Japan doubles down on nuclear power with 2nd transition bond offering

Kansai Electric Power Company is issuing Japan’s second transition bond worth ¥30 billion ($191 million) in July, signalling the country’s continued support for nuclear power despite global criticism, Bloomberg reported on Monday.

Proceeds from Kansai Electric’s bond sale will fund “carbon neutral projects” including nuclear and zero-carbon thermal power projects, as stated by SMBC Nikko Securities Inc., one of the underwriters.

The increase in Japan’s transition bond sales is partly due to government support for this type of debt issuance. Transition bonds are seen as a more practical way for Japan to reach its climate goals, given its reliance on existing infrastructure.

However, these bonds have drawn criticism from international investors. Unlike green bonds, which directly finance environmentally friendly projects, transition bonds lack specific project allocations.

This lack of transparency raises concerns about the true environmental impact of the funded activities. Kyushu Electric Power Co. also issued similar bonds last month, highlighting a potential trend within the Japanese energy sector.