Japan-influenced Strategies Trap Asian Nations in Fossil Fuels

Asian nations, particularly in South and Southeast Asia, find themselves increasingly locked in fossil fuels thanks to Japan, one of the world’s biggest fossil fuel investors, influencing their energy policies.

After luring the nations into fossil fuels, which required decades of investment as well, Japan was desperate to limit Chinese dominance, energy analysts said. This held back the energy transition, which could have given China, with its innovative renewable energy technologies, the upper hand.

Japan has been involved in formulating policies or influencing them through research or studies, deferring the net zero target to 2070 while introducing ammonia and hydrogen co-firing or carbon capture storage as clean energy – technologies that energy experts identify as false solutions invented to prolong fossil fuel use.

Despite shrinking domestic markets, Japanese energy utilities, including government-granted monopolies such as Tokyo Electric Power Company or TEPCO, which boast plans to strengthen fossil fuel value chains, are expanding their business in international markets. However, the need for energy transition disillusioned groups of people who, for decades, regarded Japan as their friend and supplier of quality products. 

For instance, a group of lawyers in Bangladesh recently moved to the High Court with a rare appeal, seeking steps to amend Bangladesh’s latest energy policy, formulated by Japan, deemed harmful to life and nature.

‘Formulated with all Japanese experts, JICA (Japan International Cooperation Agency) designed Bangladesh’s latest power and energy master plan for its benefit,’ said Abdullah Al Noman, explaining the tenets on which their writ petition, filed on December 3, 2024, was based.

Decades of Japanese Regional Influence 

Building economic ties, often with energy sector investment, is the core of Japan’s regional foreign policy. With its constitutional limitation on military engagement, Japan became a trusted regional development ally after World War II, offering flexible loans, emergency budgetary support, and important technical advice. In the 1960s, Japan spearheaded the development of the Asian liquefied natural gas value chain.

Japan provided money and technical support in formulating Bangladesh’s last four power sector master plans since 2005.

The first power sector master plan, reviewed every five years, relied overwhelmingly on fossil fuels, mainly natural gas. In contrast, the second one advocated coal expansion, introducing the so-called clean coal technology. The third master plan emphasised energy imports, including liquefied natural gas, while undermining the potential of local resource exploration and renewable energy. 

The last and fourth master plan, the Integrated Energy and Power Master Plan, passed in 2023 and recommended generating 60% of 90,000MW in 2050 from fossil fuels. The power generation mix in 2050 includes only 12% renewable energy. Calling gas the friendliest fossil fuel, the IEPMP introduced clean technologies such as ammonia co-firing, hydrogen energy and carbon capture and storage. The IEPMP said 2050 is the year Bangladesh will be net-zero ready, and it hopes to achieve it after 2070.  

A Bloomberg NEF report released in October 2023 estimated that imported hydrogen procurement could be four to five times more expensive than gas procurement, and ammonia could be seven to nine times costlier than coal. 

Bloomberg also noted that almost all hydrogen and ammonia produced nowadays are grey, derived from steam reforming of methane or gasification of coal, contributing to greenhouse gas emissions. 

Over 96%of Bangladesh’s installed power generation capacity of nearly 28,000MW depends on fossil fuels. Bangladesh cannot afford to use half its installed generation capacity by importing fuel, especially liquefied natural gas. 

A few Japanese companies have invested or are involved in Bangladesh’s power and energy sector, including JERA, which owns a fifth of Summit Power International Limited, Bangladesh’s largest independent fossil-fuel-based power producer. 

JICA recently started formulating the master plan for the energy transition management project in Indonesia. Four Japanese companies—JERA, TEPCO, TEPSCO, and MRI—all known for fossil fuel promotion are involved in preparing the master plan. 

JICA gave four suggestions in the agreement signed with the Government of Indonesia in 2023 to achieve carbon neutrality by 2060 under the master plan. In the first suggestion, JICA said it would be very expensive to achieve 100% renewable energy, recommending thermal power generation to complement the unstable and variable renewable energy. JICA identified hydrogen or ammonia thermal generation as the most economical option in 2060, advising LNG thermal as a transitional period alternative. The agreement said carbon neutrality can be achieved by promoting hydrogen, ammonia-firing or carbon capture and storage. Indonesia’s energy mix in 2022 included about 80% of fossil fuels. 

In September 2008, JICA released a study report conducted jointly with TEPCO and the Institute of Energy Economics, Japan, at the request of Vietnam’s industry and trade ministry. The study, offering an energy pathway through 2025, identified securing a stable coal supply for power generation and developing coal lifting and transportation as the most important tasks. The study also emphasised consistently developing gas fields, gas pipelines and gas-fired stations to ensure sustainability in the energy sector. JICA advocated building sea ports for large-scale coal imports and constructing harbours for crude oil imports using large cargo carriers. After recommending natural gas import from neighbouring countries, the study advised considering LNG import in the long run. Fossil fuels accounted for about 80%of the energy mix of Vietnam in 2022. 

In 2022, the government of the Philippines signed a MoU with a Japanese and an Australian firm to expedite hydrogen research. The government also plans to reduce carbon emissions through ammonia co-firing with existing coal power plants. Japan is also updating the Philippine National Oil Contingency Plan and is expected to give recommendations for creating and operating the Philippine Strategic Petroleum Reserve Programme. Fossil fuels account for 62% of the Philippine’s energy mix.

Who is Pulling the Strings? 

After Japan announced its 22-24% renewable energy targets by 2030, the Japan Climate Initiative sharply reacted, accusing the government of ignoring many voices. The JCI is a coalition among blue-chip corporations from the retail, finance, construction, homebuilding, and technology sectors, which drive Japan’s economic prosperity. Big corporations such as AEON, Fujitsu, Ricoh and Mitsubishi Real Estate also called for the renewable energy target to be raised to 50%. 

An analysis by the UK-based InfluenceMap showed that Japanese policies are greatly influenced by the fossil fuel value chain, particularly utility and energy-intensive sectors—iron/steel, electric power, automotive production, cement, electrical machinery, oil/petrochemicals, and coal. 

An analysis of 38 Japanese companies showed that barely two followed science-based policies, while 13 were misaligned with such policies. The rest of the companies were mixed-aligned. In a similar analysis among 50 associations, only three were aligned with science-based policy, while 14 were misaligned. The rest were mixed-aligned. 

Japanese utilities are continuously increasing their LNG portfolios, which are backed by government policies. Japanese utilities are likely to have a large surplus of LNG through 2030, said the Institute for Energy Economics and Financial Analysis in the report. 

In 2017, JERA announced plans to become a ‘player like BP and Total,’ a plan matched with steps such as forming international business coalitions and making frequent LNG investments, including in Bangladesh, Indonesia, the Philippines, Vietnam, Singapore, and Thailand. 

On the other hand, Tokyo Gas said that the “ultimate target is to form a Southeast Asia LNG value chain.” Osaka wants to go forward beyond borders, with the target of transacting 17 mt of LNG by 2030, up from 10.3 mt in 2019.

The recently created Asia Zero Emission Community, a platform led by Japan, declares the goal of pursuing a really implementable energy transition. However, it is criticised as yet another Japanese move to prolong fossil fuel use. 

Zero Carbon Analytics, in a report, revealed that 56 of the 158 projects included fossil fuels-based technologies such as natural gas, co-firing ammonia with fossil fuel, hydrogen produced with fossil fuels, carbon capture and storage (CCS) and e-fuels. 

Between 2013 and 2023, Japan’s government-backed financial bodies, such as the Japan Bank for International Cooperation, invested $93 billion in overseas oil and gas projects. Of this investment, $42 billion went to Asian countries. Only $9 billion was spent on clean energy over the same period.

According to Harvard Dataverse, a free data repository, Japan invested $68.59 billion in 10 Southeast Asian countries between 2000 and 2020. Of the investment, $21.40 billion went to Indonesia, followed by $20.72 billion in Thailand, $18.35 billion in Vietnam, over $2 billion each in Myanmar and Malaysia, and over $1 billion in the Philippines. A little over 47% of the overall investment was used for fossil fuel expansion, while about 13% was used in the renewable energy sector.