Weekly Japanese Industry and Policy News (September 29-October 5, 2023)

The EU-Japan Centre is pleased to start a new weekly service by publishing brief summary of the latest information from the Japanese governmental organizations & private companies/organizations. A couple of minutes reading to be informed about what is happening in Japan's policy, economy, EU-Japan relations, and innovation.

*Information is deemed correct at the time of release. 

Osaka Gas and Taiwanese state-owned company begin joint study on decarbonization such as "e-methane"
On September 28, Osaka Gas announced that it signed an agreement with Taiwan's state-run oil and gas operator, Taiwan CPC Corporation, to begin a joint study on carbon neutrality, including the introduction of e-methane in Taiwan. In this study, as part of efforts to achieve carbon neutrality at Taiwanese CPC, the two companies will jointly conduct studies on introducing and utilizing e-methane in the country, as well as studies on new energy fields such as hydrogen, ammonia, and biogas.

E-methane, which is one form of hydrogen utilization, has almost the same composition as city gas and can be used with existing LNG liquefaction and transportation equipment, city gas infrastructure, and customers' combustion equipment, so it can be used while suppressing social costs. It is possible to contribute to a smooth transition to carbon neutral city gas. In order to popularize e-methane as a new energy that will make city gas carbon neutral, the Osaka Group will not only develop and demonstrate technology in Japan, but also develop and demonstrate e-methane in North America, South America, Australia, the Middle East, Southeast Asia, etc. 

Osaka Gas website:
https://www.osakagas.co.jp/en/whatsnew/__icsFiles/afieldfile/2023/09/27/230927_1.pdf

Mitsui to jointly promote renewable diesel and SAF manufacturing business with Portugal Galp
Mitsui & Co., Ltd. and Galp SGPS, S.A., Portugal's largest energy company, have agreed on September 25to jointly promote the production of Hydrotreated-Vegetable Oil and Sustainable Aviation Fuel. They plan to establish a joint venture company as soon as they receive approval from the relevant authorities. The investment ratio will be 75% by Galp and 25% by Mitsui & Co.

HVO, which is produced from used cooking oil and animal and vegetable oils, can be introduced as a biofuel to replace diesel for internal combustion engine vehicles such as buses and trucks, and SAF can be introduced as a biofuel to replace jet fuel for aircraft. Demand for both fuels is expected to grow in the future as next-generation, earth-friendly fuels with low greenhouse gas emissions, especially in Europe, where policies to introduce biofuels are strongly promoted.

Galp is Portugal's only oil refiner, having operated the Sines Refinery since 1978. In recent years, Galp has strengthened investment in the energy transition field and is moving forward with fuel conversion initiatives. This project will construct new equipment at the Sinesh Refinery that can produce HVO and SAF by switching operation modes. Commercial production of HVO will begin in 2026, and they are also considering co-production of SAF, whose demand is expected to increase in the medium term. 

Mitsui website:
https://www.mitsui.com/jp/en/release/2023/1247489_13943.html

INPEX jointly produces ammonia in the United States with four parties
INPEX announced on October 3 that it will produce ammonia in the United States in collaboration with three companies, including Air Liquide, a major French industrial gas company. Production will begin by 2027 at the Port of Houston in southern Texas, and it will be exported to Asia as fuel for thermal power generation. The byproduct carbon dioxide (CO2) is captured and stored underground. Hydrogen is extracted from natural gas and synthesized with nitrogen to create ammonia. Production capacity is expected to exceed 1.1 million tons per year. The company will also consider increasing production in the future. Natural gas will be procured from other companies through pipelines. They will consider sales targets and financing options, and make a final investment decision in 2025.

The four companies have already completed feasibility studies for this project this year, and have selected the Port of Houston, Texas as a candidate site for the project. The Port of Houston is the world's second-largest petrochemical industry hub, and the proposed construction site is located near the pipeline network that supplies raw gas and water, and has easy access to utility facilities. 

INPEX website:
https://www.inpex.co.jp/english/news/assets/pdf/20231003.pdf

Kawasaki Heavy Industries recovers CO2 at coal-fired power plant
Kawasaki Heavy Industries and the Research Institute of Innovative Technology for the Earth (RITE, Kyoto Prefecture) announced on October 3 that they will begin a demonstration operation to separate and capture carbon dioxide (CO2) from exhaust gas at a power plant. Using a newly developed material that absorbs CO2, it will be powered by a coal-fired power plant for the first time in Japan. A CO2 separation and capture test facility has been constructed at the Kansai Electric Power Company's Maizuru Power Station. Demonstration tests are scheduled for the end of 2023. Kawasaki Heavy Industries will be in charge of the design and construction, and CO2 will be separated and captured using solid absorbent materials developed and manufactured by RITE.

This time, they applied technology to remove CO2 in closed spaces such as submarines. It uses amines, which are substances that absorb CO2. Compared to conventional technology, methods that use solid absorbents have the advantage of reducing the energy used for CO2 separation and capture. The company believes it can be applied to cement, oil refining, and chemical plants. There are also plans to commercialize large-scale CO2 capture and storage (CCS) at coal-fired power plants around 2030.

Kawasaki Heavy Industries website (in Japanese):
https://www.khi.co.jp/pressrelease/news_231003-2.pdf

Three ministries announce their approach towards financed emissions
On October 2, the Financial Services Agency, the Ministry of Economy, Trade and Industry, and the Ministry of the Environment compiled and published an approach to solving issues related to financed emissions to promote transition finance in the public and private sectors. International financial alliances such as GFANZ, which major financial institutions support, have set ambitious targets to reduce their own emissions to net zero, including the emissions of their investees and loans (financed emissions). As a result, some financial institutions may refrain from investing in hard-to-abate industries.

In this publication, they first summarized the role that financial institutions are expected to play in achieving carbon neutrality and the characteristics of financed emissions. And in order to appropriately evaluate and promote funding for innovation toward decarbonization and the transition of hard-to-abate industries, they have organized and presented the indicators by classifying them into two types of disclosure methods.

METI website:
https://www.meti.go.jp/press/2023/10/20231002002/20231002002-2rr.pdf

Toray develops new recycling technology for PPS resin
Toray announced on October 3 that it has developed a recycling technology for glass fiber reinforced PPS (Poly Phenylene Sulfide) resin. This technology can maintain the same strength as virgin material even after recycling. The company has developed pellets for material recycling by utilizing its proprietary compounding technology and blending special reinforcing fibers with PPS resin.

Conventionally, PPS resin recycling has had the problem of short glass fibers that break, resulting in a significant decrease in mechanical strength. The new technology maintains the same quality as virgin materials even when recycled materials are used. Furthermore, even when using more than 50% recycled materials, it has confirmed that the mechanical strength is equivalent to that of 100% virgin materials. If 50% recycled materials are used, CO2 emissions are expected to be reduced by more than 40%. By improving the recycling rate of PPS resin, this technology will contribute to reducing CO2 emissions and is expected to be widely used in horizontal recycling and other applications.

Toray website:
https://cs2.toray.co.jp/news/eu/eu_newsrrs01.nsf/0/768A15E041927FD349258A3E002F7351?open

METI held Tokyo Green Transformation (GX) Roundtable
On October 3, the Ministry of Economy, Trade and Industry (METI) held the Tokyo Green Transformation (GX) Roundtable to share Japan's public and private initiatives, in conjunction with Tokyo GX Week, which brings together experts in green transformation related fields from around the world to Japan. Prime Minister Kishida and METI Minister of Nishimura participated.

METI Minister Nishimura promised for the further acceleration of the introduction of renewable energy, the strong promotion of non-fossilization of power sources such as the use of nuclear power with the main premise of ensuring safety, and the implementation of “growth-oriented carbon pricing'' under the GX Promotion Act. He also stated that Japan would contribute to achieving global carbon neutrality by realizing public and private investment of over JP¥ 150 trillion over the next 10 years.

Prime Minister Kishida explained the idea of "new capitalism," using social issues such as global warming as the engine of growth, and achieving growth through public and private investment. He said that the government would formulate the sector-specific investment strategies by the end of this year, and contribute to the world through these initiatives.

METI website:
https://www.meti.go.jp/english/press/2023/1004_001.html