Resources, Energy & Environment
Business Area Briefing
September 27, 2023

Kouji Takeda
Managing Executive Officer; President of Resources,
Energy and Environment Business Area
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Contents
1. Business Area Outline
2. Business Environment Outlook and Assumptions
3. Resources, Energy & Environment Business Area Initiatives(1) General Segment Strategies Based on GroupManagement Strategies 2023
(2) Lifecycle Business Revenue Composition and Future
Strategies(3) Business Portfolio and Earnings Structure: Business
Strategies to Reach Targets(4) Process to Reach Earnings Goals: Medium-Term
Management Plan Profit Targets(5) Long-Term Earnings Growth Story: Establish andCommercialize Carbon-Neutral Business Technology

Copyright © 2023 IHI Corporation All Rights Reserved.

1. Business Area Outline
Energy domain vision: Create a carbon-neutral future
Provide new solutions so customers and society can become carbon neutral
Decarbonize with customers while efficiently managing existing assets
Development-focus
businessCore businesses■ FY2022 sales composition from key products(Clean energy field)

Carbon solutions

Asia EPC¥62.3 billion
17%

Ammonia utilization

Power plants

Power systems

Process plants

Carbon recycling & methanation

Ammoniafired engines

Gas and diesel
reciprocating
engines（RE） Gas turbines（GT）

NuclearenergyDecontamination anddecommissioning

Nuclear power
plantsSmall nuclear
reactors

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Shipelectrification

Nuclear energy¥71.0 billion
19%Power systems¥81.8 billion
22%

Carbon solutions（CS)¥156.2 billion
42%

Revenue¥371.3billion■ New builds and main facilities■ Lifecycle businesses■ Ammonia and hydrogen■ Carbon-neutral businesses

Strengths
1. Robust engineering capabilities for large structures
2. Ample experience in energy industry
3. Solid record in marine engines
4. Experience in commercializing ammonia utilization, methanation, and other carbonneutral technologies
Opportunities
1. Expanding energy demand in emerging nations
2. Rising demand for clean power and eco-materials in keeping with social needs
3. Growing demand for energy management-related infrastructure in line withrenewable energy deployment progress
4. Expanding demand for distributed power sources
Risks
1. Thermal power generation business shrinks swiftly owing to accelerating
decarbonization
2. Competition intensifies in emerging economies
3. Opposition to nuclear power rises over differing views on this power source
4. Fast deployments of environmental regulations for ships

3

2. Business Environment Outlook and Assumptions

Electricity generation(x106 GWh)

• Electricity demand rising amid global drive toward carbon neutrality• Development and implementation of decarbonization technologies is progressing mainly inadvanced nations, with technology deployments in developing countries also progressing• Transition to net-zero economy by using renewable energy, energy storage, zero-emission
fuels and feedstocks, and carbon capture, utilization and storage
Buildings
Transport

International Energy Agency’s
net zero emissions scenario
Source:Industry

https://www.iea.org/reports/net-zero-by-2050

Electrical & Heat
Other

2020
No new unabatedthermal power approvedfor development
No new oil and gas
fields approved fordevelopment, and no
new coal mines or mine
extensions
Suspending sales of
new fossil fuelboilers

2020

2025

2030

Sustainable Development Goal
calling for universal access toelectricity
Electric cars are 60% of new
car sales
1% injection of e-methane
into infrastructure (Japan)
COURSE50 blast furnacecommercialization
Most low-emission
technologies reach large-scaledemonstration stage

2035
Most appliances and coolingsystems are best in classElectric heavy trucks are 50%of salesNo new internal combustion
engine car sales
All industrial motors are bestin class

Phase-out of unabated solid
fuel in advanced economies

Overall net zero electricity inadvanced economies

150 Mt low-carbon hydrogen;
850 GW electrolysers

4 Gt CO2 captured

2025

2030

Technology and customer development
phase
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2035

2040

2045

More than 85% of buildings
zero-carbon readyHalf of existing buildings
retrofitted to zero-carbon
ready levels

90% e-methane injection(Japan)50% of fuels used inaviation are sustainable
Low emissions for 90% ofexisting heavy chemicalindustry production facilities
Net zero electricity sector
globally
Phase-out of all unabatedthermal power and oil power
plants

2040

2050

2045

Almost 70% of electricity
generation globally from solar
PV and wind
7.6 Gt CO2 captured
Half of heating
demand met by heatpumps
435 Mt low-carbonhydrogen3000 GW
electrolyzers

2050

Clean energy business expansion phase43. Resources, Energy & Environment Business Area Initiatives(1) General Segment Strategies Based on Group Management Strategies 2023

Powersystems

Asia EPC◼ Grow strategically byembedding and evolving
LCB

Expand fuel conversion business for marine engines(including ammonia)◼ Dual fuel ammonia readyand other investment
risk-reduction
technologies

Expand fuel conversion projects for distributed generation(renewable energy and gas turbines) (including biofuels
and ammonia)◼ Normalize resource
shifting and reskilling

Expand fuel conversion business for thermal power generation(including thermal power generation and commercializing
ammonia gas turbines)◼ Transition to flexible
organizational structure(from division of labor to
project-based one)

Expand gas-fired EPC business in Southeast Asia andcontribute to area for carbon solutions business expansion
in Asia◼ Expand partnerships
NuclearenergyExpand business to maximally use nuclear power anddecommission of Fukushima Daiichi Nuclear Power Stationand cultivate small reactor business

Create carbon-neutral future

Seed ship electrification market (tugboats and domestic
vessels)

Carbonneutraltransportation business

Area-wide efforts
during transition
periodCarbon-neutral electric powerbusiness

Develop carbon solutions business in steelmaking
and petrochemical and gas industries (including formethanation and carbon-neutral heating demand)

Develop ammonia receiving terminals and otherinfrastructure in ports and surrounding areas(including Combined Numerical Profile Mill)

CarbonsolutionsReplace fuels in boilers madeby other companies

Carbonneutral
industrial
business◆ Deploy measures to become carbon neutral in electric power, industrial, and transportation
sectors to realize vision in energy domain✓ Secure carbon-neutral investment resources in core existing businesses, including
lifecycle businesses✓ Reform business structure (business portfolio and profit structure)✓ Establish, commercialize, and cultivate carbon-neutral business technologies

Secure investment resources by cultivating lifecycle businesses and strengthening earnings base
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53. Resources, Energy & Environment Business Area Initiatives(1) General Segment Strategies Based on Group Management Strategies 2023

Secure earnings by embedding and evolving lifecycle businesses while expanding
revenue in carbon-neutral businesses

Expand carbon-neutral business revenue to make it arevenue pillar(including ammonia utilization, methanation, and energy
management)

Revenue trends by business portfolio
Billions of yen

Medium-term
management
plan period

450
400

Carbon-neutral
businesses

Sustainable growth
Project Change
From FY2026
FY2020～FY2022 FY2023～FY2025

350

Projects toward
carbon neutrality

300

Ammonia and hydrogen

250

Lifecycle
businesses

150
100
50

Main facilities
and newbuildsExisting
businesses

200

0

FY

Lifecycle business classifications ①～③① Orders in existing businesses highly likely② Maintain and expand existing businesses③ Expand by evolving and embedding
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Position existing businesses as corebusinesses, securing earnings by embedding
and evolving lifecycle businesses
Lifecycle business revenues bystrategic business unit ③
2,000
200 Asia EPC②① ③
Nuclearenergy
②
①
1,500
150
③ ②
Billions of yenPowersystems

①

1,000
100

③
②

500
50
Carbonsolutions

①

00
2023

2024

2025

6

3. Resources, Energy & Environment Business Area Initiatives(2) Lifecycle Business Revenue Composition and Future Strategies• Reap rewards in category ① lifecycle businesses and swiftly deploy specific measures forsolid orders in categories ② and ③• For nuclear energy strategic business unit, swiftly seed to maintain profitability• “Personalize” business to identify and resolve issues by being part of customer lifecycles
Existing lifecycle
businesses
Lifecycle business ①
Secure planned orders and provide value, including
by undertaking periodic inspections and supplyingpartsLifecycle business ②
Unplanned orders and deals that provide value,such as emergency responses and additional
ordersLifecycle businessembeddingLifecycle business ②
Expand business schemes by leveraging strengths- Deploy to new customers- Include products and peripherals from othercompanies- Use customer data
- Long-term service and service agreements andoperation and maintenance

Lifecycle businessevolution
Lifecycle business ③
Create value through new technologies andapproaches- Deploy drones, augmented reality, and otherremote technologies- Quantify and generate credits for carbon
dioxide reductions- Optimize by matching supply and demand- Create value by using satellite data

Copyright © 2023 IHI Corporation All Rights Reserved. Lifecycle business categories ① through ③: ① High potential for orders in existing businesses, ②Maintain and expand existing businesses, ③ Expand through evolution and further embedding

7

3. Resources, Energy & Environment Business Area Initiatives(3) Business Portfolio and Earnings Structure: Business Strategies to Reach Targets■Carbon solutions businessStart shifting portfolio from coal boilers to ammonia and carbon neutral businesses(Including methanation, ammonia utilization and storage tanks, and petrochemicals shift)

Overhaul engineering organization, production sites, and other areas

Transform ammonia and carbon neutral
businesses into core businesses

Carbon solutions business unit revenue and plans
Billions of yen

1,800
180

Medium-term management
plan period

Project Change
FY2020～FY2022

160
1,600
Compact methanation
machine

140
1,400

120
1,200
1,000
100

Lifecycle
businesses

800
80

Large
ammonia gas
turbineAmmonia and hydrogen

Main facilities
and new builds

200
20• Strengthen and reskill processengineers to drive ammonia, carbon
recycling, and gas turbine
development• Acquire gas turbine engineering
technology through aviation area
collaboration
Transform production sites

Large-scale
methanation

Lifecycle embedding
and evolution

600
60

00

Preparatory projects tobecome carbon-neutral

Energy management

Ammoniaburner400
40

Transform engineering organization

FY2023～FY2025• Invest in ammonia and carbonneutral hardware manufacturing• Acquire gas turbine manufacturing
technology and skills through aviation
area collaboration (prepare forammonia gas turbine production)

Boiler

2020

2021

2022

Copyright © 2023 IHI Corporation All Rights Reserved.

2023

2024

2025

FY

8

3. Resources, Energy & Environment Business Area Initiatives(3) Business Portfolio and Earnings Structure: Business Strategies to Reach Targets■ Asia EPC business Strengthen Jurong Engineering Limited Group’s project management and implementation
capabilities
 Secure profits by properly executing gas-fired EPC projects (including those by othercompanies) Help expand value chain in Southeast Asia with ammonia fuel substitution and storage
technology◆Medium-term regional strategy (Jurong Engineering and carbon solutions business)
African market• Construction and lifecycle
businesses, centered on
Sonatrach projects, toboost energy supply toEuropeMiddle East market• Enter lifecycle business forboilers made by othercompanies• Focus on constructing gasfired power plants andindustrial infrastructure

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Asian market
Indian market• Meet strong demand for gasfired thermal power plants byworking on tank EPC businesswith Afcons to generate highearnings• Expand efforts to cater to fuelconversion demand,
beginning with Adani project• Develop EPC, construction, andlifecycle businesses as core markets• Engage in sales activities to securegas-fired EPC orders• Engage in projects to stabilize
operations (including throughperformance guarantees) ofboilers made by other companies• Push ahead with fuel conversion
projects for future9

3. Resources, Energy & Environment Business Area Initiatives(3) Business Portfolio and Earnings Structure: Business Strategies to Reach Targets■Power systems business
Become business entity that secures operating profit during current medium-term
management plan
Becomeconsistently
profitable by
FY2025Engage in business and model
selection and concentration,
restructure businesses, andimprove profitability

Accelerate carbonneutrality for ships andinternal combustion
engines generating
stable earnings

Outline for securing operating profit
Reform business structure andstrengthen earnings base

Improve profitability to secure investment
resources
Operating profit

Shift resources togrowth anddevelopmentfocus businesses

Lifecycle
business
expansion

Reduce SG&A
expenses andenhanceproductivity• Accomplish structural reforms through selection
and concentration (for models, customers, andbusinesses)• Become consistently profitable organization• Expand lifecycle businesses of existing
operations

Accelerate efforts to materialize and deploy
development-focus businesses• Convert to ammonia and other carbon-neutral
fuels• Commercialize power systems

Engage in businessselection andconcentration andformulate gas turbine
business strategies

Optimize sales structure to drive carbonneutrality

Raw materials
cost
pass-throughs

Medium-term
中計期間での目標
management plangoals

• Centralize sales with carbon solutions business
unit for power, gas, industrial reciprocating
engines, gas turbines, and other offerings

FY2022 results
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10

3. Resources, Energy & Environment Business Area Initiatives(3) Business Portfolio and Earnings Structure: Business Strategies to Reach Targets■Nuclear energy business Secured stable revenue base primarily through lifecycle businesses, such as forrestarting and extending operating lives of light water reactors
 Helped construct NuScale’s first small modular reactor, establishing dominance asnext-generation reactor manufacturer～FY2040

Nuclear energy strategic
business unit revenue trends

Presence in lifecycle businesses and nextgeneration reactors

Billions of yen

80
800✓ Lengthen safe life expectancies for domestic
plants✓ Drive expansion of small modular and otheradvanced reactors overseas and domesticallyPotential for
greater revenue～FY2030

600
60

New
buildsLeverage engineering capabilities to expand
partnerships✓ Boost customer support for plant restarts in Japan✓ Build cooperative framework for inaugurating firstsmall modular reactor unit

400
40

LCB Lifecycle
businesses

200

20

0
FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2030～FY2020
Extensive boiling water reactor experience andpartnerships✓ Manufacture pressure vessels and other major components✓ Maintenance at various plants

Leverage in-house technology and expand partnerships to develop nuclear energy business

Keep supporting portfoliotransformation inbusiness areas with astable revenue baseDecontamination/
decommissioning progress at
Decom.Tech*Operational support and new
additions at Rokkasho
Reprocessing Plant

Expand overseas small modular reactor projects

Expand restarts and life
extensions

New light water reactor construction: Expand
domestic and overseas projects

Reinforce production capacity and organizational structure to support nuclear lifecycle businesses
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*Official name is Tousou Mirai Technology Co. Ltd.

11

3. Resources, Energy & Environment Business Area Initiatives(4) Process to Reach Earnings Goals: Medium-Term Management Plan Profit Targets

Expecting to expand business scale on carbon solutions and power systems lifecycle
businesses growth while boosting overseas affiliate sales
Revenue trends for FY2019~FY2022 and forecasts for FY2023 and FY2025.
Billions of yen

Billions of yen

500

Power
systems

50

NuclearenergyAsia EPC, etc.

Operating profit (right axis)

400

40

300

30

200

20

100

10

0

0
FY2019FY2020

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FY2021

FY2022

FY2023 forecast

FY2025 forecast

123. Resources, Energy & Environment Business Area Initiatives(4) Process to Reach Earnings Goals: Medium-Term Management Plan Profit Targets

Lift earnings in FY2025 through such improvement steps as expanding lifecycle
businesses, undertaking structural reforms, and expanding Asian businesses
Analysis of operating profit changes from FY2022 to FY2025
Billions of yen

6.2
2.7
Expanded
lifecycle
businesses(carbon solutions
and powersystems)

26.2

FY2022
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△5.6
Reaction toconcentrated
nuclearconstruction(lifecycle
businesses)

Structuralreforms andstrongerearnings
foundations(carbonsolutions andpowersystems)

1.5
Business
expansion andstronger risk
management(Asia EPC)

31.0

FY2025forecast
13

3. Resources, Energy & Environment Business Area Initiatives(5) Long-Term Earnings Growth Story: Establish and Commercialize CarbonNeutral Business Technology

Development-focus business (clean energy)
Swiftly commercialize ammonia utilization and methanation with killer content ofcarbon-neutral technology, helping create ammonia value chain and materialize
carbon recycling●●●

Building it into a business that will be main pillar as Aero Engines, SpaceWe will work to create and improve our entire value chain. This includes power generation equipment such as Gas Turbine thatutilizes world-leading ammonia combustion technology, as well as our storage and receiving terminals with top-tier performance.
While investigating investment in fuel manufacturing projects, we will utilize our engineering capabilities to build a new
business model.
Demonstration of ammonia mix-ﬁring in thermal
Successful development of ammonia-based Gas Turbine
power plants around the world Demonstration of
mix-ﬁring ratio increase from 20% to 60%

Ammonia Manufacturing

Joint development with GE to apply this technology tolarge gas turbines

Storage & Transportation

Utilization

Ammonia certiﬁcation platformBlueammonia
Natural gas

RenewableenergyBoilers

ＧＴ

Package boilers

Engines for power
generation

NH 3

Vessel engines

For electricity
generation

CCS/EOR

AmmoniasynthesisGreenammonia

NH 3

NH 3

NH 3

Shipping
terminal

Marine transport

Receivingterminal

Waterelectrolyzers

Development of standardsfor safe operations

Industrial use

Maritime use

Development of ammonia receiving tanks,
ﬂoating storage and regasiﬁcation equipment

Investment participation in afuel production projectCity gas and industrial use
CO 2 capture
from industrial processes

Synthesis of methane,and production of synthetic fuels, etc.

Priority energy areas during mediumterm management plan

SAF andchemical use

Killer content in energy area
※Chart from Group Management Policies 2023
announcement on May 9, 2023

3. Resources, Energy & Environment Business Area Initiatives(5) Long-Term Earnings Growth Story: Establish and Commercialize CarbonNeutral Business Technology

Large-scale ammonia utilization◆ Prepare for tomorrow’s ammonia gas turbines by expanding utilization and developing ammonia
supply infrastructure at foothold of coal-fired power plant fuel conversion◆ Reskill and shift resources with view to transitioning from boiler business◆ Pursue corporate-led business development for producing and supplying ammonia, building value
chain in collaboration with other companies
FY2023
Transformation preparationand transition period～ FY2025

First transformation
implementation phase

FY2030FY2040

Second and third transformation
implementation phases

Ammonia gas turbines and engines

FY2050Transformation

Small gas turbines: Start
commercial operations from
Osaka Expo
Small and mid-sized gas
engines: FY2026
development targets

Compact ammonia
gas turbine

Large gas turbines:
Launch commerciallyby 2030

Gas engines

Large ammonia gas turbine

Developing ammonia storage facilities and infrastructure

Ammonia storage tank

LPG/LNG tank conversion:
Convert LPG/LNG tanks toammonia ones
Large ammonia storage tanks:
Start commercializing in
FY2025Use as fuel storage facility for boiler andgas turbine ammonia fuel conversion

Convert coal-fired boilers to ammonia fuel20% mix-firing: Start
demonstration at end-FY2023
Ammonia burner

20% mix-firing: Maintain possibility of coal mono-firingMix-firing above 50%: Ammonia as main fuel20% mix-firing: Start
commercial operation
50% mix-firing: Start
demonstration

50% mix-firing: Start
commercial operation

Mono-fired
boilerTransition

Establish ammonia value chain usage phase inSoutheast Asia in collaboration with Jurong
Engineering
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Engineer, produce, and maintain terrestrial gas
turbines, including with ammonia, from aviation
through energy areas
15

3. Resources, Energy & Environment Business Area Initiatives(5) Long-Term Earnings Growth Story: Establish and Commercialize CarbonNeutral Business Technology

Carbon recycling and methanation• Become top runner in methanation technology• Small facilities: Establish brand image by expanding sales and rentals• Mid-sized facilities: Starting with demonstration facilities for which we have already received
orders, will connect hydrogen and CO2 source and methane demand to provide value beyond
equipment delivery and lifecycle businesses• Large facilities: Assess business model for large-scale production abroad to replace overseas LNG
supply chain• Accelerate development of innovative technologies to cut e-methane production costs and provide
high added value in energy management and digitization
Carbon recycling value chain

Business development scenario
Top share in methanation equipment

Effective
renewables usage✓ Maximize CO2 capture and reaction thermal
efficiencies✓ Establish track records in industrial field andother areas✓ Push ahead to deploy small standard
equipment

Provide technology on raw material
supplies side

(CO2 Supply)
Recovery and Supply

Methanation
Olefin production
SAF production

Increase profits through catalyst
replacement and other aftermarket
operations (including through long-term
service agreements)
Provide services related to environmental
value that is vital for e-methane usage

Syngas Supply: Biomass gasification
Technologies (killer contents) and businesses that energy
area is working on
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Drive expanding carbon recycling market,
including with olefins and SAF
16

Forward-looking figures shown in this material with respect to IHI’s performance outlooks and other mattersare based on management’s assumptions and beliefs in light of the information currently available to it, andtherefore contain risks and uncertainties. Consequently, you should not place undue reliance on these
performance outlooks in making judgments. IHI cautions you that actual results could differ materially fromthose discussed in these performance outlooks due to a number of important factors. These important factors
include political environments in areas in which IHI operates, general economic conditions, and the yen
exchange rate including its rate against the US dollar.

Reference: A Personalized Business Approach• Create and develop personalized solutions business that taps digital technology to penetrateentire customer lifecycles• Alongside Industrial Systems & General-Purpose Machinery Business Area, seed lifecycle
business development for customers of industrial field and of competitors
Specific example
A customer needed to cut CO2 emissions, so we analyzed exhaust gases at its plant with our CO2
separation and recovery technology. We proposed a process to transform the recovered CO2 into avaluable resources through methanation technology. The customer used IHI’s solution in its
vision for plant decarbonization.

3

2➢ IoT and data analysis in upstream anddownstream facilities and peripheral facilities➢ Proposals to streamline production, conserve
energy, and achieve carbon neutrality for
products from and outside IHI
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Fuel conversion, electrification,and renewable energy

CO2emissionsCO2
reduction

Acceleration
withdigitization

Energy consumption

Productivity and operational
improvements and optimization

Create more personalized business byembedding ourselves in customer
lifecycle, identifying lifecycle issues
with the customer, and resolving thoseissuesCustomer‘s perceived issues

Acceleration
withdigitization➢ Visualize operating status, steam
and heat consumption➢ Optimize based on data analysis➢ Improve lifetime and environmental value ofcustomer businesses➢ Develop new products, systems, and services

CO2 emission factor

118