January 30, 2024

Joint Statement:
JBIC financing for two gas power projects in Mexico would violate
the G7 agreement- JBIC, NEXI and private banks should stop consideration
immediately Japan Center for a Sustainable Environment and Society (JACSES)
Kiko Network
Friends of the Earth Japan
Mekong Watch
Two gas-fired combined cycle power projects in Mexico are now under consideration for
financing by the Japan Bank for International Cooperation (JBIC). One is in San Luis Potosi
and the other one in Salamanca. When Japanese NGOs asked the consistency of these twoprojects with the agreement reached at G7 Elmau Summit to end new public financing forfossil fuel energy, JBIC did not provide specific rationale on its judgment that the policy of theMexican government is consistent with the 1.5 degree target. If JBIC provides support, it ishighly likely that it constitutes a violation of the G7 agreement, thus JBIC should stop
consideration for financing.
JBIC placed these two projects on its list of projects under consideration for financing on
November 2, 2023 (*1). Comisión Federal de Electricidad (CFE), the state owned electricutility of Mexico is the project operator of these two projects. CFE plans to construct twogas-fired combined cycle power plants to replace the existing oil-fired power plants in San
Luis Potosi and Salamanca in Mexico, and Mitsubishi Power is expected to provide power
plant technology. The Nippon Export and Investment Insurance (NEXI) has also been
considering to underwrite for these two projects since December 6, 2023 (*2).
At the G7 Summit in Elmau in June 2022, the Japanese government committed “to end new
direct public financing for the international unabated fossil fuel energy sector by the end of2022, except in limited circumstances clearly defined by each country consistent withlimiting warming to 1.5°C and the goals of the Paris Agreement (*3)”, and hence in applying
the “limited circumstances” exception to these two projects, Mexico’s energy policy as arecipient country is required to be consistent with the 1.5 degree target. However, theanalysis published by Climate Analytics (*4) and Climate Action Tracker (*5) indicate that
Mexico’s NDC (Nationally Determined Contribution) is not consistent with 1.5 degree target.
As for the rationale for adequacy of its support for these two projects, JBIC responded in ameeting with Japanese NGOs that Mexico’s updated NDC 2022 is consistent with the 1.5degree target. However, no explanation was provided as to the rationale on how JBIC foundthe Mexican government’s NDC to be consistent with the 1.5 degree target. JBIC loans areusually co-financed with Japanese megabanks, and that private bank loan portion is often
insured by the Nippon Export and Investment Insurance (NEXI). So we sent questions toNEXI on December 7, 2023, which is considering underwriting for the projects, however, noresponse has yet been received. This violates NEXI’s own Guidelines on Environment andSocial Consideration in Trade Insurance which stipulates that efforts should be made toensure accountability.
According to the article of Mexico Business News (*6), it is pointed out that the generation
costs of solar and wind energy are lower than that of gas-fired power, and have a high costadvantage. Providing support for these two gas-fired power projects with a low costadvantage in Mexico, rather than for renewable energy projects with a high cost advantage,is not consistent either with the Infrastructure System Overseas Promotion Strategy 2025 by
the Japanese government, which indicates the maximum use of renewable energy.
Based on the above, we urge JBIC, NEXI and private banks (three megabanks: MUFG,Mizuho and SMBC) to stop considering support for these two projects that are highly likely toconstitute a violation of the G7 agreement.
Contact:
Japan Center for a Sustainable Environment and Society (JACSES)
Yuki Tanabe
tanabe@jacses.org
Marika Kita
kita@jacses.org
Note:*1:San Luis Potosi gas-fired combined cycle power plant project
https://www.jbic.go.jp/en/business-areas/environment/projects/page_00166.html
Salamanca gas-fired combined cycle power plant project
https://www.jbic.go.jp/en/business-areas/environment/projects/page_00165.html*2:
San Luis Potosi gas-fired combined cycle power plant project
https://www.nexi.go.jp/en/environment/a/202312010165_02.html
Salamanca gas-fired combined cycle power plant project
https://www.nexi.go.jp/en/environment/a/202312010165.html*3:
https://www.mofa.go.jp/mofaj/files/100364051.pdf*4: https://1p5ndc-pathways.climateanalytics.org/countries/mexico/*5: https://climateactiontracker.org/countries/mexico/*6:
https://www.woodmac.com/press-releases/solar-pv-to-overtake-onshore-wind-in-latin-america-from-2023/