SECOND PARTY OPINIONJERA CO., INC.
TRANSITION BONDPERIODIC REVIEW #1
Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 23 May 2023
Ref. Nr.: PRJN-333948-2022-AST-JPN-02

Publication History
Date of Issue
12 May 2022
23 May 2023

Remarks
Transition Bond Framework & Transition Bond Second Party Opinion_Rev1.0
Transition Bond Periodic Review (#1)
(JERA’s 8th Unsecured Bond and JERA’s 9th Unsecured Bond)

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Scope and Objectives
JERA Co., Inc. (hereinafter “JERA” *including the JERA Group) has engaged DNV Business
Assurance Japan (hereinafter "DNV") to conduct a periodic review of the JERA Transition
Bonds (JERA 8th Unsecured Bond and JERA 9th Unsecured Bond, hereinafter "the Bonds").
The purposes of the periodic review at DNV are to ensure that the Bonds comply with thefollowing standards including Climate Transition Finance Handbook 2020 (hereinafter"CTFH"), and the Basic Guidelines on Climate Transition Finance (Financial Services Agency“FSA”, Ministry of Economy, Trade and Industry “METI” and Ministry of theEnvironment ”MOE” 2021, hereinafter ”CTFBG”), and in addition, as the Bonds meeting thefour elements of transition and specifying the use of the proceeds , the Green Bond Principles
2021 (hereafter “GBP”), and Green Bond Guidelines (MOE 2020, hereafter ”GBGLs”); and toprovide an independent second party opinion on the eligibility of the Bonds.
JERA issued the Bonds on 24 May 2022. The amount of the Bonds is JPY 20 billion (8th: JPY
12 billion, 9th: JPY 8 billion). DNV’s review team conducted the first periodic review for theperiod May 2022 to April 2023 based on the CTFH and CTFBG, GBP and GBGLs.
This report provides a periodic review of the requirements of the transition bonds with thespecific use of proceeds (elements -1 to -4, as described below).
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second-party opinion for JERA.
In this report, no assurance is provided regarding the financial performance of the Bonds,
the value of any investments in the Bonds, or the long-term environmental benefits of thetransaction.

Standards/Guidelines to be applied
No.

Standards or guidelines

1.

Climate Transition Finance Handbook International
Capital(CTFH) * 1
Association (ICMA), 2020

2.
3.
4.
*1
*2

Scheme owner

Application level
MarketAppliedFinancial Services Agency, Ministry of
Basic Guidelines on Climate Transition
Economy,TradeandIndustry, Applied
Finance (CTFBG) *.1
Ministry of the Environment, 2021
International
CapitalMarketGreen Bond Principles (GBP) *2
AppliedAssociation (ICMA), 2021
Green Bond Guidelines (GBGLs) *2

Ministry of the Environment, 2020

AppliedClimate transition: The concept of climate transition focuses principally on the credibility of an issuer’s climate changerelated commitments and practices. (Quoted from CTFH and CTFBG)
It confirms compliance with the four core elements (use of proceeds, process for project evaluation and selection,
management of proceeds, and reporting) that must be met when implementing as a bond that meets the four
elements of transition and has a specific use of proceeds (quoted and edited from CTFBG).

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Responsibilities of JERA and DNVJERA has provided the information and data used by DNV during the delivery of this review.
DNV’s statement represents an independent opinion and is intended to inform JERA andother interested stakeholders in the Bonds as to whether the established criteria have beenmet, based on the information provided.
In its review, DNV has relied on the information and the facts presented to us by JERA. DNV
is not responsible for any aspect of the selected transition project assets referred to by thisopinion statement.
Therefore, DNV shall not be held liable if any of the information or data provided by JERA
and used as a basis for this assessment were not correct or complete.

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Basis of DNV’s Opinion
To provide as much flexibility for the issuer, JERA, as possible, we have adapted ourtransition bond assessment methodologies, which incorporate the requirements of the
CTFH, CTFBG, GBP and GBGLs to create a JERA Transition Bond Eligibility Assessment
Protocol (hereinafter “Protocol”). The Protocol is applicable to CTFH, CTFBG, GBP and
GBGLs based transition bonds.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion.
The overarching principle and guidelines behind the criteria are that that transition bonds
should “provide the investment opportunities necessary for climate transition finance to be
carried out transparently and credibly.”
DNV conducted a periodic review applying the following four elements in relation to theoperation and management of transition finance (with specific use of proceeds).

• Principle One: Use of Proceeds
The Use of Proceeds are guided by the requirement that a fundraiser of transition
finance ( with specific use of proceeds) must use funds raised to finance eligible
activities. The eligible activities should produce clear environmental benefits.

• Principle Two: Process for Project Evaluation and Selection
Evaluation and Selection criteria are guided by the requirement that a fundraiser of atransition finance (with specific use of proceeds) should outline the process it follows
when determining eligibility of an investment using transition finance proceeds andoutline any impact objectives it will consider.

• Principle Three: Management of Proceeds
The Management of Proceeds criteria are guided by the requirement that a transition
finance (with specific use of proceeds) should be tracked within the fundraiserorganization, and separate portfolios should be created when necessary and that adeclaration of how unallocated funds will be handled should be made.

• Principle Four: Reporting
The Reporting criteria are guided by the recommendation that Sustainability Reportingto the bond investors should be made of the use of bond proceeds and that quantitative
and/or qualitative performance indicators should be used, where feasible.

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Work Undertaken
Our work constituted a comprehensive review of the available information, based on theunderstanding that this information was provided to us by the issuer in good faith. We havenot performed an audit or other tests to check the veracity of the information provided tous.The work undertaken to form our opinion included:

Initial (pre-issue transition bond) assessment *Not included in this reportCreation of the issuer-specific Protocol for application to finance.

Assessment of documented evidence provided by the issuer on the Bonds andsupplemented assessment by a high-level desktop research. These checks refer tocurrent assessment best practices and standards methodology.

Discussions with the issuer, and review of relevant documentation.



Documentation of findings against each element of the criteria.

Periodic (annual) review * Contents of this report

Review of evidence documentation provided by the issuer in relation to transitionbond execution, supplemented by high-level desktop research, document review
and interviews with key personnel. These checks refer to current best practices of
evaluation and standard methodologies.

Discussion with issuer management and review of relevant document controls.



Field research and inspections (if required).



Review of covered projects and assets at the time of periodic review.



Documentation of periodic review observations, as detailed in this document.

The DNV's opinion statement (see below for details) summarises these.

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Findings and DNV’s Opinion•Principle One: Use of Proceeds
DNV confirmed that, as of end-March 2023, the funds raised by JERA (JPY 20 billion) had
been partially allocated to the following projects.

1. Ammonia co-firing demonstration - 1.7 billion yen allocated.
Regarding Project 1) Demonstration study of 20% ammonia co-firing in a 1 million kW
class coal-fired power plant*1 (Photo-1), JERA confirmed that the demonstration test is now
scheduled to start in FY2023, about one year ahead of schedule, due to adjustments being
made to shorten the installation period for burners, tank and pipes, and that, as of March
2023, DNV confirmed that the demonstration study is progressing smoothly, with thefoundation work and laying of pipes currently being carried out (Photo-2).
Regarding Project 2) Demonstration study on actual equipment to establish technology ofhigh ammonia co-firing rate at commercial thermal power plants*2, DNV confirmed that thedemonstration of actual equipment is in progress as scheduled, based on information
provided by JERA.
*1This project is to develop and test the technology to convert 20% of the fuel (calorific value ratio) toammonia at Hekinan Thermal Power Station Unit 4 (to FY2024).

*2

This project is to develop a new ammonia high-efficiency burner and study the specifications of theequipment (to FY 2024), and to carry out demonstration tests to convert more than 50% of the fuel(calorific value ratio) to ammonia at the Hekinan thermal power station (to FY2028).
Electrical Room

Receiving from Coal
Oceangoing Vessel Bridge

Pipelines

Pipe Rack
Ammonia Storage
Tank
Vaporization
Equipment

Demonstration
Test Unit

Intake & Discharge
Structures

Tank & Vaporizer
Installation Area

Photo-1 Project 1: JERA Hekinan Thermal Power

Photo-2: Project 1: Construction progress of

Station Unit 4ammonia tank area
(As of March 2023)

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2. Hydrogen co-firing demonstration - 0.1 billion yen allocated.
Project 4) Technical verification of hydrogen co-firing power generation for the constructionof a large-scale hydrogen supply chain is the first initiative in Japan to utilise large volumesof hydrogen*1 as fuel in a large-scale commercial LNG-fired power station, and the firstpriority is to demonstrate hydrogen power generation technology on a commercial scale.
As a result of the specification study of the hydrogen supply and power generation
facilities, it was found that trace substances (benzene, toluene, etc.) contained in the byproduct hydrogen may affect the gas turbine, which is the main equipment of the power
generation facility, and a hydrogen property assessment is planned to be carried out in a
separate project to evaluate this impact.
Though the launching date of the hydrogen co-firing demonstration will be changed due tothe hydrogen property assessment*2, it is confirmed that no impact is foreseen on theoverall JERA roadmap (JERA Environmental Target and Zero CO2 Emissions 2050).
*1

One of the options in this demonstration is the potential utilization of by-product hydrogen from theprocessing of crude oil. Low-carbonization and decarbonization will also be considered in the future
including hydrogen suppliers.

*2This assessment will also help to resolve concerns (possible contamination of hydrogen with toluene)
when separating hydrogen from methylcyclohexane (“MCH”), which could be assumed when utilizing
MCH as a storage and transport medium for hydrogen in future hydrogen storage and supply.

3. Decommissions of existing inefficient thermal power generation facilities(Demolition of Goi Thermal Power Station) - 10.6 billion yen allocated.
DNV has confirmed that the removal and power supply replacement work is well underprogressing. The completion of demolition is currently scheduled in September 2023*1.
*1

Some of the existing facilities (main office building, water, and wastewater treatment facilities) willremain temporarily as they will also be used during the power supply replacement work, yet the basic
demolition is foreseen in September 2023.

•Principle Two: Process for Project Evaluation and Selection
During evaluation and selection process of the transition project by JERA, DNV confirmedthat the transition project met the eligibility criteria and did not conflict with the pre-defined
exclusion criteria in the Framework.
•

Unfair transactions that do not comply with the laws and regulations of the country,
such as bribery, corruption, blackmail, embezzlement, etc.

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•Transactions that can cause social problems related to human rights andenvironment.

DNV confirmed that, JERA, following the specific evaluation and selection process, FinanceGroup made a pre-selection of projects based on the eligibility criteria and the selection
process was finalized by Executive Officer, Head of Finance Group taking into theconsideration of a comprehensive analysis and review of financial, technical and operational,
market environment and ESG risks by the relevant departments.

•Principle Three: Management of Proceeds
DNV reviewed the evidence on how JERA has managed the funds raised since the bondissuance until March 2023. The status of fund allocation is shown in Table 1-1.
DNV confirmed that the funds were deposited into a common account at JERA and that
Finance Group subsequently managed the allocation for each project complied by theaccounting rules and regulations and using the accounting systems and the funds
management forms of transition bonds.
It was also confirmed that the unallocated funds (7.5 billion) shown in Table 1-2 aremanaged in cash or cash equivalents and will be used for ammonia co-firing demonstrationand other activities in FY2023 and FY2024.
Note that, as mentioned earlier, DNV does not provide no assurance regarding the financial
performance of the Bonds, the value of any investment or the long-term environmental
benefits of the transaction.

Table - 1-1 Funds allocatedTransition Project

Allocated amount (JPY)

Ammonia co-firing demonstration

1.7 billion*1

Hydrogen co-firing demonstration

0.1 billion*1

Decommissions of existing inefficient
thermal power station

10.6 billion*2

Total allocation

12.4 billion(of which refinancing amount)(11 billion)

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Table - 1-2 Unallocated balance
Details

Amount (JPY)

Amount raised

20 billion

Issuing costs

0.1 billion

Total allocation

12.4 billion
Unallocated balance

7.5 billion

DNV confirmed that the information on the management of project funds for the NEDOsubsidised ammonia/hydrogen co-firing demonstration projects has been verified by NEDO.
*1This information is as of the end of December 2022.

*2

This information is as of the end of March 2023.

•Principle Four: Reporting
DNV confirmed that JERA will disclose the status of fund allocation and environmental
benefits on the JERA website. It also confirmed that, as stated in the Framework, JERA willcontinue reporting until the funds have been fully allocated, and that information will be
disclosed from next year onwards as there is an unallocated balance of JPY 7.5 billion as ofApril 2023.
With regard to the environmental benefits, DNV confirmed that JERA intends to carry out
reporting on the overview and progress of the projects for which funds have been allocateduntil the completion of eligible projects.
The allocation and management of the funds and the environmental benefits (project
overview and progress) are as follows.
(1) Status of Funds allocatedTransition Project

Allocated Amount (JPY)

Ammonia co-firing demonstration

1.7 billion

Hydrogen co-firing demonstration

0.1 billion

Decommissions of existing inefficient
thermal power stations

10.6 billion

Total allocation (20 billion raised)12.4 billion(of which refinancing amount)(11 billion)

Unallocated balance

7.5 billion

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DNV confirmed that the proceeds of JPY 19.9 billion were deposited into a common accountat JERA, and that Finance Group subsequently managed the allocation for each projectcomplied by the accounting rules and regulations and using the accounting systems andfunds management forms of transition bonds. It was also confirmed that unallocated funds(JPY 7.5 billion) are managed in cash or cash equivalents and will be used for the ammonia
co-firing demonstration in FY2023 and FY2024.
(2) Environmental Benefits
Environmental benefits (project overview and progress)
Project

Project Overview and Progress

Expenditures related to demonstration projects of fossil fuel and ammonia/hydrogen co-firing
Development and demonstration test of technology to convert① Demonstration

Project

20% of fuel (calorific value ratio) to ammonia at Hekinan

study of 20%

overview

Thermal Power Station Unit 4 (Project period: June 2021 -ammonia co-firing

March 2025).

in a 1 million kW

Due to the project being smoothly implemented, theclass coal-fired
power plant

Progressdemonstration test will start in FY2023, about one year aheadof schedule. As of March 2023, the foundation work and layingof pipes are being carried out.

② Demonstration

Development of a new ammonia high-efficiency burner andstudy on actual

study on equipment specifications (~FY2024), and technicalequipment to

Project

development and demonstration tests to convert more thanestablish

overview

50% (calorific value ratio) of the fuel to ammonia at thetechnology for

Hekinan Thermal Power Station (Project period: FY2021 -high ammonia co-

FY2028).

firing rate at

Development of a new ammonia high-efficiency burner andcommercial
thermal power

Progressplantsequipment specifications are being studied as scheduled todetermine whether the demonstration can be implemented by
FY2024.
Demonstration tests at large-scale LNG-fired power plants in④ Technicalverification of

Project

Japan to convert approximately 30% (by volume) of LNG into

overviewhydrogen for power generation (Project period: October 2021

hydrogen co-firing

to March 2026).

power generation
for theA specification study of the hydrogen supply and power

construction of ageneration facilities was carried out and it was found that tracelarge-scale

Progress

substances (benzene, toluene, etc.) in the hydrogen may affecthydrogen supply

the gas turbine. Therefore, a hydrogen property assessment is

chainplanned to be carried out in a separate project to evaluate theimpact.

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Expenditures related to decommissions of existing inefficient thermal power stations, with the aimof replacement by high-efficiency thermal power stations
Project⑤ Demolition of Goi

overview

Thermal Power
Station
Progress

Demolition of existing power generation facilities at Goi Thermal
Power Station (LNG) (construction completion date: September2023).
As of May 2023, work is well under progress. The completion ofdemolition is foreseen in September 2023.

Project ③ Demonstration of high co-firing rate at thermal power station using
ammonia single-fuel burners is not included in the evaluation, as no allocation is madein the NEDO commissioned project (9/10 commissioned + 1/10 incentive delivered) for
FY2024.
Project ⑥ Demolition of Chita Thermal Power Station is not included in this evaluation
as no allocation is made as of April 2023.

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DNV Statement of Opinion
On the basis of the information provided by JERA and the work undertaken, it is DNV’sopinion that JERA Transition Bonds meet the criteria established in the Protocol andthat it is aligned with the stated definitions or purposes of transition bonds within the
CTFH, CTFBG, GBP and GBGLs, which are to "enable capital-raising and investment for
new and existing projects with environmental benefits" and "provide an investment
opportunity with transparent sustainability credentials.”

DNV Business Assurance Japan K.K.
23 May 2023

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Masato Kanedome

Akira Tsukasaki

Project Leader

Accessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance the safety
and sustainability of their business. Combining leading technical and operational expertise, risk methodology and in-depth
industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We continuously invest in
research and collaborative innovation to provide customers and society with operational and technological foresight.
With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.
Disclaimer
Responsibilities of the Management of the Issuer and the Second-Party Opinion Providers, DNV: The management of Issuer
has provided the information and data used by DNV during the delivery of this review. Our statement represents an
independent opinion and is intended to inform the Issuer management and other interested stakeholders in the Bond as towhether the established criteria have been met, based on the information provided to us. In our work we have relied on theinformation and the facts presented to us by the Issuer. DNV is not responsible for any aspect of the nominated assets
referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions are incorrect. Thus, DNV
shall not be held liable if any of the information or data provided by the Issuer’s management and used as a basis for thisassessment were not correct or complete.

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Schedule – 1. Green Bond Eligibility Assessment Protocol
The checklists below (GBP-1 ~ GBP-4) are DNV assessment procedures developed on the basis of the Green Bond Principles 2021 for JERATransition Bond Eligibility Assessment that identify the use of funds (with specific use of proceeds).

GBP-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings

1aType of funds

Types of transition bonds are classified
into one of the following types defined by
GBP.
· (Standard) Transition Bond/Loan・ Transition Revenue Bond/Loan・ Transition Project Bond/Loan・ OtherDocuments reviewed- Framework

Through the evaluation work, DNV confirmed that JERAtransition finance (bond) falls into the following category:Interviews withstakeholders(Standard) Transition bond

The key to a transition bond is that theproceeds will be to be used for transition
projects, which should be properly statedin the legal documents relating to thesecurity.

Documents reviewed- Framework- Investment plans
for the use ofproceeds- Information on the
progress offinanced projects- Amended Shelf
Registration
Statement

1bTransition projectclassification

Interviews withstakeholders

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DNV confirmed that JERA Transition Bond aims to fund a wide
range of transition projects focused on the JERA Group's
environmental goals, as described in the Framework.
DNV confirmed that all transition projects were evaluated asconforming to the transition strategy, and the proceeds throughthe transition bonds were allocated to several transition
candidate projects.
The specific projects to which funds were allocated are: ①
Demonstration study of 20% ammonia co-firing in 1 million kW
class coal-fired power station ②Demonstration study onequipment to establish technology for high ammonia co-firing
rate at commercial thermal power stations ④Technicalverification of hydrogen co-firing power generation for theRef.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings

construction of a large-scale hydrogen supply chain ⑤
Demolition of Goi Thermal Power Station (LNG)
Through the assessment, DNV concludes that the transition
candidate projects will bring concrete and actual environmental
benefits.
Table: JERA Main initiatives to achieve CO2 zero emissions(Transition finance candidate projects)
Eligibility
Criteria

Project Overview (Main Expenditure)①Demonstration study of 20% ammonia co-firingin a 1 million kW class coal-fired power plant- Project period: June 2021 - March 2025

Expenditures
related todemonstration
projects of fossil
fuels andammonia/hydrogen co-firing

Page 14 of 21- Project description: Development anddemonstration test of technology to convert
20% of fuel (calorific value ratio) to ammonia
at Hekinan Thermal Power Station Unit 4 (toFY2024)※ Adoption of NEDO subsidized project for"Development of Technologies for Carbon
Recycling and Next-Generation Thermal
Power Generation / Research, Development
and Demonstration of Technologies forAmmonia Co-Firing Thermal Power
Generation"

Ref.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings②Demonstration study on equipment to establish
technology for high ammonia co-firing rate atcommercial thermal power plant- Project period: FY2021 to FY2028- Project description: Development of a newammonia high-efficiency burner and study ofthe specifications of the equipment (to FY2024), and demonstration tests to convert
more than 50% of the fuel (calorific value
ratio) to ammonia at the Hekinan thermal
power station (to FY2028).
※ Adoption of NEDO Green Innovation Fund
Project for "Establishment of Fuel Ammonia
Supply Chain Project”③Demonstration of high co-firing rate at thermal
power station using ammonia single-fuel burners- Project period: FY2021 to FY2028- Project description: Development of a newammonia single-fuel burner and study of thespecifications of the equipment (to 2024) andconducting technology development anddemonstration tests to convert more than
50% of the fuel (calorific value ratio) toammonia at two different boiler units (toFY2028).

Page 15 of 21

Ref.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings※ Adoption of NEDO Green Innovation Fund
Project for "Establishment of Fuel Ammonia
Supply Chain Project”④Technical verification of hydrogen co-firing
power generation for the construction of a largescale hydrogen supply chain- Project period: October 2021 to March 2026
- Project description: Demonstration tests atlarge-scale LNG-fired power stations in Japan
to convert approximately 30% (by volume) of
LNG into hydrogen for power generation (toFY2025).
※ Adoption of NEDO Green Innovation Fund
Project for “Construction of a Large-Scale
Hydrogen Supply Chain”
Expenditures
related todecommissionsof existing
inefficient
thermal power
stations, withthe aim ofreplacement by
high-efficiency
thermal power
stations

Page 16 of 21⑤Demolition of Goi Thermal Power Station⑥Demolition of Chita Thermal Power Station

Ref.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings

1cEnvironmental
benefits

All transition projects to which the funds
are used should have clear environmental
benefits, the effects of which should beassessed by the issuer and, where
possible, quantitatively demonstrated.

Documents reviewed- Framework- Investment planand results for theuse of proceeds- Information on the
progress of eachproject- Interviews withstakeholders

DNV confirmed that transition projects contribute to the goals
based on the JERA’s transition strategy, and low anddecarbonization through the two eligible criteria categories
indicated in 1b. The environmental benefit is the reduction of CO2
emissions, which has been quantitatively or qualitatively
evaluated.

Documents reviewed- Framework- Investment planand results for theuse of proceeds- Information
related to eachproject- Interviews withstakeholders

DNV confirmed that JERA plans to use all procured funds either
for new investment, refinancing or for both for one or more of
the eligible project’s candidates.

1d

Refinancing rate
If all or part of the proceeds are used or
may be used for refinancing, the issuer
will indicate the estimated ratio of theinitial investment to the refinancing and,
where appropriate, it is recommended toclarify which investment or project
portfolio is subject to refinancing.

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Prior to the implementation of the transition finance, only theoutline of each project shall be disclosed. DNV also confirmed
that, in the annual report, the outline and progress of eachproject were reported to the extent practicable, taking into
accounts the characteristics of the project.

Through the reporting (annual report), JERA disclosed theamount of the proceeds that was allocated for refinancing.

GBP-2 Process for Project Evaluation and Selection
Ref.

Criteria

Requirements

2a.

Project selection
process

2b

Issuer's
environmental andsocial governanceframework

Transition bond issuers should provide an
overview of the process of qualifying
projects for which transition bond funding
will be used. This includes (but is not
limited to):・The process by which the issuer
determines that the project in question is
included in the business category of aeligible transition project.
・ Creation of criteria for eligibility of
projects for which transition bond funding
will be used
・Environmental sustainability goals
In addition to criteria and certifications,the information published by issuers
regarding the transition bond process also
considers the quality of performance of
the issuer's framework and environmental
sustainability.

Work Undertaken(items reviewed)
Documents reviewed- Framework- Information related
to each project- Interviews withstakeholders

Documents reviewed- Framework- Information related
to each projectInterviews withstakeholders

DNV Findings
DNV confirmed that JERA has a process and a system ofdetermining the eligibility of the projects to use transition bondfunding and that these are clearly specified in their framework.

DNV confirmed that, when selecting transition projects, JERA
takes into account its compliance with environmental laws,
regulations, ordinances and rules, as well as clear environmental
benefits such as CO2 reductions during its entire life cycle or ineach process.
In the operation and implementation of their projects, eachdepartment involved is committed to the preservation of thesurrounding environment.
DNV also confirmed that the transition projects implemented by
JERA are consistent with its management and environmental
policies, as well as with the transition strategy, goals andpathway.

Page 18 of 21

GBP-3 Management of Proceeds
Ref.

Criteria

3a

Tracking procedure-1

3b

Tracking procedure-２3c

Temporary holding

Requirements

Work
Undertaken(items reviewed)

DNV Findings

The net proceeds from transition bonds
should be managed in sub-accounts,
included in a sub-portfolio, or otherwise
tracked. It should also be certified by theissuer in a formal internal process related
to the issuer's investment and financing
operations for the Transition Project.

Documents reviewed- Framework- Funds
management
forms of transition
bonds- Interviews withstakeholders

The proceeds from the funds raised through transition financeare traceable by JERA's accounting systems etc.

During the redemption period, thebalance of the proceeds being tracked
should be adjusted at regular intervals tomatch the amount allocated to eligible
projects undertaken during that period.

Documents reviewed- Framework- Funds
management
forms oftransition bonds- Interviews withstakeholders

The DNV confirmed that JERA regularly (at least once a year)
reviewed the balance of the transition finance using theaccounting systems / documents described in 3a during theperiod from issuance to redemption of transition finance.

If no investment or payment has been
made in a qualified transition project, theissuer should also inform the investor of
the possible temporary investment
method for the balance of unallocatedproceeds.

Documents reviewed- Framework- Funds
management
forms oftransition bonds- Interviews withstakeholders

Through the verification process based on JERA's accounting
systems and related documents, DNV confirmed that the balanceof unallocated funds was recognized sequentially.

Page 19 of 21

DNV confirmed the system is actually used or planned to be usedand documents are produced exclusively for this purpose.

DNV confirmed through the framework and assessment that thebalance of unallocated funds was managed in cash or cash
equivalents. DNV also confirmed that the balance of unallocatedfunds and future allocation schedules had been identified throughthis review.

GBP-4 Reporting
Ref.

Criteria

4a.

Periodic Reporting

Requirements

Work Undertaken(items reviewed)

DNV Findings

In addition to reporting on the use ofproceeds and the temporary investmentof unallocated proceeds, the issuer willconsider each project at least once a year
for projects to which the transition bonds
have been allocated, taking into accountthe following: A list of each project
should be provided.
-Confidentiality and competitive
considerations.
-Outline of each project, expectedsustainable environmental and social
benefits

Documents reviewed- Framework- Annual Report- JERA Website

DNV confirmed that the JERA will carry out an reporting oftransition bonds (annually) until the proceeds are fully allocated.

Interviews withstakeholders

DNV also confirmed that JERA will disclose information on thestatus of allocation of funds, the projects to which the funds havebeen allocated and environmental benefits.

Note that, even after the allocation plan or allocation has been
completed, JERA plans to report in a timely manner or in its
reporting on any changes in transition strategy or pathway, or
any major changes in the allocation plan or project
implementation status (e.g., interruption of a project for which
allocation has been started, significant deferral on an annual
basis, sale or decommissioning, etc.). DNV confirmed that there
were nonetheless no significant changes in this reporting period.

The reporting will be published on the website.
<Fund allocation Status>-

Eligible criteria and allocation amount
Balance of unallocated amounts and the management
methodApproximate amount of the portion of the proceeds
allocated for refinancing<Environmental benefits>-

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Environmental benefits are disclosed within the scope ofconfidentiality, to the extent practicable, and inconsideration of the characteristics of the project,

Ref.

Criteria

Requirements

Work Undertaken(items reviewed)

DNV Findings

including an overview of the project (including
progress, completion, operation, etc.)<Others>-

Efforts to achieve zero CO2 emissions by 2050 will be
reviewed as appropriate in light of policy andtechnological trends and disclosed as required

The details disclosed for the transition projects that were thesubject of fund allocation in this reporting period are provided in
the section of Element 4.Reporting in this document.

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