Japan just lost its big excuse for pushing coal on the world; now’s the time to pile on the pressure

On September 25, the U.S. and China released a joint presidential statement on climate change. While most people focused on China’s new cap-and-trade regime, there was a buried headline that may have even bigger implications for climate and for the future of coal: China pledged to strengthen regulations “with a view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both domestically and internationally.”

Translation: China plans to curb public support for the dirtiest fossil fuels, including its international finance for coal.

Why does this matter? Because China was the second-biggest provider of public finance for coal between 2007 and 2014, behind Japan (Figure 1). Limits on China’s coal finance are a big deal for the climate and a major blow to the coal industry.

Figure 1: International Public Finance for Coal, 2007-2014

Source: Oil Change International
China’s announcement also has major implications for the world’s biggest public funder of coal, Japan. Japan has been hiding behind China’s coal finance, arguing that if Japan doesn’t fund coal plants overseas, China will simply fill the void. With China’s announcement, that excuse is evaporating, and at just the right time to put Japan between a rock and a hard place. Japan has been a major blocker in discussions among OECD countries about putting limits on international coal finance. Specifically, the talks have centered on limiting export credits for coal projects (an important subset of international public finance for coal), and Japan has used the “China excuse” to delay a decision, even though Japan’s recent export credits for coal dwarf China’s (Figure 2).

Figure 2: International public finance for coal from export credit agencies, 2007-2014

Source: Oil Change International
With the next round of OECD talks on the export credit issue set for late November, China’s announcement may be the push that’s needed to get Japan to relent. When asked about the announcement, one advisor to the Japanese government noted, “Japan will have difficulty in exporting coal technologies.” Increasing pressure on Japan ahead of the OECD discussions could help secure stronger limits on coal finance. One avenue to ratchet up the volume will be the Stop Funding Fossils Day of Action on November 14, just head of the talks. Japan has lost its big excuse for pushing coal on the world, and it’s time to agree to set strict limits on public finance for coal.