Stopping climate change with citizen power

Position Paper 2021
October 2021

Kiko Network

Hydrogen and ammonia co-firing in the
power sector:

Japan is choosing to expand fossil-fuel extraction andperpetuate coal and LNG
Contents

Executive Summary--------------------------------------------------------------------------------------- 3
1. Government and industry initiatives--------------------------------------------------------------- 4(1) The policy of hydrogen and ammonia co-firing in thermal power generation------ 4(a) Origins of the policies-------------------------------------------------------------------------- 4
Column1----------------------------------------------------------------------------------------------- 5(b) Role in Japan’s Green Growth Strategy---------------------------------------------------- 6(c) Japan’s Sixth Strategic Energy Plan--------------------------------------------------------- 6(2) Policy directions------------------------------------------------------------------------------------ 7(a) Assistance through subsidies----------------------------------------------------------------- 7(b) JOGMEC as a key player------------------------------------------------------------------------ 8(c) Regulatory loopholes promote ammonia and hydrogen for inefficient coal power---- 8
2. Industry actions----------------------------------------------------------------------------------------- 9(1) Thermal power producers------------------------------------------------------------------------ 9(a) JERA------------------------------------------------------------------------------------------------ 9(b) J-POWER------------------------------------------------------------------------------------------10(c) Other companies joining the fray-----------------------------------------------------------10(d) Financial institutions and insurance companies----------------------------------------13
3. Constraints on the climate--------------------------------------------------------------------------14(1) Coal- and LNG-fired power generation in Japan today-----------------------------------14(2) Coal phase-out by 2030 needed to limit warming to 1.5°C----------------------------14
4. Problems with hydrogen and ammonia---------------------------------------------------------15(1) CO2 emissions and reductions with hydrogen and ammonia---------------------------15(a) Estimated CO2 emissions from ammonia co-firing with coal-------------------------15
Column 2.--------------------------------------------------------------------------------------------18

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(b) CO2 emission estimates from hydrogen co-firing with coal--------------------------18(2) Other issues-----------------------------------------------------------------------------------------19(a) Environmental and social impacts----------------------------------------------------------19(b) Cost concerns-----------------------------------------------------------------------------------20(c) Market creation and expansion-------------------------------------------------------------20
5. Conclusion: What's really needed is an end to coal and fossil fuels------------------------22

2

Executive Summary

The government of Japan has declared a goal of carbon neutrality, but it is attempting tomaintain the current system of thermal power generation through policies to use hydrogen andammonia as fuel. Meanwhile, electric power companies, power plant manufacturers and major
trading companies are trying to expand their businesses with the help of massive government

subsidies. However, as things are currently progressing , most of these initiatives are based on
producing ammonia and hydrogen from fossil fuels, including natural gas from Southeast Asia,

North America, and Russia, and brown coal (low quality coal) from Australia. In reality, these are
new fossil fuel development projects. To limit global warming to 1.5°C under the Paris Agreement,

developed countries are being called upon to phase out coal from their power sectors by 2030 andto decarbonize them by 2035. In that context, the use of hydrogen and ammonia in power
generation poses the following problems:••

There is anticipation that carbon capture, utilization and storage (CCUS) technologies will re-duce CO2 emissions from the production of ammonia and hydrogen from fossil fuels, but until

they become commercially viable CO2 will be emitted, and many challenges still remain.

Even if 20% co-firing with ammonia or hydrogen becomes viable by 2030, the fuel uses of coaland LNG will continue, which means the continuation of massive CO2 emissions. Halving
greenhouse gas emissions is needed by 2030, but these technologies can make little contribution to emission cuts, so this strategy is inconsistent with the 1.5°C goal of the Paris Agree-

•

ment.

Ammonia and hydrogen-related technologies and the associated CCUS come with very highcosts, so the value of these technologies will decline as decarbonization gains momentum andthe cost of renewable energy drops further. These technologies are not compatible with emission reduction strategies and exacerbate the risk that investments will become stranded assets.

Promoting the use of hydrogen and ammonia from fossil fuels for electric power genera-tion in the absence of evidence that they will promote decarbonization is not consistent with thesignificant decarbonization developed countries must achieve by 2030. In fact, the intent of theseschemes appears to be to protect the profits of certain companies and to throw a lifeline to coaland LNG.

Technologies that utilize hydrogen or ammonia are not valid options in any strategy todecarbonize the thermal power sector, and there is no assurance that they will help Japan achieve
CO2 emission reductions that would be consistent with the 1.5°C goal. The government andindustry should put the priority on completely phasing out coal power by 2030 and working tofulfill obligations to help limit warming to 1.5°C by promoting decarbonization.

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Introduction

Thermal power generation using coal and liquefied natural gas (LNG) account for over

one-third of Japan’s carbon dioxide (CO2) emissions, making this sector the largest source of emissions and the most important sector in terms of achieving net zero greenhouse gas (GHG) emis-

sions by 2050. In October 2020, the Japanese government announced a policy of aiming to becarbon neutral by 2050. It then came out quickly with policies to utilize hydrogen and ammonia as
fuels for the thermal power sector. Huge sums of official financial support and corporate invest-

ment are now being mobilized to this end. Government and industry both refer to hydrogen andammonia as “decarbonized fuels” with the aim of achieving “decarbonized thermal power gener-

ation.” But we must ask, is it really possible to have both decarbonization, which means emitting
no CO2, and thermal power generation, which means the combustion of fossil fuels?

This paper examines the related actions of government and industry and the possible CO2

emission reductions from using hydrogen and ammonia as fuels in the thermal power sector, andalso discusses costs and environmental impacts. We find that power generation using hydrogenand ammonia will induce new fossil fuel development and prolong the life of thermal power generation. We also reveal that they pose major problems in terms of promoting climate action, transforming Japan’s industrial structure, and fostering new industries.

1. Government and industry initiatives(1) The policy of hydrogen and ammonia co-firing in thermal power generation(a) Origins of the policies

After then-Prime Minister Yoshihide Suga declared Japan would be carbon neutral by 2050

in his policy speech to the Diet (parliament) on October 26, 2020, the government rapidly acceler-ated efforts for the use of hydrogen and ammonia as fuel in thermal power generation. Research
had already been underway regarding the use of hydrogen, through industry-academia-govern-

ment discussions by the Hydrogen and Fuel Cell Strategy Council, launched in December 2013,
and its “Basic Hydrogen Strategy” was released in 20171. Up to that point, the emphasis had beenon aspects such as developing the international hydrogen supply chain and the use of fuel cells formobility, while only one page of the report was dedicated to uses in the power sector. Discussions
originally started with the use of hydrogen for power generation being considered as a fuel to re-place LNG, but it is now being promoted together with coal for power generation. Coal power caninvolve a process in a coal gasification furnace, which uses carbon monoxide and hydrogen to
generate coal gas. This is the same as Integrated Coal Gasification Combined Cycle (IGCC) technol-ogy being promoted in a project by the Osaki CoolGen Corporation to increase the efficiency of1

Cabinet Decision on renewable energy and hydrogen, “Basic Hydrogen Strategy,” in Japanese, December 2017.

4

coal-fired power generation. There appears to be an effort to avoid use of the term IGCC in order topresent this as a new decarbonization technology and focus attention on the use of hydrogen.

Meanwhile, the use of ammonia for co-firing with coal had only been done on a small scale,but after the government’s carbon neutral declaration, new activities surfaced at a rapid pace. Industry is familiar with the handling of ammonia through the extensive use of ammonia as feedstock in fertilizers and chemical products, and since it has high hydrogen density, it has also attracted attention as a hydrogen energy carrier enabling the efficient transport and storage of hydrogen energy.

Just one day after the Prime Minister’s carbon neutral declaration, the Agency for Natural

Resources and Energy established the Public-Private Fuel Ammonia Promotion Council on October 27, 20202, and started discussions on technical and economic issues for introducing and ex-panding the use of ammonia as a fuel, with government and industry progressing on a sharedtimeline to address the issues (Column 1). The Interim Report3 released in February 2021 present-

ed a roadmap for the introduction of fuel ammonia, projecting Japan’s annual ammonia imports

at 3 million tons in 2030 and 30 million tons in 2050. Japan is currently using about 1 million tonsof ammonia per year mainly as urea resin and in fertilizers, of which about 800,000 tons are fromdomestic production and 200,000 tons from imports. Based on the potential direct use of ammo-

nia as fuel, the interim report projects massive imports of ammonia for use in coal-fired power

generation and shipping, sets the stage to rush ahead with ammonia production and importation
on a scale that would exceed the current global trade volume of about 20 million tons, and builds
a framework to promote that scenario.

Column 1 : Was Japan’s shift toward fuel ammonia decided mainly to help vested interests?

Based on the date of the launch of the Public-Private Fuel Ammonia Promotion Council,

just one day after the government’s carbon neutral declaration, it would appear as if the timing
was coordinated. Member companies in the Council include IHI, JERA, J-POWER, JGC Holdings(Japan Gasoline Company), Marubeni Corporation, Mitsubishi Heavy Industries, and Mitsubishi

Corporation, and in one way or another they are all involved in fuel ammonia-related projects andreceiving government subsidies4. In effect, they all have vested interests. The council includes the

Ministry of Economy, Trade and Industry (METI), plus the Japan Bank for International Coopera-tion (JBIC), and Nippon Export and Investment Insurance (NEXI), and most of its meetings andmaterials are not made public. Only meeting topics are announced, and the interim report wasdrafted and released through a process that lacked objectivity and transparency. Crucial technol-ogy choices relating to decarbonization for Japan may have been decided with the implicit aim ofsupporting member companies, as the council mainly includes actors who have vested interests.

2

Ministry of Economy, Trade and Industry (METI) “Guidelines for Establishment of Public-Private Fuel Ammonia
Promotion Council,” in Japanese, October 2020.

3

METI, “Public-Private Fuel Ammonia Promotion Council, Interim Report,” in Japanese, February 2021.

4

METI, “Member List of the Public-Private Fuel Ammonia Promotion Council,” in Japanese, February 2021.

5

(b) Role in Japan’s Green Growth Strategy

The government’s Green Growth Strategy Through Achieving Carbon Neutrality in 2050

(updated version), released in June 2021 states that “decarbonization of the power sector is the

major premise for achieving carbon neutrality in 2050,” but goes on to say “regarding thermal
power, the government will pursue its use as an option, presupposing recovery of CO2.”5 It is sur-prising that the intention is not to reduce the use of thermal power, but rather, to pursue it. On topof that, the strategy document is sprinkled with policies for technology development, transportation, ports and harbors, and market development, including tax measures and government subsidies to support commercialization and cost reductions of ammonia and hydrogen-powered electricity generation.

The strategy places high expectations on hydrogen power generation as “one of the op-

tions of power source in the era of Carbon Neutrality, which may also contribute to stabilization ofsystem as a balancing capacity,” also stating that “a full launch of the domestic hydrogen market

by creating a large demand in the electric power generation field will be supported,” and looks at“export not only to the developed countries where projects are going ahead, but also to Asia withvigorous growth of electric power demand”.

The strategy presents ammonia power generation as a decarbonized fuel and as a key tothe transition to a hydrogen society, through co-firing with coal, and aims to introduce and pro-

mote 20% ammonia co-firing with coal thermal in the short term to 2030, increasing to a 50% mix

in the longer term to 2050, proactively promoting technology development to bring that to 100%.
Through this, it is aiming for practical application by replacing existing thermal power generation,and it has the intention to spread this technology worldwide.
(c) Japan’s Sixth Strategic Energy Plan

The “Sixth Strategic Energy Plan” decided in October 20216, states that since it is “difficult

to supply all 100% of electricity demand with one type of energy source” it is “necessary to pursue
new options that require innovation such as thermal power premised on hydrogen- and ammo-

nia-fired power generation and carbon storage and use through carbon capture, utilization andstorage (CCUS).” Based on that, it says that this is “one effective option in terms of promoting de-carbonization of electricity sources, since much of the existing power generation equipment suchas gas turbines, boilers, desulfurization equipment can still be used as-is,” and promotes overcom5

After its initial release on December 25, 2020, a more detailed version was released on June 18, 2021 by
the Cabinet Secretariat, Ministry of Economy, Trade and Industry, Cabinet Office, Financial Services Agency,
Ministry of Internal Affairs and Communications, Ministry of Foreign Affairs, Ministry of Education, Culture,
Sports, Science and Technology, Ministry of Agriculture, Forestry and Fisheries, Ministry of Land, Infrastructure,
Transport and Tourism, and Ministry of the Environment. The Ministry of Economy, Trade and Industry led theformulation of the strategy.

6

METI, Sixth Strategic Energy Plan,” to be posted here, October, 2021.

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ing technical issues so that power generation from hydrogen and ammonia can function as major

suppliers and stabilizers of the electrical power system in 2050. By 2030, it envisions introducing
and promoting 30% hydrogen co-firing with gas thermal, 100% hydrogen firing, and 20% ammo-

nia co-firing with coal thermal, so that in the fiscal year 2030, hydrogen and ammonia account for
about 1% of the electricity mix. As for CCUS and carbon recycling, premised upon the commercial-ization of CO2 capture and storage (CCS), it promotes the development of suitable sites, technicaldevelopment, transportation demonstrations, and preparation of the business conditions re-quired for introduction by 2030, and says that CO2 emissions from thermal power generation will
be reduced.

(2) Policy directions(a) Assistance through subsidies

The public funds are already flowing. Subsidies are already flooding into a variety of R&D

and demonstration projects, particularly for hydrogen. The “CO2-free Hydrogen Energy Supply-chain Technology Research Association (HySTRA)”7 was established in 2016 to create a hydrogen supply chain, including hydrogen production from brown coal, as well as hydrogen transpor-

tation, storage and utilization, with the aim of commercialization by around 2030. Its various
projects include the Demonstration Project for Establishment of Mass Hydrogen Marine Transpor-

tation Supply Chain Derived from Unused Brown Coal. (Brown coal is low-grade coal that is not

generally used in coal-fired power generation due to high moisture content, impurities and low
calorific value). HySTAR member J-POWER has received subsidies from Japan’s New Energy andIndustrial Technology Development Organization (NEDO) and the Australian government to build
a demonstration facility to produce hydrogen through brown coal gasification in the Latrobe Valley (Victoria State) in Australia8.

Also, for the move to carbon neutrality in 2050, the government decided to establish thetwo trillion yen (about US$17.5 billion) Green Innovation Fund at NEDO and continue with ten
years of funding for companies for R&D, demonstration, and social implementation9. This is alarge money subsidy system for large projects budgeted at 20 billion yen or more (about US$175
million) in total project costs (government portion only). This includes projects such as the “Devel-

opment of Technologies for Carbon Recycling and Next-Generation Thermal Power Generation /Research, Development and Demonstration of Technologies for Ammonia Co-Firing Thermal Pow-

er Generation” program for projects having a total budget of under 10 billion yen (about US$88

million) over five years to 2025, and combined contracts and/or subsidies under 20 billion yen(about US$175 million) over five years. A call for proposals was made, and two of Japan’s top ther-

7

The seven members include J-POWER, Iwatani Corporation, Kawasaki Heavy Industries, Shell Japan Limited,
Marubeni Corporation, ENEOS Corporation, and Kawasaki Kisen Kaisha (“K” Line).

8

J-POWER, “Hydrogen production started at coal gasification and hydrogen refining facility,” February 2021.

9

METI, “Basic Policies for the Project for the Green Innovation Fund,” in Japanese, March 2021.

7

mal power companies J-POWER and JERA applied and are receiving this funding.
(b) JOGMEC as a key player

The Japan Oil, Gas and Metals National Corporation (JOGMEC) was established in 2004

based on the JOGMEC Act, from the integration of its predecessors, the Japan National Oil Corpo-

ration and the Metal Mining Agency of Japan. Its capacity to acquire international resources has
been bolstered through restructuring three times for the purpose of securing oil supplies, etc. The

JOGMEC Act amended in 2020 states that if it is difficult for the private sector to procure fuel for

power generation in an emergency, JOGMEC can procure it based on the Electricity Business Act at
the request of the Minister of Economy, Trade and Industry. If it becomes difficult to procure fuelfor power generation due to the divestment (withdrawal of fossil fuel investments) that has been

occurring in recent years, the Minister can request JOGMEC to intervene and procure fuel. In otherwords, a framework has been created that allows JOGMEC to procure fuel with the sanction andfinancial assistance of the national government even when the private sector withdraws due to thewave of decarbonization.

One can see signs of JOGMEC’s omnipresence in subsidy programs for hydrogen and am-

monia power generation. We examine some of them in specific projects described below.
(c) Regulatory loopholes promote ammonia and hydrogen for inefficient coal power

In July 2020, then-Minister of Economy, Trade and Industry Hiroshi Kajiyama directed his

ministry to consider concrete measures such as “new regulatory measures to ensure the fade-out
of inefficient coal toward 2030” and “the establishment of mechanisms to induce the early exit ofinefficient coal while still securing the required supply capacity for a stable supply.” With that, thegovernment at last started to move on measures to curb the use of existing coal power. An April
2021 interim report set a new target for coal power generation efficiency at least 43% for each op-

erator, regardless of the power generation technology being used10. In the global momentum tocurb the use of coal power and phase out coal, it is a problem that the government response is justto increase power generation efficiency. However, it is further problematic that it allows not only
the use of biomass fuel co-firing and by-product gas without considering life cycle CO2 emissions,but also to calculate efficiency for co-firing technology with ammonia and hydrogen. Moreover,
the report states that “For the time being, from the viewpoint of technological development anddissemination, it does not matter whether or not ammonia or hydrogen is carbon-free (i.e., wheth-er it is derived from non-fossil energy, or from fossil fuel)” (p. 14). This is a reckless arrangementthat would consider anything to be green, even if it results in fossil fuel-derived CO2 emissions. The

proposal was made with measures to reduce the ratio of coal in the electricity mix to 26% in 2030

under the Fifth Strategic Energy Plan. However, the government announced the carbon neutral

declaration and emission reduction target of 46% to 50% by 2030, and that was followed by the10

Advisory Committee on Natural Resources and Energy “Interim Report of the Working Group to Consider Coal
Power,” in Japanese, April 2021.

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Sixth Strategic Energy Plan with the target mix for coal being reduced to 19%. As we see it, themeasures based on this proposal give Japan neither a reduction of CO2 emissions from coal nor aproper phase out of inefficient coal power. Bloomberg NEF (BNEF), which reports on energy, econ-omy, and environment, has projected that under current policies, coal power will still account for
32% of Japan’s electricity in 203011.

2. Industry actions(1) Thermal power producers(a) JERAJERA was established in 2015 by TEPCO and Chubu Electric Power Co. In 2019, the twocompanies fully integrated their thermal power generation businesses, including the value chainof upstream fuel procurement, electricity generation, and wholesale business for electricity andgas. Owning half of the thermal power generation capacity in Japan, this is now Japan’s largest

thermal power producer -large even on a global scale in terms of fuel volume handled. The “JERA
Zero CO2 Emissions 2050” announcement was also made in October 2020, closely timed with thenPrime Minister Yoshihide Suga’s carbon neutral declaration12.

With a target of reducing CO2 emission intensity by 20% by 2030, the roadmap aims toclose and decommission inefficient coal-fired power plants by 2030 and promote offshore wind,

as well as co-firing of ammonia with coal or hydrogen with gas-fired power generation, aiming forammonia and hydrogen exclusively in 2050 (while using carbon offsets or CO2-free LNG for any

portion that cannot be 100% ammonia and hydrogen in 2050). In May 2021, with a four-year grantfrom NEDO for June 2021 to March 2025, JERA launched a project to co-fire coal and ammonia at
Unit 4 (1GW) of the Hekinan Thermal Power in Aichi Prefecture, aiming to achieve co-firing with
20% ammonia in the fuel mix in 202413. JERA is responsible for ammonia procurement and con-struction of related facilities such as storage tanks and vaporizers, while IHI’s role is to develop
burners to be used in the demonstration. The press release presents this as the world’s first demon-

stration project for a large volume of ammonia to be co-fired in a large-scale commercial coal-fired

power plant. Meanwhile, no details have been provided yet regarding hydrogen co-firing with gas,including the timing of any demonstration project. To secure ammonia as fuel, JERA also has anagreement to collaborate with Malaysia’s state-owned oil and natural gas company Petronas andNorwegian fertilizer giant Yara International to build an ammonia supply chain.

11

Miho Kurosaki presentation, “Carbon neutral growth strategy: Challenges and path to achievement” (BNEF Japan
Forum 2021, September, 2021).

12

ERA, “JERA Zero Emissions 2050,” October 2020.

13

JERA, “JERA and IHI to Start a Demonstration Project Related to Ammonia Co-firing at a Large-Scale Commercial
Coal-Fired Power Plant,” May 2021.

9

(b) J-POWER

J-POWER, the next largest thermal power producer in Japan after JERA, announced “Blue

Mission 2050” in February 202114. With the target of reducing CO2 emissions by 40% by 2030 andmaking its power generation business carbon-neutral by realizing carbon-free hydrogen power
generation by 2050, the plan is to promote renewable energy while phasing out and reducing ag-

ing coal-fired power plants, as well as to promote the Ohma Nuclear Power Plant Project currently
under construction, to produce and supply hydrogen, and promote electricity generation fromhydrogen. However, activities currently being promoted are for hydrogen production and electricity generation using coal gasification technology on projects such as an Australian brown-coal hydrogen pilot demonstration project and a CO2 storage demonstration and technology develop-

ment project. The company is working on the Osaki CoolGen Project, a coal-gasification fuel-cellcombined power generation demonstration project which started in 2012 with the aim of promoting “innovative low-carbon coal power generation,” and is expecting to proceed to use that tech-

nology to generate electricity with hydrogen. But ultimately, if hydrogen is being produced fromcoal, CO2 will be emitted. As for the CO2 that is emitted, the company is saying the plant would be“CO2-free” on the premise that carbon can be stored in Japan or overseas. However, its feasibility

is by no means assured.

The Matsushima Thermal Power Plant that started operating in 1981 in Saikai City, Naga-saki Prefecture is J-POWER’s oldest power plant. In April 2021, the company announced the GEN-

ESIS Matsushima Project to install coal gasification equipment to produce fuel gas and generate

electricity15. The environmental impact assessment process began in September 2021, with plansfor construction to start in 2024, and operational launch slated for 202616. As mentioned above,since the government has a policy of phasing out inefficient coal power, one would expect older

power plants like this one to be shut down quickly, but with new projects like this one being
dubbed the “first step toward the goal” of hydrogen power generation under this plan, the compa-

ny is promoting a project to further extend the life of the company’s oldest coal-fired power plant.
(c) Other companies joining the fray

Other companies are also rushing into initiatives including resource and supply chain de-velopment related to hydrogen and ammonia, as well as CCUS.

Since 2014, Mitsubishi Corporation has participated in the LNG Canada project, whichaims to be the first export of Canadian shale gas, and involves a shale gas development in an in-land region of British Colombia and a 670 km pipeline to connect to a terminal on the west coastfor export to Asia17. Although critics of pointed out violations of human rights of First Nations as
14

J-POWER, “Blue Mission 2050,” February 2021.

15

J-POWER, “J-POWER Starts Preparation for Environmental Impact Assessment of GENESIS Matsushima Plan”
April 2021; Kiko Network, “Send in your comments on the GENESIS Matsushima Project,” in Japanese, October
2021.

16

J-POWER, “Environmental Assessment for GENESIS Matsushima Project,” in Japanese, September 2021.

17

Mitsubishi Corporation website, Montney shale gas development project/LNG Canada project.

10

well as destruction of the environment18, JERA and Tokyo Gas have reached a basic agreement topurchase LNG from this project, and JOGMEC is to provide loan guarantees, while both public andprivate Japanese financial institutions are also planning to provide financing. In August 2021, Mit-

subishi Corporation and a business consortium received approval for an LNG project development
project in Indonesia19. The project is anticipated to increase natural gas production. In September

2021, Mitsubishi Corporation together with the Anglo-Dutch multinational oil and gas company

Royal Dutch Shell announced plans to build a hydrogen production facility near the Canadian cityof Edmonton, Alberta, and use natural gas purchased from local suppliers and Shell to producehydrogen, convert it into ammonia, import it into Japan, and supply it as fuel ammonia (Fig. 1)20.

Mitsui & Co. and JOGMEC have agreed to conduct a joint survey on CCS with a view to com-

mercialize clean fuel ammonia production in Western Australia. A contract has been signed be-

tween MEPAU (100% subsidiary of Mitsui & Co.) and JOGMEC. As well, MEPAU has agreed with
WesCEF on a commercial feasibility study on fuel ammonia production in Western Australia, andthe two companies have exchanged a memorandum of understanding. Specifically, the intention
is to reform natural gas produced in the Waitsia gas field, store the CO2 emitted in the process in a

waste gas field, to produce and export clean fuel ammonia21.

ITOCHU Corporation, in collaboration with the Irkutsk Oil Company, JOGMEC, and TOYOEngineering, is designing the concept of producing hydrogen and ammonia from natural gas fromoil fields in eastern Siberia in Russia, and is considering using rail and a pipeline to transport ammonia inland (Fig. 2). At the same time, it plans to establish a blue ammonia value chain in combination with enhanced oil recovery (CO2-EOR) to increase oil production22.

Marubeni, together with JOGMEC, Hokuriku Electric Power Co., and Kansai Electric Power

Co., is conducting a commercial feasibility survey for the entire supply chain to produce ammonia

from Australian natural gas, transport it to Japan by ship, and supply it for power generation andmarine fuel use. CO2 emitted in the process of ammonia production is to be converted to clean fuelby technologies including CCUS23.

With a METI grant for quality infrastructure, IHI joined with Petronas Gas & New Energy (asubsidiary of Malaysia’s state-owned oil and gas company Petronas) and TNB Genco (a subsidiaryof Malaysia’s leading electric power company TNB) to begin assessing technology for co-firing am-

18 FoE Japan website, LNG Canada Project. in Japanese.
19 Mitsubishi Corporation, SKK Migas approved Plan of Development for Ubadari Field and Vorwata CCUS
at Tangguh LNG Project,” August 2021. Consortium includes INPEX Corporation, Mitsui & Co., Sumitomo
Corporation, Sojitsu Corporation.
20

Mitsubishi Corporation, “Mitsubishi Corporation and Shell sign MoU to collaborate on hydrogen plans inAlberta,” September 2021.

21

Mitsui & Co., “Joint Feasibility Study for Creation of a Supply Chain of Low Carbon Ammonia in Western
Australia,” October 2021.

22

ITOCHU Corporation, “Initiation of Joint Feasibility Study in Phase 2 of Blue Ammonia Value Chain between
Eastern Siberia and Japan,” July 2021.

23

Marubeni, “Feasibility Study on Establishing a Clean Fuel Ammonia Supply Chain from Australia to Japan,” July
2021.

11

monia at coal power stations in Malaysia and evaluating technologies and economic viability
across the entire supply chain, including the production of “green ammonia” from renewable energy sources and “blue ammonia” from natural gas24. JERA has signed a memorandum of understanding with Petronas to cooperate on the production and supply of ammonia and hydrogen.

Furthermore, in April 2019, the Clean Fuel Ammonia Association was established with the aim of“building a value chain for CO2-free ammonia,” and all related businesses are participating.

Today we are seeing electric power companies, trading companies, plant manufacturers,

and others scrambling to get into hydrogen and ammonia-related businesses. However, the reality
is that these businesses are essentially an extension of the fossil fuel development business.

Fig. 1. Map of locations of Mitsubishi Corporation’s hydrogen plant
construction sites for the supply offuel ammonia. Source: Prepared

CANADAby Kiko Network based on Mitsubishi Corporation website.

Alberta

Edmonton

UNITED STATES

Fig. 2. Map of ITOCHU CorporaCO2-EOR
in Oil Field

Ammonia
Planttion’s hydrogen and ammonia

Ammonia Pipeline

production from natural gas fromAmmonia Terminal

eastern Siberia, and inland transport routes. Source: Prepared by
Kiko Network based on ITOCHU

Railway
Transportation
Ammonia Terminal

Ship
Transportation

Corporation website.

Ship
Transportation

Co-Combustion inPower Plant

24

IHI, “IHI and Partners Launching Ammonia Co-Firing Technology Feasibility Assessments at Coal Power Stationsin Malaysia with Partners and for Other Companies to Establish Local Carbon-Free Ammonia Supply Chain,”
October, 2021.

12

(d) Financial institutions and insurance companies

In response to the international push to decarbonize, Japan’s three megabanks have al-

ready announced policies to stop investing in coal power. They have also declared policies of calculating GHG emissions in their investment and loan portfolios, and are expected to continue set-ting medium-term targets and formulating indicators in line with the Paris Agreement’s 1.5°C goal
and carbon neutrality by 2050.

Nevertheless, they have also revealed policies of supporting innovations such as ammo-

nia and hydrogen technologies. Among non-life insurance companies, Tokio Marine Holdings Inc.
has placed restrictions on coal mine development (thermal coal), but allows exceptions for inno-

vative technologies and methods (Table 1). If, in the name of supporting the transition, the support
is provided without the banks properly verifying whether or not the projects will produce credibleCO2 emission reductions, there is a serious risk that it will fail to result in substantial emission reductions, or even increase investment and financing for fossil fuel projects that are highly problematic as responses to climate change, and keep coal power running. In particular, strict meas-ures are needed to ensure that bank support for hydrogen, ammonia and CCUS projects does not
end up being a loophole in policies intended to reduce coal power credit balances to zero.

Table 1. Innovation support policies of three megabanks and Tokio Marine Holdings, Inc.

Financial institution

Mitsubishi UFJ Financial Group,“Integrated Report 2021,” March
2021.

Innovation support policies* Strengthen financing to realize innovation in hydrogen, nextgeneration energy and carbon recycling, etc.

* Regarding innovation, consider and implement new financial

service schemes in tandem with customers, with the aim ofsupporting new business endeavors, including R&D and verification
testing, to contribute to the realization of carbon neutrality* If a proposed coal-fired power plant is essential for a country’ s

Mizuho Financial Group“Strengthening our sustainability
action,” May 2021.

Sumitomo Mitsui Financial Group“TCFD Report 2021,”
October 3, 2021

stable supply of energy and will contribute to a reduction of
GHG emissions by replacing an existing power plant, we may

provide financing or investment for the project, based on carefulconsideration.

* Continue to support development of innovative, clean, andefficient next generation technology … for the transition to a lowcarbon society* Support R&D that contributes to carbon neutrality, including
carbon capture and storage (CCS)

Tokio Marine Holdings Inc.,* Will carefully consider exceptions for (thermal) coal mining

Climate Strategy”

technologies and approaches necessary to achieve the goals of the

Revision of “Tokio Marine: Our
September, 2021

projects, limiting the scope only to projects with the innovative
Paris Agreement.

Prepared by Kiko Network13

3. Constraints on the climate(1) Coal- and LNG-fired power generation in Japan today

To date, Japan has continued to increase its use of and reliance on coal and liquefied nat-ural gas (LNG) for power generation. In the fiscal year 2019, coal accounted for 32% and LNG 37%

of the electricity mix. Coal-fired power generation alone accounts for nearly a quarter of Japan’s
total CO2 emissions and is the largest source of its emissions. After the Fukushima Daiichi nuclear

accident in 2011, construction went ahead on many new power plants, most of which used coal asa power source. Plans surfaced for 50 new coal-fired generation units starting in 2012, 17 of whichhave been canceled at the planning stage, but more than 20 have started operating, and 9 are currently under construction25.

According to power supply plans based on notifications from electric utilities compiled by

the Organization for Cross-regional Coordination of Transmission Operators (OCCTO), the installedcapacity of coal and LNG is expected to be higher in 2030 than it is today. From this one can deducethat operators are trying to increase the amount of coal power, with the anticipation that coal-

fired power generation costs will stay relatively low and without considering the likelihood of new
regulatory measures being imposed. There is a significant difference in trends for coal and LNG.
The fleet capacity factor (or utilization rate) of coal-fired power plants in 2030 is expected to re-main extremely high at 65%, but drop to 35% for LNG. If circumstances go according to plan, theamount of electricity generated (transmission side) in 2030 will be 302.2 TWh (34% of the powermix) from coal and 256.5 TWh (29%) from LNG.

In Japan’s Sixth Strategic Energy Plan, the government plans to revise the power mix in

2030 to reduce coal from the original 26% to 19% and LNG from 27% down to 20%. However, thetransmission operators’ supply plans as compiled by OCCTO tell a completely different story. Fur-thermore, as described below, the plans completely fall short of what is needed when considering
the reduction levels required to address the climate crisis.

(2) Coal phase-out by 2030 needed to limit warming to 1.5°C

The climate crisis is intensifying. The United Nations Environment Programme (UNEP) has

stated that GHG emissions in 2019 were 52.4 Gt-CO2e, with CO2 emissions alone at 38 Gt-CO2, but

global GHG emissions must be halved about 25 Gt-CO2e by 2030 to be 1.5°C consistent26. In addi-tion, the latest scientific findings of the Working Group 1 report for the Sixth Assessment Report of

the Intergovernmental Panel on Climate Change (IPCC), released in August 2021, show in detailthat that if the temperature rise exceeds 1.5°C, the impacts will be so serious they could over-whelm human society’s capacity to respond. The report also makes it clear that the remaining
carbon budget (allowable emissions) of CO2 to keep the temperature rise to 1.5°C ranges between
25

Japan Beyond Coal, power plant map & data, as of September 2021.

26

UNEP, Emission Gap Report 2020, p.25-28.

14

300 Gt-CO2 (83% likelihood) and 400 Gt-CO2 (67% likelihood). If we continue emitting at the current
rate, the remaining carbon budget will be exhausted.

Climate Analytics, a climate think tank, pointed out early on that in order to be compatible

with the 1.5°C goal, developed countries would need to phase out coal-fired power generation by
2030, and the rest of the world would have to do so by 204027. In its Net Zero by 2050” 28 report

released in May 2021, the International Energy Agency (IEA) sets out a roadmap for fossil fuels in
the energy sector to be significantly reduced and mostly replaced by renewable energy. The

roadmap states that no new investment is needed for the supply of fossil fuel, and that coal-fired

power generation needs to be phased out. As a milestone to 2050, the roadmap shows that all
unabated coal-fired power plants (those that do not have carbon capture and storage technology,
or CCS) in developed countries need to be phased out by 2030, with net zero achieved in the elec-

tric power sector in developed countries by 2035, and all unabated thermal power generation(coal and gas without CCS) phased out by 2040. It is basically a given that coal-fired power generation must be completely phased out.

4. Problems with hydrogen and ammonia(1) CO2 emissions and reductions with hydrogen and ammonia

Hydrogen and ammonia do not emit CO2 during electricity generation, so domestic emis-

sions during generation will be reduced accordingly if they are co-fired with thermal power generation. However, if hydrogen and ammonia are produced from fossil fuels, CO2 will be emitted dur-ing production. As described above, the presumed production of hydrogen and ammonia is basedon fossil fuels such as brown coal (lignite) in Australia and LNG in Russia and Canada, so even if
emissions are reduced domestically in Japan, CO2 would still be emitted in the other countries.

Hence, the apparent reductions in Japan would just be an illusion. Below we make an estimate of

the CO2 emission reduction effects of fossil fuel-derived hydrogen and ammonia based on certain
assumptions.

(a) Estimated CO2 emissions from ammonia co-firing with coal

Based on material from the Ministry of the Environment and other sources, total emissions

per ton of ammonia produced would be 1.58 t-CO2, considering emissions associated with raw

materials and emissions from machinery and thermal use during production (Table 2)29.

27 Climate Analytics, “Global and regional coal phase-out requirements of the Paris Agreement: Insights fromthe IPCC Special Report on 1.5°C,” September 2019.
28 IEA, “Net Zero by 2050: Roadmap for the Global Energy Sector,” May 2021.
29

While METI does not provide the basis for its numbers, the “Blue Ammonia Production Technology
Development” Technical evaluation report (preliminary evaluation) for research and development program forbudget request documentation for FY2022” report   (in Japanese) states that even state-of-the-art equipment

15

Table 2. CO2 emissions per ton of ammonia produced (t-CO2)

Emissions from raw
materials production (A)1.14

Tota l CO 2 e m i s s i o n s

Emissions from processing (B)

(A+B)

0.44

1.58

Note: Estimates are based on calculations by Japan’s Ministry of the Environment30. However, emissions would
be about 35% higher if calculated based on CO2 emissions from Japan’s ammonia production. 			
				Prepared by Kiko Network

Based on this, if a 20% ammonia fuel mix is co-fired in a 1 GW ultra-supercritical (USC)

coal-fired power plant, CO2 emissions would be lower by 20%, as ammonia does not emit CO2 at

the power generation stage. However, it is difficult to expect commercial applications of CCUS to

be available by 2030, so CO2 will be emitted in the producing country when ammonia is produced.
If emissions are counted without CCUS, the reduction in CO2 emissions by 20% co-firing with am-monia only comes to about 4% (Table 3, Fig. 3).

Table 3. Case study of CO2 emissions from co-firing with ammonia (1 GW coal-fired power plant)

CO2emissions
from

power

generation
CO2

emissions
duringammonia

productio

Co-firing ratio(calorificvalue)

Consumption

Fuel

Units

Ammonia

％

Coal

Coal

Ammonia

CO2 emissions/year
CO2 emissions/yea
CO2 emissions/year(reduction rate)

％

Coal

Ammonia

80

50

0

0

20

100

2.12

Mt

4.92

0

Mt

Mt

50% co-co-fired

Mt

Mt

20%

only

4.92
-

Note: Total annual power generation assumed to be 6,132 GWh. 			

fired

only

50

100

0.49

1.23

2.46

0.78

1.95

3.90

1.69

1.06

3.93

4.71

2.46

(-4%)

4.41

(-10%)

00

3.90(-21%)

Prepared by Kiko Networkemits 1.6 tons of CO2 to produce 1 ton of ammonia.
30

Ministry of the Environment, “Greenhouse Gas Emission Calculation, Reporting Manual (Ver4.7)” Vol. 2, p. II-57,
Ministry of the Environment, Calculation, Reporting of Greenhouse Gas Emissions, Sequestration, IPPU Sector“2.B.1. Ammonia Production” (in Japanese).

16Potential CO2 emissions reduction when co-firing with ammonia(case study of 1 GW coal-fired power plant)

6
5

0.78

4
3

1.95

4.92
3.93

2

3.9

2.46

1
0
100% coal-fired

80% coal, 20% ammonia 50% coal, 50% ammonia■ Emissions from combustion (Mt-CO2)

100% ammonia■ Emissions during ammonia production (Mt-CO2)

Figure 3. Potential CO2 emissions reduction when co-firing with ammonia (prepared by Kiko Network)

Table 4. Projected CO2 emissions from coal power in 2030
Capacity (GW)
CO2 emissions (Mt-CO2)

Total(39 units)
2951

Coal-fired only

20% ammonia co-fired, 80% coal

During power generation (20% reduction)

During power generation + ammonia
production (4% reduction)

1.75
1.39
1.68

Note: Excluding all inefficient coal power units (Sub-C, SC) currently operating, a total of 21 GW from 132 units.
Prepared by Kiko Network.
* Assuming all are operating in fiscal 2030.
* Major utilities (all 9 former electric power companies + J-POWER) (35 units) + Kobelco (2 units) + IGCC (2 units) = 39
units
* Capacity factor (utilization rate) 68%, emission intensity 0.785 kg-CO2/kWh

If all inefficient coal power generating units in Japan are phased out and only USC units

currently operating, planned or under construction are still operating in 2030, CO2 emissions fromcoal power with 20% ammonia co-firing will be 123 Mt-CO2 (about 10% of total GHG emissions in

FY2018), a reduction of only 31 Mt-CO2 (2.5% of Japan’s total GHG emissions in FY2018). Furthermore, if we add emissions from raw material production and processing overseas until CCUS actually becomes viable, the contribution to any emission reduction is negligible, at about 6.6 Mt-CO2.

In short, co-firing with ammonia offers only a minimal contribution to any CO2 emission reduction.

17

Column 2. UN Climate Champions: Guiding principles for 1.5°C-aligned hydrogen deployment*
The UN has appointed two persons in high level positions as Climate Champions to accel-

erate climate actions by diverse actors. The current Climate Champions and the Marrakech Partnership released the “Guiding Principles for Climate-Aligned Hydrogen Deployment,” which includes the following seven principles:

1. Hydrogen deployment should be targeted in applications where other solutions do not currently exist. Stakeholders should provide a clear assessment to evidence that this is the case.

2. Rigorous accounting of lifecycle emissions from hydrogen production, and ambitious ceilingson those emissions, are key to prioritize climate-aligned hydrogen deployment.

3. Renewable hydrogen is the only option strictly aligned with a reliably 1.5-degree energy sector
pathway.

4. Hydrogen market designs and business models should seek to avoid overbuilding infrastruc-ture, and inefficient re-purposing where a long-term role for renewable hydrogen is not clearly

established, by adopting a medium- and long-term view on the trajectory of existing solutions.

5. Time is crucial. Policymakers need to focus on getting targeted projects off the ground and‘learning by doing.’

6. Developing a hydrogen sector must simultaneously focus on delivering public health, workforce and global equity outcomes.

7. Hydrogen plans must be developed through transparent and accessible processes to ensureaccountability to citizens.

The commentary on the fourth guideline points out that there are uncertainties in the

cost-effectiveness of making long-term investments into hydrogen transport infrastructure suchas hydrogen pipelines and repurposing of existing gas pipeline. Policymakers and regulators
should exercise caution with any proposals for near-term expansion of inefficient fossil fuel infra-

structure based on expectations of future repurposing. The document also points out that be-cause of uncertainties in the geospatial distribution of hydrogen demand and supply centers, it ispremature to engage in large-scale and near-term buildout, as such investments risk becoming

stranded assets. These principles should ring alarm bells even louder about the direction Japan iscurrently headed.

*UN Race to Zero “UN Climate Champions launch ‘guiding principles’ for climate-aligned hydrogen,” October 2021.

(b) CO2 emission estimates from hydrogen co-firing with coal

The only current plan to use hydrogen gas for coal-fired power generation is the GENESIS

Matsushima Project mentioned above. It is believed that full-scale hydrogen power generation will

require the addition of reaction equipment for hydrogen-rich processes and the replacement of
turbines, but this plan does not clarify these points. Nevertheless, the GENESIS Matsushima Pro-18

ject has been launched in the name of taking the first step toward hydrogen power generation. As
with ammonia, hydrogen also emits CO2 if it is produced with fossil fuels. The GENESIS Matsushi-

ma project involves importing low-grade brown coal from Australia and also producing hydrogenin Australia and transporting it to Japan, and the entire initiative is deemed to be clean based on
the premise that any emitted CO2 will be later be captured and stored through CCUS.

One paper estimated CO2 emissions when hydrogen is produced using subbituminous coalor brown coal, and found that if hydrogen is produced from brown coal and CO2 capture by CCS isused, CO2 emissions would be reduced by 65% relative to the direct combustion of coal, but with-out CCS, CO2 emissions would range from 76% to 126% relative to the combustion of coal, showingthat either there would be little difference, or in fact emissions could actually increase31. Thismeans that if hydrogen is produced from Australian lignite and used regardless of whether or not
the hydrogen is carbon-free and before CCUS is commercially viable, there is virtually no differ-ence compared to emissions of CO2 from unabated coal-fired power generation.

(2) Other issues(a) Environmental and social impacts

The use of brown coal and natural gas has a variety of adverse environmental impacts

during transportation, including resource extraction and transport, which includes pipeline con-struction. There are also concerns about land use, including issues about infringing on the rights

of indigenous peoples. For example, the previously-mentioned LNG Canada project involves theextraction of shale gas in Canada, transporting it over long distances by pipeline, and exporting it
as LNG. Shale gas extraction results in significant environmental impacts, including climate change(due to methane emissions), earthquake-induced risks, water pollution (due to fluid injection forhydraulic fracturing [fracking]), and air pollution.

It has also been pointed out that the construction of pipelines infringes on the land rights

and human rights of indigenous peoples, and the issues are too big to justify investment from theperspective of Environmental, Social, and Corporate Governance (ESG)32. Similarly, coal and gas

developments in Australia have had major adverse impacts not only on rivers, farmland and tradi-tional settlements, but also on human health, the rights of aboriginal peoples and workers, andthe destruction of ecosystems33. If the use of brown coal and gas is promoted due to their purported low cost, these impacts will be exacerbated.

31

Burmistrz, P. et al. Carbon footprint of the hydrogen production process utilizing subbituminous coal and lignite
gasification, Journal of Cleaner Production, 139(2016) 858-865. This paper makes estimates based on GE
Energy/Texaco and Shell technologies.
32 Ibid. Footnote 18.
33

Kiko Network “Out of sight, out of mind: Impacts of Japanese use of Australian Coal,” June 2021.

19

(b) Cost concerns

The government has also acknowledged that the use of hydrogen and ammonia as fuel for

power generation is extremely expensive at this time. Costs are incurred at each stage of manufac-

turing overseas, transportation, and then from equipment at power plants. The government has

hypothetically estimated the costs of electricity generated at 12.9 yen/ kWh for 20% ammonia
co-firing with coal, at 23.5 yen/ kWh for 100% ammonia, at 20.9 yen/ kWh for 10% hydrogen co-firing with coal, and at 97.3 yen/ kWh for 100% hydrogen34.

An analysis by BNEF found that hydrogen produced from fossil fuels costs from US$1 to $3/

ton, and the processing of CO2 emissions with CCUS or other technologies adds further costs35.

The analysis showed that while at present, this is considerably less expensive than the cost of pro-ducing hydrogen from renewable energy, the costs of renewable energy are expected to continue

declining to the point that by 2030, hydrogen from renewable energy will be less expensive thanfrom fossil fuels in major countries including Japan, and by 2040, it is projected to be less expen-

sive than hydrogen from fossil fuels, even when CCUS costs are excluded. In addition, hydrogen
has a low energy density, so it requires three to four times the tank capacity and marine transportcapacity relative to natural gas. The volume can be reduced by liquefying hydrogen to be transported, but vaporization (re-gasification) also requires energy, resulting in overall costs being significantly higher than for natural gas. Converting hydrogen to ammonia makes it easier to trans-

port, but it has been projected that hydrogen from domestically produced renewable energy will
be cheaper due to the additional costs of converting ammonia.

Greenpeace has estimated the cost of co-firing with ammonia in coal-fired power plants36 .

Compared to US$73 /MWh as the mid-level average levelized cost of energy (LCOE) in ultra-super-

critical (USC) plants, they projected that co-firing with 20% fossil fuel-derived ammonia will in-crease costs to $98/MWh, further increasing to $106/ MWh if CCUS is included. Their conclusion
was that co-firing with ammonia is nothing but “expensive greenwash.”(c) Market creation and expansion

According to government data, the world’s annual production of feedstock ammonia is

about 200 million tons, of which 10% (about 20 million tons) is traded, meaning most of the production is locally produced for local consumption37. Japan consumes 1.08 million tons of feed-stock ammonia annually, of which 80% is produced domestically, and its imports amount to only

235,000 tons. One coal-fired power plant would require 500,000 tons of ammonia when co-firedwith 20% ammonia (in the case of a 1 GW plant), so if all power plants of the major utilities in Ja34

Basic Policy Subcommittee of the Advisory Committee on Natural Resources and Energy, “Consideration ofachieving carbon neutrality in 2050,” December 2020.
35 Martin Tengler presentation, “Prospects for hydrogen,” BNEF Japan Forum 2021, September 2021.

36

Greenpeace, “JERA and Japan seek costly and dirty alternative to RE: Lengthening the lifeline of coal power inJapan”, March, 2021.

37

Agency for Natural Resources and Energy “Consideration for 2050 carbon neutrality”, in Japanese, December
2021, P.59-61.

20

pan were co-firing at 20% ammonia, an amount comparable to the entire 20 million tons of current
global trade volume would be required for co-firing in Japan alone. In other words, this would require the creation of enormous new markets and supply chains for fuel ammonia. What the government is currently promoting is the creation and expansion of a huge market for ammonia production from natural gas and its transportation (Fig. 4).

The Sixth Strategic Energy Plan states that Japan intends to be a leader in creating andexpanding LNG markets and promoting a realistic energy transition in Asia38. But like elsewhere,
the cost of renewable energy is dropping rapidly in Asia. From the perspective of reducing CO2

emissions and accelerating decarbonization in developing countries, rigorous analysis and review
is required if Japan’s intention is to inject more money into thermal power generation and pro-

mote co-firing with ammonia and hydrogen. In the electrical power sector, accelerating the spreadof renewable energy is technically more feasible and overwhelmingly less expensive, so any in-vestments related to the use of ammonia and hydrogen – which really serve to extend the life of
the fossil fuel sector – risk becoming the next stranded assets.

Businesses and industries must contribute to the rapid transition to decarbonization. To

foster a sustainable economy and industry in Japan, they need to promote sectors that focus onenergy efficiency, renewable energy, and a just transition, rather than continuing with projects
linked to fossil fuels.

North America
Middle East

OceaniaFig. 4. LNG supply chain (based on documents from Basic Policy Subcommittee of the Advisory Committee on Natural
Resources and Energy)

38

Ibid. Footnote 6. P.101.

21

5. Conclusion: What’s really needed is an end to coal and fossil fuels
Ultimately, most of the hydrogen and ammonia that would be used for the projects cur-rently moving ahead would be produced from overseas fossil fuels. With co-fired thermal power
generation in that situation, there is virtually no net reduction in CO2 emissions, because eventhough their emissions may appear to be lower in Japan, they just occur during the production
stages outside of Japan. Furthermore, even if 20% co-fired power generation is realized in 2030,

CO2 emissions from the continued use of coal and LNG will still be enormous unless CCUS becomes

viable on a massive scale.

It is abundantly clear that, even though hydrogen or ammonia for electricity production

currently offer almost no hope of contributing to emissions reductions, they are being touted ascarbon-free or zero emission solutions based on the notion that at some point in the future CO2

will be captured and/or utilized with CCUS, or that conventional production may eventually be

replaced with hydrogen or ammonia produced by renewable energy. However, there is no real

likelihood that these technologies will become viable. Even with CCUS, zero emissions cannot be
achieved because CCUS requires energy consumption and thus emits CO2, there are no grounds todeclare them to be carbon-free or zero emission technologies. As it stands, what we are seeing is

simply a new type of fossil fuel development that also serves as an attempt to prolong the life ofcoal- and LNG-fired power businesses.

To allow coal-fired power generation to continue beyond 2030 would be inconsistent withefforts to achieve the Paris goal of limiting warming to 1.5°C, which requires significant GHG emis-

sion reductions by 2030. This scheme appears to be about spending enormous amounts of money
on fossil fuel-related businesses that emit the most CO2, portraying these risky technologies assaviors even though they would actually exacerbate the climate crisis, and about funneling hugeinvestments through channels such as the Green Innovation Fund. It is based on confused logic
and is entirely inappropriate as a strategy to address climate change.

The IEA has pointed out that any new fossil fuel supply projects are inconsistent with thegoal of limiting warming to 1.5°C. There is an urgent need to rethink any investments in new technologies that would add to the use of fossil fuels premised on the use of thermal power generation.

With the remaining carbon budget, the only way to meet the 1.5°C goal is to completely

phase out coal power by 2030 and reduce emissions in the electric power sector, including naturalgas, to zero in the 2030s. We call for an immediate re-examination of government policies that areassisting these technologies, including funds going to the Green Innovation Fund. Finally, Japan

should base its policies and technologies mainly on energy efficiency and renewable energy, while
for hydrogen and ammonia, Japan should make the transition to investments focusing on production from renewable energy sources only.

Published by: Kiko Network
October 2021
URL: http://www.kikonet.org
TEL.03-3263-9210 FAX. 03-3263-9463 Email.tokyo@kikonet.org
September 2021
22
Lead Author:：Kimiko Hirata, Hiroshi Ito
Design: Mihoko Araki DTP：Takuya Moriyama