In most of the world, chemical complexes are owned and operated by just one or two companies. In Jamnagar, India, for example, Reliance Industries is solely responsible for one of the most integrated refinery and chemical complexes on earth. In Plaquemine, Louisiana, Shintech operates a gigantic chlorine-based facility that uses ethylene from a nearby Dow facility to make polyvinyl chloride. Having one or two companies in charge of a major site tends to speed up decision-making and execution.
Mitsubishi Chemical Group
2013 emissions: 12.5 million t
2030 target: 7.3 million t
2050 target: 0
2013 emissions: 6.2 million t
2030 target: 3.8 million t
2050 target: 0
2013 emissions: 9.5 million t
2030 target: 4.3 million t
2050 target: 0
Japan is different. Petrochemical complexes there are typically run by an array of firms that depend on one another as suppliers and customers and that coinvest in joint facilities like ports and wastewater treatment plants. But the Japanese facilities are small compared with those in Jamnagar and Plaquemine, and they are concerned about their survival.
As a result of this fragmentation, the Japanese chemical industry can be slow to act when a strategic issue arises. That has been the case for the need to reduce greenhouse gas (GHG) emissions.
And yet, after years of dithering, Japanese companies are starting to embrace the cause. Spurred by government policies and incentive programs, the country’s petrochemical producers are exploring ways to become carbon neutral. They are studying the use of green ammonia and green hydrogen as fuel to power the crackers that generate ethylene, a key chemical building block. And Japanese firms are researching green chemistry methods to transform waste carbon dioxide into methane and methanol. They also want to involve the forestry industry in decarbonizing.
So far, the decarbonization of Japan’s chemical industry exists mostly in labs, white papers, and company announcements. And not everyone is convinced that it is financially realistic, but others are hopeful for real change.
“The Japanese chemical industry, fragmented by many players, could be strong if they join hands,” says Yoshiko Tsuji, a professor at and director of the University of Tokyo’s Environmental Safety Center and chair of the Committee for Carbon Neutral Innovation by Regional Collaboration at Japan’s Society of Chemical Engineering. “Japan excels in commercialization of mass production technology, and if we can create a consortium that can take advantage of the forte, we can establish our superiority,” says Tsuji, who also serves as vice president of the Shunan Industrial Complex Decarbonization Promotion Council.
The multiple companies in Shunan City, home to one of the largest petrochemical facilities in western Japan, have a plan to make the site carbon neutral. In addition to the chemical makers Idemitsu Kosan, Tosoh, Tokuyama, and Zeon, the complex houses companies from other industries, such as Nittetsu Stainless Steel. It is located near a residential area, so changes at Shunan City involve people living nearby.
Created by Shunan City, the decarbonization promotion council includes representatives from industry, government, academia, and the local community. In May, the council released a road map to becoming fully carbon neutral by 2050. The goal: a circular manufacturing complex that produces ethylene and derivatives from biomass, waste plastic, and carbon dioxide.
The partners want to fuel the site with imported green ammonia—major projects have been announced in Australia and Saudi Arabia—produced with solar power and other forms of renewable energy. With the help of government subsidies, the four chemical companies in Shunan City are working on a system to import 1 million metric tons (t) of green ammonia annually by 2030.
Other firms in Japan are also looking to green ammonia as a fuel source. Mitsui Chemicals is assessing it for the cracker at its Osaka Works. And Jera, Japan’s largest thermal power company, is considering a collaboration with the fertilizer companies Yara and CF Industries to use ammonia as an energy source for power generation by 2030.
The Japanese government is supporting industrial carbon neutrality in several ways. In its Green Growth Strategy through Achieving Carbon Neutrality in 2050, released in June 2021, the government states that “the era in which addressing global warming as a constraint on, or cost of, economic growth is over, and we have entered an era in which anti-warming efforts are seen as an opportunity for international growth.”
The Green Growth Strategy assumes that 240 trillion yen ($1.7 trillion) in savings held by the private sector will be invested in industries such as fuels, batteries, carbon recycling, and construction and predicts that this investment will have an economic impact of about $1 trillion and create 8.7 million jobs by 2030. The effect will swell to $2 trillion, and 18 million jobs will be generated by 2050, it forecasts.
To encourage investments in carbon reduction, the government created the $1.4 billion Green Innovation Fund to support corporate research projects. Separately, the government is providing firms with subsidies of up to one-third the cost of commercial projects intended to introduce nonfossil energy sources.
Some in the financial industry are skeptical that decarbonization efforts will prove economically beneficial, as the Green Growth Strategy promises.
Mikiya Yamada, a chemical company stock analyst at Mizuho Securities, acknowledges that making products that contribute to reducing greenhouse gases is likely a business opportunity for the Japanese chemical industry. But he warns that any growth could be offset by a decline in household income created by tax increases to pay for decarbonization investments and the higher prices for low-carbon products. “This investment will basically produce no benefits other than reduced GHG emissions,” Yamada says. “In other words, carbon neutrality–related investment is likely to have an effect similar to the reconstruction of social infrastructure destroyed by war and other factors.”
Companies are pushing ahead, though. In November 2020, Mitsui became the first Japanese chemical company to declare an objective to become carbon neutral, setting 2050 as its target year.
Mitsui reduced its GHG emissions from 6.15 million t in fiscal 2013 to 4.87 million t in 2020 and has set 3.75 million t as its 2030 goal. At the firm’s annual press conference in June, CEO Osamu Hashimoto stated that “we can achieve the target by combining existing technologies and methods and developing co-combustion technology for ammonia as a fuel for naphtha crackers.”
One focus of Mitsui’s efforts is its Osaka Works, located south of the city in the Sakai Senboku Rinkai Industrial Complex. “In order to achieve the virtually zero GHG emissions by 2050, the company has begun to realize the Carbon Neutral Vision for the Osaka Works, which is centered on the exclusive combustion of ammonia, the conversion of feedstock for naphtha crackers, and the utilization and storage of CO2,” Hashimoto said.
Mitsui has teamed up with Osaka Gas to research a project to separate and recover CO2 from the Osaka complex and Osaka Gas’s Senboku power plant, convert it into methane and methanol, and supply these products to local users. Mitsui also plans to work with other firms in the Sakai Senboku Rinkai complex on alternate feedstocks and carbon capture.
In 2021, the firm established the Mitsui Chemicals Carbon Neutral Research Center within the International Institute for Carbon-Neutral Energy Research at Kyushu University. The center has begun research in areas such as green hydrogen production and CO2 recovery and use. As of March, it had been awarded two patents and published three papers.
To further the use of ammonia as a fuel, Mitsui plans to set up a 10,000-t-per-year pilot cracking furnace in Osaka by December 2025. The firm says it is aware of the challenges of using ammonia as a fuel and is “developing on schedule a dedicated low-NOx ammonia burner and a cracking furnace designed to combine stable decomposition and optimum heat balance.”
Mitsui will also work with other companies in Chiba, where the firm has its Ichihara complex. Mitsui has agreed with Sumitomo Chemical and Maruzen Petrochemical to study going carbon neutral at the Keiyo Coastal Industrial Complex, an area that includes the Ichihara facility and plants owned by the other two firms.
Back in Shunan City, the chemical industry is looking to involve the forestry sector in its decarbonization efforts. “Three carbon sources that can replace naphtha are biomass, waste plastic, and CO2,” the University of Tokyo’s Tsuji says. “Japan is a forested country, and Yamaguchi Prefecture, where the Shunan complex is located, has a lot of flat land and rich forests, making it possible to procure biomass at low cost.” Wood is considered a carbon-neutral fuel because trees absorb CO2 as they grow.
The companies at the Shunan complex are working with the forestry industry to increase production of woody biomass by planting fast-growing trees. According to Tsuji, another low-carbon resource is hydrogen by-product from chlor-alkali facilities at the site. Hydrogen can be reacted with CO2 captured from local cement plants to form carbon-based chemicals.
The decarbonization promotion council is shepherding the Shunan project. “If a model can be developed in Shunan, other industrial complexes can emulate it, taking into account their characteristics,” Tsuji says. “For example, the Chiba area has a large population, so it is promising to use plastic waste as the main source of carbon.”
Many in government and industry in Japan argue that the push to go carbon neutral will bring about one of the most fundamental transformations since the Industrial Revolution. Whether this transformation will create wealth by generating jobs or reduce wealth by cutting disposable income, the grand experiment is accelerating.
Katsumori Matsuoka is a freelance writer based in Japan.