Rinnai Group’s Path to Becoming Carbon-Neutral
November 5, 2021

•Background to Carbon Neutrality•

Initiatives and Direction to Realize Low-Carbon andDecarbonized Society•

Reducing CO2 Emissions from Business Activities•

Investing in Carbon Neutrality

BackgroundIn response to the growing sense of crisis about global warming
around the world, the Japanese government and relevant industries
are stepping up efforts to realize a decarbonized society.
The Rinnai Group, which handles household appliances that mainly
use fossil fuels, has also set targets for 2030 and adopted a corporate
policy to realize a decarbonized society by 2050.
* Our carbon-neutral initiatives will bear fruit when the energy environment isdecarbonized, such as when 100% of the world’s energy comes fromrenewable sources and hydrogen supply infrastructure proliferates.
3

CO2 Emissions from Households: Current Situation【CO2 emissions by sector】
Industrial
processes

Waste

Energyconversion

Households
Fiscal 2019Japan’s CO2emission volume

Offices andotherIndustry

1,107.94
million tonsJapanHouseholds account for 14.4% of Japan’s total
CO2 emissions (about 160 million tons)
Rinnai’s mainstay products are water heaters,room heaters, and kitchen appliances.
Based on market share, we calculate that around 1.5%
(16.8 million tons*) of Japan’s total emissions (1.1 billiontons) come from the use of Rinnai-brand products.
* Estimate based on the Company’s market share as stated by the Japan Industrial Association Of Gas andKerosene Appliances (domestic water heater and kitchen appliance sectors).

Transportation
Source: Japan Center for Climate Change Actions https://www.jccca.org/

Our efforts to reduce CO2 emissions will play a major role in reducing Japan’s total emissions.
4Environmental Impact of Rinnai Products over Their Life Cycle JapanThe overwhelming majority of CO2 emissions involving Rinnai come from product use.
Life cycle of Rinnai products
Procurement

Development/products

Logistics

Productuse

Disposal

4.8%

0.1%

0.05%

95.0%

0.03%

t-CO2

t-CO2
CO2 emitted intransporting ourproducts

t-CO2
CO2 emitted when
our products areused

t-CO2
CO2 emitted
During the final
disposal process2020% of total CO2emissions

850,000

20,000

CO2 related toparts procurement

CO2 emitted byfactories/offices

Amount ofCO2 emissions

t-CO2

9,000

16.8 million

6,0005CO2 Emission Targets

GlobalLife cycle of Rinnai products
Procurement

Development/products

Logistics

Business activities

Productuse

Disposal

When products are used

CO2 emission targets

2020

2030

2050

2020

2030

2050

Domestic

30,00015,000Zero

16.8 million

12.6 million
t-CO2

Zero

Global100,000

50,000Zero

45 million

－Zero

t-CO2
t-CO2

t-CO2
t-CO2

t-CO2
t-CO2

(* Figures of overseas products are rough estimates)

6•Background to Carbon Neutrality•Initiatives and Direction to Realize Low-Carbon andDecarbonized Society•

Reducing CO2 Emissions from Business Activities•Investing in Carbon Neutrality

Household Energy for Decarbonization

GlobalChanges in energy composition on path to reducing CO2 emissions during product use
100%
Our products: Composition of energy used (%)

2020

Low-carbon society →Carbon-free society (carbon neutrality)
Expansion ofhydrogen
infrastructure
Proliferationof renewableenergyEco Jozu

Expansion ofcleaner fossilfuels

Water heater Bathwaterwith heatingheatersystem

Fossil fuelsGas appliancesWorldwide CO2 emissions: Zero by 2050

Products supported by Rinnai

Hydrogen(Hydrogencombustionappliances)
Renewable energy(Hybrid and electricappliances)

Carbon-free gas(Gas appliances)

2050

Hydrogen combustion
equipment

Hybrid products
Heat pumps(Electrical equipment)
Continued use of existing equipment
through methanation and propanation(Energy-saving equipment)

8

Examples of (Low-Carbon) Measures for 2030

Japan

Aiming for “decarbonization” (net zero) by 2050,
but “low carbon” (energy-efficient) in the medium term (2030)
Increase sales of ECO ONE and Eco Jozu
Water heaters: CO emission comparison2Non-Eco Jozu

1,507 kg-CO /year

Eco Jozu

1,270 kg-CO /year(Mode thermal efficiency 92.5%)CO2 emissions(compared withconventional water heaters)

Hybrid water heater withheating system
Approx. 50%
reduction

Eco Jozu
Approx. 15%
reduction2

Heat pump-based
water heater (JIS 3.3)

865 kg-CO /year

Hybrid water heaterwith heating system

707 kg-CO /year(ECO ONE 160-liter model)

ECO ONE

222

Approx. 15%
reduction
Approx. 43%
reduction
Approx. 50%
reduction

Gradually reduce number of
non-Eco Jozu units as the ratioof Eco Jozu units increases.
9Promoting Spread of ECO ONEJapan

Aiming to sell 300,000 ECO ONE units annually by 2030
What is ECO ONE?
High-efficiency water
heater that uses bothelectricity and gas

Accelerate sales of ECO ONE by combining
it with renewable energy equipment andlinking it with energy management systems.
(thousand units)

Electricity (heat pump)Gas (Eco Jozu)

High efficiency & energy-saving

Powerful & speedy

400【ECO ONE projected sales growth (image)】

300200Uses heat fromthe air to increaseenergy efficiency

Instant-heating capability
makes it useful when using
a lot of hot water or when
heating water.

100010Reducing CO2 Emissions

JapanUsing ECO ONE for reduce CO2 emissions

CO２ emission volume

Reduction due to ECO ONE

26％ reduction

20052030

ECO ONEHybrid water heater withheating system

Promote spread of ECO ONE to help reduce CO2 emissions
11

Examples of Decarbonization Measures for 2050
▶Effectively utilize renewable energy to decarbonize homes,
specifically by using power generated from rooftop solar panels
to store heat in ECO ONE tanks

Japan▶Contribute to decarbonization by maximizing use oflocal renewable energy sources in combination withresidential energy management systems
Energy management system

Solar panels
ECO ONE
Storagebattery……

Source: E-forest image by Chuo Jutaku Co., Ltd.

12

Carbon-Neutral Initiatives around the World

GlobalCountries where the Rinnai Group is involved: Targets and measures
Country2030 target

2050 target

Japan

46% GHG reduction(vs 2013)

Increase renewable energy rate to 35–38%, focusing on solar andwind power. Use hydrogen mainly in FCVs and power generation
facilities.

UnitedStates

50–52% GHG reduction(vs 2005)

Targeting zero CO2 emissions from electricity by 2035. Californiabans the laying of gas pipes in new homes.

Australia

26–28% GHG reduction(vs 2005)

UnitedKingdom

68% GHG reduction(vs 1990)

China

65% GHG reduction(vs 2005)

Total emissions

ZeroMeasures

Given high potential for renewable energy generation, we areconsidering converting surplus electricity into hydrogen for export.
Field-testing of mixtures of hydrogen and natural gas under way.
Targeting near-zero emissions from electricity by 2030 andhydrogen-fueled housing in 2023 or later. Demonstration ofhydrogen town planned around 2030.

* Total emissions(2060)
ZeroPhasing out thermal power plants without carbon capture andstorage facilities. Spearheading use of hydrogen for vehicles andindustry.

Activities are accelerating in major countries, all of which have set a target of zeroCO2 emissions. Therefore, the entire Rinnai Group must achieve carbon neutrality.

13

Long-Term Technological Development(towards 2050)

GlobalDevelopment status of hydrogen-related equipment《Market changes》《Rinnai’s efforts》

The world has already begun to maketechnological progress using hydrogen as a fuel.

The Rinnai Group is currently
conducting combustion testsof existing products (UnitedKingdom, Oceania, UnitedStates, and Italy) in whichhydrogen is mixed withhousehold gas.

Many countries have begun consideringstorage and use of hydrogen produced fromrenewable electricity as a means of adjusting
renewable electricity supply-demand balance.
For example, the United
Kingdom, Germany, andAustralia have started
demonstration tests ofmixing hydrogen withhousehold gas.

Combustion experiment with
20% hydrogen gas mixture

Rinnai Japan is spearheading
development of technology for
new products that will support Combustion experimentwith 100% hydrogen
100% hydrogen combustion in (small amount of methane
mixed with hydrogenthe future, in collaboration with since hydrogen is notvisible)
other countries.

14

Trends in United States《Market background 》(ten thousand units)

U.S. Water Heater Shipments

Tank-based water heaters

Tankless water heater ratio

Tankless water heaters

Tankless water heater ratio

U.S. water heater shipments

Around 10 million water heaters
shipped annually in the U.S. market,
more than 90% of which are tankbased water heaters with low thermal
efficiency. The shift to tankless waterheaters with higher thermal efficiency
is gradually progressing.

GlobalSource: Prepared by Rinnai based on Air-Conditioning, Heating, and Refrigeration Institute (AHRI) statistics.

《Rinnai’s strategy》
Until around 2035, Rinnai will work to replace tank-based
systems with more efficient tankless systems. After that, as themarket for renewable energy electricity expands, we will aim tobecome carbon neutral by promoting heat pumps and otherelectrified products that utilize renewable energy electricity.

Tank-based water heater
60% heat efficiency

Condensing tanklesswater heater
92% heat efficiency
15Rinnai’s Product Development RoadmapJapan

We will continue entrenching our technologies while monitoring trends in theenergy supply system as we move from “low carbon” to “decarbonization.”
Eco Jozu (condensing)Water heaterwith heatingsystem

BathwaterheaterHydrogencombustion system
Heat pump(Electric)

Solar panels

Storagebattery

Hybrid2020

Integrated system

2030

2040

2050
16

•Background to Carbon Neutrality•

Initiatives and Direction to Realize Low-Carbon andDecarbonized Society•

Reducing CO2 Emissions from Business Activities•Investing in Carbon Neutrality

Reducing CO2 Emissions from Business Activities

GlobalCO2 emissions from factories/offices
Zero CO2 emissions target* CO2 emissions when no measures are taken

CO2 emissions

CO2 emissions fromfactories↓To zero over long term
2013

(Base year)

Reduction throughenergy-saving
improvements
Measures toreduce energy
use2030

Japan

Factories/offices

Scope 1(Gas/fuel)Scope 2(Electricity)

Overseas

Factories/offices

By 2050
By 2030

By 20502050

We will also promote improvements and environmental measures to reduce
CO2 emissions from our business activities, aiming for zero emissions by 2050.
18

Zero CO2 emissions Challenge for Factories and OfficesJapan

CO2 emissions from domestic factories and offices
CO2 emissions

CO2 reduction through use of greener electricity

Scope 2Generatedenergy
Scope 1

Scope 1

2013

2030

(Base year)

Energy-saving activities at factories/offices
Introduction of non-fossil-fuel equipment

2040

2050

Achieve zero Scope 2 emissions by 2030 through purchase of green electricity and energy creation
Continue efforts to achieve zero Scope 1 emissions by promoting energy conservation
activities and introducing non-fossil-fuel equipment at factories and offices

Make proactive environmental investments to switch torenewable energy facilities and non-fossil-fuel facilities
19•

Background to Carbon Neutrality•

Initiatives and Direction to Realize Low-Carbon andDecarbonized Society•

Reducing CO2 Emissions from Business Activities•

Investing in Carbon Neutrality

Investing in Carbon Neutrality

GlobalCash flow scenarios (From fiscal 2022 ending March 31, 2022, to fiscal 2026, ending March 31, 2026)
Inflows

Operating CF¥200 billion

Appropriation ofcash carriedforward¥65 billion

Outflows

Main investments in carbon neutrality

Investment
required for basicscenario¥80 billion

Product development
Expansion of Innovation Center
Development of hydrogen combustion equipment
Development of heat pump equipment

Growth-oriented
investments &strategic
expenditures
Up to ¥125 billion

Manufacturing
Switch to renewable energy and non-fossil-fuel facilities
Switch to green power

Shareholder
return¥60 billion or moreSales
ECO ONE sales promotion (Japan)
Spread of energy-saving water heaters (global)
More than ¥50 billion cumulative investments over 5 years

Accelerate innovation in product development, manufacturing, and sales by investing
aggressively to become carbon neutral21Investing in Carbon Neutrality
Main investments in carbon neutrality

GlobalEstimated investments(5-year cumulative)

Productdevelopment

Expansion of Innovation Center
Investment in hydrogen combustion equipment, heat pumpequipment, and other next-generation technologies¥30 billion or more

Manufacturing

Switch to renewable energy and non-fossil-fuel facilities
Switch to green power¥15 billion or moreECO ONE sales promotion (Japan)
Spread of energy-saving water heaters (global)¥5 billion or moreSales

Accelerate innovation in development, manufacturing, and sales by investing aggressively
to become carbon neutral, with more than ¥50 billion cumulative investments
over 5 years estimated22Carbon Neutral Declaration

RIM 2050
Rinnai Innovation Manifesto 2050
(Carbon Neutral Declaration)
Through innovation in product development, manufacturing, and sales, Rinnai aims to “help realize
a decarbonized society” by transcending the boundaries of its conventional business domains.

23Performance forecasts and other future-oriented predictions contained in these materials are based on the Company’s judgments
using available information. Actual results may differ from such forecasts and predictions due to changing future circumstances.

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