Actions for Climate Change: Working to Reduce CO2 Emissions in Business Activities

In line with the worldwide trend toward action against climate change, the Daigas Group is striving to reduce GHG emissions from its business activities, including CO2 and methane (CH4), to help realize a low-carbon or decarbonized society. Specifically, we devote positive efforts to reduce CO2 emissions from liquefied natural gas (LNG) transportation, city gas production, and power generation. We also implement various energy-saving measures at offices, scale them up Group-wide, and verify their effects in our own buildings.

We announced the Daigas Group Carbon Neutral Vision in January 2021 and the Daigas Group Medium-Term Management Plan 2023: Creating Value for a Sustainable Future in March of the same year to further accelerate our efforts toward low-carbon or decarbonized business operations.

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

The Daigas Group has been introducing cryogenic power generation facilities for city gas processing, high-efficiency thermal power generation, and renewable energy sources (solar, wind, biomass, etc.). These business activities have contributed to a reduction in emissions of approximately 2.84 million tons in FY2021.

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

In the Daigas Group, we work to reduce CO2 emissions from energy consumption and methane (CH4), the main component of natural gas in the gas business and in the thermal supply and power generation businesses, as well as CO2 emissions from energy consumption at affiliates.^*

CO2 emissions in Osaka Gas’s city gas business for FY2021 stood at 135,000 tons, with CO2 emissions per cubic meter of gas production (emissions intensity) of 18.6 g-CO2/m³. Compared to 1990, the Kyoto Protocol’s benchmark year, total CO2 emissions were down by 49%, and emissions on a per-unit basis fell by 68%.

Efforts in recent years, such as the use of cogeneration systems and cryogenic power generation at city gas processing plants, energy efficient operations, and efforts to conserve energy in office buildings have succeeded in keeping both emissions and intensity at low levels. In FY2021, CO2 emissions and intensity increased from the previous fiscal year due to the impact of partial line stoppages caused by construction work at processing facilities.

In 1979, Osaka Gas became the first company in the world to begin operating a cryogenic power generation facility, and in FY2021 the Senboku LNG Terminal and the Himeji LNG Terminal produced approximately 31 million kWh cryogenically.
We will work toward further CO2 emission reductions by aggressively using electricity produced by unused energy such as LNG cryogenics and the gas pressure of gasification, as well as by promoting energy savings in office buildings.

In the city gas business of Osaka Gas, methane (CH4) gas is emitted during measurement of gas quality and gas fitting work. We therefore strive to reduce emissions by introducing a system that can recollect gas without it being released into the air after the measurement, by employing a no-blow gas shutting-off method and using an Eco Purge vehicle.
In FY2021, Osaka Gas emitted 58 tons of methane, achieving a continuous reduction.

We are endeavoring through a variety of energy conservation activities to reduce CO2 emissions at city gas processing terminals. We are endeavoring to reduce CO2 emissions at city gas processing terminals through a variety of energy conservation activities.

For example, our initiative to recover cold energy from LNG gasification facilities and use it for power generation has helped reduce our electricity purchasing. This method of producing electricity using LNG cold energy, called cryogenic power generation, neither needs fuels nor emits CO2. Two cryogenic power generation facilities are in operation each at the Senboku LNG Terminal and the Himeji LNG Terminal.

The Group is also putting in place various policies to ensure the efficient operation of LNG cryogenic power generation facilities. Cold energy from LNG is supplied to a chemical plant adjacent to the Senboku Terminal for their cooling processes, also helping other companies in the vicinity to save energy and reduce CO2 emissions.

At offices of each company of the Daigas Group, many small steps are being taken to save energy that will add up for achieving energy consumption and CO2 emissions targets. These include having all employees turn off lights that are not needed, switching off office equipment if not in use, and maintaining air conditioning temperatures at reasonable levels. The effort is based on standards such as ISO 14001, Eco Action 21, developed by the Ministry of Environment, and the Daigas Group Environmental Management System (OGEMS). Under the EMS, each and every employee strives to reduce his or her own energy consumption by turning off lights and office equipment not currently needed or in use, and setting air conditioning to reasonable temperatures in line with set targets.

The Daigas Group has actively been implementing advanced energy-conservation measures and measures to reduce CO2 emissions when its buildings are renewed or renovated.

Measures deemed effective for energy saving are horizontally applied to all office buildings of the Daigas Group under the Green Gas Buildings project, which has so far resulted in nine extensively renovated or newly constructed “Green Gas Buildings” by August 2018.

In addition, the Fukiai office of Osaka Gas, located in Kobe City, Hyogo Prefecture, introduced “BCP-Lite,” ^*1 an emergency power-supply system that enables even a small-sized building not usually equipped with a backup power generator to continue the minimum level of business operations in the event of a natural disaster. The “BCP-Lite” is a system in which the concept of a Business continuity plan (BCP) was added to our conventional energy-saving equipment. We expect this to help the building of a low-carbon society in the future while supporting our business continuity in the event of a contingency.

The “hu+gMUSEUM,” a showroom of Osaka Gas, is equipped with facilities with high energy efficiency, including cogeneration systems, regional air-conditioning systems, solar power generation systems, and solar-heat systems. Furthermore, the Group has built a Smart Energy Network in Osaka City's Iwasaki District where the showroom is situated. The network has played an important role in promoting the region's overall energy saving by establishing an optimal energy control system to ensure the most efficient use of energy (electricity and heat) generated in buildings and devising a high energy security system that can effectively respond to unscheduled power outage.

The Daigas Group engages in the electricity generation business using various power sources it owns, including fossil-based power generation, gas cogeneration systems and renewable energy sources. The Daigas Group is striving to reduce CO2 emissions—not only from its own business operations but also from operations at customers—by introducing highly energy-efficient fossil-based power generation systems and actively using renewable energy sources.

(In the case of the Senboku Natural Gas Power Plant)

Energy-efficient natural gas cogeneration facilities are set up on the premises of a client plant. Electricity and heat (steam) generated using the cogeneration system are provided to client companies. The Daigas Group uses part of the electricity generated as electricity sources for its power business, which helps improve the cogeneration facility utilization rate, promotes efficient energy use and reduces CO2 emissions. Daigas Gas and Power Solution Co., an Osaka Gas Group company, operates this type of facility at two locations—one at the Uji Energy Center for Unitika Ltd. and the other at the Settsu Energy Center for Kaneka Corp. Power output capacity is 66,800 kW at the Uji Energy Center and 17,460 kW at the Settsu Energy Center.

In Japan, the Daigas Group owns wind, solar, biomass, and other renewable energy sources with a total capacity of approximately 340,000 kW, contributing to CO2 emissions reduction. In FY2020, Osaka Gas signed a cooperative agreement with Acacia Renewables K.K., a Macquarie Group company, so that both parties can jointly examine the possibilities for offshore wind power generation in Japan. Afterward, in July 2020, the two companies sent an Environmental Impact Assessment Consideration Statement for the Saga Karatsu City Offshore Wind Power Project (tentative name) to the Japanese Minister of the Environment and other relevant parties and submitted the statement for public inspection.
Moreover, in FY2020, Osaka Gas signed a memorandum of basic understanding with West Holdings Corporation on jointly exploring new added-value creation businesses in the field of renewable energy. In June 2020, Osaka Gas began to provide D-Solar, a self-consumption-type photovoltaic power generation service. Afterward, on August 28, 2020 and January 29, 2021, Osaka Gas concluded two bilateral contracts with West Holdings Corporation to procure electricity to be generated by West Holdings’ new small-scale photovoltaic power generation facilities for the long term. The latter contract will enable Osaka Gas to procure 200,000 kW of renewable-energy-based electricity from thousands of small-scale photovoltaic power generation facilities to be developed by the counterpart within FY2022.

In FY2021, Osaka Gas also invested jointly with Development Bank of Japan Inc. in D&D Solar GK, which was established to hold solar power assets. Through D&D Solar, Osaka Gas acquired two solar power plants from German-based BayWa r.e Solar Projects GmbH: Kuwaharajo Mega Solar (No. 4) in Izumi City, Kagoshima Prefecture (capacity: approximately 12,000 kW) and the Isoharacho Tokkou Power Plant in Kitaibaraki City, Ibaraki Prefecture (capacity: approximately 35,000 kW).

To achieve carbon neutrality by 2050, the Daigas Group will contribute to increasing the power generation capacity of renewable energy sources by 5,000 MW* in and outside Japan, including sources developed in-house, owned, or procured from other companies, by FY2030. It also aims to increase the percentage of renewable energy in its electricity business in Japan to about 50%^*.

On October 28, 2020, Osaka Gas signed a memorandum of understanding with Tokyo Land Corporation and Development Bank of Japan Inc. (hereinafter, “DBJ”) for joint investment aimed at contributing to more widespread use of renewable energy. As their first joint project, the three companies made a silent partner investment in GK Aomori Wind Power.
This project aims to construct a 36,000 kW onshore wind farm in Noheji Town, Kamikita District, Aomori Prefecture, and put it into operation in April 2022. Japan Wind Development Co., Ltd., which has developed this project so far, will continue to manage it as a co-operator.

DBJ evaluated this project as an innovative initiative of Tokyu Land Corporation and Osaka Gas for more widespread use of renewable energy in Japan, and it used the system of Special Investment Operations^* to provide financial support for the project.

The three companies will continue joint efforts toward more widespread use of renewable energy, including wind power, by utilizing the expertise of Tokyu Land and Osaka Gas in the renewable energy business and DBJ’s financial expertise.

On November 5, 2020, Osaka Gas announced that it decided to build a biomass power plant in Tahara City, Aichi Prefecture, jointly with JAG Energy Co., Ltd. and Marubeni Clean Power Corporation.

This project aims to complete a 75,000 kW biomass power plant that will use wood pellets as fuel in October 2024. The percentages of ownership of Aichi Tahara Biomass Power Plant G.K., a limited liability company that will build and operate the plant, will be 37.5% for JAG Energy, 37.5% for Marubeni Clean Power, and 25% for Osaka Gas.

After the start of the plant’s commercial operation, Daigas G&P Solution Co., Ltd., a wholly owned subsidiary of Osaka Gas, will play the role of the owner's engineer^* as a contractor by making use of Osaka Gas’s accumulated knowledge of power plant operation.

In March 2021, Osaka Gas USA Corporation, a wholly owned subsidiary of Osaka Gas, invested in Starfire Energy Inc., which is developing systems to economically produce carbon-free, storable fuel known as “Green Ammonia”^*1 from renewable energy, air and water. Other investors include AP Ventures,^*2 Chevron Technology Ventures,^*3 New Energy Technology Pty Ltd,^*4 and Mitsubishi Heavy Industries America, Inc.

Ammonia is attracting attention as an alternative to fossil fuel because it does not emit CO2 in combustion and can be stored and transported with existing infrastructure technology. Green Ammonia, in particular, does not emit CO2 in production as well and is likely to serve as an energy source that can immensely help achieve a carbon-free society. Therefore, there are heightened expectations of green ammonia manufacturing and supply being established as a business as early as possible.

Starfire Energy Inc. is a U.S.-based startup founded in 2007 to develop renewable energy solutions, which later evolved into a focus on small-scale distributed ammonia production modules^*5 and technology for cracking ammonia into hydrogen to generate electricity. Particularly in the field of ammonia synthesis, Starfire Energy has not only a catalytic technology but also a technology for responding flexibly to the fluctuating output of renewable energy, with lower pressure and higher energy-saving efficiency compared with conventional technologies. The company is currently striving to scale up those technologies toward commercialization.

In March 2019, Osaka Gas established Green Power Fuel Corporation, a joint venture company that procures and sells domestically grown woody biomass for biomass power plants, in cooperation with Seishin Shinrin Shigen Co., Ltd. and Nippon Paper Lumber Co., Ltd.

The Daigas Group already operates or plans to operate seven biomass plants in Japan, including participating in operating the Matsusaka Woody Biomass Power Plant, which is fueled 100% by locally available biomass. In cooperation with Seishin Shinrin Shigen, which has abundant knowledge about forestry, and Nippon Paper Lumber, which has a long track record in dealing in domestically grown woody biomass, Green Power Fuel Corporation procures and transports unused wood from woodlands in Japan as power generation fuel to ensure stable long-term biomass supply for multiple biomass power plants owned or developed by the Daigas Group.

The Daigas Group is also studying the possibility of selling woody biomass to other power generators in the future, aiming to consistently expand the business by utilizing the three companies’ strengths.

Osaka Gas conducted a demonstrative experiment on the forecast of solar power generation output in cooperation with Next Kraftwerke (hereafter, “NXK”), a German virtual power plant (VPP^*1) operator. The demonstrative experiment was started on October 1, 2019 at the Yura Solar Power Plant (south) owned by Yura Wind Power Development Co., Ltd., a wholly owned subsidiary of Gas and Power Co., Ltd. (currently Daigas Gas and Power Solution Co., Ltd.), a Daigas Group company. The aim of this experiment was to help achieve a highly accurate forecasting service for solar power generation output. Osaka Gas has been working to improve the accuracy of its short-range weather forecast technology, as seen in its registration as a weather forecast service company authorized by the Japan Meteorological agency in September 2018. The aim is that this experiment will help achieve a high accuracy of solar power forecasting by making forecasts in a timely manner while taking into account weather changes occurring up to one hour before.

In Germany, where renewable energy is now widely used, the feed-in tariff (FIT) scheme was adopted in 2000 so that power generated with renewable energy would be purchased at fixed prices. In 2012, to integrate renewable energy into the electricity market, the country adopted a scheme whereby the power purchase price is determined by adding a premium^*2 to the market price. This scheme is known as the feed-in premium (FIP) scheme.^*3 In step with this, renewable energy companies have begun to carry out renewable energy generation forecasting. Therefore, many companies have come to seek business opportunities in services such as accurate forecasting of renewable power output, which fluctuates significantly, and marketing transaction on behalf of renewable energy companies. NXK is one of these companies, boasting extensive experience in this field, as seen in its management of solar power generation of 3,100 MW in Germany.

Meanwhile, in Japan, the FIT scheme was adopted in 2012 to encourage the use of renewable energy. The FIP scheme will also be adopted in Japan in compliance with the Act on Partial Revision of the Electricity Business Act and Other Acts for Establishing Resilient and Sustainable Electricity Supply Systems, which will come into effect in April 2022. It is expected that services similar to those in Germany will become necessary under the FIP scheme.

Osaka Gas has been making various efforts to realize demand response (DR)^*4/VPP operation services for the effective use of distributed energy resources, including demonstrative experiments on optimal storage-battery operation and control, which started in August 2018. In the latest demonstrative experiment, Osaka Gas worked toward providing new services for more effective use of renewable energy in anticipation of system changes.

Osaka Gas Singapore Pte. Ltd., a wholly owned subsidiary of Osaka Gas, and Energy Pro Corporation Ltd., a solar power generation company in Thailand, agreed on establishing a joint venture, OE Solar Co., Ltd. (hereinafter, “OE Solar”) in July 2019 to launch a solar power supply business in Thailand.

In Thailand, the government-approved power development plan for 2018 predicts that renewable energy will account for 20% of all power sources (excluding imported hydropower) by 2037. Public interest in renewable energy is growing in the country. Blessed with abundant sunshine, there is high demand for the introduction of solar power facilities at no initial cost.

To capture this new demand mainly among industrial and commercial customers, OE Solar will install solar power generation equipment on the roofs of buildings or in other spaces owned by such customers mainly in Bangkok. The company will continuously supply thus generated power for the customers for 15 to 20 years. By actively promoting the solar power supply business, we will contribute to reducing the environmental impact in Thailand.