Japan’s Massive LNG Investments Raise Questions on Climate Pledges

Tokyo: Japan remains a significant global financier in the oil and gas sector, despite commitments to phase out fossil fuel investments.According to Deutsche Welle, a South Korea-based organization, Japanese public financial institutions have invested $93 billion in oil and gas projects from 2013 to 2024. A notable portion of this, $56 billion, has been allocated to overseas liquefied natural gas (LNG) projects. This substantial investment comes even after Japan pledged at the 2022 G7 summit to cease funding for fossil fuel initiatives.In what the Institute for Energy Economics and Financial Analysis (IEEFA) terms the "Japanese model" of LNG investment, Japan has actively developed policies over the years to encourage direct foreign investment in LNG export projects. This has positioned Japan as a primary driver of LNG development in the Asia Pacific region. The IEEFA report indicates that Japan benefits from increased access to LNG for domestic needs and can resell surplus LNG to global markets. Austral ian LNG is identified as the primary source for Japanese LNG exports to third countries.Japan's energy strategy heavily relies on imports, with oil, coal, and LNG comprising over 83% of its energy mix, as per the Asia Natural Gas and Energy Association. Despite launching the Asia Zero Emission Community (AZEC) to work towards net-zero emissions in Asia, Japan continues to engage in projects centered on natural gas, ammonia, and carbon capture storage (CCS) technologies. LNG is classified as a "transitional fuel" within this framework.A study from Cornell University in 2024 highlighted that LNG contributes 33% more emissions than coal when considering processing and shipping. Hiroki Osaka from Friends of the Earth Japan points out loopholes in Japan's G7 pledge, allowing for investments in LNG projects that may not align with greenhouse gas reduction goals. If projects are labeled "abated" due to CCS, they might proceed under existing commitments.In Indonesia, Japan's influence is evident in the nation's long-term energy plan, which includes a significant role for natural gas. Despite Indonesia's renewable potential, Japan's investment in LNG infrastructure could hinder a transition to renewable energy, as highlighted by Wicaksono Gitawon from the Indonesian NGO CERAH. The upcoming AZEC meeting in Malaysia this September will further address these strategic energy collaborations.