Publication date: Oct 2, 2024
September 2024 Monthly Newsletter
Friends and Colleagues,
The intense summer heat in Japan has continued into September, draining LNG inventories – although the promise of cooler days ahead should provide some temporary relief from high power demand through October and November. In this month’s newsletter, we explore the follow-up discussions on the commercialization of CCS projects after the enactment of CCS legislation earlier this year. We also highlight the Japanese government’s efforts to promote storage battery projects by providing subsidies for those interested in investing in this area. Finally, we delve into the offshore wind industry, where a specialized working group will soon start discussions to draft the future rules around floating offshore wind turbine projects.
METI Kicks off Discussions on Support System for the Commercialization of CCS
The Ministry of Economy, Trade and Industry (METI) has begun discussing a support system for the commercialization of carbon dioxide capture and storage (CCS) following the enactment of the CCS Act (Law on carbon dioxide sequestration projects) earlier this year. In addition to examining the budget, taxation system, and credits for domestic projects, METI also intends to develop an institutional framework for overseas projects in order to secure carbon storage interests.
The CCS Act was approved by the Cabinet in February 2024 and enacted in May. It envisages promoting the commercialization of CCS. The Act stipulates regulations for safe and proper operation during two phases: 1) exploratory drilling and storage, and 2) transportation. METI aims to start full-scale CCS projects by 2030 while improving the business environment in accordance with the content of the law.
Twelve Storage Battery Projects to Receive Government Subsidies Totaling JPY349.9BN
The Ministry of Economy, Trade and Industry (METI) is encouraging new storage battery projects through a subsidy scheme. This subsidy is provided under the Economic Security Promotion Act, which specifies that companies aiming to ensure a stable supply of storage batteries must submit their supply assurance plans to METI. If approved, they will be eligible to receive financial support, with the amount varying for each project. Recently, twelve storage battery projects (with a total investment of JPY1.07 trillion) were approved and will receive a total of up to JPY349.9 billion. This scheme is not limited to battery units but also covers the production of related components and manufacturing equipment.
Among the twelve plans approved, the names of Japanese car manufacturers stood out. Toyota will invest a total of JPY245 billion for the production of next-generation batteries that will enable a cruising range of 1,000 kilometers, and for the development and production plan of all solid-state battery materials.
Panasonic Energy will invest JPY463 billion in a joint venture with Subaru. The company will produce batteries for EVs at a new lithium-ion battery plant to be built in Gunma Prefecture. In a separate plan, Panasonic Energy will also invest a total of JPY83.3 billion to produce lithium-ion batteries for EVs in collaboration with Mazda. Since April 2023, a total of 27 supply assurance plans have been approved by METI.
MLIT Working Group to Draft Marine Construction Scenario for Floating Offshore Wind
The Ministry of Land, Infrastructure, Transport and Tourism (MLIT)‘s Public-Private Forum on Floating Offshore Construction will form a working group to draft a “marine construction scenario” within this fiscal year. This decision stemmed from previous meetings, where the forum recognized the need to prioritize the function of base ports as construction hubs, along with securing vessels for wind turbine installation, and developing offshore work facilities for floating offshore wind development.
The new working group will be established this fall and will involve private sector companies from various fields, including construction, shipbuilding, and maritime transport. The marine construction scenario will be drafted by organizing various preconditions, such as the scale and type of wind turbines and floating foundations. The plan will include outlining a series of construction procedures, including the installation of floating foundations, transportation of materials and equipment for turbines, assembly of the turbines and towing them to the installation sites, and methods of vessel utilization.