Japan's Energy Transition toward
Carbon Neutrality by 2050
31st Annual Conference
Northeast Asia Economic Forum
July 18, 2022
Yasuo Tanabe

CEO, Global Link Lab, Inc.
Councilor, The Institute of Energy Economics, Japan

2050 Carbon Neutrality Goal and Revised 2030 Energy Mix TargetØ October 2020, PM Suga declared net-zero GHG by 2050 goal.
Ø December 2020, updated in June 2021, Green Growth Strategy covering 14
sectors, e.g. offshore wind, fuel ammonia, hydrogen, nuclear, mobility/batteryØ April 2021, PM Suga announced 46% GHG reduction target in 2030
Ø May 2021, CN 2050 is enacted (Law on Measures to Cope with GlobalWarming) by consensus
Ø October 2021, Kishida government has decided Basic Energy Plan and 2030
Energy mix
Ø May 2022, Kishida government has announced provisional Clean Energy
Strategy1Path to 2050 CN through 2030
2030
values are the amounts （46% reduction compared toof CO2 derived from2013, total GHG emission)2019
1.03 bill ton

energyConsumer
110 mill ton

Non-electricity

Industry
280 mill tonØ

ØContinue challenge up to 50% reduction

Intensively promoteenergy efficiency
policy both byregulation and support.
Realize a hydrogenbased society

Transport
200 mill tonelectricity

ØØØCarbonremoval

Source: METIØ
ConsumerIndustryØØElectrification bydecarbonized power
Pursue options:hydrogen, ammonia,
CCUS/CR
Use carbon removal
technologies forleftover.

Mainstreaming
renewable energy.
Re-establishment of thenuclear energy policy
Reduce the ratio ofthermal power
generation based on thepremise of stable supply.
Hydrogen/ammonia
power generation

ØElectricity

Electrification
Hydrogen
Synthesis fuelmethanation

Biomass

TransportØElectricity
440 mill ton

2050
Emission reduction +Removals = net zero（▲100%）

ØØ

Efforts for theutilization ofrenewable energy as
the major power
Use of nuclear power
Pursue options:hydrogen, ammonia,
CCUS/CR

Decarbonizedelectricity
sources

Plantation,
DACCs, etc

2

Revised Energy Mix in 2030
Energy DemandPrimary Energy Supply
489M kL
Renewables
13-14%

430M kL
363M kL
Electricity

An ambitious deeper
conservation
by 62M kL (-18%)
Economic Growth 1.4% / Year
Population -0.6%
Passenger Volume -2%

326M kL
280M kL
Electricity
About
30%

Heat&Fuels
Heat&Fuels
About
70%

Source: METI••FY2013

Hydrogen&Ammonia
1%

FY2030Electricity
About
28%

Renewabl
es20%
Nuclear
10%
Natural
gas
20%
Coal
20%

selfsufficiency
About
30%

Nuclear10-11%

selfsufficiency
About
24.3%

Natural
gas
18%

Coal
25%

Heat&Fuels
About
72%

FY2030
As of FY2015

Oil
30%

FY2030Oil
33%

FY2030

As of 2015

The self-sufficiency rate is about a little over 30% on a comprehensive energy statistics basis and about a little under 30% on an IEA basis.
Note that the integrated energy statistics have been revised since the formulation of the Long-Term Energy Supply and Demand Outlook in 2015, and the actual figures for FY2013 as the starting point for the FY2030 estimates are different, sosimple comparisons cannot be made.

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Revised Energy Mix in 2030 (2): Power Mix in 2030
Electricity DemandPower Mix
1,024 TWh

An ambitious deeper
conservation
by 230 TWh (-20%)

Renewables
Nuclear

18% Nonfossil
fuel
6% 24%

Economic Growth 1.4% / Year
Population -0.6%
Passenger Volume -2%

1,065 TWh930-940 TWh
Hydrogen&Ammonia

1%

Non36- fossil
38% fuel59%2224% Nonfossil
fuel
44%
2022%

37%

989.6
TWh870TWh2022%980.8
TWhCoalFossilfuel
32% 76%

20%

19%
Oil

FY2013
Source: METI

FY2030

FY2030

As of FY2015

7%

FY2019Fossilfuel56%

Fossil
fuel
41%

2%

FY20303%

FY2030

As of FY20154

14 sectors in the Green Growth Strategy (Dec. 2020, June 2021)
EnergyOffshore wind power
Wind turbines, parts,
floating wind turbines
Ammonia fuelCombustion burner(as fuel in transition period
to hydrogen-powered society)HydrogenTurbines for power generation,hydrogen reduction steelmaking, carrier ships,
water electrolyzers
Nuclear power
SMR (Small Modular Reactor),
nuclear power for hydrogenproduction
Source: METITransport/Manufacturing
Mobility and battery
EV (electric vehicle), FCV (fuel cell vehicle),next generation batteries
Semiconductor and ICT
Data centers, energy-saving
semiconductors (demand-side efficiency)
Maritime
Fuel-cell ships, electric propulsion ships,
gas-fueled ships
Logistics, people flow and infrastructure
Smart transportation, drones for logistics,
fuel-cell construction machinery

Home/ Office
Housing and building,
Next generation PV(perovskite solar cell)
Lifestyle-related industry
Local decarbonization businessResource circulation
Biomaterials,
recycled materials,
waste power generation

Foods, agriculture, forestry and fisheries
Smart-agriculture, wooden skyscrapers,
blue carbon
Aviation
Hybrid electric, Hydrogen-powered, Aircraft
Carbon Recycling
Concrete, biofuel, plastic materials

5Clean Energy Strategy (provisional) (May 2022)• Society, economic and industrial structure has to be converted.
• Necessary decarbonization investment : 17 trillion yen (130 billion US$)
/2030 (3% of GDP)- power gen. / fuel conversion (renewables, hydrogen/ammonia, batteries, etc: 5 trillion yen- manufacturing process (steel, chemical, etc.) : 2 trillion yen- end-use (buildings, autos, etc.) : 4 trillion yen- infrastructure (grids, charging stations, etc.) : 4 trillion yen- R&D: 2 trillion yen• 150 trillion yen (1.2 trillion US$) /next 10 years• Fiscal stimulas, regulatory/market design, finance, GX League development,
global strategy
6Challenge: Renewablesn 330-350TWh in 2030 by the current and the additional stronger policies
n Toward 2050 is unknown horizon. A variety of challenges face, kW and kWh.
Solar PV (mega)

On-shore wind

Off-shore wind

Biomass

Geothermal

Hydro (S&M)

Hydro (large)

Power generatic

Current and additional
possible stronger policy

Source: IEEJ

700
600
500
400
300
200
100
2050

2048

2046

0
2044

2042

2032

2030

2028

2026

2024

2022

2020

2018

2016

2014

2012

2010

2008

02040

Left axis

OthersSine qua nonü Balancing and inertia
ü Economics
2038

Right axis

100

800

kW challenges
ü Securing lands
ü Securing sea area

200

2036

300

900

kWh challenges
ü Nationwide transmissionlinesü Energy storage anddemand side measures

4002034

500

Solar PV (residential)

7Challenge: Nuclear (1) Existing Plants

Source: IEEJ

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Challenge: Nuclear (2) Innovationl Through NEXIP and other programs, METI supports various types of nuclear reactor
technologies including international cooperation projects.
l The Japan Atomic Energy Agency (JAEA) possess important test facilities.
Small Modular LWR

Fast Reactor• Smaller size, modular type• Passive safety• Sodium-cooled reactor• Fast neutrons➡ ✔ Affordable capital cost
✔ Smaller EPZ➡ ✔ Effective use ofresources✔ HLW management

High Temperature
Gas-cooled Reactor• Helium gas-cooledreactor (chemicallystable)• Coated particle fuel• Very hightemperature➡ ✔ Heat/hydrogenuse✔ Smaller EPZ

Source: METIFranceU.K.

U.S.

Fast reactor R&D
cooperation based onsimulations andexperimentHigh-temperature
Gas-cooled Reactor

Versatile Test Reactor(VTR) cooperation
Joyo:
Experimental Fast Reactor

International Cooperation

HTTR:
Experimental HTGR

JAEAʼs Facilities

9Challenge: Hydrogen & Ammonial Basic Hydrogen Strategy (2017)
ü First comprehensive national strategy
ü H2 as a future energy option toward 2050
ü Goals : making H2 affordable
Ø Cost: $10/kg ⇒ $3/kg by 2030 & less than $2/kg by 2050
Ø Scale up: up to 3 Mts by 2030 & around 20 Mts by 2050

3 conditions for realizing affordable hydrogen① Inexpensive feedstock (unused resources, renewables)② Large scale H2 supply chains【Demand】 ・・・ ③ Mass usage (Mobility ⇒ Power Generation ⇒ Industry)【Supply】l Key Technologies

Source: METI

Production

TransportationUse• Electrolysis System• Gasification + CCS• Energy Carrier• Fuel Cells (Mobility, Generation)• H2-fired Generation(LH2, MCH, NH3, etc.)

10Challenge: Technology & Innovation
It is important to accelerate innovation and prepare for the next generation of further actions.

Source: IEA

In order to realize the practical use of next-generation low-carbon technologies, it is important to acceleratetechnology development and promote demonstration facts on the scale of 90 billion dollars by 2030. To
achieve this, more international cooperation is essential.

11Challenge: Cost
2050 Electricity cost analysis by scenario
Powergeneration

RE: %Nuclear: %H2/ Ammonia: %CCUSpower: %Electricity cost
JPY / kWh

Reference Case

1,350 TWh54

10132324.9

RE: 100%

1,050 TWh

10000053.4

RE innovation

1,500 TWh63

1022522.4

High nuclear

1,350 TWh

53

204

23

24.1

H2 innovation

1,350 TWh47

10232023.5

High CCUS

1,350 TWh44

10103522.7

Demandtransformation

1,350 TWh

51

1015

2424.6

Source: IEEJ(Max nuclear 19.5)

12Challenge: Carbon Pricing- PM Kishida instructed ministries to conclude carbon pricing
policy (Jan. 2022)- MOE has proposed to raise carbon tax level (289 yen/CO2 t)- METI has proposed GX League (voluntary commitments andcarbon market )- Clean Energy Strategy (provisional) has suggested to develop
GX League to stronger framework, continuing discussion on
carbon tax

13Challenge: International Cooperation: AETI and Asia Zero-Emission
Communityl Japan announced “Asia Energy Transition Initiative (AETI)” in theSpecial ASEAN Ministers meeting in June 2021 and the 1st Asia
Green Growth Partnership Ministerial Meeting of ASEAN Ministers
in October 2021
l PM Kishida announced “Asia Zero-Emission Community” based on
AETI
１．Tech. development: roadmaps for transitions, hydrogen/ammonia, zero-emission thermal power,etc.
２．Co-investment, Co-finance: Asia Transition Finance rules, disclosure rule, buildinghydrogen/ammonia supply chains, Asia CCUS networks, etc.
３．Standardization: international standards, human resource development, emission datacollaboration, etc.
４．Carbon credit market : assisting market mechanism, expansion of JCM partners,
Source: METI

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Challenge: International Cooperation: JUCEPlJUCEP was established under the two partnerships of the “Japan-U.S.
Competitiveness and Resilience (CoRe) Partnership” and the “Japan-U.S.
Climate Partnership on Ambition, Decarbonization, and Clean Energy”
announced at the Japan-U.S. summit meeting in April, 2021.

lJUCEP is a framework to help Indo-Pacific countries utilize clean, affordable andsecure energy technologies to accelerate decarbonization while promoting astable energy supply and sustainable growth. It aims to contribute to therealization of the "Free and Open Indo-Pacific (FOIP)" through an open,competitive and transparent energy markets.

<Key Cooperation Areas>
1. Renewable Energy: Geothermal, wind, solar, hydropower, and critical minerals
2. Power Grid Modernization: Grid stability, energy management technology including battery storage, andtransmission
3. Nuclear Energy: Advanced technologies such as small modular reactors and light water reactors.

4. Decarbonization technologies: CCUS/Carbon Recycling and other abatement technologies, as well as
advanced fuels like ammonia, hydrogen, and others

Source: METI

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Conclusion
Ø Japan's goals of Carbon Neutrality 2050 and 46% reduction 2030
are extremely tough mission .
ØToward 2030, existing technologies have to be deployed withutmost political, industrial and the public efforts.
ØToward 2050, Japan, as a technology leader, has to contribute to
the world with new technology development.
ØFor global emission reduction on cost-effective basis andtechnology development, international cooperation is key.
ØArticle 6 of Paris Agreement (Market Mechanism) has to be
utilized.
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