Top Management Involvement: Decarbonization and Carbon Neutral Task Force

We have stated a strong commitment to being the first in the industry to realize a decarbonized society by enhancing contribution and engagement with the SDGs in our Brand-new Deal 2023 medium-term management plan. Based on this commitment, we began the full-scale operation of a decarbonization and carbon neutral task force across companies under the control of President & Chief Operating Officer in April 2021. This task force reports on the details of progress made on initiatives in each company every other week. Its field is not limited to hydrogen and ammonia projects; it also discusses other decarbonization projects (such as emissions trading and Carbon dioxide Capture, Utilization and Storage (CCUS)) which will contribute to a reduction in greenhouse gas emissions and whose market is expected to grow.

Introduction to Individual Businesses

• 1. Renewable Energy
• 2. Fuel Ammonia
• 3. Hydrogen Related Business
• 4. Energy Storage Systems (ESS)
• 5. Water Infrastructure
• 6. Waste Management Project
• 7. Low-carbon Iron Supply Chain
• 8. CCUS・Carbon Fixation
• 9. Green Buildings
• 10. Collaboration with Outside Initiatives

Renewable Energy Highlights

Wind Power

ITOCHU has continued invested in wind power generation (onshore and offshore) from the late 1990s. Currently, ITOCHU has interests in five power plants in Japan the United States, and Germany.

Butendiek Offshore Wind Farm in the North Sea of Germany

In response to the renewable market growth in Europe, we jointly own an offshore wind generation project (288 MW) located on the German North Sea coast with the CITIC Group with whom we establish a strategic alliance. The wind farm supplies power to approximately 370,000 standard German households, contributing to the transition to a decarbonized society.

Utility Scale Solar Projects

Following on the start of the commercial operation of a mega-solar power plant in Ehime Prefecture in 2015, ITOCHU started operating mega-solar power plants in Oita Prefecture in 2016, Okayama Prefecture in 2017 and Saga Prefecture in 2018. This means we now operate four mega-solar power plants in Japan (total power generation output: approximately 130 MW). The knowledge and experience we have gained through operating these power plants is contributing to the expansion of our renewable energy business. We will continue to operate these power plants stably.

Distributed Solar Power Supply Business

We operate one of the largest on-site distributed power plants in Japan mainly involving the roofs of supermarkets and logistics facilities through our capital and business alliance partner of i GRID SOLUTIONS, Inc. (i GRID). i GRID is involved in the on-site solar power generation business. The company installs self-consumption solar power generation systems at zero initial investment by customers. It then directly supplies power at low cost to facilities over a long period of time. Furthermore, in addition to solar power generation, it integrates and controls distributed power supplies such as storage batteries and electric vehicles with a supply and demand adjustment platform using AI. This allows it to offer solutions for the realization of green transformation in regions centered on customer facilities.

Furthermore, we have entered into a capital and business alliance with Clean Energy Connect Co., Ltd. (CEC) for initiatives to contribute to clean energy by effectively utilizing land in Japan. We have been jointly promoting this business since 2021. CEC is involved in the off-site solar power business. The company develops and owns multiple small and medium-sized solar power plants by utilizing idle land in Japan. It then bundles together green power to supply electricity and environmental value over the long-term to customers such as office buildings in the center of cities. Through CEC, ITOCHU will introduce photovoltaic power plants with additional approx. 5,000 locations in Japan with a cumulative total output of 500 MW by FYE 2026, aiming to be one of the largest corporate PPA operators in Japan.

Biomass Power

The Ichihara Biomass Power Plant (power generation output: 49.9 MW) in which ITOCHU is participating started commercial operation in December 2020. We expect this power plant to generate approximately 350 million kWh of power a year. That is equivalent to the annual power consumption of approximately 120,000 ordinary Japan households. In addition, we decided to build biomass power plants (power generation output of each: 50 MW) in Hyuga in Miyazaki Prefecture in April 2021 and in Tahara in Aichi Prefecture in November 2021, which are scheduled to start operation in FYE 2025 and 2026, respectively.

Biomass Fuel and Renewable Fuel Related Business

Sustainable Aviation Fuel (SAF)

ITOCHU is working to increase the ratio of renewable energy through the supply of biomass fuels to power generation companies in Japan. We are also working to expand procurement and supply of renewable fuels for the decarbonization of the mobility market, including airplanes and automobiles.

For example, in response to the accelerated decarbonization of the airline industry, we were the first company in Japan to begin selling Sustainable Aviation Fuel (SAF) to airline companies. We are also the first Japanese trading company to obtain ISCC CORSIA certification, which was developed to reduce greenhouse gas (GHG) emissions in the airline industry. This is a certification that proves we are able to supply SAF which meets the carbon offset requirements of CORSIA. We deliver the renewable fuels made from non-fossil-derived raw materials, contributing to a significant reduction in GHG emissions compared to conventional petroleum-derived fuels.

Renewable Power Developments in North America

Tyr Energy Development Renewables, LLC, dedicated in greenfield renewable energy development in the United States, was established in 2022 and is currently developing renewable energy projects of approximately 3,800 MW. TED has full suite function of greenfield development including land acquisition, permitting, interconnection process, PPA origination, engineering and finance. The U.S. renewable energy market is expected to grow significantly over the next 20 years. To capture the growth, we continue to enhance the development activities.

Development of Ammonia Fuel Ship

ITOCHU Corporation has agreed with Nihon Shipyard Co., Ltd., MAN Energy Solutions, Mitsui E&S Machinery Co., Ltd. (Currently, Mitsui E&S Co., Ltd.), ClassNK, ITOCHU ENEX Co. Ltd. on jointly developing oceangoing commercial ships equipped with a main engine using ammonia as its main fuel.

In October 2021, we applied for “the Green Innovation Fund Project / Development Project for Next-Generation Ships / Development of an Ammonia Fueled Ship Project” publicly offered by the New Energy and Industrial Technology Development Organization (NEDO), together with four other companies, including Kawasaki Kisen Kaisha, Ltd., NS United Kaiun Kaisha, Ltd., Nihon Shipyard Co., Ltd. and Mitsui E&S Machinery Co., Ltd. (Currently, Mitsui E&S Co., Ltd.), and successfully selected. In November 2022, ITOCHU and the said four companies obtained Approval in Principle for the basic design of an ammonia-fueled ship (200,000 deadweight ton type bulk carrier). This project aims to take the lead in the development of propulsion systems and hulls, as well as the ownership and operation of ammonia-fueled ships, as early as possible before 2028.

Development of Supply Chain of Ammonia Bunkering

ITOCHU Corporation and ITOCHU ENEX Co. Ltd. have agreed the joint development of an ammonia fuel supply (bunkering) base in Singapore, the world’s largest supplier of marine fuel, among six companies including TotalEnergies Marine Fuels Pte. Ltd, Pavilion Energy Singapore Pte. Ltd, Vopak Terminals Singapore Pte. Ltd. and Mitsui O.S.K. Lines Ltd. In April 2022, ITOCHU together with the companies signed a memorandum of understanding with the Maritime and Port Authority of Singapore to promote the development of an ammonia fuel supply (bunkering) base in Singapore. For the joint development of an ammonia bunkering, we have signed in 2023 an MOU with Peninsula Petroleum in Spain and also an MOU with Orascom Construction PLC in the Suez Canal. We will be further accelerating the development of a safe fuel supply system and the development of ammonia bunkering vessels.

Since June 2021, ITOCHU has continued to examine and verify common issues related to the use of ammonia as marine fuel through the “Joint Study” a framework established with 34 companies and organizations to promote the use of ammonia as marine fuel. In April 2022, we launched the “Joint Study Framework for Ammonia Bunkering Safety” with 16 companies and organizations as a framework to share issues and knowledge on safety and guidelines for ammonia bunkering among related parties, and are expanding the activities. As a successive phase of these activities, we have executed an MOU for the Joint Study of Ammonia Bunkering Safety for an Ammonia-fueled Container Carrier among 8 companies and organizations in September 2023.

Each of the above joint developments and frameworks is positioned as part of an “Integrated Project” of ITOCHU and partner companies that includes not only the development of ammonia fuel ships and the establishment of an ammonia fuel supply base in Singapore, but also the ownership and operation of these ships, the procurement of ammonia fuel for marine use, and the establishment of a global supply chain. We will work with domestic and overseas companies and relevant ministries and agencies to contribute to the reduction of GHG emissions from international shipping.

Project to Manufacture and Sell Clean Ammonia in Canada, Aiming to Realize a Decarbonized Society

ITOCHU Corporation and Gentari Hydrogen Sdn. Bhd., Petroliam Nasional Berhad group, a Malaysian national oil company, have been conducting detailed studies of a project to manufacture and sell clean ammonia in Alberta, Canada.

ITOCHU Corporation will pursue the creation of a decarbonized society by establishing manufacturing sites and a supply chain for clean ammonia, which is expected to reduce greenhouse gas emissions from conventional fossil fuel derived ammonia.

Strategic Collaboration to Build a Hydrogen Value Chain

ITOCHU, Air Liquide Japan G.K. and ITOCHU ENEX Co., Ltd. will jointly examine hydrogen production/supply and hydrogen station business focused on major metropolitan areas in Japan. The aim of this is to cultivate the hydrogen market for mobility and industry.

Starting with the Hydrogen Refueling Station (HRS) in Motomiya-city, Fukushima Prefecture, which is scheduled to start operation in the first half of 2024 as Japan’s first HRS, we will continue to find out more HRS opportunities with similar concept that are expected to be rolled out along with highway and to attract usage of larger scale fuel cell commercial vehicles.

We will demonstrate our comprehensive strengths as a Group by making full use of our extensive network focused on the consumer goods industry field to contribute to the growth of the hydrogen market.

Business Model Development of a Local Hydrogen Production for Local Consumption

ITOCHU Corporation has been progressing the joint operationalization research on a hydrogen business based on “the local production for local consumption model” in northern Kyushu with our important customers of Nippon Coke & Engineering Company, Limited (Nippon Coke) and Compagnie Maritime Belge B.V. (CMB). ITOCHU has been supplying raw materials to Nippon Coke, and also has a lot of newly built ship business with CMB which is the largest maritime group in Belgium, both for many years.

Featuring both the hydrogen byproduct of Nippon Coke and the hydrogen engine of CMB, this project aims to create and expand both supply of and demand for hydrogen, with the goal of realizing actually operating hydrogen supply chains based on “the local production for local consumption model”. Furthermore, by actively deploying this business model in other regions as well, ITOCHU will realize the social implementation of hydrogen on a global scale at the possible earliest time, for enhancing our contribution to and engagement with the SDGs.

Hydrogen Business Partnership with Nel and investment in Everfuel

ITOCHU Corporation has concluded a Memorandum of Understanding with Nel ASA (headquartered in Oslo, Norway), to create a strategic partnership in the hydrogen industry and the both companies are jointly developing hydrogen business. Nel is the world’s largest manufacturer of electrolyzers, which are essential for green hydrogen production, in terms of production capacity, size of systems, number of systems delivered and revenues.

Following an introduction from Nel, in December 2023, ITOCHU and a subsidiary of Osaka Gas Co., Ltd. have entered into a joint agreement to acquire shares of Everfuel A/S, which promotes the establishment of a green hydrogen value chain. The company is engaged in the EPC and operation of green hydrogen production facilities, transportation equipment, and hydrogen stations using water electrolysis equipment. The company is also promoting the construction of a green hydrogen value chain for local production and consumption by selling hydrogen to the industrial and mobility sectors through the use of its own hydrogen stations. The world’s largest hydrogen production and distribution plant (20 MW electrolyzer scale) is scheduled to start commercial operation in 2024 as the company’s first hydrogen production project.

ITOCHU aims to horizontally expand the local hydrogen production and consumption business to Europe and other regions and to enter into the business of producing hydrogen-derived products by utilizing the knowledge and expertise gained through this project, while contributing to the realization of a decarbonized society.

Sales and Cumulative Energy Capacity of Our ESS products

Cumulative Capacity of ESS Units Sold (GWh)

In cooperation with NF Blossom Technologies, Inc.^*, ITOCHU developed Smart Star ESS series, which have been sold for approximately 60,000 units as of March 2024.

We have also begun to build up a track record of installations of Bluestorage, an energy storage system for C&I and grid use, centered on the utility scale energy storage project being promoted by the Japanese government and the Tokyo Metropolitan Government to realize a decarbonized society.

• NF Blossom Technologies, Inc. is a joint venture by NF Holdings Corporation and ITOCHU launched in February 2020.

Other Initiatives

The Sale of Next-generation Residential ESS Products Using AI Technology

ITOCHU Corporation has entered into a capital and business alliance with Moixa Energy Holdings Ltd. in the United Kingdom, which develops “GridShare,” software for optimal charge/discharge control of power storage systems.

By incorporating GridShare into the Smart Star series, in addition to the original features that demonstrate its strengths during power outages, AI analyzes and learns weather forecasts, user power demand and power generation forecasts, etc., and performs optimal charge and discharge control of the storage system. This enables efficient operation of solar power generation and power storage systems.

In addition, “Smart Star 3”, which went on sale in May 2021, is equipped with the world’s first environmental value point conversion and EV charging function through a home power storage system.

Official website of Smart Star Series: Click here (Japanese only)

Strategic Business Alliance with Akaysha Energy Pty in the Utility Scale Energy Storage Development

ITOCHU and Akaysha Energy Pty (Akaysha) have entered into a strategic alliance agreement to strengthen our competitiveness in the development of high-performance and efficient grid storage battery systems. Akaysha is a business development platform owned by a fund managed by BlackRock Group, and promotes the development, ownership and operation of grid storage solutions globally. Through this collaboration, we will combine our innovative solutions to contribute to the further introduction and stable supply of renewable energy and play a role in the realization of a sustainable society.

Seawater Desalination

We have invested in a seawater desalination project in Victoria, Australia. This is the project that has been providing the reliable water supply for Melbourne since 2012, and this plant is capable to meet approximately 30% of the water need of Melbourne, Victoria. We have invested as the largest shareholder in a seawater desalination project with the Oman Power and Water Procurement Company (OPWP), a government entity of the Sultanate of Oman. OPWP is promoting this project at Barka, in the northern area of the country.

Other Initiatives

The Development and Sales of Seawater Desalinization Plants and Reverse Osmosis Membranes
Stable Supply of Life-sustaining Water

– Largest Seawater Desalination Project in Oman –

In March 2016, Barka Desalination Company, which we have invested aforesaid, agreed a contract to build and operate a new seawater desalination plant with a capacity of 281,000 m³ per day at Barka, located in the northern area of the Sultanate of Oman, with the aim of ensuring a stable supply of water in the country. This project is a public-private partnership project with the Oman government to provide water for everyday life to the Barka region that suffers from severe water stress. The facilities involved use reverse osmosis membrane (RO membrane) to desalinate the water and are projected to operate for 20 years. It is the largest seawater desalination project in Oman with a total project cost of approximately 300 million US dollars. The plant has started commercial operation in June 2018. Besides, we realized listing on the Muscat Stock Exchange in February 2022.

Creating a Low CO₂ Emission Supply Chain for Ferrous Raw Material

Reducing CO₂ emissions during the steelmaking process has become an urgent issue in the steel industry. Compared to the conventional blast furnace route, the direct reduction route, which uses natural gas and high-grade iron ore for the reduction process, significantly lowers CO₂ emissions in the ironmaking process. To secure a stable supply of high-grade iron ore, which is an indispensable raw material for the direct reduction route, ITOCHU has acquired partial interests in the AMMC iron ore mining operation in Canada. We are conducting a feasibility study on establishing a low CO₂ emission supply chain for ferrous raw material jointly with JFE Steel Corporation, who is our long-term business partner and Emirates Steel Arkan, who is one of the largest publicly traded steel and building materials manufacturers in the region. In this venture, we plan to utilize high grade iron ore produced by CSN Mineração S.A., a superior iron ore producer in which ITOCHU & JFE have invested. On the whole, blast furnace route emits approximately 2 tons of CO₂ per ton of steel, whereas the direct reduction route effectively reduces this to about 1 to 1.5 tons of CO₂ emissions^* with access to abundant natural gas. Looking ahead, we aim to achieve zero CO₂ emissions in the steelmaking process by implementing hydrogen reduction.

• JFE Environmental Vision 2050, page 9