Japan's state-owned energy agency Jogmec is planning more support for transitional fuel and carbon neutral energy development projects, in line with the country's 2050 decarbonisation goal.
The Japanese government is realigning its energy policy, of which a revision is due later this year, in response to shifting geopolitical risks and Tokyo's 2050 decarbonisation policy. The policy revision is expected to usher in additional state financial support for development of transition energy, as well as alternative fuels such as hydrogen and ammonia, along with carbon capture and storage (CCS) solutions.
Jogmec has unveiled an action plan to help achieve the country's decarbonisation goal, targeting to add to financial support for upstream oil and gas development that is combined with environmental impact offset measures, such as CCS, enhanced oil recovery using captured carbon dioxide (CO2) and afforestation. The agency is now considering backing such project by offering financial support throughout an entire supply chain and specifically for costly CCS measures.
Tokyo is boosting financial incentives for CCS investment, including financial assistance by state-owned financial institutions such as JBIC, Jogmec and Nexi, as Japan is set to continue its upstream oil and gas hunt to boost its energy security during a transitional period to carbon neutrality. Japan's oil and gas output hit a record 1.746mn b/d of oil equivalent (boe/d) during the April 2019-March 2020 fiscal year, lifting the equity-output ratio to a record 34.7pc against its 2030 target of above 40pc.
Jogmec is particularly pushing further development of LNG, which is expected to be in demand as a transition fuel and a feedstock for production of ammonia and hydrogen. The government last year expanded the agency's role, enabling it to provide financing in overseas LNG transshipment and storage terminal projects.
The agency is also expanding its backing for carbon-neutral fuels, particularly development of ammonia and blue hydrogen — typically produced using natural gas but with carbon emissions being captured and stored or reused. It is planning to build on its ties with traditional hydrocarbon producer nations and help them develop a hydrogen and ammonia market and supply chains.
Japan is looking to expand fuel use of hydrogen and ammonia in the run-up to 2050. Jogmec is already co-operating with Japanese and local firms in blue ammonia development projects in Russia and Indonesia.
Jogmec also plans to also boost support for domestic and overseas geothermal resource development, as well as for studies in biomass production and co-firing technologies of biomass fuels at coal-fired power plants.
The Japanese government is accelerating efforts to prompt Japanese companies to invest in energy transition and decarbonisation projects. It has set up a ¥2 trillion ($18.5bn) fund managed by state-owned research and development institute Nedo to provide funds for green innovation projects in various industries during the next 10 years. It is also drawing up domestic guidelines for climate transition finance to help heavy CO2-emitting manufacturers shift to more environmentally-friendly operations.
