The Japan Gas Association
1-15-12 Toranomon Minato-ku, Tokyo105-0001, JAPAN10 June, 2021

Summary of Remarks by JGA Chair HONJO Takehiro

In the draft of "Green Growth Strategy" of the National Growth Strategy
Conference held on June 2, the industry that supplies carbon-neutral methaneand hydrogen is newly designated as the "next-generation thermal energy
industry," and positioned as one of 14 priority fields which are expected to grow.
The gas industry appreciates the efforts toward decarbonization of city gas andappreciates the expectations, and takes that responsibility seriously, and theindustry as a whole works toward the realization of a carbon-neutral society for2050.

Carbon Neutral Challenge 2050

Action Plan

<Slide page 1>
In November 2020, the gas industry announced that it would take on thechallenge of carbon-neutralizing gas. Looking ahead to 2050, the first will be athorough shift to natural gas and the advanced use of natural gas, the second
will be decarbonization of the gas itself, and the third will be contributions toCCU, CCS and overseas.

Utilizing these multiple means for decarbonization,

we aim to realize carbon neutralization of gas as a "next-generation thermalenergy industry".

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<Slide page 2>
It is the vision of the gas industry, aiming to achieve a carbon
neutralization rate of 5% or more for gas and practical application of
methanation as of 2030. Furthermore, in 2050, our target is to realize carbonneutral by utilizing multiple means, such as 90% carbon-neutral methane, 5%
direct use of hydrogen, and another 5% by biogas and other decarbonization
methods.

<Slide page 3>
From page 3 onward, there are three actions formulated this time torealize carbon neutrality in the gas industry.

Action 1 is "Contribution to theachievement of NDC in 2030", Action 2 is "Challenge to implement metanation",and Action 3 is "Challenge to direct hydrogen supply".

<Slide page 4>
Page 4 is Action 1, "Contribution to Achieving NDC in 2030." Natural gas
is expected to play a major role in achieving NDC, and we will actively take on
the challenge.

During the transition period, it is important to reduce CO2

emissions of society as a whole. It will accelerate the spread and expansion of
distributed energy systems such as cogeneration and fuel cells, as well as theconversion of fuel to natural gas, which has immediate effects and contributes
significantly to CO2 reduction, and will lead to strengthened resilience andstabilization of electricity supply and demand. We will also work to promote thespread of carbon-neutral LNG and CCU.

In the transition period, we will

reduce the accumulated CO2 through those efforts, and in the future, we replace
gas itself with decarbonized carbon-neutral methane to realize carbon-2

neutralization of gas itself.

<Slide page 5>
Page 5 is an initiative in industrial sector and marine transportation sector.
In the industrial sector, high-efficiency utilization is promoted by energy savingby the engineering skills of city gas companies in addition to the conversion offuel to natural gas, and a significant reduction in CO2 can be expected. On theother hand, since investment costs for conversion are expected, we would liketo accelerate the conversion by requesting institutional support such as
subsidies in addition to the efforts of gas companies.
Since CO2 reduction in the marine transportation sector is also expected tohave a significant effect, we will be involved in expanding the development ofbunkering sites for LNG carriers, mainly in metropolitan areas.

<Slide page 6>
Page 6 is an effort to expand distributed energy systems.

We will

contribute to energy saving and strengthening resilience through the expansionof distributed energy systems such as cogeneration and fuel cells.

In addition,

gas companies familiar with the characteristics of the region will work together
with local governments to promote the construction of smart energy networks
through advanced management utilizing digital technology.

<Slide page 7>
Page 7 is about carbon-neutral LNG, CCU, and CCS.

Carbon-neutral

LNG has been introduced by three companies after Tokyo Gas decided tointroduce it for the first time in Japan in 2019. In the future, we would like to work3

on further expansion of carbon-neutral LNG.

Regarding CCU, centered on

major gas companies, we will consider a scheme that enables technologicaldevelopment such as CO2 separation and recovery and social implementationin collaboration with such as steel and chemicals industries.

<Slide page 8>
Page 8 is Action 2, "Challenge to Implement Methanation". Since
methanation can effectively utilize existing infrastructure and equipment suchas city gas pipelines, it is possible to control social costs and has great potential
as an efficient decarbonization means.

For this reason, we would like to pave

the way for the injection of city gas pipelines through scale-up of the Sabatier
reaction type methanation and demonstration of pilot plants.

In addition, wewill reduce the cost of hydrogen production, promote research and development
of SOIC-type methanations, and significantly reduce prices by collaborating withother industries.

<Slide page 9>Page 9 is an image of cost reduction of methanation, aiming for the samelevel as the current LNG by 2050.

In order to reduce costs, it is necessary toreduce costs in each of the fields of hydrogen production, CO2 capture andmethanation, and technological development becomes an issue.

<Slide page 10>
The technology development efforts are on page 10. Promote upsizing
and demonstration of manufacturing plants for commercialization of carbonneutral methane. As an example, Osaka Gas is proposing a methanation4

demonstration at the Osaka / Kansai Expo 2025. In addition, we will promotetechnological development to reduce hydrogen production costs and researchand development of SOIC for the future, which will lead to cost reduction.

<Slide page 11>
Page 11 is an effort to build a supply chain for carbon-neutral methane.
In order to manufacture and commercialize carbon-neutral methane, it isnecessary to secure a large amount of low-priced hydrogen, CO2, andrenewable energy, and to establish a stable supply system.

In order toovercome those challenges, we will proceed with a feasibility study withdomestic and overseas suitable sites in mind. At the same time, we will proceedwith the study in collaboration with various industries such as trading companies
and engineering companies.

<Slide page 12>
Page 12 is Action 3, "Challenge to Direct Hydrogen Supply".

A newhydrogen pipeline will be laid in a suitable location centered on the coast, aiming
for direct supply via a local hydrogen network.

In addition, we will consider

collaboration with various alliance partners in the fields of manufacturing, import,supply, and utilization.

<Slide page 13>
Page 13 is the main effort for direct hydrogen supply.

There is a plan tosupply hydrogen to the legacy residential area "HARUMI FLAG" of the Tokyo
Olympic and Paralympic athletes' village, but in such a suitable place, we will
promote the direct supply of hydrogen in cooperation with local governments,5etc. We would like to promote the formation of a direct supply local network.

<Slide page 14>
On page 14, this shows a roadmap for 2050 for each of Actions 1-3.
Based on the time axis, we will steadily promote initiatives in line with the plan.

<Slide page 15>
Page 15 is our response for regulatory issues.

In order to achievecarbon neutrality in 2050 through the expansion of carbon-neutral methane andcarbon-neutral LNG, it is necessary to improve the system. In methanation, CO2
will not increase because CO2 capture and emissions are offset, but we would
like to request the government to make rules to properly evaluate social
significance such as those efforts.

<Slide page 16>
In order to carry out the action plan, we newly established the "Carbon
Neutral Committee" in the Japan Gas Association. The Committee is composedof leaders of 7 regional units, and the chairman is Mr. UCHIDA, Takashi of Tokyo
Gas Company Ltd.

The Committee will carry out specific studies for theimplementation of the action plan and promote efforts toward the realization ofcarbon neutrality.

<Conclusion>
In order to achieve carbon neutrality of gas in 2050, it is indispensablethat gas companies nationwide recognize the role of gas companies andpromote the shift to natural gas during the transition period as well as facing

6with the decarbonization of city gas for the future and working on it through theirown efforts and ingenuity.
However, in order to realize it, there are some issues that are difficult tosolve by the gas industry alone, such as large-scale and affordable procurementof hydrogen and CO2.

We would like to take on the challenge of transcending

initiatives while coordinating with "Public and Private Council Meetings" andetc. to overcome those issues and develop technologies with innovation.

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