Sustainability / Environmental ReportResponse to Climate Change
Basic Approach
The Daicel Group has set out its Medium- and Long-term Reduction Target for reducing GHG emissions under its Basic Policies on Responsible Care with the goal of realizing a carbon neutral society. We will seek to reduce GHG emissions throughout the Group via a fundamental review of our production processes and the introduction of new technologies to significantly reduce energy consumption while also working to switch fuels, optimize energy consumption, and introduce renewal energy sources.
Medium- and Long-term Reduction Target for GHG Emissions
Medium- and Long-term Reduction Target for GHG Emissions
- FY2051/3: Achieve carbon neutrality*1
- FY2031/3: 50% reduction in GHG emissions (compared to FY2019/3)*2
- *1Applicable to the Daicel Group’s Scope 1, 2, and 3 emissions
- *2Applicable to the Daicel Group’s Scope 1 and 2 emissions
To achieve carbon neutrality by FY2051/3, we designated a medium-term target of reducing GHG emissions by 50%, compared to FY2019/3 levels, by FY2031/3. This target references the level of reductions required to limit the global rise in temperature to the SBT* of 1.5°C above pre-industrial levels as laid out by the Paris Agreement. To meet our Medium- and Long-term Target, we will further develop our energy-saving initiatives and promote the reduction of GHG emissions and to adhere to the framework of Science Based Targets (SBTs). In May 2023, we participated in the METI-led GX (green transformation) League with the aim of realizing a carbon-neutral society through the collaboration between industry, government, and academia.
*Science-Based Targets: Medium- to long-term reduction targets for companies, consistent with the Paris Agreement to “hold the average global temperature to well below 2°C above pre-industrial levels” and make efforts to “limit the temperature increase to 1.5°C above pre-industrial levels.”
Promotion System for GHG Emission Reductions
In July 2023, we changed the name of the Energy Strategy Committee to the Carbon Neutral Strategy Committee in order to further accelerate carbon neutral initiatives.
The Energy Strategy Committee was developed out of the Energy Conservation Promotion Committee, which operated until July 2020 under the direct oversight of the President and CEO.
The Energy Strategy Committee is chaired by the officer in charge of the Production Management Headquarters (General Manager of the Production Management Headquarters) and members include representatives from production, energy supply, and other corporate divisions in Japan. The committee will take the lead in promoting and managing energy conservation for the Group as a whole. At the same time, to achieve our GHG emission reduction targets, the entire Group will promote the building of a circular process that reduces emissions in current production processes and energy use, as well as through the use of innovate technologies.
With the aim of achieving our Medium- and -Long-term Reduction Target and in order to propose and carry out appropriate investment plans, we are considering instituting internal carbon pricing.
Structure of the Carbon Neutral Strategy Committee
Initiatives for Reducing GHG Emissions
Reducing GHG Emissions
In FY2023/3, GHG emissions for the Daicel Group decreased by 6 thousand t-CO2 to 2,342 thousand t-CO2 (down 0.3% year-on-year). This is broken down into 1,774 thousand t-CO2 (down 0.9% year-on-year) in GHG emissions at Daicel’s business sites and domestic Group companies, and 568 thousand t-CO2 (up 1.7% year-on-year) in GHG emissions at overseas Group companies.
Energy consumption has a major impact on GHG emissions. In FY2023/3, energy consumption for the Daicel Group increased by 4% year-on-year, to 753 thousand kL in crude-oil equivalent. In FY2023/3, we did not achieve our energy consumption target of improving our five-year average energy intensity by 1% or more compared to the previous year.
In FY2023/3, energy-derived CO2 emissions for Daicel’s business sites (including the head offices) increased to 1,119 thousand t-CO2 (down 1% year-on-year).
In order to ensure the reliability of the content of the report, a third party* regularly vouches for our calculations concerning GHG emissions.
In addition, we have begun to calculate the carbon footprint (CFP) of each product by utilizing the Life Cycle Assessment (LCA) method. Quantitatively visualizing environmental impact can help us reduce the environmental impact of existing products and develop new environmentally friendly materials and other products.
*Emissions of scope 1, 2 and 3 at Daicel’s business site are calculated and verified by a third party.
ESG DataResponse to Climate Change
Energy Consumption
*Energy intensity is measured by the quantity of energy required per unit of output or activity. In an index of energy intensity, the energy intensity is the quantity of energy required per unit output, and the energy intensity of a reference year is treated as 100. The power sold externally has been included in this calculation from FY2017/3, in accordance with the revised Electricity Business Act.
GHG Emissions (Scope1, 2)
Reducing GHG Emissions across Daicel’s Supply Chain
We believe that GHG emissions must be reduced by both the Daicel Group and its supply chain, and we have been working to identify and reduce the volume of GHG emissions in accordance with the GHG Protocol, the world’s most widely used standards, since FY2021/3.
Emissions of CO2, CH4, N2O, SF6, and NF3 are calculated according to the emissions coefficients established in the Act on Promotion of Global Warming Countermeasures (Global Warming Law).
In FY2023/3, we will expand both the categories covered by Scope 3 and the scope of calculation beyond Categories 1–7. In the future, we plan to expand the calculation to include overseas emissions.
GHG Emissions by Scope in FY2023/3
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| Categories | Emissions (thousand t-CO2) |
||
|---|---|---|---|
| Scope 1*1 | Direct GHG emissions | 1,553 | |
| Scope 2*1 | Electricity indirect GHG emissions | 37 | |
| Sum of Scope 1,2*1 | 1,590 | ||
| Scope 3 | Other indirect GHG emissions | 1,177 | |
| Category 1*2 | Purchased goods and services | 869 | |
| Category 2*3 | Capital goods | 131 | |
| Category 3*2 | Fuel- and energy related activities (not included in scope 1 or scope 2) | 107 | |
| Category 4*2 | Upstream transportation and distribution | 14 | |
| Category 5*2 | Waste generated in operations | 47 | |
| Category 64 | Business travel | 6 | |
| Category 7*4 | Employee commuting | 2 | |
| Sum of Scope 1,2,3 | 2,766 | ||
- *1Daicel's business sites (including the headquarters)
- *2Daicel's business sites
- *3Daicel Group
- *4Daicel's business sites and domestic Group companies
ESG DataResponse to Climate Change
Calculation Methods
Based on the Ministry of the Environment and METI’s Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain (Ver. 2.3), we used the guideline’s Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.2), IDEA (Inventory Database for Environmental Analysis) for life cycle analysis, and emission factors in the calculation, reporting, and publication system for the Law Concerning the Promotion of the Measures to Cope with Global Warming, etc.
Initiatives to Reduce the Environmental Impact of Logistics Operations
The Daicel Group is striving to curb energy consumption associated with product transportation through initiatives that include promoting a modal shift*1 and container round use*2. Compared to the previous fiscal year in terms of conserving energy, for logistics in FY2023/3, energy use in land shipping decreased, which improved specific energy consumption rates overall by 1.2 points.
- *1Freight transport methods shifted from truck-based transportation to more environmentally friendly methods such as marine and railway transportation.
- *2The practice of reusing devanned import containers for exports.
Energy Consumption and Energy Consumption Rates in Logistics Operations (Daicel’s business sites and domestic Group companies)
CO2 Emissions/Intensity (Daicel’s business sites and domestic Group companies)
Reduction in Transport CO2 Emissions from the Modal Shift
In 2007, Daicel Logistics Service switched from road to sea transport between the main ports for imports and exports and Daicel’s plants to reduce CO2 emissions generated from logistics. In FY2023/3, this modal shift of approximately 8,000 containers* to sea transport achieved a 70% reduction in CO2 emissions compared to road transport.
*Calculated on the basis of 40-foot containers.
Promoting Container Round Use
Reusing imported goods containers for exporting products can reduce CO2 emissions associated with the transport of empty containers. Daicel Logistics Service Co., Ltd. has adopted the round use method for containers for export and import operations to further reduce CO2 emissions. This also saves energy by realizing smooth, efficient transport based on its proprietary system for facilitating the matching process for each shipping company. In addition, we strive to ensure safe and efficient transport by reviewing the standards for container use and implementing simple repairs as needed.
Daicel Logistics Service: Modal Shift and Round Use (Japanese text only)Reducing GHG Emissions from Three Angles
The Daicel Group has responded to climate change through the building of a circular process, which will enable us to run our business in harmony with the global environment, from the three aspects of reductions in GHG emissions: reductions in GHG emissions in current production processes, innovative technology, and the energy supply division.
Reduction in GHG Emissions in Current Production Process
Energy consumption by the Himeji Production Sector and Ohtake Plant accounts for 80% of overall consumption at Daicel’s business sites. We treat these as if they were a single factory in cyberspace (a virtual factory*) and centrally manage information related to their manufacturing processes. This enables us to formulate optimal manufacturing plans and achieve overall optimization and energy savings. We will also seek to reduce GHG emissions by installing and deploying an autonomous production system evolved AI logic, which we jointly developed with the University of Tokyo. This is part of our Intellectual and Integrated Production System constructed through DAICEL Production Innovation that will lead to further reductions in GHG emissions.
*A factory model virtually created in a computer as if it were the real thing.
Process Innovation with Virtual RealityIntroduction of the Energy Operation Optimization System
In order to manage our energy consumption in accordance with the optimal manufacturing plan, we have introduced the Energy Operation Optimization System, which provides online monitoring and controls for the most favorable operating conditions based on actual operating conditions and simulations. This system is used by the Himeji Production Sector and Ohtake Plant.
Leveraging the Self-Consignment System
As part of optimizing energy supply and demand, the Ohtake Plant started sending excess generated electricity to other worksites in West Japan using the self-consignment system. The plant began sending electricity to the Arai Plant in East Japan in May 2020 and to the Fuji Plant of Polyplastics Co., Ltd. in April 2021. Looking ahead, we expect to further extend the system to other Group companies toward achieving zero purchased electricity at the Group level.
The Self-Consignment System
Reduction in GHG Emissions by Innovative Technology
The Daicel Group looks well beyond efforts to improve and refine its technologies when putting in place energy-saving measures. It also works to comprehensively review its production processes and develop new technologies to reduce its GHG emissions. The R&D costs for environmental load reduction in FY2023/3 were ¥119 million.
In general, distillation processes tend to account for around 40% of general energy consumption in the chemicals industry. This is also true for Daicel’s operations, so establishing energy-saving technologies in distillation processes is key to achieving significant energy savings. The distillation process utilizes high-temperature thermal energy but also generates large volumes of low-temperature exhaust heat energy that is released unused. With this in mind, it is essential to also develop technology that effectively recovers and reuses low-temperature exhaust heat energy in addition to reducing high-temperature thermal energy use.
The Daicel Group has launched an innovative energy-saving technology project and has been promoting cross-sectional activities throughout every level of the Company. As a result, these efforts have led to the creation of a modified Petlyuk process and vapor recompression (VRC) technology to reduce the energy consumption of distillation towers. Although these basic technologies have been used in industrial processes for a long time, they have not been scaled up for use in large chemical plants, with Daicel being the first in the world to do so.
Moreover, we are engaged in joint research with several universities to establish the technology for melting wood at normal temperature and pressure (which requires less energy) for constructing a new biomass product tree that holds the key to a carbon-neutral future. We are also developing a technology for recycling carbon dioxide by converting it into carbon monoxide through a reverse reaction. This is to further reduce the amount of CO2 that escapes into the atmosphere even after taking measures to limit CO2 emissions in the manufacturing process.
Enhancing Our Current Technologies
● Modified Petlyuk distillation process
Petlyuk distillation, and its practical application as a dividing-wall column (DWC), is widely recognized as an energy-saving technology. However, implementing a DWC requires the complete replacement of distillation towers since it cannot be retrofitted to existing facilities, resulting in massive amounts of initial expenditure for the installation. By refining Petlyuk technology, Daicel developed a new process technology that allows for its application through improvements to distillation towers. Since 2014, the technology has been applied at the Arai Plant and the Company’s acetic anhydride manufacturing facilities. We are also considering introducing this technology to the production facilities at the Ohtake Plant.
● Vapor Recompression (VRC) Technology
Expectations are mounting that VRC technology will become ubiquitous to recover heat as high-temperature steam by compressing the exhaust heat inherent in low-temperature steam. While this technology has been widely used in aqueous-system simple distillation processes, there have been no examples of its application in organic solvent distillation processes. Aiming to do just this, Daicel has been working with a compressor manufacturer to develop a compressor that would enable the use of VRC technology in organic solvent distillation processes. We have completed verification using a prototype distillation process and we are currently continuing verification through long-term operations. We are also considering horizontal deployment to other facilities.
New Technologies that Adapt to Environmental Change
● Membrane Separation Technology
The evaporation process in distillation consumes massive amounts of energy. Dramatic energy savings, however, are possible if a membrane separation technology is used instead. And we have been evaluating the operating life of various candidate membranes since April 2016.
● New Reaction Technology
We developed an innovative process, which leverages a newly developed reaction technology with a new catalyst. It has been installed at the Aboshi Plant’s 1,3-BG facility. We expect that energy consumption will be reduced by approximately 20% compared to that of conventional technologies.
● New Wastewater Treatment Technology (Anaerobic Wastewater Treatment Technology)
Anaerobic wastewater treatment does not require oxygen and therefore requires less energy. In addition, the methane gas generated in the decomposition process can be used for fuel. We have been experimenting and validating at our Aboshi Plant this new technology for use in production.
● Appropriate Production Technology with Microfluid Devices
Microfluid devices are devices that have several hundred micrometer channels on their base, so that chemical operations, such as blending, reacting, and distilling can be performed on a micro scale. Parallelizing 10,000 or more microfluid devices allows manufacturing methods that have been established through research to be expanded into mass production, and at the same time, one can adjust the amount produced to save space, conserve energy, and save resources, as well as to produce the amount required as needed. This technology will help make sustainable next-generation production plants a reality. Our intention is to have the industrial-academic alliance between Daicel, Taiwan’s National Tsing Hua University, and the University of Tokyo result in the production of a working model soon.
*1micrometer= 0.001 mm
Reduction in GHG Emissions in the Energy Supply Divisions
Each of the Daicel Group’s plants generates its own steam and electricity for manufacturing, and we will also seek further energy conservation and reductions in GHG emissions by upgrading their facilities, promoting fuel conversion for boilers and procuring green energy such as renewables.
Energy-saving and GHG Reduction Measures at Each Plant
| Aboshi Plant | In September 2012, the plant installed a cogeneration system with gas turbines. In June 2019, it started selling its excess electricity. |
|---|---|
| Ohtake Plant | In August 2007, the plant started selling its excess electricity. In July 2016, it installed an additional boiler. Two dual-fuel boilers are run in parallel using a mix of coal and scrap tires as fuel. |
| Arai Plant | In January 2017, the plant switched from a coal boiler to a cogeneration system with gas turbines. |
Using Fuel Derived from Scrap Tires to Reduce Fossil Fuel Use
In Japan, roughly 100 million scrap tires, or about one million tonnes, are generated each year, placing a considerable load on the environment. On the other hand, about 30% of scrap tires consist of biomass, including natural rubber, making them a superb energy fuel.
Having noticed this characteristic, we carry out thermal recycling at the Ohtake Plant with co-firing of coal and tire chips. The addition of tire chips can reduce the use of fossil fuels and CO2 emissions, so we have been collaborating with manufacturers of power generation equipment, making progress in the improvement of the co-firing rate and developing technologies to generate the necessary level of power safely.
These efforts have yielded some success.
Moreover, we are promoting recycling through the use of particulates and cinders in cement and roadbed improvement agents, which account for about 60% of the total volume of generated industrial waste and the sorting and collection of plastic waste.
In FY2022/3, we sought to improve the quality control of scrap tires and achieved a co-firing rate of 53% (49% in FY2021/3), and a fossil fuel usage rate of 47% (51% in FY2021/3). Going forward, we will continue to reinforce our recycling efforts to bring about a sustainable society.
Changes in the Fossil Fuel (Coal) Usage Rate at Ohtake Plant
Information Disclosure in Line with TCFD Recommendations
The Daicel Group endorsed the TCFD* recommendations in November 2021. In accordance with the recommendations, the Group will disclose information on each item related to climate change for governance, strategies, risk management, and metrics and targets.
*Task Force on Climate-related Financial Disclosures
Participating Initiatives and External Evaluations
Governance
Addressing climate change is an important agenda item for the Sustainable Management Committee and is discussed at the management level.
Strategies
In line with the TCFD recommendations, from FY2023/3 the Group has begun conducting scenario analyses assuming a temperature rises of less than 1.5°C/ 2°C and 4°C with a timeline of 2030.
These scenario analyses largely reference the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) materials, which are commonly used for TCFD scenario analyses.
● Implementation procedures for scenario analyses
Scenario analyses follow the procedures listed below.
- Step1 Set the scope of a scenario analysis
- Step2 List the risks and opportunities presented by climate change for each business
- Step3 Create a business scenario according to each business’ external scenario and re-evaluate the magnitude of those risks and opportunities
- Step4 Financially evaluate each business
- Step5 Summarize climate change impacts and countermeasures for the entire Group
The implementation status for scenario analyses will be disclosed in due course.
● Set the scope of a scenario analysis
In FY2023/3, we have currently conducted a scenario analysis for our Engineering Plastics Business, which is the driving force of the Group.
Going forward, we will target the acetyls business (Smart and Materials Businesses) with a focus on cellulose acetate as well as the Safety Business, conducting scenario analyses in turn and consolidating the risks and opportunities of climate change for the Group.
Scenario analysis for the Engineering Plastics Business (Polyplastics Co., Ltd.)
Risk Management
The Daicel Group regards climate change as a major risk in sustainable management, and we conduct risk assessment, formulate responses, and confirm implementation status as part of the Group's risk management system. The Sustainable Management Committee conducts detailed examinations for key issues.
Metrics and Targets
The Group has listed Response to Climate Change as one of its 15 key sustainability issues (materiality), and has set GHG emission reduction rates as a KPI.
We have also set KPIs for our materiality issues of Provide Environmentally-Friendly Materials and Technology and Contribute to the Development of a Circular Society. Further discussions will be held on products and services that contribute to a low-carbon economy, and we will consider setting better indicators and targets.