Takaichi and Trump Are Natural Fossil Fuel Buddies

The first fruits of the $550 billion investment deal promised between the United States and Japan have already been tainted by pollution.

A unit of SoftBank Group Corp. will invest $33 billion in a natural gas power plant in Ohio that would be the world’s largest non-renewable power plant. Another $2.1 billion will be spent on the crude oil export terminal. The two projects are the main elements of the first tranche of the agreement, which aims to reduce tariffs on Japanese imports from 25% to 15% in exchange for investments in the United States.

This carbon-heavy outcome may come as no surprise to Washington, where President Donald Trump’s administration has ordered the Pentagon to buy coal-fired power and turn fuel pellets into kawaii mascots. But surely Japan, the country that invented the lithium-ion battery and the hybrid car, knows better?

Not exactly. In reality, Japan has been quietly doing for years what Trump is now saying loudly: fighting a rearguard action against the energy transition to preserve the status of established businesses. Trump’s involvement in his latest projects means a return to type rather than a change of plot.

Japan’s export finance agency, the Japan Bank for International Cooperation, or JBIC, is the “dirtiest foreign financier” in Southeast Asia, according to a study last year by the Center for Energy, Ecology and Development, a clean energy think tank based in the Philippines. Between 2016 and 2024, more than a third of Southeast Asia’s coal energy financing came from Japanese banks, and more than a fifth of natural gas came from Japanese banks.

This activity has continued despite Japan signing international agreements such as the 2022 Group of Seven declaration promising to end such state support. JBIC alone has provided $3.9 billion for such projects since its 2022 commitment, according to Friends of the Earth Japan.

The government’s support of dirty energy abroad is best understood as an extension of the magical thinking that passes for energy conversion policy at home. Japan pins most of its decarbonization hopes not on shutting down fossil power plants but on distributing biomass and ammonia to furnaces, still 80% powered by conventional coal piles.

This reduces emissions only marginally and increases costs by approximately 50%; so by most measures this is not a good start. However, if government money could be used to support an export market for the technology, Japan’s industrial companies have little chance of selling it, while utilities don’t have to write off obsolete assets.

The common justification for Japan’s foot-dragging is that sticking to fossil fuels is necessary to resist clean energy supply chains dominated by China.

But this is not true. Sharp Corp. It was once the largest solar panel manufacturer on the planet, and Panasonic Holdings Corp. with Kyocera Corp. They were also big producers. All are now largely out of business, squeezed by a vestigial domestic market as well as competition from hungry Chinese rivals. Only four gigawatts of solar installed in 2024; This is the lowest figure since 2012.

It’s the same with wind, which is barely functioning in Japan due to objections from farmers, fishing vessels and landowners. Mitsubishi Heavy Industries Ltd. It was once a major player but has been overtaken by European, US and Chinese rivals that are building turbines 10 times larger. In an industry still largely devoid of competition from Chinese exports, subsidiary Mitsubishi Corp. It has already abandoned three offshore wind projects last year.

The best explanation for what’s happening isn’t so different from the state of energy politics in Washington these days: Japan’s oligarchic utility sector has hijacked the JBIC and the powerful Ministry of Economy, Trade and Industry, as well as its own regulators, to prop up existing businesses and crowd out cleaner rivals.

The United States can at least make the case that it is rich in fossil fuels. It exports approximately 9% more energy than it consumes on net. But Japan is one of the most energy import-dependent economies on the planet, with only 13% produced domestically.

This is an existential risk that will cause fossil fuel addiction to worsen. In the past few months alone, Prime Minister Sanae Takaichi has found himself locked in a bitter diplomatic battle with Beijing over how Japan would respond to an attack on Taiwan. At the same time, the Chinese navy is practicing how to blockade Taiwanese ports and ban shipping in the Western Pacific in the event of such a crisis.

If Japan were deprived of imported energy sources in the event of such a conflict, its LNG and coal stocks, which provide two-thirds of its electricity, would be depleted in about a month. Crude oil would last for six months, thanks to the stockpiles launched after the 1973 oil embargo plunged the country into exactly such a crisis of panic buying and recession. Nuclear fuel will run out within two years. But solar panels and wind farms, which Japan currently rejects, will continue until the 2050s. This sounds like energy security, I wish Tokyo would recognize this.

Previous generations of Japanese strategists understood the risks of energy insecurity. By collaborating with the isolationist United States to support its quixotic campaign against the world’s transition to clean energy, today’s leaders risk further exacerbating these dangers for both Japan and the planet.