Japan to fund seven projects to advance CCS strategy

Market: Emissions, Hydrogen
13/06/23

Japan's state-owned energy agency Jogmec has selected seven potential carbon capture and storage (CCS) projects for its financial support, aiming to accelerate the development and utilisation of the technology to drive the country's decarbonisation.

The cross-industry winners of the seven projects, comprising five domestic and two overseas projects, are to begin test drilling from the April 2024-March 2025 fiscal year and confirm how much the projects will be able to store carbon dioxide (CO2). They are likely to make a final investment decision in 2026-27. Japan is aiming to start commercial CCS business from 2030-31 with its current CCS roadmap.

The seven projects, which aim to expand hub and cluster businesses and cut costs, are projected to store a combined 13mn t/yr of CO2. The projects include those that can store 1.5mn t/yr of CO2 in north Japan's Hokkaido's Tomakomai, 2mn t/yr in the Sea of Japan side of Tohoku, 1.5mn t/yr in Higashi-Niigata, 1mn t/yr in the Metropolitan area and 3mn t/yr in the Kyusyu region, along with 2mn t/yr offshore Malaysia and 2mn t/yr in an unspecified area of Australasia.

This is the government's first financial support for CCS. It is still unclear how much Jogmec will finance each project, depending on future negotiations with the winning consortiums. The trade and industry ministry (Meti) has allocated around ¥3.5bn ($25mn) in its 2023-24 initial budget to support advanced CCS projects through Jogmec.

Japan plans to achieve CO2 storage capacity of 6mn-12mn t/yr by 2030 so that the country can start its CCS business from 2030. Tokyo aims to store 120mn-240mn t/yr of CO2 by 2050, after adding the 6mn-12mn t/yr of capacity over 20 years from 2030. Meti has estimated the country could store around 70pc of 240mn t/yr of CO2 in 2050 through the domestic projects, if it could develop 20-25 areas, including the selected five domestic areas.

Japan would need to deploy CCS and carbon capture, utilisation and storage technology to offset CO2 emissions that cannot be removed in sectors such as power, refinery, steel, chemical, cement and paper production sites. Japan aims to cut its greenhouse gas emissions to 760mn t by 2030-31, down from 1.2mn t in 2019-20.

Jogmec last year expanded its funding coverage to CCS projects, as well as hydrogen and ammonia, to help reduce domestic firms' risk exposure.

By Motoko Hasegawa

Japan CCS projects selected by Jogmec
	Consortium	CO2 storage capacity (mn t)

Tomakomai	Japex, Hokkaido Electric Power, Idemitsu	1.5
Tokyo metropolitan	Inpex, Nippon Steel, Kanto Natural Gas Development	1.0
Sea of Japan, Tohoku	Itochu, Nippon Steel, Taiheiyo Cement, Inpex, MHI, Taisei	2.0
Higashi Niigata	Japex, Tohoku Electric Power, Mitsubishi Gas Chemical, Hokuetsu, NRI	1.5
Kyushu	Eneos, JX, J-Power	3.0
Offshore Malaysia	Mitsui	2.0
Australasia	Mitsubishi, Nippon Steel, ExxonMobil Asia Pacific	2.0
		Source: Jogmec

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

31/10/24

US court set to weigh biofuel blend mandates

New York, 31 October (Argus) — A US court on Friday will weigh some novel issues that could affect enforcement of the Renewable Fuel Standard (RFS), the federal program that sets minimum biofuel blending levels for domestic motor fuel supplies. The Environmental Protection Agency (EPA) in last year's RFS regulation required refiners and importers to blend increasing volumes of renewable fuel from 2023-2025. But the rule differed from past obligations in a crucial way. While the RFS law set annual volume targets of cellulosic, advanced and conventional biofuels through 2022, it tasked EPA with setting volumes in subsequent years by balancing factors such as the environmental impacts of biofuels, energy security, expected production and consumer costs. In a consolidated case to be heard Friday by the US Court of Appeals for the District of Columbia Circuit, environmental groups and oil refiners are separately challenging aspects of how the EPA applied those factors in setting 2023-25 volumes. The court has previously affirmed the legality of many RFS rules. "Past cases always give you some perspective on how the DC court might see it," said Susan Lafferty, a partner at law firm Holland & Knight. "But the DC court could also say, ‘not relevant anymore because this is a different part of the statute that we are working with.'" Refiners say EPA misapplied the criteria, upping compliance costs more than necessary by setting targets for cellulosic and conventional biofuels too high and targets for advanced biofuels too low. They also challenge EPA's balancing of potential impacts, noting that the agency assumed that all parties can easily pass the costs of compliance on to consumers. In a separate case this year, the DC Circuit discarded EPA rejections of program waiver petitions, in part because judges disagreed that refiners can easily pass on the cost of Renewable Identification Number (RIN) credits used to show compliance with the RFS program. EPA used this pass-through theory in the 2023-2025 rule "like a magic wand, waving it around to dismiss any argument that the rule will cause harm", the American Fuel and Petrochemical Manufacturers and small refineries said in a case filing. Lafferty expects the judges at Friday's hearing to probe the extent to which EPA's volumes relied on this pass-through theory, "a policy that now this very court has gutted." Environmentalists have similarly targeted EPA's cost analysis, arguing that the agency downplayed the environmental drawbacks of growing crops for energy. The Center for Biological Diversity and the National Wildlife Federation argue that EPA has legal discretion to set post-2022 volumes for corn- and soybean-derived biofuels as low as zero. EPA counters that the court owes the agency deference in evaluating scientific data and making predictive judgments. And biofuel groups that have intervened argue that the program is designed to require more biofuel production even if there are no formal volume requirements in law anymore. While EPA's post-2022 authority to set blend mandates is a new issue, the DC Circuit has handled various cases about EPA's implementation and has generally been deferential to the agency's volume decisions. The court this year upheld 2020-2022 targets. In a 2019 decision, the court kept volumes in place , despite telling EPA to more deeply weigh endangered species impacts. While the court might take issue with some aspects of EPA's latest rule, including the agency's lateness in finalizing volumes, judges could again be reluctant to upend fuel markets if they find only small oversights. Depending on how skeptical judges appear about EPA's arguments on Friday, the case could cause concern for biorefineries. A decision is expected next year, meaning any order for EPA to better justify its decisions or go back to the drawing board would likely fall to the next president's administration. On the panel for Friday's hearing are two judges familiar with the program: Democratic appointee Cornelia Pillard, who wrote the opinion this year upholding 2020-2022 blend mandates, and Republican appointee Gregory Katsas, who dissented and said those volumes were excessive. The third judge on the panel is Democratic appointee J. Michelle Childs. RINcrease or decrease RIN market activity has thinned as participants await the results of the court case and November's presidential election. In its latest rule, EPA aimed to provide a clearer picture over a longer timeline by finalizing volumes over multiple years. But the agency underestimated the growth in renewable diesel production, partly because of unexpectedly high feedstock imports. The result has been persistent oversupply, which took D4 biomass-based diesel credit prices from around 150¢/RIN in spring last year to as low as 42¢/RIN a year later according to Argus assessments. Multiple refiners have consequently dialed back biofuel production. In the past, RIN prices have proven sensitive to legal developments as traders anticipate supply and demand shifts. Prices softened this summer after the DC Circuit vacated small refinery waivers, leaving it unclear whether many facilities would have to buy RIN credits at all. By Cole Martin and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

Q&A: EU-GCC eye alliance anchored in energy, security

31/10/24

News

31/10/24

Q&A: EU-GCC eye alliance anchored in energy, security

Dubai, 31 October (Argus) — Russia's invasion of Ukraine in 2022, and the start of the war in Gaza last year hastened the strengthening of relations between the EU and the Gulf Co-operation Council (GCC) ꟷ something both blocs had long been striving for. Argus sat down with the EU's special representative for the Gulf region and former Italian foreign minister Luigi di Maio at the Future Investment Initiative in Riyadh this week to discuss his hopes for the future of the relationship. You spoke at the conference about a comprehensive EU-GCC trade agreement. Such a thing has been on the table for a while without really moving forward. Could the first ever EU-GCC summit two weeks ago in Brussels provide the push needed for it to happen? The final statement of the summit clearly emphasised the importance of finalising the negotiation in a positive way, and reaching the free trade agreement at a regional level as soon as possible. Then we can start tailor-made negotiations on trade and investments. This can work in complementarity with the free trade agreement, for instance, on investments and energy co-operation bilaterally. This doesn't mean we are going to kill the free trade agreement at the regional level, but there are some sectorial co-operations that we can implement. This is a very good starting point. I would say the summit was ‘the message' because although our co-operation agreement dates back to the late 1980s, it was the first ever summit. Of course, that also testifies to the gap that we have to fill. This is why the EU approved the new strategy and why there is a special representative to implement this strategy. And why we are working with the Gulf countries to negotiate and implement [it] as soon as possible. Riyadh is where we opened the first ever European Chamber of Commerce in the GCC. The EU and Saudi Arabia are going to sign an energy co-operation MoU by the end of the year. The text has been discussed, and now we will work for the signature. What are the elements of this energy agreement with Saudi Arabia? It is a new framework to co-operate, particularly, on renewables, hydrogen, and technologies linked to renewables. This is very important, and currently in the hands of the EU commissioner for energy, Kadri Simson, and Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia. Speaking of hydrogen, Prince Abdulaziz spoke here about Saudi Arabia being one of the lowest-cost producers of hydrogen. We also know that hydrogen is a major element of the India-Middle East-Europe Economic Corridor [IMEC] agreement signed at the G20 summit in New Delhi. Is the IMEC project still on the table? And is this growing hydrogen relationship between the EU and the GCC part of it? First, the lesson we, the EU, learned is diversification. So, it's very important to implement our diversification policy on any kind of energy source. It is not only linked to oil, gas or hydrogen, or in general, technologies, raw materials and production. Then there is the issue of how much we can count on the suppliers. The Gulf countries like Saudi Arabia, the UAE, Qatar and others have always been reliable partners. This is why we see the energy co-operation as a pillar of our partnership. On hydrogen, there is a mutual interest to meet our ambitions. Our ambition, according to the European Commission's REPowerEU proposal, is for the EU to produce 10mn t of hydrogen on its soil by 2030, and import another 10 mn t. Saudi Arabia, the UAE and Oman are working with our companies and member states to export hydrogen to Europe. And I think the development of technologies and new projects around that will be at the core of our future co-operation. If you look at Vision 2030, here in Saudi Arabia, but even in the UAE and in the other countries, many of the goals are in line with our REPowerEU, NextGenerationEU, or the European Green Deal proposals. So there is momentum, and we are taking it. We are trying to fill the gap of the past. And the very important thing, not only about hydrogen, but even about the climate co-operation that is in our final statement [of the EU-GCC summit], is that it's not an "Una tantum" [one-off] event. We are working to have the ministerial foreign ministers' meeting in Kuwait next year and the next EU-GCC summit in Saudi Arabia in 2026. We have a long road ahead to implement the deliverables of the last summit, but also to improve our co-operation on renewables. There was a significant breakthrough at Cop 28 with the mention of fossil fuels in the final declaration. Do you see the growing EU-GCC relationship as a leverage to push GCC countries on their climate agendas and goals? The approach should not be that we push them on their climate agendas. We are working together. And thanks to the multilateral relations, ambitions and policies that we have, we can, even in view of Cop 29, co-ordinate in the same way we did at Cop 28. This is very important, because thanks to their influential foreign policy, on Africa, on central Asia, even sometimes on Latin America, and our ambitions and partners around the world, we can merge our relations to take another step forward on climate policy. But as you said, Cop 28 was historic, as consensus was the most ambitious result of the UN climate Cops, and I think we have to continue on this path together. It is not a matter of pushing someone. It's a matter of co-operation. Our level of partnership with GCC has to switch at a strategic level. We want to create a strategic partnership on peace and prosperity. This is our agreed ambition on both sides. Speaking of peace and prosperity, Iran is involved indirectly in the Russia-Ukraine conflict, and its direct confrontation with Israel leaves the GCC sandwiched in the middle. How do you see the EU working with the GCC to attain peace and prosperity, given the increased insecurity in the region? We share with the GCC the interest of peace, prosperity and stability of the region. Because if you look at these countries, what are they doing on Ukraine, like returning children and prisoner exchanges… They are very active, and we appreciate their efforts. So my perception is that the more we work with the GCC on regional stability, the more we will achieve results, because we have a common agenda. They will be very important for the future of the two-state solution, but also for the stability of Lebanon. Even for conveying messages of de-escalation to Iran. The channels with Iran have to be open… to convey messages about nuclear, ballistic missiles, about weapons to Russia for use against Ukraine, and the ‘Axis of Resistance' policy in the region, about the Red Sea and the freedom of navigation. We have to use all the channels we have and the channels the GCC have are precious because of the normalisation processes in the region, just like the Iran-Saudi Arabia one. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

UK government consults on oil and gas scope 3 emissions

30/10/24

News

30/10/24

UK government consults on oil and gas scope 3 emissions

London, 30 October (Argus) — The UK government has opened a consultation seeking views on assessing the effects of scope 3 — or end-use — emissions from proposed offshore oil and gas projects. "Scope 3 emissions from downstream activities need to be assessed… in relation to offshore oil and gas production activities", the government said today. It proposed that a baseline scenario is defined for assessing scope 3 emissions, to set out how the environment "is likely to evolve without the development of a proposed project". The government also proposed that information on "relevant scope 3 categories" is included when a developers applies for a permit. This would include the effects of emissions from the combustion of oil or gas, as well as "other downstream activities", such as refining or transport of fuels. The UK's current process means that developers applying for consent must provide information on scope 1 and 2 — operational — emissions in an environmental statement. But scope 3 emissions are not included, despite making up around 80-95pc of emissions for a typical oil and gas company. The consultation was spurred by a ruling made in June by the UK's Supreme Court. The judgment ruled that consent for an oil development in southern England was unlawful, as the scope 3 emissions were not considered. The government — which was elected in early July, shortly after the ruling — has halted the assessment of any environmental statements related to oil and gas extraction and storage activities, including any that were already being assessed. These would be deferred until the new environmental guidance was in place, expected in spring 2025. The consultation will close on 8 January 2025. Separately, the government will consult by the end of this year on the implementation of its commitment to issue no new oil and gas licences to explore new fields, it said today. The UK has a legally-binding target of net zero emissions by 2050. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Cepsa rebrands to Moeve to reflect sustainability shift

30/10/24

News

30/10/24

Cepsa rebrands to Moeve to reflect sustainability shift

Madrid, 30 October (Argus) — Spain-based integrated energy company Cepsa has changed its name for the first time in its 95 years of existence, to Moeve (pronounced Moo-eh-vey). The change reflects Cepsa's transition "in which the majority of profits will come from sustainable activities by the end of this decade," said chief executive Maarten Wetselaar. Cepsa has sold nearly 70pc of its oil and gas production over the past two years, including its stakes in upstream assets in Abu Dhabi , in Peru and in Colombia . It has retained stakes in light crude and gas production in Algeria, which has a significantly lower carbon footprint. The company reported provisional working interest crude production of 36,000 b/d in July-September, down from 80,000 b/d in the same period of 2021. Since then it has announced an €8bn ($8.65bn) investment strategy to decarbonise much of its business through ventures such at the planned 2GW Andalusian Hydrogen Valley , announced at the end of 2022, together with second-generation biofuels, biomethane and renewables development. Cepsa, or Compañia Espanola de Petroleos SA, was founded in 1929. It has been been majority controlled by Abu Dhabi sovereign wealth investors IPIC and Mubadala Investment Company since 2011. US investment fund Carlyle acquired 37pc of the firm in 2019. By Jonathan Gleave Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia to support four new carbon credit methods

30/10/24

News

30/10/24

Australia to support four new carbon credit methods

Sydney, 30 October (Argus) — The Australian federal government will support the development of four new carbon crediting project methodologies proposed outside of government, federal energy minister Chris Bowen announced today. A total of 39 expressions of interest under the proponent-led model launched earlier this year were submitted to the Emission Reduction Assurance Committee (Erac), the statutory body responsible for ensuring the integrity of Australia's carbon crediting framework. The four selected proposals will now move on to the development phase. "Capturing opportunities across Australia remains a key priority for the government, and we've been working to deliver on the Chubb Review recommendation to bring forward more innovative ways to reduce emissions," Bowen told delegates at the Carbon Market Institute (CMI)'s Australasian Emissions Reduction Summit in Melbourne on 30 October. Two of the selected methods were proposed by state governments — the "improved native forest management in multiple-use public native forests (INFM)" method, put forward by the New South Wales (NSW) department of climate change, environment, energy and environment, and the "improved avoided clearing of native regrowth (IACNR)" proposed by the Queensland department of environment, science and innovation. The two others came from indigenous groups — the "extending savanna fire management to the northern arid zone" proposed by the Indigenous Desert Alliance, and the "reducing disturbance of coastal and floodplain wetlands by managing hooved animals" proposed by Northern Australian Indigenous Land and Sea Management Alliance. The successful proponents will now lead work on the drafting of the methods, with the Erac to publish the draft methods for public consultation before recommending them to the minister. A representative from the Department of Climate Change, Energy, the Environment and Water (DCCEEW) previously said that developing a new method under the proponent-led model could take 1-2 years. Delays with new methods The development of new Australian Carbon Credit Unit (ACCU) framework methods had been until now led by the federal government, but this has proved "too slow," CMI's chief executive John Connor previously said. Work on a remake of the Environmental Plantings (EP) method, which will make it easier for landholders to undertake projects, is expected to be finalised by the end of the year, Bowen said on 30 October. The method already expired on 30 September this year. And exposure drafts for three other priority methods will only be delivered in the first half of next year, Bowen noted, including the long-awaited government-led Integrated Farm and Land Management (IFLM) method that will combine activities of several existing soil and vegetation sequestration methods into a single method. This includes the key human-induced regeneration (HIR) ACCU method, which expired on 30 September 2023. The DCCEEW had previously indicated the IFLM exposure draft would be sent to Erac by the end of this year, which would then be followed by public consultation. The other exposure drafts are for new savanna fire management methods and for a reformed landfill gas method which could potentially lead to tighter supplies in the future . By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more