Decarbonizing Japan’s Energy Landscape Is A Two Step Process

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The Fukushima nuclear disaster of 2011 was catastrophic – an earthquake followed by a tsunami caused explosions, radiation leaks, and widespread environmental devastation. The initial tremors were massive – around 9.0 on the Richter scale – followed by a wall of water over 40 meters high. The tsunami inundated the coastline, reaching up to ten kilometers inland. Some 20,000 people died, 165,000 were evacuated, and one million buildings were destroyed.

The disaster marked a significant shift in Japan’s energy policy. To ensure a stable energy supply, the country was forced to rely more and more on other countries to compensate for its own lack of resources, at a time when competition for the same resources intensified around the world.

Energy for a new era
“In 2015, two electric power companies merged to form JERA, Japan’s Energy for a New Era,” said Kazuo Sakairi, corporate vice president and CFO of JERA, speaking at the recent TAC-sponsored International SAP Conference for Energy i Basel, Switzerland. He was referring to the Tokyo Electric Power Company (TEPCO) and the Chubu Electric Power company, and their decision to work together to solve the issue.

Reduce CO2 emission concept.Sustainable development and green business based on renewable energy. Renewable energy-based green businesses can limit climate change and global warming.
JERA’s vision is to scale up Japan’s clean energy platform of renewables and low greenhouse gas thermal power to spark sustainable development in Asia and around the world.GETTY
Sakairi, who was working at a large mergers and acquisitions (M&A) advisory firm at that time, was called in to support the merger. He was later appointed to his current role at JERA.

JERA’s mission is very clear: provide a cutting-edge solution to energy issues. “If there’s no electricity, people can’t go about their daily business, even if it’s just for a few hours. That’s a big problem in some parts of the world, but for Japan, the third largest global eonomy, it’s simply unthinkable,” Sakairi explained.

The vision is to scale up Japan’s clean energy platform of renewables and low greenhouse gas thermal power to spark sustainable development in Asia and around the world. JERA’s leaders believe that companies exist to contribute to society, and JERA’s contribution is to provide the region with a stable supply of energy. JERA has a detailed plan for achieving its ambitious goals, which includes working with LNG providers like INPEX Australia.

“The challenge lies in balancing decarbonization and securing a stable energy supply during uncertain times,” said Sakairi. “It begins with achieving maximum corporate value to secure our financial position.”

A two-pronged approach
Sakairi went on to explain that in 2022, JERA had to respond to soaring fuel prices following the Russian invasion of Ukraine. In a country poor in resources, this meant a sharp increase in the cost of fuel, but fortunately Japanese financial institutions and the govenment provided the necessary support. Japan’s unique geography adds to the challenge. Surrounded by deep sea a short distance from land, the small island nation is often hit by typhoons and earthquakes. These geographical constraints pose problems for renewables such as setting up wind farms in the ocean.

JERA has defined two strategic pillars. One is the development and expansion of renewable energy such as solar and offshore wind. However, the output from natural energy sources fluctuates widely due to weather and other natural factors, making it difficult to ensure a stable supply when and where it is needed. To mitigate this problem, the company is leveraging one of the characteristics of thermal power generation – its adjustable output.

The second pillar involves increasing the use of greener fuels such as hydrogen and ammonia during a transitional time while the country decreases its use of liquid natural gas (LNG) and coal.

Going global
“By complementing renewables with therml power and vice versa, we aim to achieve carbon neutrality by 2050,” said Sakairi. By pursuing this goal, JERA is becoming an enabler and an exemplar of true global leadership.

“We believe that zero-emission thermal power with ammonia and hydrogen is a realistic approach. Our way of thinking is well received in countries like the Philippines, Indonesia, Thailand, and Bangladesh,” said Sakairi. “By collaborating to secure the power supply in these countries, we are enabling economic growth and stability in the region.”

One of JERA’s major challenges is procuring enough ammonia from green hydrogen. Besides cofiring ammonia in its Hekinan Thermal power station, JERA has been working with YARA International, the world’s largest manufacturer of nitrogen-based fertilizers to create the ammonia value chain. The two companies have signed a memorandum of understanding (MOU) for the joint development, sales, and purchase of clean ammonia. The two companies also plan to produce over one millio metric tons of blue ammonia per year in the Gulf of Mexico.

To address the challenges in the renewables space, JERA recently acquired Parkwind, a Belgian company that operates offshore wind farms. Parkwind will provide JERA with a platform on which to grow its renewables business globally and accelerate into markets where JERA is already well-positioned in offshore wind development.

JERA’s chief financial officer is well aware that reducing CO2 emissions is a gradual process that requires strategic decisions, bold initiatives, and the right mindset to maintain momentum.

“Not only must we balance the energy mix during the transitional time, we must also develop a diverse and inclusive work place that leverages the individual strengths of our people,” said Sakairi. After all, it’s always the people who make things happen.

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Judith Magyar
Judith Magyar