Weekly Japanese Industry and Policy News (November 17-November 23, 2023)

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 joint venture with British transport major to procure storage batteries
Hitachi announced on November 17 that it has entered into a partnership agreement with British transport operator First Group for electric vehicle (EV) bus business. In addition to establishing a joint venture to procure storage batteries, the company will provide a system to manage the remaining battery charge of buses.

Both groups will each invest up to £10 million in the new company, Next Gen. The company will procure storage batteries for 1,000 EV buses and lease them to bus companies affiliated with First Group. First Group will introduce 1,000 EV buses by 2026, and add 500 from 2026 onwards. Hitachi will provide a system for managing the charging status of storage batteries for its buses. It can also be used for reuse in stationary storage batteries and recovery of precious metals.

Hitachi website:
https://www.hitachi.com/New/cnews/month/2023/11/231117.pdf

Toyota uses recycled materials at U.S. battery factory
Toyota Motor Corporation announced on November 16 that it will use recycled materials at its automotive battery factory under construction in North Carolina. It will expand the partnership with Redwood Materials, a US battery materials startup, to procure metals used for battery positive and negative electrode materials. As dependence on overseas battery resources becomes an issue, it will establish a system to circulate resources in North America. Toyota plans to start operating the battery factory currently under construction in 2025. The company's annual production capacity is expected to reach more than 30 gigawatt hours by 2030, and it will be installed in electric vehicles (EVs), multi-purpose sports vehicles with three rows of seats. This is equivalent to about 400,000 electric vehicles (EVs) at present.

Redwood was founded in 2017 by then-Tesla executive J.B. Straubel while he was still at the company. The company is engaged in the business of extracting rare metals such as lithium, cobalt, and nickel from used batteries and reusing them as positive and negative electrode materials. In addition to Toyota, the company also has partnerships with Ford Motor Co., Panasonic Energy, and others. Toyota developed the world's first mass-produced hybrid vehicle (HV), the Prius, and began selling it in the United States in 2000. In the future, as vehicles reach the end of their lifespans, it is expected that a large amount of used vehicle batteries will become available. In June 2022, they announced a partnership with Redwood to build a battery recycling system.

TOYOTA website:
https://pressroom.toyota.com/toyota-and-redwood-materials-agree-to-battery-recycling-materials-procurement/

Establishment of hydrogen and ammonia supply network between Japan and South Korea
On November 17, Prime Minister Fumio Kishida and South Korean President Yoon Seong-yeol announced a plan to create a supply network for decarbonized fuels such as hydrogen and ammonia in both countries. They have also launched a new framework for collaboration in quantum technology. Both sides made the announcement at a debate at Stanford University in conjunction with their attendance at the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco.

Hydrogen and ammonia are mostly produced from natural gas. Japanese and Korean companies will jointly invest in production projects in third-party countries that produce natural gas, such as the Middle East and the United States, and government-affiliated financial institutions will support financing. Both Japan and South Korea have strengths in industries that use a lot of energy, such as steel and chemicals. As both countries rely on energy imports from abroad, joint procurement of hydrogen and ammonia is in the interests of both countries.

Prime Minister's Office website:
https://japan.kantei.go.jp/101_kishida/diplomatic/202311/17korea.html

Tokyo Gas invests € 220 million in European offshore wind fund
Tokyo Gas announced on November 17 that it has participated in an offshore wind fund set up by British new power company Octopus Energy. The company will invest € 220 million. Through this fund, the company invests in companies involved in power generation business and development, primarily in Europe. It gains knowledge of power plant operations and cost management and prepare for large-scale development in Japan. The fund was established in October 2022. Tokyo Gas became the company's first investor, having formed a capital alliance with the company in 2020. Octopus aims to attract more investors and increase the amount under management to €3.5 billion by 2030, and to €20 billion from 2035 onwards.

Octopus has been involved in four offshore wind projects in three countries, including the UK. He also has excellent knowledge of business operations, such as managing power supplies using digital technology. Tokyo Gas will participate in a power generation project being planned at Kashima Port in Ibaraki Prefecture, but it has no experience operating large-scale power plants. The country is proceeding with large-scale bidding for offshore wind power, with the aim of highlighting its track record in Europe when bidding. However, in Europe, the profitability of offshore wind power projects is declining due to soaring costs of equipment and materials. Determining which businesses to invest in requires advanced knowledge.

Tokyo gas website:
https://www.tokyo-gas.co.jp/en/IR/support/pdf/20231117-01e.pdf

IPEF summit establishes new dialogue to strengthen supply chain for important minerals
The Indo-Pacific Economic Framework (IPEF), which includes 14 participating countries including Japan, the United States and Australia, held a summit meeting on November 16. Agreement was confirmed in three of the four areas of negotiation, including decarbonization. The leaders' statement released on the same day stated that they would launch a framework for dialogue on critical minerals and strengthen the supply chain.

The leaders' statement clearly states that the countries will “promote cooperation and dialogue in the fields of energy security and technology.'” It also touched on the need for further public and private investment to promote regional decarbonization. "We achieved our goal in record time," the statement said. Following the agreement reached in May of this year on "strengthening the supply chain," the member countries reached a substantive agreement on a "clean economy" aimed at decarbonization and a "fair economy," including measures to prevent tax evasion. Agreement on "trade facilitation," including digital technology, was postponed due to opposition of the United States and differences in the stances of each country. 

MOFA website:
https://www.mofa.go.jp/mofaj/files/100582857.pdf

METI and MOE hold a workshop on CCU/carbon recycling technology
On November 7, the Ministry of Economy, Trade and Industry (METI)and the Ministry of the Environment (MOE) held an online workshop on CCU/carbon recycling technology. A total of 75 people attended from G7 countries, invited countries, and related organizations. At the workshop, a pioneering project on carbon recycled fuels and the status of international CO2 counting rules were introduced, and issues related to promoting the use of carbon recycled fuels were discussed. The main discussions of this workshop are as follows.

‒    E-methane and e-fuel can be used on existing infrastructure, and are expected to be used in the city gas and transportation sectors.
‒    Regarding private sector initiatives related to e-methane and e-fuels, private operators are currently considering a wide range of options for producing
and procuring renewable energy and hydrogen.
‒    Access to low-cost renewable energy, hydrogen and CO2 sources and proximity to existing infrastructure are important factors in site selection for projects. It is effective to have a clear framework.
‒    There is currently no clear guidance on international rules for counting CO2 emissions associated with the use of CCU/carbon recycled products. In the future, it is conceivable that different accounting approaches will be adopted depending on the type of CCU/carbon recycled product.
‒    Regarding the handling of CCU/carbon recycled products in the national greenhouse gas counting method, the idea is to organize them in the national greenhouse gas inventory based on the IPCC guidelines, or to organize them outside of the inventory through bilateral agreements, etc. 

METI website (in Japanese):
https://www.meti.go.jp/press/2023/11/20231120003/20231120003.html

Steel cans, recycling rate over 90% for 12 consecutive years
Recycling of steel cans remains at a high level. The recycling rate for FY 2022, compiled by the Steel Can Recycling Association, was 92.7%, exceeding 90% for the 12th consecutive year. Although it is inferior to aluminum cans (93.9%), it is higher than plastic bottles (mid 80%) and glass bottles (over 70%).

Steel cans are highly airtight and are suitable for long-term storage. More than 60% of the total goes to beverages such as coffee and foods used for canning fruits and fish. Collected cans are passed on to steel companies that use electric furnaces via scrap dealers and others, where they are turned into steel again. Local governments have a separate collection system in place, and beverage manufacturers also use collection boxes attached to vending machines, making it possible to collect almost all cans other than littered cans.

Electric furnaces do not use fossil fuels and have low carbon dioxide (CO2) emissions. With the trend toward decarbonization, the use of electric furnaces is expected to expand. However, the use of steel cans is decreasing. According to the Association, the weight consumed in fiscal 2022 was 363,000 tons, down 7% from the previous year. This was almost halved compared to FY2012 (664,000 tons). Steel cans are attracting a lot of attention in the effort to realize a recycling-oriented society, but unless the steel and can manufacturing industries promote their usefulness as storage containers and encourage their use, their presence is at risk of diminishing further.

The Japan Steel Can Recycling Association website (in Japanese):
https://steelcan.jp/recycle/recycle01/