Toshiba Will Quit Coal Only After Building More Plants

(Bloomberg) -- Toshiba Corp. said it will stop taking orders for new coal-fired power plants as it makes a wider push to embrace renewable energy, though it will still complete work on about 10 further facilities.

The engineering-to-technology giant will continue to manufacture steam turbines and offer maintenance services for existing coal-power plants, and work on the construction of plants that have already been ordered.

It’s a shift that highlights differences between equipment suppliers as they move to leave behind the coal sector and focus on gas turbines and renewable energy. Samsung C&T Corp. has faced criticism over its intention to complete further coal projects before quitting the fuel, while General Electric Co. said in September it will pursue an exit from its existing obligations.

The firms are under pressure amid investor demands for action on climate change and over the prospect that tighter government policy on greenhouse gas emissions will limit scope for new coal-fired plants, even in Asia, where nations currently remain reliant on the fuel as a form of cheap electricity generation.

“Demand for new coal-power plants has been dwindling,” Toshiba President Nobuaki Kurumatani said during a media briefing Wednesday. “We started considering withdrawing from new coal-plant construction in the previous fiscal year, and finally made the decision” after Japan’s government pledged last month to become greenhouse gas neutral by 2050.

Renewable energy-related investments in Japan could total as much as 80 trillion yen ($760.6 billion) over the next decade amid efforts by the nation to lower emissions, Kurumatani estimated.

Toshiba has existing orders for the installation of coal-fired plant facilities in counties including Indonesia and India, according to details listed on its website. The Nikkei first reported the decision to exit coal on Tuesday.

Shares of the firm rose 0.8% in Tokyo trading on Wednesday. The company also released its second quarter earnings Wednesday, announcing an annual dividend forecast that beat analyst estimates.

Toshiba “needs to change strategy to take advantage of growth sectors,” Llewelyn Hughes, an associate professor at the Australian National University’s Crawford School of Public Policy, said by email. “Toshiba is able to make this shift because it is a diversified company, so exiting coal is not existential for them.”

The company plans to invest 160 billion yen in renewable energy for its operations through the fiscal year ending March 2023, and also aims to halve carbon dioxide emissions by 2030, including so-called Scope 3 pollution, spokesman Takashi Ebina said Wednesday.

Toshiba aims to increase annual sales from its renewable energy business to 650 billion yen by March 2031, compared to about 190 billion yen in the most recent full year. Sales from thermal coal power and hydrogen businesses amounted to 222.5 billion yen in the year ended March 31, representing 6.6% of total sales.

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