11th Asia-Pacific Eco-Business Forum Materials

Development of low-carbon petrochemical recycling
technology and business in the city of Kawasaki

February 5, 2015
Senior manager, Socio & Eco Strategic Consulting Unit, NTT Data Institute of Management Consulting, Inc.
／Representative of board of directors, Resource Circulation Network, Inc.

Takamasa Hayashi

Development of low-carbon petrochemical recycling technology
and business in the city of Kawasaki
1. Resources Recycling Facilities
2. Companies’ Collaboration in Kawasaki Eco-Town
3. Characteristics and advantages of Kawasaki Eco Town
4. Moving ever forward: City of Kawasaki Green Innovation
Guidelines
5. Issues in achieving more advanced, lower-carbon recycling
6. Study of the feasibility of a waste plastic oil conversion business7. Status of technological development to facilitate the commercializationof an oil-conversion business8. Properties of recycled oil and anticipated applications
9. Green innovation driven by partnerships among government,manufacturers, and recyclers

1. Resources Recycling Facilities
SHOWA DENKO K.K.
Material production forammonia from waste plastics

DC CO.,LTD.

JFE group companies

Recycling cement production

Reusing material for blast furnace fromwaste plastics/Concrete setting frame
production from waste plastics/Usedelectric appliances recycling

Kawasaki Zero Emissions Industrial ParkPET REFINE TECHNOLOGYCO.,LTD
Material production for new
PET bottles (PET to PET)

Radius of circle 1.5 km

SAN-EI REGULATOR CO.,LTD.
Toilet and tissue paper production
from mix paper in used papers

2. Companies’ Collaboration in Kawasaki Eco-Town

Non ferrous
scrap

Non ferrous metal
production furnace

Ferrous metal
production furnace

Ferrous scrap

Used electricAppliances

Used electric appliances
recycling equipments

Non ferrous
metal

Ferrous metalframe material

Material production
for blast furnace
Waste plastics
Ammonia

Construction boardproduction

Used PETbottles

Ammonia production
CementMaterial forammonia production
Mud fromconstruction site

Material production
for PET to PET

Sewageplant mud
Used paper

Sewage treatment
plant

Cement production
PET bottle

Used paper recycling
Treated sewage water
Toilet paper3. Characteristics and advantages of Kawasaki EcoTown
Urban planning-oriented
approach
Typical success model(Japanese eco townapproach)Urban planningfrom the perspective of recycling

Similar overseasmodelBusinessadvantages
Urban planning
direction

Future target areas

Comprehensive planning

Incrementalism

Kitakyushu Eco Town

Kawasaki Eco Town

・ Recycling economic zones
located throughout China(Tianjin, Dalian, etc.)

・Kalundborg Eco-industrial Park・EIP in Ulsan, South Korea, etc.

◇ Capacity to accept a variety of recycledresources◇ Advanced use by means of facility-to-facility
transactions◇ Regional branding, etc.

◇ Stability in acceptance and sale of recycledresources◇ Lower environmental impacts and costs
associated with distribution◇ Surplus energy transactions between facilities, etc.

Recycling
complex model

Smart community
model◆Primarily in developing nations◆In developing and advanced nations

・ New industrial parks and other complexes
built in coastal and suburban regions

・Existing industrial zones undergoingredevelopment projects that are integrated withenergy- and water-saving measures, etc.

4. Moving ever forward:
City of Kawasaki Green Innovation Guidelines
I. Formulation of guidelines
1. Background◎ Region-scale environmental problems○ Global warming and other environmental problems constitute urgent global issues.
◎ Energy problems○ It is important to seize the opportunity presented by the Great East Japan Earthquake to address energy problems.
○ The national government is studying how to reassess its basic energy plan and reform its power system.
2. Issues◎ Addressing environmental, energy, and other problems○ Implementing a sustainable society in Kawasaki and working to address the need to create, save, and store energy○ It is necessary to take advantage of environmental technologies and other resources available in the city to develop
and promote widespread use of even more innovative technologies.
◎ Improving the environment in Asia’s cities and elsewhere○ In cities such as those in rapidly growing Asia, it is necessary to pursue measures to address not only global
warming, but also pollution, waste treatment and disposal, and other issues.
3. Kawasaki’s strengths and characteristics◎ Accumulated environmental technologies and industries○ Kawasaki is home to a cluster of environmental technologies and industries involving low-carbon, anti-pollution
measures, resource recycling, and energy.
◎ High environmental awareness on the part of businesses and citizens○ Kawasaki is home to businesses with a high level of environmental awareness and numerous citizens who are
pursuing regional initiatives.
◎ A history of initiatives designed to harmonize environmental and economic priorities by creating a virtuouscycle○ Kawasaki has a successful track record of initiatives designed to harmonize environmental and economic priorities
in a virtuous cycle, including the city’s low-CO2 plant certification program and its hosting of international
environmental technology exhibitions.
Formulation of the Kawasaki Green Innovation Guidelines (tentative name)By having the Economics and Labor Affairs Bureau and the Environmental Protection Bureau orchestrate agovernment-wide green innovation program by taking the lead in redoubling and expanding a series of initiatives thathave been undertaken to leverage the city’s environmental technologies and industries, this effort seeks to foster a
new generation of vitality in the city while creating a sustainable society that will lead to the maintenance andimprovement of pleasant citizen lifestyles.
○ Pursuing initiatives to develop and promote widespread adoption of innovative technologies to solve issues○ Fostering the “greening” of the economy and society so that environmentally conscious behavior can permeate
citizen lifestyles and business activities

II. Basic approach
Creating a sustainable city that takes advantage of environmental technologies and industries(1) Revitalizing the region’s economy through the promotion of environmental technologies and industries(2) Utilizing exceptional environmental technologies and industries in citizen lifestyles(3) Fostering cooperation with a variety of key actors in order to utilize environmental technologies and industries(4) Utilizing Kawasaki’s environmental technologies and industries to contribute to international society

III. Four pillars of the effort to pursue green innovation
The city has outlined four general directions to guide initiatives based on its basic approach:

1. Promoting environmental technologies and industries○ Work to revitalize the region’s economy by supporting new initiatives and overseas expansion ofcompanies involved in environment-related businesses and facilitating new use and development of
Kawasaki’s regional characteristics in the future.

2. Creating environmentally friendly mechanisms that make use of exceptional
technologies○ Create environmentally friendly mechanisms in an effort to promote widespread adoption of exceptional
technologies and incentivize their introduction.
○ Urge the national government to relax or change regulations and to make other changes as necessary.

3. Practicing urban planning in a way that takes advantage of environmental
technologies through cooperation with a variety of key actors○ Create a society that takes advantage of environmental technologies through partnerships andcooperation with a variety of key actors.
○ Actively introduce exceptional environmental technologies into citizen lifestyles and business activities.

4. Taking advantage of environmental technologies to make international
contributions○ Contribute to international society by taking advantage of the accumulation of environmental
technologies and industries that is both a strength and defining characteristic of Kawasaki to harmonize
environmental and economic priorities in a virtuous cycle on a regional scale.
IV. Building structures to implement these initiatives
Build structures such as programs, business schemes, and information in order to effectively implement theinitiatives that serve as the four pillars of green innovation.

1. Building a green innovation cluster○ Build a cluster (network) that links businesses, related organizations, and other stakeholders.

2. Developing projects that foster partnerships among a variety of key actors○ Carry out projects in partnership with a variety of key actors, for example through publicly-offered
solicitation of business proposals.

3. Pursuing joint research and projects with international organizations○ Pursue projects in partnership with international organizations such as the United Nations Environment
Programme (UNEP).

4. Sharing and disseminating information○ Disseminate cities’ knowledge and expertise and businesses’ environmental technologies by integratingthem into discrete packages.

5. Carrying out leading projects○ Carry out leading projects consisting of initiatives that can be expected to trigger a ripple effect.

5. Issues in achieving more advanced, lower-carbon
recycling
Changes in the external
environment

Baseline scenario－〔Projects〕
Conserving
resources＋
Using alternative
energy sources＋
Reducing methanegas emissions
Etc.
－GHGs generated during
the recycling process

Achievement of more advanced,
lower-carbon recycling

Introduction of Scope3

Expansion of GHG
assessment andcalculation
techniquesthroughout thevalue chain byemitters

Approach to the benefitsof a low-carbon
approach(Project techniques)

Need to establish concrete, fair indicators,
calculation techniques, etc.

Power shortages, etc.
(in Japan)

Transformation in
the approach to alow-carbon
recycling(Standardizedindicators ofinitiative results)

Toward pursuit of a low-carbon society through recycling6. Study of the feasibility of a waste plastic oilconversion business
Study background● In 1997, Kawasaki received approval from the Ministry of Economy, Trade and Industry (then known as the Ministry of International
Trade and Industry) for an eco-town area consisting of the city’s entire coastal area.
● Some of the companies operating key recycling facilities in Kawasaki Eco Town are facing challenges such as procuring recycledmaterials and obtaining customers for recycled resources. These companies are studying how to develop their businesses in the futurefrom a variety of angles.
● JFE Kankyo Corporation, which is pursuing a recycling business in Kawasaki Eco Town, is studying whether to develop a waste plastic
oil conversion business that it would operate in partnership with Ricoh Company, Ltd., which would provide processing and othertechnologies.
● Ricoh is developing new technologies to facilitate the chemical recycling of copier supplies (toner cartridges and bottles, etc.), which
are currently recycled using thermal (heat recovery) processing, in order to recover kerosene, heavy oil, and carbon in a process
known as oil conversion.

Overview of the feasibility study

Effects ofthe project

Entity carrying out study: City of Kawasaki
Cooperating entities●JFE Kankyo Corporation (anticipated operator of project)⇒ JFE Kankyo studied the feasibility (acceptance,processing, sales) of a waste plastic oil conversion
business in Kawasaki Eco Town of which it would
serve as the operator.
●Ricoh Company, Ltd., etc.
⇒ Ricoh studied the feasibility of technology for moreadvanced oil conversion of waste plastics.
●NTT Data Institute of Management Consulting, Inc.
⇒ NTT Data Institute of Management Consulting
measured the benefits of a low-carbon approach,regional revitalization, and other aspects of theproposed project.

● Pursuit of green innovations that use waste processing technologies originating in Kawasaki● Implementation of more advanced, lower-carbon waste processing by companies located in Kawasaki Eco Town
● Promotion of resource recycling in Kawasaki Eco Town and of the environmental industry in the city

7. Status of technological development to facilitate thecommercialization of an oil-conversion business
Commercial operation at pilot plant

Toner cartridges, etc.

Heavy oil, kerosene

Iron and nonferrous metals*Trials are being
carried out at atest facility toresolve additional
technical issues.

Carbon8. Properties of recycled oil and anticipatedapplications
Although carbon and hydrogen are the principal components of heavy oil, the substance also contains small amounts of sulfur and trace
amounts of inorganic compounds and other substances. Sulfur content ranges from 0.1% to 3.5% by weight, while inorganic compounds
account for 0.03% of ash or less by weight.
Heavy oil consists of distillation residual oil or a mixture of distillation residual oil and kerosene, and the viscosity, residual carbon, sulfur
content, flow point, and other characteristics of the final product are adjusted according to the intended application.
Generally speaking, there are three types of heavy oil: heavy oil A (JIS K 2205, Class 1), heavy oil B (JIS K 2205, Class 2), and heavyoil C (JIS K 2205, Class 3).
Equivalent to heavy oil A and used as a fuel for boilers in buildings and other facilities and for heating greenhouses

TypeProperty

Class 1
No. 1

No. 2

Class 2Class 3
No. 1

No. 2

No. 3

NeutralReactivity≥60

Flash point (℃)≥70

Kinematic viscosity (50℃)(mm2/s, {cSt})≤20≤50≤250≤400≤1,000Flow point (℃)≤５≤10－－－

Residual carbon content byweight (%)≤４≤８－－－Moisture content by weight (%)

≤0.3

≤0.4

≤0.5

≤0.6

≤2.0

Ash content by weight (%)

≤0.05

－

Sulfur content by weight (%)

≤0.5

≤2.0

≤3.0

≤0.1
≤3.5

－－－

9. Green innovation driven by partnerships among
government, manufacturers, and recyclers◇ Kawasaki’s coastal area comprises a world-class industrial cluster wherepartnerships with the material industry and other innovations have lead to theintroduction of advanced recycling technologies and facilities.
◇ The City of Kawasaki is giving shape to a policy of “moving ever forward” byimplementing measures to address global warming and energy problems in keepingwith a series of Green Innovation Guidelines.
◇ The waste plastic oil conversion business is one leading project being pursued by
the City of Kawasaki in partnership with a variety of key actors in order to takeadvantage of environmental technologies and industries.
◇ Going forward, the city will continue to work to give shape to technologicaldevelopment and business models that help achieve the dual priorities of moreadvanced, lower-carbon recycling while receiving support from the Ministry of theEnvironment.

☆The goal is to lead the world in developing and commercializing low-carbon oilconversion recycling technology by integrating the city’s policy proposal
capabilities, manufacturers’ technological skills, and recyclers’ field capabilities.