The 8th CJK Dialogue
Session2 Joint efforts on building a secure, stable and clean supply chain
by China, Japan and Korea

January 17th, 2022

Energy Systems in Japan
for Achieving Carbon Neutrality
Keigo Akimoto
Systems Analysis Group
Research Institute of Innovative Technology for the Earth (RITE)

Image of Primary Energy in Japan
for Net Zero Emissions

2【Domestic primary energy supply】
Energy saving or Reductionin embodied energy of goods/services(incl. Society 5.0)

✓ The combination ofseveral kinds oftechnologies is required.

【Use of overseas resources】
Nuclear

Nuclear
Domestic renewables

DecarbonizedenergyRenewable energy

Measures of grid to expand
renewables (incl. storage battery)Use of renewables surplus
for hydrogen

Use of overseas renewables (green Sys. fuels prone to be generated fromfossil fuels if the constraint on CO2 ishydrogen) (import of hydrogen,loose in the producing countries, whilefrom BECCS or DAC (with increased
ammonia, and syn. fuels (CCU))
cost) if the constraint is strict.

✓ All of the technologies
have roles and challenges,
and large uncertainties.
Development of several
scenarios is necessary forconsiderations on carbon
neutrality.

Use of overseas CO2 reservoir (pre-combustion CO2
capture) (import of blue hydrogen (incl. ammonia))

Fossil fuels + CCS

Remainingfossil fuels

Fossil fuels w/CCS
Fossil fuels
w/o CCS

Domestic CO2 storage

BECCS, DACCS

Use of overseas CO2
reservoir (postcombustion)

Forestation, mineralization (concrete CCU)

Negative emission technologies (NETs)【Use of overseas
resources】

Trends of Renewable Costs in the World and Japan3(yen/kWh)Solar power(Japan)First half of 2020: 13.2 yen

7.7 yenSolar power(World)First half of 2020: 5.5 yen

Source) IRENA, 2021

(yen/kWh)Onshore wind power(Japan)(Source) Advisory
Committee for
Natural Resources
and Energy, 2021

✓ The costs of VRE have been greatly
reduced.
✓ However, there are large differences in
the costs among nations. The prices inJapan are considerably high comparedwith the average prices in the world.

First half of 2020: 12.9 yen

Onshorewind power(World)8.1 yenFirst half of 2020:
4.8 yenCurrent Conditions of Renewable Energies in Japan
4

Increase in renewables (except hydro power)Japan

GermanyJapan

GermanyUK
World

Installed renewables per flat land area in Japan is the largest in the world.
(104kWh/km2)

renewables

PV+onshore wind

Renewables should
be increased
greatly to meet theemission targets,
but it is very
challenging issues
in Japan.
Source) The Government of Japan, 2021

Japan

Germany

UK

FranceChina

BrazilUS

India

Energy Assessment Model: DNE21+(Dynamic New Earth 21+)5



Systemic cost evaluation on energy and CO2 reduction technologies is possible.

Linear programming model (minimizing world energy system cost; with 10mil. variables and10mil. constrained conditions)

Evaluation time period: 2000-2100
Representative time points: 2005, 2010, 2015, 2020, 2025, 2030, 2040, 2050, 2070 and 2100

World divided into 54 regions
Large area countries, e.g., US and China, are further disaggregated, totaling 77 world regions.

Interregional trade: coal, crude oil/oil products, natural gas/syn. methane, electricity, ethanol,hydrogen, CO2 (provided that external transfer of CO2 is not assumed in the baseline)

Bottom-up modeling for technologies on energy supply side (e.g., power sector) and CCUS

For energy demand side, bottom-up modeling conducted for the industry sector including steel,cement, paper, chemicals and aluminum, the transport sector, and a part of the residential &commercial sector, considering CGS for other industry and residential & commercial sectors.



Bottom-up modeling for international marine bunker and aviation.



Around 500 specific technologies are modeled, with lifetime of equipment considered.

Top-down modeling for others (energy saving effect is estimated using log-term price elasticity.

••

Regional and sectoral technological information provided in detail enough to analyze consistently.
For analyzing the 2050 carbon neutrality in Japan, the integration costs of VRE are estimated by using ageneration mix model having five regions within Japan and interregional grid connections developed by the
University of Tokyo and IEEJ, and they are integrated into the DNE21+.
Analyses on non-CO2 GHG possible with another model RITE has developed based on US EPA’s assumptions.

•Assumptions for Estimating Integration Costin the Univ. Tokyo - IEEJ Model
Output(p.u.)

Output(p.u.)

1

1

0.9

0.9

0.8

0.8

0.7

0.7

0.6

0.6

0.5

0.5

0.4

0.4

0.3

20:00
16:00
12:00
8:00
4:00
0:00

0.2
0.1

1-Dec

1-Oct

1-Nov

1-Sep

1-Jul

1-Aug

1-Jun

1-Mar

1-May

31-DecOutput example of PV

1-Apr

1-Jan

0

31-Dec

1-Nov

1-Dec

1-Sep

1-Oct

1-Aug

1-Jun

1-Jul

1-May

1-Mar

1-Apr

0

1-Feb

0.1
1-Jan

0.3

20:00
16:00
12:00
8:00
4:00
0:00

0.2

1-Feb

Regional aggregation
Divide Japan into 5 regions: [1]Hokkaido,[2]
Northeasternarea, [3] Tokyo, [4] Westernarea other than Kyushu, [5]Kyushu6

Output example of wind power

Considered in modeling・・・ Output control, power storage system (pumped hydro, lithium-ion battery and hydrogen storage),
reduction of power generation facility utilization, inter-regional power transmission lines,
electricity loss in storage and transmission
Not considered in modeling・・・ Intra-regional power transmission lines, power grid, influence of decrease of rotational inertia,
grid power storage by EV, prediction error of VRE output, supply disruption risk during dark doldrums

Mainly with Lithium-ion battery (setting 150$/kWh in 2050
based on estimation by the National Renewable Energy
Laboratory (NREL)), it is assumed that existing pumpedstorage hydropower and hydrogen storage will be used
together.

Cost of interconnection lines
With reference to the plan by the Organization for Crossregional Coordination of Transmission Operators, costs ofinterconnection lines are assumed to be 200,000 yen/kW
between areas [1] [2] and [3][4], and 30,000 yen/kW inother areas, with an annual expense ratio of 8%.
Underground transmission lines and submarine cables
between Hokkaido and Tokyo are not considered.

Marginal cost of grid integration for VRE in Japan
700

Solar PV
太陽光
Wind
風力

600

cost [US$/MWh]integration [US$/MWh]
Grid
系統統合費用Power storage system

500

400

300

200

100

0
0

5

10

15

20

25

30

35

40

45

Share
in total power generation
総発電電力量に対するシェア[%] (%)

50

55

60

Overview of Assumed Scenarios
7

GHG emission
reduction in 2050

Technology assumption(cost / performance)

Technology deployment scenario

Offset emission credits of overseas(The least-cost measures in the world =Equal marginal abatement costs among
nations)

Domestic emission
reductions areendogenously
determined.

Standard case

Determined endogenously (costminimization), with constraints for nuclear
power up to 10% and CO2 storage.

Reference case

▲100%

Assuming highshare of RE
under Standard
case(For other thanJapan, ▲100% foreach westerncountry, and▲100% for theothers as a whole)

Assuming eachtechnology isfurther
accelerated or
expanded.

1. Renewable
Energy 100%
2. Renewable
EnergyInnovation
3. Nuclear Power
Utilization
4. Hydrogen
Innovation

5. CCS Utilization

6. Synthetic fuelUtilization

7. Demand
Transformation(Note: It is premised that RE is
diffused due to suspected
inertial force in high share RE
scenario.)

Renewable energy nearly 100%
(Nuclear power 0%)

Acceleration of RE cost
reduction

Determined endogenously, with constraints
for nuclear power up to 10% and CO2
storage.

Expansion of nuclear power
deployment

Determined endogenously, with constraints
for nuclear power up to 20% and CO2
storage.

Acceleration of hydrogen cost
reduction

Determined endogenously, with constraints
for nuclear power up to 10% and CO2
storage.

Expansion of CO2 storage
potential

Determined endogenously, with constraints
for nuclear power up to 10%. Large CCS
storage potential assumed.

Acceleration of RE cost red. +Constraints of CO2 intern’ltransportation

Determined endogenously, with constraints
for nuclear power up to 10% and CO2
storage. No intern’l transportation of CO2.

Expansion of car-/ride-sharing

Dramatic expansion of car-/ride-sharing due
to fully autonomous car implementation
assumed.
Other assumptions are same as Referencecase.

Scenario Assumption andShare of Renewables in Total Electricity(in 2050)
Scenario

Cost ofrenewableenergyReference Case*1

1. Renewable
Energy 100%
(RE 100)
2. Renewable
Energy Innovation

Cost of hydrogen

Standardcost

7. Demand
Transformation

Fully autonomous driving(Car ride sharing)0%Standard cost

Low cost

Max. 10%Max. 20%

Domestic storage: max.
91MtCO2/yr;
Overseastransportation：
max. 235MtCO2/yr
Standard assumption(no fully autonomous cars)

Hydrogen production suchas water electrolysis,hydrogen liquefaction
facility cost: Halved

Standard
cost

Domestic：max.
273MtCO2/yr;
Overseas：max.
282MtCO2/yr

5. CCS Utilization

6. Synthetic fuelutilization

CCUS(Storage potential)

Max. 10%

3. Nuclear Power
Utilization*2
4. Hydrogen
Innovation

Ratio ofnuclearpower

8Max. 10%

Domestic: max. 91Mt,
Overseas: 0Mt

Low cost

Standard costStandard
cost

Domestic: max.
91MtCO2/yr;
Overseas：max. 235MtCO2/yr

Realization and diffusion of
fully autonomous driving andexpansion of car ride sharing
after 2030, and decrease inmaterial production due toreduction of the number of
automobiles* Regarding changes on the demand side, further scenario analysis that takes into account factors other than car sharing will be conducted.
*1：There is no feasible solution without DAC, and DAC is assumed to be available in all scenarios.
*2：Nuclear power utilization scenarios up to a ratio of 50% are separately examined.

GHG Emissions by Sector in Japan in 2050
9
1400
DACCS
Non-CO2 GHG

1200

Process CO2
LULUCF CO2Other energy conversion
800

Power generation▲63% relative
to 2013600

Residential & Commercial
Other domestic transportation
Domestic aviation

400

Road transportation
200

Other industry
Chemical0

Pulp & Paper
Cement-200

Iron & Steel2015

7. Demand Transformation

6. Synthetic fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Reference Case

-400

Offset emission credits
of overseas

GHG Emission [MtCO2eq/yr]

1000

Offset emission credit areused in the case of offset
emission credits ofoverseas.
Residual GHG emissions
are offset by NETs optionsin the other cases.

2050✓ In the case of offset emission credits of overseas, the emission reduction in 2050 is 63%
relative to 2013 in Japan, because there are offset emission credit opportunities of cheaperNETs options such as BECCS and DACCS outside of Japan.
✓ For offset of residual GHG emissions, DACCS plays an important role.

Total Primary Energy Supply in Japan in 2050
10
Gas: non-energy use

400

Oil: non-energy use

350

Imported hydrogen andammonia
Imported biofuel

300

Solar thermal

250

Solar PV
Wind power

200
Nuclear power

150

Hydro and Geothermal

100

Biomass w/ CCUS
Biomass w/o CCUS

50
Synthetic methane2015

7. Demand Transformation

6. Synthetic fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Reference Case

0

Offset emission credits
of overseas

Primary energy supply [Mtoe/yr]

450

Gas w/ CCUS
Gas w/o CCUS
Synthetic oil
Oil w/o CCUS
Coal w/ CCUS
Coal w/o CCUS

2050

Note 1) Conversion rates of primary energies correspond to IEA statistics.
Renewable energies except biomass : 1 TWh = 0.086 Mtoe, nuclear : 1TWh = 0.086 / 0.33 Mtoe
Note 2) Fossil fuels without CCS are offset with NETs, thus serving as carbon-neutral fossil fuels.

All are offset with NETs
in ▲100% scenarios✓ For all of the scenarios, CCS is a cost-effective measures. Particularly in [6] syn. fuel case,large amounts of synthetic fuel supplies can be observed.
✓ A substantial amount of imports of hydrogen, ammonia and synthetic fuels are observed.

Electricity Supply in Japan in 2050
11

1600

Solar PV w/o gridWind power w/o gridElectricity generation [TWh/yr]

1400

Gas and hydrogen /Coal and ammonia
Hydrogen and annmonia

1200

Solar thermal

1000

Solar PV
Wind power (offshore)

800
Wind power (onshore)
Nuclear power

600

Hydro and Geothermal

400

Coal and Biomass w/ CCUS
Biomass w/ CCUS

200

Coal and Biomass w/o CCUS
Biomass w/o CCUS2015

7. Demand Transformation

6. Synthetic fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Reference Case

Offset emission credits
of overseas0

Gas w/ CCUS
Gas CGSGas w/o CCUS

Oil w/ CCUS
Oil w/o CCUS
Coal w/ CCUS
Coal w/o CCUS

2050

✓ In the case of offset emission credits of overseas, relatively large share of gas without CCS including
co-generation can be seen in Japan.
✓ Especially for the RE100 case, a surge in integration costs significantly raises marginal cost ofelectricity supply, causing considerable decrease in electricity demand. CCS is important.

Toward Carbon Neutrality
12

 To achieve carbon neutrality (net-zero emissions), in principle, primary energy

should consist of renewable energy, nuclear energy, and fossil fuels with CCS.
The combination of an increase in electrification ratio and low-and decarbonized power supply plays a vital role in achieving net-zero emissions.
 The increase in the further installations of renewable energy is a robust

outlook. On the other hand, the increase in the grid integration costs is
expected with the large deployments of VRE.
 Japan has a relatively high cost of renewable energy compared with othercountries. Also, Japan has a relatively high cost of CCS and its potential isalso relatively small. Therefore, a global strategy including the utilization ofoverseas-made renewable energy and CCS through hydrogen, ammonia, ande-fuels (synthetic gas and oil, one of CCU technologies) is needed.
 Not only Japan but also many Asian countries have a similar condition, andCCU will be also important as well as CCS for the net-zero emissions.
 Caron dioxide removal (CDR) (or NETs) such as DACCS will also play animportant role in achieving net-zero emissions including the opportunities in
the implementations overseas with emission credit transfer.
 Whole energy systems including electricity, carbon, and hydrogen will be

required from a global viewpoint.

Appendix

Global Baseline Emissions andAssumed Emissions Scenarios under 2C and 1.5C80

CO2 emissions
Net zero CO2 emissions
around 2050

60

CO2 emissions [GtCO2/yr]

14

40

Net zero CO2 emissions
around 2060

20

Net zero CO2 emissions
around 2100

0
Historical
Baseline
-20

-40
2000

Net zero GHG emissions
around 2065

2DS(▲40% GHG in 2050)
B2DS(▲70% GHG in 2050)
Below 1.5℃ in 2100 (>66%)
2010

2020

2030

Net zero GHG emissions
around 2100
2040

2050

2060

2070

2080

2090

2100

120

Note) Emissions for baseline shows model estimates
results under SSP2, not assumed scenario

In the scenario analyses of Japan’s 2050 carbon neutrality,
1.5C global scenarios are assumed in addition to Japan’semissions reduction scenarios, for the global competition
for carbon neutral resources to be considered.

GHG emissions [GtCO2eq/yr]※ 2DS, B2DS, B1.5OS scenarios assume
emission constraints equivalent to NDCs ofeach nation up to 2030

100
80

GHG emissions

Historical
Baseline
2DS(▲40% GHG in 2050)
B2DS(▲70% GHG in 2050)
Below 1.5℃ in 2100 (>66%)

60
40
20
0
-20
2000

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

【ref.】Concept of Innovation in Power Supply Ref. Value
15

Each power source must overcome a large hurdle to achieve the reference values for power sources in 2050 aspresented at the Strategic Policy Committee.



Under these conditions, for the 30 to 40% of nuclear power and fossil+CCUS, in case the upper limit of nuclear
power is 10%, it is necessary to cover 20-30% with fossill+CCUS, thus it is assumed a considerable amount of CO2
is stored at home/abroad including CCUS required amount other than the electric power sector. For hydrogen/ammonia and carbon recycled fuel, it is assumed that infrastructure development, etc. is expected to execute alarge-scale transportation without setting the upper limit of supply on the model.
It should be noted that in this analysis, the conditions were set by mechanically assuming such CCS storage
amount based on the above reference values.
2020/12/21 Strategic Policy Committee Material

Renewable Energy

・ Continue to aim for maximum introduction as the main power source in 2050.
・ Immediately work on issues to promote the maximum introduction such as adjustment amount, transmission capacity, ensuring
inertial force, responding to natural conditions and social constraints, maximizing cost control, and increasing social transformation
to cost increases.
・ How about deepening discussions on covering 50-60%(approx.) of the generated power (* 1) with renewable energy in 2050 as areference value (* 2)?

Nuclear power

・As an established decarbonized power source, aim for a certain scale of utilization on the premise of safety.
・ In order to restore public trust, make an increased effort to improve safety, gain understanding and cooperation of the locationarea, solve back-end problems, secure business feasibility, maintain human resources and technical capabilities, etc. How about
deepening discussion on covering 30-40% (approx.) with nuclear power which is a carbon-free power source other than renewableenergy and hydrogen/ammonia, along with fossil+CCUS/carbon cycle in 2050 as a reference value (* 2)?

Thermal power

Power sources required innovation

Established decarbonized
power source

In order to aim for carbon neutrality in 2050, stable power supply from decarbonized power sources is indispensable. From the perspective of 3E+S, multiple
scenarios will be analyzed without limiting to the following. In deepening the discussion, the positioning of each power source is suggested as follows.

Fossil + CCUS

・ While having the advantages of supply capacity, adjustment power, and inertial force, decarbonization of fossil-fired power is the
disadvantage.
・Aim to utilize on a certain scale iimmediately by developing technology and suitable sites, expanding applications and reducing
cost, etc., toward the implementation of CCUS / carbon recycling. How about deepening discussion on covering 30-40% (approx.)
together with nuclear power which is a carbon-free power source other than renewable energy and hydrogen/ammonia in 2050 as areference value (* 2)?

Hydrogen,Ammonia

・While having the advantages of adjusting power and inertial force without emitting carbon during combustion, the challenges are
establishing technology for large-scale power generation, reducing costs, and securing supply. Aim to build a stable supply chain
immediately by promoting co-firing of gas-/coal-fired power, increasing supply and demand.
・Aim for a certain scale of utilization as a carbon-free power source, taking into account competition with industrial andtransportation demand. Based on the fact that procurement required for future power generation is estimated to be 5-10-million ton
as basic hydrogen strategy, how about deepening discussion on covering 10% (approx.) of generated power withhydrogen/ammonia in 2050 as a reference value (* 2)?

*1: The amount of power generated in 2050 will be about 1.3-1.5 trillion kwh as a reference value (* 2) based on the power generation estimation by RITE presented at "the 33rd Strategic
Policy Committee".
*2: This is not as a government goal, this is one guideline / option for future discussions. This will be the one of options to deliberate in considering multiple scenarios in the future.