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JICA’s funding Matarbari coal project sparks row in Japan

24 Jul 2021 00:00:00 | Update: 24 Jul 2021 10:22:29
JICA’s funding Matarbari coal project sparks row in Japan
Construction work of Matabari coal- red power plant continues in Maheshkhali upazila of Cox’s Bazar. – UNB

TBP Desk

Matarbari, a verdant, mangrove-lined island in south-eastern Bangladesh, hosts one of the biggest and most controversial tests of Tokyo’s commitment to help phase out fossil fuels.

Bangladesh is building Matarbari coal-fired power plant on low-interest loans from the Japan International Cooperation Agency and the construction works are expected to be completed by 2024.

JICAhas been considering funding an expansion to the 10-year-old project, known as Matarbari Phase 2 though it had earlier said it would work with Bangladesh “to promote a low or zero-carbon transformation” of its energy economy.

The Financial Times on Thursday reported Japan’s financing of Matarbari plant embodied the tensions in the country’s fossil fuel policies as it risks falling out of step with moves to promote renewable energy at home and abroad.

Bangladesh’s official enthusiasm for mega-projects such as Matarbari is waning as renewable alternatives become cheaper. Sheikh Hasina’s government in June scrapped 10 of the coal-power plants it had planned. While the mooted Matarbari Phase 2 project was not officially among them, analysts say it is looking less and less viable, the FT report added.

“Now, [Bangladesh’s] focus is more pro-renewables, and [it] seems to be turning away from coal,” Simon Nicholas, an analyst with US think-tank the Institute for Energy Economics and Financial Analysis (IEEFA) told the Financial Times. “That’s more economics than anything else.”

Bangladesh wants to generate 40 per cent of its power from renewable energy within 20 years.

Japan has long invested in Bangladeshi infrastructure, a partnership that stems back nearly as far as the South Asian nation’s independence 50 years ago. But JICA’s support for the Matarbari units has faced severe censure.

“Japan has no right to invest in coal in other countries — they have a responsibility to ensure zero emissions,” Hasan Mehedi, an activist with the Bangladesh Working Group on External Debt, which opposes the project, told the newspaper. Japan is “making money… transferring pollution to other countries so that they can phase themselves clean,” said Mehedi.

Japan’s suppliers of coal-fired boilers and turbines have realised that there is little future in coal which prompted a big shift in policy last year, when Japan adopted a presumption against new coal projects overseas. Banks began to question whether coal financing was worth the international opprobrium. 

“There are very few possibilities for Japanese industry to export coal power plants,” says University of Tokyo Professor Yukari Takamura, who was part of a government expert panel on the topic. She adds that “almost all Japanese banks have now said they will not finance new coal plants overseas.”

There is still no clear ban on coal projects overseas in Japan’s policy and its government made strongest commitment yet at last month’s G7 summit in the UKagreeing to halt all new direct government support for unabated coal power generation abroad by the end of 2021.

They now run against official policy over Matarbari, but commitments were made. JICA says that preparatory surveys are continuing.

Attitudes of locals towards the Matarbari project are polarised.

Its supporters are touting its job-creating potential, but critics are accusing it of displacing residents and polluting the adjacent Kohelia river. Sharif Jamil, of environmental group Bangladesh ParibeshAndolan, says locals complain that construction contractors are bringing in workers from outside areas. They had hoped “the area will be developed like Singapore,” he says. “But now the myth has gone.”

IEEFA’s Nicholas said that such projects will exacerbate Bangladesh’s power overcapacity, with utilisation of the power system currently around 40 per cent. He thinks the country should instead upgrade its grid to make better use of its existing electricity supply and to meet its renewable energy targets.

“Until recently, Bangladesh was expected to be one of the key growth markets for seaborne thermal coal,” he says. “The potential growth markets around Asia — that were supposed to replace Japan, South Korea and China as they shift away from thermal coal imports — increasingly look like they will disappoint the coal industry.”

 

 

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