Japan approved a plan to help finance a long-planned coal power plant in Vietnam, despite the government’s pledge to curb overseas investments in dirtier technology and cut emissions at home.
The Japan Bank for International Cooperation agreed to provide $636 million worth of project financing for the Vung Ang 2 plant in central Vietnam, it said Tuesday in a statement. The loan is co-financed with private banks, as well as the Export-Import Bank of Korea.
The move has garnered criticism from environmental activists for contradicting Prime Minister Yoshihide Suga’s pledge for net-zero emissions by 2050 and stricter conditions for investing in coal projects abroad. Companies from Japan and South Korea, which has a similar climate target, have faced backlash from investors for working on the controversial project.
“This project was planned quite a long time ago, but this clearly shows that Japan’s pledge for carbon neutrality is not put into practice,” said Kimiko Hirata, an international director at Kiko Network, a Japan-based group that promotes climate-friendly policies.
JBIC said in its statement that it has been working with Vietnam on efforts to decarbonize, without going into detail. JBIC decided to support the Vietnamese project after related ministries held discussions and found that it would be in line with the government’s policy, according to a spokesman.
Japan’s Mitsubishi Corp. and Korea Electric Power Corp. are among the companies investing in the 1.2 gigawatt Vung Ang 2 power plant, despite pressure from shareholders to stay away from the project.
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