Contents

Information disclosure
based on TCFD
recommendations
Requireditem

Details

Governance

Disclose the organization’s
governance around climaterelated risks and opportunities.

Strategy

Disclose the actual and potential
impacts of climate-relatedrisks and opportunities on theorganization’s businesses,
strategy, and financial planningwhere such information ismaterial.

Introduction

The Tokyo Gas Group regards the Task Force on Climate-Related Financial
Disclosures (TCFD) framework as being an effective way to promote information
disclosure and dialogue with stakeholders on climate-related issues. We therefore
signed the statement of support for the TCFD, in May 2019. We are using the TCFD
recommendations as an indicator to examine our response to climate change, and willcontinue to appropriately disclose information on the impact of climate change on theTokyo Gas Group’s business activities and the measures to be taken.

Disclosures recommended by TCFD
A. Describe the board’s oversight of climate-related risks andopportunities.
B. Describe management’s role in assessing and managing climaterelated risks and opportunities.
A. Describe the climate-related risks and opportunities the organization
has identified over the short, medium, and long term.
B. Describe the impact of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
C. Describe the resilience of the organization’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lower scenario.

CEO’s Message
How We Create Value
Compass2030
Invisible Assets

Information Disclosure
Based on TCFD
Recommendations

Where applicable as per Integrated Report 2022

Corporate GovernanceBusiness Overview

Promoting Sustainability and Materiality

P.15

Corporate Governance

P.45

Promoting Sustainability and Materiality

P.15

Compass Action Challenge 1: Leadership in the effort

P.25-29

Information disclosure based on the TCFD
proposals

P.42-44

to achieve Net-Zero CO2

Financial Data

A. Describe the organization’s processes for identifying and assessing
climate-related risks.
Risk
management

Disclose how the organization
identifies, assesses, andmanages climate-related risks.

B. Describe the organization’s processes for managing climate-relatedrisks.
C. Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organization’s overall risk
management.

Metrics andtargets

Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where suchinformation is material.

A. D
 isclose the metrics used by the organization to assess climate-relatedrisks and opportunities in line with its strategy and risk management
process.
B. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhousegas (GHG) emissions, and the related risks.

Promoting Sustainability and Materiality

P.15

Corporate Governance

P.45

Risk Management SystemP.54

 rogress of the Medium-term Management PlanP
and KPIs

P.23

Compass Action Challenge 1: Leadership in the effort

P.25-29

to achieve Net-Zero CO2

Information disclosure based on the TCFD
proposals

Web Site

Investor Relations Website

P.44

Investors’ Guide (Financial
Data and Industry Data)

C. Describe the targets used by the organization to manage climaterelated risks and opportunities and performance against targets.

Financial Results
Presentation Materials
Financial Results Bulletin
Corporate Governance
ReportTokyo Gas Group Integrated Report 2022

41

Sustainability ReportContents

Strategy
Risks and
Opportunities

Introduction

In November 2021, we have formulated “Compass Action” as a detailed roadmap for achieving Compass 2030, and it sets roadmap fortransitioning to carbon neutrality.
P.25-29(Challenge 1: Leadership in the effort to achieve Net-Zero CO2)
In line with this, we reviewed the climate-related risks and opportunities over two phases by adding the 2030-2050 period in addition to the up to 2030.
In reviewing the Tokyo Gas Group’s risks and opportunities, we referred to two representative scenarios of the International Energy Agency andthe Intergovernmental Panel on Climate Change—the below 2°C warming scenario and the 4°C warming scenario, and assumed changes in thebusiness environment.

CEO’s Message
How We Create Value
Compass2030
Invisible Assets* S cenarios for reference:Below 2°C warming scenario:
Sustainable Development Scenario (SDS)(IEA WEO 2019); B2DS (IEA ETP 2017); RCP2.6 (IPCC AR5) 4°C warming scenario:
IEA Stated Policies Scenario (STEPS) (IEA WEO 2019); RTS (IEA ETP 2017); RCP8.5 (IPCC AR5)-2030: Accelerate transition

Classification(Growth of the potential and role of LNG/natural gas)

Details

Opportunities and risks

High financial impact

Information Disclosure
Based on TCFD
Recommendations
2030-2050: Advance toward carbon neutrality(Phase for achieving decarbonized society)

Opportunities and risks

Global (including Japan) demand for natural gas and LNG

Opportunities

Opportunities and risks

The global (including Japan) spread of carbon-neutral gaseous energy

Opportunities

Opportunities

The spread of renewable energy

Opportunities

Opportunities

Securing of the balancing renewable power

Opportunities

Opportunities

Risks

Opportunities and risks

Decarbonization technology innovation

Opportunities and risks

Opportunities and risks

Introduction of carbon pricing

Opportunities and risks

Opportunities and risks

Reputation

Focus on low carbon and decarbonization in investment standards

Opportunities and risks

Opportunities and risks

Resilience

Enhancement of resilience through a decentralized energy system

Opportunities

Opportunities

Risks

Risks

Markets andenergy resources
Below
2°C

Conversion to non-fossil energy
Technology
Policies and regal

Corporate GovernanceHigh financial impact

Business Overview
Financial Data

4°C

Acute

Impact on operations by increasingly severe abnormal weather

Measures taken by the Tokyo Gas Group

Sophisticated use ofnatural gas

Infrastructuredevelopment(resilience) witch from coal, oil, etc. to natural gas as fuel, introduce
Scogeneration systems, develop smart cities, strengthen resiliencein Japan and global markets.
Increase provision of carbon-neutral LNG (CNL)Expand use for balancing renewable powerDevelop & expand CCU, Expand commercial use of CCUS

Decarbonization ofgas and electric arbon-neutral methane: Transition to large-scale & highCefficiency methanation and commercial use
Hydrogen: Establish practical, affordable hydrogen production
technologies
Expand renewable power sources (Increase solar, wind & biomass
power generation)
Achieve zero emissions in our thermal power generation (Explore
use of hydrogen & ammonia)

Web Site

Investor Relations Website
Investors’ Guide (Financial
Data and Industry Data) nhanced resilience in the natural gas infrastructureEExpanded use of decentralized energy systems that are highly resilient, such as smart energy networks, cogeneration systems, and ENE-FARM (home fuel cells), etcEnhanced establishment of a water hazard-resilient public utilities (i.e., disaster countermeasures for LNG terminals and power stations) and full preparation for BCP

Financial Results
Presentation Materials
Financial Results Bulletin
Corporate Governance
ReportTokyo Gas Group Integrated Report 2022

42

Sustainability ReportContents
Introduction

Major Initiatives Taken in FY2021

CEO’s Message

Sophisticated use of natural gas
CCUS

Decarbonizing gas and electricity

 orld’s 1st! Commence Manufacturing of CO2-absorbing Concrete that Uses Exhaust Gas Emitted
W
During the Use of City Gas Devices (July 2021)
Produced Japan’s first potassium carbonate using CO2 from city gas devices (September 2021)
Launch CCU Verification Test Jointly with Yokohama City and MHI Group (February 2022)

CNL eceipt of Third-party Validation Report for Japan’s First Carbon Neutral City Gas Plan (June 2021)
RTokyo Gas to supply carbon neutral city gas to the Tokyo 2020 Summer Olympics athletes’ village (July2021)
Introduced carbon neutral city gas in Tokyo’s Marunouchi district, as the largest project of its kind inJapan (October 2021)

Other

 G Natural Resources: Started a methane leak detection and repair project using a helicopter (NovemberT2020-)
Commencement of verification of virtual power plant using ENE-Farm residential fuel cells andresidential storage batteries group control (June 2021)
Tokyo Gas launches verification of residential demand-response (July 2021)
Establishment of the Joint Venture with the PTT Group Company-Promotion of Decarbonization throughOn-site Energy Service Business including Improving Efficiency Technology Solutions and Fuel Supply in
Thailand (October 2021)
Signed a business alliance agreement with The Kansai Electric Power Company, Inc. for VPP businessusing decentralized energy resources (November 2021)
Joint development of EP420G, full-time gas cogeneration system that achieves world-class power
generation efficiency (January 2022)
Tokyo Gas issues a transition bond for the first time as a city gas supplier (February 2022)
Modification of the power supply equipment of the Sodegaura Power Plant (formerly Tokyo Gas Bay
Power) to gas engine as the balancing power source to renewable energy (scheduled to start operationin 2024)

TOPIC 1

RenewableenergyOther

Methanation facilities*1: The City of Yokohama andTokyo Gas sign collaborationagreement on methanation
demonstration testing(announced January 18, 2022).
*2: Launch CCU Verification Test
Jointly with Yokohama Cityand MHI Group (announced on
February 24, 2022).

Compass2030
Invisible Assets

Information Disclosure
Based on TCFD
Recommendations
Corporate GovernanceBusiness Overview

 cceleration of the Development of Kashima Port Offshore Wind Project (April 2021)
ALaunched “Sasutena Denki,” an electricity rate plan with 100% real renewable energy (June 2021)
Launch of Commercial Solar Power Operations Begins in Iwakuni, Yamaguchi Prefecture (July 2021)
The Aktina Solar Power Project in the U.S. began partial operation (150 MW) (August 2021)
Jointly implemented the Sakaide biomass power generation project (October 2021)
Tokyo Gas selected as the prospective recipient in NEDO’s Green Innovation Fund Project / Offshore
Wind Power Cost Reduction Project (for the development of low-cost technology for manufacturing andinstalling floating foundations) (January 2022)
Establishment of a subsidiary in Denmark and joint development of renewable energy in the Nordics
through business collaboration with EWII S/I (January 2022)
Participated in the dedicated biomass combustion power generation project in Sendai City, Miyagi Pref.
(March 2022)

Financial Data
Signingof Comprehensive Agreement for Carbon-neutral Urban Development in local government(November 2021-)
Launched “EVrest” EV charging service for housing complexes (November 2022)

TOPIC 2

Launch of methanation demonstration testing for
supporting achievement of carbon neutrality anddecarbonized society in 2050
Methanation demonstration testing
commenced at Tokyo Gas Yokohama
Techno Station in Tsurumi Ward,
Yokohama City. The purpose ofthis demonstration is to acquire a
range of technologies and knowhow, from the procurement ofelectricity from renewable energy
sources to the production of greenhydrogen by water electrolysis, andthe production and utilization ofsynthetic methane.
In addition, we are collaboratingwith Yokohama City and otherparties* 1,* 2 to consider a localproduction, local-consumption
model for the carbon neutralizationof a community. We will also identify
issues and study solutions for largerscale demonstration testing andestablishment of a supply chain.

Hydrogen
Methanation

How We Create Value okyo Gas and SCREEN Agree to Jointly Develop a Water Electrolysis Cell Stack for Low-cost GreenT
Hydrogen Production (May 2021)
Started feasibility study toward creation of a carbon-neutral methane supply chain with Petronas,
Sumitomo Corporation and Mitsubishi Corporation (November 2021)
Launch of joint research project with JAXA and Yamaguchi University for demonstrating methanation
technology (December 2021)
The City of Yokohama and Tokyo Gas sign collaboration agreement on methanation demonstration testing(January 2022)
Start of feasibility study for methanation project aimed at city gas pipeline supply of synthetic methanemade with CO2 from cement production (March 2022)
Launched demonstration testing of the methanation process toward achieving carbon neutrality and adecarbonized society by 2050 (March 2022)

TOPIC 3

Acceleration of the development of Kashima Port
Offshore Wind Project

Reduced methane leakage resulting from a methaneleak detection and repair project using a helicopter

In April 2021, the Company decided
to accelerate the development of theKashima Port Offshore Wind Project,which is located at Kashima Port in
Ibaraki Prefecture, through joint investor
Wind Power Energy Co., Ltd.*3
The Project is located in ‘Kashima
Coastal Industrial Area,’ which isone of the top such areas in Japanand located near Tokyo, a major
Rendering of the Project
consumer of energy. With approvaland certification from Ibaraki*3: In addition to the Company,
joint investors include Wind
Prefecture, we will install 19 newly
Power Group Co., Ltd. andselected wind turbines in ‘areas that
Nippon Wind Energy K.K., autilize renewable energy sources’ (680
wholly owned subsidiary of
hectares) designated in the port area
Vena Energy Holdings Ltd.
of Kashima Port. We will promote
construction of an offshore wind
power plant with a power generation
capacity of approximately 160,000 kW,
equivalent to the annual consumptionof approximately 70,000 households.

TG Natural Resources, a shalegas development and production
company in the United States, has
effectively identified areas where
there were leaks (and later repairedthem) by using a helicopter equippedwith a laser methane detector
to inspect from the air an area
approximately twice the size of the
23 wards in Tokyo. This has resulted
in achieving a 15% reduction inmethane leakage. We will continue
our efforts to reduce methaneleakage, which is a global challenge.

Laser device

Web Site

Investor Relations Website
Investors’ Guide (Financial
Data and Industry Data)

Satellite map of detection
Above: BH206 JetRanger helicopter equipped with a laser unit
Below: E xample of methane leakage detection (blue lines indicating
underground integrated pipeline channels)

Financial Results
Presentation Materials
Financial Results Bulletin
Corporate Governance
ReportTokyo Gas Group Integrated Report 2022

43

Sustainability ReportContents

Metrics and Targets

Introduction

The Tokyo Gas Group’s management indicators and key quantities to realize growth are laid out inits management vision statement Compass2030 and FY2020-2022 Mid-term Management Plan.
Progress of the Medium-term Management Plan and KPIs

CEO’s Message

P.23

How We Create Value

A cross-industry climate-related index category

Compass2030

GHG emissions: Figure for FY2021 result

Climate-related opportunities* The sum of individual data may not be equal to the total due to the way figures are round.
Upstream (procurement)
6,229 thousand t-CO2e

Scope1+2
3.362 thousand t-CO2e
Total

Downstream (by customers)
28,153 thousand t-CO2e

37,754 thousand
t-CO2eScope334,392 thousand t-CO2e(thousand t-CO2e)

3,362

Scope1+2

3,126

Scope1

2,922

Scope2

205

Overseas Scope1+2

Information Disclosure
Based on TCFD
Recommendations
Natural gas
transaction
volume in 2030

Corporate Governance

20 million tons

Business Overview
Financial Data

2) Renewable energy

Scope 1 and 2
Target: Consolidated subsidiaries
Japan

Invisible Assets

1) LNG and natural gas
 atural gas and LNG are important energy sources in the transition phase towardNdecarbonization, globally and particularly in Asia. Further, in Japan, for industries which emithigh amount of GHG but find it difficult to quickly decarbonize due to ongoing need for hightemperature heat, conversion to natural gas and advanced energy usage will be extremely
effective solutions during the transition period. LNG and natural gas are also expected to be
used as balancing force to stabilize energy supply in conjunction with the large-scale relianceon renewable energy.
During the transition period, LNG and natural gas, through fuel conversion, smart city
conversion, and carbon neutral LNG and CCUS, will contribute to CO2 emissions reduction
at domestic and overseas customers’ sites. In the future, the decarbonization of gas itself bymeans of methanation will lead to the realization of a carbon-neutral society with suppressedsocial costs obtained by use of existing infrastructure.

Business activities
3.372 thousand t-CO2e

P.23

Progress of the Medium-term Management Plan and KPIs

(thousand t-CO2e)

Scope3236

34,392
1) P urchased goods and services3) Fuel and energy related
activities not included in Scope
1 and 2

6,229

4) Transportation (upstream)5) Waste generated in operations

56) Business trips

27) Commuting by employees

310) Processing of sold products

2,95711) Use of sold products

25,196

Physical risks
Operational impacts by typhoon and other flood damages
 ith the anticipated increase in typhoons and torrential rains due to climate change, the influx of water and sandW
into gas pipes caused by submerged or buried gas supply facilities, and by collapse of houses may affect the gas
supply.
As a flood prevention measure, measures are implemented based on hazard map information of each region having
gas supply facilities, and equipment are to be raised above the expected flood level and equipped with flood
sensors and other devices as needed. Furthermore, in order to minimize the damage caused by flood, we have beenworking on both hard and soft measures, such as advanced use of weather information and writing of the wind andwater damage section of the Business Continuity Plan (BCP).
Incidentally, the Typhoon No. 19 in 2019 that caused immense damage in various places did not cause any serious
damage to Tokyo Gas Group.

 he introduction and spread of renewable energy is essential in achieving a carbon-neutralT
society, and government policy support is essential. In Japan, which is surrounded by thesea, the potential for offshore wind power is high.
The Tokyo Gas Group is steadily expanding development of solar, land wind, biomass, andoffshore (seabed-fixed) wind power sources. It is also focusing on technology development
for floating offshore wind power, and is working to realize early implementation.
Furthermore, by taking advantage of the Group’s strengths of long-term stable operation of
power generation infrastructure, operation & maintenance (O&M) capability, and the scale ofour customer base, we will build a renewable energy value chain unique to the Tokyo Gas
Group by being engaged in all stages from development to O&M and from power generation
to electricity sales.

Capital allocation

Renewableenergy transaction
volume in 2030

6 million kW

CFO’s message

P.21

Active investment in growth areas, including decarbonization, while leveraging ESG financing
In December 2020, Tokyo Gas issued a green bond (issue amount: 10 billion yen) to financethe renewable energy business. Specifically, it was used for the Aktina Solar Power Project(Wharton County, Texas, 630,000 kW) and the Annaka Solar Power Project (Annaka City,
Gunma Pref., 63,000 kW).
In March 2022, Tokyo Gas issued transition bonds* (71st, 72nd domestic unsecured notes:
20 billion yen in total) through a domestic public offering platform for the first time by a city
gas supplier in Japan. Based on the Ministry of Economy, Trade and Industry’s Technology
Roadmap for Transition Finance in the Gas Sector, the bonds were issued by a new financing
method to promote low-carbon and decarbonization initiatives during the transition period
toward realizing a decarbonized society. The proceeds would be used for investments in threeprojects (Niihama LNG Project, Smart Energy Network Project, and Harumi Hydrogen Project).

2

Approx. trillion
yen investment
by 2030 in growthareas, including
decarbonization

Web Site* Selected as a model case of the Ministry of Economy, Trade and Industry’s 2021 Climate Transition Finance Model Project.
Remuneration

Officer remuneration

Investor Relations Website

P.50

Investors’ Guide (Financial
Data and Industry Data)

The bonuses of Corporate Executive Officers reflects the evaluation of the term performanceagainst non-financial indicators related to climate change (contribution to CO2 emissions
reduction; renewable power source transaction volume), in addition to financial indicators.

Financial Results
Presentation Materials
Financial Results Bulletin
Corporate Governance
ReportTokyo Gas Group Integrated Report 2022

44

Sustainability Report