Weekly Japanese Industry and Policy News (December 8-December 14, 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. 

Japanese and Norwegian leaders confirm cooperation on decarbonization
Prime Minister Kishida met with Prime Minister of the Kingdom of Norway STØRE at his official residence on December 7, and issued the first joint statement between the two countries. It was confirmed that Japan and Norway which faces the challenge of becoming an economy that does not rely on oil and natural gas exports, will expand cooperation in areas such as decarbonization. This is the first face-to-face summit meeting between Japan and Norway in five years since 2018. The two countries agreed to upgrade their bilateral relationship to "strategic partnership" and deepen cooperation.

The joint statement lists areas of cooperation such as offshore wind power, hydrogen, ammonia, CCS that captures and stores carbon dioxide (CO2) and CCUS that reuses CO2, and welcome the Joint Partnership Communiqué between the Minister of METI and Industry and the Minister of Trade and Industry of Norway. Prime Minister STØRE cited the Japanese government's procurement of the Norwegian cruise missile "JSM" as an example, and emphasized that companies from both countries cooperate in security and defense. The two countries also agreed to strengthen political cooperation through regular meetings and dialogue between government officials.

MOFA website:
https://www.mofa.go.jp/erp/we/no/pageite_000001_00027.html

Mitsubishi Heavy Industries and UAE's ADNOC reach agreement to build blue ammonia and blue hydrogen value chain
On December 6, Mitsubishi Heavy Industries (MHI) and ADNOC of the United Arab Emirates (UAE) agreed to cooperate to build a value chain for blue ammonia (NH3) and blue hydrogen (H2). As a technology provider, MHI will support ADNOC's efforts to decarbonize its oil and gas production bases. MHI has technologies that accelerate the energy transition, including hydrogen and ammonia-fired gas turbines, ammonia co-fired boilers, and hydrogen production equipment. Meanwhile, ADNOC is a diversified energy and petrochemical group wholly owned by the Emirate of Abu Dhabi, aiming to achieve net zero in 2045.

MHI website:
https://www.mhi.com/news/23120805.html

MOE Minister announced support package for Asia at COP28 
On December 9, at the COP28 ministerial meeting, Environment Minister Ito announced an“Investment Promotion Support Package'' with cooperation with Asian countries, and announced Japan's policy to contribute to the prevention of global warming.

At the meeting, Minister Ito talked about the greenhouse gas reduction targets set by each country for decarbonization, using data from a satellite that Japan will launch next year to observe greenhouse gases, and encouraging developing countries in Asia to formulate plans. He also added, in order to respond to weather disasters in developing countries that are occurring due to the effects of global warming, the government of Japan will work with private companies to develop an "early warning system" in the Asia-Pacific region that uses weather radar to promptly notify disaster risks.

Environmental groups say that Japan is reluctant to take measures against climate change, as Japan is the only G7 country not to participate in the Coal Free Alliance, a group that aims to move away from coal-fired power generation. During this time, he demonstrated his commitment to contributing to global decarbonization through technical assistance.

MOE website:
https://www.env.go.jp/en/press/press_02190.html

Marubeni to produce green ammonia in Oman, 1 million tons in 2029
On December 13, Marubeni announced that it will begin studying the production of green ammonia in Oman, which does not emit carbon dioxide during production. In cooperation with local companies, the company aims to achieve annual production of 1 million tons by 2029, which will be one of the largest in the world. Marubeni will acquire sales rights for around 40% of this, and is expected to sell the product mainly to Japan for co-firing with thermal power generation and chemical manufacturing applications.

First, the company will enter into a joint research agreement for green ammonia production with OQ Alternative Energy, a group company of Oman's national oil company, and Samsung C&T (South Korea), a general trading company. The total project cost is expected to be between $7 billion and $9 billion. A final decision on commercialization will be made by 2026 after investigating price competitiveness.

It is estimated that 40% of the produced ammonia will be destined for Japan and South Korea, with 20% expected to be consumed locally. Hydrogen is created from desalinated seawater and synthesized with nitrogen to produce ammonia, which costs more than using freshwater from the beginning, but it reduces electricity procurement costs because it builds its own renewable energy power plant such as solar power. 

Marubeni website:
https://www.marubeni.com/en/news/2023/release/00119.html

Following the next fighter jet, Japan and Italy cooperate on　semiconductors and AI
On December 12, Minister of Economy, Trade and Industry (METI) Nishimura met with Italy's Minister of Enterprise Urso, who was visiting Japan, and signed a joint statement on cooperation in cutting-edge fields such as semiconductors and artificial intelligence (AI). The two countries, including the UK, are collaborating on the joint development of the next generation fighter jet, but this time they will expand their cooperative relationship to areas such as semiconductors and AI, with the aim of establishing economic security.

The relationship between the two countries was upgraded to a "strategic partnership" earlier this year. In addition to the joint development of the next fighter jet, the two countries are deepening their cooperation in a wide range of security-related fields, including participating in an international cooperation framework aimed at realizing nuclear fusion power generation, which is expected to be the next generation of energy. Following the joint statement signing ceremony, the two governments also held a closed semiconductor workshop meeting.

METI website (in Japanese):
https://www.meti.go.jp/press/2023/12/20231212003/20231212003.html

Itochu and Osaka Gas invest in world's leading hydrogen company
Itochu Corporation and Osaka Gas announced on December 13 that they will enter the hydrogen business. Both companies will invest up to 40% in Everfuel (Denmark), the world's leading hydrogen producer. The company will begin producing 3,000 tons of hydrogen per year in 2024, making it one of the world's largest hydrogen producers. Itochu and Osaka gas will establish a joint venture company to acquire a nearly 14% stake in Everfuel in the spring of 2024, and it is expected to invest around 30% to 40% in stages through the subscription of new shares, etc.

Everfuel is a start-up company in the hydrogen business that operates hydrogen stations in Denmark and the Netherlands. Production of 3,000 tons of hydrogen per year will begin in Denmark in spring 2024. The scale of production will be one of the largest in the world with "green hydrogen" made from renewable energy electricity. The hydrogen produced will be used to refine crude oil at an adjacent refinery. Everfuel plans to build new hydrogen production plants outside of Denmark, and Itochu and Ogas will consider investing in each project. The total investment amount is expected to be approximately JP¥10 billion.

ITOCHU website:
https://www.itochu.co.jp/en/news/press/2023/231213.html

Toyota accelerates realization of circular economy
On December 7, Toyota Motor Corporation announced its efforts to manufacture cars that aim to achieve carbon neutrality. Based on the concept of 3R (Reduce, Reuse, Recycle), it aims to ensure that the value of recycled raw materials and products can be used for as long as possible, and also to minimize waste by incorporating it into the design. In particular, regarding batteries for electric vehicles, it will first develop batteries that save resources and long-life. After that, it will thoroughly implement the 3R concept of batteries, which involves rebuilding, reusing, and finally recycling using methods that reduce CO2 emissions. The 7th Toyota Environmental Action Plan, which was formulated as an implementation plan, sets the goals of 2025 as “maximum recovery and detoxification of batteries in five regions: Japan, the United States, Europe, China, and Asia.” 

TOYOTA website:
https://global.toyota/en/newsroom/corporate/40102076.html

Rakuten's mobile infrastructure is in operation in Germany
On December 8, Rakuten Group announced that 1&1, a new German telecommunications company, has launched a service using Rakuten's infrastructure. Rakuten's communications network reduces costs by replacing most of the equipment other than antennas with cloud-based software. The company sells technologies called "virtualization" and "open RAN" to overseas carriers through its subsidiary Rakuten Symphony. 1&1 is the first company in Europe to use virtualization technology to provide high-speed 5G network mobile phone services. Outside of the 1&1 line area, roaming from other major carriers will be used.

Rakuten Group website:
https://global.rakuten.com/corp/news/press/2023/1208_01.html?year=2023&month=12&category=corp%20ir

JCI makes recommendations to the government regarding carbon pricing
On December 5, the Japan Climate Initiative (JCI), which is made up of 186 organizations including companies, local governments, and NGOs, announced the proposal as the government response is insufficient to "carbon pricing," which would put a price on carbon (CO2) and change the behavior of emitters. 
The GX Promotion Act, enacted in May 2023, paved the way for the introduction of carbon pricing, which has been discussed for many years. However, compared to carbon taxes and emissions trading systems that are becoming more popular around the world, it is insufficient to achieve the same level of emissions reductions. JCI recommends six principles, including the following three points:

‒    Bring forward the introduction date to 2025
‒    Aiming for a carbon price sufficient for 2030, such as $130/t-CO2 as indicated by the International Energy Agency (IEA)
‒    Rather than leaving it up to companies to act independently, the system should be transformed into a cap-and-trade type emissions trading system that is on par with the rest of the world, by setting total emissions limits for target sectors and requiring them to participate in the system and reduce emissions.

JCI pointed out that the active involvement and widespread support for this proposal indicates that non-state actors such as companies share a strong sense of crisis and urgency regarding the current state of Japan's carbon pricing and emissions reductions by the government.

Japan Climate Initiative website:
https://japanclimate.org/english/news-topics/cp-proposal/