With Japan's Nippon Life Insurance Company purporting to restrict new finance for coal plant projects regardless of their location, a group of environmental NGOs and experts on Saturday hailed the decision, saying it was aimed to strengthen commitment to the Paris Agreement to limit global warming to 1.5 degrees Celsius.
"The news that Nippon Life Insurance Company decided it will cease project finance for new coal-fired power plants is the most progressive policy among Japanese financial institutions as it purports to restrict new finance for coal plant projects regardless of their location," a statement by the NGOs said.
The NGOs comprise the Japan Center for a Sustainable Environment and Society, Friends of the Earth Japan, Kiko Network, 350.org Japan, Greenpeace Japan and Rainforest Action Network.
Nippon Life Insurance Company's decision comes as unprecedented and significant with the company being the biggest life insurer by revenue in Japan.
"We applaud Nippon Life Insurance Company for adopting this blanket restriction on finance for new coal plant projects. At the same time, we urge the company to catch up with its global insurance industry peers, such as AXA and Allianz, by moving to divest from companies dependent on coal power and mining.
"Nippon Life Insurance Company's new policy should provide the benchmark for Japanese banks and insurance majors to strengthen their commitment to the Paris Agreement by ceasing new lending and investment in new coal fired power projects and companies involved in coal fired power expansion both domestically and overseas," the NGOs said in a statement issued in Tokyo.
Tim Buckley, Director of Energy Finance Studies, Institute for Energy Economics and Financial Analysis (IEEFA), said: "Japan is a key global player in the Asian coal fired power sector, alongside China it is the largest financier and promoter of new coal power. This is a really important announcement that will put pressure on all other Japanese financiers."
"This follows the significant move by SwissRe last week to cut thermal coal exposure and suggests global momentum is really finally starting to build in support of the Paris Climate Agreement.
"This comes at a time when technology has driven a more than 50 per cent decline in renewable energy costs in the last two years alone," Buckley added.
New Delhi-based Centre for Financial Accountability Executive Director Joe Athialy said Nippon Life Insurance Corporation is setting the right kind of example by its decision to not fund any new coal power plants.
"We are seeing several insurance companies opting out from investing in coal projects. In May, Dai-ichi Life Insurance company adopted a policy to not fund any new coal projects overseas. Indian insurance companies need to take a note of this. The Life Insurance Corporation of India is one of the single largest investors in coal and it's time that LIC consider adopting a similar policy."
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