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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

Marubeni’s coal policy announcement needs to be seen in the wider context of the significant shift starting to emerge from the major Japanese trading houses (the sōgō shōsha), power utilities, insurance companies and banks through 2018 that IEEFA summarised in a December 2018 release.

Executive Summary

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.

Please view full report PDF for references and sources.

Press release: IEEFA Japan: Marubeni’s coal exit announcement a good first step but increased commitment needed

Simon Nicholas

Simon Nicholas is IEEFA’s Lead Analyst for 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

Tim Buckley, Director, Climate Energy Finance (CEF) has 30 years of financial market experience covering the Australian, Asian and global equity markets from both a buy and sell side perspective. Tim was formerly Director Energy Finance Studies, Australia/South Asia, IEEFA, and was a Managing Director, Head of Equity Research at Citigroup for 17 years until 2008.

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