Japanese chemical companies are actively exploring the path of carbon neutrality

On the major issue of decarbonization, Japanese petrochemical producers are exploring a unique path to carbon neutrality, driven by government policies and incentive programs. Japanese chemical companies are studying the use of green ammonia and green hydrogen as fuels to power crackers for the production of ethylene. Japanese chemical companies are also working on converting carbon dioxide into methane and methanol. So far, though, the decarbonization of Japan's chemical industry has largely remained in labs, white papers, and company announcements, and despite economic pressures, all are hopeful for change.

The government has taken many measures to support carbon neutrality

Currently, the Japanese government is supporting industrial carbon neutrality in a variety of ways. In June 2021, the Japanese government released the "Green Growth Strategy for Carbon Neutrality by 2050". Japan's private sector will invest 240 trillion yen in sectors such as fuels, batteries, carbon recycling, and construction, and predicts that these investments will have an economic impact of about $1 trillion and create 8.7 million jobs by 2030. By 2050, its impact will expand to $2 trillion and will create 18 million jobs. To encourage investment in carbon reduction, the Japanese government has set up a $1.4 billion Green Innovation Fund to support research projects by companies. In addition, the government is providing subsidies to companies up to one-third of the cost of commercial projects that introduce non-fossil fuels.

However, some in Japan's financial sector are skeptical that decarbonization efforts will be as economically beneficial as the green growth strategy promises. Mizuho Securities' chemical company equity analyst Mikiya Yamada acknowledged that producing products that help reduce greenhouse gases could be a business opportunity for Japan's chemical industry. However, he warned that decarbonization will also have negative economic impacts, one of which is that the government will subsidize decarbonization investment, which will lead to higher tax revenues, which will affect consumption; Second, the price of low-carbon products will rise relative to the original products, which will also cause a decline in household consumption. He even said that the investment would have little economic benefit other than reducing greenhouse gas emissions. However, many in the Japanese government and industry believe that the push for carbon neutrality will bring about one of the most fundamental changes since the Industrial Revolution, and that carbon reduction is accelerating.

Japanese chemical companies are actively promoting carbon neutrality

Under the promotion of the Japanese government, Japanese chemical companies are promoting carbon neutrality. In November 2020, Mitsui Chemicals became the first Japanese chemical company to announce its goal of achieving carbon neutrality by 2050. Mitsui Chemicals reduced its greenhouse gas emissions from 6.2 million tons in 2013 to 4.87 million tons in 2020 and set a target of 3.8 million tons for 2030. Subsequently, Mitsubishi Chemical and Sumitomo Chemical also announced their respective goals of achieving carbon neutrality by 2050. Mitsubishi Chemical emitted 12.5 million tons of greenhouse gases in 2013 and aims to 7.3 million tons in 2030. Sumitomo Chemical emits 9.5 million tons in 2013 and aims to 4.3 million tons in 2030.

At the company's annual press conference in June, Mitsui Chemicals CEO Osamu Hashimoto introduced a hybrid combustion technology that uses ammonia as a fuel for naphtha crackers, and believes that this technology can effectively reduce carbon emissions for companies.

One of the priorities of Mitsui Chemicals' decarbonization efforts is its Osaka plant, located in the Kaisenkitako Waterfront Industrial Park in the south of Osaka. "In order to achieve zero greenhouse gas emissions by 2050, the company has begun to realize the vision of carbon neutrality at the Osaka plant," Hashimoto said. The vision will focus on ammonia as a fuel, the conversion of naphtha cracker feedstock, and the use and storage of carbon dioxide. "Mitsui Chemicals has partnered with Osaka Gas on a project to separate and recover carbon dioxide from the Osaka plant and Osaka Gas's Senhoku Power Plant, convert it into methane and methanol, and supply these products to local users. Mitsui Chemicals also plans to collaborate with other companies in the Jiequan Beigang Waterfront Industrial Park to research alternative feedstocks and carbon capture.

In 2021, Mitsui Chemicals established the Mitsui Chemicals Carbon Neutrality Research Center within the International Institute for Carbon Neutral Energy at Kyushu University in Japan. The center has already started research in areas such as green hydrogen production and CO2 recycling. To further use ammonia as fuel, Mitsui Chemicals plans to build a new 10,000 mt/year cracking pilot furnace in Osaka by December 2025. The company said it is on track to develop dedicated ammonia burners and cracking furnaces with low NOx emissions to achieve stable decomposition and optimal thermal balance.

In addition, Mitsui Chemicals has reached an agreement with Sumitomo Chemical and Maruzen Petrochemical to study achieving carbon neutrality in the Keiyo Coastal Industrial Park.

Create a model for the decarbonization of industrial parks

In Japan's carbon neutrality plan, chemical parks are also playing a role as a link between companies and as a service provider between companies and society.

Yoshiko Tsuji, director of the Center for Environmental Safety at the University of Tokyo, chairman of the Regional Cooperation Committee for Carbon Neutral Innovation of the Japanese Society of Chemical Engineering, and vice chairman of the Decarbonization Promotion Committee of the Zhounan Industrial Complex, said that the members of the Zhounan Industrial Park Decarbonization Promotion Committee include representatives from industry, government, academia and the local community. In May, the council released a roadmap to achieve full carbon neutrality by 2050, with the goal of establishing a circular manufacturing industrial park that uses biomass, waste plastics and carbon dioxide to produce ethylene and its derivatives. Enterprises in the industrial park want to fuel the base with imported green ammonia. With the help of government subsidies, four chemical companies in the Zhounan Industrial Park are setting up green energy supply systems.

Japan's chemical industry is also seeking to involve the forestry sector in its decarbonization efforts. "The three carbon sources that can replace naphtha are biomass, waste plastics, and carbon dioxide," Tsuji said. Yamaguchi Prefecture, where the Shunan Industrial Park is located, has large forests, which makes it possible to obtain biomass at a low cost. "Chemical companies in Zhounan Industrial Park are working with the forestry industry to increase the production of woody biomass by planting fast-growing trees.