Hard to say goodbye: South Korea, Japan, and China as the last lenders for coal

ABSTRACT

The politics of international finance for coal power plants have intensified since the 2015 Paris climate agreement was negotiated. Over the past few years, Japan and South Korea have signaled their intent not to fund new coal projects overseas, leaving China and its Belt and Road Initiative as the ‘financier of last resort.’ In September 2021, China too announced its intent to stop providing finance for overseas coal projects. What accounts for their decision to cease financing overseas coal projects despite prominent differences in political systems, degree of internationalization of their financial systems, and economic size? Drawing on datasets of coal projects and financing supplemented by case material and interviews, this paper explores the dynamics of coal export finance and how the combination of international reputational pressures and declining demand for coal finance diminished the domestic support for incumbent coal exporters in all three countries.

KEYWORDS:

• Coal phaseout
• Belt and Road Initiative
• South Korea
• Japan
• China
• climate change

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/09644016.2023.2211488.

Notes

1. Announced is defined as proposals that have been announced as planned but have not yet moved forward in seeking permits or financing. Pre-permit development refers to projects that have submitted a pre-feasibility study and are actively doing studies and submitting applications toward permits, environmental and otherwise. Permitted are defined as projects that have received all necessary environmental approvals to begin construction. Construction means physical construction such as concrete pouring and boiler erection have begun. Operating denotes the unit has been commissioned. Shelved means a project has been formally put on hold, or there is no evidence of activity for two years or more. Cancelled means a project has been called off by the sponsor or host government, or there is no evidence of activity for four years or more.

2. Major shareholder information (>1% stake) was collected from MarketScreener (www.marketscreener.com).

3. While Japan’s policy changes were welcomed internationally, advocates continued to highlight the exceptions and that existing projects would not be affected (JACSES, Kiko Network, 350.org Japan, Friends of the Earth Japan, Greenpeace Japan, and Mekong Watch 2020).