Many countries in the Global South are burdened with huge public debts. These rising debts are a drain on public resources that are urgently needed for sustainable development programmes, and further pressure Southern governments to prioritise debt service over climate actions. 

Global South countries allocate more funds for debt service – 65% in lower- income countries and 14% in lower-middle-income countries – than their combined budgetary spending for education, health and social protection.  

Included among the public debts of Global South countries are those from projects tainted with fraud and whose negative impacts on people, economies and the planet far outweigh the benefits, if any. Furthermore, many debts arose from projects that did not involve democratic consultations nor the free, prior and informed consent of affected communities including indigenous peoples. Prime examples of these debts are those arising from or related to fossil fuel projects. These debts should be seen and treated as illegitimate.   

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For several decades, international financial institutions and public finance institutions have lent hundreds of billions of dollars to Southern governments to support fossil-fuel energy projects. Many of the loans extended by the World Bank, Asian Development Bank (ADB), and other public finance institutions such as the Japan Bank for International Cooperation (JBIC), remain part of the current outstanding public debts. 

There is already a clear consensus among governments and many public financial institutions that fossil fuel energy – from its extraction, production and consumption – is the main driver of climate change.  

This is evidenced by outcomes from the Conference of Parties (COPs) summits of the UN Framework Convention on Climate Change, calling for the phase-out or transition away from fossil fuels, as well as outcomes from G7 and G20 summits committing to the phase-out of fossil fuel subsidies. Individual governments including China and Korea, have announced decisions to stop their financing of overseas coal projects. Further evidence is in the decisions made by public financial institutions to stop or phase out financing of coal and fossil fuels.   

These decisions, commitments and policy shifts should be taken as acknowledgement of their co-responsibility in the promotion of fossil fuels and the harms fossil fuel projects have caused to people, communities, the environment and climate systems. 

Owning up to their co-responsibility for fossil fuel projects and their impacts, and consistent with their avowed commitments to combat climate change, governments and public financial institutions, including international financial institutions, should cancel all outstanding public debts that arose from fossil fuel projects. These outstanding debts may be transformed into grants for renewable energy systems.  

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The same can be said for private banks, financial and investment institutions and corporations that have lent money to governments for fossil fuel projects. Many have also recognised fossil fuels as the main drivers of climate change and have shifted their policies towards reducing or phasing down their lending and investments in coal and fossil fuels.   

From April 17 to 19, the IMF and the World Bank (IMF-WB) will hold their Spring Meetings in Washington D.C. These meetings take place amidst an ever-worsening debt crisis, most harshly felt by 3.3 billion people living under governments that spend more on interest payments than education or health.  

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A new report released on the eve of the meetings found that developing countries will pay a record $400 billion to service external debt this year. It said climate spending could bankrupt developing countries due to huge debt costs and called for debt forgiveness for those most at risk. The report from the Debt Relief for Green and Inclusive Recovery Project (DRGR) warned 47 developing nations would reach external debt insolvency thresholds in the next five years if they invested the necessary amounts to meet the 2030 Agenda and Paris Agreement goals.

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It is deplorable that the IMF-WB continues to push loans as the solution to multiple crises facing developing countries, including loans for climate action. At the height of the COVID-19 pandemic, when financial resources were most urgently needed, they supported and promoted the debt relief schemes of the G20 and Paris Club for the mere postponement of debt payments. These have all but proven flawed and futile. The suspended payments fall due in 2025 – by which time debt accumulation will have sped up even more. Private and commercial lenders, who now hold over 60% of sovereign debt, remain free to refuse participation in debt reduction. 

Total public debt, domestic and external, reached $92 trillion in 2022, increasing five-fold since 2000. Southern governments account for almost one-third of the total debt and are accumulating debt much faster than their richer counterparts. The number of countries with public debt levels exceeding 60% of GDP continues to rise, from 22 in 2011 to 59 in 2022. The long-term public external debts alone of low- and middle-income countries, excluding China, amount to a staggering $3.3 trillion. 

The consequences of World Bank projects, coupled with IMF neoliberal, policies have been devastating for vulnerable communities in the Global South. Large-scale infrastructure projects financed by the World Bank have led to displacement of communities, loss of livelihoods and destruction of ecosystems, and in the process, deepened inequality and impoverishment. Its fossil fuel subsidies and project loans impacted communities already struggling to survive economic hardships and environmental degradation. It also continues to subsidise the fossil fuel industry through direct and indirect financing, estimated at $885 million in 2022 and at least $194 million in 2023.  

The World Bank and the IMF, now in their eighth decade of committing to fight poverty, have yet to account for loans that are clearly illegitimate and must be canceled outright, nor for harsh loan conditionalities that have deepened inequality and impoverishment.

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The leaders will convene for the Association of Southeast Asian Nations (ASEAN) Summit following a once-in-200-year heatwave that shut down schools and led to widespread hospitalizations across the region. 

But, at a time when ASEAN leaders must take strong action to transition to renewable energy, Japan is undermining Southeast Asia’s transition by promoting technologies that would expand and prolong the use of fossil fuels. 

Japan is using initiatives such as the “Asia Zero Emission Community (AZEC)” and the “Asia Energy Transition Initiative” to supposedly support ASEAN partners’ decarbonisation efforts. However, these initiatives are vehicles to promote Japan’s so-called “Green Transformation” strategy, which relies heavily on fossil fuels and fossil fuel-based technologies.

Japan’s plans emphasize the development of liquefied natural gas (LNG), fossil hydrogen, carbon capture and storage (CCS), and co-firing ammonia and biomass at coal-fired power plants. These technologies will not help Asia reduce emissions.

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According to thinktank TransitionZero, co-firing ammonia at coal plants in Indonesia, Malaysia, the Philippines, and Thailand will not cut emissions in line with the International Energy Agency’s 2050 net-zero target.

Similarly, switching from coal to gas power plants globally will not reduce emissions enough to meet climate targets, according to Global Energy Monitor. It will also delay the necessary transition to clean and renewable energy, such as solar and wind. 

Japan’s efforts to undermine Southeast Asia’s energy transition are extensive. Last year, Japan drafted a decarbonisation plan for Indonesia that prioritised the development of LNG, hydrogen, ammonia co-firing, and CCS. Japan is slated to develop a national decarbonisation plan for Cambodia, among others. Earlier this year, Japan convened an AZEC meeting to build support for its technologies amongst energy ministers across Asia. 

More recently, Japan’s hand was visible in the August joint statement of ASEAN Ministers on Energy Plus Three, which encouraged the deployment and utilization of “hydrogen, fuel ammonia, small modular reactor, bioenergy, clean coal technology (CCT), and carbon capture utilisation and/or storage (CCU/S)/carbon recycling” and emphasized the need for investment in LNG for “energy security and energy transition in the region.”

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At the upcoming ASEAN Summit, member states must reject Japan’s self-serving push for fossil fuel-based technologies and strengthen their cooperation on increasing solar and wind capacity in the region. With the costs of solar and wind falling worldwide, this is the most cost-effective way to cut emissions and meet climate goals. 

ASEAN countries must also not waste precious public funds on technologies such as LNG, CCS and ammonia co-firing, which will prolong the use of fossil fuels and keep Asia’s skies full of smog. In addition, ASEAN governments must firmly demand that developed country governments like Japan deliver climate finance and fulfill their obligations under the UN Framework Convention on Climate Change. Climate finance should partly be used to support the acceleration of the equitable and just transition to solar and wind energy.

The ASEAN Summit will conclude on the International Day of Clean Air for Blue Skies. If ASEAN leaders, led by Indonesian President Joko Widodo, are serious about improving air quality for millions of citizens and mitigating the climate crisis, they must make ambitious commitments to scale up solar and wind and reject Japan’s dirty fossil fuel-based technologies. 

Bondan Andriyanu is a Climate and Energy Campaigner at Greenpeace Indonesia, Novita Indri is an Energy Campaigner at Trend Asia in Indonesia, and Lidy Nacpil is the coordinator of Asian Peoples’ Movement on Debt and Development and convener of Don’t Gas Asia Campaign. 

The post Southeast Asia must not let Japan hijack its energy transition appeared first on Climate Home News.

This month, Japan’s government addressed one of the leading causes of the climate crisis. Rising political star Shinjiro Koizumi had convinced Japanese officials to review the government’s policy on financing new overseas coal-fired power plants.

Koizumi, the charismatic Japanese environment minister and son of former Prime Minister Junichiro Koizumi, raised hopes that Japan would finally stop spending billions exporting the dirty, climate-wrecking technology. Coal is one of the dirtiest fossil fuels and is responsible for nearly one third of the global rise in temperatures.

However, the Japanese government came up short.

Last week, the government issued a policy stating that, “in principle,” it will not finance overseas coal plants for any country that does not have a decarbonization policy. While recognizing that it is new for the Japanese government to say no to coal finance, the policy contains dangerous exceptions allowing financing for so-called “highly efficient” coal technologies and will not apply to coal plants already under consideration.

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According to climate experts, building any new coal plants is inconsistent with meeting the goals of the Paris Agreement and averting catastrophic climate change. Rising sea temperatures have led to more frequent and severe rainstorms, like the current deluge that has left at least 68 people dead in Japan’s southern Kumamoto prefecture.

Last year, UN Secretary General Antonio Guterres called on governments in Asia to end their “addiction to coal” and stop fossil fuel subsidies. Guterres recently renewed his calls, urging countries to stop financing coal and pledge to stop building new coal-fired power plants to facilitate a shift towards clean energy.

Instead of taking bold action in line with the global exodus away from coal and taking action to avert the worst impacts of the climate crisis, the Japanese government chose to maintain loopholes that allow continued financing of coal projects. The projects in Japan’s coal financing pipeline have also come under fierce scrutiny for human rights violations, impacts on health and livelihoods and problems with economic viability.

Consider Vung Ang 2 in Vietnam, Indramayu in Indonesia and Matarbari 2 in Bangladesh.

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Vung Ang 2 drew the consternation of Koizumi who initially called on Japan to reject financing for the project earlier this year. According to financial think tank Carbon Tracker, it is already cheaper in Vietnam to invest in new solar panels than new coal plants. New onshore wind power is expected to become cheaper than coal power by next year.

Groups in Japan and Indonesia recently launched a petition calling on the Japanese International Cooperation Agency (JICA) to reject financing for the Indramayu coal plant in Indonesia. The project threatens the livelihoods of thousands of farmers and fishermen and is associated with serious human rights violations. The petition says, “the project must not be pushed through at the expense of the livelihoods and environment of the local community, or in exchange for future generations’ opportunities and choices, and global climate”.

The Matarbari 2 coal plant in Bangladesh is also facing opposition. 44 groups in 18 countries issued a letter calling on JICA to reject support for the project. In light of the devastating impacts of Covid-19 and supercyclone Amphan on Bangladesh, groups stated “Simply put, Bangladesh cannot afford another coal-fired power project which is likely to be a stranded asset and need a huge amount of government subsidy.”

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JICA’s involvement in the Matarbari coal-fired power plants contravenes its climate strategy, which says JICA will support the transformation to a low-carbon society in developing countries in line with the Paris Agreement.

We are deeply disappointed that the Japanese government’s policy on coal still falls short of what is needed to prevent catastrophic climate change. Japan must stop ignoring the demands of communities across Asia and calls across the world to completely and immediately end its overseas coal finance.

Over the last few months, government and corporate officials have signaled their intent to stop financing overseas coal power plants. This is no time for signals. No time for exceptions. The urgency of the climate crisis requires bold leadership and action from governments like Japan. It is time for a swift and just transition to renewable and clean energy that is not only possible but is urgently needed.

The Japanese government has been, and will continue to be, the subject of international criticism until it categorically ends its support for coal-fired power plants.

Lidy Nacpil is the coordinator of the Asian People’s Movement on Debt and Development. Susanne Wong is the coordinator of the No Coal Japan coalition.

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