Weekly Japanese Industry and Policy News (March 15- March 21, 2024)

The EU-Japan Centre is pleased to start a new weekly service by publishing brief summary of the latest information from the Japanese governmental organizations & private companies/organizations. A couple of minutes reading to be informed about what is happening in Japan's policy, economy, EU-Japan relations, and innovation.

*Information is deemed correct at the time of release. 

Hitachi Zosen tests methanation in Oman
On March 12, Hitachi Zosen and its wholly-owned subsidiary Hitachi Zosen Inova AG (HZI/Switzerland) signed a memorandum of cooperation for the commercialization of methanation with Oman LNG LLC, which is invested by the Omani government and Japanese trading companies. A methanation device will be installed at the LNG plant owned by Oman LNG, with the aim of turning CO2 into a resource. Methanation is a technology that synthesizes methane, the main component of natural gas, by reacting hydrogen and carbon dioxide in a reaction vessel filled with a catalyst. Based on the memorandum, Oman LNG plans to construct a small-scale pilot plant adjacent to the existing LNG plant to produce 1,200 Nm3/h of synthetic methane.

The memorandum of understanding was concluded in recognition of Hitachi Zosen and HZI's methanation-related knowledge and track record, water electrolysis technology and water treatment technology to produce the hydrogen necessary for methanation, and EPC capabilities to construct large-scale plants. Japan and Oman aim to achieve net zero greenhouse gas emissions by 2050, and the two governments signed a "Memorandum of Cooperation on Carbon Recycling Including Hydrogen, Ammonia, and Methanation" in December 2022. This memorandum is an initiative based on the memorandum of cooperation between the two countries.

Hitachi Zosen website:
https://www.hitachizosen.co.jp/english/newsroom/news/release/assets/pdf/FY2023-97.pdf

PET bottle recycling factory by France's Veolia and others begins operation
On the 14, a used plastic bottle recycling plant was completed in Tsuyama City, Okayama Prefecture, a joint venture between the Japanese subsidiary of French environmental services giant Veolia, Mitsui & Co., and Seven & i Holdings. Low-grade PET bottles with labels or dirt, which were previously difficult to reuse, are processed and recycled into resin for beverage bottles.
Taking advantage of its location, which has easy access to Kyushu and Shikoku, it will become the western Japan base for horizontal recycling of PET bottles.

The production capacity will be approximately 25,000 tons per year, equivalent to approximately 4% of annual domestic sales of PET bottles. Using Veolia's latest technology, the resin is recycled into flakes of PET resin through automatic sorting, crushing, washing, and melting. The raw material is plastic bottles collected from JR West and JR Kyushu stations, Seven-Eleven
convenience stores, commercial facilities, and households. 

Veolia Japan website:
https://www.veolia.jp/en/newsroom/news/veolia-and-partners-accelerate-circular-economy-new-plant-recycle-plastics-food-grade

Mitsui O.S.K. Lines, Idemitsu Kosan, and HIF jointly develop synthetic fuel/synthetic methanol supply chain
Mitsui O.S.K. Lines, Idemitsu Kosan and HIF USA LLC and HIF Asia Pacific Pty Limited, subsidiaries of HIF Global, agreed to jointly develop a synthetic fuel (e-fuel)/synthetic methanol (e-methanol) supply chain, including maritime transportation of CO2. It was announced March 19. Challenges for commercialization are the production, transportation, and supply of synthetic fuel/synthetic methanol, as well as the stable supply of CO2 as a raw material. In this joint development, they will mainly investigate the feasibility of items as below, and work on building a supply chain for synthetic fuel/synthetic methanol, including the stable securing and transportation of raw material CO2; 1) Transporting CO2 by sea from Japan to overseas synthetic fuel/synthetic methanol production plants operated by HIF, 2) Build a supply chain to transport synthetic fuel/synthetic methanol produced by HIF at overseas manufacturing plants to Japan, 3) Efficient maritime transport of CO2 and synthetic methanol.

Mitsui O.S.K.Lines website:
https://www.mol.co.jp/en/pr/2024/img/24035.pdf

Japan, the US, South Korea and Australia will contribute $33 million to IPEF's decarbonization fund
On March 14, Minister of Economy, Trade and Industry Takeshi Saito attended an online ministerial meeting of the Indo-Pacific Economic Framework (IPEF), a new economic zone initiative involving 14 countries including Japan, the United States, and Australia. They confirmed that Japan, the United States, Australia, and South Korea will contribute a total of $33 million to a fund to help decarbonize emerging countries. IPEF member countries had agreed to establish the fund in November 2023. It is envisioned that it will be used in projects such as introducing renewable energy within the region. The meeting also announced that the United States will hold an in-person ministerial meeting in Singapore in June 2024. As a joint project to support decarbonization among participating countries, it was agreed to establish new working groups in areas such as “clean electricity'' such as renewable energy and “sustainable aviation fuel,'' in addition to hydrogen, which Japan has led. IPEF has been attended by 14 countries including Japan, the United States and Southeast Asia, and has been negotiating on four themes. Although measures had been compiled by November 2003 in three areas: "clean economy" to encourage decarbonization, "fair economy" to prevent tax evasion, and "strengthening of supply networks," there remains an agreement on "trade facilitation." was carried over.

METI website:
https://www.meti.go.jp/english/press/2024/0314_001.html

Bank of Japan cancels negative interest rate
The Bank of Japan (BOJ) decided to end its negative interest rate policy at its monetary policy meeting on March 19. The policy interest rate, which had been set at minus 0.1%, was raised to around 0-0.1% (uncollateralized overnight call rate). The Bank also decided to control long-term and short-term interest rates (yield curve control, YCC) to keep long-term interest rates low and to end purchases of risk assets such as exchange-traded funds (ETFs). When asked why he decided to lift the negative interest rate policy this time, Governor of BOJ Ueda explained the reason for the decision to raise interest rates for the first time in 17 years, saying, “The virtuous cycle of wages and prices is becoming stronger.'' The negative interest rate policy is a clever scheme in which BOJ charges a minus 0.1% interest rate on some of the money private banks deposit with the BOJ, allowing private banks to increase lending instead of hoarding money, thereby improving the money flow. However, corporate borrowing demand did not increase dramatically, and the side effects such as the weaker ￥JP became significant, so Governor Ueda, who took office last year, has been looking for the timing to lift the restrictions.

Bank of Japan website:
https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2024/k240319a.pdf

Eight Gas companies including Tokyo Gas and Osaka Gas establish international organization to promote synthetic methane
Tokyo Gas and Osaka Gas announced on March 19 that they will establish an international organization to promote the use of synthetic methane (e-methane), which is made from hydrogen and other raw materials, in order to promote the decarbonization of city gas. Three of the world's major energy companies, including France's Engie, will also join in efforts to raise awareness and build an international certification system. The name of the group is "e-NG Coalition" and it will be established by June. Tree Energy Solutions (TES), a Belgian company that promotes business development in Europe, will serve as representative. Japanese companies such as Toho Gas and Mitsubishi Corporation have also joined, and a total of eight companies have agreed to become members, including France's Total Energies and the US Sempra Group. 

Synthetic methane is made from hydrogen and carbon dioxide (CO2). CO2 emissions when using gas can be reduced to virtually zero, and since the main components are the same as city gas, gas equipment can be used without having to be replaced. In Japan, Tokyo Gas and Osaka Gas are planning to introduce around 1% of gas sales by 2030. However, mechanisms to offset CO2 emissions and systems to ensure quality are still immature. Major gas companies from around the world will gather together and work with other countries to encourage the development of international rules and aim for early dissemination. In the future, they will invite companies involved in production and transportation to participate.

Osaka Gas website:
https://www.osakagas.co.jp/en/whatsnew/__icsFiles/afieldfile/2024/03/18/240319.pdf

Sakana AI evolves through new methods and “combination” of multiple technologies
Sakana AI, which was founded in Japan by researchers from Google in the US, announced on March 21 that it has developed a new method that combines multiple types of artificial intelligence (AI) to create better AI. By encouraging the evolution of AI through repeated cross-breeding in a short period of time, it is possible to shorten the development period to several hundredths of what it used to be. Developing generative AI typically requires high-performance semiconductors and vast amounts of training data. The ability to develop advanced fundamental technologies was limited to a handful of well-funded technology companies.

Sakana AI aims to implement a different approach than before and change the game in the development of generative AI. Sakana AI was founded in 2023 by David Ha and Lion Jones, both of whom used to work at Google, and Ren Ito, who previously worked at the Ministry of Foreign Affairs and served as executive director of Mercari. Jones is known as one of the co-authors of a paper published by Google in 2017 that laid the groundwork for today's generative AI.

AI developed by US technology companies and other companies has improved its ability to handle language by using giant computers and training them on vast amounts of textual data. Sakana AI has set itself apart from these conventional development methods and has set the goal of achieving advanced intelligence by combining small-scale AIs, much like fish forming a school. This announcement is the first step toward making this a reality. It typically takes years for American technology companies to develop their own large-scale language models. Although it is not possible to make a simple comparison because the conditions and methods are different, Sakana AI's new method has the potential to reduce the time it took to learn large amounts of data to improve language skills by several tens to hundreds of times. 

SAKANA website:
https://sakana.ai/evolutionary-model-merge/