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Marubeni Update: Continuing coal-fired power risks

March 01, 2019
Simon Nicholas and Tim Buckley
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Key Findings

Marubeni committed to increase the ratio of generation from renewables in its power portfolio from 10% to 20% by 2023

Briefing Note: Marubeni Update

Continuing Coal-fired Power Risks

In July 2018, IEEFA released a report on Japanese conglomerate Marubeni’s coal-fired power business and the financial and reputational risks it is creating for the company.

Less than two months later, Marubeni announced a change in policy on coal-fired power. The company stated that it will cut its coal-fired power capacity of around 3 GW by half by 2030. Marubeni also said that it will not enter into any new coal-fired business “as a general principle” (although left a caveat which could allow them to do so under certain circumstances). Finally, Marubeni committed to increase the ratio of generation from renewables in its power portfolio from 10% to 20% by 2023.

Marubeni committed to increase the ratio of generation from renewables in its power portfolio from 10% to 20% by 2023

We note this policy change does not apply to Marubeni’s current coal-fired power projects already in the development stages which we summarised in our July 2018 report. The company has around 12 GW of coal-fired power proposals in various stages of development across nine countries. As such, Marubeni and its investors are still exposed to the risks encapsulated in these major new coal projects as the world increasingly turns away from coal and towards renewable energy.

This briefing note provides an update on events that have occurred since our July 2018 report and revisits Marubeni’s current coal-fired power projects to highlight the continuing risks being faced by Marubeni and its investors.

Simon Nicholas

Simon Nicholas is IEEFA’s Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets.

Simon’s focus is on the energy transition, the long-term outlooks for coal and steel as well as the need for emerging nations to establish financially sustainable power systems to support their development.

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Tim Buckley

Former Director Energy Finance Studies, Australasia, Tim Buckley has 25 years of financial markets experience, specializing in equity valuation, including as a top-rated analyst and as co-founder and managing director of Arkx Investment Management.

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