UN climate funding used to build Japanese coal plants

KANCI KULON, Indonesia – About $1 billion in loans under a U.N. initiative for poor countries to tackle global warming is going toward the construction of power plants fired by coal, the biggest human source of carbon pollution.

Japan gave the money to help its companies build three such plants in Indonesia and listed it with the United Nations as climate finance, the Associated Press has found. Japan says these plants burn coal more efficiently and are therefore cleaner than old coal plants.

However, they still emit twice as much heat-trapping carbon dioxide as plants running on natural gas. Villagers near the Cirebon plant in Indonesia also complain that stocks of shrimp, fish and green mussels have dwindled.

Japan’s coal projects highlight the lack of rules to steer the flow of climate finance from rich to poor countries – a critical part of U.N. talks on global warming, which resumed Monday in Lima, Peru. There is no watchdog agency that ensures the money is spent in the most effective way, and no definition of what climate finance is.

Japan, a top contributor of climate finance, denies any wrongdoing and has done nothing illegal – there are no rules against counting such projects as climate finance in the U.N. system.

“There are countries … that cannot afford to have other methods than coal,” Japanese Foreign Ministry spokeswoman Takako Ito said. “For these countries, we’d like to provide the best method of reducing carbon dioxide.”

However, U.N. climate chief Christiana Figueres, who was unaware that the Japanese-funded coal plants in Indonesia were labeled as climate finance, said “there is no argument” for supporting such projects with climate money.

“Unabated coal has no room in the future energy system,” she told AP. “Over time, what we should be seeing is a very, very clear trend of investment into clean renewable energy.”

In 2009, rich countries pledged that by 2020 they would provide $100 billion a year in climate finance. They agreed to come up with $30 billion over the next three years, with Japan providing about half.

An analysis of the 300 top climate finance projects during that period showed Japan was the only country to include direct support to new coal plants.

The second-largest project on the list was a $729 million loan for what Japan described as a “high energy efficient thermal power plant project in East Java.” AP found that the loan from Japan’s Bank for International Cooperation, or JBIC, was used to build an 815-megawatt coal-fired unit at the Paiton power plant, which is partly owned by Japanese firms Mitsui and Tokyo Electric Power Company.

Also among the top 30 projects globally was a $214 million JBIC loan for another “thermal power plant” in West Java, which AP confirmed was the Cirebon power station. The plant is co-owned by Marubeni Corp., a Japanese company that was fined $88 million this year by the U.S. Department of Justice for bribing Indonesian government officials to secure a separate power project.