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Pioneering carbon neutrality: Japan's CCS journey and ambitions for a greener future

Interview - September 13, 2023

An in-depth conversation with Toshiaki Nakajima, President of Japan CCS and the company’s innovative approach to a greener future

TOSHIAKI NAKAJIMA, PRESIDENT OF JAPAN CCS CO., LTD.
TOSHIAKI NAKAJIMA | PRESIDENT OF JAPAN CCS CO., LTD.

Japan is an island that lacks natural resources and imports approximately 95% of its oil and energy sources. To address this issue, the Kishida administration has implemented a basic energy plan to promote Japan's self-sufficiency and increase reliance on renewable investments. However, there are opposing views, particularly from the nuclear panel, arguing that the nuclear policy benefited Japan's energy independence and significantly reduced the cost per unit of energy compared to renewables. Considering economic competitiveness, which energy mix do you believe is best suited for Japan?

The foundation of Japan’s energy mix is S+3E, which stands for Safety, Energy Security, Economic Efficiency, and Environment. The environment aspect has recently gained significant importance, especially in achieving carbon neutrality by 2050. Efforts to reach this target are primarily focused on reducing energy consumption, adopting clean energy sources, and decarbonizing hard-to-abate industries, such as steel manufacturing and cement.

With regard to clean energy sources, a combination of renewable energy, nuclear power, and reduction of CO2 emissions by using fossil fuels in conjunction with CCS (Carbon Capture and Storage) should be implemented.

In Japan, however, there are limitations in land areas and areas with suitable wind conditions, making it economically challenging to expand renewable energy. Also, there are social-political challenges in increasing nuclear energy.

There are various pathways to achieving carbon neutrality while securing energy security, and it is unrealistic to predetermine the ideal proportion of energy sources, ignoring possible technological advances. Dependence on a single energy source may lead to safety and energy security problems, while the role of CCS is extremely important to decarbonize fossil energy.

The Japanese energy sector considers the ensurance of a stable supply of energy its social responsibility, and this applies also to JAPEX (Japan Petroleum Exploration Co., Ltd.), where I am from, and which is the largest shareholder of JCCS. For instance, during hot summer or cold winter days, a shortage of required energy such as electricity and natural gas is an issue that would endanger people's lives. In order to achieve carbon neutrality while avoiding such situations, an effective means from the viewpoint of maintaining a stable supply of energy may be to avoid being overly dependent on energy sources such as renewables which are presently lacking in supply capability, but to combine them with CCS, which decarbonizes existing energy sources.

 

How would you respond to the viewpoint that CCS may enable prolonged dependence on fossil fuels and divert focus from transitioning to alternative energy sources?

The objective of carbon neutrality is to prevent the further increase of CO2 concentration levels in the atmosphere or to reduce such concentrations. Using fossil fuels itself is not inherently a problem if CO2 emissions can be reduced by utilizing CCS technology. What's important is finding the optimal combination that will minimize the social cost in achieving carbon neutrality. Renewable energy is considered to hold significant potential in Japan, and the government and private companies are actively pursuing efforts to increase the use of renewable energy. On the other hand, considering the capacity of renewable energy in Japan, the per capita generation may be lower than that of foreign countries. If Japan tries to meet all its energy needs only with renewable energy, energy costs may be extremely high.

It is therefore important to use renewables in combination with other energy sources such as a certain amount of fossil fuels while reducing the CO2 emissions by CCS, and expanding the use of nuclear power. Although there may also be other means, there is a need to consider the optimal combination with the lowest economic cost.

The most common role of CCS is for example to capture and store the CO2 emitted when oil or natural gas is burned in thermal power plants.

Another role is the realization of a hydrogen society through the combustion of hydrogen or ammonia, reducing CO2 emissions during combustion. One method of hydrogen production is the electrolysis of water by renewable energy. Another method produces hydrogen from fossil fuels, where the function of CCS is to store the CO2 generated in this process in the subsurface.

A further role of CCS is its implementation in combination with Direct Air Capture (DAC) technology, called DACCS. DACCS aims to capture CO2 directly from the atmosphere and securely store it underground, providing for a removal of emissions.

Although there are opposing views regarding CCS especially in Europe, various European nations are enhancing their efforts to develop CCS technology. We should focus on the objective of reducing the atmospheric concentration of CO2 in the most cost-effective way, rather than opposing CCS as a technology prolonging the use of fossil fuels.

 

CCS technology represents a powerful option to mitigating climate change, encompassing various sectors such as research institutions, government, and private enterprises. Your company was established in 2008 with nine initial companies and has now grown to involve over 30 companies. Why is a specialist company like yours necessary to provide solutions instead of private companies individually pursuing this path?

Our company was founded in 2008 in response to the recognition of the importance of CCS technology at the G8 Hokkaido Toyako Summit. We initially started with nine shareholders, which quickly grew to over thirty. There was a widespread understanding that Japan as a whole would embrace the challenge, which is one reason why so many companies participated. At that time, the viability of CCS technology was totally unknown, making it challenging for private enterprises to envision pursuing research and securing a return on investment.

As it was unlikely that the private sector would take the initiative of commercial investment, the Japanese government provided funding and commissioned JCCS to conduct the research and development of CCS technology. At that time, there was no single company that held all the technology required for CCS, such as carbon capture, plant, and geological storage technology. There was a need for numerous companies with expertise in energy related technologies to participate and collaborate.

 

CCS faces significant challenges, both technical and economic. Currently, companies are actively working on implementing energy-efficient and cost-effective technologies. Given these ongoing efforts, when will a more refined and finalized version of CCS be available?

The Japanese government is advancing efforts in accordance with its CCS Long-Term Roadmap. Multiple projects by the private sector will be set up and commence CO2 storage by 2030. From 2030 to 2050, efforts will be made to scale up the size and number of CCS projects, establish the necessary infrastructure, and achieve the approximate target of 120-240 million tons of storage annually by 2050.

JOGMEC (Japan Organization for Metals and Energy Security) has recently selected seven projects as “Advanced CCS Projects”, with 2030 as the target to start CO2 storage. Both an economic and legal framework is needed to facilitate this, and the Japanese government plans to establish these frameworks.

Currently, JCCS is conducting research, development, and demonstration of CCS for the Japanese government with projects including the Tomakomai project, liquefied CO2 ship transportation demonstration, investigation of potential CO2 storage sites, and feasibility studies of carbon recycling. We are advancing these efforts with the aim that the seven Advanced CCS Projects will fully leverage the knowledge and experience acquired in our projects.


Bird’s Eye View of Tomakomai Capture/Injection Facilities


Japan is a highly seismic country, experiencing numerous earthquakes each year. This presents a significant challenge to the integrity of the CCS system and the potential risk of CO2 leakage, which can cause asphyxiation and harm human health. However, Japan is known for being one of the most safety-conscious societies globally and excels in anti-seismic technologies. Considering that many countries located in the Ring of Fire may be interested in adopting this technology in the future, how is your company embracing this challenge?

Though we acknowledge the public's concerns regarding the possibility of a relation between CCS and earthquakes, the issue is whether there is a causal relationship. In selecting areas for CO2 storage, we have avoided areas that have frequent earthquakes and have selected geologically stable areas. We have conducted surveys and have selected geological structures with minimal risk of leakage of the stored CO2. In the Tomakomai project, a large earthquake occurred in the eastern Iburi area, approximately 30 km from the CO2 injection area. However, there is no continuity of the geological structure of the injection area and the earthquake because the storage takes place at depths of 1,000-2,000 meters, whereas the earthquake's hypocenter was 37 km below the surface, and there is a huge difference in depth. Our monitoring data confirmed that there was no leakage of the CO2 stored, and no damage to the injection wells had been caused by the earthquake. Though there were some rumors suggesting that the CO2 injection may have triggered the earthquake, we asked seismology experts to investigate the matter, who confirmed that there was no causal relationship. JCCS published a report of their findings, and by explaining scientifically that there was no relation between the CO2 injection and the earthquake, we believe we have been successful in gaining the understanding of the public.

CO2 can be harmful at high concentrations. However, there have been no reported leakages with CCS, and the CO2 concentration must reach extremely high levels before posing any danger to people. The likelihood of a block of high-concentration CO2 rising from depths of several thousand meters to the surface and affecting people is highly improbable.

JCCS is pursuing efforts to share the aforementioned information with the local communities and stakeholders to dispel unnecessary safety concerns and demonstrate that CCS is a secure and reliable technology.

 

Currently, there are approximately 200 projects related to CCS, of which only 30 are operational. These projects are in various stages of development. In this context, where does Japan stand in comparison to other countries? Furthermore, what sets Japan apart regarding its competitive advantage concerning CCS-based projects?

The early CCS projects that were pioneered this world were conducted at oil exploitation sites where injecting CO2 enhances the production of oil – also known as Enhanced Oil Recovery (EOR) technology. Countries like the US have taken the lead in introducing this technology to enhance oil recovery.

Japan has a few oil and gas fields suitable for EOR, and there have been examples of CO2 injection for EOR on an experimental basis. On the other hand, Japan’s first full-chain CCS project from capture to storage was conducted in Tomakomai. We completed 300,000 tons of CO2 storage in 2019, and have suspended injection.

The cumulative injection of 300,000 tons is not large compared to foreign projects; however, many visitors globally and domestically come daily to visit the Tomakomai site. One reason for their interest is that the Tomakomai project is located near a large urban area. Visitors want to know how we were able to conduct the project without opposition from the local residents, how we received the acceptance of the local community. Another feature of the Tomakomai project attracting attention is that it was the first time CO2 injection wells for dedicated CO2 storage were drilled from onshore to the offshore sub-seabed. With regard to technological aspects, we utilized standard oil and gas technology to drill the injection wells and store CO2, which is also the case in foreign CCS projects.

In the Tomakomai project, we adopted an energy efficient capture process utilizing an amine solution and achieved world-class performance. Other capture technologies such as membrane separation and solid absorption are being developed in Japan, and there is the possibility of unique technologies being developed. Recently there have been many visitors from Asian countries like Thailand, Malaysia, Indonesia, Taiwan, Korea, and China. These Asian countries are showing a keen interest in CCS.

 

When it comes to renewable energies, European nations are far ahead in renewables and have entered the so-called post-FIT (feed in tariff) society. In this model we see a lot of private corporates entering into purchase power agreements. Japan is still a little bit behind the European nations in this regard. Regarding Carbon Capture and Storage, how do you see it progressing?

The Japanese government needs to establish a legal and economic framework that would enable private entities to conduct CCS projects. The electricity sector is transitioning from a Feed-In Tariff (FIT) system to a Feed-In Premium (FIP) system. There are ongoing discussions about the possibility of implementing a carbon pricing in Japan, but the way forward is uncertain. There are various views as to whether incentives and/or penalties are needed to achieve carbon neutrality, but a certain level of carbon taxes or credits should be introduced. There will be expenses associated with shifting the energy structure from how we use energy today to how to use energy to achieve carbon neutrality. The discussions will inevitably be about determining who will bear these costs and how they will be distributed throughout society. The Japanese government is currently considering incentives and legal frameworks for commercial CCS deployment.

 

Are you currently seeking to collaborate with international companies? If so, what type of collaboration are you interested in pursuing? Are you considering technical or business partnerships, or perhaps something else?

As JCCS's role is to implement specific CCS projects commissioned by the Japanese government and the New Energy and Industrial Technology Development Organization's (NEDO), we are not considering directly collaborating with foreign governments or companies. However, we are open to sharing knowledge through the exchange of information, and in this context, we welcome visits from overseas entities to our facilities. At the government level, the Japanese government has established the Asia CCUS Network to promote collaboration with various Asian nations. As for the private sector, two of the seven Advanced CCS Projects mentioned earlier will involve partnerships with overseas companies. There is a high likelihood that the individual companies involved in these projects will collaborate with foreign companies and governments, in particular in Asia, and jointly pursue CCS business in the future.

 

If we were to conduct this interview again in three years, what dreams and ambitions would you like to have accomplished by that time?

JCCS is the leader of a consortium that is conducting a CO2 ship transportation demonstration project. JCCS is currently constructing a liquefying terminal and a receiving terminal, and another consortium member is building the demonstration ship. The ship transportation demonstration is scheduled to begin by the end of this year and continue until 2026. Looking ahead three years from now, our mission is to have completed this project and to have achieved its objectives successfully. The Tomakomai project is also expected to continue, and we aim to complete the remaining tasks by 2026. The experience and knowledge acquired in the Tomakomai project will be utilized in the seven Advanced CCS Projects. In addition, the Tomakomai area has been selected as one of the seven projects, and is led by a consortium of JAPEX (Japan Petroleum Exploration Co., Ltd.), Idemitsu (Idemitsu Kosan Co., Ltd.) and HEPCO (Hokkaido Electric Power Co.). As a director of JAPEX, I hope that three years from now, this project will be progressing smoothly on its way to achieving its goals.

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