Japanese exports of power station equipment, including turbines for coal plants, rose 55 per cent in the year through March

US challenges Japan over coal technology exports

US officials have challenged Japan over moves to boost exports of coal-fired power technology by offering cheap loans to buyers.

Japan is one of only a handful of industrialised economies that still allows unrestricted financing of overseas coal projects by state-backed lenders in defiance of US calls to stop supporting coal projects in the developed world in an effort to curb greenhouse gas emissions.

The US has told Japan it should only back coal plant construction that includes carbon capture and storage (CCS) technology, according to a source with direct knowledge of the issue who declined to be identified.

Japan has been exporting equipment that cuts carbon dioxide output by burning coal more efficiently, but that does not go as far as more expensive technology designed to capture around 90 per cent of carbon dioxide emissions that is slowly being introduced on a commercial scale in North America.

The source said the dispute had taken place quietly and Japanese officials had politely rebuffed the criticisms, but it comes ahead of a November gathering of the Organization for Economic Cooperation and Development (OECD) where members are expected to discuss coal-fired power funding.

Takafumi Kakudo, director for coal at Japan's Ministry of Economy, Trade and Industry, said he was not aware of growing pressure from US officials, adding that the nation's coal-burning technology was far cleaner than alternatives that many developing countries could afford.

"Japan is trying to help foreign countries adopt low-pollution power systems such as renewable energy and liquefied natural gas plants as much as possible," said Kakudo.

"But some countries can't afford these systems and those which produce coal want to utilise their own resources. In those cases, it is better to build plants with the high-efficiency that Japan can provide."

Coal burning technology that runs turbines at higher temperatures and pressures can reduce carbon emissions by up to about 50 per cent, according to the International Energy Agency.

US officials were not immediately able to comment. One Treasury official said the department may respond to requests for comment later.

In his Climate Action Plan launched last year, President Barack Obama said the United States would limit investment in foreign coal-fired projects and urged others to do the same and the UK and several European nations have followed suit.

But Japanese Prime Minister Shinzo Abe is looking to triple infrastructure exports to about 30 trillion yen (£174bn) by 2020 and exports of power station equipment, including turbines for coal plants, rose 55 per cent in the year through March to £4.9bn from the previous 12 months, according to industry body the Japan Machinery Centre for Trade and Investment.

"Japan has emerged as a regressive force in the global effort to address climate change," said Steve Herz, director of the international climate programme at US environmental group the Sierra Club.

"It would be a huge missed opportunity if the OECD and export credit agencies did not use the Paris summit to announce they have made progress on limited coal project lending," he said, referring to a United Nations climate change conference late next year.

But some in Japan were sceptical about Obama's push against pollution, suggesting the US was looking for potential markets for exports from its boom in shale gas extraction.

"President Obama is doing it for show as the country wants to promote and reap the benefits of shale gas," said Norio Sasaki, vice chairman of Toshiba Corp, which won a major equipment order from India in February.

"But for Asian countries, importing shale gas can be expensive as transport adds costs. Some emerging countries still need to rely on cheaper coal and Japanese technology can help lower greenhouse emissions."

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