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IEEFA says Marubeni’s coal exit announcement a good first step but stronger commitment needed

JAKARTA ( – The Japanese conglomerate Marubeni has announced its long-term strategy to pull out from the coal business, however stronger commitment is needed to materialize the plan, Institute for Energy Economics and Financial Analysis (IEEFA) says.

The call for further commitment is made given the fact that the company still has around twelve gigawatts of coal-fired power proposals in development, exposing investors to continued risk as the world moves away from coal.

A new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA), “Marubeni Update: Continuing Coal-fired Power Risks” notes the company announced a major change in policy to reduce reliance on coal-fired power in September 2018.

In addition to cutting by half its coal-fired power capacity of around 3 gigawatts (GW) by 2030, Marubeni announced it would not enter into any new coal-fired business ‘as a general principle’ and would be increasing the ratio of renewable energy generation from 10% to 20% by 2023.

Despite this announcement, Marubeni continues to progress existing, outdated coal projects in Japan and across eight developing countries.

IEEFA’s briefing note finds the company’s ongoing coal-fired power projects face a range of difficulties including banks withdrawing from projects, reduced access to insurance, cancellation threats, legal headwinds, community opposition, and cheaper and cleaner renewable energy technology.

Briefing note author Simon Nicholas says developing nations are now leading the transition to clean energy.

“The idea that developing nations will meet growing electricity demand with expensive imported coal-fired power generation is increasingly outdated,” Nicholas said.

“Marubeni must adapt quickly in the face of changing conditions and reduce their coal exposure.

“Given Marubeni’s higher focus on power generation development relative to the other Japanese trading houses, there will be increasing opportunity in renewable energy as the world moves away from fossil fuels and towards clean energy.”

“By accelerating the realignment of its power business towards new clean technology, Marubeni can hope to remain relevant to future power markets and avoid further surprises – such as ever decreasing renewable energy costs – and rising stranded asset risks.” (*)

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