Investors question J-POWER over extension of inefficient coal plants

ACCR is responding to reports that J-POWER is considering extending the operation of its domestic inefficient coal-fired power plants beyond its previously disclosed closure timeline. ACCR estimates that J-POWER's remaining four operating coal-fired units currently scheduled for retirement by 2030 emit approximately 10 MtCO2e annually (equivalent to the annual emissions of approximately 2 million petrol cars). The company is expected to set out revised coal phase-out plans in its new Medium-Term Management Plan next spring.

Commenting on this, Martin Norman, Head of Stewardship, Global, ACCR, said:

“Extending the life of inefficient coal plants should not be the answer to the growth in electricity demand J-POWER claims to face. The additional capital and operational costs of extending inefficient plants will be of immediate concern to investors – as will the projected increase in emissions.

“J-POWER should instead address the growth in electricity demand by accelerating investment in cleaner generation and flexibility. J-POWER should be focusing on accelerating deployment of lower-emissions alternatives, including solar, wind and battery storage.

“Delaying J-POWER's coal retirements would contribute to the prolongation of Japan's dependence on imported fossil fuels and its exposure to volatile international fuel prices and supply disruptions. With almost all of Japan's coal imported, reducing reliance on coal is also an important part of strengthening Japan's long-term energy independence.

“Revising the coal retirement plan would raise broader questions from investors about the credibility and durability of J-POWER’s transition strategy. Investors need confidence that the company’s transition targets and commitments remain reliable bases for assessing its future strategy and capital allocation.

“Investors will be seeking clarity on any proposed changes and how J-POWER intends to remain as close as possible to its previously disclosed transition pathway."

Background:

In 2024, J-POWER released its FY 2024-2026 Medium-Term Management Plan, which updated the company’s Blue Mission 2050 decarbonisation strategy and committed to closing five domestic coal fired power generation units by FY 2030, one of which was retired in 2025.

The announcement followed two consecutive years of shareholder dissent over J-POWER’s decarbonisation strategy:

At the 2022 annual general meeting (AGM), 26% of shareholders voted in support of a shareholder proposal asking J-POWER to set credible emissions reduction targets and disclose plans to achieve them. Co-filers included Man Group, a global active investment management firm, Amundi, Europe’s largest asset manager, HSBC Asset Management and ACCR.

At the 2023 AGM, 21% of shareholders voted in favour of a shareholder resolution calling on J-POWER to set and disclose credible short and medium-term emissions reduction targets aligned with the goals of the Paris Agreement. The resolution was filed by Amundi, HSBC Asset Management, ACCR, and was supported by Man Group.