NYK Group
Decarbonization Story
Decarbonization GroupESG Strategy Headquarters, NYK Line
November 2023

Chapter
01.

Purpose and Logbook the Journey02.

Decarbonization Strategy-1 GHG Reduction and Removal Plan
-2 Concept for Sustainable Growth

Appendix

NYK Group Decarbonization Story: Content Overview

01.
Purpose and Logbook of the Journey02.
Decarbonization Strategy

02-1
GHG Reduction and Removal Plan

02-2
Concept
for Sustainable Growth

Mitigate Climate Impact

Facilitate Business Development© 2023. NYK Group. All rights reserved.

3
4

Chapter 01

Purpose and Logbookof the JourneyPurpose
We are all navigating in a sea of uncertainty.

The goals of this story are as follows:1.

Set a course for decarbonization

2.

Encourage reader’s participation and engagement

3.

Realize sustainable growth through the journey© 2023. NYK Group. All rights reserved.

5

Standing at a critical moment for humanity in the global warming crisis,
our stakeholders are concerned about our business resilience andour capability to cope with the climate agenda.

In response we are showing the world our bold vision and concrete actions as
a part of a strategy to walk a climate-positive path together with likeminded
partners united by a shared ambition.

A will finds a way.

This is the NYK Group Decarbonization Story.
Let all lines go and set sail for a decarbonized future.
Our journey has already started.

© 2023. NYK Group. All rights reserved.

6

History of the NYK Group’s environmental agenda
Our journey thus far shows that our “passion for planetary wellbeing” is on solid ground tocontinuous actions against climate change, enabling us to stay one step ahead to lead theindustry.
UNFCC(1992-)

1997 COP3

The Kyoto Protocol

2015

COP21
The Paris Agreement

2°C Scenario

2021 COP26

The Glasgow Climate Pact

Well Below 2 °C /1.5°C Target

Zero emissions by the end of century

2014 IPCC 5th Assessment Report

IMO

NYK

2011 IMO EEDI adopted.

Zero emissions by 2050

2018 Special report 1.5 °C

2023 IPCC 6th Assessment Report2018 IMO’s initial GHG reduction strategy

2023 IMO’s revised GHG reduction strategy

Energy Efficiency Regulation for
new buildings vessels. [g-CO2/ton-mile]

1990 Establishment of the Global Environment
Committee

Net-zero by end of the century
50% emissions reduction by 2050

2018 + Medium-term business plan

2002 ISO 14001 Certified
2008 Launch of NYK Cool Earth Project
Company’s first CO2 reduction target callingfor 10% reduction from 2006 levels by 20132009 NYK Super Eco Ship 2030

1.5°C Scenario

Net-zero close to 2050
Indicative checkpoints for 2030/40

2023 + Medium-term business Plan

Staying Ahead 2022
With Digitalization and Green

Sail Green, Drive Transformations 2026
A passion for Planetary Wellbeing+ SBTi Certified (2.0 °C)+ Paris Agreement 1.5 °C aligned target

From 2014
Design, building, and operation of the alternative fueled vessels

2018 NYK Super Eco Ship 2050

IMO: International Maritime Organization, EEDI: Energy Efficiency Design Index, SBTi: Scienced Based Targets initiatives, CS: Cross-sector© 2023. NYK Group. All rights reserved.

7

A Passion for a zero-emission ship (1/3)
In 2009, NYK designed NYK Super Eco Ship 2030 as a concept ship to mark the midpoint of thejourney toward zero emissions by 2050.
• Ships are the most environmentally friendly mode of transportation, but as the global economy develops and trade
increases, the number of ships in the world also increases, leading to concerns about an increase in GHG emissions.
• In order for ships to continue to be environmentally friendly means of transportation that can contribute to thedevelopment of the global economy, the NYK Group has envisioned what ships will look like in 2030 and has beendeveloping technology toward that vision.

NYK Super Eco Ship 2030

CO2 Emissions

100

31
HFO
0

2010
Diesel Engines

MeOH

2020

2030

LNG

2040
Fuel Cells

H2

Required power

Renewable solar and wind(2-5 MW)

Propulsion power

2050（Year）© 2023. NYK Group. All rights reserved.

8

A Passion for a zero-emission ship (2/3)
In 2018, the NYK Group unveiled a new future concept ship: NYK SUPER ECO SHIP 2050, which
incorporates innovative technologies that will result in an emission-free vessel by 2050.
2006-2014 Built Vessels(Base Vessel)

NYK Super Eco Ship 2030

NYK Super Eco Ship 2050

Required energy

100
74
Heavy oil

LNG

100

67

Solar power 3
Wind power 4

CO2 reduction

69%

41

Waste heat recovery 3
Solar power 5

Hydrogen33

CO2 reduction

100%

67% reduction inenergy derived
from fossil fuels** compared with a 2014built vessel

More slides on NYK Super Eco Ship 2050 are in Appendix© 2023. NYK Group. All rights reserved.

9

A Passion for a zero-emission ship (3/3)
NYK has taken a first-mover advantage by becoming a leader in concept design, technicalmanagement of newbuilds, operation, and maintenance of oceangoing vessels powered byalternative fuels.
Alternative
Fuel

LCV
(MJ/kg)Density(ton/m3)

Conceptual
DesignFirst Ship Delivery
Ship Type, Year, Ship Name, Builder

No. of Ships
in 2030*1

Tug:
2015, Sakigake, Keihin Dock Co., Ltd.
LNG Bunkering Vessel:
2017, Green Zeebrugge*2 , Hanjin Heavy Industry
Car Carrier:
2016, Auto Eco, KHI/NACKS
2020, Sakura Leader, Shin Kurushima Dockyard
Bulk Carrier:2023, Shoyo, Oshima Shipyard

40 vessels

VLGC:
2022, Lupinus Planet, KHI

8 vessels

LNG(about 1.9)

50.0

0.420

2009
NYK SES 2030

LPG

46.0

0.448

N/A

Methanol

19.9

0.796

2009
NYK SES 2030

MR Product Tanker:
2019, Takaroa Sun, Hyundai Mipo Dockyard

3 vessels

0.674

2022
AFAGC, ABV(AiP awarded)Tug:
2024, TBA, Keihin Dock (Conversion)
AGC:
2026, TBA, Nihon Shipyard

3 vessels

Ammonia

18.8

AFAGC : Ammonia fueled ammonia gas carrier, ABV : Ammonia bunkering vessel*1 The number of ships is based of management plans as of 2023
*2 ex. ENGIE Zeebrugge© 2023. NYK Group. All rights reserved.

10

Transformation toward net-zero by 2050
With a growing consensus forming across all sectors to reach net-zero emissions by 2050,
a transformation in business, customer preferences, and society and markets is emerging .
Businesses
Resource

Customers
Capability

M&A
Partnerships- Complexity of complying with
regional and global regulations- Partnership with first movers

Value

Segment- Transition bonds- Green bonds

Platform

Green Business
Opportunities- Planetary wellbeing- Life cycle assessment- Carbon footprint of
products- Cargo (NH3, CO2, LH2*, etc.)- Alternative fuel supply chain- Advisory services- NETs*- Carbon Credits- Others

Selection andConcentration

JUST transition
Training program on the safe handling of
Alternative fuels

Ship Innovation

DomainEmergence of
New Value

Recruitment anddevelopment

Green FinanceSociety and Markets

Tailored logistics
to cater to customers’
environmental agenda needs

Bringing new value

Low-carbon and zero-carbon
System Integration
footprint of services
E.g., Automation technologies
Sensing and simulation technologies

Framework: EY Strategy and Consulting Co., Ltd; applied for NYK Group businessAccelerating
Momentum- Lobbying- Initiatives- Frameworks- Industry groups

New ecosystems
Business opportunities for first movers involved
In the decarbonization project
E.g., Green shipping corridor*LH2: Liquefied Hydrogen*NETs: Negative Emission Technologies© 2023. NYK Group. All rights reserved.

11

Chapter 02

Decarbonization Strategy

The Objectives of Our Decarbonization Strategy
Our decarbonization strategy aims to manage increasing carbon risk and to realize thedecoupling of business growth and environmental impact based on the following objectives.

Fulfilling our responsibilities with respect to climate change• Complying with relevant regulations and reducing GHG emissions from our business, including
supply-chain emissions, to fulfil our social responsibility and meet stakeholder expectations.

Building a resilient business portfolio• Building a resilient business portfolio and to remain competitive by managing increasing
carbon risk.

Embracing new business opportunities• Welcoming new business opportunities in the transition to carbon neutrality.

Refer to Appendix as for the positioning of decarbonization strategy.

Propelling decarbonization strategy forward
The decarbonization strategy is being steadily carried out at all stages, from preparation andplanning to execution.
•

Further, process management based on ISO 14001 (EMS) will be entrenched across.

October 2022
DPT (Decarbonization Promotion Team) set up

Step 1 | Preparatory Work

April 2023
ESG Strategy Headquarters established

April 2024
Concrete actions to be commenced

Step 2 | Path Planning

Step 3 | Execution, Sail Green

Set targets

Awareness
Building

NYK Group
Decarbonization
Story

ESG Strategic Meeting Agenda
May – Sept 2023

November 2023

PDCA Cycle
GHG
Aggregation

Current Status
GHG Emissions
Technology Trend

BusinessIntelligence2023
GHG aggregation system
2024
Actions to be commenced
Energy efficiency, bio-oil etc.

Resource Allocation

Risks and Opportunities
TCFD report publishedJun 2022

SocialTransformation

NYK TCFD Report: https://www.nyk.com/english/esg/envi/tcfd/

Plans and Actions
In-House Policy*

Engagement* e.g., Internal carbon pricing scheme (ICP), Procurement policy© 2023. NYK Group. All rights reserved.

14

Path planning – Setting a target: Definition of net zero
Our definition of net zero in the 2050 target is clarified to involve carbon removal.

Net Zero Corporate GHG Emissions by 2050
Reduction

Scope
1+2
• Direct emissions• Indirect emissions from theuse of electricity, etc.

Present Day

Scope
3• Supply chain
emissionsRemovalNet Zero

CDR*

0
zero

* Carbon dioxide removal- Offsetting of residual emissions

Net Zero
By 2050

Climate Positive© 2023. NYK Group. All rights reserved.

15

Path planning – Setting a target (1/2)

Ready to set ambitious targets
Social transformation responding to the threat of climate change has become a major trend in full swing.
• The world is accelerating its efforts to balance greenhouse gas emissions and sinks by the second half of this century. We are invited to develop andcommunicate long-term strategies for a lower and zero-emission society.
• The nature of growth has changed for companies. As uncertainty increases, it is necessary to build a resilient business portfolio and to take theopportunity during the transition to actively communicate the sustainability initiatives of the NYK group to stakeholders.

A big gap exists between the backcasting from the decarbonized society we aim for and the forecast fromstatus quo.
• Will renewable energy and decarbonized fuels become sufficiently produced and available all over the world? Will innovation bridge the gap?
• Gap remains unless we take actions. “Without dreams we have no ideas. Without ideas, we have no plans. No plan, no action, Without action, we
can’t succeed at all.” - Shoin Yoshida, Distinguished Intellectual, 1830-1859

Abandon the idea of achievable goals and be prepared to set goals that may not be achievable”• A carbon budget (*400-500 Giga ton-CO2e) is presented to each of us to curb irreversible climate change around the world.
• In order to become a collaborator for taking climate actions that humanity as a whole desires, it is necessary to show that our efforts and actions are
not self-righteous but rather fully aligned with others to achieve collective goals through collaboration with global initiatives.
• Decarbonize logistics, without which the decarbonization of all industries is not possible.
• With long timelines and an uncertain future, strive to spur technical and business innovation rather than rely on current ways of thinking andtechnology• “Where there’s a will, there is a way” - Abraham Lincoln, 16th President of United States, 1809-1865* Updated to the latest figures in the IPCC Sixth Assessment Report© 2023. NYK Group. All rights reserved.

16

Path planning – Setting a target (2/2)
The NYK Group aims to realize a sustainable society based on a conviction to lead the world
toward decarbonization. Accordingly, we will clearly demonstrate our high aspirations andstance of actively promoting decarbonization initiatives both inside and outside of the Group.
NYK Group Revised GHG Target 2023 aligned with global pathway to 1.5 Deg. C
Medium-Term Target

Long-Term Target
Fiscal Year: April to MarchFY 2021

Base Year( - )FY 2030

Target Year

FY 2050

45% Reduction

TargetNet-Zero Emissions

Absolute Corporate Emissions

Unit

Absolute Corporate Emissions

Scope 1 + 2

Scope

Scope 1 + 2 +3

1. Aligned with science-based target
2. Indicative Checkpoint
60% by 2035 and 70% by 2040

Remark

1. CDR applied
2. Subject to availability of zero-carbon
and/or carbon-neutral fuels.
Find our history of GHG reduction target© 2023. NYK Group. All rights reserved.

17

Chapter 02-1

GHG Reduction andRemoval Plan

Way to reduce absolute emissions
Aiming to maintain business activity to fulfill responsibility as a part of social infrastructure,
our goals are to maximize energy efficiency and minimize carbon intensity.
Emissions

Business Activities[ton-CO2e*][ton-cargo x mile]*CO2e: CO2 equivalent

Efficiency

Intensity[ton-fuel / (ton-cargo x mile)][ton-CO2e/ton-fuel]Technical Assessment⚫ GHG Reduction Measures

Economical Assessment⚫ GHG Abatement Cost

Accelerators⚫ Public Policy: (Int’l Shipping) IMO EEDI/XI/CII, Market-Based Measures, GFS etc.
(Other Sector) Carbon Tax, Emission Trading Scheme etc.
⚫ Private Sector: Corporate Internal Carbon Pricing, Reduction Targets etc.
*EEDI: Energy efficiency design index for newbuilding, EEXI: EEDI for existing vessel, CII: Carbon Intensity Indicator, GFS: GHG fuel standard,

See the Appendix for information on the current situation of world shipping activity and energy efficiency.
© 2023. NYK Group. All rights reserved.

19

Identified shipping reduction measures
All hands on deck with every possible measure to reduce GHG emission.
We do expect other innovative options to be a part of this important role together.

GHG reduction measures (maritime)

Fuel Option

Nature(Wind)

Alternative
Fuel

Energy Efficiency

Emission AvoidanceElectricity,
Nuclear etc.

Capture andStorage

Decomp.*Operation

RenewalSpecification*Decomp.: Decomposition

Low-carbon
FuelZero-carbon
Fuel

Carbon-neutral
Fuel

LNG

HydrogenBio-oil

LPG

NH3

Bio-MeOH

E-fuel*MeOH**MeOH: Methanol

CCS*

Catalyst*CCS: Carbon
Capture &Storage

PlasmaNavigation

Operation
Time

Upkeeping

Performance
In actual seas

Mechanical
Efficiency

Optimization

Hull/Propeller
Fouling Control

Hull Lines
Appendage

Battery Hybrid
Fuel Cell

Waiting Time

Routing
Sea Passage

Engine Plant
MaintenanceLow-friction
Paint

Engine Derating,Upgrading

Loss of Time

Speed
Engine load

Air Lubrication
SystemWaste HeatManagement

Wind
Assisted

ESD**E-fuel: Electro-fuel*ESD: Energy Saving Device© 2023. NYK Group. All rights reserved.

20

GHG abatement cost and Internal Carbon Prince (ICP)
Abatement costs have emerged as a key tool to drive the decarbonization of economies,
reduce decarbonization cost and assess the efficiency of a technology.
Cost

Utility

GHG Reduction Measures

CO 2 eAdditional CostX [$]GHG Abatement Cost

C=

X－Y
A

Fuel Saving

GHG Reduction

Y [$]A [ton-CO2e][$/ton-CO 2 ]ICP is a mechanism to price carbon within a company to use it as an incentive to promotedecarbonization, to identify the risks and opportunities, or to guide investment decisions.
• It is also possible to control the emissions of an entire company depending on the scope of application of
the ICP and the setting of prices. NYK started using ICP in 2021 as an impact visualizer and is now moving on to thesecond stage to extend its utilization to the investments and the evaluation of businesses performance.
• Our ICPs set in 2023 are $120 from 2023 to 2026, $200 from 2027 to 2030, and $250 after 2030.
Reference: World Bank, Institute for Climate Economics etc.
© 2023. NYK Group. All rights reserved.

21

Cost-Utility
Analysis

GHG reduction technologies - Reduction potential and its abatement cost

to 2022
Fuel Saving

Transition Early Stage (2023-2030)
Fuel + GHG reduction by ICP

Transition Later Stage (2030- 2050)
Fuel + Carbon Tax + ICP (Option)

Future Technologies

Proven Technologies
High

Technical readiness

Low

Commercial Project

Pilot Project

GHG Reduction Technologies
Potential and Cost

GAC: GHG abatement cost as of today[$/ton-CO2e]

Upkeeping
Underwater
Cleaning

Renewable Energies

Shaft Generator

Battery Hybrid

Waste HeatManagement

Shore Power
System

Air Lubrication

Engine Derating

Wind Assisted

Etc.

Hull
appendage

Onboard CCS
Fuel Cell

Alternative Fuels*

Propeller
Design

0

20

30

50

100
Accumulated Emissions Reduction(%)
Compared with 2021

Optimized Navigation
Low friction Coating
Figure: Abatement Cost Evaluation for GHG mitigation measures (Illustration only)* Subject to regulation, subsidy, and innovation.
Especially GAC will be reduced by carbon tax such as EU-ETS (2024 onward),
FuelEU Maritime (2025 onward) or IMO’s medium-term measures (2027 onward).
© 2023. NYK Group. All rights reserved.

22

GHG trajectory and its economic impact assessment
GHG Scope-1 Emissions [CO2e-ton]
P/L Improved

100%

P/L Deteriorated

①
②

③
④

P/L Deteriorated

P/L
Heavily Deteriorated

Alternatives measures to ensure the achievement of the target

⑤

⑦

⑧

⑨

⑥
2021

2025

2030

2035

2040

2045

2050

⑨
Abatement Cost [US$/ton-CO2e]

f (x)

⑧
⑦

Future Technologies- Low technical readiness level- No tangible benefits commensuratewith expenditure

CDR

ICP Set Level (2023-2030)⑥④

ICP Range

⑤

0

①

②

③

100%

Internal Carbon Pricing = $0

Accumulated GHG Reduction [%]Figure: Abatement cost evaluation for GHG mitigation measures (Illustration only)© 2023. NYK Group. All rights reserved.

23

Prioritizing the reduction of GHG scope 1 + 2 emissions
The trajectory toward zero emissions shows how NYK Group plans to reduce its GHG emissions
with tactics of energy efficiency and alternative fuels.

NYK Group GHG Emissions (Scope 1+2)

Medium-term management plan
2023-2026

Tactic1

Maximizing Energy Efficiency
by 2030

Tactic

2

2010

2015

■CO2 Emission[ton-CO2/year]

2020

2025

2030

Accelerating GHG reduction through theuse of alternative fuels from 2030 onward

2035

2040

2045

2050

■GHG[ton-CO2e/year]© 2023. NYK Group. All rights reserved.

24

Tactic 1: Maximize energy efficiency by 2030
Due to the limited access to zero-carbon and carbon-neutral fuels before 2030, it is prudent tomaximize the energy efficiency of the existing fleet through various options.
• Keywords: Operational optimization (Passage planning, Navigating speed, hull conditions, Arrival time etc.)
Fouling control, Performance improvement in actual seas, Engine optimization and partnerships
Energy Efficiency

Operational Improvements
Sharing the best management practices
Within an organization adapting to digital transformation

Enhancement of Technical Capabilities
Tech./MarineGroup

ESG Strategy
Committee

BusinessGroup

Name of Framework
Officers

ESG Strategy Committee *Management

GHG Reduction Task Force

Task Force
Energy Efficiency WG
EE Upgrading
ProgramBest Management Practice Sharing (2-4 times /year)
Vessel Operator

IBIS* Challenge
Workshop specialized for improvements in vessel
operations (4 times /year)

All Employees

IBIS Frontier
Study session on decarbonization and ESG as a whole
300-400 Participants (4 times in FY2022)* IBIS: Innovative Bunker and Idle-time Saving* ESG Strategy Committee : See Appendix “Decarbonization governing structure”

DomainKnowledge & Experience
Operation
Profile & Analysis

Engineering Companies

Inhouse Capability

Refit Work
(Drydock)

Phase 1: 2024-2026 (3 Years) Target 10% improvement
Phase 2: 2028-2030 (3 Years) (TBA)© 2023. NYK Group. All rights reserved.

25

Tactic 2: Acceleration of GHG reduction through the use of alternative fuels
We will build a resilient fleet through immediate reductions that include considerations forother environmental impacts (such as oil spill risk, SOx, NOx, and black carbon) in the transition.
• Onboard CCS may play an important role in the transition subject to the maturity of the CO2 supply chain.
Available
fuel options now

Mono-fueled

Dualfueled

Fossil Oil(0.5%, 3.5%)

Transition period

Trial period

Future Fuels
Oils(e- / bio- )Increase in percentage of bio-oil use
Fuel Conversion may consider

Low
Carbon

LNG (CH4)

Increase fuel share of drop-in LMG*1

Methane(e- / bio- )Low
CarbonLPG (C3/C4)

Increase fuel share of drop-in LPG or DME*2

LPG, DME(e-, bio-)

Zero
CarbonAmmonia(design stage)

Ammonia(e- / bio-)
Grey

Low
CarbonMethanolFor simplicity, the secondary fuel like MDO/MGO is omitted.

Blue

Green
Methanol(e- / bio-)*1 LMG: Liquefied renewable Methane Gas*2 DME: Dimethyl ether© 2023. NYK Group. All rights reserved.

26

Ammonia energy carrier for maritime decarbonization (1/2)
Industry is showing clear signals in moving clean ammonia technologies forward.
New technologies to drive energy transition
Quantitatively significant impact
on energy transformation (EX)01

02

Expected ammonia demand (1.5 C Scenario)
Ammonia [Million Tons]
800

Technical readiness level (TRL)
sufficient to implement within 10 to 20 years

700

Cost Level
that society can bear

400

03

600
500
300
200

Power Generation (JP)H2 Carrier
Shipping
Other uses
Fertiliser

183 Mil Ton

688 Mil Ton

200
20

120

2030

2040

100

Supply Chain Decarbonization

04

0

2020

2050

Existing Global Supply Chain
Ammonia as an energy carrier

Haber-Bosch Process
N2 + 3H2 -> 2NH3

●Loading ●Unloading

H2O + N2

Renewable
EnergyProduction

NH3 Port Facility

NH3

Logistics
Int’l Shipping

NH3

Consumption

Gas Turbine, Boiler etc.
4NH3 + 3O2 -> 6H2O + 2N2

Reference: Cross-ministerial Strategic Innovation Promotion Program in Japan

Source: IRENA Innovation Outlook Ammonia (2022)© 2023. NYK Group. All rights reserved.

27

Ammonia energy carrier for maritime decarbonization (2/2)
Use of gas as ship’s fuel requires specific measures to ensure safe operation.
• The challenge remains how to control the risk of toxicity when gas is leaked or accidentally released into the atmosphere.
Lowering said risk to an acceptable level through technical solutions and further risk reductions via our operational
excellence in gas carriers could help.

Toxic Properties of Ammonia
General Design and Human Factor Approach
Risk Mitigation Area

Solutions (Specific to NH3 in bold)

Ship Design and Arrangement

Tank, Compartment, Cofferdam Arrangement

Fuel Containment System

Proven Design (IMO Type-A/B/C)

Material and Pipe Design

Double-Wall Piping System
Double Block and Breed System

Bunkering

Quick Coupler, Emergency Release System

Ventilation

Redundancy and Enhanced Capacity

Fuel Supply to Gas Consumers

Emergency Shut-Down System

Fire Safety and Explosion
Protection

Gas Detection System
Water Spray System

Control, Monitoring, andSafety Systems

Emergency Shut Down System
Automation System (Advanced)
Ammonia Detox System

Drill, Training, Certificate

In-House Training Facilities and Programs
Experience building in owned DF vessel

Project Specific Approach
Project-Based Risk Assessment
HAZID
Hazard Identification

QRA
Quantitative
Risk Assessment

HAZOP
Hazard andOperability Study

Operational Concepts and Insights

NH3 Bunkering Study© 2023. NYK Group. All rights reserved.

28

Tactic 2: Use of bio-oils

Capability

Assessment

Stepwise Approach

Increasing the use of bio-oils as drop-in fuels would have an intermediate effect and be a longterm solution based on a stepwise approach to keep vessels-in-operation safe.

Information

Laboratory

Test Engine

Onboard Application

Sample checks by
In-house laboratory

Dedicated engine for bio-oils
slated to be in operationin 2024

Small scale ( -100 tons /bunker)
3 months plan (-1,000 tons)
6 months plan

Technical Aspects

Commercial Aspects

Cost

Availability

Sustainability

Storage

Compatibility

Pre- and posttreatment

Exhaust gas

Bio-oil Procurement Policy

Bio-oil Technical Guidance

Type, volume, GHG intensity, etc.

Onboard operational manual, procedure, and instruction© 2023. NYK Group. All rights reserved.

29

Balancing residual GHG emissions – Role of CDR
1.5 deg. C aligned climate scenarios project the need of CDR to achieve net zero.
• In global shipping, which is a hard-to-abate sector, a GHG emissions reduction close to 100% is expected be challenging
to achieve from both technical readiness and maturity and economic standpoints• Carbon dioxide removal (CDR) is a necessary element to achieve net-zero CO2 and GHG emissions both globally andnationally, counterbalancing residual emissions from hard-to-transition sectors. Reference: IPCC WG3 Chapter 12

Corporate GHG Emissions

Negative Emissions Technologies

BAU Emissions

Technology-Based Solutions

Nature-Based Solutions

DACCS
BECCS

Afforestation and Reforestation
Ocean Alkalization
etc.

etc.

NYK’s Actions

Actual Emissions
Net Emissions Trajectory
2020

30

40

2050

Marunouchi Climate Tech
Growth Fund

Eastwood Climate Smart
Forestry FundBusiness Exploration

Forest Management

Climate Positive

Net Negative Emissions

We will work on the development of both solutions to built
an emissions mitigation portfolio considering co-benefits inprotecting biodiversity, local ecosystem, preservation ofwater resources etc.

© 2023. NYK Group. All rights reserved.

30

GHG Scope-3 emissions reduction
Stakeholder engagement is vital to success in reducing GHG scope 3 emissions.
• It is best to engage with like-minded suppliers and customers who have ambitious targets for realizing a low-carbon
society and reducing their carbon footprint of product.

01

GHG Scope-3: Way forward to reduction

Sharing the value of low-/zero-carbon in supply chain

Awareness building
workshop on Scope 3

Example: Material Supplier

Scope
02

03

Set system boundary and structure
appropriate metric, boundary, etc.

Scope

Customers

31Service

Product

Data aggregation and validation
to confirm data creditability

Low-/Zero-carbon value
Scope

04

Policy and disclosure
with concreate reduction plan

Scope

1
The NYK Group

3
Scope

Scope

3

1

Suppliers

Product
05

Stakeholder engagement
Logistics

Example: Manufacture© 2023. NYK Group. All rights reserved.

31

Engagement – World-leading initiatives, in which NYK actively participates
NYK is determined to join efforts and make contributions to initiatives facilitating andaccelerating the decarbonization of the global maritime industry by building a neutral andopen platform for cross-disciplinary collaboration, thereby becoming a global, visible
driving force in decarbonizing the entire maritime industry.

Initiative

NYK
JoinedIn 2020
as Founding Partner

In 2023
as Strategic Partner

Location

Copenhagen, Denmark

Singapore

Founding
Partners

7
ABS, A.P. Moller-Maersk, Cargill, MAN-ES, MHI, NYK Line,
Siemens

7
BHP, BW, DNV, MPA, ONE,Eastern Pacific Shipping, Seatrium

Strategic
Partners

24
Incl. FP

3
Hapag-Lloyd, BP, NYK LINE

Projects
involved

NH3-Fueled Vessel / Bunkering Concept,
Quantitative Risk Assessment,
Green Shipping Corridor etc.

Drop-in Bio-oils
Etc.

See other partnerships https://www.nyk.com/esg/technology/green/© 2023. NYK Group. All rights reserved.

32

The NYK Group GHG emission trajectory toward 2050
Efforts toward net-zero emissions by 2050
• Four milestones are set along the reduction pathway.
Scope-1+2

Scope-3

Removal(million tons)

No.1
Base Year 2021
Emission Scope 1+2 12.7 Mil. ton-CO2e
Scope 3
3.9 Mil. ton-CO2e

10.0

9.0

45% reduction by 2030
< Indicative Checkpoints>- 60% reduction by 2035
- 70% reduction by 2040

No.2

5.0

No.3: Removal

12.7
10.2

-0.2
2025

0.7

Neutralization of residual emission
through use of negative emission
technologies to be started around 2030

1.3

No.4: Net Zero
Across all scopes and businesses

2.0
7.0

2021

By 2025
Total GHG emissions include Scope 3
emissions regarding to peak out

No.2: Achievement ofMedium-term target (Scope 1+2)

about

3.9

No.1: GHG emissions peak

2030

5.1

3.8

No.4

-1.0

-1.5

-2.0

No.3 2035

2040

2050 (FY)© 2023. NYK Group. All rights reserved.

33

Roadmap of GHG reduction plan

ICP

2020

2023

2021 Introduced
Shadow Type

2025

$120

2030

$200

Implicit Type

2040

2050

$250

Maximize Energy Efficiency

Scope 1+2

Plan

Phase 1

Plan

Phase 2

Accelerate with Alternative FuelLow-carbon Fuels (LNG / LPG / Methanol)

Newbuilding with Zero- / CN* Fuel

NH3 Pilot Projects

Retrofitting to Zero- / CN* Fuel

Bio-oil Trial

Commercial application of bio-oils on a scale

Scope 3

* CN: Carbon-neutral
2024- EU ETS
2025- Fuel EU Maritime2028- EU CSRD
Supplier / Customer Engagement
Disclosure of Scope 1, 2, and 3

Data Aggregate Project

CDR

Plan

Offtake Removal Credit and Retire
CDR Business

2021

Base Year

2025

2030

2050

Emissions
Peak out

45%
Reduction

GHG Net Zero
© 2023. NYK Group. All rights reserved.

34

Chapter 02-2

Concept
forSustainable GrowthSustainable growth
Through decarbonization, the NYK Group is to achieve sustainable growth while reducing its
group GHG emissions including scope 1+2+3.
• Historically, there has been a close correlation between economic growth and environmental degradation.
• In the transition to a sustainable society, the value of logistics may change in the eyes of the customers.

Group GHG emissions

Sustainable growth

Decoupling

Business Activities

Zero emissions© 2023. NYK Group. All rights reserved.

36

Our actions toward sustainable growth

Transformation to a sustainable society

Our actions to drive transformation

Emerging New Value
Climate-Friendly, Environmental Footprint

Green Shipping Corridor
Cross-Sectors, First Movers, Demonstrations

Carbon Footprint of Product
Performance Indicator, Supply Chain

LCA

Regulatory Boundaries

Carbon Footprint of Service
Baseline, Creditability, Mass-Balance, B&C*

Tank to Wake, Well to Wake, LCA

Data Free Flow with Trust*
Carbon Accounting, Data Creditability

Emissions Data QC and QA
Standardization, Validation, and Verification* Open exchange of data based on trust relationships* B&C: Book and Claim© 2023. NYK Group. All rights reserved.

37

Hypothesizing a customer’s willingness to pay (WTP)
Planetary Wellbeing can be the value that the customer is willing to pay.

Value of transported cargo for our customers

Performance Indicator

Nature-friendly
Ecology-friendly

Climate-friendly

TimelyEconomically

SafelyEnvironmental Impact

Carbon Footprint

DeliveryTransit Time

Cost

Freight
QualityAppearance, Composition© 2023. NYK Group. All rights reserved.

38

Expanding regulatory boundaries
With the advent of electric vehicles, the scope of the GHG regulations have expanded
throughout the lifetime of a product, which will affect the logistics sector.
Life Cycle Assessment (LCA)
Well to Wheel

Responsible Recycling

Tank to Wheel
Material

Transport

Production (Parts, Vehicles)

Use

Recycle• Environment Protection• Circular Economy• Carbon Footprint of Product

LCA Comparison (ICEV vs. BEV)
• Electricity supply based on EU stadards• 150,000 km total distance• Unit: kg-CO2e
Shipping

Refinery

Replenishment

ICEV

Extraction

Use
Power Source
Distribution

Conditioning

Charging

BEV

Generation

Production
CO2e

ICEV

Zero

BEV

Reference: Life cycle assessment in the automotive sector (2018, Francesco Del Pero etc.)
ICEV: Internal combustion engine vehicle, BEV: Battery electric vehicle© 2023. NYK Group. All rights reserved.

39

CFP (Carbon Footprint of Product) gaining momentum
Social need for GHG reduction on a product-by-product basis• Attention is growing with regard to addressing GHG emissions over a product’s lifetime = Carbon Footprint of Product.
• To reduce the CFP, all players (or participants) in the supply chain have an important role and responsibility.
• Carbon accounting now becomes key to data integration.

Scope of GHG Aggregation
Current
AgendaCorporate Group
Organization

Social Interest

Disclosure1) Amount of GHG emissions (Scope-1, 2, and 3)
2) Financial implication of climate change

Investors, Financers,
and Authorities

Our Impact
Next
AgendaProduct-by-Product
Service-by-Service

Client(Business Contract)
Authorities*3) Carbon footprint over a product’s life cycle

Baseline
ReducedMaterial

Production

Distribution and Storage

Sales

Use

End of Life

A

B

Logistics Service Provider

X

Y

Z

Recycled
material

Renewable
EnergyLow- / zero-carbon Fuels* EU: Battery Regulation, Carbon Boarder Adjustment Mechanism etc.

Energy Efficiency© 2023. NYK Group. All rights reserved.

40

Data Free Flow with Trust (DFFT) enables the delivery of SDGs
The concept of Data Free Flow with Trust (DFFT) aims to promote the free flow of data while
ensuring trust in privacy, security, and intellectual property rights.
• Free data flows can help address pollution, climate change, and other sustainability objectives by minimizing waste andincreasing traceability across sustainable supply chains.

Industrial CFP
Accounting• Reducing the carbon footprint : End-to-end supply chain transparency and sharing of actual and verified emission data,
not estimates or averages, down to the individual product and supplier level is needed. *1

Step 1

Step 2

Step 3Aggregation and Disclosure

Secondary data

Primary data
PDS: Primary Data Sharing

Supplier’s
Direction

Guideline: Pathfinder Framework V2.0 (2023)*2

DATA-EX / GAIA-EX

Engagement

Sectorial Standard/Formula

Verified Data Integration

Current Status

2025-2030

2030 onward*1: Source: https://www.digital.go.jp/en/dfft-en*2: WBCSD Pathfinder Framework
https://www.wbcsd.org/Programs/Climate-and-Energy/Climate/SOS-1.5/Resources/Pathfinder-Framework-Version-2.0© 2023. NYK Group. All rights reserved.

41

Valuating carbon footprint of service (CFS)The nature of carbon footprints is invisible. The credibility of emission data to prove thefootprint becomes important as a performance indicator for the customer and service provider.
• Credibility = Data Transparency + Traceability + Accountability

Low CFS is to valuate the GHG reductions from the agreed baseline.

Shared target

Willingness

Guarantee

Performance

Specify the baseline of CFS *1

Satisfaction

Verification

Value of low CFS

Reduction
Baseline

Emissions(CFS)〔Options subject to agreement〕① Improve Energy Efficiency② Use of Alternative Fuels / Carbon Insetting③ Offset mechanism*1: It may refer to Industrial Standard or it can be set as project specific baseline subject to mutual agreement.
© 2023. NYK Group. All rights reserved.

42

GHG emission data quality control and assurance (GEQC/QA)
The demand for emission data assurance may grow to ensure that actual GHG missions are
consistent with the self-declared amounts.

CFS Report / Certificate
Emissions
Quality Assurance<Verification>

CFS Open
Platform*1
E.g., FLL (Fuel Lifecyle Label)
Certificate Schemes

E.g., Satellite Monitoring

Interface

Data Stream

GHG
Gas
SensorEmissions
Quality Control<Validation>S

GHG Data

S

Ship’s Log

Cargo Data

S

Flow Meter
Main Engine
Aux. Engine
Aux. Boiler

Sounding

F
F
F

Fuel
Tank

Emissions = Direct Measurement [ppm]× Exhaust Gas Volume
To be developed

Emissions = Carbon Intensity [ton-GHG/ton-fuel]× Consumption [ton-fuel]Current PracticeCarbon Intensity: Default value or figure in BDN: Bunker delivery note
*1 Example: IoS-OP (Internet of Ships Open Platform)© 2023. NYK Group. All rights reserved.

43

Commercial barriers in the transition to a decarbonized society
We need to find a solution to unlock the potential of our decarbonization actions.
• Industries are fragmented and stakeholders have different interests and mindsets.
• A level playing field in the IMO (regulatory framework) is expected from 2025 onwards at the earliest.
• Frequent rule changes could inhibit investments due to the lack of predictability.

• The lifetime of an oceangoing vessel is about 15 to 25 years. Supply chain of alternative fuels needs to cover most of theports in the world. So, the transition to a decarbonized society in maritime is likely to take time.
• How can we accelerate the transition with a limited number of vessels sailing with blue/green fuels?
Service Fleet (ex. 100 vessels)

Possible Solutions (e.g.,)

Item

Incentive for greener vessel
No of
Vessels

x 50

x 30

x 15

x 5

GHG Emissions
Performance

Base
Conventional

30%
Reduced

50%
Reduced

100%
Zero emission

Cost(CAPEX+OPEX)

E.g., Tonnage Tax, Port Due,

Valuate GHG Emissions Performance
E.g., Carbon footprint of service

IMO Market Based Measures, GFS
E.g., Feebate Scheme, ETS

Profitability

Owner/Operator’s willingness to reinvestment to greener fleet will not be promoted.
© 2023. NYK Group. All rights reserved.

44

Corporate brand ready for use
Sail GREEN is a brand that emphasizes NYK's efforts to reduce GHG emissions through thetransport of goods and contribute to the eco-friendly supply chains of customers, regardless ofthe mode of transport (e.g., by sea or land, through terminals, etc.).

Mass Balance Concept
Low Carbon Premium Service
Customers with WTP

Identity Preserved Concept

Normal Service

Normal Service

Customers with WTP

Other Customers

Other Customers

Service B

Service C

GHG Reduction

GHG Reduction

GHG Reduction

Service A

Service B

Service C

Service A

Low Carbon Premium Service

GHG Reduction

Verified by third party

Low Carbon Fuel

Energy Efficiency

Ship A

Ship B© 2023. NYK Group. All rights reserved.

45

Showcase of zero carbon shipping to accelerate decarbonization
Green Shipping Corridor Projects• Green shipping corridors are expected to act as a catalyst for the global energy transition by providing frameworks forregional and international stakeholders to collaborate on maritime decarbonization goals while aligning with broader
regional, national, and international decarbonization initiatives. (reference: ABS – Green Shipping Corridors )

Fuel

Port

Cargo

Port: A

Port: B

Zero CFS

Ship

Rule

http://mission-innovation.net/missions/shipping/green-shipping-corridors/route-tracker/© 2023. NYK Group. All rights reserved.

46

Business growth though the transition to net zero
The trajectory toward net-zero emissions shows how NYK will sustainably generate profits
through the transition to decarbonization.

Profitability vs. levels of GHG emissions
Profits
Tipping point
Lower CFS: Carbon footprint of service
More support from customers
More profits and reinvestment

Near zero-CFS

Positive spiral
Momentum needed
Progress
not apparent

2025
Peak out year

Progressvisualized

2050© 2023. NYK Group. All rights reserved.

47

Sustainable growth plan in the context of decarbonization
Sustainable Growth (Profit Generation)

Goal

Competitive Advantage

Cost Leadership

WTP*1

Carbon risk Management

Planetary Wellbeing

Critical Core

Positive Spiral

Low CFS

Concept

Components

Niche Market

Low Carbon Footprint of Service
Data
AF*2

EE*3

CC*4

Inset / Offset

Business Decarbonization

Assets and Operations

Intelligence

Policy / System

Technical Capability

Foundation

Resources

Sense of Urgency
3I’s-(Integrity, Innovation, and Intensity), Corporate Culture*1 WTP: Willingness to pay *2 AF: Alternative fuel *3 EE: Energy efficiency *4 CC: Carbon capture© 2023. NYK Group. All rights reserved.

48

Our journey is to be continued.
Please look forward to the sequel of this story.

© 2023. NYK Group. All rights reserved.

49

免責事項
本資料は、電子的または機械的な方法を問わず、当社の書面による承諾を得ることなく複製又は頒布等を行わないようお願いします。

Legal Disclaimer
No part of this document shall be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying,recording or otherwise, without the prior written permission of NYK Line.
© 2023. NYK Group. All rights reserved.

Appendix

System to manage our environmental responsibilities
We have been ISO-certified since 2002, the first shipping company to achieve this recognition.
• ISO 14001, internationally agreed standard that helps improve the performance through more efficient use of resources,
allowing us to gain a competitive advantage and the trust of stakeholders.
• System coverage now extends to our 66 sites and the fleet being operated by the NYK Group.

NYK Group
Mission, Vision,and Values

Europe3 sites
Environmental
vision and policyGroup EMS :Environmental management system

East Asia

USA

5 sitesJapan

1 site50 sitesSouth Asia
& Oceania

7 sites- Policy, legal requirements, objectives, and targets- Structure and program- Planning, control, monitoring, preventive andcorrective actions- Auditing and review activities
BACK© 2023. NYK Group. All rights reserved.

52

NYK Cool Earth Project launched in 2008
Special programs led by the strong leadership of top management in response to increasing
concerns over environmental issues.
• The launching of the “Earth Is Our Home” campaign, the introduction of e-learning focusing on global warming, and theestablishment of an advocacy policy are some examples of said programs.

Five - Project Tasks

Organization Structure
Environmental Management Unit

To strive under a spirit of challenge for revolutionary innovation of hardwareand equipment capable of reducing CO2 emissions

Technical Innovation Unit

To properly comply with regulatory affairs discussed among governments
and IMO shipowners' associations

Regulatory Affairs Unit

To properly evaluate the cost-efficiency of investments in facilities
and fuel-saving efforts

Operational Innovation Unit

To examine the possibility of making major, not minor, changes to our businessmodel to facilitate smoother management of the transition to a low-carbon
global economy

Business Model Reformation Unit

To make environmentally conscious contributions to society

Corporate Communications Unit
BACK
© 2023. NYK Group. All rights reserved.

53

NYK Super Eco Ship 2050
100% reduction in CO2 Emissions
67% reduction in energy derived from fossil fuels*
Improvement ofElectrical Power

Improvement of
Propulsion Efficiency 6%

Lightweight Hull－
Minimal Resistance 34%

Distribution 1%

Reduction inElectricity used

Fuel Cells 18%
Waste Heat Recovery 3%

8%Solar Power 5%

Hydrogen Fuel Battery andWaste Heat Recovery

Solar Power

Digital Twin

Optimized Fleet Operation

The vessel is powered by hydrogen fuel cells(SOFC), in which the hydrogen is produced byrenewable energy sources.
・Power production efficiency:
69% through waste heat recovery
・Hydrogen tank capacity:
1,900 cubic meters/21-day endurance

The storage of liquefied hydrogen on board thevessel will be expensive and require significant
space, so fully utilizing power produced on board
is essential.
・Energy conversion efficiency: 45％
・About 9,000 square meters of solar panels
・Covers 15% of total energy demand

Holistic digital twins enable
access to shore-based expertisefor the crew on board. Several
scenarios can be evaluated to
optimize planned and corrective
maintenance to minimize
accidents and troubles on board.

Thanks to advanced weather
and performance optimization,route planning is no longer aship-level activity. It is done at
the port and fleet level, whichenables just-in-time arrival
throughout the supply chain.

* Compared with a 2014-built vessel

BACK© 2023. NYK Group. All rights reserved.

54

Positioning of decarbonization strategy
Achieving our decarbonization strategy requires a cross-functional approach involving all ourbusinesses.
• Courage, collaboration, care, and determination are key to promoting decarbonization activities.*
Business Strategy
Liner &
Logistics
Business• Container• Terminal• Air Cargo• Logistics

Bulk Shipping
Business

Corporate Strategy

Other
Businesses

Portfolio• Automotive• Dry bulk
• Energy• Cruise• Real Estate• Technology
Development
Other

Decarbonization
・・・

Technology
HR, Finance, Legal, Governance
BACK* Reference: Maersk Mc-Kinney Moller Center for Zero Carbon Shipping© 2023. NYK Group. All rights reserved.

55

Decarbonization governing structure
A “Center of Excellence” style structure has been adopted, which separates policy-making andbusiness execution .
• Each business group oversees its own emissions-reduction program for its business operations as well as for consolidated
subsidiaries and equity-method affiliates. The Decarbonization Group in ESG Strategy Headquarters is responsible for the
NYK Group’s decarbonization strategy, planning, and program management.
Board Meeting

Management MeetingCEO

ESG Strategy Committee
Assess Risks and Opportunities
Share information and insightBusiness
Headquarters

ESG Strategy Headquarters
Established in 2023

Decarbonization Group
Strategy

Plans

Each GroupManagement

Assign a team/PIC responsible
for GHG aggregation

Instruction / Reporting
Knowledge sharing, Supporting*Taskforce Style

Working Groups*

Own operation

Consolidated
Subsidiary

Equity-method
Affiliate
BACK© 2023. NYK Group. All rights reserved.

56

GHG emissions from shipping – IMO 4th GHG Study
Published in 2020, GHG emissions from the shipping segment were estimated to beabout 1,000 million ton-CO2e as of 2018.
This amount accounted for about 3.0% of global anthropogenic emissions.
• In 2050, about 1.5 times more emissions than the 2018 estimate are expected based on the BAU andcurrent regulations in force (EEDI+SEEMP).

RoRo+Vehicle Cruise
Carrier3%
5%

Ref Bulk
1%

Ferry-Ropax
5%

2018
Shipping Emissions

General Cargo
6%
Liquefied gas
tanker8%

Oil+Chemical
Tanker26%

954 Million Tons (CO2e)
935 Million Tons (CO2)

BAU + Current Regulation

50% more than 2018

Approx. 3%of global anthropogenic emissions
Bulk Carrier
21%

Source: IMO 4th GHG Study

Container
25%

Drawn by BV based on IMO 4th GHG Study© 2023. NYK Group. All rights reserved.

57

GHG emissions from NYK Group in FY 2022
The NYK Group’s direct scope 1 emissions amounted to 11.3 Million ton-CO2e in 2022
• 11% reduction from the base year of 2021.

Annual GHG Emissions [ton-CO2e/Year]
Scope-1

Scope-2

Scope-3

16.61 Mil.
14.25 Mil.
837,919

13.32 Mil.

14.60 Mil.

3,890,661

3,264,023

1,623,678

Air freighter

0.96

11% down

13,360,000
11,650,054

2019

2020

12,678,695
11,255,044

2021

Others0.17

Scope 1emissionsby segment

Shipping

10.2

2022
BACK
© 2023. NYK Group. All rights reserved.

58

Awareness building
To take appropriate actions and build solutions, we must first to understand the climate agenda,
that we are currently facing.
• In 2023, a series of “Climate Fresk” workshops was arranged for persons in charge of GHG emission data aggregation ineach group.
• Other than the above, a training program (e-learning), workshop and opportunities to learn about importance of climate
action have been provided to build a sense of urgency on climate change.

The facts in Climate Fresk are sourced from the most respected scientificpublications: the IPCC reports. These are the same reports that inform global
political and economic decision-making at the highest level.
Climate Fresk is neutral and objective and presents only established scientificfacts.
Code Advisory Climate Fresk

BACK© 2023. NYK Group. All rights reserved.

59

The NYK Group’s GHG emissions data aggregation (1/3)
The first step is to aggregate GHG data from all assets and operations of the NYK Group.
Scope 3 (Total 15 categories)
Business Category

Scope 1

Scope 2
1

2

3

4

5

6

7

8

9 10 11 12 13 14 15

NYK Group fleet and facilities around the world

Liner & Logistics Business- Container- Terminal- Air Cargo- Logistics

Bulk Shipping Business- Automotive- Dry bulk
- Energy

Other Businesses- Cruise- Real Estate- Technology Development- Other
Figures as of March 31, 2023

© 2023. NYK Group. All rights reserved.

60

The NYK Group’s GHG emissions data aggregation (2/3)
A project has been established to enhance the aggregation of GHG emissions data across all
scopes and all the NYK Group businesses.
[Task-1] GHG data ownership to be transferred to each business division and headquarters to enable them to utilize GHG
data in ways tailored to their respective businesses(before Apr. 2023)

GHG emissions data aggregation scheme (from Apr. 2023)

Group

Scope-1+2+3 Yearly Report

Decarbonization GroupESG Strategy Meeting

ESG Management Meeting
Business Division
Business HQ

Own
Operations

Consolidated
Subsidiaries

Own Operations
Group

Consolidated
Subsidiaries

Equity-method
affiliates

Corporate HQ
Analysis & Report

Own Operations

Group

Equity-method
affiliates
Scope 1+2 Monthly Report
Scope 3 Quarterly Report

DecarbonizationGroup© 2023. NYK Group. All rights reserved.

61

The NYK Group’s GHG emissions data aggregation (3/3)
A project has been established to enhance the aggregation of GHG emission data across all
scopes and all the NYK Group businesses.
[Task-2] GHG Scope 3 emissions data to be aggregated across all NYK GroupIt seems to be a simple but complicated task ahead of us. Putting in a range of NYK Group businesses, a well-structured
system and providing dedicated support to those responsible for carbon accounting across not only a range of NYK Linebusinesses but also the entire Group are important. For this reason, NYK appointed a consultancy service to promote the
NYK Group’s efforts.

Output :GHG Calculation SheetandGHG Calculation Manual

・・・

・・・

Each Business

Each Business

Steps in Emissions Calculation

Step 1

Step 2

Step 3

Step 4Check theEmission Activity Sheet

Check the Data Collection
Flow Sheet

Fill in the Emission
Activity Sheet
Check the Calculation Sheet to
be entered

Fill in the Calculation Sheet

By checking the category to be
calculated, the data required for
calculation, and the logic to be used
we can grasp an outline of theemissions calculations.

The data required for emissions
calculations. The method required forgathering data, and the order of data
input are to be checked. Thereafter,
consideration must be given to thedata that can be obtained.​

For the obtainable data checked insteps 1 and 2, enter the calculation
target and confirm the data to be
written on the calculation sheet instep 4.

Fill the calculation sheet with thecollected data.

BACK© 2023. NYK Group. All rights reserved.

62

Technology trends in the context of decarbonization
Driving digital and energy transformation induces innovation toward carbon neutrality.
• Cyber-physical systems will enhance safety and energy risk management and optimize design and operations.

Concept

Asset Risk Management

Digitalization
Simulation

Decarbonization

Sensing

Energy Efficiency

EnergyTransformation

NYK’s concrete solutions

Optimized Design & Operations- Front-Loading Design with 3D models- Model-Based Systems Engineering (MBSE)- Design and Risk Assessment of Safe and Efficient Use of
Alternative Fuel and Actual Operation- Autonomous Ship Project – DFFAS- Establishment of Maritime and Ocean DigitalEngineering Cooperation Program- Installation of ESDs: Energy-Saving Devices,
Battery-Hybrid, Wind-Assisted, Engine Derating
Waste Heat Recovery, Shore Power Systems
Air-lubrication, etc.

- Remote Diagnostics Center (Expert-in-the-loop)- Cybersecurity Concept of Operation- NYK Emissions Monitor- Fleet Emission Simulator

https://www.k.u-tokyo.ac.jp/en/information/category/press/9627.html- Bio-oil Trial and Assessment Program- In-House Gas fuel Training Course

BACK© 2023. NYK Group. All rights reserved.

63

Identified solutions and our actions
Shell’s Solutions Identified

Our action (Business resource allocation)

Scale Up Customer Demand

Emphasizing the importance of reduction throughout the supply chain of a product(E.g., Use of green Steel for newbuilding https://nbpc.co.jp/news/4062 )Global Regulatory Alignment

Creating a level playing field globally through involvement in industrial groups,
advisory body of Japanese government for IMO agenda and various initiatives.
Examples of our initiatives at https://www.nyk.com/english/esg/concept/initiatives/

Cross-sector Research and Development

Intensifying partnerships through participation in Maersk Mc-Kinney Moller Center for Zero Carbon Shipping,
Global Maritime Forum, and Global Center for Maritime Decarbonization, among others to come.

Scale up Controlled Pilot Projects

Launching small scale NH3 fueled pilot project for a Tug and applying the lessons learned to the large-scale
projects as NYK did for the application of LNG as fuel.

Coordinated industry commitments

Increasing the reach of existing initiatives to be in line with our policies.

Flexible and Modular Design

Leading the dual-fueled concept design applicable to various types of vessels.

Port Coalitions

Actively participated in Green Shipping Corridor Projects.

Investor Pressure

Increasing the depth of engagement with stakeholders over climate agenda.

Green FinanceUse of green-related loans such as green bond (2018) / transition bond (2023)

Scale-up Fuel Production

Joined forces to help decarbonize hard-to-abate sectors (2021)
Invested in Tsubame BHP for producing NH3 with less energy (2021)

Scale-up Bunkering Infrastructure

LNG bunkering business

Operational Efficiency

Fleet upkeeping project ongoing across the shipping businesses.
Continuous efforts to improve operational efficiency

Framework: Shell- All Hands on Deck 1.0 https://www.shell.com/business-customers/marine/decarbonising.html

BACK© 2023. NYK Group. All rights reserved.

64

Path planning – Risks and opportunities
The first report (TCFD Report) was published in 2022 and widely covers NYK’s business througha qualitative assessment to evaluate the financial impact of climate change. The report’s
coverage has now been extended to encompass a quantitative approach to evaluate thephysical risks on specific businesses vulnerable to the threat of climate change.
Business Assets
on Shore

Decarbonization
strategy
Offices
Climate-relatedrisks

Climate-related
opportunities

Terminals
Logistics bases

Business Assets
at SeaTrucks

Oceangoing
Vessels

Other

Assets and Operations
Transition Risks

Physical Risks

Quantitative Risk Assessment (2023)
Regulations andTechnologies

Acute Risks

1

Physical risk and supply chain risk assessment
for logistics bases on shore

2

Physical risk and opportunity assessment
for oceangoing vessels at sea

Risk

Market,Reputation

Chronic Risks

https://www.nyk.com/english/esg/pdf/TCFD2023.pdf© 2023. NYK Group. All rights reserved.

65

Risk and opportunity – Quantitative assessment (on shore)
The modeling and conditioning of climate change risk assessments regarding onshore assets is
performed.
◼ Wind risk assessment model◼ Risk calculation under the
future climate
Incorporates future changes in TCs andfloods utilizing literature and various
climate change projection data.

Evaluates wind risk of tropical cyclones(TCs) based on past meteorological data

Temperature change (median)℃

65Future changes in global mean air tempature◼ Climate change risk assessments
Output:• $ XX increase in asset depreciation
until 2050.
• YoY decrease of YY % in operating
rate until 2050.
Loss (JPY)RCP2.6

RCP8.5
RCP4.5
RCP2.6

RCP4.5
4

RCP8.532
102010 2020 2030 2040 2050 2060 2070 2080 2090 2100

◼ Flood risk assessment model

Evaluates flood risk based on
published flood inundation maps

Considered future changes• Changes in TC frequency and intensity• Changes in severe rainfall frequency andintensity• Sea-level rise

Present

2030

2040

2050

2040

2050

Operating rate (%)
RCP8.5
RCP4.5
RCP2.6◼ Risk calculation under thepresent climate
Present

2030

Credit: Sompo Risk Management Inc.
© 2023. NYK Group. All rights reserved.

66

Risks and opportunities – Quantitative assessment (at sea)
Physical risk and opportunity assessment for oceangoing vessels at sea• Question: How severely will the shipping activity be impacted by the future climate ?
• Our View: An increase in physical risks such as asset integrity, cargo damage, fuel consumption, GHG emissions due tothe maritime weather in the future climate is not anticipated in this study but will review further.

Encountered Sea State

Location-based Sea StateSea State in 4 Deg. C Scenarios

Source: CISRO‘s CMIP6 global wind-wave 21st century climate projections phase 1
https://data.csiro.au/collection/csiro:53176

Not significant changes in sea state

If the sea state at each location does notdeteriorate in the future climate, then theencountered sea state will remain
unaffected (see year 2096 – 2100).

No significant changes
in encountered sea state
BACK© 2023. NYK Group. All rights reserved.

67

Path Planning – Setting targets (comparison with past targets)
Aligned to the IPCC 1.5 deg. C scenario shows the resolute determination.

BeforeNew

Announcement of Net-Zero Emissions

GHG Reduction Target (2023)

Sep. 30, 2021

Target Year

2050

Objective

Net-Zero Emissions

Scope

Oceangoing Businesses

HistoryLong-Term

Released

November 2023

2050
(Re-defined) Net-Zero Emission
GHG Scope-1/2/3
Across all NYK Group Businesses

Latest Management Plan

GHG Reduction Target (2023)

2008

2011

2014

2018

March 2023

November 2023

Medium-termManagement
Plan

New
Horizon2010

More Than
Shipping
2013

More Than
Shipping
2018

Staying
Ahead
2022

Sail Green, Drive
Transformation 2026

NYK Group ESG Story 2023
(NYK Group Decarbonization Story)

Base Year

2006

2010

2010

2015

2021

Target Year

2013

2015

2018

2030

2030

Efficiency

Efficiency

Efficiency

Efficiency

Absolute

Unit: Absolute GHG Emission

10%

10%

15%

30%

-

▲13.4%(2015)▲14.3%(2017）+6.4%(2021)

30% - (Int’l Shipping)- 10% (Other)

Reduction 45%
GHG Scope 1 + 2(Indicative Checkpoints)
60% / 2035, 70% / 2040

Unit
TargetReduction
ResultMid-Term

ReleasedBase Year 2021
Target Year 2030

BACK
© 2023. NYK Group. All rights reserved.

68

Path Planning – Updating the target (Medium-term management plan)
We shall reduce GHG emissions by a further 15% beyond our reference in the latest
medium-term management plan by improving energy efficiency under ICP scheme and using
low-carbon fuels such as bio-oils.
Investment: JPY 100 Billion (to FY2030）
Fuel Conversion Premium: JPY 80 Billion
Optimum Operations, Energy Saving: JPY 20 Billion

GHG Reduction Measures (Maritime)

Fuel
Options

Medium-termManagement Plan

Energy Efficiency

5～15 %
EnergyEfficiency

Operation
Fuel
Options▲15

Navigation

Specification

UpkeepingNote: Each share subject to change
F/O

Low-carbon and Drop-in Fuels

2021
Base
Year

E/E

ICP

Phase 1
$120

2027
Review&
Plan

2030
Phase 2

TargetYear$200

Mechanical
Efficiency

0～10 %

0～5 %OperatingTime

Performance inActual Seas

Optimization

Waiting Time

Routing Sea
Passage

MinimalLoss of Time

Speed,Engine Load

Hull/Propeller
Fouling Control

Hull Lines
Appendage

Battery-Hybrid,
Fuel Cell

Engine Plant
MaintenanceLow-friction
Paint

Engine Derating(upgrading)

Air-Lubrication
SystemWaste HeatManagement

WindAssisted

ESDs

Subject to change
F/O: Fuel options, E/E: Energy efficiency, ICP: Internal carbon pricing

BACK© 2023. NYK Group. All rights reserved.

69

Comparison of IMO and NYK GHG reduction targets
In 2023 IMO strategy on reduction of GHG Emissions from Ships was adopted in MEPC-80

GHG Emissions [Million ton-CO2e]20

NYK’s Emission
in 2008

18

18.5

IMO Strategy for reducing
GHG emissions

16

IMO-Indicative Checkpoints- at least 20% striving for 30% by 2030
- at least 70% striving for 80% by 2040

IMO

20% Down

14

12.7

12

NYK Group
Revised GHG Target 2023

10

IMO

30% Down

7.0

8

IMO

70% down

5.1

6

IMO

4
3.8

2
0
2005

2010

2015

2020

2025

2030

2035

80% down

2040

1.3

2045

2050

2055

BACK
© 2023. NYK Group. All rights reserved.

70

Zero Pathfinder – an integrated simulation system
The Zero Pathfinder system performs techno-economic-based simulations incorporating
actual performance and operational profile data to assess fuel options, GHG reduction
trajectories and the total cost impact, under parameters such as operational speed,
operational ratio, improvement in energy efficiency, carbon prices and future fuel prices areincluded.
• Use Case: 1. Scenario Study 2. Carbon Budget Setting

Corporate GHG Emissions [ton-CO2/year]

Fuel Share of NYK Fleet [%]A.F. (C)A.F. (B)A.F. (A)Conventional Fuel Oil

Output Examples

A.F. : Alternative fuelBACK
© 2023. NYK Group. All rights reserved.

71

Shipping activity and energy efficiency × intensity
To reduce the shipping activity for the purpose of GHG reduction is not an option.

Energy Efficiency × Intensity

Shipping Activity+35%

Unit: g-CO2/ton-mile
17
15

Container
Approx.

1313.0 g-CO2/ton-mile

11

TankerApprox.

9.5 g-CO2/ton-mile

9

BulkerApprox.

7
5
2012

Source : DNV – “Energy Transition Outlook 2023 - Transport in transition”

7.4 g-CO2/ton-mile
2014

2016

2018

2020

Source: UNCTAD – Ship Type Energy efficiency

2022

BACK
© 2023. NYK Group. All rights reserved.

72

LNG – NH3 pathway for tech-driven transition (1/2)
Alternative
Fuel

Molecule

Cargo

Low-carbon Gas Fuel

CH4
LNGC
LNG Carrier

Bunkering

Cryogenic

Refrigerated *1-162 Deg. C-33 Deg. C

Since 1983

Since 2002

86 Vessels

7 Vessels

Excluding ordered.

incl. ordered.

NH3AGC
NH3 Gas Carrier

Green Zeebrugge

LBV

KaguyaApproved Design In Principle, 2022

Japan’s first purpose built, 2020

Sakigake

LFVJapan’s first LNGDF TUG, 2016

LNG Fueled Vsl.

Pilot Project
Commercial Scale

NH3 Bunker Vsl.

TBA

AFV

Japan’s first NH3DF TUG, 2024

Auto Eco / Energy
World first LNGDF PCTC, 2016

ABV

TBA

World first purpose built, 2017

LNG Bunker Vsl.

Fuel

Zero-carbon Gas FuelTBA

NH3 Fueled Vsl.

The first NH3DF AGC, 2026

Owning and Operating Vessels
Maritime Training Center, In-house Ship Management, Marine Consulting / Technical Service
NYK
Core
Competence

Elemental Technologies

System Integration

Design Review

Operation- Hull Structure, Cargo Equipment- Engine, Machinery, Electric Outfitting- Capacity, Arrangement- Control, Diagram- Risk Assessment- Operational Concept- Execution, Trouble Shooting- Evaluation and Feedback

Technical Capability in Design Feedback and Operational Concept
BACK*1: It is also possible to carry ammonia in pressurized state (at ambient temp.) or semi-refrigerated state (10-20 deg.)© 2023. NYK Group. All rights reserved.

73

LNG – NH3 pathway for tech-driven transition (2/2)
Alternative
Fuel

Low-carbon Gas Fuel

System Integration

S.S. NORTHWEST SWIFT Delivered
Integrated Automation System(IAS) adopted
Way forward to mitigate the risk of using ammonia

Navigation

CTMS Cargo Transfer
Spray Control and Measurement

IAS

Advanced Sensing and Control

Elec. Power
Main BoilerCargo Compressor and Heater
Main Turbine(BOG Management)

2021
Sensing and Simulation

Automation Technologies

1989

Zero-carbon Gas Fuel

Ballast / Trim-Heel

Reduced ammonia toxicity

LNG FGSS* Simulation (NYK / MTI)
Model-based safety assessment〔Accuracy verified by actual operational data〕
FGSS
Liquid LineOperational
Scenarios

FGSS
Gas Line

Consequence
Assessment

Cyber-Physical Engineering
LNG Tank System

With collaborative innovation
Methane Value* FGSS: Fuel gas supply system

Abnormality

BACK© 2023. NYK Group. All rights reserved.

74

NETs (Negative Emission Technologies)
TRL*1

Abatement
Cost Level*2

Mitigation
Potential*3

6100 – 300

5 - 40

Increased energy and Water use

5～6

15 – 400

0.5 – 11Additional Land and water use

Afforestation and
Reforestation

8～9

0 – 240

0.5 – 10

Reversal of carbon removal

Biochar6～7

10 – 345

0.3 - 6.6

Particulate and GHG emission fromproduction

Soil Carbon
Sequestration

8～9

Minus 45 – 100

0.6 - 9.3

Increased N2O emission from organic
nitrogen in the soil

Enhanced
Weathering

3～4

50 – 200

2–4

Air quality impacts of rock dust when
spreading on soil

Alkalinization

1～2

40 – 2601 – 100

Marine biota. Possible release ofnutritive elements

Blue Carbon
Enhancement

2～3

Insufficient
data

<1

Release carbon back to atmosphere.

Ocean Fertilization

1～2

50 - 500

1-3

Potential for decadal to millennial-scale
returnNegative Emission Technologies
DACCS *1

Associated Risks

Technology-Based
Solutions
BECCS *2

Land-BasedNature-Based
Solutions

Ocean-Based

Figure and Table : Negative Emission Technologies and the evaluation (as of 2023).
*1: DACCS: Direct air carbon dioxide capture and storage*2: BECCS: Bio-energy with carbon dioxide capture and storage*1 TRL: Technology Readiness Level, *2 Unit: $/ton-CO2e *3 Unit: Giga ton-CO2e/YearBACK© 2023. NYK Group. All rights reserved.

75

Stakeholders in the maritime industry
Collaboration among stakeholders in the shipping ecosystem play an important role indecarbonization.

IMO
Port State

Consumer

Flag

Insurance

BrokerFlag Registration

Recognized Organization
Classification Society

Shareholder

Cargo Owner
Contract

Class Registration

Association / Initiative
Engagement

Charterer
Ship Insurance
Contract

Ship Building Contract
PSC Inspection
Flag/Class Survey

Financing

FinancerCharter Party

Owner

Ship Management Contract
Demolishing

Ship

Ship Management Service

Ship Recycling

Ship Manager

Procurement
SupplyShipbuilder

NGO / NPO

Participation

Manning Procurement andSupplyEngineering, Procurement and Supply
Fuel Supplier
Outfitting
Supplier

Designer

Material
Supplier

Remark: It does not cover all the stakeholders but typical for illustration

Lubricant Oil
Supplier

Manning

Provision
Supplier
M&R provider

BACK© 2023. NYK Group. All rights reserved.

76