Weekly Japanese Industry and Policy News (June 23-June 29, 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. 

Mitsubishi Corporation establishes new company in the Netherlands to produce and sell hydrogen
Mitsubishi Corporation announced on June 22 that it has established a new company, Eneco Diamond Hydrogen, in the Netherlands to expand its green hydrogen production and sales business in Europe. The new company was established on June 6 as a fifty-fifty joint venture with Eneco, a Dutch integrated energy company that is a subsidiary of Mitsubishi Corporation. Eneco is engaged in the power generation business centered on renewable energy, electricity trading, and retail business in Europe.

The new company utilizes the knowledge and experience of renewable energy development that Eneco has cultivated over many years and our network with a wide range of industries such as petroleum, chemicals, steel, and shipping, and engages in green hydrogen production and sales business. In 2020, Mitsubishi Corporation acquired Eneco jointly with Chubu Electric Power. Eneco is developing a vertically integrated portfolio covering renewable energy-centered power generation business, power trading, and retail business in the Netherlands, Belgium, and Germany.

Mitsubishi corporation website:
https://www.mitsubishicorp.com/jp/en/pr/archive/2023/html/0000051535.html

METI holds 1st Asian Zero Emission Community (AZEC) Meeting
On June 24, the Ministry of Economy, Trade and Industry (METI) held the first Asian Zero Emission Community Senior Officials Meeting (AZEC SOM) in Jakarta, Indonesia. Senior officials from various countries participated in the meeting, and based on the results of the AZEC Ministerial Meeting held in Japan in March of this year, discussions were held to give shape to future cooperation. From METI, the Agency for Natural Resources and Energy, Mr. Minami, International Chief Carbon Neutral Coordinator, and Mr. Kobayashi, International Strategy Coordinator for Natural Resources and Energy participated.

At the meeting, it was confirmed that Japan will implement measures to (1) formulate a master plan for hydrogen and ammonia, (2) formulate technical standards for CCS, and (3) promote the utilization of the Joint Crediting Mechanism (JCM). METI will continue to promote the decarbonization of Asia together with AZEC partner countries through the expansion of the market for decarbonization technology and the associated cost reduction through policy coordination and support.

METI website (in Japanese):
https://www.meti.go.jp/press/2023/06/20230626001/20230626001.html

Use of liquefied biomethane (LBM) derived from livestock manure as ship fuel
On June 21, 7 companies including Mitsui O.S.K. announced that a demonstration test of using liquefied biomethane (LBM) derived from livestock manure as a marine fuel on a coastal LNG-fueled cargo ship was successfully conducted. This is the first attempt in Japan to use biomass-derived carbon-neutral LBM as marine fuel. And this time, the existing LNG supply chain can be used to transport LBM, the existing LNG lorry can be used for truck-to-ship bunkering (supplying LNG from a tank truck on the quay to a moored LNG-fueled ship) and, LBM can be used stably with the ship's existing facilities are confirmed.

LBM is produced by recovering unused biogas generated from biogas plants owned by dairy farmers, and the main component, methane was liquefied at approximately -160°C. By liquefying it, the volume can be compressed to 1/600, allowing a large amount of methane to be transported at once. LNG fuel is expected to reduce CO2 emissions by about 25% compared to conventional fuel oil, but further CO2 reduction effects can be expected by partially using LBM. The main component of LBM is methane, and since it can utilize existing LNG supply chains related to transportation and consumption, it is expected to be an effective means of decarbonizing ship operations.

Mitsui O.S.K. website:
https://www.mol.co.jp/en/pr/2023/23082.html

METI held Japan and Ukraine Public-Private Roundtable
On June 22, a "Public-Private Roundtable" was held in London for government and business officials from both Japan and Ukraine to exchange opinions on the economic recovery of Ukraine. It was organized by the Ministry of Economy, Trade and Industry (METI), JETRO, etc. on the occasion of the Ukraine Recovery Conference, and 46 companies from Japan participated in the event and worked to collect information with the aim of balancing reconstruction support and business. 26 companies from Ukraine also participated, and about 120 people attended, including government officials from both countries. Tsubame BHB, an ammonia production venture, announced that it has begun to consider building a production facility in Bucha near the capital Kyiv (Kiev), and exchanged a memorandum with the mayor of Bucha.

METI website (in Japanese):
https://www.meti.go.jp/press/2023/06/20230623004/20230623004.html

Tsubame BHB website:
https://tsubame-bhb.co.jp/en/news/press-release/2023-05-19-3709

JIC to acquire JSR, a leading semiconductor materials manufacturer, for approximately JP￥1 trillion 
The Japan Investment Corporation (JIC), a public-private fund, announced on June 26 that it would acquire JSR, a major semiconductor material company, for
about JP￥1 trillion. As the importance of semiconductors increases worldwide,
the company, which has technology essential for miniaturization, will be taken private and will support medium- to long-term growth. The idea is to lead to the restructuring of Japan's semiconductor materials industry, which is competitive but small in scale. The total purchase price is expected to be JP￥903.9 billion. JSR recommended the shareholders to apply for the TOB. JIC aims to start TOB in late December after going through the procedures of each country's competition authorities.

The photoresist (photosensitive material) handled by JSR is an important material for miniaturization technology that determines the performance of semiconductors. According to materials released by both JSR and JIC to the media, as major overseas material manufacturers are increasing their competitiveness through large-scale mergers and acquisitions, JSR asked JIC to discuss its capital policy for growth in mid-November last year. It is said that the two companies shared the same recognition by moving to a system that is not affected by short-term performance by delisting, and by promoting structural reform and industry reorganization.

As the importance of economic security increases, the Ministry of Economy, Trade and Industry (METI), which has jurisdiction over JIC, has designated semiconductors as strategic goods and is providing financial support to the industry. Subsidies have been invested in Rapidus, which was launched last year with the aim of mass-producing next-generation semiconductors with a line width of 2 nanometers, and in a new factory planned by Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) in Kumamoto Prefecture. The METI has set a goal of increasing the sales of companies producing semiconductors in Japan
to JP￥15 trillion by 2030, about three times the current level.

JIC website:
https://www.j-ic.co.jp/en/news/pdf/E_20230626_JIC_PressRelease.pdf

Mitsui & Co. launches underground CO2 storage business in Malaysia
Mitsui & Co. announced on June 27 that it will start a business to store carbon dioxide (CO2) underground in Malaysia. It aims to start by 2030. The reservoir will be jointly developed with Petronas, the state-owned oil company of Malaysia, and Total Energies, a major French energy company. It is expected to accept CO2 emitted from manufacturing industries in Japan, South Korea, and Taiwan.

Demand for CCS is expected to increase in the future from companies with limited decarbonization methods, such as steel companies. The specific storage amount is under investigation, but Malaysia has many geological formations suitable for storage. The potential CO2 storage capacity is 13.3 billion tons, one of the largest in the world. Mitsui & Co. plans to secure storage capacity of 15 million tons per year, mainly in the Asia-Pacific region, by 2035, including this project. It also started developing a liquefied CO2 transport ship, and plans to make it a service, including the development of a distribution network.

Mitsui & CO. website:
https://www.mitsui.com/jp/en/topics/2023/1246779_13949.html

METI Minister Nishimura attends the 3rd Japan-EU High-Level Economic Dialogue
On June 27, the 3rd Japan-EU High-Level Economic Dialogue was held. Mr. Nishimura, Minister of Economy, Trade and Industry and Mr. Hayashi, Minister for Foreign Affairs, from the Japanese side, and Mr. Valdis Dombrovskis, Executive Vice President of the European Commission for an Economy that Works for People, European Commissioner for Trade, from the EU side, attended. The three Ministers endorsed the "Japan-EU Digital Trade Principles", noting that Japan and the EU have achieved a higher level of cooperation. After that, discussions were held on (1) Japan-EU economic cooperation, (2) economic security, and (3) a rules-based free and fair-trade framework.

(1) Japan-EU economic cooperation
METI Minister Nishimura stated that he would like to accelerate discussions on negotiations regarding the inclusion of "provisions for the free flow of data" in the Japan-EU Economic Partnership Agreement. He also expressed his expectations for increased cooperation in the Global South in conjunction with the EU's Global Gateway Strategy. He also urged the early lifting of restrictions on the import of Japanese food products based on scientific evidence.

(2) Economic security
Mr. Nishimura evaluated that the EU's economic security strategy is in line with Japan's strategy, and stated that he would like to build a strong and reliable supply chain, including specific cooperation fields such as important minerals. 

(3) Free and fair-trade framework based on rules
Minister Nishimura called for further cooperation between Japan and the EU toward MC13, including the early realization of dispute resolution system reforms, the substantial conclusion of e-commerce negotiations by the end of this year, and the handling of non-market policies and practices. 

METI website:
https://www.meti.go.jp/english/press/2023/0627_003.html

METI summarizes the direction of negative emission technologies (NETs)
On June 28, the Ministry of Economy, Trade and Industry (METI) released a report that determined the direction of early social implementation and industrialization of negative emission technologies (NETs). In Japan, to achieve offset the estimated residual emissions of approximately 500 million to 240 million tons/year centering on the industrial and transportation sectors, approximately several hundred million tons/year of CDRs will be required. However, since the removal cost is higher than the reduction cost, it is not possible to expand the introduction of NETs naturally. Therefore, it is important to start efforts to expand NETs as soon as possible.

In order to create a negative emissions market, this report describes (1) the need to consider government support in the initial stage of market formation, taking into consideration the status of studies in Europe and the United States,  (2) carbon credits for trading the value of CO2 removal (CDR). (Removal credits) utilization environment and expansion of initial demand, (3) promote a business model that includes co-benefits (secondary value other than CO2 removal) and promote understanding of consumers, and (4) establishment of system for formulating necessary rules for market acquisition. 

METI website (in Japanese):
https://www.meti.go.jp/press/2023/06/20230628003/20230628003.html

JOGMEC publishes guidelines for calculating carbon intensity (CI guidelines)
On June 23, JOGMEC announced a calculation method for GHG emissions associated with the production of LNG, hydrogen/ammonia, and synthetic fuels, and Carbon Intensity (CI: carbon intensity), which indicates GHG emissions per unit (energy content or weight), published as the second edition of the guideline showing the calculation method.

Based on JOGMEC's thinking, these guidelines were created with reference to individual international standards and industry standards, etc. regarding methods for calculating GHG emissions associated with the production of LNG, hydrogen/ammonia, and synthetic fuels, which are being discussed globally. By referring to these guidelines, it is devising ways to think about CI calculation methods and more optimal calculations of methane emissions, which are being requested internationally. The main changes from the first edition are the following three points.

・Identification of major GHG emission sources in LNG/ammonia plants
・ Added synthetic methane (e-methane) to the scope of the guidelines
・ Added hydrogen derived from water electrolysis to the scope of the 
guidelines

JOGMEC website:
https://www.jogmec.go.jp/english/news/release/news_10_00037.html