Japan’s interest in carbon capture, usage, and storage technology (CCUS) is fueled by its commitment to net carbon neutrality by 2050 and its desire to keep thermal power generation assets online to provide reliable baseload power. The Japanese government expects CCUS technology to be available for some applications as soon as 2030 and widely used in the power generation and chemical industries by 2050. Major Japanese industrial corporations are already researching and experimenting with the technology in pilot projects supported by governmental subsidies. However, the technology only appears financially viable for industrial use when coupled with carbon taxation at levels much higher than today. The technology also still needs to be demonstrated at scale in Japan.
CCUS Technology and Its Applications in Japan
Carbon Capture, Utilization, and Storage groups several technologies that aim at capturing CO2 before it is emitted into the atmosphere or to capture it directly from the air, transport it, and either permanently store it or use it to create products.
One strategic approach of the Japanese Energy Basic Plan is to keep using thermal generation but decarbonize it by adding hydrogen and ammonia to the fuel mix or using carbon capture at the power plants. METI’s Fifth Energy Basic Plan, published in July 2018, already emphasized the research and development of CO2 capture and its effective utilization or storage – with commercialization targeted for 2020. Carbon recycling was also included in the Green Growth Strategy formulated in 2020, and the associated technologies are among those able to receive financial support from the Green Innovation Fund. The fund is targeting R&D projects to capture and separate CO2 from gas thermal power plants, starting from FY2022 until at least FY2030.
CCUS is seen as a natural strategic option for oil & gas companies worldwide, and INPEX, JAPEX, and ENEOS in Japan have incorporated it into their growth strategies. They expect to use the technology to reduce scope 1 and 3 emissions, applying it to their upstream and downstream assets and offering it to clients for industrial applications burning their oil and gas.
Big industrial energy consumers are also keen on CCUS. Taiheiyo cement is conducting R&D to apply CCUS to its cement production, while engineering and construction companies Shimizu Corporation, Chiyoda corporation, and Taisei Corporation are researching the technology to offer it to their customers.
According to a report by the Yano Research Institute in 2021, the Japanese CCUS and carbon recycling market is currently worth about two billion yen and is expected to grow to 160 billion yen in 2030 and 480 billion yen by 2050.
The Hurdles to CCUS Deployment in Japan
CCUS technology is still in its development phase, and there is no large-scale project in Japan yet. Japan’s oil and gas companies, such as INPEX and JAPEX, are considering integrated CCUS projects – with CO2 captured from upstream activities before being transported and stored in depleted oil & gas fields or used in methanation, for example. But, despite having pledged net carbon neutrality for scope 1 and 2 emissions by 2050 and announcing CCUS as a strategic pillar to achieve this, the two companies have yet to provide any technological/cost roadmap in their annual reports.
The question of the cost associated with CCUS is rarely if ever, discussed by industrial players. METI has published some CCUS cost estimates for thermal power plants, which it says will add 7 to 9 ¥/kWh for coal plants and 3 to 4 ¥/kWh for gas plants.
CO2 storage capacity is another possible limit to CCUS development in Japan. The Global CCS Institute estimated in 2019 that Japan’s storage capacity was about 14,000 million tons, while Japan’s annual CO2 emissions are ~1,100 million tons per year. Therefore, the development of carbon recycling technologies is high on METI’s roadmap.
Japanese Government’s Target for CCUS
METI views CCUS as essential to reach the 2050 target of net carbon neutrality. It recognizes several hurdles in the development of CCUS technologies, particularly the costs of CAPEX, along with OPEX and associated energy consumption. It is still devising a methodology to evaluate both these criteria across the developing technologies. It also lists CO2 transport and storage as a major hurdle to the deployment of CCUS and recognizes that there is not yet a market for CO2 from nascent carbon recycling operations.
METI’s project support is focused on developing low-cost CO2 separation and capture and transportation methods by vessels for liquified CO2. By 2030 it expects that the technologies necessary for CO2 separation, capture and storage will be developed and that by 2040 they will be deployed.
The agency has defined several quantitative targets for 2030. It expects that for low-pressure gases, chemical absorption, solid absorption, and physisorption technologies can be applied with energy requirements of 1.5GJ/t-CO2 and a cost of 2,000¥/t-CO2.
For high-pressure gases, it targets physical absorption, membrane separation, and physisorption technologies with energy requirements of 0.5GJ/t-CO2 and a cost of 1,000¥/t-CO2.
For other processes such as power generation and chemical synthesis systems, it also targets costs of 1,000¥/t-CO2 and required energy of 0.5GJ/t-CO2.
As for CO2 recycling, METI only published a crude roadmap, targeting the development of the necessary technologies in the 2020s, cost reduction in the 2030s, and full adoption in activities such as chemicals production, methanation, and concrete production after 2040.
Current Projects and Players
There is no commercial CCUS application in Japan, but several pilot projects are running.
With METI’s support, Kansai Power, Kawasaki Heavy Industry, and the Research Institute of Innovative Technology for the Earth are running a CCS demonstration project using solid absorbent at the Maizaru thermal power plant.
A storage project by Japan CCS K.K. has been running since FY2012 in Tomakomai, Hokkaido. It stored 300,000tons of CO2 under high pressure in the harbor’s seabed. Construction was completed in 2015, and storage in 2019. Since then, it has been in the monitoring phase.
Hitachi Zosen, with financing from the Ministry of Environment, is conducting a methanation project using green hydrogen and CO2 captured from a waste incinerator. Sekisui Chemical is conducting a similar project, also subsidized by MoE, producing syngas from green hydrogen and CO2 captured from a waste incinerator and then creating ethanol from the syngas using a microbial catalyst.
Kawasaki Heavy Industry is working on a solid absorbent material to capture CO2 from low CO2 concentration gases with a low energy process.
An uncertain future
METI sees CCUS as a cornerstone of its decarbonization strategy and is supporting the development of associated technologies and putting together a framework for their development and commercialization. Several Japanese industrial players are also betting on the potential of CCUS and participating in internal R&D or joining pilot projects to reduce their own carbon emissions and/or commercialize their CCUS solutions. It is, however, difficult today to separate the hype from the technical realities of the technology. Detailed technological and cost roadmaps have yet to be published, and it is not obvious that the technology will significantly impact Japan’s emissions reduction. It is also far from clear that it will enable Japan to continue burning coal and gas in the coming decades.