• Japanese public finance of oil and gas revealed to be 4 times larger than $24.5 billion provided for clean energy projects over the same period

• Japan’s continued upstream project investments, at a time of decreasing domestic gas demand, suggests downstream investments creating demand for gas in Southeast Asia are likely to increase

• Despite Japan’s G7 commitment in 2022 to end fossil fuel finance, financing amount increased in 2023 compared to the previous year

• JBIC revealed as largest financier, accounting for 55% of total public finance for overseas oil and gas projects

September 5, 2024 (TOKYO) Japanese public financial institutions including Japan Bank for International Cooperation (JBIC), Japan Organization for Metals and Energy Security (JOGMEC), Nippon Export and Investment Insurance (NEXI), Japan International Cooperation Agency (JICA), and Development Bank of Japan (DBJ), provided a staggering $93 billion in support for overseas oil and gas projects between 2013 and 2023 fiscal years (April 2013 to March 2024), with 45% of finance concentrated on upstream investments promoting additional extraction and processing of fossil fuel resources. 

Figure 1: Japan’s overall oil and gas financing by value chain segments

Source: SFOC, OCI, JACSES (2024)

The new report by Solutions for Our Climate (SFOC), Oil Change International (OCI), and Japan Center for a Sustainable Environment and Society (JACSES), “Billions Off Course: Japan's Oil and Gas Financing Fueling the Climate Crisis”, reveals the support to be 4 times larger than that provided for clean energy projects over the same period, which amounted to $24.5 billion. As a member of the G7 countries, Japan is the third largest financier of fossil fuels amongst the G20, even after having committed to end fossil-fuel financing by end of 2022.

Malika Maxutova, Researcher at SFOC said “As the climate crisis demands global action, it's alarming that Japan, a G7 leader, has spent $93 billion on overseas oil and gas projects over the past decade. Instead of leading in clean energy, Japan is reinforcing fossil fuel dependencies, jeopardizing a sustainable future. Japan must urgently shift its investments to clean energy, which has received only a quarter of the support given to oil and gas. The choices made today will shape tomorrow’s energy landscape.”

Figure 2: Japan’s yearly total financing by value chain (FY 2013 to 2023)

Source: SFOC, OCI, JACSES (2024)

Japan’s continued upstream investments at a time of declining domestic demand generate need for increasing investments in downstream projects abroad 

Financing for gas-only projects stood at $56 billion (60%), while oil projects received $26 billion (28%), with mixed projects making up the remainder. As per value-chain, upstream financing stood at $42 billion (45%), with Mozambique as the top recipient country ($8.2 billion), due to financing for the Rovuma Area 1 LNG project, currently delayed due to insurgency in the area. Downstream financing amounted to  $30 billion (33%), mostly for energy production and refining projects, while midstream financing totaled $21billion (22%), with the U.S receiving 40% of the sum for its export related projects.  

Yuki Tanabe, Program Director for the Japan Center for a Sustainable Environment and Society (JACSES) said "Japan's domestic LNG consumption will decline as Japan's population decreases. Yet, Japan is planning to support LNG terminals and gas power plants in Southeast Asia and South Asia - effectively expanding LNG addiction to these countries. This poses a critical danger to meeting the Paris 1.5 degree Celsius goal. As a member of the G7, Japan should follow the G7 commitment to end its public support for new fossil fuel projects." 

Japan’s continued upstream project investments at a time of decreasing domestic gas demand, suggests downstream investments creating demand for gas in Asia are likely to increase in the coming years. In line with the Green Transition (GX) and AZEC initiatives which encourage fossil fuel reliance, Japan’s approach centers on maintaining its LNG trading scale. As a result, Japan is driven to offload its excess LNG to countries in the region and is currently involved in multiple projects in South and Southeast Asia.

Lidy Nacpil, Coordinator at Asian Peoples' Movement on Debt and Development (APMDD) said “Japan is pushing the Philippines and all of Asia down a dangerous path toward greater fossil gas dependency. Japanese financing of new LNG import terminals and gas power plants contradicts the Paris Agreement and risks harming people across Asia and the world.  It serves only the interests of fossil fuel companies and the Japanese banks profiting from these investments. We call on the Japanese government to deliver on its historical obligations to fund real solutions, instead of plunging us deeper into the climate crisis.”

The analysis further identifies leading Japanese entities receiving gas-related financing, revealing Mitsui & Co., Mitsubishi Corporation, and JERA as the leading recipients. Mitsui & Co. was the largest recipient in the upstream segment at 49% of total financing, while Mitsubishi dominated the midstream segment, receiving 22% of midstream finance. JERA was the largest recipient in the downstream segment with 25% of financing extended to projects the power generation company took part in. 

Figure 3: Top recipient Japanese entities in gas financing (by financing case and financing amount) 

Source: SFOC, OCI, JACSES (2024)

The breakdown of financial support provided by each public financial institution for the past decade is as follows. JBIC, the largest contributor, utilized $51 billion, accounting for 55% of the total public funds supporting overseas oil and gas projects. NEXI followed, providing approximately $19 billion (21%), while JOGMEC contributed around $13 billion (14%). JICA and DBJ provided $7 billion (8%) and $2 billion (2%), respectively.

Figure 4: Overall oil and gas financing by financial institution

Source: SFOC, OCI, JACSES (2024)

Oil and gas financing puts global efforts to stop climate change at risk, harming environments and local communities while damaging Japan’s reputation 

These findings raise significant concerns regarding Japan’s commitment to phase out oil and gas finance. The report warns that Japan's oil and gas financing harms the environment, exacerbates climate change, and negatively impacts local communities through participation in these projects. 

Highlighting the global declining demand for oil and gas under climate scenarios, Japan’s over contracted position in the LNG market, and the fact that renewable energy projects have become cheaper than fossil projects, the reports further highlights that Japan has been pushing for a fossil agenda internationally, resulting in increased reputational risk. 

Makiko Arima, Senior Campaigner at Oil Change International said, "Japanese financing is driving gas expansion across Asia and globally. This year alone, Japan has already funneled over $4 billion in public finance towards gas projects. This is highly concerning given Japan, as part of the G7, has committed to end support for international fossil fuel projects. Japan must stop putting Japanese corporate interests over people and the planet by continuing to promote gas and other dangerous distractions in Asia through the Asia Zero Emission Community (AZEC) platform and other channels."

ENDS.  

Report co-authors:

Solutions for Our Climate (SFOC) is an independent nonprofit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.   

Website: https://forourclimate.org/  

Japan Center for a Sustainable Environment and Society (JACSES) was established in 1993 as an independent, non-profit policy research organization that promotes the realization of an environmentally sustainable and socially equitable society in Japan and throughout the world. JACSES is critically monitoring fossil fuel projects funded by Japanese financial institutions.

Website: https://jacses.org/en/

Oil Change International (OCI) is a research, communications, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the ongoing transition to clean energy. Rooted in community solidarity and principled policy analysis, OCI works within larger movements to build a fossil free future. Founded in 2005, Oil Change International has an experienced and dedicated international team backed by hundreds of thousands of supporters. 

Website: https://priceofoil.org/ 

Media contacts:

• Kate Kalinova, Communications Officer, at kate.kalinova@forourclimate.org

• Yuki Tanabe, Program Director, Japan Center for a Sustainable Environment and Society (JACSES), at tanabe@jacses.org 

• Susanne Wong, Asia Program Manager, Oil Change International (OCI), susanne@priceofoil.org