Carbon Neutrality
Briefing
March 18, 2022

Eisaku Ito
Executive Vice President & CTO© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

1

Table of Contents◼ MISSION NET ZERO

◼ Our Vision of a Carbon Neutral World◼ Status of Solutions Development◼ Summary© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2

Allow me to begin today’s briefing.
Here are the main topics that I will cover.
I will start by outlining MISSION NET ZERO and MHI's vision of Carbon Neutrality. I
will then discuss our investment plans and the development status of the solutions
that will make it happen. Finally, I would like to speak about business development.

2

MISSION NET ZERO

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

3

First off is MISSION NET ZERO.

3MISSION NET ZERO

Target Year

Reduce CO2 emissions
across MHI Group
Scope 1&2

Reduce CO2 emissions
across MHI’s value chain
Scope 3 + reductions from CCUS

2030

-50% (compared to 2014)-50% (compared to 2019)

2040

Net Zero

Net Zero

Scope 1&2: The calculation standard is based on the GHG Protocol.
Scope 3: The calculation standard is based on the GHG Protocol. However, we also account for reductions achieved by CCUS as an MHI original index.
GHG: Greenhouse Gas

CCUS: Carbon dioxide Capture, Utilization and Storage© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

4*As CO2 comprises 99% of MHI Group’s GHG emissions, we have focused our targets solely on the reduction of CO 2 in order to simplify our message.

MHI Group announced MISSION NET ZERO last October. Achieving a Carbon
Neutral world is a global challenge. As a proven leader in the area of decarbonization,
we believe we have a responsibility to lead the way in addressing Climate Change.
We will contribute to the achievement of Net Zero with a wide range of products,
technologies, and services which help reduce CO2 emissions. Specifically, we aim toachieve a 50% reduction by 2030 and Net Zero by 2040.

4

Roadmap to MISSION NET ZERO
Reduce CO2 emissions across MHI Group
Scope 1&2

Reduce CO2 emissions across MHI’s value chain
Scope 3 + reductions from CCUS

Implement proprietary
technologies at MHI factories

Rapidly establish decarbonization
technologies and drive commercialization

kton CO2

Mton CO2

1,000

1,500
(reference)
1.2 Gton

Energy Conservation
Energy management

Fuel Conversion
Energy Transition

1,000
500

CO2
Emissions
0

2014

2021

Implement proprietary
technologies
Heat pump chillers
H2, CCUS, etc.
Implement decarbonizedenergy sources

2030

Energy conservation/
electrification
New Mobility & Logistics
Electrify and improve
efficiency of existing businesses

Japan’s
GHG Emissions(2019)

500

CO2
Emissions
2040

02019 2021

2030

2040

Expansion of
CCUS business© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

5

The following is a roadmap towards completion of MISSION NET ZERO.
For Scope 1 and 2 emissions, we have already made considerable reductions in thepast. Going forward, we will adopt our own technologies at our factories to achieve
Net Zero by 2040.
We will reduce Scope 3 emissions on a scale that exceeds Japan‘s total CO2
emissions. We will contribute to global implementation by establishingdecarbonization technologies, including Energy Transition initiatives, at an earlystage.

5

Roadmap to MISSION NET ZERO Achievement

Achieve Carbon Neutrality within MHI Group by 2040 and
deploy decarbonization solutions around the world© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

6

We aim to achieve Carbon Neutrality within MHI Group by 2040 and actively deploy
the results of our efforts to society at large to achieve Carbon Neutrality.
Today, I would like to share with you our thinking on Carbon Neutrality, which has notbeen adequately expressed in the introduction of individual products or press
releases to date.

6

Our Vision of a Carbon
Neutral World© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

7

First, I would like to talk about MHI Group's vision of a Carbon Neutral world.

7

Towards Realizing a Carbon Neutral World
Sustainable increase in environmental value is predicated on balancing
stable energy supply with both sound economics and safety

EnergySecurity

SafetyEconomic
Efficiency© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Environment8

We have thought nonstop about the 3 Es of energy for more than 20 years now, andsince 2014, we have considered what in Japan we call the 3Es + S. A sustainable
increase in environmental value is predicated on a stable energy supply, economic
efficiency, safety, and security. We cannot achieve a sustainable Carbon Neutral
world if we only consider environmental value.

8

MHI Group’s Carbon Neutrality Solutions Ecosystem◼ Not just a value chain◼ Create environmental and economic value by connecting diverse industries→ Quickly commercialize with MHI’s wide range of products andservices

6 keywords for achieving this:Utilize

Exchange

Separate

Circulate

Consolidate

Synthesize© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

9

We believe that a sustainable Carbon Neutral society is one where people coexist indiversity. We also need a Carbon Neutrality solutions ecosystem that ensures the3Es + S.
An ecosystem is a system that connects and leverages diverse value chains.
However, it is not just a value chain. In other words, it is a system that creates both
environmental and economic value by linking a wide variety of industries. Our goal isto quickly commercialize these solutions with MHI Group's wide range of products
and services.
The mechanisms needed to achieve this are represented by these six keywords:
Utilize, Separate, Consolidate, Exchange, Circulate, and Synthesize. Let me explainthese one by one.

9

Our Approach to Scope 1&2 Net Zero Achievement
Decarbonize MHI factories and commercialize those solutions
Step 0

Step 1

Step 2

Step 3Calculate requiredenergyReduce waste

Reuse heat

Use non-fossil
energyNet Zero

Fuel Use
Casting

Use solar heat
Heat pump chillers

Scope 1

Electricity
Use

Streamline
manufacturing
processes

Energyconservation &EMS*

Scope 2
Manufacturing
Cost

Solar power +battery energy storage© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

10*EMS: Energy Management System

The first example of such an ecosystem is our approach to Net Zero at our factories.
Scope 1 is CO2 emissions from fuel use, and Scope 2 is emissions from electricity
use.
First, we calculate theoretical minimum energy requirements and consider any
energy use above this as a target for reduction. We will streamline manufacturing
processes utilizing existing equipment and facilities. Heat that is discarded in the
manufacturing process will be reused to the fullest extent. Our heat pumps are
effective in this regard. In this way, non-fossil fuel energy will replace other energy
sources and approach the theoretical minimum value.
As the streamlining of manufacturing processes progresses, waste will be eliminated,and manufacturing costs will go down. In other words, environmental value andeconomic efficiency can be realized simultaneously. We will promote Carbon
Neutrality at our machinery works and then commercialize these technologies andtechniques as new businesses.

10New Facilities/
Processes

Energy: Local Production & Consumption of H 2
Global H2 Procurement

Water
Electrolysis

Liquifaction

Transport

H2 Storage(Receiving
Terminal)

Gasification

H2
Pipeline

H2
Gas
TurbineCarbonNeutralPower

Reforming

CO2
Storage

Prepare infrastructure
for global H2 procurement

Natural Gas© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

11

Here is the Carbon Neutrality ecosystem as it relates to Scope 3. First, let me
describe the hydrogen solutions ecosystem.
Infrastructure is currently being developed for global hydrogen procurement. This isan example of a value chain in which hydrogen is produced by a natural gas supplier,liquefied, transported, stored, and then used in a hydrogen gas turbine to generate
electricity.

11Energy: Local Production & Consumption of H 2

Existing
Facilities

New Facilities/
Processes

Global H2 Procurement

Water
Electrolysis

Liquifaction

Transport

H2 Storage(Receiving
Terminal)

Gasification

H2
Pipeline

H2
Gas
TurbineCarbonNeutralPower

Reforming

CO2
Storage
Existing Facilities(Gas-Fired Thermal Power)

Existing infrastructure for gas-fired
thermal power facilities present both
domestically and abroad

Natural Gas
Liquifaction

Transport

LNG
Storage© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Gasification

LNG
Pipeline

Gas
Turbine12

However, there is a lot of existing gas-fired power generation infrastructure in Japanand around the world. So, let's consider the first of the keywords I mentioned at the
beginning: Utilize.

12

New Facilities/
Processes

Energy: Local Production & Consumption of H 2
Global H2 Procurement

Water
Electrolysis

Liquifaction

Transport

H2 Storage(Receiving
Terminal)

Gasification

H2
Pipeline

H2
Gas
TurbineCarbonNeutralPower

Reforming

CO2
Storage
Local H2 Production & Consumption
Using Existing Facilities

Utilize existing infrastructurefor H2 with minimal modification

Natural Gas
Liquifaction

WaterElectrolysis

Transport

LNG
Storage

Gasification

LNG
Pipeline

H2
Gas Turbine(Retrofit)

CarbonNeutralPower

Pyrolysis
Solid Carbon© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

13

For clarity, existing infrastructure is indicated in orange.
Existing infrastructure can be used for hydrogen with minimal modification.
Specifically, water electrolysis units will be added to produce hydrogen using Carbon
Neutral electricity from the existing power grid. Similarly, natural gas delivered by anexisting gas pipeline can be pyrolyzed to produce hydrogen. This is called turquoisehydrogen.
The important thing to remember here is that you do not have to invest in equipment
all at once. Little by little, we can increase the production of hydrogen and mix it withnatural gas to be fired in a gas turbine. No modifications to a gas turbine are requiredfor 30% mixed firing. Even 100% hydrogen firing can be achieved by simply
replacing the combustor. The most economic method of hydrogen power generation
can be achieved by locally producing and consuming hydrogen.

13

New Facilities/
Processes

Energy: Local Production & Consumption of H 2
Global H2 Procurement

Water
Electrolysis

Liquifaction

Transport

H2 Storage(Receiving
Terminal)

Gasification

H2
Pipeline

H2
Gas
TurbineCarbonNeutralPower

Reforming

Demonstration Facility

CO2
Storage

Takasago
Hydrogen Park

Local H2 Production & Consumption
Using Existing Facilities

Slated to begin operation in FY2023 within
MHI Takasago Machinery WorksNatural Gas
Liquifaction

WaterElectrolysis

Transport

LNG
Storage

Gasification

LNG
Pipeline

H2
Gas Turbine(Retrofit)

CarbonNeutralPower

Pyrolysis
Solid Carbon© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

14

To validate these technologies, we are working to build our new Takasago Hydrogen
Park facility. The plant will begin generating power from hydrogen in FY2023.

14

Energy: Local Production & Consumption of H 2

Produce H2 and solid carbon
for use as raw materials
Water
Electrolysis

Natural Gas

H2
Gas Turbine(Retrofit)

Pyrolysis

CarbonNeutral
Power

Solid
CarbonMaterial Manufacturers(incl. chemical/steel
manufacturers)

Raw Materials© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Power Grid

Manufacture

Sell

15

Local production and local consumption of hydrogen includes the second keyword:
Separate. In this case, natural gas is separated into hydrogen and solid carbon.
This solid carbon can be used as a raw material by manufacturers of materials suchas chemicals and steel. This is one example of how value chains from different
industries can coexist.

15

Energy: Local Production & Consumption of H 2

Exchange for new value or materials
Water
Electrolysis

Natural Gas

Pyrolysis

H2
Gas Turbine(Retrofit)

Heat

Solid
CarbonPower Grid

CarbonNeutralPower

Carbon Neutral
Materials
Material Manufacturers(incl. chemical/steel
manufacturers)

Raw Materials

Manufacture

Sell© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

16

Next is the third keyword: Exchange. This is indicated in pink.
In the hydrogen gas turbine example, heat that the gas turbine would normally
exhaust is sent to a natural gas pyrolysis unit, which returns the resulting hydrogen to
the gas turbine to be used as a fuel. If a material manufacturer were built next to thepower plant, there could be an exchange of heat for raw materials.

16

CO2 Recycling in Steelmaking

Steelmaking(Direct Reduction)

Iron Ore

Blast
FurnaceGas(incl. CO2)Power
Generation/
Heat Use

Coal

Natural Gas

Steel Products© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

17

Next, we will consider an example of the steelmaking industry as a CO2 solutions
ecosystem.
The steelmaking process uses iron ore as a raw material and emits CO2 as blast
furnace gas. Let us examine CO2 recycling in steelmaking.

17Materials: CO2 Recycling in Steelmaking
Reuse carbon within the steelmaking process
Steelmaking(Direct Reduction)

Iron Ore

Blast
FurnaceGas(incl. CO2)

CCU
Coal

CarbonRecycling

Natural Gas

incl. COSteel Products© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

18

The fourth keyword is Circulate, which we have indicated in green.
CO2 from the blast furnace gas is captured by a CO2 capture system. We are
currently developing technologies to efficiently convert CO2 to CO.
CO2 is converted to CO and returned to the reduction process. This will greatly
reduce the amount of coal and natural gas needed to make steel. By recycling
carbon throughout the process, we not only reduce CO2 emissions, but we also
reduce the consumption of raw materials and fuel. This is another example ofcombining environmental value with economic efficiency.

18

Materials: CO2 Recycling in Steelmaking
Reuse carbon within the steelmaking process
Steelmaking(Direct Reduction)

Iron Ore

Water

MethaneNatural Gas (CH4)

Blast
FurnaceGas(incl. CO2)

CCU

Water
Electrolysis

Pyrolysis

CarbonRecycling

Solid
Carbonincl. CO

Carbon Neutral
Steel Products© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

19

The hydrogen production section from the hydrogen gas turbine page has been
added to the left in blue.
Coal and natural gas can be replaced with solid carbon and hydrogen. Carbon
Neutral steel products can be used in a variety of products. This is a great exampleof carbon recycling between different industries.

19

Waste Treatment: The CO2 Recycling Chain

Municipal Waste

Existing
Facilities

Waste-to-Energy
Boiler© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

20

The following is the case of a waste-to-energy boiler. It emits CO2.

20

Waste Treatment: The CO2 Recycling Chain

Municipal Waste

Existing
Facilities

Waste-to-Energy
BoilerHeat

CO2 Capture

CO Conversion

Oil/
Chemical Synthesis© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

21

This brings us to the fifth keyword: Synthesize. It is indicated in brown.
CO2 and heat generated from waste to energy boilers can be effectively utilized. MHI
is currently developing technology to convert CO2 into CO using Carbon Neutralelectricity.
By adding hydrogen to CO2, syngas, a mixture of CO and hydrogen, is obtained.
Syngas is a raw material for oil and chemical products.

21

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain

Municipal Waste

Waste-to-Energy
BoilerHeat

Biomass

CO2 Capture

Effectively
utilize CO2

Gasification

CO Conversion

Oil/
Chemical Synthesis© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

22

A biomass gasifier, which produces CO, has been added to the right side of this slide.
This is also an MHI Group product. Similar to the previous slide, chemical products
can be synthesized by combining CO with hydrogen.

22

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain

Heat
Treatment
Food Waste

Plastic
Waste

Waste-to-Energy
BoilerHeat

Biomass

CO2 Capture

Cycle I
Ferment food waste
to produce methane

Gasification

MethaneFermentation

Mix with
Municipal Gas

BiogasCO Conversion

CO2 Capture

Carbon Neutral
MethaneOil/
Chemical Synthesis© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

23

The fourth keyword, Circulate, has been added to the left side in green.
At the MHI Research & Innovation Center, we are currently validating a methane
fermentation system which breaks down food waste and generates methane. Thismethane can be mixed with natural gas. In this way, the natural gas industry will alsojoin the CO2 solutions ecosystem.
In addition, plastic waste can be separated out and recycled, which reduces the total
amount of waste. This is another form of carbon recycling.

23

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain

Cycle II
Heat
Treatment
Food Waste

Plastic
Waste

Waste-to-Energy
BoilerHeat

CO2 Capture

Recycle plastic
Biomasswaste
Gasification

MethaneFermentation

Mix with
Municipal Gas

BiogasCO Conversion

CO2 Capture

Oil/
Chemical Synthesis

Carbon Neutral
MethaneRecycled
Plastic© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

24

Let's look at the next keyword, Circulate, from the perspective of plastics. A large
cycle has been indicated in green.
This is the cycle of plastic waste recycling.

24

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain

Heat
Treatment
Food Waste

Plastic
Waste

Cycle III

Waste-to-Energy
Boiler

Heat

CO2 recycling
In Mobility

Biomass

CO2 Capture

Gasification

MethaneFermentation

Mix with
Municipal Gas

BiogasCO Conversion

CO2 Capture

CO2 Capture

DAC*

Oil/
Chemical Synthesis

Carbon Neutral
MethaneSAF
Recycled
Plastic© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Sustainable Aviation
Fuel

Renewable
Diesel25*DAC: Direct Air Capture

Let's return to the topic of oil synthesis. Now the right side has been highlighted ingreen.
Oil that was originally food waste or biomass and can be used as Sustainable
Aviation Fuel, SAF. Normally, CO2 from aircraft is emitted into the atmosphere, but
by performing Direct Air Capture, that CO2 can be captured, and a CO2 recycling
chain can be created on the right side. DAC can be achieved using MHI CO2 capture
equipment.

Renewable diesel fuel, shown at the bottom right, can be produced in the same way
as SAF, so this is truly a Mobility-focused CO2 recycling chain.

25

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain
Cycle I
Ferment food waste
to produce methane
Heat
Treatment
Food Waste

Plastic
Waste

Three Cycles

Waste-to-Energy
BoilerHeat

Biomass

CO2 Capture

Cycle III
CO2 recycling
in Mobility

Gasification

MethaneFermentation

Mix with
Municipal Gas

BiogasCO Conversion

CO2 Capture

CO2 Capture

DAC

Oil/
Chemical Synthesis

Carbon Neutral
MethaneSAF

Cycle II
Recycle plastic
waste© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Recycled
Plastic

Sustainable Aviation
Fuel

Renewable
Diesel26

This all has become a bit complicated. To summarize, by incorporating MHI’s
existing products as well as new technologies under development into existing waste
incineration facilities, we can create three major carbon recycling chains.
Value chains in differing industrial sectors will become increasingly connected. All
value chains will be characterized by satisfying environmental value while also being
highly economical through the use of by-products. This is exactly the Carbon
Neutrality solutions ecosystem MHI Group is aiming for.

26

Existing
Facilities

Waste Treatment: The CO2 Recycling Chain

CO2 Capture Points
Heat
Treatment
Food Waste

Plastic
Waste

Waste-to-Energy
BoilerHeat

Biomass

CO2 Capture

Gasification

MethaneFermentation

Mix with
Municipal Gas

BiogasCO Conversion

CO2 Capture

CO2 Capture

DAC

Oil/
Chemical Synthesis

Carbon Neutral
MethaneSAF
Recycled
Plastic© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Sustainable Aviation
Fuel

Renewable
Diesel27

By the way, have you noticed that there are multiple CO2 capture points in thesethree cycles? We have highlighted them in red on this slide.
Multiple collection points exist at disparate locations. This is where the last keyword,
Consolidate, comes in. I will explain this on the next page.

27

Consolidated CO2 Processing
Provide CO2 absorbent collection and supply services

×

Heat

Factory/Power
Plant/Waste-to-Energy
Boiler/etc.

Sustainable Aviation
Fuel

Oil/
ChemicalSynthesis

Heat Pump
Heat

SAF

Large-Scale
CO2
Collection

Small-Scale
CO2 Collection/
DAC© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Renewable
DieselRecycled
Plastic

28

MHI has a 70% market share in large-scale CO2 capture equipment for use inchemical and power plants. We have recently launched a lineup of small, modular
CO2 capture systems as well.
Modular CO2 capture systems are available for all industrial sectors. Existing
infrastructure in all industries can be utilized without modification, and CO2 capture
equipment can be installed according to its scale. Heat required for CO2 capture is
generated at low cost by our heat pumps. These small amounts of CO2 can then becollected at volume by consolidation, making the synthesis of oil and other materials
more efficient and less expensive.
We are also considering providing CO2 absorbent supply and collection services, aswell as remote operation of CO2 capture equipment for thousands or tens of
thousands of facilities.

28

Status of Solutions
Development© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

29

So far, I have introduced some of the examples of the Carbon Neutrality solutions
ecosystem that MHI Group is aiming for, namely, the coexistence and success of awide variety of industries.
Here are some examples of individual products and technologies that will make thispossible.

29

Carbon Neutrality Investments**Investments: Total of capital expenditures, investments, and R&D costs

Execute large shift in funds to R&D and investments,
reaching 2 trillion yen by 2030
Carbon Neutrality

Carbon Neutrality

80%

40%
CapEx

¥300 bn/

R&D

year
CapEx

(18 MTBP)

Investment¥300 bn/year

R&D(21 MTBP and
beyond)Investment

Shift investment to decarbonization ecosystem development in each business, focusing on six keywords (1. Utilize, 2. Separate,
3. Exchange, 4. Circulate, 5. Synthesize, and 6. Consolidate) mentioned in the previous section© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

30

But first, let me lay out our investment plan.
The ratio of R&D and investment will be significantly increased to an accumulated
total of 2 trillion yen through 2030. We will also double the percentage of investment
in Carbon Neutral products from 40% to 80% to accelerate the development of ourtechnology and product areas.

30Energy Management System
Begin use in FY2022
Validation to begin in FY2022 as a core part of the
MHI Group Integrated Development Plan

DemandOptimization
Algorithm

Supply Optimization
Algorithm◼ Leverage position as equipment
manufacturer
Utilize knowledge base regarding core energy
supply products such as power plants and HVAC
to develop algorithms which account forlifecycle costs and operability

Data Center◼ Compatible with carbon neutral
equipment
Install solar panels and battery energy storage
equipment. Develop carbon neutrality
management technologies.

◼ Verify effectiveness withsimulations
Simulate operational changes and/or installationof new equipment. Quantify cost anddecarbonization effectiveness, and increase
accuracy of return on investment calculations◼ Use latest evaluation indices
Energy cost and battery charge/discharge costmodels using the latest techniques, including
levelized lifecycle costing, are included in control
algorithms© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

YHH DemandSide Equipment

300kW

100kW-500kWh

Motor

100kW

YHH CN Type EMS Core System Development
Development

Validation

Install CN models in factories

Commercialization

EMS base system for customer use

Development

2021

2022

Commercialization

2023
2021 Medium-Term Business Plan

31

Now, I'll briefly discuss the readiness of individual products as it pertains to Carbon
Neutrality.
First off, here is an Energy Management System, which is required for all industrial
sectors in the ecosystem.
We will validate Carbon Neutral solutions management technology by installing solar
panels, battery storage equipment, and a data center at Yokohama Hardtech Hub,and also by linking with external fluctuating clean energy sources. We will begin
validation operations in FY2022, and after decarbonizing our factories, we willcommercialize the system.

31

Heat Pump Chillers
Begin validation in FY2022
Complete prototype design and fabrication in
FY2022 and validate at in-house manufacturing
facilities in FY2023

Factory Decarbonization Solutions◼ Reduce CO2 emissions fromheating processes

Reuse heat

Electrify heating processes in factories and otherfacilities. Develop energy conserving heat pumpchillers. Achieve large decrease in CO2emissions.

Casting Process
Effectively use hightemperature waste heat

◼ Leverage existing productdevelopment and manufacturing
technologies
Quickly commercialize while ensuring highreliability

Heat pump chillers◼ Provide decarbonization solutions
for heating processes

Utilizereused heat
(waste heat) or
atmospheric heatas heat sources

Combine heat and energy equipment design anddevelopment capabilities with engineeringknowledge base cultivated in existing businesses

Decrease CO2 emissions
by replacing fossil fuel boilers© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

32

Heat pumps are key to decarbonizing factories.
By increasing the lineup in the high-temperature range above 100C and replacing
existing factory boilers, we will contribute to decarbonization in many industries. We
will complete the design and production of a prototype in FY2022 and begin
operation at our machinery works in FY2023.

32

Mihara Carbon Neutral Factory
Achieve a fully Carbon Neutral
factory by the end of FY2023
Demonstrate the achievability of MISSIONNET ZERO by offsetting 10,000 tons-CO2/
year

Mihara Machinery Works
Itosaki Kohama Plant

Wadaoki Plant◼Install solar panels
Install an amount of solar panels
equivalent to the electricity consumptionof Mihara Machinery Works.
Achieve Scope 2 decarbonization with thisdedicated renewable energy source.

◼Utilize as R&D proving ground
Execute challenging adoption of energy
conservation, electrification, fuelconversion, and renewable energy
sources while using as a proving groundfor various technologies and carbon
neutral solutions

×

+ H2

H2

Energy Conservation/
Electrification

CO2＝10,000 tons ≒Substation

KohamaItosakix 700,000 trees

Wadaoki＋
Substation

CarbonNeutrality

2021 Medium-Term Business Plan
2021
© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2023
33

This is the new Mihara Carbon Neutral Factory initiative.
Solar panels equivalent to the electricity consumption of Mihara Machinery Works will
be constructed at the plant site. We will decarbonize the power we use and alsoutilize the facility as a proving ground for the development of other technologies.

33

Takasago Hydrogen Park
Begin operation in FY2023
A one-stop-shop for validating hydrogen-related
technologies from hydrogen production to power
generation

H2 Gas Turbine(Small to Mid-Size)

H2 Gas Turbine(Heavy Duty)◼ Add hydrogen production and storage
equipment to existing demonstrationplant
H2 Production Equipment

Test and validate water electrolysis, turquoisehydrogen*, SOEC** and other technologies in-houseand improve product reliability*Turquoise hydrogen: H2 obtained through pyrolysis ofmethane into H2 and solid carbon

H2 Storage Equipment**SOEC (Solid Oxide Electrolyzer Cell): High temperature
steam electrolysis◼ Validate hydrogen gas turbine
technology
Validate technology in lead up to commercializationof 30% mixed firing in heavy duty gas turbines and100% hydrogen firing in small to mid-size gas
turbines by 2025

◼ Combine and evolve energy
infrastructure and hydrogentechnologies
Make progress toward establishing a hydrogensolutions ecosystem, which will help achieve asustainable society by linking various industries withhydrogen technologies

H2 production/
storage/
supply to GT

2020

2025

2030

Validation with waterelectrolysis
Turquoise H2

SOEC

Validation testing

Validation testing*Pictured: SOFC
© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

34

The new Takasago Hydrogen Park will add hydrogen production and storage
equipment to the existing GTCC demonstration plant at Takasago Machinery Works.
This will enable validation testing of an integrated process from next-generationhydrogen production technology to power generation using hydrogen gas turbines.
After validating the system using water electrolyzation, we plan to produce turquoisehydrogen by pyrolyzing methane into hydrogen and solid carbon, among otherinitiatives. Operation is scheduled to begin in FY2023.

34

Hydrogen Gas Turbine (EU Taxonomy Compliant)
EU Taxonomy Compliant◼Small to mid-size gas turbines
Validate on actual equipment at Takasago
Hydrogen Park in preparation forcommercialization of hydrogen gas
turbines by 2025, meeting the EU
Taxonomy deadline

SM GT
400

HD GT
CO2 (g/kWh)Leveraging Takasago Hydrogen Park,
develop hydrogen gas turbine technologythat complies with the EU Taxonomy’s strict
CO2 emissions standards. Development
schedule meets Taxonomy timing
requirements as well.

300

(30%
mixed
firing)200(50% mixed firing)100(100% H2 firing)◼Heavy duty gas turbines
Development of 30% mixed hydrogenfiring technology was completed in 2018.
Validation will be performed at Takasago
Hydrogen Park in the lead up tocommercialization in 2025.

EU Taxonomy

C270 g/kWh (Direct)(natural
gas)

2020

2025

2030

100％
H2 firing2035

Hydrogen Combustor
Small &
mid-size GT

100% hydrogen firing

Forecasted to achieve 100% hydrogen(40 MW class)firing by 2030 and meet the EU Taxonomy
30-50% mixed firing
requirements a full 5 years before the
Heavy duty GT(450 MW class)deadline

100% hydrogen firing© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

35

Here is the status of hydrogen gas turbine development.
For small and mid-size gas turbines, we plan to validate 100% hydrogen firing at
Takasago Hydrogen Park in 2024. This technology is EU Taxonomy compliant.
The development of 30% mixed firing has been completed for heavy duty gas
turbines, and validation will start in 2023.
The development of 50% mixed firing and 100% hydrogen firing will be completed in
2024 and 2030, respectively, both of which are before the EU Taxonomy standards
come into effect.

35

Nuclear Power
Carbon-free, large-scale power source
Nuclear power is a stable power source, which does notemit CO2 during operation and also is not affected byweather. Therefore, we believe it will be essential to theachievement of a Carbon Neutrality.

◼ Restart existing plants and complete thenuclear fuel cycle
Currently focusing on restarting existing plants,building Specialized Security Facilities*, andcompleting the nuclear fuel cycle◼ Develop a next-generation light water
reactorDevelop a next-generation light water reactor withfurther improvements to safety, aiming forcommercialization in the mid-2030s

Present

2030

2040

2050

Restart existing plants/Build
Specialized Security Facilities/
Complete the nuclear fuel cycle

Development &DesignNext Generation
Light Water
Reactor

Small Modular
ReactorFuture Reactors

Development & Design(High Temp. Gas Cooled Reactor,
Fast Breeder Reactor)

ITER Project/Prototype Reactors
Restarts & Specialized
Security Facilities

Next-Generation
Light Water Reactor

High Temperature
Gas Cooled Reactor

Small Modular
ReactorFusionReactor◼ Develop future reactors and fusion
reactors
Develop and commercialize small modular reactors,
high temperature gas-cooled reactors, and fast
breeder reactors to satisfy the diversifying market
needs of the futureHigh-volume, stable, carbon-freehydrogen production using hightemperature gas-cooled reactors
Contribute to meeting decarbonization and hydrogen use
needs of various industries including steelmaking byachieving high-volume, stable hydrogen production withhigh temperature gas-cooled reactors

H2
Supply heat withhigh temperature
helium gas© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

36*Specialized Security Facilities: Isolated, large-scale facilities used to safely shut down a reactor in the event of such security incidents as airplane strikes or terrorist attacks

Nuclear power does not emit CO2 during operation, is not affected by weather
conditions, and is a stable power supply. This makes it essential for realizing a
Carbon Neutral society that satisfies the 3Es + S criteria. We will contribute to thestable production of hydrogen using high-temperature gas-cooled reactors, while
making steady progress in restarting operations, completing the nuclear fuel cycle,
and developing next-generation light water reactors.

36

Biomass Gasifier
Achieved world’s first regularlyscheduled flight* powered by SAF
Sustainable Aviation Fuel (SAF) produced fromwood biomass

Pilot Plant

JERA

JAXA

Materials
Procurement

MHI

Toyo Engineering

EngineTesting

Biomass
Material

Gasification

FT Synthesis/
Hydrogen Production

SAF◼ Integrated biojet fuelmanufacturing technology

JERA

Operation

Established by MHI, JERA, Toyo, and
JAXA under contract from NEDO**◼ Validated in a pilot plant
Built a pilot plant and validated theachievability and efficacy of a gasifier withprocessing capacity of 0.7 ton/day and agas production output of approx.1,000 Nm3/day
during FY2017-2020.

◼ Adaptable to any region
Biojet fuel meeting ASTM
quality standards

Achieved an SAF production process using
captured CO2 including from DAC*Outline of domestic regularly scheduled flight
powered by SAF produced from wood pulp:- Date: June 17, 2021
- Flight: JAL 515- Route: Tokyo-Haneda to New-Chitose(Japan domestic)- Aircraft: Airbus A350-900

Biomass Gas Equipment

View of pilot plant（within JERA Shin-Nagoya Thermal Power Station)© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

37**NEDO: New Energy and Industrial Technology Development Organization

This is a gasifier that produces Sustainable Aviation Fuel, which I explained during
the section on waste treatment.
We have already developed technology to produce SAF through the gasification of
biomass under contract from NEDO. In 2021, MHI and our partners supplied SAF to
the world’s first regularly scheduled airline flight powered by SAF.
Since aviation fuels need to be adapted to the characteristics of each region, we will
promote the establishment of a process from CO2 capture, including DAC, to SAF
production.

37

Modular CO2 Capture Equipment
Shipped first production unit in FY2021
Fill out the product lineup by FY2023
Commercialize units for ships, gas engines, waste
incinerators and others◼ Proprietary CO2 capture technology
Extensive commercial experience and highcapture rate (over 90%) for chemical and thermal
power plants◼ Expand equipment lineup（0.3-200t/day）Develop equipment targeting not only large but
also small- and medium-sized emission sources
to diversify CO2 recovery demand◼ Modularize and standardize
Development of low-cost general-purpose
equipment aiming to reduce size (70% reduction
in installation area) and minimize on-site
construction (75% reduction compared withconventional equipment)◼ Remote monitoring and O&M
Option to minimize customer effort. Beginvalidation testing in 2022. Commercialize CaaS*
business in 2024.

Conserve spacewith container
housing

Minimize site construction© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

CC-Oceanmaritime test of modular
CO2 capture equipment
38*CaaS (CO2 Capture as a Service): A business covering all processes of CO2 capture, collection, storage and conversion/utilization

This slide explains small, modular CO2 capture systems.
MHI Group has approximately a 70% market share in CO2 capture equipment on acapacity basis. We are expanding our equipment lineup and can contribute todecarbonization in all industries.
We will also introduce remote monitoring and O&M services to minimize customer
labor and costs, and CO2 Carbon Capture as a Service to supply, collect, and renew
absorbent for use in carbon capture systems. MHI will become a key player in theCO2 solutions ecosystem across diverse industrial sectors.

38

Roadmap
Current research will transition to the next phase by 2023.
Will continue to add new research areas
Oct 2020

Mar 2024

2021 MTBP

2030

2040

Future MTBPs

Scope 1&2

50% reduction

Scope 3+50% reduction(compared to 2014
levels）(compared to 2019
levels）

reductions from CCUS
Energy Management
Systems
Carbon Neutral Factories
Hydrogen Production
Equipment

Development/Investment
Development
Development

Takasago Hydrogen Park

Nuclear Power
Biomass Gasifier
Modular CO2 Capture
Equipment

Restarts/Specialized Security Facilities/Fuel cycle
Pilot plant validation testing/Feasibility studies
Expand lineup

2040:
Achieve Net Zero

Mihara Carbon Neutral Factory/
Roll out to other machinery works/Commercialization
Sequential validation of next-generation hydrogenproduction tech./Commercialization
Heavy duty: 100% H2 firing/
Small mid-size: 100% H2 firing
Heavy duty: 50% mixed firing
Commercialization

Development/
Investment

Development

Japan & othercountries
achieve Net Zero

Commercialization

Development/Validation at YHHHydrogen Gas Turbines

2050

Operation
Next-Generation Light Water Reactor/
Small Modular Rector/
High Temp. Gas Cooled Reactor

Commercialization
Commercialization© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

39

This is the development roadmap for individual products and technologies.
In the current fiscal year, which is the first year of the 2021 Medium-Term Business
Plan, we have already begun development of many new technologies and products,
and new ideas are being generated every day. Most of these will be coretechnologies in the solutions ecosystems introduced today. They will enable value
chains from diverse industries to balance environmental value with economics.
Prototype production and validation testing will be conducted sequentially, and wewill commercialize new products as the they become ready.
In this way, MHI Group will achieve a 50% reduction in Scope 1&2 emissions by
2030 and Net Zero by 2040.

39

Summary© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

40

Allow me to summarize today’s presentation.

40

Business Size (Energy Transition-Related Businesses)
Seize business opportunities and revolutionize business models through
Carbon Neutrality initiatives
Scope 1&2
Scope 32030 Business Size (billion yen)
300 Energy Transition¥300 Carbon Cyclebn Waste, biomass → Carbon neutral fuels
Factory Decarbonization50%
reduction

Roll out from in-house → customer facilities

Energy/Environment

Hydrogen Solutions Ecosystem

700 New Mobility &Water electrolysis → Turquoise hydrogen, etc.

Logistics

Social Infrastructure

CO2 Solutions Ecosystem

Aircraft, Defense &
Space
FY20

FY23

Large scale → Modular → CaaS/CCUS
business

FY30

2040
Achieve
Net Zero¥50 bn

2023

2025

2030

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

41*Figures above do not include revenue from renewal/decarbonization of H2 gas turbines, Nuclear Power, or other existing businesses, or New Mobility & Logistics

This slide shows revenue levels from Energy Transition-related businesses in green.
Through Carbon Neutrality, we will create business opportunities and transform ourbusiness models. We will develop CO2 and hydrogen solutions ecosystems, carbon
recycling, and factory decarbonization. The solutions ecosystems I mentioned today
will connect various industries, and we expect that they will expand very rapidly.

41Philosophy and Vision for Achieving a Carbon-Free World
Our Principles- We deliver reliable and innovative solutions that make a lasting difference to customers
and communities worldwide- We act with integrity and fairness, always respecting others- We constantly strive for excellence in our operations and technology, building on a wide
global outlook and deep local insights

MISSION NET ZERO
Enable coexistence among diverse
industries with MHI Group’s wide range of
products and services

2040 Net Zero

Balanceenvironmental andeconomic value

Scope 1&2
Scope 3+ reductions from CCUS

Achieve a sustainable,
Carbon Neutral society© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

42

Our philosophy and vision for achieving a Carbon-Free world is in harmony with
MHI's principles.
Through MISSION NET ZERO, we aim to enable coexistence among diverse
industries with MHI Group's wide range of products and services.
By combining not only environmental value but also economic value, we will realize asustainable Carbon Neutral world.

42

Actively Pursuing Climate-Related Disclosures and ESG Finance◼ MHI Group will disclose two climate change
scenarios in accordance with the TCFD
framework (scheduled for April 2022)

ESG Finance◼ Plans to issue transition bonds (FY2022)
Selected as model example for the Japan
Ministry of Economy, Trade and Industry’s 2021
Climate Finance Model Projects(March 17, 2022)◼ Issued green bonds for two consecutive years
FY2020: 25 billion yen, FY2021: 15 billion yen◼ Executed positive impact finance loan
agreement (Amount: 2 billion yen,
Date of execution: March 14, 2022)© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

43

Finally, we will continue to actively pursue climate-related disclosures.
In April, we will disclose two climate change scenarios in accordance with the TCFD
framework.
Additionally, we will accelerate our initiatives by utilizing ESG finance, includingtransition bonds, green bonds, and positive impact finance.
Thank you for your attention.

43

44