24. februar 2024
* Mitsubishi UFJ Financial Group (XNYS:MUFG) *

Japan and South Korea are pushing ahead with a controversial coal plant in Vietnam and will provide US$1.8 billion in loans for the project, despite having announced ambitious pledges to become carbon-neutral on their home turf.

The state-aligned Japan Bank for International Cooperation (JBIC) said it will lend around US$636 million to the Vung Ang 2 project in central Vietnam, which has come under international criticism and divided opinion within Japan’s government.

Private financial institutions and the Export-Import Bank of Korea will also provide loans, with the total amounting to US$1.77 billion, JBIC said on Tuesday.

The 1,200-megawatt Vung Ang 2 plant was first proposed over a decade ago and has received investment from heavyweight firms such as Mitsubishi.

Japan said in July it would tighten rules for investment in foreign coal-fired power stations on environmental grounds, but stopped short of promising to end government funding for projects or axe existing ones.

The country also recently unveiled plans to boost renewable energy and phase out petrol cars in a bid to reach its new goal for carbon neutrality by 2050. South Korea has made a similar pledge this year.

Vung Ang 2 came under fire in May when 127 environmental groups from around 40 countries signed a petition calling on all the Japanese parties involved – reported to include big private banks – to pull out of the project.

“It’s a real disappointment,” Eri Watanabe from 350.org, which signed the May petition, told AFP on Wednesday about JBIC’s announcement.

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