INTERVIEW: Japan weighs support frameworks for large-scale CCS introduction

Japan intends to introduce a set of support frameworks for the country's carbon capture and storage projects, before companies make final investment decisions from around the end of fiscal year 2026-27 (April-March), a top official in charge of CCS policy told Platts, part of S&P Global Commodity Insights.

"We are targeting the start of [CCS] frameworks before [companies] make FIDs from the end of FY 2026-27 to FY 2027-28," Yoshinori Keino, director of the CCS Policy Office at the Ministry of Economy, Trade and Industry, said in an interview.

"We now aim to conclude discussions in May," Keino said, adding that the goal is to compile an interim report in June or July, following a series of working group discussions on the CCS support frameworks.

The move comes as Japan is gearing up to launch its CCS businesses in 2030, starting with a minimum storage capacity of 6 million mt/year of CO2.

On Feb. 18, the Japanese cabinet approved the 7th Strategic Energy Plan -- the country's principal energy policy -- which designates CCS as one of the key steps to decarbonize hard-to-abate and energy sectors as part of its efforts toward achieving carbon neutrality in 2050.

Scenarios used in the FY 2040-41 energy supply and demand outlook, which supports the 7th Strategic Energy Plan, stipulate that Japan's annual CO2 storage volume will vary between 60 million mt and 120 million mt, depending on technological innovation levels and CO2 capture volumes.

However, both scenarios expect the country's annual domestic CO2 storage volume to be 50 million mt, with CO2 transport and storage abroad making up the balance.

Support frameworks

The working group, launched Feb. 5, first focused on considering support frameworks for domestic projects involving pipeline transport before compiling the interim report. It will then consider support for ship transport.

"I think the [support for] domestic pipelines will be very similar to the price gap support for hydrogen, and the [support for] ships will probably be slightly different," Keino said. "Just as the hydrogen price gap support aims to support the entire hydrogen and ammonia supply chain, I envision that the domestic pipeline support will cover the entire CCS value chain connected by the pipeline."

On Nov. 26, 2024, Japan started a series of CO2 voyages on a low-temperature, low-pressure liquefied CO2 carrier -- the first of its kind in the world -- over 1,000 km between Maizuru in Kyoto Prefecture and the Tomakomai terminal in Hokkaido, northern Japan.

"Regarding the standardization of technical specifications, there are several ongoing discussion items," Keino said. "However, discussions on the direction of standardizing technical specifications for low-temperature, low-pressure transport have progressed significantly."

"The technical consensus among stakeholders in domestic maritime transport is becoming stronger, and we also need to coordinate with the receiving parties," he added.

Advanced projects

As of June 2024, state-owned Japan Organization for Metals and Energy Security has selected nine projects to store around 20 million mt/year of CO2 in Japan and the Asia-Pacific, including five projects in Japan, three in Malaysia and one in Oceania.

On Feb. 21, Japan announced that it has designated part of the area near offshore Tomakomai, Hokkaido, in the north as the first site for a potential CCS project.

"Considering the data we have collected so far, we believe the storage potential is very high," Keino said. "Therefore, we consider this a promising candidate site for the project currently leading in our country."

When asked about other areas in Japan with potential, Keino said, "It is not easy to pinpoint specific areas. One option is to use depleted oil and gas fields in Higashi Niigata, similar to Tomakomai, where there is potential for underground CO2 storage."

As for priorities for CCS development, Keino said, "We will start with the cheaper options." He added that overseas projects are relatively expensive.

"The initial investment is especially high, but since it is for infrastructure, it will eventually be amortized. However, the running costs are high due to transportation fees, so they will remain elevated," he said. "CCS must be inexpensive because CO2 processing is fundamentally a cost for the emitting businesses."

Meanwhile, Keino said Japan has started initial discussions with Malaysia, which hosts three of the four advanced CCS projects abroad, to establish arrangements for transporting CO2 across borders.

"At this point in time, there is significant focus on Malaysia, so we have started dialogues with them," Keino said. "However, just starting the dialogue does not mean that we have begun formal negotiations for agreements."