Toward Electricity Decarbonisation- Japan Perspective -

17 October 2019, Paris

Kazuhiro KURUMIDeputy Director, New and Renewable Energy Division

Agency for Natural Resources and EnergyMinistry of Economy, Trade and Industry, Japan

Sixth Annual Expert Workshop Challenges in Electricity Decarbonisation

1

Hokkaido5GW

Tohoku14GW

Kansai25GW

Hokuriku 5GW

Kyushu15GW

Chugoku10GW

Shikoku5GW

1.9GW

Chubu 24GW

Tokyo50GW

50Hz

4.1GW

2.5GW1.2GW 1.4GW

5.2GW

0.9GW

2.5GW

0.3GW

Frequency Converter

1.2GWOkinawa

2GW

Note: The figure in each area indicates the maximum electricity demand in 2016.The italic figure in each interconnection indicates operating capacity.

60Hz

Large electricitydemand areas

Grid structure

0

2000

4000

6000

8000

10000

12000

55606570 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017

新エネ等

石油等

ＬＮＧ

水力

石炭

原子力

(TWh)

(FY)

3.1%

8.7%

39.8%

32.3%

7.9%

8.1%

1952

1,056

1,150Renewables (excl. hydro)

Oil

LNG

HydroCoal

Nuclear

Source: Energy White Paper 2019 in Japan 2

Power generation and power supply composition in Japan

1,200

1,000

800

600

400

200

Based on “Outline of electric power development (METI)” and “Outline of power supply plan (METI)”

Based on “Comprehensive energy statistics (METI)”

Non-fossilgeneration

19.1%

Renewable electricity introduction in Japan

3

(FY)

(GW)

10.4% 10.0%10.9%

12.5%

14.3%14.6%

16.0%

0%

3%

6%

9%

12%

15%

18%

0

20

40

60

80

100

120

2011 2012 2013 2014 2015 2016 2017

Solar PVWindGeothermalBiomassHydroRenewable generation ratio (right axis)

Capacity Renewablegeneration ratio

CO2 emissions from electricity sector in Japan

Source：Ministry of the Environment, GHG Emissions

Coal generation23％

Gas generation15%

Oil generation4％

4

electricity sector42%1.1Gt-CO2

(FY2016)

Industrial sector27％

Transport sector19％

Building sector10％

5

Key measures for electricity decarbonisation

Non fossil fuel generation

Improving efficiencyof fossil fuel generation

Carbon Capture, Utilisation and Storage

(CCUS)

Flexibility sources(Storage, DSR, hydrogen, etc.)

Decarbonisation of transport and building sectorsthrough electrification

Electricity decarbonisation

Long-Term Strategy under Paris Agreement as Growth Strategy

6

Sectoral vision

1. EnergyPursuing every option for promoting energy transitions and decarbonisation

2. IndustryDecarbonised manufacturing

5. Measures for Carbon Sinks

4. Community and LivingRealizing carbon neutrality, resilient and comfortable communities and lives by 2050/ creating “Circulating and Ecological Economy”

Cross-sectoral measures to realize a “virtuous cycle of environment and growth”i. Promotion of innovationii. Promotion of green financeiii. Business-led activities (improving business environments) and international cooperation

Vision: “Decarbonised Society” as the ultimate goal 80% GHG emissions reduction by 2050

Basic Principles of Policy: “Virtuous Cycle of Environment and Growth”

3. TransportContribution to the challenge of ”Well-to-Wheel Zero Emission”

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CO2 emissions1.13 Gt 0.93 Gt

Heat (buildings)0.11

Substantial GHG emissions reduction through innovation and international cooperation is indispensable

Non

-ele

ctric

ity s

ecto

rEl

ectr

icity

sec

tor

Industry 0.3

Transport0.21

Electricity 0.51

0.36

0.15

0.09

0.33

2016 2030 (▲26%)

0.2 to 0.3 Gt

2050 and beyond (▲80%)

●Recycling carbon as resource (CCUS)

●Decarbonisation of power and heat by utilisingcarbon-free hydrogen

●Reorganisation of network considering massive renewable introduction and distributed energy system

●Improvement of investment environmentfor improving foreseeability

●Market integration of renewables

●Contribution to global GHG emissions reduction through business-led overseas development

Global hydrogen alliance Overseas expansion of low-carbon

products and services

Decarbonising pathways toward 2050

8

Renewable generation ratio

Final energy consumption per GDP

Non-fossil fuel generation ratio

GHG reduction ratio

19

-7

16

22-24%

44%

-26%

-35%

-8

Japan’s progress toward the mid-term target

(%)

(FY)

9

Current 2030 2050 and beyond

Volume ofCO2 utilisation

Expected to be highly consumed from 2030 Chemicals

Polycarbonate, etc. Liquid Fuels

Bio-jet fuels, etc. Concrete Products

Road curb blocks, etc.

Phase 2 Attempt to reduce costs of technologies that are

expected to spread from 2030 onwards. Special effort should focus on technologies for

large-volume commodity, which will be enabled by inexpensive hydrogen supply from 2050 onwards. Attempts should be made to reach equivalent cost of existing energy and products from 2050 onward.

Pursue further cost reductionPhase 3

Pursue all potential technologies for carbon recycling initiatives.

Special effort should focus on technologies requiring no hydrogen and producing high-value added materials, both of which shall be expected to spread from around 2030 onwards.

Expected to Spread from 2050 Chemicals

Commodity (Olefin, BTX, etc.) Fuels

Gas, Liquid Concrete Products

Commodity

Expected to Spread from 2030 Chemicals

Polycarbonate, etc. Liquid Fuels

Bio-jet fuel, etc. Concrete Products

Road curb blocks, etc.

Cost must be reduced to 1/3 – 1/5 of current one

Cost must be reduced to around1/8 -1/16 of current one.

Concrete Products (Road curb blocks, etc.)

Liquid Fuels (Bio-jet fuel, etc).

Further reduction volume of CO2, for the polycarbonate.

Chemicals (polycarbonate, etc.)

Phase 1

CO2 capture technology Reducing cost Less than ¼ of current cost

Hydrogen JPY20/Nm3（cost at delivery site）

Roadmap for Carbon Recycling Technologies

https://www.meti.go.jp/press/2019/06/20190607002/20190607002-2.pdf

Conclusion

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Japan set a goal of reducing 80% GHG emissions by 2050 toward “Decarbonised Society”

Electricity decarbonisation could be achieved through:

⁃ Expanding non-fossil generation with flexibility sources

⁃ Improving efficiency of fossil fuel generation as wells as utilizing CCUS

Electricity decarbonisation also leads to other sectors’ decarbonisation through electrification

Innovation is indispensable

Speech by Prime Minister Abe at the WEF Annual Meeting (23 January 2019)

We must invite more and still more disruptive innovations before it‘s too late. CO2, ladies and gentlemen, could well be the best and most affordable resource for multiple uses. There is artificial photosynthesis, for which a key discovery, one for photocatalysis, was made by Akira Fujishima, a Japanese scientist. An old technology of methanation is getting attention anew to remove CO2. It's time now to think about CCU, Carbon Capture AND Utilisation. Hydrogen, as both a primary source, and more importantly, a carrier of energy, must become cheaper and more easily affordable. My government is aiming to reduce the production cost of hydrogen by at least 90 per cent by the year 2050, to make it cheaper than natural gas.We will be inviting to Japan topmost experts in science and technology from G20 member countries to

combine forces in accelerating innovations. I am also pleased to tell you that my government, first among others, published a guidance paper in December last year along with the TCFD, or Task Force on Climate-related Financial Disclosures. ESG investment world-wide has grown over the last five years by more than 9 trillion US dollars. That's a big amount, but we must channel even more into green innovation. And the guideline we put together will help motivate more companies to spend greater amounts on disruptive innovations.I must say that spending money for a green earth and a blue ocean, once deemed costly, is now a

growth generator. Decarbonisation and profit making can happen in tandem. We policy makers must be held responsible to make it happen, as I will be stressing in Osaka this year.

I would very much like to highlight what innovation does and how much innovation counts in tackling climate change, because, and this is an important “because,” we NEED disruptions. To remind us of that, the IPCC, in its recent "1.5-degree report," tells us that global net human-caused emissions of CO2 should reach "net zero" around 2050, meaning that any remaining emissions would need to be balanced out by removing CO2 from the air.

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Thank you