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 3.34 million tons in FY2022.

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 the Daigas Group’s city gas business for FY2022 stood at 143,000 tons, with CO2 emissions per cubic meter of gas production (emissions intensity) of 19.7 g. Compared to 1990, the Kyoto Protocol’s benchmark year, total CO2 emissions were down by 46%, and emissions on a per-unit basis fell by 66%.

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 FY2022, CO2 emissions and intensity increased from the previous fiscal year due to the impact of an increase in the electricity purchased from outside at processing facilities.

In 1979, the Daigas Group became the first company in the world to begin operating a cryogenic power generation facility, and in FY2022 it produced approximately 33 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 the Daigas Group, 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 FY2022, Osaka Gas emitted 57 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.

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.

Daigas Group engages in the electricity generation business using various power sources it owns, including thermal power generations, 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 460,000 kW, contributing to CO2 emissions reduction.

On March 29, 2022, Osaka Gas made an investment in Leben Energy NO. 1 GK, which owns and operates 82 small- and medium-sized solar power plants (with a total power production capacity of approximately 35,500 kW) developed by Leben Clean Energy Co., Ltd., which is an associated company of Takara Leben Co., Ltd. and develops commercial solar power plants across Japan. On March 31, 2022, Osaka Gas and Sky Solar Japan Co., Ltd., which develops commercial solar power plants across Japan, came to an agreement that Osaka Gas would invest in domestic solar power plants developed by Sky Solar Japan based on their agreement^*1 signed in October 2021 on continuous joint development and ownership of commercial solar power plants, mainly small- and medium-sized ones. The power plants were developed by Sky Solar Japan across Japan. The total power production capacity of the six power plants is approximately 23,000 kW.

Osaka Gas has also been developing renewable energy power sources in various fields. The company participated in the Yokohama Town Wind Power Plant (Kamikita-gun, Aomori Prefecture) and Hyuga Biomass Power Plant (Hyuga City, Miyazaki Prefecture) projects. In terms of wind power generation projects, a consortium in which Osaka Gas participated became Japan’s first selected based on public offering guidelines towards realization of a floating offshore wind power generator in a marine renewable energy power generation facility maintenance promotion area offshore Goto City, Nagasaki Prefecture.

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^*2 in and outside Japan, including sources developed in-house, owned, or procured from other companies, by FY2031. It also aims to increase the percentage of renewable energy in its electricity business in Japan to about 50%^*2.

On July 19, 2021, Osaka Gas acquired the Yokohama Town Wind Power Plant through joint investment with Tokyu Land Corporation and Development Bank of Japan Inc. in GK Yokohama Town Wind Power. This is the second project in which the three companies will jointly invest, following the Noheji Mutsu Bay Wind Power Generation Project (power generation capacity: 39,600 kW) announced in October 2020.

This onshore wind farm with a planned power generation capacity of 43,200 kW is under construction in Yokohama Town, Kamikita-gun, Aomori Prefecture, and is aiming to start operation in April 2023. Japan Wind Development Co. Ltd. Group, which has been developing this project so far, will continue to carry out construction management, operation, and maintenance as a joint venture.

The three companies will continue to jointly promote and expand renewable energy by leveraging the knowledge of the renewable energy business of Osaka Gas and Tokyu Land and the financial knowledge of DBJ.

On September 3, 2021, Shiribetsu Wind Development Co., Ltd., in which Daigas Gas and Power Solution Co., Ltd., a wholly owned subsidiary of Osaka Gas Co., Ltd., has a stake, commenced commercial operation of the Shiribetsu wind farm.

The power plant is an onshore wind farm with a power generation capacity of 27,000 kW located in Suttsu-cho, Suttsu-gun, Hokkaido, and Rankoshi-cho, lsoya-gun, Hokkaido. Construction had been underway to start business after the transfer of shares from Japan Wind Development Co., Ltd. to the Daigas Group in 2018. The Daigas Group entered in the wind power generation business in 2004. With the addition of this power plant, the total number of onshore wind farms which started commercial operation in and outside Japan has increased to nine (total power generation capacity: 190,000 kW). This is the first onshore wind farm that has started commercial operation in the eastern part of Japan.

On April 15, 2021, Osaka Gas decided to build a biomass power plant with a generation capacity of 50,000 kW in Hyuga City, Miyazaki Prefecture, jointly with ITOCHU Corporation, Tokyo Century Corporation, and Tokyo Energy & Systems Inc. The project will be operated in harmony with the local community.

Building and operation of the project will be undertaken by Hyuga Biomass Power Generation Co., Ltd., which is jointly owned by Osaka Gas (35%), Aoyama Solar Co., Ltd., a subsidiary of ITOCHU (35%), Tokyo Century (25%), and Tokyo Energy & Systems (5%). The project aims to start operation in November 2024.

In the project, Green Power Fuel Corporation, a subsidiary of Osaka Gas, will supply domestically grown wood chips over the long term as part of fuel, aiming for harmony with the local community in offering renewable energy. Hakko Transportation Co., Ltd., which is headquartered in Hyuga City, will offer full support in unloading, storing, and transporting fuel, including imported wood pellets.

Osaka Gas has been studying measures to help improve the resilience of the local community by supplying electric power generated by the project to the grid in the local area in the event of an emergency, such as a natural disaster.

In operation of the project, Daigas Gas and Power Solution Co., Ltd., a wholly owned subsidiary of Osaka Gas, will undertake technical support and project management support.

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.

On December 17, 2020, Ichihara Biomass Power Co., Ltd., a joint venture established by Osaka Gas, ITOCHU Corporation, and Mitsui E&S Engineering Co., Ltd., started commercial operation.

This power plant is located in the Chiba Works of Mitsui E&S Holdings Co., Ltd. in Ichihara City, Chiba Prefecture. It is a biomass power plant that uses wood pellets and palm kernel shell (PKS) as fuel (power generation capacity: 49.9 MW). Its estimated annual power generation is about 350,000 MWh, which is equivalent to the annual power consumption of about 120,000 households.^* The launch of the power plant project was announced in September 2017. The plant was constructed by Mitsui E&S Engineering. The three companies will ensure stable management of the power plant by taking full advantage of their strengths. Specifically, a group company of Mitsui E&S Holdings Co., Ltd. will operate and maintain the plant, ITOCHU will supply the biomass fuel, and Osaka Gas will offer power plant management expertise.

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.

On December 17, 2021, Green Power Fuel Corporation (hereinafter, “GPF”) signed a cooperation agreement with Shiso City, Hyogo Prefecture, on the utilization of fast growing trees for fuel applications, aiming for local production and consumption of biomass fuels and sustainable growth of domestic forestry. GPF decided to start a demonstration project that aims to build a stable supply system of biomass fuels using fast growing trees, in cooperation with Shiso City, Hyogo Prefecture, which has abundant forest resources (land suitable for project operationalization). The company focuses on fast growing trees,^*1 which are expected to have shorter growth and logging cycles than those of general tree species, from the viewpoint of further increasing its biomass procurement volume and reducing cost. As the first step of this project, the company plans to examine the growth of fast growing trees and evaluate their usefulness as biomass fuels through trial planting in the forests owned by Shiso City and on abandoned cultivated land. Through this demonstration project, GPF will work to build a sustainable business model for domestic forestry by utilizing fast growing trees as fuels and by utilizing the output of this project. The company will try to realize the independent operation^*2 of biomass power plants after the purchase period under the FIT scheme expires.

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, power generation 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 transactions 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 applied to promote introduction of renewable energy in 2012. In April 2022, the FIP scheme was introduced in accordance with the Energy Supply Resilience Act. For FIP and non-FIT renewable energy, power generation companies are required to forecast the output. Thus, demand for the forecast of the renewable energy power generation amount is expected to increase. Osaka Gas will continue to work on utilization of the forecast of the power generation amount based on knowledge derived from the above demonstration, etc.

On November 3, 2021, Osaka Gas concluded a capital alliance agreement with JEDLIX B.V. (hereinafter, “JEDLIX”), which is engaged in the balancing^*1 services business in Europe, through Osaka Gas UK, Ltd., a wholly owned subsidiary of Osaka Gas. Osaka Gas will participate in the balancing markets^*2 in Europe, which is most advanced in the design of the system in the world.

Recently, the balancing function has become increasingly important to cope with fluctuations in the renewable energy output depending on weather conditions in line with global introduction of renewable energy. Europe was quick to introduce renewable energy. Its system design of the balancing market is the most advanced in the world.

JEDLIX is an aggregator^*3 operating in Europe. It performs balancing by remotely controlling batteries of electric vehicles (hereinafter, “EVs”) through its proprietary system. JEDLIX is a startup established in 2016. It operates in seven countries, including the Netherlands and France, and has been expanding its business steadily. JEDLIX aims to expand its business by further promoting partnerships with EV manufacturers, EV charging spot operators, and energy retailers.

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.