Japan’s Controversial LNG Investments: Balancing Climate Commitments and Energy Needs – DW – 05/25/2025

Japan has become a major player in financing fossil fuel projects, especially gas and oil, despite promising to stop such investments at the 2022 G7 summit. Between 2013 and 2024, public financial institutions in Japan funneled a staggering $93 billion into oil and gas initiatives. This includes $56 billion for liquefied natural gas (LNG) projects, according to a report from Solutions for Our Climate.

In contrast, only $24.5 billion went toward clean energy during the same timeframe. Walter James, an expert on Japan’s energy policies, highlights that Japan’s influence on fossil fuel financing stretches across the entire supply chain—from exploration to usage in power plants.

Japan’s LNG investment model has evolved over decades, making it a key driver in the Asia-Pacific region’s LNG market. The Institute for Energy Economics and Financial Analysis (IEEFA) notes that this model helps Japan secure more energy access while allowing for the resale of surplus LNG abroad.

Interestingly, Japan has shifted from being a mere consumer of LNG to an exporter, with record-high resales reported recently. Much of the LNG Japan exports comes from Australia.

Despite this massive investment in fossil fuels, Japan heavily relies on imports for its energy needs, as domestic resources are limited. More than 83% of its energy comes from coal, oil, and LNG, according to the Asia Natural Gas and Energy Association.

### Is Japan Greenwashing with LNG?

After its G7 fossil fuel pledge, Japan introduced the Asia Zero Emission Community (AZEC) to promote net-zero emissions across Asia. In 2024, Japan signed 70 Memorandums of Understanding (MOUs) with several countries to collaborate on reducing emissions. However, many projects still focus on natural gas and carbon capture technologies, complicating Japan’s position on fossil fuel investment.

A study from Cornell University indicates that LNG could produce 33% more emissions than coal, once processing and transportation are considered. Hiroki Osada from Friends of the Earth Japan argues that Japan’s G7 commitment contains loopholes that allow further investments in LNG projects.

He describes this as “greenwashing,” where projects are framed as environmentally friendly simply because they incorporate some emissions-reduction measures, despite still contributing to greenhouse gas outputs.

### Indonesia’s Energy Landscape

Indonesia, for example, signed a $20 billion energy transition deal at the G20 summit with Japan’s backing. Critics argue that Japan’s focus on natural gas in Indonesia undermines true renewable energy potential. Research from the Institute for Essential Services Reform shows that renewables are already more cost-effective than natural gas in Indonesia.

Wicaksono Gitawon from the Indonesian NGO CERAH suggests Japan should pivot away from gas and push for renewables. He warns, “Investing in gas could lock Indonesia into fossil fuel dependency.”

Experts like James assert that Japan’s involvement in LNG meets the demand for technology and investments in countries like Indonesia, which have their own energy transition strategies.

The upcoming AZEC meeting in Malaysia will further address these pressing concerns, indicating that the conversation around energy sourcing is far from over. The complexities of Japan’s role in fossil fuel financing and its environmental commitments remain a topic of significant debate among experts and activists alike.



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