Info for shareholders

Risks of J-Power’s Climate Policies[Proposal] To shareholders and investors
This document is intended to inform J-Power's shareholders and investors that the coal-fired
power projects that J-Power is pursuing pose significant risks from both an environmental
and business perspective in light of international agreements. The international community
has been emphasizing the importance of limiting the global temperature rise below 1.5°C as
a necessary response to the climate crisis. J-Power operates coal-fired power plants thatemit large amounts of greenhouse gases, and this acting as an obstacle to decarbonization
could result in a significant reduction in the value of J-Power's shares.
We respectfully request the following from Representative Director President Kanno and hismanagement team to ensure that their business is conducted in a manner that takes into
consideration the global environment as well as the safety and security of local communities.
[Contents of Proposal]
・Re-examine the operation of coal-fired power plants.
Coal-fired power generation is a power source that emits large amounts of CO2. Coal-fired
power generated by J-Power accounts for a very large share, approximately 20% of Japan's
coal power. The amount of CO2 reduced through coal gasification and hydrogen/ammonia
co-firing, which J-Power has proposed as decarbonization measures, is negligible, and thefeasibility of CCS remains unclear. Furthermore, these technologies are prohibitivelyexpensive. It is necessary to fundamentally re-examine these risky coal-fired power projects.
・Prepare a phase-out plan for coal-fired power plants that is consistent with the Paris
Agreement and the 1.5°C target.
J-Power's current business strategy does not properly assess the risks associated withclimate change.

The international community is exiting coal
In order to achieve the 1.5°C goal of the Paris Agreement, the international community has
agreed that, in order to prevent the most serious damage caused by climate change, it isnecessary to reduce greenhouse gas emissions by almost half by 2030 and to virtually zeroby 2050. At the United Nations Framework Convention on Climate Change’s COP28
conference in November-December 2023, the world’s nations recognized theIntergovernmental Panel on Climate Change’s recommended 43% reduction in greenhousegas emissions by 2030 and 60% reduction by 2035 compared to 2019 levels. And at the G7
Summit in June 2024, the phase-out of "unabated coal power" was specified for the first timein a top-level agreement, with a deadline of the first half of the 2030s (referred to as "thiscritical decade").
Hydrogen and ammonia co-firing and CCS are not an “ace in the hole” fordecarbonization
The Japanese government claims that hydrogen and ammonia co-firing for power generation
is an "abatement" measure and thus is not necessary to phase-out, but this notion is notacknowledged by the international community. “Unabated coal-fired power plants" refers to
those without interventions to capture 90% or more of CO2 (IPCC 6th Assessment Report).
Current CCS projects are not at the level of practical implementation, with CO2 capture atbest only around 60-70%. J-Power's GENESIS Matsushima Project to install gasification
facilities in aging coal-fired power plants, and the co-firing of hydrogen and ammonia in coalfired power plants, have little effect on CO2 reduction, and are completely different from thelevel of "abatement" indicated by the IPCC that is assumed by the international community
to be consistent with the 1.5°C goal.

The GENESIS Matsushima Project will not meaningfully reduce emissions
In October 2023, J-Power announced a two-year postponement of the GENESIS
Matsushima Project (construction to start in 2026 and operation in 2028). J-Power estimatesthat the GENESIS Matsushima project will reduce greenhouse gas emissions by only about10%, which is about the same as the latest coal-fired power generation technology (ultrasupercritical) in terms of power generation efficiency. The timing and scale of the future cofiring of ammonia and biomass remain unclear. As for the capture of CO2 from coal, as wellas during hydrogen production and power generation, the current technology to capture theCO2 made during production has only been demonstrated for a relatively small amount(17% of the gas produced by a coal gasification plant). Furthermore, the transportation
methods and storage locations for the vast amount of CO2 that would be captured have notyet been determined. These measures cannot be said to meet the internationally recognized
standards for "abatement”.
Emission reduction measures at other coal-fired power plants owned by J-Power will
not be implemented in time
J-Power announced in its mid-term management plan the retirement of three units:
Matsushima Power Station Unit 1 (started operation in 1981, to be retired at the end ofFY2024) and Takasago Power Station Units 1 and 2 (started operation in 1968 and 1969,respectively). The Takehara Power Station Unit 3 (started operation in 1983) and Matsuura
Power Station Unit 1 (started operation in 1990) are scheduled to be either retired orconverted to reserve power sources. The remaining Isogo Power Station Units 1 and 2,Takehara Power Station Unit 1, Tachibana-wan J-Power Power Station Units 1 and 2,
Matsushima Power Station Unit 2, Ishikawa Power Station Units 1 and 2, and Kashima
Power Station Unit 2 operated by Kashima Power, a joint venture company, are subject tomeasures such as hydrogen/ammonia co-firing, biomass co-firing, addition of integrated coalgasification combined cycle (IGCC) facilities, and introduction of CCS. However, the planned
implementation dates of these measures are after 2030, which is not consistent withinternational agreements. Coal-fired power plants that do not comply with international
agreements will surely reduce the value of the company.

From a Regulating Power Source to a Stranded Asset
With the expansion of solar, wind, and other renewable energy sources, coal-fired thermalpower plants are expected to be required to curtail operations even more in the future.
Additionally, coal-fired thermal power plants have played a role as a regulating power source
to supply electricity during the hours when renewable energy does not generate power, but
this role is also shrinking due to LNG power plants and nuclear power. This is alreadyevident in the below graphs of thermal power capacity factor and electricity sales volume,and in the most recent fiscal year (FY2023), the capacity factor did not reach 75% even at its
highest value in December. The coal-fired power owned by J-Power is becoming a stranded
asset.
Thermal Power Capacity Factor by Month（FY2013-FY2023）（％）
10090807060
50403020100（GWh）

60,000FY2013

FY2014FY2015FY2016FY2017FY2019FY2020

FY2021

FY2022

FY2023

FY2018

Electricity Sales Volume by Month（FY2013-FY2023）
December

50,000November
October

40,00030,00020,00010,0000

SeptemberAugustJuly
JuneMay
April
MarchFebruary
JanuaryA phase-out plan for coal-fired power generation in line with international agreements
is needed
The room for developed countries like Japan to depend on fossil fuel-based power
generation and diverge from the international community's movement toward
decarbonization is shrinking every year. Simply following the current policies of theJapanese government could also damage shareholder value, as investments made in coalfired power generation may be wasted due to unforeseen changes in government policies
and policies caused by changes in international conditions.
We ask shareholders and investors to speak up so that J-Power can continue to be acompany that contributes to the global transition toward decarbonization.

Disclaimer: Although the author believes that this information has been obtained fromreliable sources, the accuracy of the information is not fully guaranteed. No responsibility isassumed for any consequences resulting from this document.