TOKYO- Japan's banks and public agencies have funnelled nearly $25 billion into liquefied natural gas (LNG) projects since 2017 but the investments may sour as prices plummet from the COVID-19 pandemic and as climate change risks rise, a new study shows.

Spurred on by the government to boost energy security since the 2011 Fukushima disaster shut down the country's reactors, Japan's investment in LNG rivals that for coal, the dirtiest fossil fuel, while more evidence is emerging of the high climate impacts from LNG and gas.

The backing of high-risk projects that require decades of sales to return investments looks questionable, with some facing the risk of delay or being scrapped, the study by Global Energy Monitor (GEM) released to Reuters showed.

"The original rationale for the program - enhanced energy security - appears now to be fundamentally flawed, as the simultaneous shocks of the COVID-19 pandemic and the 2020 oil price crash reveal the vulnerability of global LNG supply chains," analysts Greig Aitken and Ted Nace wrote in the report.

Japan is the world's biggest importer of LNG, with burning gas from LNG producing about 40% of the country's electricity, though purchases are in long-term decline.

Competition from renewables and energy storage, which are growing cheaper, may also hit the investments, the report said.

GEM is a network of researchers focusing on fossil fuels and alternatives, the grouping says.

Japanese banks, public agencies and other entities have provided $23.4 billion of loans and support in 10 countries for more than 20 LNG terminals, tankers and pipelines, GEM said. Fourteen more LNG terminals in 11 countries are in line for Japanese financial support, the report said.

The report names government-owned Japan Bank for International Cooperation (JBIC), along with Mitsubishi UFJ Financial Group 8306.T , Sumitomo Mitsui Financial Group 8316.T and Mizuho Financial Group, 8411.T the country's biggest commercial banks.

In response to questions about the report from Reuters, the commercial banks pointed to recent policy changes tightening fossil fuel lending, where they recognized the climate impacts of them. They are also big lenders to renewable energy infrastructure. 

They declined to confirm the lending amounts or give details on any revisions in loan values. JBIC did not respond.

Underlining the risks to investments, Royal Dutch Shell this week announced plans to slash the value of its gas and oil assets by up to $22 billion. 

Climate change is returning to the global agenda even as the coronavirus pandemic, which dominated headlines for months, is worsening. 

More attention is also being focused on the atmosphere-warming impact of methane, which is often released or leaks from gas and oil facilities.

(Editing by Jacqueline Wong) ((aaron.sheldrick@thomsonreuters.com; 81-80-2677-4134;))