JOGMEC Carbon Neutral Initiative

November 14, 2022

A history of the efforts of JOGMEC toward environment / climate change⮚

Accelerating global
trends on climatechange issues,
increasing social
demands

JOGMEC’s initiative for Achieving
Sustainable Development Goals(SDGs) ( December 2018)1

Formulation of thesixth Strategic
Energy Plan

Japan's 2050 Carbon
Neutral Declaration➢ Amendment of
JOGMEC law(November 14, 2022)⮚⮚

Emphasis on SDGs by supporting astable energy / resource supply

1. Ensuring a stable supply of energy andresources to support industry and everyday life
2. Measures aimed at tackling climate change
and contributing to the establishment of arecycling-based society

Technical Business Strategy for a
Low-Carbon Society(oil and gas sector) (July 2020)① Contributing to establishinga low-carbon society

Establishment of
Carbon Neutral Promotion Headquarters(April 2021)
Newly established for initiatives as an entire organization,
including metal and geothermal fields.
⮚② Pursuing new possibilities foroil and gas field development

JOGMEC Carbon Neutral Initiative
Announced on April 20, 2021
Revised on November 14, 2022
Formulate an organizational initiative policy.

Three basic policies

3. Environmental conservation activities related toresource projects
4. Regional revitalization through partnerships
with stakeholders③ Strengthening foundation technologies for technicalevaluation, exploration, and development projects

5. Empowering of all people

Three central pillars of the novel technical business strategy

Action plans

JOGMEC Carbon Neutral Initiative

JOGMEC will contribute to achieving a carbon-neutral society
by securing a stable resource / fuel supply and strengthening
initiatives that are consistent with climate change.

Three basic policies
Fossil fuel development
and decarbonization

Geothermal

Oil
Coal

Strengthening the
LNG supply chain

Strengthening efforts forclean resources and energy

2

Promoting domestic
development and international
project development ofgeothermal resources

Gas

MetalsStable metal / mineral
resource supplies
which support
electrification

LNG

NH3

Constructing hydrogen /ammonia supply chain
and market expansion

H2

Offshorewind

Synthetic
fuel

Securing CCS-suitable sites

Wind condition andgeological surveys fordomestic offshore winddevelopment

Contributing tosystem developments

Strengthening efforts for
decarbonized fuel andtechnology

Contributing to the developmentof systems necessary for
decarbonization

Action Plan

1. New initiatives in accordance with the amendment to the JOGMEC law(1) Providing equity capital andliability guarantees for the production
and storage of decarbonized fuels（2）Providing equity capital/liability
guarantees and geological/geophysicalsurveys for CO2 storage（overseas andaround the coastal waters of Japan)

3(3) Providing equity capital and liability
guarantees for domestic ore processing
and smelting business（overseas and domestic）

CCS
Hydrogen/Ammonia/
Synthetic fuelMetals(4) Providing equity capital foroverseas geothermal exploration（5）Wind condition and geologicalsurveys for domestic offshore winddevelopment

Geothermal

Oil/Natural gas

Offshore windCoal1.(1) Providing equity capital and liability guarantees for the production and storage of
decarbonized fuels

4

We will promote efforts for decarbonized fuels, such as hydrogen, ammonia, and synthetic fuel. We will strengthen
support not only in fields where the technical knowledge of JOGMEC can be directly utilized, such as fossil fuelderived hydrogen and ammonia, but also for renewable energy-derived hydrogen, ammonia and synthetic fuel.
⚫ Direction of support
strengthening (Image)
Existing scope of support
E

Equity capital

L

Liability guarantees

C

Concession acquisition

Overseas

Equity capital

L

Liability guarantees(Source: created by JOGMEC basedon materials from the release of the
Ministry of Economy, Trade andIndustry)

L

C

Development
NaturalGas

New scope of support
E

E

Production* Including MCH
conversion
anddehydrogenation
plant

L

Liquefaction

Supply of raw
material gas

shipping

E

Receiving

Utilization

L

StorageLE

production

StorageE

Hydrogens

E

E

Domestic

E

L

Shipping

L

StorageE

Utilization
L

Production

1.(2) Providing equity capital/liability guarantees and geological/geophysical surveys for CO2 storage
We will strengthen efforts for fossil fuel decarbonization technologies, such as CCS and carbon recycling. We will
specifically maximize the use of technical knowledge of JOGMEC on the subsurface and surface characteristics andstrengthen financial and technical support for Japanese companies in securing suitable sites for CCS.

Equity capital

L

Liability Guarantees

C

Concession acquisition

G

Geological/geophysical surveys

V

Vessel lease

New scope of support
E

Equity capital

L

Liability Guarantees

C

Concession acquisition

G

Geological/geophysical surveys

V

Vessel lease(Source: created by JOGMEC basedon materials from the release of the
Ministry of Economy, Trade andIndustry)

Naturalgas

V

Survey
G

V

CCS

E

G

E

C

Exploration

E

L

C

Development

E

Production

Liquefaction

CO2 Capture
E

C

Exploration

SurveyE

L

Contribution to a stable
and affordable supply of
LNG to JapanC

Domestic (around the coastal waters of Japan) CO2 Capture
G

V

SurveyE

Exploration

SurveyV

E

Storage

Development

E

E

Exploration

Storage

Contribution to a stable
and affordable supply ofnatural gas
E

Production

CO2 CaptureG

Shipping

Storage
Shipping

Naturalgas

Existing scope of support

Overseas

CCS⚫ Direction of support
strengthening (Image)5

LContribution to a stable
and affordable supply ofnatural gas

ShippingL1.(3) Providing equity and liability guarantees for domestic ore processing and smelting businessDespite an expected increase in demand for minor metals (such as rare-earth metals, lithium, cobalt, and nickel,
which are necessary for renewable energy plants and batteries for energy storage) and base metals (such ascopper, which is vital for electrically-conductive materials), supply risks owing to a high dependence on specificcountries for processing and smelting are of concern for some metals. We contribute to resilience in the mineral
resources supply chain in Japan through strengthening financial support to the domestic ore processing andsmelting business.

(Source: created by JOGMEC based on materials from the Mining
Subcommittee of the Ministry of Economy, Trade and Industry)● Direction of financial support strengthening (Image)
Existing scope of
supportE
O

Equity capital

Overseas
E

O

DomesticG

Exploration

E

L

MiningE

L

Processing/
Smelting

Import of Metal materials

loan

L

Liability guarantees

G

Geological survey

E
Surveys for discovery
of promising mineraldepositOre extraction
in mineImpurity removal/
Metal extraction

L

Processing/
Smelting

Equity capital

L

Liability guarantees

These steps are highly dependent on
foreign countries for the minerals

RecyclingMetalmaterials
supplyNew scope of support
E

6

Manufacturingindustry(battery, motor,
electric power
equipment)

Impurity removal/
Metal extraction

Conditional to its contribution to reducing
import of mineral resources by recycling andused products including metals

1.(4) Providing equity capital for overseas geothermal exploration
To fundamentally enlarge geothermal energy installations in Japan, we will support Japanesecompanies by providing equity capital to achieve technologies and know-how through participating inmajor geothermal development projects overseas.
＜Current situation and Challenges＞• Accelerating efforts for major geothermal development innational parks is necessary towards achieving installation
target of geothermal power in 2030 (1.5MkW).
➢ Current installation amount is ca.0.6MkW.
➢ Technologies and know-how are scarce because of limited
experiences and actual achievements of major geothermal
development in Japan.
• Major projects (average 0.1MkW) and example of advanced
exploration and drilling technologies exist abroad.

＜After an amendment to the JOGMEC law＞
• JOGMEC will begin to provide equity capital for overseas
geothermal exploration on 1st April 2023. We aim atbringing technologies achieved in projects overseas into
domestic projects to promote domestic geothermal
developments.

● Image of support for overseas geothermal exploration

Technologies and know-how expected toapply domestic projects• Technology of acid water control• Technology of well-drilling• Technology of geothermal development
not required hydrothermal waters

Utilization in the domestic geothermal developments of technologies andknow-how acquired in major projects overseas
Providing
Equity Capital

Japanese
Companies

Providing
Equity Capital

7

Project
Companies

Geothermal
exploration
overseas**Limited to the technology
which is vital fordevelopment of domestic
geothermal resources1.(5) Wind condition and geological surveys for domestic offshore wind development
So far, several grid operators conducted initial surveys in potential areas, which led to inefficient
surveying and became a burden on the local communities. Considering this situation, Japanese
government empowered us to conduct the initial surveys for wind energy evaluation, planning
turbine layouts, and selection suitable foundation designs.

8(Source: created by JOGMEC basedon materials from the council of the
Ministry of Economy, Trade andIndustry)●Process of project creation by “Japanese Centralized Model” and the role of JOGMEC’s initial surveys (Image)
Project creation in each region

Information provision from local prefectural governments
to the government

Selection of survey areas by the government
Surveys required for wind energy evaluation, planning
turbine layouts, and selection suitable foundation designs
Wind condition surveys

Geological surveys(seabed topography and ground property)

Providing survey results to grid operators
Designation of promotion area by the government
Public bid process by the government
Detail surveys and construction work by a selected grid operator
Commencement of operation

Establishment of acouncil and consultation
based on Act on
Promoting the Utilizationof Sea Areas for theDevelopment of Marine
Renewable Energy Power
Generation Facilities

Action plan

2. Strengthening support measures for achieving carbon neutrality,
promoting new initiatives(1) Promotion of fossil fuel development
and decarbonization(2) Stable LNG supply /market expansion promotion(3) Further promotion of geothermal
development

Strengthening financial and technical support for
decarbonization activities in oil/gas fields and coalmines

Securing a stable supply of LNG, which isimportant as a regulated power source and raw
material for hydrogen/ammonia, and supporting
expansion of the Asian market

Promoting domestic and technical development
as well as international project development ofgeothermal power, which is a clean base load
power source(4) Promotion and decarbonization ofmineral resource development(5) Support for hydrogen and ammonia
production etc.

(6) Comprehensive support for CCS

Support for feasibility evaluations towards
establishment of international value chain onhydrogen and ammonia etc.

Joint research for CCS business feasibility
evaluation, strengthening cooperation with oiland gas- producing countries and contributing tosystem developments

Financial and technical support for the
exploration/development/production
andrecycling of carbon-neutral-relevant minerals*In addition to the above, JOGMEC is also involved in a wide range of studies on the roles and functions to be fulfilled without beingbound by conventional departments and support frameworks. We will actively contribute to supporting the efforts of the Japanesecompanies and building systems in cooperation with the government.

9

Strengthening effort started from FY2022: Example I.
Action Plan 2.(6) Comprehensive support for CCS

Formulation of CCS guideline and GHG/CI guideline (for LNG, hydrogen and ammonia)

10

We formulated the recommended guidelines for the implementation of carbon dioxide capture and storage projects, as well as GHG
and carbon intensity (CI) accounting framework for LNG/Hydrogen/Ammonia project. We also intend to study methodologies toquantify the amount of CO2 storage through CO2-EOR (enhanced oil recovery by carbon dioxide injection) and enlarge the scope ofthe guidelines to include the production of synthetic methane. We will contribute to the promotion of CCS, project developmentwith reliable CI, and market expansion of hydrogen and ammonia through utilization and technical verification of these guidelines.
Recommended guideline for the implementation of carbon
dioxide capture and storage projects (CCS guideline)• Specialized in technical recommendations and GHG calculation
methodologies to evaluate GHG reduction amount for CCS projects.

Schematic of the calculation of net CO2/GHG reduction➢ News Release（May 30, 2022）
https://www.jogmec.go.jp/english/news/release/news_10_00004.html

Recommended guideline for greenhouse gas and carbon
intensity accounting framework for LNG/Hydrogen/Ammonia
project (GHG/CI guideline)• Provides a recommended guideline to calculate GHG emission andproduct carbon intensity for LNG/Hydrogen/Ammonia projects.

System boundary and process➢ News Release (May 30, 2022)
https://www.jogmec.go.jp/english/news/release/news_10_00005.html

Strengthening effort started from FY2022: Example II.
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Action Plan 2.(4) Promotion and decarbonization of mineral resource development

Strengthening financial support on high-risk minerals for carbon neutrality
High-risk minerals (rare-earth, cobalt, lithium, nickel, and PGM) essential for the battery, etc. (which are importantfor electricity and greening) are being called for urgent attention in the movement of decarbonization.
We improved the support for reducing investment risk on resource development by Japanese companies throughincreasing JOGMEC’s rate of provided equity capital for overseas development and production of high-risk minerals.
＜Conditions for financial support＞
Examples of equipment required toachieve carbon neutrality

Lithium-ion battery(lithium, nickel, cobalt)

Electric vehicles

High-performance magnets forgenerators and drive motors(rare earths)(Source: created by JOGMEC based on materials
from the Mining Subcommittee of the Ministry of
Economy, Trade and Industry)

SystemOverview

Exploration loans

Loan ratio:
Base metal: max 70%
Minor metals / uranium: max 80%

Equity capital

Investment ratio: max 50%

Liability guarantees

Guarantee ratio: max 90%,
Guarantee fee rate: 0.4-1.55%(guarantor: 0.1%)

Equity capital fordevelopments andproduction

Investment ratio: max 50%（High-risk minerals: max 75%）

Strengthening effort started from FY2022: Example III.
Action Plan 2.(5) Support for hydrogen/ammonia production, etc.

Efforts to apply existing tanks for storage of decarbonization fuels
Hydrogen carriers, such as methylcyclohexane (MCH) and ammonia, draw attraction as effective energy for achievingcarbon neutrality. We conduct technical support for modification of existing tanks (crude oil tanks and lowtemperature LPG tanks) for storing MCH and ammonia.
⚫ Direction of support for application of existing tanks for storing decarbonization fuel (Image)Evaluation for
operationalization（Plan）

Project
Implementation（Design/Construction work）

Formulation of technical guidebook forstoring decarbonized fuels in existingtanks for private companies➡Technical support for feasibility
study of possible project on storing
decarbonized fuels

Modification

Tank fordecarbonized
fuelLeading to the Action plan 1.(1)Providing equity capital and liability
guarantees for the production andstorage of hydrogen, ammonia, andsynthetic fuel by utilization of
accumulated technical knowledge

Modification

Low-temperature tankfor LPG

Existing tanks＋
Technical
supportFloating-roof tank for
crude oil

12

Revision history
Issued in April 2021
Revised in November 2022