Japan’s Coal Policy

September 11th, 2018

Masatsugu Yoshioka

Director for Coal Division, Natural Resources and Fuel Department,Agency for Natural Resources and Energy

1． Japan’s energy policy and coal

2． Development and Deployment of Clean Coal Technologies

Items

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2

1．Japan’s energy policy and coal

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55 60 65 70 1975 1980 1985 1990 1995 2000 2005 2010 2014

新エネ等

揚水

石油等

ＬＮＧ

一般水力

石炭

原子力

(100 million kWh)

(year)

Nuclear0%

Oil10.6%

LNG46.1%

Pumping up

power 0.6%

Coal31.0%

Hydro Power8.4%

Renewable3.2%

1952

Source：Japan’s Energy White Paper2016

Renewable

Pumping up power

Oil

Hydro Power

Coal

Nuclear

Hydro＞Thermal era

Oil > Coal era

Oil Alternative Energy

Increase of utilization of coal fired power and import coal

1-1. Transition of power generation and composition of power sources in Japan

Japanese Government set out the 5th Strategic Energy Plan on July 3, 2018. Japan tackles the policy targets related to Safety, Energy security, Economic

efficiency, and Environment simultaneously.（3E＋S）

Economic efficiency

Energy security

Self-sufficiency: About 8%(FY2016)→24%(FY2030)

Electricity cost: To lower from the current level(9.7 trillion yen in FY2013 to 9.5 trillion yen in FY2030)

<Policy target for 3E+S>

Environment Greenhouse gas emission reduction target:(reduction of 26.0% in FY 2030 compared to FY 2013)Sa

fety

is th

e to

p pr

iorit

y.

Safe

ty1-2. The 5th Strategic Energy Plan 4

1-3. Energy Mix in Japan

2030FY2016FY2010FY

Renewables 8%

Nuclear 11%

Fossil fuels: 81%Gas 18%Oil 40%Coal 23%

Renewables13-14%

Nuclear11-10%

Fossil fuels: 76%Gas 18%Oil 33%Coal 25%

Fossil fuels: 89%Gas 24%Oil 40%Coal 25%

Renewables 10%

Renewables 22-24%

Nuclear22-20%

Renewables 15% Renewables 9%

Nuclear 25%

Fossil fuels: 65%Gas 29%Oil 9%

Coal 28%

Fossil fuels: 84%Gas 42%Oil 9%

Coal 32%

Fossil fuels: 56%Gas 27%Oil 3%Coal 26%

Fossil fuels

Non-fossil fuels

Wind 1.7%

Geothermal1.0-1.1%

Solar 7.0%

Biomass3.7-4.6%

Hydro8.8-9.2%

Nuclear 2%

Primary energy

Power

The Japan’s Strategic Energy Plan is comprised of realization of long-term energy supply and demand outlook in 2030.

5

Nuclear 1%

6

(3) Coal(i) Position

Though coal has a problem ― it emits a large amount of greenhouse gas ― it is currently evaluated as a fuel for an important base-load power supply because it involves the lowest geopolitical risk and has the lowest price per unit of heat energy among fossil fuels, but it is expected that the need to adjust power output appropriately will grow as a consequence of the expansion of the introduction of renewable energy. Going forward, GOJ will promote conversion to high efficiency and next-generation coal thermal power generation and utilize this energy source while focusing on reducing the environmental load in the long term, for example by making efforts to shift to the use of cleaner gas and fadeout inefficient coal use.

1-4. Position of Coal in the 5th Strategic Energy Plan

※This translation is provisional

Coal is evaluated as an important base-load power source in the 5th Strategic Energy Plan which was approved by the cabinet on July 3, 2018.

Energy Mix by Power Sources (2015)

1-5. Comparison of sources for electricity generation• Energy mix of each country depends on its situation.

34%40%

23%

2%

44% 43%34%

23%

70%75%

0%5%

10%

8%3%

1%

0%

1% 2%

1%

1%

0%

2%

27%

5%1%

41%

23%

23%

4%

10%

22%

32%

30%

2%

5%

73%

14% 10%

1%

11%

24%

78%

14%

30%

19%

21%

3%

3%

0%

3%15%

8%16%

15%

10%

3%

0%

6%

2%

19%10%

0%

62%

57%

8% 7%13%

7%

28%

2%8%

24%

5% 5%0%

12%7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Japan World EU France Germany Korea US UK China India Saudi Brazil Canada

Coal Oil Gas Nuclear Hydro Other RenewablesData: IEA World energy balances 2017

７

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(3) Coal(i) Position

Though coal has a problem ― it emits a large amount of greenhouse gas ― it is currently evaluated as a fuel for an important base-load power supply because it involves the lowest geopolitical risk and has the lowest price per unit of heat energy among fossil fuels, but it is expected that the need to adjust power output appropriately will grow as a consequence of the expansion of the introduction of renewable energy. Going forward, GOJ will promote conversion to high efficiency and next-generation coal thermal power generation and utilize this energy source while focusing on reducing the environmental load in the long term, for example by making efforts to shift to the use of cleaner gas and fadeout inefficient coal use.

1-6. the need for power plant flexibility with the expansion of VRE in the 5th Strategic Energy Plan

※This translation is provisional

The need for coal fired power plant’s flexibility adjusting power output with the expansion of VRE is described in the 5th strategic energy plan.

1-7. Demand & Supply Balance in Kyushu Area (May.4th,2016）

• Dispatch ability of thermal power plant is essential.

PV

DemandCurve

Pumped Storage Power Generation

O`clock O`clock O`clock O`clock O`clock

Stop or restrain the operation of thermal power, and pump up water during day time

38% (the ratio of Renewables per day)

Increase of output of thermal power and pumped storage power, responding to the rapid electricity demand increase (around 2Gw/hour), caused by PV output decrease.

Thermal Power as a baseload

Decrease of output of thermal power, responding to electricity decrease caused by PV output increase.

4.9 million (kW) (around 66% of the total demand) out put of PV and Wind during day time(at 13:00) Pumped Storage Power Generation

Pumpingupwater

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2．Development and Deployment of Clean Coal Technologies

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Photos by Mitsubishi Heavy Industries, Ltd., Joban Joint Power Co., Ltd., Mitsubishi Hitachi Power Systems, Ltd., and Osaki CoolGen Corporation

65％

60％

55％

50％

45％

40％

Gas Turbine Combined Cycle (GTCC)Power generation efficiency: Approximately 52%CO2 emissions: 340 g/kWh

Power generation efficiency

GTFC

IGCC（Verification by blowing air)

A-USC

Ultra Super Critical (USC)Power generation efficiency :

Approximately 40%CO2 emissions: Approximately 820

g/kWh

1700 deg. C-class IGCC

1700 deg. C-class GTCC

IGFC

LNG thermal power

Coal-fired power

2030Present

Integrated coal Gasification Combined Cycle (IGCC)

Power generation efficiency: Approximately 46 to 50%CO2 emissions: 650 g/kWh (1700 deg. C-class)Power generation efficiency: Approximately

46%CO2 emissions: Approximately 710 g/kWh

Advanced Ultra Super Critical (A-USC)

Integrated Coal Gasification Fuel Cell Combined Cycle (IGFC)

Power generation efficiency: Approximately 55%CO2 emissions: Approximately 590 g/kWh

Gas Turbine Fuel Cell Combined Cycle (GTFC)

Power generation efficiency: Approximately 63%CO2 emissions: Approximately 280 g/kWh

Power generation efficiency : Approximately 57%CO2 emissions: Approximately 310 g/kWh

Ultrahigh Temperature Gas Turbine Combined Cycle

Power generation efficiency: Approximately 51%CO2 emissions: 350 g/kWh

Advanced Humid Air Gas Turbine (AHAT)

Around 2020

Reduction of CO2 by approximately 20%

Reduction of CO2 by approximately 30%

Reduction of CO2 by approximately 10%

* The prospect of power generation efficiencies and discharge rates in the above Figure were estimated based on various assumptions at this moment.

2-1. The prospect of highly efficient and low-carbon next-generation thermal power generation technology

Reduction of CO2 by approximately 20%

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122-2. Integrated Coal Gasification Combined Cycle (IGCC)

Fukushima Revitalization Power540MW Nakoso IGCC (COD: Sep.2020)540MW Hirono IGCC (COD: Sep.2021)

Joban Joint Power Co.250MW Nakoso #10(Demo.2007-, Commercial 2013-)

Osaki CoolGenOsaki CoolGen Project(Demo 2016-)

IGCC Projects in Japan

• In IGCC, coal is gasified and burned at a “gas turbine”, and heat is recovered by combined cycle steam turbine.

• Thermal efficiency is approximately 46 to 50% and CO2 emissions can be reduced to approx. 700 g/kWh.

Overview○ Osaki CoolGen Project aims to realize innovative low-carbon coal-fired power generation that combines CO2 separation and capture with IGFC, which is the ultimate high-efficiency coal-fired power generation technology. Demonstration operation started on August 16, 2016.

(1) Technical feature Thermal Efficiency Target: 55% (up from 40% of USC)

※net, HHV CO2 capture & storage through Oxygen-blown IGCC

(2)Project entity: Osaki CoolGen Corporation(Joint Venture of J-POWER and Chugoku Electric Power)

(3)Project Schedule: FY2012 to FY2021

Plant image

Project Outline

Project Schedule

FY 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

<1st stage>Oxygen blown

IGCCDemonstration

<2nd stage>CO2 Capture

with IGCCDemonstration

<3rd stage>CO2 Capture

with IGFCDemonstration

Demonstrationtest

Oxygen blown IGCCDesign, Manufacturing and Construction

Demonstrationtest

CO2 CaptureDesign, Manufacturing

and ConstructionFeasibility study

Demonstration test

CO2 Capture with IGFCDesign, Manufacturingand Construction

Feasibility study

Waste water treatment unit

(Existing)

Coal gasification

unitGas clean up

unit

Waste water treatment unit(new)

CO2 capture unit

Air separation

unit

Gas turbine unit

Project Site: Osakikamijima cho, Toyota gun, Hiroshima

2-3. IGFC Demonstration Project (Osaki CoolGen) 13

2-5. Increasing capacity of coal-fired power

• The capacity of coal-fired thermal power is estimated toincrease along with economic growth mainly in India, China,and Southeast Asia.

800gCO2/kWh

709gCO2/kWh

593gCO2/kWh

World Electricity Generation (New Policies Scenario)(TWh)

Perspective of increase or decrease of Capacity of Coal-Fired and Gas-Fired Power Generation in the World

（Source: IEA World Energy Outlook 2017） （ＧＷ）

-

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

2000 2015 2016 2025 2030 2035 2040

Other RE

PV

Wind

Hydro

Nuclear

Gas

Oil

Coal

-200 -100 0 100 200 300 400 500

Russia

US

EU

MiddleEast

Africa

Southeast Asia

India

China

Coal Gas

14

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(3) Coal(ii) Policy Direction (Excerpt)

In order to lead global decarburization taking into account the Paris Agreement, GOJ proposes to the partner country all options that contribute to CO2 emissions reduction, including renewable energy and hydrogen, etc., based on the needs of the partner country, to actively promote “low-carbon infrastructure exports.” In this process, in the case that there is a request from a partner country for Japan’s high efficiency coal thermal power generation then only for those countries that are forced to choose coal as an energy source from the perspectives of energy security and economic viability GOJ supports the introduction of power generation equipment that is in principle at or above ultra-supercritical pressure (USC), the global state-of-the-art, taking into account OECD rules and in a form that is consistent with the energy policy and climate change measures of the partner country.

2-4. Policy for Overseas Deployment of Coal Power Plants

※This translation is provisional and not official

In the 5th Strategic Energy Plan, it is described that GOJ support overseas introduction of at or above USC in principle, taking into account OECD rules.

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Plant Unit Size(Gross) Large Medium Small

Steam Condition ＞500MW ≧300MW ＜300MW

USC≧593℃＞240Bar

Maximum repayment terms

12 yearsMaximum repayment terms

12 yearsMaximum repayment terms

12 years

SC＞550℃＞221Bar

Ineligible10 years

[IDA-eligible countries, Low electrification ratio,Geographically isolated location (islands area) ]

10 years [IDA-eligible countries,

Low electrification ratio,Geographically isolated location (islands area) ]

SUB-C221Bar＞ Ineligible Ineligible

10 years [IDA-eligible countries,Geographically isolated location (islands area) ]

2-6. OECD Sector Understanding on Export Credits for Coal-fired Electricity Generation Projects agreed in Nov-2015

Effective 1 January 2017

Thank you!

Agency for Natural Resources and Energy