Briefing Note: Japan's CCS (Carbon Capture and Storage) Policy

Overview

In order to achieve carbon neutrality, the Japanese government is promoting carbon capture and storage (CCS) to store carbon dioxide (CO₂) in business sectors where CO₂ emissions are unavoidable, and has set a goal of storing 120-240 million tons of CO₂ by 2050. This is equivalent to approximately 10-20% of Japan’s current emissions. The government is working on cost reduction, fostering public understanding, promoting CCS overseas, and developing CCS business laws to realize their goal of commercializing CCS by 2030 (CCS Long-Term Roadmap, 2023). In 2023, Japan Organization for Metals and Energy Security (JOGMEC) selected seven priority projects. Two of the projects are based on the assumption that Japan would export CO₂ overseas.

There is little time left to combat climate change. The most effective solution is to “transition away from fossil fuels," as stated in a COP28 outcome document. CCS faces many challenges both technologically and financially, and relying on such technology will delay climate action.

 Japan’s CCS Policy

Although CCS was originally intended to be proven viable by 2020¹, there have been no cases of commercial-scale CCS operations in Japan. One relatively large-scale demonstration experiment was conducted in Tomakomai, Hokkaido. In this project, a total of 300,000 tons of CO₂ was injected from two injection wells over a period of three and a half years, from April 2016 to November 2019, and monitoring is still ongoing. One of the injection wells was not able to inject a sufficient amount of carbon dioxide².

Since Japan has limited storage potential on land, ocean storage is being considered. For this reason, storage in Japan would be costly, and discussions are currently underway to transport CO₂ overseas, where it can be stored at a lower cost. A liquefied CO₂ carrier is under development with government support but is still in the experimental stage³.

According to the estimates presented in 2022 by the Ministry of Economy, Trade and Industry’s (METI) working group for CCS project costs and implementation schemes, the current CCS costs range from 12,800 yen to 20,200 yen/tCO₂, with plans to reduce these costs by 60% by 2050. However, no concrete measures on how to achieve these reductions have been presented at this time.

The policy states that CCS projects will begin in earnest by 2030, and that the government will work on cost reductions, legislation, and furthering public understanding to achieve the goal of storing 120-240 million tons of CO₂ per year by 2050. Japan’s annual greenhouse gas emissions are 1.122 billion tons (CO₂ equivalent, 2021), and 120-240 million tons per year is 10-20% of that amount. The Japanese government has stated that “decarbonization will be achieved to the maximum extent possible, and CCS will be utilized in areas where CO₂ emissions are unavoidable," but CCS is also being proposed in the power sector, where alternatives such as renewable energy exist.

In order to create rules for CCS operators, manage government supervision of these operations, and ensure security and liability, etc., METI plans to submit the CCS Business Act when the ordinary Diet is in session in 2024.

Government Support for CCS

The Japanese government has long provided policy support for CCS. In addition to the Tomakomai demonstration test, the Research Institute of Innovative Technology for the Earth (RITE) conducted a CO₂ demonstration injection test in Nagaoka City, Niigata Prefecture over a period of a year and a half starting in 2003, in which 10,000 tons of CO₂ was injected. The project was commissioned by METI.

In 2021, the Japanese government announced the Asian Energy Transition Initiative (AETI) for “realistic energy transitions” in Asia, which included $10 billion in financial support assistance for several sectors such as renewable energy, energy conservation, and CCUS projects. Under the Kishida administration, the GX (Green Transformation) Strategy has been promoted since 2022. The GX Promotion Act was passed by the Diet on May 12, 2023, followed by the GX Decarbonized Power Supply Bill on May 31. The GX Promotion Act requires the government to develop a GX promotion strategy, issue GX transition bonds (20 trillion yen scale), and to secure private GX investors. CCS is also included as an area to be promoted, and the government plans to invest 4 trillion yen over the next 10 years⁴. Thermal power plants integrated with CCS are also included in the Long-Term Decarbonization Power Source Auction, which will begin operating in January 2024, but CCS has been excluded from the first round of the auction because no such projects exist yet.

Policy support is expected to include feasibility studies (F/S) conducted by private companies, exploration of storage sites, and CAPEX (capital expenditure) support, and subsidies have already been provided for F/S and other projects. For example, a joint CCS study in Malaysia (a joint project between JAPEX, JGC Global, and Kawasaki Kisen Kaisha, Ltd.) is funded by METI subsidies available for oil refinery technology in oil-producing countries⁵. Subsidies have also been allocated for a study of CCS in Indonesia’s Gundih gas field, including the possibility of adaptation to JCM (Joint Crediting Mechanism)⁶.

A mechanism is also being considered for making carbon credits generated by CCS projects available for use in Japan. In addition, the government is also working to establish rules with relevant countries regarding the export of CO₂ and to comply with the London Protocol.

The institutions that support CCS projects in Japan and overseas include wholly owned Japanese government agencies such as JOGMEC, JBIC, JICA, and NEXI. In 2023, JOGMEC solicited private participation in “studies on the implementation of advanced CCS projects" and selected seven candidate projects (five domestic and two overseas storage projects, assuming that the projects would begin storage of CO₂ by FY2030⁷.

Diagram: Location of 7 Japanese Advanced CCS Project and companies proposed each project (Source: JOGMEC)

Problems

CCS cannot be an effective climate change measure

In order to combat the climate crisis, it is necessary to implement measures that contribute to a definite reduction of greenhouse gases as soon as possible. However, CCS, which seeks to separate, capture, and store CO₂ from the extraction and combustion of fossil fuels, is a technology that enables the continued use of fossil fuels and the emission of greenhouse gases. Although the standard carbon capture rate is expected to be 90%, the actual capture rate is only 60-70%, meaning that not all CO₂ will be captured. Furthermore, this technology only captures CO₂, and does not have the ability to capture other greenhouse gases such as methane. Moreover, enormous amounts of energy and water are required for CCS’ separation and capture processes⁸.

Technological Challenges

CCS technology has been studied since the 1970s, but there are not many examples of this technology being demonstrated in real-world applications. What has been implemented is a type of enhanced oil recovery (EOR), in which captured CO₂ is injected into oil fields to increase the amount of crude oil extracted, which promotes increased fossil fuel production.

Of the 31 commercial-scale CCS projects that have been conducted worldwide to date, 28 have been onshore and 22 have been enhanced oil recovery (EOR) projects⁹. There are almost no oil fields in Japan, making it impractical to conduct EOR. According to Japan CCS Research Corporation, there is large storage potential within Japan’s territories, particularly in the ocean, but the cost is high and no specific storage sites have been identified so far. Additionally, there are currently no transport vessels that have the proven ability to carry captured CO₂, and demonstration experiments are still in early stages.

Environmental Impacts

There are concerns about the various environmental impacts of CCS, including the possibility of inducing earthquakes as a result of ground injections, the risk of CO₂ leakage, increased water stress, and ocean acidification. As part of a CCS project in Algeria, CO₂ had been injected into depleted gas fields from 2004, but the injection was suspended in 2011 when movement was observed in the layers of the ground that prevent CO₂ from leaking out provoking concerns of leakage¹⁰. In 2020, a CO₂ transport pipeline that was part of an EOR project in Mississippi, USA was damaged, resulting in the evacuation of 300 people. 45 people were hospitalized with carbon dioxide poisoning¹¹.

The technologies used to recover CO₂ from exhaust gas include the chemical absorption method (which separates CO₂ by chemically absorbing it into a solvent such as amine) and the physical absorption method (which separates CO₂ by absorbing it into a physical solvent under high pressure). The amine absorption method used at Tomakomai generates harmful chemicals such as amine compounds in the process of absorbing, separating, and recovering CO₂, and there are concerns regarding the impacts it will have on ecosystems and the environment¹².

High Costs

Many CCS projects in the past have failed. 43% of the CCS projects planned between 1995 and 2018 were either cancelled or postponed for various reasons such as lack of funding. Furthermore, 78% of large-scale projects (those that capture more than 30,000 tons of CO₂ per year) were either cancelled or postponed¹³. According to the estimates presented in 2022 by METI’s working group for studying CCS project costs and implementation schemes, the current CCS costs range from 12,800-20,200 yen/tCO₂, with plans to reduce these costs by approximately 60% by 2050. However, the Japanese government’s long-term roadmap for CCS states that the government will “continue to promote research, development, and demonstration of technologies that will enable cost reduction toward the target cost,” a statement which leaves reduction feasibility ambiguous. Even at 60%, the cost will remain high.

The implementation of CCS in power plants has also been shown to significantly increase the cost of power generation. Figure 1, which compares LCOE by energy source, shows that coal and gas-fired power plants with CCS significantly exceed the cost of offshore wind and solar power facilities that have storage capabilities. It is clear that the Japanese government’s support of CCS in the name of “decarbonizing Asia” will in fact delay decarbonization in Asia and drive electricity prices up.

Monitoring and Liability

For CCS to be a viable option for decarbonization, it is important to confirm that carbon can be stored in a stable state for a long period of time. Other countries have established monitoring systems for at least 10-20 years, but liability is an issue in the event of carbon leakage or accidents that occur after the monitoring period. Currently, the Japanese government has stated that once it has confirmed that stable storage is possible, JOGMEC, a government organization, will be responsible for monitoring, but  they have not specified the method or duration of monitoring.

While inclusion of CCS projects in the international carbon market has been discussed, in the discussion of carbon removal under the UNFCCC, it is important that after CO₂ is removed from the atmosphere for a long period of time. IPCC uses the word “durably” to describe the storing of CO₂ in geological, terrestrial, or ocean reservoirs, or in products for CDR (Carbon Dioxide Removal). There is no clear definition for the length that “durably" entails, but some have suggested at least 200-300 years¹⁴. A legal system that can guarantee the maintenance of sequestered carbon for such a long period is not feasible in practice. After the monitoring period conducted by the utility company ends, if the government takes over responsibilities and finances the management of the expected large amount of carbon at public expense, we will only be leaving this problem for future generations to deal with. This is not a solution to the problem.

Recommendations

A fundamental review of the positioning of CCS is required

It is said that CCS will be considered in business sectors where CO₂ emissions are unavoidable. However, the use of CCS in sectors where alternatives exist, such as renewable energy and energy conservation, are also being considered. The investment of large amounts of money and resources for the implementation of CCS may hinder and delay technological innovation and implementation of higher priority energy conservation and renewable energy projects. The “Long-term CCS Roadmap” which provides the basis for Japan’s CCS policy, is not feasible to begin with, and instead of positioning CCS as a trump card for carbon neutralization, the government should fundamentally rethink its current CCS policy.

Public funds should not be used for CCS projects, especially the ones involving the exportation of CO₂ overseas

Taking into consideration Japan’s historical responsibility for climate change, drastic domestic emission reductions are necessary. It is socially and morally unacceptable to export and store CO₂ overseas as a response to inadequate emission reductions. It also goes against climate justice. According to estimates, liquefying CO₂ and transporting it by sea will further increase the energy consumption of CCS projects, which are already energy-intensive operations.

A fossil fuel-free policy should be established

Before focusing on CCS, the Japanese government should formulate a policy to implement fossil fuel phase-out. Regarding coal-fired plants, the Japanese government currently only has a policy of phasing out inefficient coal-fired power plants and has established a system that allows biomass co-firing and ammonia co-firing plants to be exempted from early decommissioning¹⁵. At COP28, Prime Minister Kishida stated that “Japan will follow its own path to net-zero energy efficiency and ensure stable energy supplies while ending the construction of new domestic coal-fired power plants that have not taken emission reduction measures.” However, the 1.5℃ Paris Agreement target cannot be met without the elimination of coal-fired and other fossil fuel-powered generation, regardless of whether emission reduction measures are taken.

Citations

1. Low Carbon Society Action Plan (2008); 3rd Strategic Energy Plan (2010).
2. METI, CCS Large-Scale Demonstration Test at Tomakomai: Report as of 300,000 tons of injection (“Summary Report") https://www.japanccs.com/wp/wp-content/uploads/2020/05/report202005_full.pdf, December 2020. (Japanese Only)
3. NEDO, Completion of the world’s first demonstration test ship “Excool" for low-temperature, low-pressure mass transportation of liquefied CO₂, https://www.nedo.go.jp/news/press/AA5_101705.html, November 28, 2023. (Japanese Only)
4. METI, Investment Strategy by GX Sector for CCS, https://www.meti.go.jp/shingikai/enecho/shigen_nenryo/carbon_management/pdf/002_08_00.pdf, November 2023. (Japanese Only)
5. JAPEX, JGC Global and Kawasaki Kisen Kaisha, Ltd. to Participate in Joint CCS Study in Malaysia, https://www.japex.co.jp/news/uploads/pdf/JAPEX20220729_MalaysiaCCSstudy_join_j.pdf, July 29, 2022. (Japanese Only)
6. J-Power, Launch of JCM Survey Project for CCS Demonstration Project in Indonesia, https://www.jpower.co.jp/news_release/2020/05/news200520.html, May 20, 2020. (Japanese Only)
7. JOGMEC, First Step to Launch Japanese CCS Project- JOGMEC selected 7 projects, starting CO2 storage by FY2030 – https://www.jogmec.go.jp/english/news/release/news_10_00036.html, June 22, 2023.
8. Renewable Energy Institute, Bottlenecks and Risks of CCS Thermal Power Policy in Japan, May 2022.
9. ibid
10. MIT, In Salah Fact Sheet: Carbon Dioxide Capture and Storage Project, 　htttps://sequestration.mit.edu/tools/projects/in_salah.html, Last accessed February 2024.
11. Huffington Post, The Gassing Of Satartia, August 2022; The Intercept, Louisiana rushes buildout of carbon pipelines, adding to dangers plaguing cancer ally, August 2023.
12. Ministry of Environment, “Commissioned Study Report on Environmentally Friendly CCS Introduction", https://www.env.go.jp/earth/ccs/h26_report.html, 2014.
13. Wang et al, What went wrong? Learning from three decades of carbon capture, utilization and sequestration (CCUS) pilot and demonstration projects, Energy, November 2021.
14. Information note, Removal activities under the Article 6.4 mechanism, https://unfccc.int/sites/default/files/resource/a64-sb005-aa-a09.pdf.
15. National Diet Library, Trends in Japan’s Coal-Fired Power Policy, https://dl.ndl.go.jp/view/download/digidepo_12361633_po_1207.pdf?contentNo=1, November 24, 2022. (Japanese Only)