New Investigation: Sumitomo Corporation’s Dirty Energy Investments Highlight Japan’s Failure to Act on Climate

As the international community gathers in Madrid to discuss next steps in the fight against global climate change, a new report is exposing how Japan’s policies are empowering a major corporation that embraces and invests in dirty energy sources like coal and biomass. Mighty Earth’s new report, “Sumitomo Corporation’s Dirty Energy Trade: Biomass, Coal, and Japan’s Future,” illustrates how the massive, Tokyo-based trading company lies at the heart of global coal and biomass networks that mine, chop, finance, ship, and burn the most destructive fuels on Earth. From the American southeast to British Columbia to Vietnam, Sumitomo Corporation is putting global forests at risk to generate electricity for Japan.

“Sumitomo Corporation is moving Japan backwards on climate both at home and abroad,” said Roger Smith, Japan Project Manager at Mighty Earth. “At a time when other countries are negotiating deeper emissions cuts, Japan’s Sumitomo Corporation instead is deepening the problem by continuing to invest in the dirtiest sources of fuel.”

Mighty Earth is calling on Sumitomo Corporation to immediately adopt and implement a ‘No Deforestation, No Peat, No Exploitation’ (NDPE) policy and make a public commitment to end involvement in all coal generation and mining of thermal coal globally by 2030.

An Unrepentant Polluter – Sumitomo Corporation’s Coal Business

Sumitomo Corporation has played a pivotal role facilitating coal imports to Japan. And now, as the climate crisis increasingly dominates international headlines, Japan is the only G7 nation still adding to its domestic coal generation. Sumitomo is a key part of this trend; the company continues to own and invest in coal mines, through which it supplies Japan with more than 6 million tons of coal each year.

Sumitomo is also at the forefront of the construction of dirty coal plants abroad. The company is currently building new, polluting coal-fired power plants in Vietnam, Indonesia, and Bangladesh. One of the coal plants Sumitomo is linked to – the Van Phong 1 plant in Vietnam – is particularly controversial as its construction is expected to contribute to approximately 1,900 premature deaths from air pollution over its period of operations.

“Even in the Japanese market where progress on clean energy is moving at a snail’s pace, Sumitomo Corporation is lagging behind its peers.  Through its policy riddled with loopholes, Sumitomo has left itself the space to push ahead any number of coal power stations, including the Van Phong 1 coal power station in Vietnam, a project up to nine times more polluting than the average new build in Japan. The company is also expanding coal power in Bangladesh with two new 1200 MW coal power stations.” said Julien Vincent, Executive Director of Market Forces.

“Building a coal power station in 2019 is foolhardy, when scientific experts agree that to meet the goals of the Paris climate agreement, we can’t build any more coal power. With international investors increasingly viewing coal as a stranded asset and moving finance out of the sector, many will question why Sumitomo continues to pursue these risky deals.”

Trashing Forests for Fuel – Sumitomo Corporation’s Biomass Business

Japan’s soaring consumption of wood biomass is a crisis in the making. The amount of wood pellets imported into Japan to burn for electricity increased five-fold between 2014 and 2017, placing Japan among the top consumers of wood biomass. Protecting existing forests, which store carbon from the atmosphere, is essential to combating the climate crisis. Increased logging for biomass degrades natural forests and results in forests turned into carbon-poor tree plantations. This process of chopping down trees abroad, processing the wood, and shipping them across oceans to Japan requires the burning of large amounts of fossil fuels.

Sumitomo Corporation is Japan’s leading importer of wood pellets and wood chips, both of which are burned for electricity. Sumitomo has a 55 percent market share of imported wood pellets. The company states that it intends to control 40 percent – 1.6 million tons – of all imported biomass fuel by 2021.

In 2017, Sumitomo Corporation acquired a 48 percent share of Canadian-based biomass producer Pacific BioEnergy, raising concerns about increased logging in the delicate Boreal forests of British Columbia. Sumitomo also contracts for wood pellets with Enviva Partners, a company tied to the logging of critically endangered forests in the Southeastern United States. In North Carolina and other southeastern states, foreign demand for wood pellets has placed additional pressure on an already highly degraded landscape.

“Forests of the Southern US are not only important to communities, but they are the world’s most biologically-diverse temperate forests,” Dogwood Alliance Campaign Director Rita Frost said. “These forests are under immense threat from logging caused by the wood pellet biomass industry, led by Enviva. Enviva’s logging is enabled by overseas companies, like Sumitomo, and will lead to further degradation and loss of our forests. We call on Sumitomo to end their use of imported wood pellets from the Southern United States. Our forests aren’t fuel.”

Climate Laggards

While Sumitomo released a climate policy in August of 2019, it fell overwhelmingly short. While the company pledged not to develop new coal-fired plants, they allowed a glaring loophole for plants deemed to be “essential”, explicitly exempting the Van Phong I project. The policy also lacks a plan or timeline to phase-out coal plants or production of thermal coal. Sumitomo Corporation cannot both be committed to alleviating climate change and also involved in the expansion of coal generation.

Sumitomo has an opportunity to be a climate champion by developing truly clean energy,” said Smith. “Climate change is a crisis that affects our entire world, and we need companies like Sumitomo to lead the way toward solutions. Actions, not just their words, are what matter.”

Mighty Earth and its partners are calling on Sumitomo to develop a detailed implementation plan to exit from coal generation and thermal coal mining by their 2020 annual general meeting, move away from imported forest-derived biomass as a fuel source, adopt a company-wide “No Deforestation, No Exploitation” commitment to forest sustainability, and shift investments into truly clean renewable energy sources.