Carbon neutrality/climate change action

Idemitsu Kosan is committed to fulfilling its "responsibility to support people's lives" and "Responsibility to protect the global environment now and in the future" by leveraging the strengths of its own group provide for society power to realize a carbon neutral (CN) and recycling-oriented society. With regard to climate change-related initiatives, we will continue to strengthen information disclosure in a manner consistent with the framework of the TCFD recommendations, which we signed in support of in 2020, and accelerate our efforts with the understanding and cooperation of all our stakeholders.

The pages on which each item of the TCFD framework is posted on this website are listed in the table below.

(Supplementary item)

An overview of our corporate governance system is provided in the link below, and supplementary information regarding our response to climate change is provided below.

For our company, whose main business is the sale of fossil fuels, responding to climate change is one of our most important management issues, and it is an initiative that will involve a large-scale transformation of our business portfolio over the medium to long term.
The Board of Directors has the role of determining management policies based on a multifaceted approach to this issue, and supervising that actions based on those policies are carried out quickly and steadily.
The 11 directors who make up the Board of Directors are people with experience, track record, and knowledge in a variety of fields, including the environment, Resources circulation, domestic and international energy transition trends, related advanced technology, and sustainability.

Major climate change-related proposals are submitted to the Management Committee, which is the highest deliberative body for business execution, and particularly important matters are reported to the Board of Directors. This has created a system in which the Board of Directors supervises whether execution is steadily being carried out based on company-wide policies.

Efforts to address climate change are company-wide and cover a wide range of themes. Therefore, we recognize the need to accelerate the planning and execution of company-wide strategies to realize a carbon-neutral (CN) society, and our specialized department (CNX ^* Strategy Office) is taking the lead in promoting this. Carbon Neutral Transformation Department leads company-wide CN strategy planning, GHG reduction target setting, and CNX human resource development in collaboration with related internal departments.
Each business division formulates and executes its own CN strategy based on company-wide policies. These major responses to climate change, led by each department within the company, are brought forward to the Executive Committee, where the content is deliberated in light of company-wide policies. The members of the Management Committee place emphasis on diversity in their specialized fields and areas of responsibility, and have established a system for comprehensive and effective discussions on cross-divisional issues and risks.

* CNX: Carbon Neutral Transformation

*1 Establishment of management policies based on climate change issues Supervising the implementation of actions based on policies
*2 Deliberation of major climate-related topics
*3 Scenario analysis, company-wide investment and loan policy formulation and management
*4 Company-wide CN strategy planning, GHG reduction target setting, progress monitoring of each department strategy
*5 GHG emissions capture and monitoring
*6 CN strategy planning and execution by business division

The remuneration system for our directors (excluding part-time directors and outside directors) and senior executive officers and above consists of ① fixed compensation, ② performance-linked bonuses, ③ performance-linked stock compensation, and ③ performance-linked stock compensation. It also includes CO₂ _​ reduction indicators that are essential for realizing a carbon-neutral, recycling-oriented society.

Long-term energy business environment scenario towards 2050

To specifically consider how to respond to climate change, we have formulated a long-term business environment scenario for the period up to 2050, identified risks and opportunities based on the output of the scenario, and are moving forward with the formulation of specific strategies.
Since the Company's first public announcement of its business environment scenario in 2019, the scenario has been reviewed from time to time in response to changes in the social environment, and three scenarios have been assumed when considering Medium-term Management Plan (FY2023-FY2025). Among these, we have formulated a plan with a strong awareness of the "Hekiten+" scenario, which is similar to the IEA's net zero scenario, which would make the most progress in decarbonization.
In the "Hekiten+" scenario, governments around the world take measures at a rapid pace to achieve the "1.5℃ target," and various decarbonization technologies are provide for society at an extremely rapid pace. We envision a world where this is achieved. In this scenario, in addition to renewable energy, various decarbonization technologies will be introduced, including nuclear power generation, hydrogen/ammonia combustion power generation, thermal power generation with CCS (Carbon Capture and Storage), synthetic fuel, and negative emissions. The goals of the Paris Agreement will be achieved through “total war.” Furthermore, oil demand in the Asia-Pacific region is expected to peak in 2025, and domestic oil demand is expected to decline by 30% in 2030, 60% in 2040, and 80% in 2050 compared to 2019. is.

*The three business environment scenarios are unique to our company, but the following are scenarios from other organizations that are similar to each scenario.
Cloud: IEA Stated Policies Scenario
Rainbow: Between the IEA Stated Policies Scenario and the Sustainable Development Scenario
Hekiten+: IEA Net Zero Emissions by 2050 Scenario

●Long-term energy demand outlook

Based on long-term business environment scenarios for 2050, we are identifying risks and opportunities related to climate change. We have summarized the expected timeline, financial impact level, and our response for each area, and are proceeding with specific initiatives in accordance with the details listed in the table below.
In response to risks and opportunities, we will work to strengthen the profitability of existing businesses and improve capital efficiency, create new businesses through business structure reforms investments, and transform our business portfolio. As a result, as of 2030, we are targeting an operating profit + equity profit/loss base of 270 billion yen.

*1 Financial impact over a long-term timeline Level 1: ~5 billion yen, Level 2: 5 billion yen ~ 50 billion yen, Level 3: ~50 billion yen
*2 Super engineering plastics, oxide semiconductors, high-performance asphalt, environmentally friendly agricultural and livestock materials, etc.

"Our response" to the above risks and opportunities includes potential themes for provide for society up to 2030. We are working on these as part of our transition strategy towards 2050.

We plan to invest a cumulative 1 trillion yen by 2030 to expand new businesses that contribute to CN.
The provide for society status of each project that contributes to CN may change significantly depending on future trends in technology development and policy trends in each country/region, so we will run various options simultaneously and implement the system shown in the diagram below. During Medium-term Management Plan (FY2023-2025), we will carefully select investment projects through screening based on the social value and investment efficiency of each project.
In addition, investments related to new projects are determined by checking the changes in Scope 1, 2, and 3 emissions before and after the project, as well as the reduction contribution of others, and then setting an internal carbon price (internal carbon pricing, 100$/t-CO₂ _​) to conduct sensitivity analysis and use it as a reference when evaluating investment projects.

Our transition strategy has been adopted as a model case for climate transition finance led by the Ministry of Economy, Trade and Industry.

In order to realize carbon neutrality society, we will reduce our own direct and indirect emissions (Scope 1, 2) through business operations, and contribute to the reduction of others' emissions through the provision of new products and services (Scope 3 reduction, We believe that efforts from both sides (creating reduction contribution amount) are necessary.
In moving forward with this initiative, we need to consider how we can simultaneously contribute to the environment by reducing emissions, contribute to society by supplying energy, and contribute to the economy by maintaining and expanding corporate profits. Recognizing that it is important to see how well we can achieve our goals, we have set the three indicators listed below to monitor the progress of related activities.

*Indicators 2 and 3 have been revised in light of trends in international discussions regarding avoided emissions.

The target values (target levels) for each indicator are as described below.

Regarding reducing emissions throughout the supply chain in order to realize carbon neutrality society, from the perspective of simultaneously contributing to the environment (reducing CO₂ _​) and contributing to society (supplying low-carbon energy needed by society), We will set target values using an index called "Intensity" and proceed with related initiatives.

*The area graph in the figure shows the low carbon degree of society based on the IEA scenario (our assumption)

The "Energy one step ahead" that we are promoting as a future business field is an initiative that will greatly contribute to Scope 3 reduction, and we hope to contribute to the realization of carbon neutrality society through provide for society of this field. .

* Target in 2030 assumes high-octane gasoline

●Image of reducing Scope 1, 2, and 3 emissions through business portfolio transformation

In response to increasingly severe natural disasters, we can anticipate various types of damage such as earthquakes, tsunamis, and storm surges, extract risks, and minimize damage to Refineries / Complexes in the event of a disaster and quickly restore their original condition. Extremely important. We will continue to fulfill our mission of supplying energy by strengthening our hardware by investing in equipment to strengthen our security capabilities, and by enhancing our intangible aspects from the perspective of disaster mitigation in the event of unexpected disasters.
In recent years, more and more typhoons are moving across the country while maintaining their strength, and climate change is said to be a contributing factor. Storm surges brought about by typhoons increase the risk of flooding for Refineries / Complexes located in coastal areas. Therefore, we are simulating the route in which the largest typhoon expected in the future will land directly on Refineries / Complexes, and conducting risk analysis on the impact of flooding from storm surges. Based on the results of this analysis, we are considering hardware reinforcement measures such as installing flood walls in the seawater pump room, as well as soft disaster mitigation measures by enhancing the disaster prevention response manual.

●Estimated typhoon path as a prerequisite for studying storm surge damage estimation Refinery

●Estimated image of storm surge damage

Low-carbon Petroleum

In order to realize the energy transition, we will first steadily make use of our assets (customers, human resources, stores, systems, infrastructure, equipment, etc.) and, in conjunction with new investments for next-generation businesses, provide diverse services to our customers. We will create a system that can provide a stable supply of energy.
In the biomass fuel field, we have built a SAF manufacturing facility (production capacity: 100,000 kL) at Chiba Complex using cutting-edge technology, and we plan to start supplying it in 2026, contributing as a low-carbon solution for the air transportation industry. We are aiming for This initiative has been selected as a Green Innovation Fund project ^*1 by NEDO (New Energy and Industrial Technology Development Organization).
Our interim goal is to build a system to produce 500,000 kL of SAF ^*2 annually in Japan by 2030. In building this system, we will link raw material procurement and expansion into biochemistry, and will also begin supplying biodiesel, an internal combustion engine oil, to customers.

*2 SAF: Sustainable Aviation Fuel
Jet fuel is produced from sustainable sources with low CO₂ emissions during the process from raw material production and collection to combustion.

※3 ATJ：Alcohol To Jet
It is a technology and process for producing SAF from ethanol, and has been certified as the international standard "ASTM D7566 Annex 5" for SAF.
※4 Hydroprocessed Esters and Fatty Acids：Hydroprocessed Esters and Fatty Acids
SAF production method for hydrotreating used cooking oil, vegetable oil, etc.

Establishment of CNXcenter concept

Our establishment of CNXcenter concept is to leverage the characteristics and strengths of Refineries/Complexes have operated for many years as fossil-based energy production bases, while reborn as new carbon-neutral fuel and product supply bases. In doing so, we will build a new supply chain according to the characteristics and demands of the industrial complex where each base is located, contributing to the "carbon neutrality" of the industrial complex as a whole.

Building an ammonia supply chain at Tokuyama Complex and Shunan area

Four companies, Tosoh Corporation, Tokuyama Corporation, and Japan Zeon Corporation, have started a joint study with the aim of establishing a supply system for more than 1 million tons of carbon-free fuel ammonia per year at the Shunan Complex by 2030. We will develop our Tokuyama Complex piers and storage facilities as a common supply base for ammonia in the Shunan Complex, and study the ammonia supply infrastructure for the Shunan Complex companies (on the demand side). In addition, based on this project, the four companies will promote the construction of Japan's first ammonia supply chain in the Shunan region through various initiatives, such as demonstrations of ammonia combustion in actual equipment.

SAF manufacturing using ATJ process technology at Chiba Complex

Implementation of efficiency improvement work on heavy oil direct desulfurization equipment

In May 2020, we carried out renovation work to improve the efficiency of the heavy oil direct desulfurization equipment (RH equipment) at Chiba Complex. This work is intended to comply with the low sulfur content regulations for marine fuel set by the IMO (International Maritime Organization).

Construction of high-efficiency naphtha cracking furnace (Tokuyama Complex)

Expanding the use of electricity derived from renewable energy

Starting in fiscal 2020, we have decided to use CO₂-free electricity (3,732kW of contract power) provided by Idemitsu Green Power oil terminal terminals and other locations in Japan.

Supplying renewable energy to offshore oil fields

Sales of coal boiler control optimization system (ULTY-V plus™)

We jointly developed the boiler control optimization system "ULTY-V plus™" with the NYK Group. By introducing ULTY-V plusTM, coal consumption can be reduced by approximately 1%, resulting in improved economic efficiency for customers and a reduction in CO₂ emissions. In March 2019, we established Yusen Idemitsu Green Solutions Co., Ltd. in a 50-50 partnership with the NYK Group, and are focusing on proposal and sales with this company at the core. In fiscal 2021, we received an order for four units from Hokuriku Electric Power Co., Inc., and the installation of these four units is expected to reduce CO₂ emissions by approximately 100,000 tons per year. We will continue to promote sales domestically and internationally. In addition, we have developed a system (product name: "BAIOMIX™", hereinafter "this system") that calculates the optimal co-combustion rate of biomass fuel in coal boilers, and began sales in August 2021.ULTY -By installing this system into the V plus system, it will be possible to optimally and automatically control biomass co-firing in coal boilers.

Tokuyama biomass power generation project initiatives

Our group is engaged in the biomass power generation business as an initiative that contributes to CO₂ _​ reduction through the use of renewable energy and local production and consumption of energy. To date, we have invested in Tosa Green Power Co., Ltd. in Kochi Prefecture and Fukui Green Power Co., Ltd. in Fukui Prefecture, and have developed the Keihin Biomass Power Plant, which utilizes a former Refinery refinery site.
In January 2023, we began commercial operation of the Tokuyama Biomass Power Plant, the group's fourth site. This power plant utilizes part of the site of Refinery (currently Tokuyama Complex), which closed in 2014, and existing infrastructure. Approximately 70% of Japan's land area (37.8 million hectares) is forest, and the utilization of thinned wood that remains unused has been a long-standing issue. For the time being, our company ^will use imported wood pellets and palm kernel shells (PKS)*, but in the medium to long term, we will use domestically produced thinned wood and sawn wood scraps to create an environment-friendly solution. We will contribute to sustainable forest creation, forestry promotion, and the cyclical use of domestic forest Resources.
In addition, our company has been participating in the Woody Biomass Utilization Promotion Council, which was launched in January 2021 by Shunan City, Yamaguchi Prefecture, since its inception. Taking advantage of the regional characteristics of both abundant forest Resources and biomass power generation facilities, we will work together with local governments to promote the use of domestically produced woody biomass materials, and build and develop a circular economy through local production and local consumption of energy and promotion of forestry. We will continue to contribute to

*Both wood pellets and PKS have obtained third-party certification at the supplier, ensuring sustainability and traceability in production and manufacturing processes, and consideration for the global environment, biodiversity, working environment, etc. Use approved materials.

●Image of cyclical use of forest Resources (created by our company based on the figures published in the Forestry Agency's FY2021 Forest and Forestry White Paper)

Construction of a geothermal power plant in Yuzawa City, Akita Prefecture

As part of our efforts to expand our geothermal business, we are jointly working with INPEX Corporation and TEPCO Renewable Power Co., Ltd. on a plan to install a geothermal power plant (name: Snail Mountain Power Plant, output: 15,000 kW) in Yuzawa City, Akita Prefecture. We have decided to move on to the construction phase. The power plant will be built on Mt Snail and will be operated by Oyasu Geothermal Co., Ltd., a company invested in by three companies, with operation scheduled to begin in March 2027. As a result of the blowout test (demonstration test to evaluate production capacity) conducted in 2021, it is expected that stable production of geothermal fluid (steam and hot water) equivalent to an output of approximately 15,000 kW will be possible in the long term. Yes, the electricity generated is certified under the renewable energy FIT (Fill-in Tariff) system. In addition, the Snail Mountain Power Plant will work to construct and operate power plants that contribute to the local community by designing them with consideration for the environment and landscape. Unlike renewable energies such as solar power generation, geothermal power generation has been attracting increasing attention in recent years as an energy source that can provide a stable power supply regardless of the weather. We will continue to actively promote the spread and expansion of renewable energy, and hope to contribute to Japan's energy security and the realization of a low-carbon society.

Verification of commercialization of pumped storage hydropower generation at the Musselbrook coal mine site

Idemitsu Green Energy Pellets

Coal-fired power generation emits more CO₂ _​per kWh (amount of electricity generated) than other power sources, so there is a need for solutions to reduce CO₂ _​emissions. One of these is the use of biomass fuel, which is a carbon-neutral raw material. Biomass fuel is an organic material derived from plants, which absorbs CO₂ _​ through photosynthesis during the growth process of living organisms.
By 2030, we are aiming for annual production of 3 million tons of Idemitsu Green Energy Pellets a biomass solid fuel to replace coal. We will complete construction of a factory in Vietnam in fiscal 2023, and will continue to contribute to carbon neutrality by expanding our production base and production volume.

●Production system roadmap (image)

EV charging service demonstration using dynamic pricing

Our company and Solar Frontier Co., Ltd., together with Nissan Motor Co., Ltd., are working on a demonstration project for an EV charging service that utilizes our unique dynamic pricing ^*1.
The three companies will work on this demonstration with the aim of reducing and leveling the power load in the future, when electric vehicles such as EV ^*2 and PHV ^*3 become more popular. This demonstration will verify the effective use of renewable energy for EV charging and a mechanism that enables charging to avoid times when electricity demand is high, contributing to the achievement of carbon neutrality and the realization of sustainable electricity infrastructure. We aim to do so.

Joint study towards CCUS implementation in Tomakomai area, Hokkaido