Initiatives to Address Climate Change

Initiatives to Achieve Net Zero Carbon

In 2021, the Group issued its 2050 Net Zero Carbon Declaration, and set the goal of reducing Scope 1 and 2 greenhouse gas (GHG) emissions from the Group's business activities to net zero by 2050. In 2022, we established a roadmap that outlines the required initiatives and processes to achieve this goal.

Then, with the release of the Seventh Consolidated Medium-Term Management Plan, we announced that we would expand the scope of our Net Zero Carbon Declaration to include supply chain emissions, thereby broadening the goal to include Scope 3 emissions. Accordingly, the Group is investigating initiatives to reduce GHG emissions and ways to achieve them.

 

Roadmap for Achieving Net Zero Carbon by 2050

 

Our Roadmap for Achieving Net Zero Carbon by 2050 was prepared using a scenario analysis recommended by the Task Force on Climate-related Financial Disclosures (TCFD), along with an analysis of the Group’s external and internal environments.

 

Addressing Climate Change — Support for the TCFD Recommendations

Pursuing Carbon Neutrality in Collaboration with the Oil Industry

As members of the Petroleum Association of Japan, which is made up of oil refining and wholesaling companies, Cosmo Oil and Cosmo Oil Marketing are participating in the association’s Vision for Carbon Neutrality in the Petroleum Industry, and taking action accordingly.

 

Vision for Carbon Neutrality in the Petroleum Industry

Japan’s oil industry is accelerating its efforts to decarbonize the petroleum supply chain and products. While aiming for net zero CO2 emissions (Scope 1 and 2 emissions) arising from business activities, the industry is actively working on research and development and social adoption of innovative decarbonization technologies that can utilize existing infrastructure, such as (1) CO2-free hydrogen; (2) synthetic fuels; and (3) carbon capture and storage/utilization (CCS/CCU). By also taking on the challenge of achieving net zero Scope 3 emissions arising from the products supplied, the industry is working to contribute to carbon neutrality for society as a whole.

 

For details, visit the Petroleum Association of Japan website.
https://www.paj.gr.jp/environ/carbon_neutral

 

If our industry organization were to adopt a position that is significantly weaker or inconsistent with the Cosmo Energy Group Code of Conduct, we would engage with the organization. If the organization failed to revise its position, our Code of Conduct would take precedence.

Progress in Reducing GHG Emissions

We have always positioned the reduction of GHG emissions as an important issue and have been working for years to reduce CO2 emissions throughout the supply chain.

Actual CO2 emissions in fiscal 2022, the final year of the Sixth Consolidated Medium-Term Management Plan, were 6.92 million tons, a 7.2% reduction compared to fiscal 2013 (against a target of 16%). Although CO2 emissions intensity improved due to the increased efficiency of our manufacturing segment, the amount of avoided CO2 emissions was affected by two factors: crude oil refining exceeded the plan due to increased sales, and startup for some renewable energy expansion facilities (wind power) was delayed until fiscal 2023.

Under the Group’ s Seventh Consolidated Medium-Term Management Plan, we will make further efforts to reduce GHG emissions based on our Roadmap for Achieving Net Zero Carbon by 2050.

Group-Wide CO2 Emissions (1,000 t-CO2)

  FY2013 FY2018 FY2019 FY2020 FY2021 FY2022
Transportation sector (crude oil, raw materials, and products) 900 810 750 710 770 840
Manufacturing sector (petroleum/petrochemicals) 6,760 6,200 6,500 6,310 6,620 6,510
Other (service stations and research centers, etc.) 40 20 20 30 20 10
Biofuel (with ETBE)1 -70 -140 -130 -140 -170 -190
Expansion of renewable energy (wind power) 2 -160 -240 -270 -250 -270 -240
Subtotal: CO2emissions 7,460 6,650 6,880 6,660 6,970 6,920
GHG emissions other than CO2 20 20 20 20 20 30
Total: GHG emissions 7,470 6,670 6,900 6,680 6,990 6,950

1. Biofuel: The avoided CO2 emissions resulting from adding ETBE to gasoline is calculated as negative CO2 emissions.

2. Expansion of renewable energy: CO2 emissions avoiding by using renewable energy is calculated as negative CO2 emissions (total power generation for the fiscal year concerned multiplied by the emissions intensity of the displaced fossil fuel-based electricity for the fiscal year concerned).

*1. The CO2 emission calculation methods for “Group-Wide CO2 Emissions” and “Environmental Impact of Business Activities” differ as follows.

• Expansion of renewable energy (wind power) is included in the targets of the Consolidated Medium-Term Sustainability Plan, so it is included in “Group-Wide CO2 Emissions.”

• CO2 emissions from crude oil production are not included in the targets of the Consolidated Medium-Term Sustainability Plan, so they are not included in “Group-Wide CO2 Emissions.”

• CO2 emissions from product use are not included in the targets of the Consolidated Medium-Term Sustainability Plan, so they are not included in “Group-Wide CO2 Emissions.”

• CO2 emissions from product transportation by Maruzen Petrochemical Co., Ltd. are not included in the targets of the Consolidated Medium-Term Sustainability Plan, so they are not included in “Group-Wide CO2 Emissions.”

• CO2 emissions from the research centers of Maruzen Petrochemical are not included in the targets of the Consolidated Medium-Term Sustainability Plan, so they are not included in “Group-Wide CO2 Emissions.”

For information on the CO2 emission calculation method used for the “Environmental Impact of Business Activities,” please refer to the notes provided with that statement.

 

*2. “Group-wide CO2 emissions” are different from the fiscal 2013 (base year) net emissions (6.86 million tons) listed in the Roadmap for Achieving Net Zero Carbon by 2050, which was calculated based on Scope 1 and 2 emissions under the GHG Protocol standards.
“Group-Wide CO2 Emissions” include CO2 emissions from the Group’s transportation segment, which are Scope 3 emissions, but do not include those from crude oil production, which are Scope 1.

Energy Saving Activities

For energy consumption intensity at Group refineries in fiscal 2022, there was an approximately 0.4% improvement compared to the previous fiscal year. This was due to energy conservation activities (such as the adoption of a utility balance optimization calculation system) and improved equipment operating rates thanks to an increase in production volume. On the other hand, CO2 emissions increased by approximately 0.4% compared to the previous year due to this increase in production volume. In fiscal 2023, we will continue to pursue energy savings by improving both equipment and methods.

Note: The value is calculated by dividing the total energy consumption of a refinery by the amount of crude oil equivalent throughput, taking into account the complexity of the refining technology, and is expressed in kiloliters of crude oil per 1,000 kiloliters. Total energy consumption is calculated by converting the amounts of various types of energy consumed, such as heat and electricity, into crude oil equivalent, and the unit is kiloliters of crude oil.

 

Actual results for energy usage and consumption intensity

Developing Environmentally Friendly Businesses

Cosmo Denki Green for Households

With the Cosmo Denki Green program for households, consumers can purchase CO2-free electricity that is essentially 100% renewable energy. This is done by offering non-fossil fuel energy certificates for electricity derived from renewable energy that are equivalent to or more than the customer’s annual electricity consumption. This option results in a CO2 emission coefficient of zero. To operate Cosmo Denki Green, Cosmo Oil Marketing procures wind-generated electricity from Cosmo Eco Power and supplies it to customers.

Moreover, since a portion of the electricity sales is donated to the COSMO Eco Fund, Cosmo Denki Green customers are also able to support the environmental activities of this fund.

Cosmo Denki Business Green for Corporations

Cosmo Oil Marketing provides renewable electricity not only to residential customers but also to corporate customers. The company offers the Cosmo Denki Business Green plan, which uses Cosmo Eco Power’s wind-generated electricity, to corporate customers, seeking to meet their low voltage, high voltage and extra high voltage needs. They can easily procure electricity that complies with Japan’s Act on Promotion of Global Warming Countermeasures and the RE100 initiative.

In addition to an option that provides 100% renewable electricity, the power plan also offers an option where companies can choose renewable energy rates of 30%, 50%, or 70%. This allows us to meet the needs of customers who want to gradually expand their adoption of renewable energy. As an option for Cosmo Denki Business Green contracts, there is also a Solar Plan with a power purchase agreement (PPA), which allows companies to install solar power equipment at their facilities without any initial investment. Some of the solar power generated can be used directly by the customer, and it can also be used as an emergency power source in the event of a natural disaster.

Cosmo Zero Carbon Solution

In September 2021, Cosmo Oil Marketing launched Cosmo Zero Carbon Solution, a package of renewable electricity and EV services that provides one-stop decarbonization support for local governments and corporations. This was done by combining its renewable energy services with two of the Cosmo Energy Group’s other businesses: car leasing, a field the Group has been engaged in for a long time, and mobility services such as car sharing, which the Group is pursuing as a new initiative.

Some local governments and corporations want to start decarbonizing but don’t know how to go about securing renewable electricity and EVs. Cosmo Oil Marketing provides easy, convenient opportunities for these customers to adopt renewable energy and EVs, which provide various benefits, including CO2 emissions reduction.

Cosmo Oil Marketing will continue enhancing its services to enable more local governments and companies to decarbonize in easy and convenient ways.