TOKYO -- The Japan Bank for International Cooperation will join big private lenders to provide roughly $1.77 billion in financing to a coal-fired power plant in Vietnam, defying criticism that the project runs counter to the global shift away from fossil fuels.
JBIC is providing about $636 million for the Vung Ang II thermal power project, the state-backed lender said Tuesday. Other lenders include Japan's three leading banks and the Export-Import Bank of Korea. Trading house Mitsubishi Corp. is an investor in the project.
Environmental groups have criticized the Vung Ang project. A group of about 20 investors, largely from Europe, also sent a letter in October urging the project's sponsors to withdraw. Standard Chartered Bank has since pulled financing from the new coal plant.
Japan's three largest banks have decided not to invest in new coal power projects as a rule. But they were in talks over Vung Ang before making that pledge. Tokyo's view of the project as a way to bolster economic cooperation with Vietnam and a matter of national interest likely contributed to the banks' participation as well.
JBIC's announcement contrasts with Japanese Prime Minister Yoshihide Suga's goal of achieving net-zero greenhouse gas emissions at home by 2050. Japan's government over the past few weeks has announced new targets on using more renewable energy and curbing auto emissions in the country.