TOKYO -- Japanese trading house Mitsubishi Corp. is set to increase the share of renewable energy sources in its power generation business from the current 30% to over 60% by its 2030 fiscal year, bringing one of its most important businesses in line with the government's latest efforts to reduce greenhouse gas emissions.
The company will increase investment in solar and wind power at home and abroad, while gradually reducing coal-fired power generation to zero by 2050.
Trading companies handle the electric power business, which ranges from the construction to operation of power plants which are mainly located overseas.
Mitsubishi Corp. has a generating capacity of 10.8m kilowatts, including those under development, when calculated based on its ownership ratio. This is nearly twice the capacity of Shikoku Electric Power.
By fiscal 2030, Mitsubishi Corp. will double the amount of power from renewable energy sources from the levels in fiscal 2019 to 6.6m kilowatts.
Mitsubishi Corp. joins a list of Japanese companies increasing their decarbonization efforts, after Tokyo recently announced an ambitious target to reduce greenhouse gas emissions by 46% by fiscal 2030 from fiscal 2013 levels, and to achieve net-zero emissions by 2050.
The growing trend toward decarbonization is driving many industries to reduce their dependence on fossil fuels. But generating much of the power from renewables poses a challenge for the stable supply of electricity.
Solar and wind power, which can generate a large amount of electricity depending on the climate and location of units, are often considered less reliable when it comes to providing a stable electricity supply.
The power generation businesses of trading houses have earned stable profits by building large-scale power plants and selling power over the long term.
Mitsubishi Corp. is expected to speed up its push to create new systems to manage electricity supply and demand by leveraging technology and storage batteries. It will also have to review its business model in order to transition to renewable energy.
In the U.S. and Europe, the company will promote development through its electric power subsidiary Eneco, a Dutch renewable energy power generator it bought in March 2020 in partnership with Chubu Electric Power, spending a total of 500bn yen ($4.5bn).
The subsidiary, which mainly develops new offshore wind power plants, has 6m power contracts in countries including the Netherlands and Belgium. In February, it won a contract to supply electricity to Amazon.com's European locations.
Mitsubishi Corp. is also seeking to expand its business in the U.S. through Nexamp, a Massachusetts solar power developer acquired in 2018. Having an advantage in the decentralized power generation business by using the rooftops of commercial facilities, Nexamp will build up projects with tens of thousands of kilowatt-generating capacity and expand the supply of electricity produced and consumed locally.
In Japan, offshore wind power development projects will be launched in Chiba and Akita prefectures. Mitsubishi Corp. aims to gain more projects by making use of Eneco's experience in Europe, which is a more advanced market for renewables.
Coal and gas-fired thermal power generation, which currently accounts for 70% of Mitsubishi Corp.'s power supply mix, will be drastically reduced. Coal emissions will be slashed by 60% to 830,000 kilowatts and gas emissions by half to about 2.75m kilowatts. The total generation capacity is expected to remain flat, with renewable energy accounting for more than 60% of the total.
The company will not develop new coal-fired plants, and will gradually withdraw from existing facilities. As of 2030, a total of just three coal plants, including Vietnam's planned Vung Ang 2 project, as well as a coal gasification combined cycle power plant (IGCC) in Fukushima Prefecture, Japan, are expected to remain.
In Vietnam, which is still seeing strong economic growth and development, the need for a stable supply of electricity and related costs will be taken into consideration. Emissions will be reduced there by developing technologies to capture and store carbon dioxide.
Mitsubishi Corp. will also sell its share of gas-fired thermal power plants in North America and close old facilities. Although gas is considered a promising source of electricity in the transition phase to renewable energy, the trading house will still make reducing the use of gas a prominent part of its push towards a decarbonized society.
Mitsubishi Corp. is the first Japanese trading company to announce a reduction in its use of gas-fired power plants. By 2050, the company aims to achieve virtually zero carbon emissions in the entire power generation business by establishing a technology to burn coal mixed with hydrogen and ammonia in gas-fired thermal power plants.
"The challenge of carbon neutrality is how to deal with thermal power generation," said Katsuya Nakanishi, executive vice-president of Mitsubishi Corp. who heads the electric power division. "A turning point in history is an opportunity. We'd love to take it."