Coal, medicine, trains top Tokyo's Asia infrastructure plan

Abe announced the commitment, topping the USD 100 billion China set for its newly created Asian Infrastructure Investment Bank, yesterday with an explicit pledge to make a "treasure trove" of Mongolia's vast reserves of brown coal, regarded as too polluting for power generation.

Tokyo: Prime Minister Shinzo Abe's offer of USD 110 billion in fresh infrastructure financing for Asia is as much about Japan's agenda for selling its clean coal know-how and other technologies as it is about keeping up with China.

Abe announced the commitment, topping the USD 100 billion China set for its newly created Asian Infrastructure Investment Bank, yesterday with an explicit pledge to make a "treasure trove" of Mongolia's vast reserves of brown coal, regarded as too polluting for power generation.

Japan sided with the US in not joining the 57 countries that have signed on to the Beijing-initiated AIIB, but instead has pledged to provide more support itself, both through the Asian Development Bank, to which it is the largest donor, and also through public-private initiatives.

The plan announced yesterday represents about a 30 percent increase over current funding levels. It is in keeping with Japan's priorities to counter China's growing influence while also helping support its own manufacturing capacity and trade in the region, especially in Southeast Asia.

"Asia has a voracious infrastructure demand, reaching as much as 100 trillion yen (USD 830 billion) annually," Abe said. "We should seek quality as well as quantity. Pursuing both is perfectly suited to Asia."

Abe reminded his audience, who included former Malaysian Prime Minister Mahathir Mohamad and Mongolia's president Elbegdorj Tsakhia, of Japan's longstanding role as a provider of aid to the region.

Six decades ago, through the "tenacity of the Japanese engineers who grappled in the dense forest with large snakes, elephants and tigers," Japan built Myanmar's Baluchaung Hydropower Plant, which still provides a fifth of the country's electricity, he said.

Even with their increased commitments, the scale of available financing falls short of the USD 8 trillion the ADB says is needed by 2020 to help build up essential infrastructure.

Having shut down its nuclear reactors following the 2011 disaster at the Fukushima Dai-Ichi nuclear power plant, Japan has ramped up its use of coal and needs cheap supplies from its neighbours.

Support for coal-fired power plants that use new high-efficiency combustion technologies to reduce CO2 emissions, compared to older coal plants, is in sync with efforts to counter climate change, Abe said.

He cited power industry estimates that releases of greenhouse gas emissions by 1.5 billion tonnes a year if it were to spread to the US, China and India.

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