March 8, 2022

NGOs welcome Sumitomo Corporation’s decision to end support for the Matarbari 2 coal-fired power plant, and urge the Japanese government and JICA to follow.

Asia – On February 28, Sumitomo Corporation announced its revised “Policies on Climate Change Issues” (*1) deleting the exception on the possibility to participate in the Matarbari 2 coal-fired power plant. Environmental NGOs that have actively campaigned to end fossil fuel finance by Sumimoto (Japan Center for a Sustainable Environment and Society (JACSES), Kiko Network, Friends of the Earth Japan, Japan and Mekong Watch) welcome its decision not to participate. They also strongly urge the Japanese government and the Japan International Cooperation Agency (JICA), who are preparing to finance the project, not to sign the loan agreement.

Eri Watanabe, Japan Finance Campaigners says,

“It is fast becoming clear that coal is a risky investment, as well as the leading contributor to the devastating climate crisis. We welcome this announcement from Sumitomo Corporation and now it is time for the Japanese government and JICA to also get on the right side of history. Japan cannot claim to be a climate leader if the government does not immediately end all financing of coal overseas as well.”

Sumitomo Corporation has been participating in Matarbari 1 coal-fired power project (Unit 1 and 2) as a construction contractor and Matarbari 2 is a planned expansion project of Matarbari 1. Sumitomo Corporation had previously revised its “Policies on Climate Change Issues” in May 2021 and declared not to be involved in new coal-fired power projects, with Matabari 2 as an exception. It has since revised its policy and removed that exception, making it clear that there is no possibility for the company to participate in the EPC bidding for Matarbari 2. Meanwhile, the Japanese government and JICA are still preparing to finance the project.

According to Climate Analytics, a European research institute, in order to achieve the 1.5 degrees Celsius goal of the Paris Agreement, developed countries need to completely stop the operation of coal-fired power plants by 2030 and developing countries by 2040, at the latest (*2). The support by the Japanese government and JICA for the construction of coal-fired power plants, which are expected to operate for decades after they are commissioned, is clearly not consistent with the long-term goals of the Paris Agreement. Moreover, in response to the agreement made at the G7 Cornwall Summit, the Japanese government revised its policy on providing support for overseas coal-fired power projects in June 2021, stating it would “end new direct international government support for unabated coal-fired power generation by the end of 2021.” The support for Matarbari 2 is violating the promises made at the G7 Summit.

Shibayan Raha, South Asia Senior Digital Organizer says,

“Japan’s continued support for coal and funding of the Matarbari coal plant projects in Bangladesh undermines the effort for a just transition to renewable energy. A growing movement in Bangladesh calls on the Government to enact a “Green New Deal” and halt all coal power projects, including the Japan International Cooperation Agency-supported Phase 2 Matarbari coal plant. As Bangladesh reels under continued climate-induced disasters, Japan would do well by supporting renewable energy development and help the country leapfrog towards a sustainable future.”

It has been pointed out that Bangladesh is already facing an overcapacity of power, raising a concern that building more fossil fuel power plants could become a large hindrance to the future expansion of renewable energy. According to the “Revisiting Power System Master Plan (PSMP) 2016 (published in November 2018)” (*3) by the Bangladesh Ministry of Power, Energy and Mineral Resources, the actual reserve margin is anticipated to reach a maximum of 69% in 2026, and the actual reserve margin is projected to consistently exceed the target reserve margin until 2041.

Furthermore, there is a risk that the construction of new fossil-fueled power plants will seriously impact Bangladesh’s financial status and cost of power generation. Institute for Energy and Economics and Financial Analysis (IEEFA), the U.S.-based think tank, states that “power plants that have not begun construction should be halted – this applies to expensive LNG- and oil-fired plants as well as any further coal-fired power proposals such as Matarbari 2” (*4).

Therefore, we strongly request the Japanese government and JICA not to sign the loan agreement on Matarbari 2 coal-fired power project in Bangladesh.








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