Weekly Japanese Industry and Policy News (August 11-August 17, 2023)

The EU-Japan Centre is pleased to start a new weekly service by publishing brief summary of the latest information from the Japanese governmental organizations & private companies/organizations. A couple of minutes reading to be informed about what is happening in Japan's policy, economy, EU-Japan relations, and innovation.

*Information is deemed correct at the time of release. 

Kansai Electric Power participates in barge-type floating wind power generation project in Spain
On August 1, Kansai Electric Power announced it will participate in a barge (flat-bottomed ark) type floating offshore wind power generation project that is being jointly implemented by Saitec Offshore Technologies and RWE Renewables in the port of Bilbao in northern Spain. This "DemoSATH project" aims to start operation in 2023, and has completed the assembly of the floating foundation and wind turbine at the port, and is preparing for towing to the site.

In this project, a floating facility equipped with a 2,000-kW wind turbine will be constructed at the Port of Bilbao, and will be towed to a demonstration site approximately 3 km offshore before starting operation. Demonstration tests on the power generation equipment will be carried out over a period of about two years.

The Kansai Electric Power Group is working to popularize and expand renewable energy with the goal of 5 million kW of new development in Japan by 2040 and a cumulative total of 9 million kW. In order to achieve this goal, the company will actively accumulate knowledge on various types of floating structures, and will enthusiastically work on the new development of floating offshore wind power plants, which are expected to have high development potential in Japan.

Kansai Electric Power website:
https://www.kepco.co.jp/english/corporate/pr/2023/pdf/aug1_1.pdf

MOL promotes onboard hydrogen production project
Mitsui O.S.K. Lines (MOL) announced on August 3 that it will jointly carry out a project with Kyushu University to produce hydrogen from water onboard using offshore wind energy. This hydrogen production involves a water electrolysis process using pure water, which is of higher quality than drinking water, and how to produce pure water is an important elemental technology.

When producing hydrogen from seawater, the seawater is first filtered to remove impurities such as organic substances (carbon-containing substances, microplastics, etc.), inorganic substances (iron, magnesium, sodium), sludge, etc., and purify the seawater. However, the filters that are commonly used today require frequent replacement, which increases the workload of crew members and places a heavy burden on costs.

In this development, they applied high-precision seawater filtration equipment developed by Kyushu University and RO (reverse osmosis) equipment to develop a long-life, high-durability, and high-performance filter that can remove even the level of bacteria. 

In addition, in this development, through demonstration experiments at Lake Biwa in Shiga Prefecture, they will design a pure water production system that targets not only seawater but also freshwater. By comparing the freshwater and seawater of Lake Biwa, Japan's largest lake, they will verify the know-how of hydrogen production in freshwater and the cost difference between seawater and freshwater hydrogen production. 

MOL is working on the "Windhunter" project as a zero-emission business that utilizes wind power and hydrogen. When the wind is strong, the ship will use the wind power to navigate, and the underwater turbine will generate electricity to produce and store hydrogen onboard. When the wind is weak, stored hydrogen is used to generate electricity with a fuel cell and propulsion with a propeller. A demonstration experiment using a yacht has already been completed in Omura Bay, Nagasaki Prefecture. As the next stage, it plans to build a 60-70m class hydrogen production vessel with multiple sails after 2024.

MOL website:
https://www.mol.co.jp/en/pr/2023/23099.html

Shimizu Corporation to test remediation of PFAS-contaminated soil in the U.S.
Shimizu Corporation announced on August 10 that it has begun a demonstration test of a technology to remediate soil contaminated with organic fluorine compounds (PFAS) in the United States. By using technologies such as separation using bubbles in water, the amount of contaminated soil that requires secondary treatment can be reduced, and costs can also be reduced.

The scale and duration are not disclosed. The soil is purified using a classification process that sieves particles according to their size and a foam separation method that separates and collects particles by adhering them to bubbles in water. So far, it has been used to purify soil contaminated with heavy metals and dioxins. The company has cleaned about 3.2 million tons of soil.

PFAS is heat-resistant and repels both water and oil, so it has been used in coating agents and fire extinguishing foams. However, it is difficult to decompose in the natural world and is also called "eternal chemical substance". It is easy to accumulate in the environment, etc., and there is also a risk of health damage. Manufacture and import of some types of PFAS (PFOS and PFOA) are prohibited.

The company has conducted experiments to purify groundwater contaminated with PFAS. This time, after confirming the soil purification performance, they plan to put it into practical use in the United States, where PFAS regulations are leading the way. In the long term, it aims to develop the technology in Japan.

SHIMIZU CORPORATION website (in Japanese):
https://www.shimz.co.jp/company/about/news-release/2023/2023025.html

METI announced self-development ratio of oil and natural gas of Japan
On August 15, the Ministry of Economy, Trade and Industry (METI) announced that the self-development ratio of oil and natural gas of Japan in FY2022 had been 33.4%, down 6.7 percentage points from the previous fiscal year. The self-development ratio of oil and natural gas is defined as the ratio of the purchased amount and domestic production related to the interests of Japanese companies to the import and domestic production of oil and natural gas.

For Japan, which relies on imports from overseas for most of its oil and natural gas, securing a stable supply of resources and energy is essential. Therefore, in the 6th Strategic Energy Plan (decided by the Cabinet in October 2021), it was proposed to raise the independent development ratio of oil and natural gas, including domestic production, to 50% or more in FY2030 and 60% or more in FY2040. 

However, the self-development ratio in FY2022 decreased by 6.7 points compared to the previous fiscal year. Although it peaked at 40.6% in FY2020, it has been on a downward trend since then, reaching 40.1% in FY2021 and 33.4% in FY2022. According to the METI, while the amount of crude oil imports increased due to the recovery from the economic downturn caused by the COVID-19, the amount of oil and natural gas in which Japanese companies have interests has decreased due to changes in the international situation and the energy market.

METI website (in Japanese):
https://www.meti.go.jp/press/2023/08/20230815001/20230815001.html

Annual GDP increased 6.0% April-June, but personal consumption weak
The Cabinet Office announced on August 15, 2023 that the gross domestic product (GDP) for the April-June quarter was up 1.5% in real terms compared to the previous quarter, or 6.0% on an annualized basis. This is the third consecutive quarter of positive growth. While personal consumption was weak, recovery in exports boosted the overall economy. Nominal GDP increased by 2.9% from the previous quarter, or an annualized increase of 12.0%. The actual annualized amount was JP￥590.7 trillion, exceeding the previous term (JP￥574.2 trillion) and setting a record high.

The annual growth rate will exceed 6.0% for the first time since the October-December quarter of 2020 (7.9% increase), which temporarily recovered from the slump caused by the　COVID-19. Exports increased by 3.2% from the previous quarter, marking the first positive growth in two quarters. The growth was driven by an increase in the number of automobiles due to the easing of semiconductor supply constraints. The recovery in inbound (foreign visitors to Japan) also contributed positively. Inbound consumption is classified as exports for calculation purposes.

Imports fell 4.3%, marking the third straight quarter of negative growth. The negative range widened from the 2.3% decrease in the January-March period. The decline in mineral fuels such as crude oil, medicines such as COVID vaccines, and mobile phones pushed down the whole. The decline in imports was a factor pushing up GDP. Items related to domestic demand are conspicuously depressed or sluggish. Personal consumption, which accounts for the majority of GDP, decreased by 0.5% from the previous quarter, marking the first negative growth in three quarters. Eating out and lodging increased as the COVID crisis returned to normal, and sales of automobiles and game software also increased. On the other hand, food and beverage sales declined due to persistently high prices, and home appliances, which stay-at-home demand due to the COVID has run its course, were down.

Cabinet office website:
https://www.esri.cao.go.jp/en/sna/data/sokuhou/files/2023/qe232/gdemenuea.html

Mitsubishi Corporation builds the world's first bio-paraxylene supply chain for PET bottles with 2 other companies
Mitsubishi Corporation announced on August 7 that it has reached an agreement with Suntory Holdings and ENEOS to build a supply chain for sustainable PET bottles made from biomass resources such as used cooking oil. The production of sustainable PET bottles using bio-PX derived from bio-naphtha is the world's first on a commercial scale. By the end of 2023, they plan to manufacture a quantity equivalent to approximately 35 million PET bottles of Bio PX, which will be the cornerstone of this supply chain construction. Ultimately, it will be used as a raw material for Suntory's sustainable PET bottles from 2024.
 
For the realization of a decarbonized society, it is assumed that bio-recycling of PET bottles will become as important as recycling in the future. Ethylene glycol (MEG), which accounts for 30% of the main raw material of the PET resin used in PET bottles, is being bio-processed, but there is a problem with the bio-production of PTA, which is manufactured from the remaining 70% of PX. In this supply chain, by converting PX, which is the raw material of PTA, into a bio-based product, they can contribute to the resolution of the issues related to the bio-based use of PET resin, and it is expected significantly reduce CO2 emissions compared to conventional petroleum-based products. 

Mitsubishi Corporation website:
https://www.mitsubishicorp.com/jp/en/pr/archive/2023/html/0000051845.html

METI Minister Nishimura visited five African Countries
Minister of Economy, Trade and Industry (METI) Nishimura visited five African countries (Namibia, Angola, Democratic Republic of the Congo, Zambia and Madagascar) from August 6 to August 13. He held meetings and signed joint statements and memorandums of understanding with his relevant ministers in various places. He also sought to strengthen intergovernmental and business ties to secure mineral resources.

Namibia
Minister Nishimura, Minister of Mines and Energy of the Republic of Namibia and Minister of Industrialization and Trade signed a joint statement on cooperation in the mining sector, improvement of the investment climate and economic cooperation.

Angola
This was the first visit to Angola as Minister of METI. He signed the Joint Statement on Improving the Investment Climate and Economic Cooperation and witnessed the signing of the Japan-Angola Investment Agreement. METI also hosted the Japan-Angola Business Roundtable in which over 20 Japanese companies and Angola companies took part in.

Democratic Republic of the Congo
He witnessed the signing of a work plan on exploration cooperation with the Japan Energy and Metals National Corporation (JOGMEC) and the Ministry of Mines of the Democratic Republic of the Congo.
  
Zambia
METI held the Japan-Zambia Mining Investment Roundtable, and the minster exchanged the opinion with the attendees from 11 Japanese companies in order to realize investment in Zambia. And he witnessed the signing of a memorandum of understanding between JOGMEC and the Ministry of Mines and Mineral Development to strengthen cooperation in the field of exploration, etc.

Madagascar
Both countries confirmed that Japan cooperates in a wide range of fields, including minerals, such as the Ambatovy Project, Africa's largest mining investment project that produces nickel and other minerals, in which Japanese companies participate, and the Toamasina Port expansion project which will serve as a shipping port for this project. 

METI website (in Japanese):
https://www.meti.go.jp/press/2023/08/20230812001/20230812001.html

2.32 million foreign visitors to Japan in July, nearly 80% of pre-COVID-19 numbers
On July 16, the Japan National Tourism Organization (JNTO) announced that the number of foreign visitors to Japan in July was 2.32 million, an increase of 77.6% compared to 2019. Excluding China, where restrictions on overseas travel to Japan continued, the total number was 103.4% compared to the same month in 2019, exceeding the record before the spread of the COVID-19.

By region, the number of foreign visitors to Japan increased from East Asia, including South Korea, and in Europe, the United States, Australia, and the Middle East, particularly in the United States and Canada, which exceeded the results in the same month of 2019. Regarding regular international flights, as of the summer 2023 schedule, the number of flights has recovered to about 60% of the pre-COVID-19, and since then, the number of flights has continued to increase and return, mainly from East Asia.

On August 10, the Chinese government announced that it had lifted the ban on group travel to Japan, which had continued for three and a half years. This is likely to further boost the recovery of inbound tourists from the same month onwards. On the other hand, there is a serious shortage of human resources in the service industries such as hotels and restaurants.

JNTO website (in Japanese):
https://www.jnto.go.jp/