Compass2030
Tokyo Gas Group Management Vision

Providing energy and solutions to the future of our life, society and the earth

November 27, 2019

Tokyo Gas Co., Ltd.

1 Providing energy and solutions to the future of our life, society and the earth
Tokyo Gas has led the way to the age of city gas.
In 1969, Tokyo Gas became the first company to introduce LNG in Japan. We constructed LNG receiving terminals, a main circular and a subsea trunk
pipelines. Over the course of 17 years, we also visited and achieved the calorific value change to supply city gas with a high calorific value for 5.5 million
customers.
In the half-century since, we have led Japan and the rest of the world in promoting more widespread use of this new source of energy, through a stablesupply and new products and solutions that include manufacturing using clean natural gas, urban development through smart energy networks, andlifestyle design using new technologies such as fuel cells. In this way, Tokyo Gas has led the way to the age of natural gas. Creating innovative change
through energy and achieving a sustainable society is very much in the Tokyo Gas Group’s DNA and is in line with both the spirit of the United Nations
Sustainable Development Goals (SDGs) and the strongly held desire of the founder of Tokyo Gas, Eiichi Shibusawa, who valued common good.

We are on the cusp of a new age of innovation in the lead-up to 2030.
In the new digital age that is causing profound changes in work and lifestyles, values are also continuing to evolve, and people are less concerned with“what one has” while placing more importance on “what one experiences” and “what one feels.” In addition, progress in the decentralization andderegulation of energy has resulted in a fierce competition in terms of various models for providing added value.
At the same time, climate change and other problems affecting society have also become increasingly severe, and decarbonization has become a major
trend. Moreover, as exemplified by the SDGs, people have come to naturally view such issues that affect societies and the world as issues that affectthem personally.
Amidst these major changes, we feel that the ten-year period leading up to 2030 is one in which we must question the proper roles for both energy andenergy suppliers.

The Tokyo Gas Group is ready to tackle new challenges.
In preparation for the next half-century, the Tokyo Gas Group has formulated its “Compass 2030” management vision outlining the course that should be
pursued in this age of uncertainty. As the management decided 50 years ago, Compass 2030 states the Group’s determination to take on this newchallenge.
Natural gas, one of the pillars of the Tokyo Gas Group’s business, is expected to play an even larger role due to its stability, environment-friendly nature,and economic viability, as well as its affinity for use in combination with inherently unstable renewable energy sources. We will continue to provide suchof natural gas to our customers.
At the same time, however, as a leading company dealing in natural gas (a fossil fuel), we feel it is our responsibility to deal forthrightly with the issue ofclimate change. The Tokyo Gas Group will combine natural gas with renewable energies and other new technologies to provide solutions for our life,
society and the earth.
In this way, the value that will be created by the Tokyo Gas Group will be working with customers, business partners and society as a whole to identify
and resolve problems and to quickly and flexibly provide energy and solutions.
We will strive to become a corporate group that uses the various strengths of each partner to tackle new challenges and create greater value throughencounters with diversity. The result will be the achievement of personal growth, corporate growth and sustainable growth for society.

By “Providing energy and solutions to the future of our life, society and the earth,” together with the society as awhole, the Tokyo Gas Group will explore to the future.
12 Environmental awareness and our future goals
 The Tokyo Gas Group, while maintaining S+3E* as the bedrock of its business activities,
recognizes changes in the market environment as a major opportunity for growth in
the lead-up to 2030.
Our goal will be a business group which continues to create value together with ourcustomers, business partners and society as a whole while becoming a leader in the
future energy systems.

Noteworthy changes in the market environment(1) Decarbonization(2) Digitalization (rapid technical innovation)• Increased desire for decarbonization on the part of thegeneral public worldwide• Increase in the number of companies participating in
the RE100 initiative, etc.

• Changes in how people purchase and communicate in their
daily lives• Changes in the efficiency of work processes and work
styles in business(3) Diversification of customer(4) Deregulation in Energy Market• Change from “things” to “experiences” and “value” inconsumption behavior• Increase in the number of “prosumers”** due toincreased decentralization• Increased competition between energy providers• Changes in industry structure that transcend industrial
sectors (market entry by companies in different industries
such as telecommunications, railways, IT and so on)

S+3E: The “Golden Rules” for Energy
Certain achievement of the energy mix*** leading up to 2030
Natural gas — with its outstanding stability, environment-friendliness and economic viability —will become even more important in the global energy market.
***

S+3E: Safety + Energy security, Economic efficiency and Environment
Prosumer: Consumers who engage in production activities (for example, consumers who own power generation equipment and sell the power theygenerate)*** Energy mix: Policy objectives for energy supply and demand in FY 2030 as indicated in the Strategic Energy Plan of Japan2

3 Three challenges
 In addition to providing value in retail sales of city gas, the Tokyo Gas Group, working with its
customers, business partners and society as a whole, will create and provide various types ofvalue in each function of the LNG value chain.
2030

LNG value chain
Electricity

Procurement/ Supply
City gas
Production (pipeline Retail sales
network)
Services

Value provided

Currently

Three Challenges
1: Leadership in the effort toachieve Net-Zero CO2

Customersolutions

Trading

Transformation of the
LNG value chain
Network

Production
and power
generation

2: Establishment of avalue co-creation ecosystem
3: Transformation of the LNG
value chain
Utilization of the strengths of the Tokyo Gas Group in
activities both in Japan and in global markets

34 Challenge 1: Leadership in the effort to achieve Net-Zero CO

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 In its overall business activities, the Tokyo Gas Group will work to achieve Net-Zero CO2emissions including customer emissions and lead the transition to a decarbonized society.
 We will use technologies and expertise for the effective use of natural gas to promotedecarbonization in the electricity and heat sectors as well as for CO2 capture technologies.
 We will contribute to reduce carbon emissions on the scale of 10 million tons by 2030
(which exceeds Japan’s target ratio*) and lead the way to reducing CO2 emissions on a global
scale.

＜Efforts to achieve Net-Zero CO2 in the Tokyo Gas Group’s style＞

1: Zeroemissions– 2030– around 2050
Emissions reductions not only in the Tokyo
metropolitan area but on a global scale
Expanded use of renewable power sources
Development of decarbonization technologies forgaseous energy

Decarbonization in
the electricity andheat sectors

Effective use of natural gas
2: Zeroemissionsachievedthrough
offsetting(reduced energy consumption through efficient use of natural gas, coordination with thefluctuating output of renewable energy sources)

Use of CCUS** technologies (capture of emitted CO2)
Incorporation of successful reduction efforts overseas

Japan’s reduction target ratio: The greenhouse gas reduction target in the Intended Nationally Determined Contribution submitted to the United
Nations (26% reduction in FY 2030 as compared to FY 2013).
** CCUS: Carbon Capture, Utilization, and Storage

The combination of these activities
will lead to Net-Zero CO2

Efforts
domesticallyandinternationally*44 Challenge 2: Establishment of a value co-creation ecosystem
 We will establish a value co-creation ecosystem* that creates value together with customers,
the local community, local governments, and business partners that include companies indifferent industries and venture firms.
 We will flexibly combine the diverse products, technologies and services in theecosystem to provide a variety of solutions that resolve various issues in areas ranging
from individual lifestyles to the local community.
LifestyleBusiness＜Environmental
consciousness＞
settingsetting
Introduction of decarbonization
technologies＜Comfort＞
Creation of comfort tailored to thecustomer＜Stable supply＞
Enhanced resilience＜Economic efficiency＞
Advanced energy management

Provision of solutions for thehome• Comfortable living spaces• Lifestyles solutions that matchlife cycles

Customer participation• Volume of energy use and equipment
operation• Data on spaces and living
environments• Excess energy from prosumers• Life cycle and lifestyle preferences

Expansion of management service

Local
community

Strengths of the Tokyo Gas Group• Data and connections with customers(primarily through Tokyo Gas Lifeval)• Provision of gas, electricity and solutions• Equipment/appliances, construction andmaintenance• Air conditioning control for office spaces• Inter-area energy exchange between
redevelopments and industrial parks andthe local community

Business partner participation• Energy technologies (IoT equipment,
storage batteries)• Digital technologies (blockchain)• Data analysis (AI)• Connections with individual company
customers* Ecosystem: Business environment in which many companies combine their technologies, expertise and knowledge in their specific areas of strength inorder to create new value.

54 Challenge 3: Transformation of the LNG value chain
 We will create and provide the various types of value from trading, production and power generation,
networks, and customer solutions.
 We will Crystallize the business expertise accumulated up to now and Explore new
domains in order to expand the customers base for whom value is created and provided, andmaximize each of the functions of the LNG value chain.

Crystallize

Trading

Production & power
generation

Networks

Customer solutions

Pursuit of “safety, security and reliability” through diverse procurement, increased resilience
Persistent improvement in productivity and cost efficiency through innovation of work processes
Stable, inexpensive
and flexible
purchasing throughthe use of AOT*

Achievement ofworld-class digitalized
terminals

Streamlining andincreased efficiency forpipeline maintenancework

Deepening of the “lastmile” services***

ExploreUse of digital technologies (AI and IoT)
Full-fledged
deployment of
LNG and power
tradingGlobal deployment ofConstruction of LNG
receiving terminals,
power plants,
engineering andO&M**

Deployment of newservices, including
those that utilize smart
meters“Energy as a Service” toexpand the domains inwhich value is provided
in daily life andbusinesses****Expand the customer base for whom value is created and provided
For markets, energy
Nationwide andCustomers in the Tokyo
providers and service
internationally
metropolitan area
providers*
AOT: Asset Optimization & Trading (use of digital technology for optimal linkage of LNG transactions, LNG vessels and receiving terminals)** O&M: Operation & maintenance*** Last mile: Site operations that require human intermediation in the final process of the value chain.
**** Energy as a Service: Sale not of energy alone but of a menu of services combining energy, equipment, control technologies and maintenance, etc.

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5 Action 1: Coordination of renewable energies and natural gas
 We will accelerate the efforts to acquire renewable power sources both in Japan and global
markets, and actively use of decentralized resources such as PV*, storage batteries and EV**
to develop businesses that combine large-scale power sources and decentralized powersources.
 We will combine renewable energies with clean natural gas that offers excellent control
to achieve a stable and inexpensive supply of energy.
New businesses utilizing decentralized
Acquisition of renewable power sources
resources• Expand renewable power source transaction volumes
both at home and abroad• Promote new businesses utilizing PV, storage
batteries, EV etc. as well as VPP***

5 million kW
International

0.49 million kW

Domestic

2019

2030

Domestic and international renewableenergy resource transaction volume

PV Onshore/offshore
wind power

Hydroelectric Biomass
power

Stable supply through the combination of renewable energies and natural gas
using digital technology• Adjustment of fluctuating renewable energy output using gas-fired power generation andgas cogeneration systems

Gas-fired power plant

Gas cogeneration systems

ENE-FARM

Effective use of natural gas* PV: Photovoltaic power ** EV: Electric vehicles
7*** VPP: Virtual power plant. A mechanism that uses IoT to manage and control decentralized power sources, batteries, etc. as if they were a single power plant.

5 Action 2: Decarbonization technology innovations
 We will promote innovations in essential core technologies that contribute todecarbonization in the period leading up to 2030.
 After 2030, we will promote hydrogen production and direct use that make use of both
domestic and global renewable power sources and the introduction and use of
methanation technology,* etc. to meet the demand for heat. In addition, these means
will be combined and utilized for achieving Net-Zero CO2 through IoT, AI.
Roadmap to Net-Zero CO2
Development of essential coretechnologies using open-innovation

Degree of contribution to
Net-Zero CO2 Achievement

To Net-Zero
CO2

High-efficiency fuelcell technology

Partner companies, universities andresearch institutions

Hydrogen production
technology
Combination and use ofvarious means

Introduction and use ofhydrogen, methanation
technology etc.

×CO2 separation andcapture technologies

Introduction of ultra-high efficiency fuelcells
Introduction and use of CCUS

Optimal use and control of renewable power sources

Advanced use of natural gas* Methanation technology: Producing carbon-neutral
methane by combining hydrogen and CO2

Current

2030

2050

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5 Action 3: Resolving problems in daily life and businesses We will confront problems in daily life and businesses and provide various solutions, beginningwith “Energy as a Service.” Efforts to create and provide new solutions, including theestablishment of new companies, will be accelerated.
 A digital infrastructure for value co-creation will be established and advanced digitalmarketing will be employed. In addition, we will expand the number of business partners, theamount of data used, and products and technologies to enable a broader range of solutions
to be created and provided.
Resolving various customer needs andInstantly offering wide-ranging values tailored
problems
to customers• Accelerate the creation of new solutions including
the establishment of new companies• Establishment of a digital infrastructure forvalue co-creation

Living security

Expanded range(from meetings, Web, IoT and smart meters) of data used
Smart homes
Providing even value thatthe person does not notice
Providing value when desired
and at a time of the person’s
choosing

Wider rangeof solutions

Needs and problems in daily life
Reduced housework /improved diet

Shift from “owning things indaily life” to “using things indaily life”

CustomerAI

Expandedproducts andtechnologies

Predicted needs↓
Combined

Expanded number of partnercompanies

Expanded utilization ofrenewable energy

Behavioral data

Proposal for residencesthat match life cycles

95 Action 4: Enhanced resilience functions through the use of natural gas
 The opening of the Ibaraki Line in 2020 will create our second circular trunk pipeline network.
The Tokyo Gas Group, through stronger cooperation with local governments andinfrastructure companies, will work to strengthen the resilience of the natural gas
infrastructure towards 2030 in the Tokyo metropolitan area that is the political, economic
and industrial center of Japan.
 By expanding decentralized energy systems, we will promote disaster-resilient lifestyles
and urban design that can continue to supply energy even in the event of an emergency.
Enhanced resilience of natural gas infrastructure

Disaster-resilient lifestyles and urban
design• Enhanced disaster preparedness functions forhomes and businesses through the expansion ofdecentralized energy systems

In the period leading up to 2030
Cooperation with local governments andinfrastructure companies (interconnected
pipeline, etc.)

2020
Four LNG receiving
terminals interconnected
through a main trunk
pipeline network by
opening of the Ibaraki
Line＜Residential fuel cell (“ENE-FARM”)＞＜Gas cogeneration system＞• Urban design that not only provides electricity in theevent of an emergency but also ensures the stable
use of heat, water, and IT and data systems

1999

Existing
area

Redevelopedbuilding

Three LNG receiving
terminals interconnected
through a main trunk
pipeline network in order
to increase and expand
natural gas use

Plant＝LNG terminal＝Power plant (under study)

System power

Electricalequipment

City gas

Gas cogeneration
system(medium pressure)= Currently

Electricity

Heat

Electricity

50% supply of electricity
even during an emergency＜Nihonbashi Smart Energy Project＞

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5 Action 5: Overseas expansion

 The Tokyo Gas Group will strive to achieve Net-Zero CO2 on a global scale through businessdevelopment, considering the energy market environment in each country.
 We will work to triple overseas profits through business operations that utilize theGroup’s strengths in the LNG value chain.
 In addition to resource development, we will diversify operations our activities gas & power
supply and the renewable energy business.
Utilization of LNG value chain functions
Expansion of LNG trading
Expansion into renewable energy business• Expand operations at an accelerated pace by means ofgrowth engine type investment* that utilizes our expertise
cultivated through project investments.
• Promote shale gas and other resource development thatcreates the Group’s earnings base, and expand into
renewable energy business, gas & power supply and LNG
terminal business.
Expansion of profits by overseas investment

TripledRenewableenergybusiness
LNG and gas
infrastructure
Resource
development

Current• Work with business partners mutually taking advantage ofindividual strengths and regional differences, etc. to develop
full-fledged trading in expanding LNG markets.
• Optimally combine LNG trading, owned LNG vessels andreceiving terminals, using digital technologies as well
• Increase LNG added value through transport and operation

Wind power generation(Mexico)2030
Photovoltaic power generation (Mexico)* Growth engine type investment: Activities to grow operating companies byinvesting them and taking part in their management.

EuropeAsia/Australia

North America

Use in each LNG value chain function
Provided to customers both at home and abroad(Southeast Asia, etc.)
Expansion of trading scale to 5 million tons

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6 Management guidelines and key figures for achieving growth In the first half of the 2020s, we will concentrate primarily on making operations more cost-effectivein accordance with the transformation of the LNG value chain, in order to expand energy (gas +power) profits.
 Throughout the second half of the 2020s, we will work to increase profits from services andoverseas projects in which we have invested, and actively use means such as M&A to achieve
growth.
 We will work to increase the overall profit level to approximately JPY 200 billion by 2030, while
maintaining profitability and fiscal health and judging the results of activities based on key figures.
We will meet shareholder expectations through the increase in enterprise value.
Key figures

Company portfolio in 2030: Profit levelOverseas

Solutions, etc.
Overseas*

25%

25%

Current

Approximately
JPY 120 billion

Renewable power source
transaction volume

5 million kW(domestic and international, including purchasing)Solutions, etc.**

Energy***(Gas+Power)

Challenge 1: Leadership in the effort to achieve
Net-Zero CO2
CO2 reduction contribution -10 million tons

Challenge 2: Establishment of a value co-creation
ecosystem
Energy(Gas+Power)

50%

2030

Approximately
JPY 200 billion* Overseas: All overseas businesses** Solutions, etc.: Ongoing service agreements, engineering, real estate etc.
*** Energy: Domestic gas and power businessNo. of customer accounts****20 million

Challenge 3: Transformation of the LNG value
chain
Natural gas transaction
volume*****
20 million tons****

Total no. of gas, power and service agreements(domestically and internationally)***** LNG equivalent including overseas business and trading7 Engagement with current and future colleagues
 The Tokyo Gas Group will make “Three Promises” to current and future colleagues
working on the “Three Challenges.” We will formulate a personnel strategy and conduct diversity activities in order to fulfill thesepromises.

1. We will produce work thatwill have a major impact onsociety.
We commend a spirit of taking onchallenges and the ability to learn
from mistakes.

Three Promises

2. We will create a venue forencounters with diversity
and friendly competition.
The Tokyo Gas Group will be agathering place for diverse
thinking and experience.

3. We will emphasize theself-fulfillment of each
person.

We believe in the potential ofeach individual and will support
each employees activities.

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