Japan has publicly pledged its support for overseas LNG project finance as it sees LNG as a transitional energy source that can supplement renewables and help replace coal in its efforts towards 2050 carbon neutrality goals, just days ahead of the climate change summit to be hosted by US President Joe Biden.
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State-owned Japan Oil, Gas and Metals National Corporation said April 20 that it will step up financial support for LNG projects and enhance its market information as part of efforts to ensure Japan's LNG supply security.
Jogmec said in its carbon neutral action plans that Japan also sees LNG as a feedstock for producing hydrogen and ammonia, which are expected to play a key role in achieving the country's carbon neutrality.
The state-run energy and resources financing arm said it will boost financial support for midstream LNG projects, with an eye to expanding the LNG market in Asia in addition to its support for upstream LNG projects.
Following an amendment to the Jogmec law that took effect in June, Jogmec is now allowed to finance Japanese companies participating in LNG reloading and receiving terminals overseas, as Japan sees it is essential to expand the LNG market in Asia as means to enhance its energy security.
Jogmec's announcement came just days after the petroleum and natural gas subcommittee at the Ministry of Economy, Trade and Industry approved April 16 a set of policy actions, including its support for helping Asia introduce LNG as a realistic means for its energy transition.
METI's support for the Asia LNG introduction includes $10 billion finance and capacity building through Jogmec, among other channels.
As part of its LNG market information enhancement, Jogmec will start publishing Japan's monthly average LNG spot import price on May 14, when it reports the average April contract and delivery price, according to a Jogmec official.
Japan's support for gas-fired power, natural gas infrastructure and LNG regasification projects has been critical to the development of the sector in South Asia and Southeast Asia, as most countries in the region have difficulty accessing finance from traditional sources like private sector banks and financial institutions due to poor credit.Emerging market countries have had to rely on lenders like the Asian Development Bank and the World Bank to fund natural gas projects, and more recently Japanese lenders have stepped in to fill the funding gap. The projects have in turn helped replace fuels with more carbon dioxide emissions, like coal.
Public lenders like state-owned Japan Bank for International Cooperation have collaborated with Japanese commercial banks and companies such as JERA, Inpex and others to back gas and power projects in emerging Asian markets.
The projects have helped boost Japan's energy security, or helped utilities offload excess LNG cargoes when they have been overcontracted.
Top Asian leaders, including Japanese Prime Minister Yoshihide Suga, will attend US President Joe Biden's virtual climate summit scheduled for April 22-23.
The summit will be a key platform for Biden to galvanize efforts by the major economies to tackle the climate crisis and mark a turning point in the global climate battle, with the US taking the lead.
The re-emergence of the US in tackling climate change is critical to how Asian countries frame the climate debate and create policies within their own borders. It also heavily influences the economic and political drivers that will require Asian countries to advance their own domestic climate policies.
In the run-up to the summit, US climate envoy John Kerry has been on a whirlwind tour in Asia to garner support for Biden's green push. Other major Asia Pacific nations invited to the summit are Australia, China, India, South Korea, Singapore, Indonesia and Vietnam.
The summit will also pave the way for stronger climate action at the United Nations Climate Change Conference (COP26) this November in Glasgow, where national commitments will be critical to petroleum, natural gas, coal, power, renewables, hydrogen and carbon markets in the coming years.