Global Trends and Strageties toward Carbon Neutrality

With the adoption of the Paris Agreement in 2015, the world is quickly moving towards a society, free of carbon and decarbonized by the year 2050.
The establishment of a decarbonized and sustainable energy system is a common global challenge. As a global company, HORIBA, with its comprehensive global footprint, keeps abreast of ever-changing policy, technological, and economic trends in each country and region. Here are a few topics summarizing the latest trends from HORIBA's perspective.
(Please note that the content below is edited based on information released by public organizations, but includes our own interpretations, views, and findings.)

Table of Contents


Global: Preliminary Report on COP27 Trends

COP27 has been held from November 6-18, 2022, with Egypt presiding. According to preliminary information compiled by the New Energy and Industrial Technology Development Organization (NEDO) of Japan, the focus is expected to be on international cooperation, especially support for developing countries by developed countries. The following is a list of three main pieces of information from the United Nations (UN) and other sources at this timepoint. (Nov. 2022)

[UN Secretary-General Guterres' opening speech]

Called for a historic agreement that combines capabilities in developed and developing countries to redirect the world toward reducing carbon emissions, transforming energy systems, and averting a climate catastrophe. Key messages included "We are on the highway to climate hell," "The two largest economies, the United States and China, have a particular responsibility to join efforts to make this Pact a reality," " The war in Ukraine, other conflicts, have caused so much bloodshed and violence and have had dramatic impacts all over the world. But we cannot accept that our attention is not focused on climate change," and "I am asking that all governments tax the windfall profits of fossil fuel companies".

Reference link: ”Secretary-General's remarks to High-Level opening of COP27 ”

Cited from "Sharm-El-Sheikh Adaptation Agenda"

[Sharm El Sheikh Adaptation Agenda]

Egypt, as the chairing country, presented an action plan to support the 4 billion people living in areas most vulnerable to the effects of climate change. The plan includes concrete measures to be implemented by 2030 for the five systems of resilient food and agriculture systems , water and natural systems, human settlement systems, coastal and oceans systems, and infrastructure systems, including the cultivation of crops that can withstand high temperatures and the introduction of early warning systems to warn of flooding and landslide disasters.

Reference link:"Sharm-El-Sheikh Adaptation Agenda"

[New participation to Global Offshore Wind Alliance (GOWA)]

COP27 has seen nine new countries including Belgium, Colombia, Germany, Ireland, Japan, the Netherlands, Norway, the UK, the US join the Global Offshore Wind Alliance (GOWA), pledging to a rapid ramp up of offshore wind in order to tackle the climate and energy security crises.

The alliance, which is bringing together governments, the private sector, international organizations and other stakeholders to accelerate the deployment of offshore wind power, was launched in September by the International Renewable Energy Agency (IRENA), the Government of Denmark, and the Global Wind Energy Council (GWEC).

Reference link: ”Nine New Countries Sign Up for Global Offshore Wind Alliance at COP27 in Sharm El-Sheikh


Water Electrolysis Technology Trends from Patent Perspective (IRENA Report)

The European Patent Office (EPO) and the International Renewable Energy Agency (IRENA) have jointly published a report examining trends in patent applications relating to water electrolysis (tanks) for the period 2005-2020.
The overall trend for both domestic and international patent applications combined is an average annual increase of 18% in the number of applications, with China, Japan, Korea, the U.S., Germany, and France having the largest number of applications by country, in that order, with China having by far the largest number of domestic applications.
Comparing the numbers of international patents alone, the number of applications is higher in Japan, the U.S., Germany, Korea, France, and China, in that order, and by technology, catalytic technology using non-precious metals reversed precious metals in 2018, and photoelectrolysis technology is increasing, mainly in academia.As for trends in Europe and Japan, which account for about half of the total number of patents, Europe is leading in electrolyzer (41% share in the field), electrocatalyst materials (34%), and cell operating conditions and structure (31%), while Japan is leading in stack technology (39%) and cell configuration technology such as separators (34%). In separator technology, in particular, international patent applications by Japanese companies for ceramics membranes dominated the list, while the number of applications for electrolyzer cost reduction technology increased, and the United States tended to file applications in a wide range of fields, giving an insight into the technological strategies of each country and company. (May 2022).

Reference link : IRENA "Patent insight report - Innovation trends in electrolysers for hydrogen production"


Battery Policy Learning from Germany (NEDO Report)

The New Energy and Industrial Technology Development Organization (NEDO), Japan, has issued a report titled "Competition for Resources in the Renewable Energy Era: The Case of Germany's Lithium-Ion Battery Policy.
The purpose of the report is as follows: "Compared to localized fossil energy, renewable energy has the advantage of being ubiquitous on the planet. Therefore, energy security in the carbon-neutral era will be at a major turning point, along with industrial policies such as storage batteries that complement it. On the other hand, the manufacture of storage batteries requires rare earths and other rare materials, which are as localized as fossil energy, posing a dilemma. To avoid this problem, the German government has adopted a policy of inviting the global battery industry and circulating rare earths domestically. Currently, demand for automotive batteries in Europe is growing faster than in China, and Germany is expected to be the center of this growth, surpassing the U.S. and ranking second in the world after China in terms of LIB production capacity in 2025. At the same time, it is beginning to build a supply chain of recycling and reuse domestically, and is also taking the lead in the circular economy".
Germany also signed a Memorandum of Understanding (MOU) for bilateral science and technology cooperation in the battery field with the Japanese government in 2017, suggesting that the German government is strategically pursuing industrial policies with an eye to the future. This report concludes that Germany's approach of constructing a comprehensive policy covering everything from resources to industry and society is highly suggestive. (April 2022)

Reference link: NEDO, "Overseas Trends: Competition for Resources in the Renewable Energy Era: Germany's Lithium-Ion Battery Policy as an Example" (Japanese only)


Progress Trends in Renewable Energy Technology Development (IRENA Report)

The International Renewable Energy Agency (IRENA) has issued a report summarizing the current status of technologies for "generating" renewable energy such as solar photovoltaic, solar thermal, offshore wind, and onshore wind, and technologies for "storing" energy such as water electrolyzers and household storage batteries, including cost reduction, current technical issues, and performance forecasts for 2050.  This report is the result of the European Commission's "Horizon 2020" (https://ec.europa.eu/info/research-and-innovation/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-2020_en), which aims to link industry and academic research in 2021 (TEIIF project).
With regard to water electrolyzers, which have received particular attention in recent years, comparisons have been made mainly between alkaline and PEM types.The PEM type, which is still in the process of development, is said to have greater variation from project to project, and the inclination for cost reduction is also greater for the PEM type, and it will take more time before a conclusion is reached. Japan, the U.S., and Germany lead in the number of high-value patent applications, and overall, the common issue is to increase the scale of projects. For more information, please refer to the report from the link below. (March 2022)

Reference link:IRENA "Renewable Technology Innovation Indicators: Mapping progress in costs, patents and standards"


Geopolitical Considerations of Hydrogen Import/Export (IRENA Report)

Currently, green hydrogen (hydrogen produced with electricity derived from renewable energy sources) is mostly a local business with on-site production/consumption, but is expected to become an internationally traded commodity in the future.
The International Renewable Energy Agency (IRENA) has summarized the report of geopolitical factors to consider regarding international hydrogen procurement risk/opportunity, such as renewable energy production potential, procurement risk of rare earths used in water electrolysis equipment, pipeline networks, and technological development. 
In its conclusions, the report appeals for international cooperation to ensure the rapid deployment of hydrogen and its long-term contribution to decarbonization. Supporting the deployment of renewable energy and green hydrogen in developing countries, particularly in Africa, is essential to decarbonizing the energy system and will contribute to global equity and stability. For more information, please click on the link below to read the report. (February 2022)

Reference link:IRENA "Geopolitics of the Energy Transformation: The Hydrogen Factor"


Energy Market Trend Forecast in 2022

In 2022, there is a growing possibility that the movement toward Life Cycle Assessment (LCA) to reduce total carbon dioxide emissions will accelerate, especially in Japan.
One of the backgrounds of this trend is the "Green Value Chain Platform" disclosed by the Ministry of the Environment. In recent years, companies have become more aware of their own emissions, and from the perspective of enhancing CSR, they are likely to shift/accelerate from "their own emissions" to "emissions of the entire supply chain (GHG Protocol Scope 3)".
Under Scope 3, emission reductions by other businesses involved in the supply chain are also considered as their own reductions, and the structure is designed to accelerate the industry-wide acceleration of such reductions. (January 2022)

Reference link: Ministry of the Environment "Green Value Chain Platform"


Joint Statement Toward Zero-Emission Vehicles (COP26)

At COP26, a joint statement was announced that all new cars sold in major markets will be electric vehicles (EVs) and other zero-emission vehicles by 2035 and by 2040 globally, but it was revealed that countries and automakers are not aligned on this goal. 
The statement was signed by 28 countries, including the United Kingdom, Sweden and other Nordic countries, Canada, Chile, and the Netherlands, as well as 44 cities and states in 10 emerging countries, including India. In addition, 11 automakers, including Mercedes-Benz of Germany, GM and Ford of the United States, and BYD of China, have signed the statement. In addition, investors and financial institutions with large holdings in automakers will be added to the list. On the other hand, Japan, the U.S., China, Germany, France and some automakers have not signed the agreement. This shows the different levels of brand-specific strategies toward carbon neutrality. (December 2021)

Reference link:"COP26 DECLARATION ON ACCELERATING THE TRANSITION TO 100% ZERO EMISSION CARS AND VANS"


Discussion on reducing the environmental impact of EV battery recycling and automated driving

Battery recycling" and "energy-saving technology through automatic driving" are being discussed regarding electric vehicles (EVs).
As for battery recycling, there is a growing movement toward LIB battery regulations in order to enclose the battery market in the European region. Japan has also set up a requirement to include recycled materials and a numerical target for recycling rate, and is considering a proposal to develop a "technology to recover more than 70% of lithium, 95% of nickel, and 95% of cobalt" as a follow-up to these targets, including an institutional framework. The proposal to develop a technology that recovers at least 70% lithium, 95% nickel, and 95% cobalt is under consideration.
In addition, with regard to energy-saving technologies for automatic driving, it is expected to develop technologies for reducing traffic congestion and controlling acceleration and deceleration in combination with connected technologies, as well as simulation technologies for estimating CO2 reduction effects through power consumption management of vehicle sensors, etc. However, for example, it is said that using automatic cruise control on highways improves fuel efficiency by about 10% for engine cars, which does not necessarily apply to EVs, since they are highly energy-efficient and have low fuel consumption speed. In addition, when charging infrastructure is also taken into consideration, overall efficiency must be discussed in combination with grid power supply and demand, and the difficulty of estimating the effects is quite high. (November 2021)

Reference link: Ministry of Economy, Japan "Trade and Industry "Industrial Structure Transformation Field Working Group" (Japanese Only)


Movements of Countries toward COP26 (NEDO Report)

In preparation for COP26 (the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change, held from October 31 to November 12, 2021), the New Energy and Industrial Technology Development Organization (NEDO) published a report on October 22 summarizing the efforts of major countries (the United States, China, the European Union, and the United Kingdom) in the area of carbon neutrality. The report summarizes the efforts of major countries (U.S., China, EU, and U.K.) to become carbon neutral.
In particular, the U.S., EU, and U.K. are notable for including support not only for research and development, but also for infrastructure and facility projects and job creation. For more details, please refer to the following link. (October 2021)

Reference link: NEDO "Trends in major overseas countries (U.S., China, EU, U.K.) regarding carbon neutrality toward COP26" (Japanese only)


Countries Moving Toward Carbon Neutrality - After the Hydrogen Ministerial Conference

The Hydrogen Ministerial Conference, organized by the Ministry of Economy, Trade and Industry (METI) and NEDO, was held online on October 4, 2021, bringing together representatives from various countries, international organizations, and companies committed to the hydrogen society. The Hydrogen Ministerial Conference began in Japan in 2018 and is now taking place for the fourth time.
The Ministers from New Zealand, Argentina, Australia, Chile, EC (European Commission), Germany, Netherlands, Norway, Poland, Saudi Arabia, Spain, UAE, IEA, IPHE (International Partnership for Hydrogen and Fuel Cells), Hydrogen Council, and JH2A (Japan H2 Association) participated. In addition, the heads of 14 countries/agencies including South Korea, Russia, Canada, DoE (United States Department of Energy), and the International Renewable Energy Agency (IRENA) sent video messages. Local governments and private companies from Namie Town, Fukushima Prefecture, Yamanashi Prefecture, and Lancaster City, California, USA, also participated. Panel discussions were divided into four sessions: "Supply Chain," "Regional Models," "FC Modules," and "Water Electrolysis.
Among the many discussions, there was a strong assertion that climate change will not wait if a hydrogen society is not realized soon, especially in Europe and the U.S. On the other hand, the panelists discussed the importance of hydrogen trade prices that are not yet in the market economy, flexible private sector and speedy policy synchronization, and international cooperation to complement each country's characteristics/regional differences.
The development of hydrogen strategies has now expanded to 17 countries, and global trends and stances are becoming clearer, including countries that are in the process of developing their own strategies. (October 2021)

Reference link: Ministry of Economy, Japan "Fourth Hydrogen Energy Ministerial Meeting Held


Global: Stronger International Cooperation to Accelerate Carbon Neutrality (IEA, IRENA)

In order to rapidly reduce global GHG emissions, the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) have simultaneously issued a report urging strong international cooperation.
This is due to the slow progress of the roadmap toward carbon neutrality (CN) caused by global political instability, and as a milestone toward reaffirming the agreement reached at COP26 and COP27 to be held in November 2022. The report warns that "stagnation in international cooperation will delay the realization of CN by decades," and it calls for behavioral changes in five sectors (electricity, hydrogen, road transport, steel, and agriculture), technological development, and modal shifts such as Mobility as a Service (MaaS) to attract investment and achieve market expansion at the earliest possible time. In Japan, the Ministerial Conference on Hydrogen will be held on September 26, and HORIBA expects the coming year to be marked not only by hydrogen production, but also by green power generation (semiconductors), electrification of mobility, hydrogen-reduced steelmaking, and soil/water conservation, according to statements from various countries. (September 2022)

 

Reference link: IEA"Breakthrough Agenda Report 2022"
                       IRENA  "THE BREAKTHROUGH AGENDA REPORT Accelerating Sector Transitions Through Stronger International Collaboration 2022"


Japan: Panel on the Formulation of a Hydrogen Safety Strategy (Ministry of Economy, Trade and Industry, Japan)

In the midst of drastic changes in the internal and external environment surrounding hydrogen safety, such as climate change, progress in hydrogen utilization technologies, diversification/complexity of business categories, and safety requirements, a panel was established to look at the overall strategy and the entire supply chain with the aim of accelerating the implementation of hydrogen in society.
Discussion points include: ensuring the safety of consumers, local residents, etc., seamless response throughout the supply chain to promote smooth use of hydrogen, and actions according to the physical characteristics of hydrogen and technological progress/risks. The first meeting (feasibility hearings and compilation of past efforts) will be held on August 5, and the report will be compiled and published in February 2023. Prior to that, in July 2022, the NEDO-sponsored "Hydrogen and Fuel Cell Outcome Reporting Meeting 2022" was held on a large scale over three days. There, as well, nearly half of the time was spent on active discussions related to hydrogen stations, regional hydrogen utilization models, power-to-gas, hydrogen supply chains, hydrogen power generation, and other topics, with discussions going beyond the framework of technological development and starting to move toward social implementation. (August 2022)

 

Reference link: Ministry of Economy, Trade and Industry, Japan "1st Study Group on Formulation of Hydrogen Safety Strategy" (Japanese only)


Global: Ukraine Aggression Impact on Energy/Mineral/DX/Space Sectors (NEDO Report)

A report titled "Ukraine-Russia Report (Impact on Energy Resources, Mineral Resources and Rare Gases, and Digital and Space Sectors)" has been issued by NEDO. The report summarizes critical issues in the short-, medium-, and long-term, including resource price hikes, supply chain impacts, and technological development, and also mentions the impact on the DX/space/food sectors. 
In terms of energy issues, the report describes Japan's energy-saving technologies, such as heat pumps, as a once-in-a-lifetime business opportunity, whereas in Europe, where the concept of energy efficiency and conservation has not been widely accepted in the short term. In the medium to long term, it is also important to realize carbon neutrality in consideration of energy security. With regard to mineral issues, the report states that it is necessary to promote the use of recycling technologies such as storage batteries, develop alternative resources, improve resilience in procuring resources, and engage in strategic international cooperation. Additionally, it mentions the importance of the DX sector, such as cyber security and the successful use of virtual currency. The report also summarizes the impact on the space sector, such as the impact on advanced control of the International Space Station (ISS), of which Russia is responsible, and on the food sector, such as soaring prices of sunflower oil, barley, and wheat, of which Russia and Ukraine together hold more than 50% of the world production share. (July 2022) 

Reference link: NEDO "Ukraine-Russia Report" (Japanese only)


Japan: Movement toward a Circular Economy

Following in the footsteps of Europe's Battery Passport (a system developed to record information on materials used in storage batteries, supply chain, carbon footprint, performance, etc.), Japan has begun full-scale efforts toward a circular economy that aims to maximize resource and product value, minimize resource consumption, and reduce waste generation, with storage batteries as a leading example. On the other hand, in addition to understanding the actual distribution situation for reuse and recycling, strengthening the ability to collect used batteries, revitalizing the reused battery market, and building a recycling infrastructure, the establishment of cross-industry data linkage and traceability (DX) was identified as an issue, and the entire supply chain, from design and production to sales, maintenance, and service, must be highly coordinated at the equipment, product, and component level, including the "identification of necessary data," "identification of system requirements," and "coordination with overseas entities," in order to increase efficiency and add value. (July 2022) 

 

Reference links: Ministry of Economy, Trade and Industry, Japan "Study Group on Sustainability of Storage Batteries, Draft Interim Report," "Data Linkage" (Japanese only)


Global: Policy Package to Promote Energy Efficiency (IEA Report)

Amid the backdrop of the Ukraine crisis, a policy toolkit for governments to support stronger action on energy efficiency was launched at the 7th Annual Global Conference on Energy Efficiency conference hosted by the International Energy Agency (IEA). The toolkit provides a practical approach to accelerating action on energy efficiency by guiding governments in designing effective policy measures, supporting policy decisions, and implementing policy measures. It combines regulation/information/incentives and designs policies based on 10 strategic principles, including ensuring economic/social/environmental benefits, promoting DX, and strengthening international collaboration, and enlightens the transportation and building sectors with immediate impact, as well as their own citizens, to be guided immediately from behavioral change. (June 2022) 

 

Reference link: IEA "Policy Toolkit"


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