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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

FeatureApril 2021, the government made a further
commitment to raise its reduction target forgreenhouse gas emissions from 26% to 46%
compared to the level in 2013. This is one of many
examples of an accelerating move toward
decarbonization seen in Japan and overseas.
With the aim of achieving our management
vision, we are promoting the effective use of

Adding depth to business management with a further emphasis on ESG

E
Environment

related to the management of hydrogen and CO 2

Tackling social issues throughvalue cocreation
1 Create sustainable communities
2 Provide services that address various urban

lifestyle issues

Challenge 1

Leadership in the effort toachieve Net-Zero CO2

Challenge 2

Establishment of a value cocreation ecosystem

Challenge 3

Transformation of
the LNG value chain2030

l u e cre ate d a n d p r ovi dedalue co - crea
ti o nof a v
ent
ec
m
os
is h
ys
ffort to achieve
bl
te
he e
Ne
ta
m
nt
t-Z
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pi
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er
sh
r
o
e
d

Di

s
ver

e va

2

Social

1 Reduce CO 2 emissions on a global scale
2 Develop and commercialize technologies

Acceleration and achievement of thethree challenges

O
CS

Accelerate initiatives toachieve Net-Zero CO2

natural gas, the expansion of renewable energy
sources, and the development of core element
technologies for decarbonization, as we arecommitted to taking up the challenge to achieve
Net-Zero CO2 and leading the transition to a
decarbonized society.

a

Net-ZeroIn the management vision, Compass2030,
announced in November 2019, the Tokyo Gas
Group declared it would take up three challenges,
including that of “taking a lead in the effort toachieve Net-Zero CO2.” Then, in October 2020,
more than a year later, the Japanese government
declared the goal of realizing a carbon-neutral,
decarbonized society by 2050. Six months later, in

Le

Challenge to achieve

Customersolutions

Transformationof the LNG
value chain

Network

G
GovernanceCarrying out groupformation reforms

Trading

Production andpower
generation

1 Carry out management reforms(Improve management quality and transparency)

2 Reform the Group’s organizational structure(Improve the earning power of each function of the value chain)

Tokyo Gas Integrated Report 2021
03

Utilization of the strengths of the Tokyo
Gas Group in activities both in Japan and inglobal markets

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

While it is difficult to predict the progress of
future technology in detail at present, we believethat the strength of the Tokyo Gas Group is to
manage the supply side and the demand side ofenergy in an integrated manner. By combining the
supply of decarbonized energy (via the spread ofSupply side

decarbonized gas by methanation, local areahydrogen, and large-scale renewable energy use)with the demand side’s optimal energy
management (via VPP*1 using decentralized powersources including PV generation, storage
batteries, and EV*2), we aim to realize Net-Zero

Demand side

Decarbonized energy supply

CO2 in a way that is unique to the Tokyo Gas
Group.
*1: Virtual Power Plant (VPP) A mechanism that uses IoT to manage andcontrol decentralized power sources, batteries, etc. as if they were asingle power plant.
*2: Electric Vehicle (EV)

Optimal energy management for lower carbon or
decarbonization of demand

Incl. creation of overseas supply chains
PV generation

Tokyo Gas Group’s
Net-Zero CO 2 visionand its technology
development efforts

Decarbonizedgas supply

Methanation

PV generation

Local hydrogen
NW

LNG terminal
HydrogenPV generation
StoragebatteryEV

ENE-FARM

On-site CCU

Residential consumers

Local area hydrogen supply

CO 2

Decarbonized electric
power supply
Onshore/Offshore
wind powerPV

Biomass

Energy business,driven by demand/
supply matching, in
the Net-Zero CO2 era

Fuel cell

Decentralized
resource use and
VPP

Power gridGas pipeline
network

Large-scale renewable energy

Cogeneration

Business-use
consumers

On-site CCU

Including ammonia

Business-use
consumers

CO 2

CO 2

Storagebatteries

CO 2

Cogeneration
Cogeneration

Storagebatteries

Communities

Heat conduits

Thermal power
CCUS, forestation, DACCS, BECCS, etc.

Technology
development
efforts

Storagebatteries

Independent
power lines

On-site CCU

Large-scale CCS

Expansion of renewableenergy power sources

Hydrogen andmethanation

Decentralized resource
use and VPP

On-site CCU

Microbubble technology

Advanced operation of
power generation facilities

Methanation verification test
Low-cost hydrogenproduction

Control of decentralized
resources

CO 2 separation and capture,
and application technology
at customers’ site

P.06

Tokyo Gas Integrated Report 2021
04

P.07

P.08

Back To Contents

Introduction

Management
MessageFeature:Challenge to achieve Net-Zero CO2

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Specific initiatives toward decarbonization
During the transition stage, steady reduction in
CO2 emissions is important. In addition to“expanded use of renewable energy in Japan andoverseas,” we are working on “shifting the energy
source for city gas,” as well as “energy saving
through the use of natural gas, and advanced useof energy” as fast-acting measures to reduce CO 2 ,and “the use of CCU technologies at customers’sites” and “carbon neutral LNG initiatives” asdecarbonization measures for gaseous energy.
Over the medium- to long-term, in addition to“CO2 absorption and offsetting by means such asuse of natural gas and CCUS,” we will combine“initiatives on hydrogen and methanation for zeroCO2 emissions,” which will enable effective use of
our existing city gas infrastructure, in our efforts
to achieve Net-Zero CO2 .

Up to 2030

Transition stage

Up to 2050

Decarbonization

Zero CO2 emissions

Technology development and implementationof hydrogen and methanation
Expanded use of renewable power sources in Japan and overseas

Roadmap towardachieving Net-Zero
CO 2

Natural gas(LNG)

CO2 emissions
reduction

Introduction of ultra-high-efficiency fuel cells
Shift of fuel source to city gas, high-efficiency gas
appliances, and area energy networks

Incorporation of overseas reduction effects

CO2 absorption
and offsetting(energy saving, CCUS, etc.)

Use of CCU technologies at customers’ sites
Expanded use of carbon neutral LNG
Illustration of theTokyo Gas Group’s
CO2 emission trend
toward decarbonization

Thorough CO2 emissions reduction
during the transition periodTokyo Gas Integrated Report 2021
05

Decarbonization

Combining thesemeasures towardachieving
Net-Zero CO2

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

Challenges facing low-cost greenhydrogen production by the waterelectrolysis method that Tokyo Gas
is working on

within two years low-cost production technology
for a water electrolysis cell stack, which accounts
for a large portion of the production cost in awater electrolysis device. Tokyo Gas will use thetechnologies of material selection andperformance/durability evaluation, accumulated in
the development of residential fuel cells (ENEFARM), and work on reducing the material cost.
SCREEN will be in charge of developing the waterelectrolysis cell stack production technology andproduction equipment that applies continuous
production technology using its proprietary roll-toroll methodology*1. We will thereby work on
drastically reducing the production cost, which had
so far been difficult to achieve. Going forward, in
conjunction with this development project, the twocompanies will undertake technologicaldevelopment for the systematization of this waterelectrolysis device to realize low-cost green

1 Low-cost electric power procurement
2 Reducing cost of hydrogen production

systemReducing cost of water electrolysis
deviceReducing cost of cell stack(material cost and manufacturing cost)

Hydrogen-related
technology development

Joint developmentof water electrolysis
cell stack for lowcost green hydrogenproduction

Joint development with SCREEN
Holdings, utilizing the strengths ofTokyo Gas
Tokyo Gas and SCREEN Holdings Co., Ltd. haveagreed to jointly develop a “water electrolysis cellstack” and a “water electrolysis cell stack
manufacturing device” with the aim of establishing

Concept and basic
composition of a waterelectrolysis cell stack
HydrogenSummary of water electrolysis systemhydrogen production methods (left)
and fuel cell power generation method (right) (illustration)

Cell

Water electroysis

Electrolyte membrane

Renewable energy
source, etc.

Electrode
Electrode

Separate

Hydrogenproductione-Electonse-Electonse-

Oxygene-Parts are now thinned andundergo high-speed
continunous manufacturing
Water

Hydrogen ionsElectric power

What is a water electrolysis
cell stack?

Low-cost production of a waterelectrolysis cell stack (illustration)

OxygenSeparate

Cell Stack

Jointly with SCREEN, we will consider diverse
possibilities to make use of the development
outcome. If lower-cost production for a waterelectrolysis cell stack is realized, Tokyo Gas may
potentially be able to produce low-cost hydrogenby itself, supply hydrogen to local areas, and use it
as a material for methanation. Other possibilities
may include technology licensing to system makers
in Japan and overseas, and systemization and saleby ourselves or in alliance with a manufacturer.

Hydrogen
OxygenWater

Utilization of technology
development

Using conventional technologies, thick parts were made one
by one, after which they werestacked and manufactured

Fuel cellPowergenerationhydrogen production. The goal is to further
alleviate hydrogen production cost by quickly
achieving*2 the hydrogen supply cost goal for 2030
of 30 yen/Nm3-H2, which is being promoted by thegovernment.

Electrode
Electrode
Electrolyte membrane
Electricity (Renewable energy
power souce) + Water

It comprises of multiple stacks of thinparts (cells) that produce hydrogen andoxygen through water electrolysis (fuelcells have a reverse reaction).

Hydrogen +OxygenWater

Hydrogen ionsElectrode
Electrode
Electrolyte membrane

Hydrogen + Oxygen

Electricity +Water

Formidable improvement
in manufacturing speed
Smaller amounts of materials

Owing to these and other factors

Manufacturing cost was
sharply curtailed*1: A low-cost manufacturing process for functional films that consists of the continuous processing of film using a coating and other methods during the rewinding
process of a long film substrate wound in a roll. In the current project, this manufacturing process will be used in the manufacturing of water electrolysis cell stacks.
*2: To achieve this goal, in addition to alleviating hydrogen production system costs through this development project, the realization of low-priced power procurement is also anticipated mainly through the growth of the renewable energy market.

Tokyo Gas Integrated Report 202106

Back To Contents

Introduction

Feature:Challenge to achieve Net-Zero CO2

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Overview of methanation

Tsurumi District Carbon Neutral Collaboration Plan and future initiatives

Methanation refers to the synthesizing of
methane (CH4): to use CO2-free hydrogen produced
or procured in Japan or from overseas, make itreact with CO2 emitted from power generation
plants and other places, and capture it.
Supply of thermal energy using methanation
has been positioned as one of the priorities inJapan’s green growth strategy.

As the first step to use and adopt hydrogen and methanation, we will conduct a methanation verification
test, using hydrogen produced from electric power by a water electrolysis device, at the Tokyo Gas site in
Tsurumi-ku, Yokohama. We are also considering building a local production for local consumption model incooperation with companies in Suehiro-cho, Tsurumi-ku and the City of Yokohama. Using the knowledge
acquired from the verification test, we aim to potentially conduct a larger-scale verification test at our LNG
terminal for commercialization and to create a supply chain.

Illustration of Tsurumi District Carbon Neutral Collaboration
Hydrogen-related

Oxygen-related

Methane-related

CO 2 -relatedConceptual diagram of methanation
H2

Transportation
H2

CO2
Power generation
plants, etc.

Methanation verification test

OxygenDevices using
oxygenUse

CH4Offsetting CO 2
capture withCO 2 emissions

Combustion
exhaust gas

Steam and heat

Electric power
HydrogenFC

By-producthydrogen source

MethaneStemGas
consumption
devicePreprocessing
Electric power

Electric
power

Hydrogen

Methanationequipment

Hydrogen

CO 2

CO2

Source: Agency for Natural Resources and Energy

Electricity-relatedTokyo Gas

Grid power

Waterelectrolysis
deviceCO 2

Use of city gas pipeline

PV

Steam-using process
Steam-using device

On-site electric
power load
CO 2

On-site load

Tsurumi District
Carbon Neutral
Collaboration Plan

Financial Data

Strengths of Tokyo Gas

CO 2

CO2 usage
applications

Biogas, combustion exhaust gas, etc.

As methane is the largest component of naturalgas, we can use our existing infrastructure,including LNG ships, receiving terminals, pipelines,
and the gas appliances of our customers, for the
supply of decarbonized gas using synthetic
methane. This means that we may not need tomake a large investment.

Schedule of the verification test
Start synthesizing of methane during fiscal 2021.
2 Start full-scale verification testing after the ITM-brand water electrolysis device starts operation (June 2022).
3 After the start of full-scale test operation, consider the introduction of a collaborative
Methanation
Water electrolysis
CO 2 capturesystem with neighbors, using our proprietary water electrolysis device.
1

FY2021April

July

Preparation/
production

October
Installation/
test runFY2022January1

April
Test operation ofequipment

July

April

Full-scale test operation

Challenges involving methanation

2

The biggest challenge facing the use of methanation isto produce and procure hydrogen at a low price and inlarge quantities. Other challenges include securinglow-cost CO2 in large quantities, selection of an
appropriate site, and larger-scale manufacturing.

Period going forward

October

ITM-brand water electrolysis devic
operation (June 2022 onward)
3

Proprietarily development of low cost water electrolysis device

Collaboration with carbon neutral regions(mid-FY2022 onward)
Verification (early 2020s onward)

Consider CO 2 separation method from combustion gas, develop and install CO 2 separation device
Innovative technological development related to methanation

Tokyo Gas Integrated Report 2021
07

Verification(mid-2020s onward)
Verification(late-2020s onward)

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

Overview of CCU

Strengths of Tokyo Gas

Future initiatives

Carbon dioxide capture and utilization (CCU) refers
to technology for separating out and capturing CO2,
which has been a focus of Japan’s green growthstrategy. The Tokyo Gas Group has been working ontechnology development for on-site CCU, meaning
the use of CO2 in gas emitted from a gas applianceat a customer’s site. Major challenges in the practicalapplication of CCU technology include matchingwith gas appliances and minimizing energy for CO2
separation, capture, and utilization.

With an emphasis on “Co-creation with customers,”
the Tokyo Gas Group has been making efforts todesign, build, and operate an energy system thatmeets the needs of customers. We will make use of
our accumulated advanced engineering capabilities
concerning energy systems and users’ know-how inmaking appropriate CCS system proposals to
individual customers.

Our “on-site CCU service,” which effectively uses
emitted gas from gas appliances used at thecustomers’ site, has already attracted a high levelof interest from our customers, such as commercial
facilities and factories. We will speedily develop
technology in cooperation with other companies inJapan and overseas – open innovation. Throughthese efforts, we intend to differentiate ourselves
and enhance our relationship with customers.

Handling of emitted gas

Examples of CO2 applications

CO 2 management technology
development

CCU at customer’s site
Customers

Gas appliances

1

Conversion and absorption to materials

Mineralization

Fuel cell

Commercial
facilities(1) Direct use

Carbonate

CO 2 concentration: 5-10%

Concrete

2 Direct use of CO2
Dissolution

Boiler

Factories
Gas engine

Wastewater
Sterilization
neutralization and disinfection

CO 2
separation (2) Use of concentrated CO2
and capture
CO 2 concentration: 99% or more
deviceTokyo Gas Integrated Report 2021
08

Industrial
gas
Beverages

Welding

Developing technology to
use CO 2 contained in gas
emitted from gas appliancesin production of carbonate,concrete, and othermaterials for products

Developing technology to
use CO 2 contained in gas
emitted from gas appliancesin alkali wastewater
neutralization, sterilizationand disinfection.

Ongoing development ofa technology to provide
highly-concentrated CO 2 asindustrial gas

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Feature:Challenge to achieve Net-Zero CO2

Invisible
Assets

TCFD(Published date of press release)

Business
Overview

Financial Data

(Published date of press release)

Renewable energy development

Decarbonized energy supply

Invested in Principle Power, Inc. in the U.S. (May 2020)

Launched free solar power system provision service “Zuttomo
Solar” (April and Sep. 2020)

Invested in Principle Power, which developed and owns proprietary floating
system technology. The technology has significant offshore stability and is
expected to be widely adopted in floating offshore wind projects around theworld. Tokyo Gas will actively engage in the development of floating offshore
wind projects in and out of Japan by utilizing the technology.

Acquired a large-scale solar power project in the U.S. (July 2020)

P.37

Acquired wood pellet biomass power generation facilities in
Takaoka, Toyama Pref. and Ichikawa, Chiba Pref. (Aug. 2020)

Launched free solar power system provision in collaboration with housing
makers in 2019. The scheme is for a customer to use the electricity generated
by the system, sell unused electricity to an electric power company, and sell
the revenue to Tokyo Gas, based on a contract exchanged by the customer
and Tokyo Gas.

Began handling of the effective renewable energy electricity
using FIT non-fossil fuel energy certificates (July 2020)

Acquired Fushiki Manyofuto Biomass Power GK and Ichihara Yawatafuto
Biomass Power GK (approximately 126,000 kW).

Became Japan’s first electricity retail operator that handles the effective
renewable energy electricity using the FIT non-fossil fuel energy certificateswith tracking information.

Joined a JV for offshore wind power projects in Japan (Nov. 2020)

Launched the “Hinatao Solar” energy service for condominiums
and buildings (Oct. 2020)

Joined Chiba Offshore Wind Inc. – a JV established by Shizen Energy andNorthland Power Inc. – in 2019. With a target to achieve promising area
designation for offshore wind power projects off the coastline of Chiba
Prefecture, the development business is being promoted.

Progress andhighlights of theMedium-termManagement Plan

Corporate
GovernanceLaunched commercial operation of a mega-solar power plant inIwakuni, Yamaguchi Pref. Domestic mega-solar power output
reached 100,000 kW (July 2021)
The Iwakuni-Yu Solar Power Plant (output: 23,490kW) started commercial
operation in July 2021. The acquisition of the plant contributed to the Tokyo
Gas Group’s mega-solar power output reaching 100,000 kW.
(Published date of press release)

Technology development of CCU, hydrogen, and methanation
Released “suidel” small hydrogen generators with Tokyo Gas
Chemical Co., Ltd. and MIURA CO., LTD. (Feb. 2021)
Released “suidel” small hydrogen generators, targeting semiconductor, metal,
chemical manufacturers as potential customers, in March 2021. Tokyo Gas’technologies for ENE-FARM have been utilized.

Tokyo Gas and SCREEN Agree to Jointly Develop a Water
Electrolysis Cell Stack for Low-cost Green Hydrogen Production(May 2021)

P.06

World’s 1st! Commence Manufacturing of CO2 -absorbing Concretethat Uses Exhaust Gas Emitted During the Use of City Gas Devices(July 2021)
Agreed with KAJIMA CORPORATION to jointly develop technology to use CO2 SUICOM®, a CO2 -absorbing concrete developed mainly by KAJIMA, and to absorb
and solidify CO2 contained in exhaust gas released when using city gas equipment.

Plan to launch a methanation verification test within fiscal 2021
(July 2021)

P.07

Tokyo Gas Integrated Report 2021
09

A subsidiary of Tokyo Gas, Hinatao Energy Co., Ltd. launched the “Hinatao
Solar” energy service. The solar power generation system on the rooftops of
our customers’ condominiums and buildings is installed at Hinatao’s expensewith no initial investment by customers.

Formed Strategic Alliance with UK-based Octopus Energy(Dec. 2020)

P.27

Concluded power purchase agreement for non-FIT solar power
plants with Renewable Japan Co., Ltd. (Feb. 2021)
Concluded a power purchase agreement for non-FIT solar power plants withRenewable Japan, with the aim of expanding use of non-FIT renewable energy
power sources. Renewable electricity is provided to environment-conscious
customers, such as those participating in the RE100 global initiative.

Establishment of a Carbon Neutral LNG Buyers Alliance(March 2021)

P.37

Exchanged Japan’s first contract to supply carbon neutral LNG with
Marunouchi Heat Supply Co. in Oct. 2019 and began to supply it to officebuildings owned by Mitsubishi Estate Co. As of July 2021, more than 30
corporate customers have adopted carbon neutral LNG.

Newly launched “Sasutena Denki,” an electricity rate plan with
100% real renewable energy (June 2021)
Created “Sasutena Denki,” a 100% renewable energy electricity rate menu,
which added a non-fossil certificate designated as renewable energy, forcustomers using low-voltage electricity in the Kanto area. Tokyo Gas will plant
one tree for each customer contract, contributing to further CO 2 reduction.