Corporate Strategy

40 Tokyo Gas Group Integrated Report 2023

Introduction

Introduction

Contents

CEO's

CEO's Message

Message

How

How We Create Value

We

The Value Creation Process

CreateValue

Promoting Sustainability and Material issues

Business

Business Strategy

Compass2030 & Compass Action

Compass Transformation 23-25

Strategy

Introduction of Internal Companies

CFO's Message

Corporate

Corporate Strategy

Sustainability

Responding to Climate Change

Disclosure based on TCFD

recommendations

Strategy

Energy Security

Human Capital Management

Corporate Governance

FinancialData

Financial Data

Web Site

Investor Relations Website

Investors' Guide

(Financial Data and Industry Data)

Financial Results Presentation Materials

Financial Results Bulletin

Corporate Governance Report

Sustainability Factbook

Sustainability

Responding to Climate Change-Initiatives for a Decarbonized Society-

Introduction

Introduction

Contents

As a group of energy companies that supports society, the Tokyo Gas Group will realize a decarbonized society without compromising stable supply from the present to the medium to long term, even amid uncertainties surrounding energy such as geopolitical risks.

First in this transition period, we will make sophisticated use of natural gas, which has the lowest CO2 emissions among fossil fuels, in various forms, and steadily reduce CO2 emissions of society as a whole. At the same time, we will promote the use of renewable energy and actively develop technologies for the social implementation of new technologies such as e-methane, hydrogen, and bio-derived energy. We will promote these initiatives on the premise of stable supply, and realize a responsible transition. By 2030, we will achieve a CO2 reduction contribution of 17 mn tons.

In addition, beyond 2030, we will continue to contribute to reducing CO2 emissions of society as a whole by steadily increasing the amount of e-methane introduced and further expanding renewable energy, while aiming to achieve net-zero CO2 in 2050 for the Tokyo Gas Group's CO2 emissions (Scope 1, 2, 3). During this period, we will continue to make maximum use of our Group's energy infrastructure and effectively utilize diverse energy sources to optimize the operation of the entire energy system in terms of both supply and demand, thereby realizing a new model for stable supply.

Conceptual diagram of CO2 reduction contribution

(representative example)

CO2 reduction contribution

of

Total

emissions

emissions society

of society

decrease

Total

Corporate

Corporate

emissions

emissions

increase

2022

2030

2050

Sophisticated use

e-methane

e-methane

of natural gas

2030 Target

Fuel switching

CNL

1%deployed

Hydrogen

Renewable energy

Highly efficient equipment,

Toward a

of 6 mn kW

Bio-derived energy

Smart energy network

decarbonized

society

Decarbonization of gas and electricity

Renewable energy

Renewable energy

solar , wind power

Offshore wind power

Transition

period

CO2

emissions

CO2 reduction contribution results and

Breakdown of 2030 target of 17 mn tons

targets (compared to FY2013)

Category

Major initiatives

2022

2025

2030

25% Fuel switching

Domestic

Low carbonization field

Domestic

15%

High-efficiency equipment

and

Domestic

65%

6.35 mn tons

overseas

25%

Introduction of high-efficiency

and

LNG-fired power generation

12 mn tons

overseas

Decarbonization field

15%

Introduction of renewable energy

and new energy

17 mn tons

35%

20%

Utilization of non-fossil fuel

certificates

Concept and calculation method of reduction effect (example)

p.48

Total CO2 emissions of society

Approximately 58 mn tons

(figures for FY2022 result)

Net-zero CO2

The Tokyo Gas Group's

CO2 emissions*1

(Scope 1, 2, 3)

Net-zero CO2 from our activities*2

2022

2030

2050

*1 Including the amount of absorption (CCUS and forests) and offsetting by carbon credits

*2 CO2 emissions from city gas production facilities, buildings we use, and corporate vehicles

CEO's

CEO's Message

Message

How

How We Create Value

We

The Value Creation Process

Create Value

Promoting Sustainability and Material issues

Business

Business Strategy

Compass2030 & Compass Action

Compass Transformation 23-25

Introduction of Internal Companies

Strategy

CFO's Message

Corporate

Corporate Strategy

Sustainability

Responding to Climate Change

Disclosure based on TCFD

recommendations

Energy Security

Strategy

Human Capital Management

Corporate Governance

Financial Data

Financial Data

Web Site

Investor Relations Website

Investors' Guide

(Financial Data and Industry Data)

Financial Results Presentation Materials

Financial Results Bulletin

Corporate Governance Report

41 Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Specific initiatives Acceleration of the transition

Smart energy network

Kiyohara Industrial Park: Realizing significant energy and CO2 savings through business collaboration

The Kiyohara Industrial Park Smart Energy Project (Utsunomiya City, Tochigi Prefecture) is an example of Tokyo Gas Engineering Solutions Corporation building a smart energy network (an optimal energy system for each area utilizing ICT) in an existing industrial park. This unique energy network comprises a smart energy center that uses mainly gas cogeneration, as well as private power lines and steam lines, serving seven plants and offices at the park that are operated separately by three companies. This is designed to supply electricity and heat in a highly stable and environmentally friendly manner. This has resulted in approximately 20% energy and CO2*1 savings, which would be difficult to achieve at individual business sites. The project represents Japan's first "integrated energy-saving business serving multiple plants" to supply electricity and heat to multiple businesses of different sectors in an inland-type industrial park, and has been certified by the Minister of Economy, Trade and Industry under its Certification System for Collaborative Energy Saving Plans*2. The initiative was also awarded the Chairperson's Prize for Cogeneration in FY2020, the METI Minister's Prize for Energy Conservation in FY2021, and the METI Minister's Prize for the Global Environment in FY2023. Going forward, we will continue to work on initiatives in collaboration with each company toward further energy conservation and CO2 reduction.

*1 Reduction rate of electricity and heat sent from the Smart Energy Center (compared to FY2015, measured in 2020). Crude oil equivalent approx. 11,500kL/year, CO2 reduction of approximately 23,000t/year

*2 A system under which, when multiple business operators are collaborating to implement energy-saving initiatives, the amount of energy saved through the collaboration can be distributed among the business operators in their regular reports under the Act on the Rational Use of Energy (Energy Conservation Act).

42 Tokyo Gas Group Integrated Report 2023

Fuel switching

Niihama LNG terminal: Promotion of carbon neutrality and stable supply of energy

NIIHAMA LNG Co., Ltd., which Tokyo Gas Engineering Solutions Corporation established jointly with Shikoku Electric Power Company, Inc., Sumitomo Chemical Co., Ltd., Sumitomo Joint Electric Power Co., Ltd., and Shikokugas Co. Ltd., completed construction of the Niihama LNG terminal and started gas supply in March 2022. By supplying natural gas to Sumitomo Chemical Ehime Works, and Sumitomo Joint Electric Power's Niihama Kita Thermal Power Plant, we expect to reduce CO2 emissions by 650,000 tons per year in the future by switching from coal, LPG, and heavy oil. We also supply gas to nearby customers to promote fuel conversion, reduce CO2 emissions in the surrounding areas, and contribute to the development of the Shikoku region.

Locations of

LNG terminals

Kagawa

Prefecture

Ehime

Tokushima

Prefecture

Kochi

Prefecture

Prefecture

LNG tank (230,000 kl,

1 above-ground unit)

Equipment Manufacturing facilities overview (LNG vaporization facilities)

Truck shipping facilities

Receiving facilities for LNG carriers

Introduction

Introduction

Contents

CEO's

CEO's Message

Message

How

How We Create Value

We

The Value Creation Process

CreateValue

Promoting Sustainability and Material issues

Business

Business Strategy

Compass2030 & Compass Action

Compass Transformation 23-25

Strategy

Introduction of Internal Companies

CFO's Message

Corporate

Corporate Strategy

Sustainability

Responding to Climate Change

Disclosure based on TCFD

recommendations

Strategy

Energy Security

Human Capital Management

Corporate Governance

FinancialData

Financial Data

Web Site

Investor Relations Website

Investors' Guide

(Financial Data and Industry Data)

Financial Results Presentation Materials

Financial Results Bulletin

Corporate Governance Report

Sustainability Factbook

Specific initiatives Acceleration of the transition

Carbon-neutral LNG: To meet heat demand

Carbon-neutral LNG (CNL) is LNG for which the greenhouse gases emitted in the processes from natural gas exploration to combustion have been offset by carbon credits (carbon offsets) generated from environmental protection projects carried out in emerging countries and elsewhere. In addition to reducing greenhouse gases emissions on a global scale, these environmental conservation projects are also related to SDG goals, such as creating local jobs and protecting biodiversity, and the use of CNL will contribute to the realization of a sustainable society.

The Tokyo Gas Group recommends CNL to its customers to meet their heat demand in addition to promoting energy conservation and introducing renewable energy, and CNL is currently being used by more than 120 customers. As the rules for CO2 credits are currently in the process of being developed, our Group is working to ensure customer trust by

1 improving the quality and transparency of credits and 2 tightening operational procedures, including quantity control.

Voluntary carbon

Carbon-neutral

Carbon-neutral

Customers

credits

LNG

City gas

(use)

Acceptance

Manufacture

Supply

Initiative to achieve Net-zero CO2 emissions from our activities

The Tokyo Gas Group has been working to reduce CO2 emissions from our activities by thoroughly conserving energy and introducing high-efficiency equipment. We will further accelerate these efforts to achieve net-zero CO2 emissions from our activities in FY2030 for buildings we use, city gas production facilities, and company vehicles.

Specifically, we will promote the use of non-fossil certificates for energy consumption, switch to carbon-neutral LNG, and introduce low-emission company vehicles (hybrids, fuel cells, EVs) as our main initiatives, while actively introducing products into our own facilities that the Tokyo Gas Group will plan to build up as businesses (off-site corporate power purchase agreements, EV-related services* ,etc).

In FY2022, we achieved 18% net-zero CO2 emissions from our activities (using FY2020 as the benchmark) by completing the net-zero conversion of our headquarters and offsetting electricity consumption by using non-fossil certificates (electricity) for other buildings we use as well as some city gas production facilities. Going forward, we will continue and expand our efforts, aiming for a 60% achievement rate for FY2025 through net-zero-related initiatives at city gas production facilities.

  • EVrest (an EV charging service) and Charge Planner (an EV installation support service for corporations and local governments)

Implementation as of March 2023

Tokyo Gas headquarters

Introduction

Introduction

Contents

CEO's

CEO's Message

Message

How

How We Create Value

We

The Value Creation Process

Create Value

Promoting Sustainability and Material issues

Business

Business Strategy

Compass2030 & Compass Action

Compass Transformation 23-25

Introduction of Internal Companies

Strategy

CFO's Message

Corporate Strategy

1 Mechanism for using high-quality voluntary carbon credits

Professional meeting body of top executives

2 Tightening of operations

Issuance of supply certificates to

Offsetting of CO2 emissions of electricity consumption by using non-fossil certificates (electricity), carbon-neutral city gas (gas), and J-Credits (heat from district heating and cooling)

Buildings,

Corporate

Sustainability

Responding to Climate Change

Disclosure based on TCFD

recommendations

Energy Security

Human Capital Management

Common among

projects

Our own risk assessment manual

After procuring credits

Reputation risk assessment in light of the manual Double-checking by domestic and international experts

After procuring

credits

Manual based monitoring

Communication with customers

customers (image at right)

Third-party verification to tighten operations Development

of gas industry management guidelines

etc.we use

Other buildings used by the company

Offsetting of CO2 emissions of electricity consumption in some buildings owned by Tokyo Gas Real Estate Co., Ltd. by using non- fossil fuel certificates (electricity)

Strategy

Corporate Governance

Financial

Financial Data

Carbon-neutral

122

CNL buyers alliance

77

city gas consumers

members

(As of April 30, 2023)

43 Tokyo Gas Group Integrated Report 2023

City gas

Hitachi LNG terminal

Offsetting of CO2 emissions of electricity

production

consumption by using non-fossil fuel

facilities

certificates (electricity)

Hamamatsucho headquarters building

Data

Web Site

Investor Relations Website

Investors' Guide

(Financial Data and Industry Data)

Financial Results Presentation Materials

Financial Results Bulletin

Corporate Governance Report

Sustainability Factbook

Specific initiatives Innovation for a decarbonized society

Introduction

Introduction

Contents

Electric power

Efforts toward commercialization of floating

p.29

offshore wind power generation business

Gas Aiming for urban decarbonization with e-methane

The Tokyo Gas Group is accelerating Initiatives for the practical application of e-methane, a carbon-neutral gaseous energy. e-methane is produced by methanation, a technique for synthesizing methane which is the main component of city gas, through a chemical reaction between the raw materials hydrogen and CO2. In the production of e-methane, CO2 recovered from exhaust gases is reused as a raw material, so even if CO2 is emitted during combustion, there is substantially no increase in atmospheric CO2. In addition, we plan to manufacture hydrogen, another raw material, using renewable energy, so e-methane can be said to be a carbon-neutral energy.

CO2 emission reduction effect of e-methane

Hydrogen

e-methane

CH4

Hydrogen production

H2

CH4

from renewable energy

sources

Use of city gas

Methanation

Emitted and

Atmospheric CO2 does not increase

Re-emitted

recovered

because it is recovered and reused.

during use

CO2 emissions from

CO2

CO2

power plants

CEO's

CEO's Message

Message

How

How We Create Value

We

The Value Creation Process

CreateValue

Promoting Sustainability and Material issues

e-methane has the following values: 1 decarbonization in the heat sector, 2 reduction of social costs through the thorough utilization of existing infrastructure, 3 improvement of energy security through reduction of country risk, and 4 overseas expansion of Japan's unique technologies.

Value provided by e-methane

Value

Decarbonization

Contribution to the realization

1

in the heat

of carbon-neutrality in Japan

sector

Value

Reduction

Reduction of the burden

of additional

2

on the public (customers)

social costs

Value

Improved energy

Reduction of

3

security

country risk

Overseas

Toward global

Value

expansion

4

of Japanese

carbon-neutrality

technologies

Business Strategy

Business Strategy

Compass2030 & Compass Action

Compass Transformation 23-25

Introduction of Internal Companies

CFO's Message

Corporate Strategy

Sustainability

Roadmap for social implementation

In 2022, the Tokyo Gas Group started a domestic demonstration using the Sabatier reaction, an existing methanation technology, for the social implementation of e-methane.

We aim to establish a large-scale overseas production and supply chain by FY2030 and introduce e-methane for 1% of our Group's domestic city gas demand (approx. 80 mn m3), and we are currently promoting specific projects.

At the same time, we are working to improve efficiency and reduce costs through the development of innovative methanation technologies utilizing the Green Innovation Fund project.

Establishment of technology Scale up Social implementation

2021

22

23

24

25

26

27

28

29

30

31

32

33

Selection and evaluation

Innovative technology prototypes

of innovative technologies

Innovative technology: Hybrid Sabatier, PEMCO2

In-house demonstration

Approx.

Construction

Domestic

small-scale demonstration

Innovative

technologies

50,000

Small-scale demonstration

m3/year

Suitable site selection

FS

FEED

FID Construction

Approx.

Domestic regional

cooperation

Innovative technologies

1.6 mn

and on-site use

Application

m3/year

1% deployed

Social

implementation

Approx.

Construction of

large-scale

Suitable site selection FS

FEED FID Construction

80 mn

overseas production and

m3/year

supply chains

Corporate Strategy

Domestic

Financial

Data

Overseas

Responding to Climate Change Disclosure based on TCFD recommendations

Energy Security

Human Capital Management Corporate Governance

Financial Data

Web Site

Investor Relations Website

Investors' Guide

44 Tokyo Gas Group Integrated Report 2023

(Financial Data and Industry Data)

Financial Results Presentation Materials

Financial Results Bulletin

Corporate Governance Report

Sustainability Factbook

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Tokyo Gas Co. Ltd. published this content on 31 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 September 2023 07:39:04 UTC.