Environmental Management: Indicators, Targets and Results

To reduce the environmental impact of its Group-wide business activities, the Daigas Group has set medium-term environmental targets in its Long-Term Management Vision 2030 and other plans and manages progress in achieving the targets.
The environmental targets the Group is striving for include those for CO2 emissions reduction, more widespread use of renewable energy, waste reduction and recycling, and the reduction of excavated soil for final disposal. We also annually calculate GHG emissions (a chief cause of climate change) from the activities throughout our Group’s value chain and use that data to advance our efforts to reduce GHG emissions.

Third-party verification completed Osaka Gas underwent a third-party review by Bureau Veritas Japan Co., Ltd.

The Long-Term Management Vision 2030, announced by the Daigas Group in March 2017, declares that the Group will further enhance ESG-conscious management and sets an environmental target of reducing its GHG emissions by a total of approximately 70 million t-CO2 during the period from FY2018 to FY2031. In January 2021, the Daigas Group formulated and announced the Daigas Group Carbon Neutral Vision, which expresses the Group’s determination to take on the challenge of achieving carbon neutrality by 2050. In March of the same year, the Group also announced its Medium-Term Management Plan 2023: Creating Value for a Sustainable Future. These have updated the targets set in the Long-Term Management Vision 2030, and the Group has set a target of 10 million tons of CO2 emissions reduction contribution by FY2031 as a materiality index.
This target for avoided CO2 emissions was set based on the estimated CO2 emissions reduction that the Daigas Group will achieve by introducing highly energy-efficient equipment, low-carbon energy sources, etc. in its business activities from FY2018 onward, with reference to the CO2 emissions level in FY2017.

The CO2 emissions reduction effect of the Group’s various measures was estimated by summing the products of the following multiplication: [the forecast quantities of highly energy-efficient equipment, low-carbon energy sources, etc. to be introduced] × [CO2 emissions reduction per unit quantity to be made by replacing the current equipment, energy sources, etc. with them]. This calculation method is based on that of calculating the CO2 emissions reduction shown in the Japanese government’s Plan for Global Warming Countermeasures (approved by the Cabinet in October 2021). In addition, based on the above concept, the marginal emission factor (average emission factor of thermal power sources) was used as the CO2 emission factor of purchased electricity. As shown by the graph below, the expansion of the Daigas Group’s business scale will naturally entail an increase in all Scope 1, Scope 2, and Scope 3 GHG emissions. However, the Group’s efforts to reduce CO2 emissions, including replacing the current energy sources and systems with low-carbon ones, will help reduce CO2 emissions from other companies’ operations and their value chains, contributing to society-wide CO2 emissions reduction.

For more details about the method of calculating avoided CO2 emissions, click the link below.

The Daigas Group’s initiatives for CO2 emissions reduction resulted in avoided CO2 emissions of approximately 3.36 million tons in FY2022. Those initiatives included the use of cryogenic power generation at our LNG terminals, the introduction of renewable energy sources in Japan and high-efficiency thermal power generation in Japan and abroad, the introduction of fuel cells, gas-powered air conditioning, and high-efficiency hot-water heaters at customer sites, and conversion to the use of natural gas as a fuel in Japan and abroad. We will continue to introduce highly energy-efficient equipment, low-carbon energy sources, etc. into both our own and customers’ facilities to make active contributions to realizing a low-carbon society.

Recognizing that global warming is a global long-term issue to be solved, the Japan Business Federation (Keidanren) formulated a plan titled “Keidanren’s Commitment to a Low Carbon Society” in 2013 (revised in 2017), presenting a vision common to the Japanese industries of leveraging their technological prowess to play a central role in achieving the target of reducing global GHG emissions by half by 2050. This plan envisions that each member industry should work to reduce CO2 emissions from business activities and people’s lives in Japan by introducing the best available technologies (BAT) to the maximum and that aspiring initiatives to stop global warming should be actively encouraged abroad. The plan also sets targets for strategically developing innovative technologies that will help achieve a breakthrough for the reduction of CO2 emissions by half by 2050.
Among the industrial organizations participating in this plan, the Japan Gas Association and the Electric Power Council for a Low Carbon Society have established their own action plans to achieve a low-carbon society in the city gas industry and the electricity industry, respectively. Osaka Gas, a member of both organizations, participates in those plans for both industries and promotes initiatives to address global warming (climate change).

In June 2021, this plan was renewed as the “Keidanren Carbon Neutrality Action Plan.” From now on, we will formulate a plan to achieve carbon neutrality by 2050 and promote initiatives to serve that purpose.

Third-party verification completed Osaka Gas underwent a third-party verification by Bureau Veritas Japan Co., Ltd. (The items marked with “^*” are subject to verification.)

The results for each target established based on the Medium-Term Management Plan 2023 are as follows.

Third-party verification completed Osaka Gas underwent a third-party verification by Bureau Veritas Japan Co., Ltd.

The Daigas Group calculated GHG emissions from its entire value chain in accordance with guidance given by the GHG Protocol, which provides international standards for GHG emissions reduction. The calculation method and results have been verified in terms of reliability and accuracy by a third-party organization.

The calculation has revealed that in FY2022, the total GHG emissions were approximately 26.79 million tons-CO2, of which approximately 4.86 million tons-CO2 (about 18%) was Scope 1 and Scope 2 emissions from the Group’s own business activities, and approximately 21.92 million tons-CO2 (about 82%) was Scope 3 emissions from other parties throughout the Group’s value chain. City gas and LNG combustion at customers’ sites accounted for about 64% (17.09 million tons-CO2) of the total GHG emissions. This indicates that facilitating CO2 emissions reduction in society as a whole requires us to further promote energy conservation using natural gas with low CO2 emissions and encourage more widespread use of highly energy-efficient equipment and systems, including ENE-FARM and cogeneration systems.

Meanwhile, among our own business activities, the power generation business accounted for about 16% (4.38 million tons-CO2) of the total GHG emissions, which accounts for the majority of CO2 emissions from our business activities. Accordingly, we will continue our efforts to reduce our GHG emissions by introducing the most advanced highly energy-efficient power generation facilities and renewable energies as power generation sources.

Also, material and fuel procurement accounted for about 18% (4.74 million tons-CO2), over 70% of which was from the procurement of LNG and other energy sources. We will continue collaborating with suppliers in GHG emissions reduction and working to enhance the fuel efficiency of carriers.

In addition to GHG emissions, various forms of the environmental impact include general and industrial waste, and excavated soil, used polyethylene (PE) pipes, and other scraps from gas piping works. We have recycled a high percentage of these kinds of waste and will strive to maintain the current level. About 97% of water used for our business activities is taken from the sea. Seawater is mainly used to gasify LNG at our LNG terminals or as coolant in steam turbine condensers at some power plants. Once used, water is discharged under appropriate management, instead of being consumed.

The chart below uses life cycle assessment (LCA^*1) to show a comparison of fossil fuel greenhouse gas emissions (as carbon dioxide equivalents), covering all processes from production to combustion. LNG is the cleanest energy of all fossil fuels in terms of GHG emissions.

In FY2001, we introduced environmental accounting, which we see as an important tool for quantifying environmental costs and economic benefits toward more efficient environmental activities and continuous enhancement of our environmental performance.

Environmental conservation costs the aggregate of environmental investment and expenses for FY2022 increased from the previous fiscal year mainly due to an increase in capital investment for climate change countermeasures and an increase in purchase expenses for piping materials, printing, and office equipment. In terms of internal economic effects, cost reduction progressed through energy and resource saving.

We will continue to follow up on our environmental initiatives in monetary terms to ensure efficient environmental investment and expenses.

Osaka Gas's environmental accounting method, which calculates costs and benefits, is based on the 2000 version of The Environmental Accounting Guidelines For Gas Utilities released by the Japan Gas Association. The guidelines are based on the Ministry of the Environment's Creating an Environmental Accounting System guidelines and reflect the distinctive characteristics of city gas companies.

Osaka Gas Co., Ltd.

April 1, 2021 - March 31, 2022
In order to improve the accuracy of environmental accounting as well as reduce the workload, Osaka Gas developed and operates a system tied to the in-house financial accounting system since FY 2001.

The aggregate figures for each item are compiled as far as possible using only costs incurred for environmental purposes (differential aggregation). R&D and personnel costs from which it is difficult to extract only those costs incurred for environmental purposes are calculated on a pro rata basis using an “environmental ratio” determined in accordance with their degree of connection to the environment.
Investment: aggregate of the fixed assets acquired in the fiscal year in question that contribute to environmental improvements
Costs: aggregate of depreciation costs, labor costs and expenditures for environmental efforts
Depreciation of fixed assets acquired since 1997 (including terminals and other large-scale facilities acquired prior to that) is calculated via the declining balance method over the useful life of the equipment. Labor costs are calculated using standard unit costs.

The benefits accrued from cutting expenses that can be clearly reduced based on the company's operational performance were aggregated.

The monetary values of social benefits derived from reducing environmental impact were calculated. For final disposal of excavated soil, the monetary values of social benefits stemming from environmental conservation are calculated by multiplying the base unit price determined through the contingent valuation method (CVM; a method in which residents are surveyed on the amounts they are willing to pay for environmental conservation and then the monetary value of this conservation is calculated) by the reduction in environmental impact.
Base units were also selected for other environmental impacts corresponding to the amount of environmental value on the basis of research on environmental damage costs, etc., both inside and outside Japan, and then the environmental conservation benefits were calculated by multiplying these base units by the respective amounts of harmful impacts curbed.

Third-party verification completed Osaka Gas underwent a third-party verification by Bureau Veritas Japan Co., Ltd.

Osaka Gas has adopted environmental management efficiency as an indicator and uses it to continuously assess the progress of environmental management in an integrated manner. This indicator is intended to assess the environmental management of the Company’s gas business, separately from its power generation and other businesses. The indicator is designed to quantify the environmental impact of the Company’s business activities by converting the value per unit gas production of each of the various forms of the impact, such as GHG emissions, NOx emissions, COD emissions, final disposal of general and industrial waste, final disposal of excavated soil, chemical emissions, and water consumption for general and industrial use, into monetary values and summing up those values (yen/1,000 m³).