Coal news and updates

As most developed economies turn their back on coal, Japan is burning record amounts for electricity generation and plans to use even more of the dirtiest fossil fuel to fill the gap after the Fukushima disaster paralysed its nuclear sector.

 

But as Prime Minister Shinzo Abe's government pushes coal power, both at home and through exporting technology abroad, some of Japan's powerful trading houses are cutting or freezing coal investments over concerns about the environmental fallout.

 

With networks spanning the globe, trading houses such as Mitsui & Co <8031.T> are closely attuned to international developments that might hit future profitability.

 

An Oxford University study warned that billions of dollars of Japanese coal assets could eventually have to be written off if coal becomes uneconomic, although the government and utilities have so far brushed off such questions.

 

Mitsui, however, plans to cut its investment exposure to coal by a third within three years, citing environmental concerns after the U.N. climate agreement in Paris last year.

 

"Considering the result of COP 21 (Paris talks) last year, we plan to reduce thermal coal assets," Mitsui President Tatsuo Yasunaga told a recent analyst meeting.

 

The output of thermal and coking coal from mines Mitsui has stakes in was about 13.5 million tonnes in the year to March 2016, or about 7 percent of the 190 million tonnes Japan imported last year.

 

Another trading house, Sojitz <2768.T>, also said it would limit investments in coal due to environmental issues.

 

Japan recently gave environmental approval to three more coal-fired power plants out of 45 planned, even after Tokyo agreed at last year's U.N. climate conference to cut carbon emissions by 26 percent by 2030 from 2013 levels.

 

By contrast, the United Kingdom's power grid went coal free on several occasions in May for the first time in over a century. Japan says it has to rely more on the fuel after shutting down most nuclear reactors that used to supply a third of its electricity before the Fukushima disaster.

 

Japan has pledged to make thermal power stations more efficient to meet its global emissions commitments, though experts question how quickly and cost effectively this can be done.