Basic Approach to Addressing Climate Change

In December 2015, the United Nations Climate Change Conference adopted the Paris Agreement, which aims to limit the average global temperature increase to below 2°C above preindustrial levels.
At the Air Water Group, we use vast amounts of energy in our business activities—such as in the production of oxygen and nitrogen at industrial gas plants—and emit large volumes of carbon dioxide. We understand that climate change is a huge risk associated with our continued business activities, and are thus making groupwide efforts to reduce the amount of CO\( \sf _2 \) we release into the atmosphere.

Key Performance Indicators

Air Water has established “fighting climate change” as its key management challenge. Further, we have also established a greenhouse gas (i.e., carbon dioxide) emission reduction target to chart our progress, and announced that target as one of the group’s KPIs in NEXT-2020 Final, our mid-term management plan.
To hit this target, we are working to reduce our CO\( \sf _2 \) emissions by making capital investments in high-efficiency equipment, implementing thorough energy-saving activities through operational improvements, and proactively developing personnel to lead the next generation of energy-saving measures.
In addition to our own efforts, we are working to calculate emissions throughout our supply chain, beginning by gauging the CO\( \sf _2 \) emissions (Scope 3) of our clients and customers.

CO\( \sf _2 \) reduction through business

The Air Water Group defines clean energy solutions as part of its contribution to resolving social issues through business. By expanding the woody biomass power generation business and the liquefied natural gas (LNG) and liquefied petroleum gas (LPG) business, we help customers reduce their greenhouse gas emissions.

Activities for KEIDANREN's Commitment to a Low Carbon Society

The Air Water Group takes part in activities related to KEIDANREN's Commitment to a Low Carbon Society through the Japan Chemical Industry Association. We report our plans and the results of Group-wide energy conservation measures and CO\( \sf _2 \) emission reduction through the Japan Chemical Industry Association to KEIDANREN and work towards building a low-carbon society in Japan.

Reducing CO\( \sf _2 \) Emissions

At the Air Water Group, we are striving to meet our CO\( \sf _2 \) reduction targets through efficient plant operations and by installing the latest high-efficiency equipment. In fiscal 2019, emissions by our group companies classified as Specified Business Operators under the Act on the Rational Use of Energy were 4.3% lower than fiscal 2013 levels (70,000 t-CO\( \sf _2 \)). We will continue to strengthen our efforts to reduce CO\( \sf _2 \) emissions.

CO\( \sf _2 \) emission reduction targets

Scope of collection:Companies classified as Specified Business Operators under the Act on the Rational Use of Energy (Air Water and 31 group companies [32 companies in total])

Major Initiatives Aimed at Reducing CO\( \sf _2 \) Emissions

At the Air Water Group, particularly at energy-hungry group companies classified as Specified Business Operators under the Act on the Rational Use of Energy, we have formulated a mid-to-long-term plan which sets forth actions such as capital investment and improved operations. Through this plan we aim to reduce CO\( \sf _2 \) emissions in the mid to long term. Key initiatives stipulated in the plan for fiscal 2020 are shown in the following table.

The Air Water Group’s Mid-to-Long-Term Plan to Cut CO\( \sf _2 \) Emissions (From FY2020 onwards)

Business area

Major initiatives

Reduction
(t-CO\( \sf _2 \)/year)

Industrial

  • Improve equipment for reuse of nitrogen plant waste gas
  • Upgrade compressor equipment

8,881

Seawater

  • Improve firing efficiency through installation of new kilns
  • Upgrade ion exchange membranes

2,660

Agriculture and Food Products

  • Collect heat from warm wastewater
  • Save energy used for drying machines by reducing ratio of sludge water

2,444

Chemical

  • Install waste heat collection equipment

1,620

Other

  • Switch to inverter pumps

114

Total

15,719

Initiatives to Cut CO\( \sf _2 \) Emissions at Industrial Gas Plants

Using air to make oxygen, nitrogen, argon, and other industrial gases at our industrial gas plants takes vast amounts of electricity. The power supplied by utility companies is generated at thermal power plants, and in that way, we indirectly emit carbon dioxide—a serious challenge to our mission to cut emissions.
The Air Water Utsunomiya Plant replaced its old plant in 2017 with a VSUA plant (high-efficiency, compact, liquefied oxygen, liquefied nitrogen, and argon production plant) in an effort to achieve more efficient manufacturing. In fiscal 2017, the plant’s carbon dioxide emissions were down 7.7 percent year-on-year, and 13 percent the following year. The Utsunomiya Plant upgraded its old storage tanks in fiscal 2019 to new models that reduce loss, thereby further cutting greenhouse gas emissions.

Certification Regarding Special Provisions for Allotted Money under Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities

To benefit from certification regarding special provisions for allotted money under the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities, Air Water and certain of its group companies submit energy conservation investment plans to the Minister of Economy, Trade and Industry and carry them out.

Calculating Greenhouse Gas Emissions

Supply Chain CO\( \sf _2 \) Emissions

In recent years, calls for corporations to disclose their indirect CO\( \sf _2 \) emissions—that is, throughout their supply chain—have been growing louder. As such, in addition to the CO\( \sf _2 \) emissions from its own energy usage (Scope 1 and 2), the Air Water Group has also begun calculating emissions throughout its supply chain (Scope 3).
Based on the Ministry of the Environment’s Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain, CO\( \sf _2 \) emissions are calculated by category.

CO\( \sf _2 \) emissions
(1,000 t-CO\( \sf _2 \))

Notes

Scope 1

289

Direct emissions generated through use of in-house fuel, etc.

Scope 2

1,274

Indirect emissions generated through use of electricity, steam, etc., from other companies

Scope 3

2,366

Indirect emissions generated through business activities across the supply chain

Calculated Scope 3 emissions

Category

CO\( \sf _2 \) emissions
(1,000 t-CO\( \sf _2 \))

1

Purchased goods and services

493

2

Capital goods

191

3

Fuel and energy-related activities not included in Scope 1 or 2

206

4

Transportation and delivery (upstream)

32

5

Waste generated in operations

15

6

Business travel

2

7

Employee commuting

4

8

Leased assets (upstream)

-

9

Transportation and delivery (downstream)

-

10

Processing of sold products

-

11

Use of sold products

1,422

12

End-of-life treatment of sold products

-

13

Leased assets (downstream)

-

14

Franchises

-

15

Investments

-

Total

2,366

  • Due to calculation difficulties, categories 10 and 12 are currently not included in the total.
    None of the Air Water Group’s businesses are relevant to categories 8, 9, 13, 14, or 15.

Third-party Verification of Greenhouse Gas Emissions

The Air Water Group discloses greenhouse gas emissions in the Air Water Report and on its website. To ensure that the data we provide are highly transparent and verified from an independent, objective perspective, we have received third-party verification for our greenhouse gas emissions since fiscal 2017.
We will continue working to provide even more reliable data to outside stakeholders through third-party verification of our greenhouse gas emissions.

Energy Management Structure

As a Specified Business Operator under the Energy Saving Act, Air Water has established an environmental management structure with the Compliance Center General Manager acting as the Energy Management Control Officer.
This has included establishing the Energy Conservation Committee (Subcommittee 1), which is made up of the Energy Management Control Officer, Energy Management Planning Promoter, and Energy Management Person in charge of designated energy management factory, and Energy Conservation Committee (Subcommittee 2), which is made up of plants and business sites with relatively low levels of energy consumption. Each subcommittee holds meetings on a regular basis.
At Group companies, the Compliance Center checks their energy management structures and provides guidance through environmental audits.

Information Liaison Conference of Energy Management Staff

Since 2015, Air Water has held the Information Liaison Conference of Energy Management Staff for Group companies designated as Specified Business Operators under the Energy Saving Act. There are talks by outside instructors, as well as discussions on energy conservation at the Group based on information provided by the Environmental Management Promotion Department of the Compliance Center and presentations of energy-saving practices.

Efforts in Transportation Field

As a freight consigner, the Air Water Group promotes energy conservation and reduction of greenhouse gas emissions in collaboration with transportation companies.

<Mid-to long-term of Transportation Field>

We had set a medium- and long-term goal of lowering energy consumption per unit of production by at least 1% on average for the past five years. However, it rose 0.9% on a five-year average. It rose 3.7% from the previous fiscal year. This hike is due largely to an increase in truck transport in the seawater business.

Greenhouse gas emissions and energy consumption intensity index in the transportation sector

Adaptation to Climate Change (continuation of supply of medical and industrial gases)

We are working to reduce the risks of natural disasters, such as suspended equipment and disconnected gas supply routes by installing VSUs (compact liquefied oxygen/nitrogen production plant) in various locations so that we can ensure a continuous supply of medical and industrial gases even in the case of a catastrophic natural disaster.

Evaluation from external organizations regarding environmental initiatives

CDP* Climate Change Assessment

The Air Water Group takes part in surveys by the CDP,\( \sf ^* \) an organization that collects information on and evaluates climate change activities by major global companies. As a result, we were rated "A-" in fiscal 2019, and "B" in fiscal 2020 for our climate change efforts and information disclosure.
In addition to the CDP Climate Change questionnaire, we also respond to the “CDP Water Security” questionnaire concerning depletion of water resources and other related issues. In fiscal 2019, we received “B-” and “B” for the water security efforts.

*An international non-profit organization based in London. Aiming to promote corporate efforts toward a low-carbon society, CDP considers climate-related management risks, collects, analyzes, and evaluates climate change information from major global companies, and discloses the results to institutional investors.

Eligibility for the DBJ Environmentally Rated Loan Program

In March 2020, Air Water was ranked as “a company with excellent advanced environmental initiatives” by the Development Bank of Japan (DBJ). We were highly rated in a number of areas, such as our firm implementation of environmental management across the group, our efforts to reduce the environmental impact of our business activities through endless improvements and ongoing investments in environmental conservation, and our development of businesses that contribute to the solution of social challenges. This ranking made us eligible for loans under the DBJ Environmentally Rated Loan Program.

*A global first, DBJ offers preferential loans based on the degree to which corporations carry out environmental management.