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Mitsubishi Heavy Industries plans to reach net zero with CCUS

01 December 2021 Max Tingyao Lin

Japanese engineering group Mitsubishi Heavy Industries (MHI) plans to use its carbon capture, utilization, and storage (CCUS) technology to achieve net-zero CO2 emissions within two decades.

In late October, Tokyo-based MHI said it would aim to reach carbon neutrality across its Scope 1, 2, and 3 emissions by 2040 when the CO2 captured by companies using its CCUS technology is taken into account.

It had previously in 2017 targeted to reduce carbon intensity by 16% before fiscal year 2030, relative to FY 2014 levels.

The bespoke accounting method underscored MHI's confidence in its market position: company figures showed 14 of the 26 commercial-scale CCUS plants in operation as of September were geared with MHI's scientific know-how. They have an annual capture capacity of 40 million metric tons (mt) per annum.

In June, MHI agreed to install carbon capture technology at Drax's biomass power station near Selby, North Yorkshire, UK, which could eventually store at least 8 million mt of CO2 per year at the UK East Coast Cluster by 2030. The company has set up a CCUS team in London as part of the deal.

Net-Zero Business Daily spoke with Kentaro Hosomi, chief regional officer for Europe, Middle East and Africa at MHI, about the company's decarbonization strategies and vision for CCUS.

Net-Zero Business Daily: How does MHI plan to reach the goal of carbon neutrality?

Hosomi: In order to reach such a target, the first thing we think about is how we deal with existing assets and how we can reduce CO2 emissions from them. For that, we are working on decarbonizing thermal power plants with co-firing of hydrogen and co-firing of ammonia solutions.

This is the kind of technologies we are developing. Furthermore, there are many areas that can benefit from energy efficiency improvements, such as waste heat recovery from production processes, which can allow to increase production without increasing the carbon footprint.

These kinds of technologies are already available, and we can build on them. Those technologies can also contribute to our energy infrastructure.

Net-Zero Business Daily: What kind of role will CCUS play on your decarbonization pathway?

Hosomi: Our target is for Scope 1, 2, 3 plus carbon capture. So, it is not strictly the definition of GHG Protocol. In practice, reducing CO2 emissions is not only through carbon-free products but also through carbon capture from existing facilities. That is why we have categorized it this way ourselves.

We are the largest supplier in the carbon capture business. Our technology captures the CO2 in exhaust gas of fossil-fuel firing energy systems with our proprietary solvent, and that is our strength.

Our clients range from power stations to industrial plants. It is not so easy to just transition into renewable electricity, especially for the energy-intensive, hard-to-abate industries. Some will continue to use fossil fuels, and this is where the need for carbon capture technology will be vital to achieve global net zero targets.

The CCUS is not mainly for our plants—we are not a big emitter ourselves. It will make more sense to deploy the technology to our clients.

Net-Zero Business Daily: Is the cost for CCUS still too high for many industries?

Hosomi: In terms of costs, the carbon price in the EU Emissions Trading System was around €62 ($70) in early November. Our cost of capturing CO2 is quite close to that. (Note: EU carbon prices have reached fresh highs in recent weeks and stood above €70 per metric ton in late November.)

In the past, the market had not grown as much as we expected. One reason was that all projects were from one single CO2 source to storage. The economics were very challenging.

What we are seeing with the UK Cluster approach is that there are many participants in the system. Captured CO2 will go to a single trunkline by National Grid and eventually be stored in depleted gas fields owned by BP, Equinor, and others. This means the connection infrastructure is going to be shared among multiple projects. And if there is government support, the risks would also be reduced.

I believe such an ecosystem can take off. The UK Clusters could be the first economical cases for such a system.

This model could then be applied to everywhere in the world, the countries that need CCUS technology. It is not just the UK or Japan. If we can build a successful business case, we can spread it to countries like India, Southeast Asia, and eventually China.

Net-Zero Business Daily: How do you plan to be involved in CCS infrastructure development?

Hosomi: This is a very new area of business. You need the storage, transportation system, and the businesses that are emitting CO2. All have to join hands together.

That is why we think that partnerships are very important. We have not been in the storage and transportation business, we do not have assets in those areas, and we do not have the know-how to operate these assets. This is a business model where each party will bring its own strength. And our strength is the carbon capture technology. If we bring all parts of the ecosystem together then everyone involved will get the return they aim for—which is reducing the carbon footprint.

Net-Zero Business Daily: Will MHI want to participate in CCS projects as an equity partner?

Hosomi: We are always considering participating as an equity partner. We think it is reasonable that we can participate in construction and make this business take off.

But we do not have as much experience on the operations side. As such we do not consider ourselves as the main player, but rather as the enabler.

The point is that we are the technology provider. And as the technology provider, we are best tasked with scaling and commercializing the technology.

Net-Zero Business Daily: In general, what kind of role a government can play in CCUS project development?

Hosomi: The cost for carbon capture has become very competitive and very close to the carbon pricing level. But in order for a CCUS project to take off as a business, we need a predictable market where there is a business case that we can get our return on investment.

To make this business model predictable, I think the government has to provide legislation or financial support to ensure the investors that this is going to be a business they can count on.

For example, if everything goes green, there is no need for carbon capture. The business case is not there many years in the future. This could be the case. What we are trying to do is to make an investment case with a predictability of 20 years or so. This sort of framework has to be established by the government directly.

Net-Zero Business Daily: Will you use carbon offsets for your decarbonization targets? Or, will you want to develop CCUS plants as carbon offset projects? In Australia it's possible to do so.

Hosomi: At this moment, we are not involved in any kind of carbon-offset programs. What we believe is that with our technology and products, we can reduce the carbon footprint in a practical way and [provide] much more than just offsetting.

Net-Zero Business Daily: Other than CCUS, what type of decarbonization businesses you are looking at?

Hosomi: Within our portfolio, we are starting with hydrogen co-firing or ammonia co-firing at fossil fuel-fired power plants. These kinds of technologies are already available with us. We are also progressing towards full hydrogen-firing and full ammonia-firing, which are scheduled for commercialization by 2025.

Posted 01 December 2021 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability

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