Japan megabanks, government are biggest funders of Southeast Asia’s gas expansion

Singapore’s DBS Bank is newly listed among the top 60 banks globally which committed US$705 trillion into fossil fuel financing in 2023, a new report shows.

Japan oil rig
An oil and gas rig in Nigata, Japan. The country's state-backed Japan Bank for International Cooperation has poured US$7 billion into Southeast Asia's methane gas industry since the 2016 Paris Agreement. Image: Koichi Hayakawa/ FlickrCC BY-SA 2.0 DEED

Japan’s biggest banks and its government are at the forefront of bankrolling fossil fuel expansion in Southeast Asia, a new report by the Banking on Climate Chaos (BOCC) Coalition found.

Sumitomo Mitsui Banking Corporation (SMBC), Mitsui UFJ Financial Group (MUFG) and Mizuho Bank were listed as the top financiers of methane gas power expansion in Southeast Asia, the report said, backing ultra deepwater oil and gas.

Mizuho alone, which was ranked as the second biggest financier of fossil fuels globally after American bank JP Morgan Chase, increased its financing from US$35.4 billion in 2022 to US$37 billion in 2023.

Meanwhile, MUFG, which financed the most fossil fuels of all the Japanese banks since 2016, following the Paris Agreement signed in December 2015, had also increased its funding for fossil fuels in 2023 to US$33.25 billion.

State-backed Japan Bank for International Cooperation has channelled US$7 billion from public funds to Southeast Asia’s methane gas industry since 2016, which accounted for 47 per cent of all public finance for the region’s gas sector.

“As a result, the Japanese government is the biggest financier of the methane gas industry in Southeast Asia,” said the report, drawing on findings from the Center for Energy, Ecology and Development.

A recent report by the think tank Institute of Energy Economics and Financial Analysis (IEEFA) showed that Japan’s interest in cultivating Southeast Asian demand for gas is the result of surplus LNG volumes the country is looking to offload.

According to the BOCC report, Thailand was among the biggest recipients of fossil fuel financing in the region. The country has added the most liquified natural gas (LNG) capacity in the region since 2016 and in 2022, Thailand was the biggest importer of LNG from top global exporters, including neighbouring Malaysia. LNG is almost entirely made up of methane gas.

“Coal is not called ‘natural’ rock. It’s a fossil fuel. Likewise, there is no such thing as ‘natural’ gas. It’s methane, and it’s a fossil fuel,” the report said.

Vietnam and the Philippines are also set to become leading buyers of LNG after both countries officially began importing methane gas in 2023, having commissioned their first LNG import terminals and received deliveries last year. Both countries combined comprise about 63 per cent of the gas power plant and import capacity in the region, the report said.

Meanwhile, Malaysia and Indonesia are among the world’s biggest exporters of methane, accounting for about 10 per cent of global methane exports and planning to add 13.5 million tonnes per annum of new export capacity.

The report also highlighted the Philippines’ San Miguel Corporation’s expansion of fossil fuels, including coal and gas power plants. The conglomerate is behind the biggest planned capacity expansion of fossil gas in Southeast Asia, including a landmark US$3.3 billion deal for the construction of an LNG facility in the biodiverse Verde Island Passage. Local communities have protested against the project.

Not a bridge fuel

The BOCC report, now in its fifteenth edition, ranked the world’s top 60 banks lending and underwriting finance to over 4,200 fossil fuel companies globally. The data accounts for each bank making financial contributions to fossil fuel deals, in addition to banks in leading roles.

Altogether, the top 60 banks listed pumped US$705 billion into fossil fuels in 2023, adding to a total of US$6.9 trillion since 2016. Nearly half of this went towards fossil fuel expansion. Citibank was named the biggest funder of fossil fuel expansion since 2016.

Singapore’s DBS Bank was a new addition to the list this year, having poured a cumulative US$36.8 billion in gas and coal expansion between 2016 and 2023.

The report found that some of Southeast Asia’s largest fossil fuel financiers come from historically carbon-polluting nations, such as the United States, Europe and Japan. Between 2021 and 2023, the banks in the report channelled US$27.6 billion into 15 companies which were expanding LNG trade in the region with 100.1 million tonnes per annum of methane gas terminal expansion plans.

Coal is not called “natural” rock. It’s a fossil fuel. Likewise, there is no such thing as “natural” gas. It’s methane, and it’s a fossil fuel.

Banking on Climate Chaos Coalition

Over the same period, those banks also poured US$39 billion into the methane gas-fired expansion plans of 40 companies in Southeast Asia, which had planned 105 gigawatts (GW) of gas-fired expansion worldwide.

“Those financiers are enabled by policies that falsely tout methane gas as a bridge fuel and encourage the sector by providing public finance,” the report said.

The region also received fossil fuel financing from multilateral development banks, namely the Asian Development Bank and the World Bank, which had channelled US$1.2 billion into fossil fuels since 2016.

On the bright side, these same financiers are also backing renewable energy development across the region, the report said. “Even with 139 GW of new methane gas capacity in the pipeline… renewable energy growth amounts to 328 GW, more than twice as much as the proposed methane gas capacity,” it said.


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