A Persistent Fossil Fuel Agenda? Japan’s Overseas Energy Development in Southeast Asia

Abstract:Despite growing concerns about the impacts of climate change, Japanese public financial institutions continued to build on long-standing partnerships in Southeast Asia through the expansion of thermal power generation. Recent Japanese investments include coal-fired power plants in Indonesia and Vietnam and natural gas supply chains in Indonesia and Bangladesh. Japan was one of the last developed countries globally to champion coal development that, even if highly efficient, comes at a cost to the environment. Overseas energy investment is at the nexus of two significant challenges of this century: the threat of climate change and great power competition. Japan, regionally proximate to China and burdened with a shrinking economy and limited energy supplies, shapes its regional foreign policy to enhance energy security, expand overseas market share, and uphold a rules-based international order. This paper discusses these primary drivers of Japan’s policy approach and highlights examples of Japan’s overseas energy investment strategies starting to shift to maintain a competitive edge as public opinion and market forces react to the increased risk perception of climate change.