Country Report - City Gas Industry in Japan - Haruki Takahashi Senior Managing Director September 5, 2006 GASEX 2006
Contents 1. Japan s National Energy Policies 2. Current Situation of Japan s City Gas Industry 3. Countermeasures by City Gas Utilities 1
1. Japan s s National Energy Policies (1)Current Energy Situation (2) Current National Energy Policies (3) Importance of Natural Gas 2
(1) Current Energy Situation 1. Japan s National Energy Policies a) Surge in energy prices Structural changes in the global energy market Growing instability in the energy production & supply chain b) Kyoto Protocol Obligation of GHG reduction (million ton -CO 2 ) 1,400 Japan s GHG emissions (tons of CO2) 1,300 1,200 1,255 1,355 + 8% 1,180-6% Rising CO2 emissions 1,100 1,000 1990 2004 2008-2012 Source : Ministry of Environment s website 3
1. Japan s National Energy Policies (2) Current National Energy Policies June 2006 : New National Energy Strategy October 2006 : Basic Plan for Energy Supply and Demand Objectives: Establish energy security Promote energy saving 4
(3) Importance of Natural Gas 1. Japan s National Energy Policies Advantages of natural gas -Widespread and rich reserves in various regions -Lowest emission among other fossil fuels Current LNG Projects for Japan Trend and Outlook of Total Primary Energy Supply in Japan 3.6% 9.6% 4.2% 0.1% Oman Abu Dhabi Qatar Brunei Malaysia Australia Indonesia Alaska *FY 1990 (actual record) 2000 (actual record) 2030 (standard case) 2030 (further energy conservation case) 596 Mtoe (oil equivalent) 3.2 694 Mtoe 35.3 52.8% 46.5 38.4 707 Mtoe 624 Mtoe 4.8 3.7 16.8% 10.4% 18.1 13.5 12.7 17.4 17.8 14.8 17.4 16.0 17.6 Source: Ministry of Economy, Trading and Industry *Fiscal year = from April 1 to March 31 3.7 0.1 2.4% 5.0 3.4 0.1 3.2 0.1 2.4 4.4 Petroleum LPG Coal Natural gas Nuclear power Hydropower Geothermal energy Renewable energy 5
2. Current Situation S of Japan s s City Gas Industry (1) Current Status of City Gas Market (2) Progress of Regulatory Reform in the City Gas Industry (3) Challenges -- Inter-energy Competition 6
(1) Current Status of City Gas Market I Sales volume and number of customers (billion m3) 35 30 25 Trend of city gas sales volume and number of customers Sales volume Number of customers 32.5 billion m 3 Residential 2. Current Situation (million customers) 30 29 28 27 20 15 Commercial 26 25 Industrial 24 10 23 5 22 0 21 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 (FY) Source: Others 7
(1) Current Status of City Gas Market II Number of natural gas distribution utilities (As of June 30, 2006) Private 176 Municipal 34 Total 210 2. Current Situation Ratio of city gas resource 1980 44.8% 6.3% 48.9% 1985 59.9 6.6 33.5 1990 69.8 6.0 24.2 LNG Indigenous natural gas Others (naphtha, coal gas, etc.) 1995 75.8 5.3 18.9 2000 81.5 5.8 12.7 2005 88.2 6.2 5.6 (FY) Source: 94.4% 8
(2) Progress of Regulatory Reform Retail Liberalization 2. Current Situation 1995 2 2 million million m 3 3 (*44%) (*44%) or or more *per year more *per year 1999 2004 1 1 million million m 3 3 (*49%) (*49%) or or more more 0.5 0.5 million million m 3 3 (*52%) (*52%) or or more more 2007 0.1 0.1 million million m 3 3 (*59%) (*59%) or or more more Discussing in 2006 *Ratio of total sales volume Below Below 0.1 0.1 million million m 3 3 (*100%) Large-volume customers Medium-volume customers Small-volume customers Small-volume customers including residential use Ratio of new entrants sales volume in liberalized market 8.0% (21 utilities, 108 sites) (as of March 2006) 9
2. Current Situation (3) Challenges --- Inter-energy energy Competition Fierce competition especially with electricity in each sector Residential Use Glass-top cooking stoves Cooking Induction heating cookers Natural Gas High-efficiency water heater, Fuel cells Gas fan heater, Floor heating Gas cogeneration system for residential use Absorption type, Gas heat pump Water heating Space heating Electricity Commercial & Industrial Use Air conditioning CO 2 refrigerant heat pump, Electric or kerosene boiler, etc. Electric air-conditioner, Electric or kerosene space heater Electricity from grid Electric heat pump, Ice thermal-storage Other Energies Gas fueled boiler Gas fueled cogeneration Heat Electricity Oil fueled boiler Electricity from grid 10
3. Countermeasures by City Gas Utilities (1) Market Cultivation (2) Establishment of Supply Safety 11
(1) Market Cultivation I -Natural gas fired cogeneration 3. Countermeasures by City Gas Utilities Operating capacity(gw) 6.0 Diffusion of gas cogeneration systems and the target Number of installations 30,000 5.0 Operating capacity a bnumber of systems 25,641 4.98GW 25,000 4.0 3.59 20,000 3.0 2.0 1.0 0.0 0.87 1.00 1.19 * Steam turbine not included * The target includes fuel cell cogeneration 1.33 1.51 1.69 1.90 2.15 709 796 906 1,014 1,151 1,400 1,6732,578 2.42 5,778 3.13 13,785 FY 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2010 15,000 10,000 5,000 Source: 0 12
(1) Market Cultivation II -Residential cogeneration Eco-Will, 1kW gas fueled engine cogeneration system Energy efficiency: 85% (Generating efficiency: 20%, Exhaust heat recovery: 65%) Target: 235 thousand units in 2010 3. Countermeasures by City Gas Utilities Trademark of Eco-Will 13
(1) Market Cultivation III -Fuel cell Target: 2.2 GW (including 1.2 GW for residential use) in 2010 Apr. 05: Tokyo Gas Co., Ltd. installed the world s first commercial PEFC. Efforts of gas companies and FC manufacturers: -Lower cost and higher durability R&D for SOFC 3. Countermeasures by City Gas Utilities Panasonic Model (1 kw PEFC) 14
(1) Market Cultivation IV -Residential High-efficiency water heater Eco-Jozu, a condensing water heater Heat efficiency: 95% Target: 350 million units in 2010 3. Countermeasures by City Gas Utilities Exhaust heat (50-80 C) Heat exchanger 2 10-15% Efficiency Total efficiency 95% Burner Heat exchanger 1 80% Efficiency Air Water Hot Gas Drainage 15
(1) Market Cultivation V -Gas air conditioning 3. Countermeasures by City Gas Utilities 22.3% of the entire installed capacity of air conditioners nationwide (as of fiscal 04, excl. residential use) (million refrigerant ton) 12 10 Diffusion of gas air conditioning 8.87 8 1.73 9.40 1.98 10.02 10.58 2.57 2.28 11.10 million RT 2.85 Absorption Type 6 4 2 7.14 7.42 7.74 8.01 8.25 Gas Heat Pump 0 Source: Gas Facts in Japan '00 '01 '02 '03 '04 (FY) 16
(1) Market Cultivation VI -Natural gas vehicle 3. Countermeasures by City Gas Utilities (number of NGVs) 30,000 25,000 20,000 Diffusion of NGV and refueling stations a b Number of NGVs Natural gas rapid refueling stations 224 350 27,605 288 311 300 270 24,263 20,638 250 (natural gas rapid refueling stations) 15,000 181 16,561 200 138 12,012 150 10,000 5,000 0 6 6 12 49 123 243 Source: Gas Facts in Japan 24 421 34 759 47 62 2,093 1,211 82 3,640 107 5,252 7,811 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 (FY) 100 50 0 17
3. Countermeasures by City Gas Utilities (2)) Establishment of Supply Safety Earthquake countermeasures -Facility measures : -PE pipe, Intelligent gas meter Standardization of safety devices -Flame failure prevention device -Small water heaters with a function to prevent incomplete combustion Polyethylene pipe Intelligent gas meter -Emergency measures : -Area subdivision -Recovery measures : -Establishment of quick relief system industry-wide Image: Ultra-safe cooking stove 18
Challenges of Our Natural Gas Business Stable demand in consuming country Accelerate mutual partnerships Stable production & investment in gas-producing countries 19
Thank You for Your Attention! Haruki Takahashi Senior Managing Director