Japan, S. Korea run With Vietnam Coal Plant Despite Climate Vows

The state-aligned Japan Bank for International Cooperation (JBIC) has announced that it will lend around USD 636 million to the Vung Ang 2 project in central Vietnam, which has come under international criticism and even divided opinion within Japan’s government.

Private financial institutions and the Export-Import Bank of Korea will also provide loans, with the total amounting to USD 1.77 billion.

The 1,200-megawatt Vung Ang 2 plant was first proposed over a decade ago and has received investment from heavyweight firms like Mitsubishi Corporation. Japan said in July it would tighten rules for investment in foreign coal-fired power stations on
environmental grounds, but stopped short of promising to end government funding for projects or axe existing ones.

The country also recently unveiled plans to boost renewable energy and phase out petrol cars in a bid to reach its new goal for carbon neutrality by 2050. South Korea had also made a similar pledge this year.

Vung Ang 2 came under fire in May when 127 environmental groups from around 40 countries signed a petition calling on all the Japanese parties involved — reported to include big private banks — to pull out of the project.

“It’s a real disappointment,” Eri Watanabe from 350.org, which signed the May petition, told AFP about JBIC’s announcement. “It shows the Japanese government is not very serious about complying with the Paris agreement and mitigating CO2 emissions,” she said.

The Global Energy Monitor watchdog said in 2019 that Japan accounted for over USD 4.8 billion in financing for coal power plants abroad — particularly in Indonesia, Vietnam, and Bangladesh. Japan’s Environment Minister Shinjiro Koizumi has also raised concern over the country’s financial support for the project.

“To me, this is wrong… as we are facing a lot of criticism from the international community,” he said in January. “I want to change Japanese policies to those that can further contribute to decarbonization.”