Carbon Neutral Challenge
2050 Action Plan (Full version)

10 June 2021
The Japan Gas Association© 2021 The Japan Gas Association© 2021 The Japan Gas Association

1-1. Carbon Neutral Challenge⚫
⚫

In November 2020, the Japan Gas Association (JGA) declared that the gas industry would take on the challenge of "carbon
neutralizing gas in 2050," and expressed its determination to realize a decarbonized society.
Looking ahead to 2050, in the transition period, the gas industry will make efforts by combining the following three various
approaches in a complex manner, which will lead to the realization of a decarbonized society.
(1) Thorough shift to natural gas / advanced use of natural gas (2) Decarbonization of gas itself(3) Initiatives such as CCU / CCS and overseas contribution⚫

Aiming to realize carbon neutralization of gas as an industry that supplies next-generation thermal energy (next-generation
thermal energy industry *) by utilizing multiple means for decarbonization such as direct use of methanation and hydrogen.

* One of the "14 priority areas where growth is expected" in the "Green Growth Strategy for 2050 Carbon Neutral (Draft)"Scenario for carbon neutralization of gas
Greenhousegasemissions

Efforts during the transition period

1. Thorough shift to natural gas and advanced use of natural gas (demand side)
Fuel conversion from oil and coal, widespread use of cogeneration and fuel cells,
higher efficiency of equipment, etc.

Decarbonizedsociety

2. Decarbonization of the gas itself (supply side)
Decarbonization of the gas itself for innovation on the supply
side such as methanation and hydrogen utilization

3. CCU / CCS and overseas contribution, etc.
Carbonneutralizationof gas

CCU / CCS, overseas expansion of innovative gas appliances and engineering
capabilities developed in Japan, utilization of carbon-neutral LNG, etc.

Government target
now

2030

2050

1

© 2021 The Japan Gas Association

1-2. What the gas industry is aiming for⚫ Deepened discussions through the "Study Group on the Ideal Gas Business for2050" held as a METI study group, and set targets for 2050 and 2030 as a milestone.

2030

2050

Achieving carbon neutralization rate of 5% or more for gas
Practical application of methane(injection of carbon neutral methane into city gas pipeline 1% or more)

Aiming to realize carbon neutralization of gas
by multiple means*Efforts to solve major issues such as increasing the capacity of methanation equipment and stable and inexpensive hydrogenprocurement.
*Although there are many uncertainties, we will take on the challenge of realizing it by making full use of various measures that
contribute to decarbonization.

Our view toward the realization of carbon neutralization of gas in 2050

BiogasOther decarbonization
measures

5％ 5％⚫ CCU／CCS⚫ Carbon neutral LNG(CNL)*1⚫ Overseas contribution、DACCS *2 、Tree planting

Percentage
of total gas

Direct use ofhydrogen90 ％2

Carbon neutral methane（CN methane*3）* 1. LNG that offsets GHG generated in the processfrom natural gas mining to combustion by CO2
reduction by supporting reforestation.
* 2. Direct Air Carbon Capture with Storage (CO2
direct capture and storage technology)* 3. Decarbonized hydrogen and CO2 synthesizedmethane● The figures in the graph are an example of thegoals to be achieved when innovation progresses
smoothly.
● Assuming that hydrogen, CO2, etc. areeconomically and physically accessible inconjunction with policies, etc.
© 2021 The Japan Gas Association

2. Action Plan -3 Actions～

Action 1

Contribution toachieving NDC*
in 2030*NDC:Nationally Determined Contribution

Action 2

Action 3

Challenge toimplement
methanation

Challenge todirect hydrogen
supply3© 2021 The Japan Gas Association

Action 1

CONTRIBUTION TO ACHIEVING NDC IN 2030
POINT

⚫ In the transition period until the practical application of decarbonization
technology, it is important to reduce the CO2 emissions of society as awhole by promoting the spread of natural gas.
⚫ Natural gas conversion from other fossil fuels such as large-scale industrial
users who have immediate effect and contribute to CO2 reduction towardachieving NDC (Japan's greenhouse gas reduction target: -46% * compared to
FY2013) in 2030 Promote advanced utilization by converting fuel to CO2 andexpanding the spread of distributed energy systems (cogeneration, fuelcells, etc.). At the same time, we will accelerate the promotion of the spread ofcarbon-neutral LNG, whose introduction is expanding, and CCU, which is underconsideration for social implementation, across the country. By expanding theuse of gas, we will contribute to strengthening resilience and stabilizing the
supply and demand of electricity.

⚫ In the transition period, these efforts will reduce cumulative CO2 and, in the
future, replace the gas itself with decarbonized carbon-neutral methane toachieve carbon-neutralization of the gas.
* Prime Minister's remarks at the government's Global Warming Countermeasures
Promotion Headquarters Meeting and Climate Summit (held on April 22, 2021)

4© 2021 The Japan Gas Association

【Action 1】 Contribution to achieving NDC in 2030

(Natural gas conversion: Industrial field, Marine transportation field)⚫

Fuel conversion and advanced utilization from other fossil fuels to natural gas in the industrial field
is expected to reduce CO2 reliably and on a large scale, while large-scale conversion costs and runningcosts are expected to rise. In addition, we are accelerating the conversion by seeking support for the
introduction of subsidies.

⚫

CO2 reduction in the marine transportation field can be expected to have a significant effect, and in recent
years, major gas companies have also participated in bunkering to LNG carriers, mainly in urban areas.
Gas companies are actively involved in expanding the maintenance area for future basedevelopment.

Promotion of natural gas conversion

Cases of natural gas conversion■Industrial sector（Asahi Kasei）

Heavy OilＡHigh＋
NaturalEfficiency
Conventionalgasburner45
Natural Gas
Technical
support100 conversion 75 from city gas companies(CO2)

CO2 saving

Coal
Coal-fired power generation
Before fuel conversion
Gas turbine cogeneration
Power：37,000kW Natural gas-fired power generation
New facilities
scheduled to start operation in 2022
Steam：140t／h
LNG tank：6,500kL
LNG receiving
Coastal vessel receiving equipment, LNG
facilities
vaporizer, gas conduit, etc.

Energy savingCO2

Newly EstablishedIn addition to natural gas conversion, energy measurement,
burner development, etc. Implementing technical support andpromote advanced use of natural gas

Annual reduction of approximately 160,000 tons-CO2(equivalent to 5% of Asahi Kasei's total annual CO2 emissions)■ Bunkering bases are being developed mainly in the■CO2 reduction potential by converting coal / oil tonatural gas
Private power generation(coal / oil)

Gas
Cogeneration

harbor area of the metropolitan area

Kitakyushu Port

Approx. 3% of
the CO2
reduction target
as of 2030

Approx.19 million tons-CO2* When all fossil fuels such as coal that can be converted in Japan are shifted tonatural gas.
* Calculated only for applications that can be gasified with natural gas by referring to
the detailed table of Government Statistics 2018

In May 2019, Saibu Gas, Kyushu ElectricPower, Chugoku Electric Power, andNippon Yusen conducted the first LNG
bunkering at Kitakyushu Port as ademonstration project.

5(Source: Saibu Gas Co. Website)© 2021 The Japan Gas Association

【Action 1】Contribution to achieving NDC in 2030
(Distributed energy system)⚫ Contributing to significant energy savings and resilience through the widespread use of"Distributed energy systems" such as cogeneration and fuel cells.。
⚫ Promoting further low-carbonization and decarbonization while strengthening regional
resilience by local gas companies who are familiar with the characteristics of the region,
working together with local governments and companies to expand the introduction ofrenewable energy and build a smart energy network through advanced management
utilizing digital technology.
Building a smart energy network that utilizes distributed energy
Expansion of renewableenergy introduction andregional coordination

L N G te r m i n a l
Gas Network
S o l a r po w e r

Wind PowerHeat Network
Electricity Network

B i o m a s s po w e r

L a r ge - s c a l e c e n tr a l i z e dpo w e r ge n e r a ti o n
N a tu r a l Ga s
c o ge n e r a ti o n

Area use of heatand electricity

工場

Integration of supply anddemand balance utilizing digitalN a tu r a l Ga s
c o ge n e r a ti o n

Energy source in theevent of a disasterN a tu r a l Ga s
c o ge n e r a ti o n

B a tte r y

H o s pi ta l

In the future, we will promote the conversion to CN methane through methane, etc.
to decarbonize the region© 2021 The Japan Gas Association
6

【Action 1】Contribution to achieving NDC in 2030
(Carbon Neutral LNG, CCU / CCS)

⚫ Carbon-neutral LNG (CNL) has been introduced by gas companies, with Tokyo Gas announcing
the introduction decision for the first time in Japan in June 2019, followed by Hokkaido Gas, OsakaGas, and Toho Gas. In the future, we will work on creating a mechanism for further expansionof introduction, such as responding to institutional issues.
⚫ Regarding CCU, we are considering technological development such as CO2 separation and capture
through collaboration with industries such as the steel industry and chemical industry, centered on
major gas companies, and socially mountable schemes for chemical raw materials and concrete
applications will be discussed.

Expanded introduction of carbon-neutral LNG
CNL
introduction
cases■Tokyo Gas announced Japan's first CNL
introduction decision (June 2019)■Tokyo Gas established CNL buyers' alliance(15 customers)■Hokkaido Gas, Osaka Gas, Toho Gas announced
introduction of CNL

FutureWorking on creating a mechanism for further
JGA
expansion of introduction in collaboration with gas
Initiatives companies

Net zero emissions
Source：https://carbon-neutral-lng.jp/(processed by JGA)

Promotion of the spread of CCU / CCS
CCU（Reuse）
Technology development forpractical use of CCU business⇒Promote technological development
and service development that collects
and utilizes CO2 emitted by customers(Tokyo Gas)

CCS（Storage）
Participation in government-led
projects and EOR projects⇒Efforts to demonstrate microbubble
technology, etc. that converts
CO2 into fine bubbles
and efficiently storesthem underground(Tokyo Gas)
※ EOR: Enhanced Oil Recovery

7

CCU／CCS（Separation, Recovery）
Technology development to reduce CO2
separation and capture costs⇒R&D of direct CO2 capture in theatmosphere using cold heat(CryoDAC) implemented
by Tokyo Gas.
* Joint research with NEDO
Cryo-DAC image© 2021 The Japan Gas Association

Action 2

CHALLENGE TO IMPLEMENTMETHANATION
POINT⚫ Methane synthesized by methanation can effectively utilize existing infrastructureand existing equipment such as city gas pipelines, can reduce social costs, and has
great potential as an efficient decarbonization means.

⚫ Sabatier reaction formula that succeeded in demonstrating a small-scale plant * 1
Scale-up of methanation / Pilot plant demonstration led by each gas company, etc.,
paving the way for urban gas conduit injection and commercialization.
⚫ In addition, we will promote the development of cost reduction technology forhydrogen production, research and development and scale-up of theinnovative technology SOEC type * 2 methane, and by collaborating withother industries within the industry, a large amount of CN methane will be
produced in the future. Aim to reduce the price and realize commercialization.

*1Technology to generate CH4 (methane synthesis) by reacting H2 and CO2 via a catalyst*2Technology to generate CH4 (methane synthesis) by electrolyzing (co-electrolyzing) both CO2 and H2O at the same time8

© 2021 The Japan Gas Association

Image of efforts to reduce methanation costs⚫ Japanese gas industry aim to achieve the same price as the current LNG in 2050 for
carbon-neutral methane produced from decarbonized hydrogen and CO2.
⚫ In order to reduce prices, it is necessary to reduce costs and develop technologies forhydrogen production, CO2 capture and methanation, and Japanese gas industry willproceed with efforts to realize them.

Power
plant

Supply chain

H2

CO2
Customers
DAC

→P.10

Methanation plantResearch for lowering
the price of hydrogenproduction equipment→P.10

Metanation
demonstration project

Carbon neutral methane(Aiming for the same price as the current LNG by 2050)
→P.11

→P.10

Promotion of
R&D of DAC
technology, etc.
that willcontribute tofuture pricereduction of CN
methaneFeasibility study for building CN methane domestic and overseas supply chains9© 2021 The Japan Gas Association

【Action 2】Challenge to implement methanation(CN methane production demonstration, innovative R&D)⚫

⚫
⚫

Promoting upsizing and demonstration of manufacturing plants for commercialization of CN methane. At the sametime, Japanese gas industry is developing technology to reduce hydrogen production costs. As a precedentexample, in the NEDO project, INPEX and Hitachi Zosen are developing and demonstrating the technology of asmall CN methane manufacturing plant (8Nm3 / h).
Osaka Gas has succeeded in basic research on the SOEC-type methanation, which has higher conversion efficiency
than the Sabatier reaction formula, which is a conventional technology. In the future, Japanese gas industry will
promote research and development as a practical technology with the support of the government.
For stable and inexpensive procurement of CO2, Japanese gas industry is promoting innovative research anddevelopment such as CO2 capture emitted by industrial users and DAC (Direct Air Capture) technology, which is a
CO2 capture technology in the atmosphere.

Price reduction by demonstration of CN
methane production and upsizing

Innovative R & D to reduce future costs■High efficiency of methanation
by SOEC co-electrolysis technology

Demonstration proposal
at the Osaka / Kansai Expo 2025

Renewable energy
power
Absorption

Osaka Gas is proposing a methanation demonstration to
produce CN methane from biogas generated from swill
at the venue and hydrogen derived from renewableenergy for the Expo 2025.

Exothermic reaction
Effective use ofwaste heat

heat reaction

Conversion
efficiency
close to90%

Technology development to reduce hydrogenproduction costs

MethaneSOEC co-electrolyzer

Tokyo Gas is working on the technological developmentof electrolytic equipment for inexpensive and large-scalehydrogen production by utilizing
the technology and know-how
cultivated in the world's firstcommercialization of fuel cells andthe development of hydrogenproduction equipment.

Methane chemical reactor■Promotion of R&D of CO2 capture method and
DAC technology

10

research
content

detailsCO2
capturemethodR & D of CO2 capture method for CO2
generated from gas consumption of large
consumers near the methanationequipment and CO2 generated fromnearby steel factories, power plants, andchemical factories

DAC

DAC element technology development© 2021 The Japan Gas Association

【Action 2】Challenge to implement methanation(Building domestic and overseas supply chains)⚫ For the production and commercialization of CN methane, it is necessary to secure a large
amount of low-priced hydrogen, CO2, and renewable energy, and to establish a stable supply
system for these. In order to solve this problem, Japanese gas industry will conduct
feasibility studies with manufacturing in Japan or overseas.
⚫ To build a supply chain, Japanese gas industry will proceed with studies in collaboration
with various industries such as trading industry and engineering industry.
Supply chain of hydrogen carriers containing CN methane(manufacturing-transportation-utilization)

Renewable energy

Hydrogenproduction

CH4

H2

MethanePower plants etc.

supplybypipeline

CO2
CO2
capturemanufacture
Issues to beconsidered■Procurement of
inexpensive renewableenergy■Inexpensive hydrogenproduction and developmentof methanation plantGasturbinedirectutilization

Fuel cellHeatutilizationtransportation

utilization■Combined use of CN
methane and natural gas inexisting infrastructure such asliquefaction bases, LNG
carriers, receiving terminals,
and pipelines■Establishment of carbon
neutral system for CO2
emissions during gas
utilization■Preparation / examination for reducing calorific value, etc.

11

© 2021 The Japan Gas Association

Action 3

CHALLENGE TO
DIRECT HYDROGEN SUPPLY

POINT⚫ New hydrogen pipelines will be constructed in suitable locations centered oncoasts. Aiming to supply hydrogen directly through local hydrogen network.
⚫ Regarding hydrogen, while considering trends such as the interim report of the
National Hydrogen and Fuel Cell Strategy Council, with a view to collaboratingwith various alliance partners on issues in terms of manufacturing, import, supply,
utilization, etc.

12

© 2021 The Japan Gas Association

【Action 3】Challenge to direct hydrogen supply⚫ Gas companies promote efforts for direct hydrogen supply in cooperation with local
governments, etc., and form a large-scale local network for direct hydrogen supply inthe region.
⚫ Issues for making up hydrogen supply chain include (1) hydrogen production, (2)hydrogen marine transportation, (3) hydrogen tank, (4) hydrogen conduit supply, (5)consumer equipment development, and (6) other security aspects.
The gas industry will focus on (1), and (4) to (6).
Organizing and examining issues for
Examination for hydrogen supply chain
direct hydrogen supply
Direct hydrogen supply for
HARUMI FLAG* (Tokyo Gas Co.)

(1)Hydrogen production

Hydrogen pipeline will be
installed in HARUMI FLAG
to supply hydrogen topure hydrogen fuel cells
installed in each block.
* Scheduled to becompleted as a new house
after utilizing theTokyo 2020 Olympic and Paralympic Olympic Village.

→ Action2(2) Hydrogen sea transport(3)Hydrogen tank(4)Hydrogen pipeline supply

To be considered by
the national hydrogenand fuel cell strategy
council, etc.

■Selection of suitable site for local hydrogen network
construction■Safety evaluation associated with hydrogen pipeline
construction(Source: Tokyo Metropolitan Government)(5) Consumer equipment development

Formulation of new energy society
realization concept (Jobankyodo Gas Co.)

■R&D support for hydrogen gas appliances

Independently formulated the "New Energy Society
Realization Concept" that includes the construction ofhydrogen pipelines and the development of industrial parks
as a measure to create hydrogen demand.

(6) Other security aspects, etc.

■Safety verification in direct hydrogen supply

13© 2021 The Japan Gas Association

3. Action plan-Roadmap for realization
Starts from now

start now～2030【Action 1】
Contribution toachieving NDC
in 2030

Promotion of CCU / CCS

Bunkering base maintenance

Expansion of infrastructure development

Widespread use of distributed energy systems
Expanded introduction of CNL(Carbon Neutral Methane)
Efforts to publicly evaluate CO2 reduction effects

CCU initiatives
at customers

Expansion of CCU introduction

CCS technology development / examination of suitable sites Businessscale expansion Full-scale expansion
On-site utilization of biogas

Promotion of biogas
spreadOverseas biogas business

Expansion of utilization scale

Expansion of overseas businessContribution to CO2 reduction overseas, etc.

Overseas contribution【Action 2】
Challenge toimplement
methanation

CN methane production
demonstration andupsizing
Innovative technology
development
Establishing domestic &overseas supply chains【Action3】
Challenge todirect hydrogen
supplyEstablishing a hydrogen
supply chain

Expansion of direct
use of hydrogen

2050

Natural gas conversion from coal / oil

Widespread use of
distributed energy
systems
Expanded introduction ofcarbon-neutral LNG

2040

Conversion of natural gas as a raw material
for city gas to CN methane

Promotion of natural gas
conversion
Expansion of LNG
bunkering

2030

start after 2030

R & D of water electrolyzer
Research for improving catalyst durability

Demonstration
by pilot plant

Business scale expansion
Realization and expansionof cost reduction

Improving durability

Commercial expansion

SOEC Metanation Technology Development

Larger scale & lower cost

DAC element technology development

Demonstration

Expansion of
introduction

Start of transportationfrom overseas to Japan& expand introduction

Domestic & overseas
supplychain construction

FS / Suitable site survey

Commercial scaledemonstration
Efforts to improve the system
Construction of local hydrogen network,
selection of suitable site
Examination for building
Demonstrationa supply chain

Gradual introduction expansion

Hydrogen combustion equipment development

Safety evaluation associated withhydrogen pipeline laying

Expanding the use of hydrogen© 2021 The Japan Gas Association

4. Initiatives for institutional issues⚫ In order to realize carbon neutrality in 2050 through the spread and expansion of CN
methane produced by methanation and CNL utilizing credits, the social significance ofvarious efforts is appropriate in Japan's laws and systems. Japanese gas industry will
request the government to make efforts to improve the system so that it will be evaluatedby the government.
CO2 emission reduction effect by methanation

H2
Utilization

H2
Synthetic

CN
Methane（CH4）

Distribution
using city gas
pipeline

CO2
capture
Power
plant
etc.

The CO2 emitted by the use (combustion) of CN
methane and the CO2 separated and recovered
are offset (offset). Use of synthesized gas does
not increase CO2

Offsetting CO2
capture andemissions15emission

CO2© 2021 The Japan Gas Association

5. Promotion system⚫ The "Carbon Neutral Committee" will be newly established within the Japan Gas
Association as an organization to promote carbon neutrality in the gas industry.
⚫ The committee consists of seven regional chairs, headed by the chair of the regional
chairs' meeting.
⚫ Japanese gas industry is also working with the public and private sectors to promote
efforts toward the realization of carbon neutrality.

Gas companies
Carbon Neutral Committee
Role●Specific examination for execution of action plan
●Exchange of opinions on the progress of the action planand exchange of information between businesses regarding
carbon neutralization efforts●External transmission of various initiatives in the action plan

Cooperation
with thepublic andprivatesectors

Committee System
Chair
Members

Chair of the 7 Regional Chairs' Meeting*1(President of Tokyo Gas)

7 Regional Chairs*2※1. Regional Chairs゜Meeting：A meeting body where the heads of seven regional committees nationwide gather※2. Regional Chairs：Presidents of following 7 companies: Hokkaido Gas, Tobu Gas, Tokyo Gas, Toho Gas,
Osaka Gas, Hiroshima Gas, Saibu Gas

16

Realizationof carbon
neutrality© 2021 The Japan Gas Association

END© 2021 The Japan Gas Association

【Reference】 Image of gas supply in 2050 (published in November 2020)⚫ Japanese gas industry will contribute to the realization of a carbon-free society in 2050 byproperly using carbon neutral methane (CN methane) that can utilize the existing gas
infrastructure and direct use of hydrogen in the right place, and optimizing the entire energy
including renewable energy.
(1) Coastal areas

Construction of hydrogen pipeline network starting from overseas imported hydrogen, CN methane production athome and abroad, domestic import(2) Urbanized areas

Inexpensive decarbonization of CN methane by utilizing existing gas equipment

Use CN methane and hydrogen properly. Local production for local consumption within each conduit network torevitalize the region.
(3)Rural Area A(2)Urbanized Areas(1)Coastal Areas(3) Rural Areas

Liquefied Carbon
Neutral MethaneTransportation

Carbon-neutral methane
production
Carbon-neutral
methane transportation
CH4

H2

CO2-free hydrogentransportation
LNG receiving terminal/gas
production facility

Gas
Cogeneration

Gas Air Conditioner

Gas boiler

Gas Water heater
CO2
CO2Biogas

FCV/NGV

Methanation

Fuel Cell
Methanation
CO2

H2

CO2
CO2

Hydrogen Power
Generation
Hydrogen Cogeneration

New H2 pipeline
network

Fuel Cell

Gas Cogeneration
Gas Cooking Stove

Receivingterminal/hydrogenproduction facility

CH4

BiogasH2 Boiler

Methanation

H2
cogeneration

H2 Power
Generation
H2 Station

Hydrogen Station

Fuel Cell

City Gas Pipeline

Gas System/Pipelines
Hydrogen Pipeline

H2 Transportation

Heat Pipeline

H2
Cogeneration
New H2 Pipeline
network

H2 Station(3)Rural Area B
Power Grid

© 2021 The Japan Gas Association