africa) submitted the letter to Marubeni to request an update or a summarised report on the current status of the proposed Thabametsi coal fired-power station on April 11, 2019.（PDF)
Rapel (Rakyat Penyelamat Lingkungan: People Environment Safer) Cirebon and WALHI West Java submitted the statement of claim to stop the Cirebon Coal-fired Power Plant Project in Indonesia, on March 26, 2019. “Re: Ongoing Serious Impact on the Community and Our Continuous Demand to Stop the Cirebon Coal-fired Power Plant Project – Unit 1 and Unit 2 in West Java, Indonesia” (Original had signed by the leaders of Rapel Cirebon and the director of WALHI West Java.)（PDF)

Following lists are Marubeni related documents and papers issued by international organizations.

Press Release: IEEFA Japan, Marubeni’s coal exit announcement a good first step but increased commitment needed (March 12, 2019)
(IEEFA Briefing Note) Briefing Note: Marubeni Update　Continuing Coal-fired Power Risks
Press Release: New IEEFA Report Coal-exposed Marubeni must embrace global renewable shift, July 2018.
(IEEFA Report) Marubeni’s Coal Problem A Japanese Multinational’s Power Business Is at Risk
Urgewald report: The 2018 Coal Plant Pipeline – A Global Tour (PDF), October 2018

Mitsubishi Corporation

Mitsubishi Corporation (MC) revised its ESG Data Book 2018 in October 2019 and announced that it would not develop new coal-fired power generation in principle. However, under this policy MC has excluded and continued four projects: Vung Ang 2 and Vinh Tan 3 in Vietnam, and Nakoso and Hirono in Japan. In March 2021, MC was reported to be withdrawing from Vinh Tanh 3, but in the same year, it started land clearance for Vung Ang 2. Also in June the same year, it made a contract for EPC (Engineering, Procurement, and Construction) of Quang Trach coal-fired power plant in Vietnam.

Mitsubishi Corporation’s coal policy

Document	Sustainability Report 2020 (As of August 31, 2021)
Summary of MC’s coal policy	Independent Power Producer (IPP) With the Vung Ang II in Vietnam being the last, will not enter into any new coal-fired power generation project Reduce its equity share to approximately one-third by 2030 compared to 2020 levels (which is about 2.2GW including projects under development or construction) and to exit all existing coal-fired power generation projects by 2050. Will work to reduce CO₂ emissions in thermal power generation business by taking steps such as converting to alternative fuel sources. Aim to achieve a 100% non-fossil power generation portfolio by 2050 by 1) decarbonizing thermal power generation business by switching to zero-emission thermal power and 2) further expanding renewable energy business. Engineering, Procurement and Construction (EPC) With the Quang Trach 1 in Vietnam being the last, will not enter into any new EPC businesses for coal-fired power plants. However, will continue to provide after-sales services for installed plants in cases such as when MC has a contractual obligation with the relevant power generation company, or when it is requested to do so by the power generation company or equipment manufacturer. Will continue additional construction work and equipment replacement to reduce the environmental impact of existing coal-fired power plants, while assessing the effectiveness of such measures, as an initiative linked to the transition to a low-carbon/decarbonized society. Thermal Coal Have sold all of its thermal coal interests.

Document

Sustainability Report 2020 (As of August 31, 2021)

Summary of MC’s coal policy

Independent Power Producer (IPP)

With the Vung Ang II in Vietnam being the last, will not enter into any new coal-fired power generation project
Reduce its equity share to approximately one-third by 2030 compared to 2020 levels (which is about 2.2GW including projects under development or construction) and to exit all existing coal-fired power generation projects by 2050.
Will work to reduce CO₂ emissions in thermal power generation business by taking steps such as converting to alternative fuel sources.
Aim to achieve a 100% non-fossil power generation portfolio by 2050 by 1) decarbonizing thermal power generation business by switching to zero-emission thermal power and 2) further expanding renewable energy business.

Engineering, Procurement and Construction (EPC)

With the Quang Trach 1 in Vietnam being the last, will not enter into any new EPC businesses for coal-fired power plants.
However, will continue to provide after-sales services for installed plants in cases such as when MC has a contractual obligation with the relevant power generation company, or when it is requested to do so by the power generation company or equipment manufacturer.
Will continue additional construction work and equipment replacement to reduce the environmental impact of existing coal-fired power plants, while assessing the effectiveness of such measures, as an initiative linked to the transition to a low-carbon/decarbonized society.

Thermal Coal

Have sold all of its thermal coal interests.

2 Projects Mitsubishi Corporation is currently involved
	Country	Plant name	Capacity	Estimated MC’s equity capacity	Plan to operate
1	Viet Nam	Vung Ang 2	600MW×２units	480MW	2024
2	Japan	Hirono IGCC Power	543MW	217MW	2021

NOTE: MC holds shares in several more coal-fired power generation projects other than listed above.

Projects in Vietnam that deserve attention

Vietnam is one of the most vulnerable countries to climate change. Because of economic development and rapid industrialization in recent years,it is also experiencing increased environmental pollution, especially air pollution.

It is also important to note that coal-fired power plants are losing their dominance because of sharply declining renewable energy costs worldwide. Carbon Tracker, a financial think tank based in the UK,projects that building new solar power plants will be cheaper than operating existing coal-fired power plants in Vietnam as soon as 2022. It says that not only investments in new coal-fired power plants, but also the economic viability of existing coal-fired power plants should be questioned. Under the Paris Agreement, developing countries including VietNam have committed to making efforts to reduce greenhouse gas emissions. If coal-fired power plants currently being planned are built and start operating, a huge amount of CO2 emissions will be “locked in” for the next several decades, impacting the climate change measures contributions of developing countries.

In such circumstances, MC is going against the coal exit movement by continuing to go on with EPC of Quang Trach and to develop Vung Ang 2 coal-fired power plant projects. These projects only worsen environmental pollution and damage the health of local residents.
They also impose economic risks on Vietnam as well as risks from failing to meet its climate contribution commitments.

Projects in Fukushima

On August 2, 2016, MC established two new companies, Hirono IGCC Power GK and Nakoso IGCC Power GK, and is moving forward on two large demonstration projects for Integrated coal Gasification Combined Cycle (IGCC) power plants in Fukushima. Nakoso started commercial operation in April 2021, and Hirono ignited in the gasifier facility in March 2021 (The original plan was to start operation in September 2021 but the start date of commercial operation is undecided in November 2021.)

Project proponents call IGCC a “next-generation clean coal technology with improved generation efficiency and environmental performance,” but despite its “high efficiency” claim, IGCC power plants still emit about twice as much CO2 as LNG thermal plants. It is far-fetched to say that IGCC is a “clean” technology when the amount of pollutants it emits is so high. Furthermore, the construction cost of IGCC is said to be about 20% higher than that of conventional coal-fired power plants, indicating that IGCC is not economically competitive either.

Reference

Kiko Network Paper
Universal failure: How IGCC coal plants waste money and emissions

Coal hiding behind “cogeneration”

Other than its domestic and overseas coal-fired power plants business, MC also has three coal-fired thermal power projects in its cogeneration business. MC should also consider a detailed coal equity reduction plan that includes these cogeneration projects and is truly aimed at decarbonization.

Cogeneration Businesses

Country	Plant name	Net equity basis (Net)	Fuel
Japan	MC Shiohama Energy Services	98 MW	Gas, Coal
Japan	MCM Energy Services	52 MW	Coal, Biomass mixed combustion
Japan	Mizushima Energy Center	56 MW	Coal
		Total 206 MW

Reference:

SUMMARY SHEET　”Why investors should divest from Mitsubishi Corporation”（PDF)

Released Information

From Japanese NGO:

[Joint Statement] Mitsubishi Corporation should withdraw from EPC for Vietnam’s Quang Trach 1 Coal-fired Power Plant (2021/06/30)
Press Release: 128 organizations from 39 countries demand Japanese government and companies to withdraw from Vung Ang 2 coal power plant project in Vietnam (2021/1/25)
NGO Joint Statement on Mitsubishi Corporation’s Coal-fired Power Generation Policy（2019/10/21 ）
[Press Release] NGOs urge 51 investors to divest from Mitsubishi Corporation which promotes coal-fired power generation（2020/03/23）

Sumitomo Corporation

In August 2019, Sumitomo Corporation (Sumitomo) in its Integrated Report 2019,announced that it“will not have new development in the coal-fired power generation business” however it said to make an individual decision on Vietnam’s Van Phong 1 coal-fired power generation project, and kept itself involved and started its construction in the same year. In May 2021, Sumitomo revised its “Policies on Climate Change Issues“ stating that the company will not be involved in any new EPC (Engineering, Procurement, Construction) for coal-fired power generation business but indicated Bangladesh’s Matarbari Unit 3 and 4 as an exception which they have possibility to participate. In its revision in February 2022, the company deleted this possibility clause.

Sumitomo Corporation’s coal policy

Document	Policies on Climate Change Issues (Revised February 2022)
Summary of SC’s coal policy	In terms of net ownership generation capacity, shift from coal 50%, gas 30%, renewables 20% as of 2020 to 20%, 50%, 30% respectively in 2035. Will not be involved in any new coal-fired power generation business neither IPP nor EPC. For IPP business, reduce CO2 emissions by 60% or more by 2035 (compared to 2019) and will end all the coal-fired power generation business in the late 2040s. For thermal coal mining, will not make any further investment in interest and aim to achieve zero production from thermal coal mines by 2030.

Document

Policies on Climate Change Issues (Revised February 2022)

Summary of SC’s coal policy

In terms of net ownership generation capacity, shift from coal 50%, gas 30%, renewables 20% as of 2020 to 20%, 50%, 30% respectively in 2035.
Will not be involved in any new coal-fired power generation business neither IPP nor EPC.
For IPP business, reduce CO2 emissions by 60% or more by 2035 (compared to 2019) and will end all the coal-fired power generation business in the late 2040s.
For thermal coal mining, will not make any further investment in interest and aim to achieve zero production from thermal coal mines by 2030.

	Country	Plant name	Capacity	Estimated SC’s equity capacity	Plan to operate
1	Indonesia	Tanjung Jati B coal-fired Power Plant Expansion	1,000MW×２units		2021 (Started construction in March 2017)
2	Viet Nam	Van Phong 1 coal-fired power plant	600MW×２units	1320MW	2023 (Started construction in August 2019)

Information sent from Japan

Joint Statement: Sumitomo Corporation’s new coal policy still includes major loopholes – NGOs urge Sumitomo Corporation not to participate in the EPC bidding for Matarbari Units 3 and 4 – (2021/05/10)
https://sekitan.jp/jbic/en/2021/05/10/4840