Japan considers carbon capture as a key component of national decarbonization strategy. (Photo: iStock)
Japan is set to incorporate Carbon Capture and Storage (CCS) into its national energy development framework, aiming for commercial operation by 2030. The government predicts that by 2040, CCS will be commercially competitive, with costs projected to be lower than carbon prices.
Japan to invest CCS projects aiming for commercial launch by 2030
In late June, the Japanese government selected nine CCS projects, five of which are located domestically, while four are in Malaysia and one in Oceania. These initiatives are expected to capture and store a total of 20 million tons of carbon dioxide annually. Masaki Tone, Director of the Resources and Energy Agency at the Ministry of Economy, Trade and Industry (METI), stated that a government decision on investment must be made by 2026 to meet the 2030 commercial launch target.
Tone anticipates that CCS will achieve commercial competitiveness around 2040, when costs are expected to fall below carbon prices without government subsidies. Until then, industry will require government incentives to foster technological development.
Current carbon pricing varies significantly by region. According to the World Bank, prices in Europe range from $40 to $60 per ton, while prices in Asia are around $20 per ton. The cost of carbon capture currently falls between $65 and $130 per ton.
An offshore rig in Malaysia. (Photo: iStock)
Leading Japanese companies invest in CCS
A crucial factor in reducing carbon capture costs is achieving scale. The Japanese government aims to store between 6 million and 12 million tons of CO2 by 2030, increasing to 120 million to 240 million tons by 2050.
METI is currently seeking funding for pilot projects, which will be included in the supplementary budget of the Shigeru Ishiba administration. CCS is expected to play a vital role in Japan's transition from coal-fired power generation until renewable sources such as wind, nuclear, and hydrogen reach sufficient capacity.
The Japanese business community is optimistic about the government’s CCS initiatives. Despite the projected daily storage scale of 16,000 to 32,000 tons being six times greater than the largest carbon capture facility operated by Mitsubishi Heavy Industries (MHI) in Texas, MHI’s Carbon Capture Business Head, Tatsuto Nagayasu, expressed confidence that the 2030 commercialization goal is "absolutely doable."
MHI foresees substantial growth in the decarbonization sector, estimating potential revenues of 300 billion yen (about $1.9 billion USD) by 2030. Nagayasu emphasized that achieving this target will rely on advancements in carbon capture and hydrogen development.
Other major players, including trading firms Marubeni, Sumitomo, and Mitsui & Co., are also investing in carbon capture projects, with a focus on international development. Due to Japan's lack of decommissioned oil fields, there is a scarcity of storage sites, leading energy consultancy Wood Mackenzie to predict that up to 80% of Japan's CO2 will need to be stored across borders, potentially positioning Japan as a leader in the Asia-Pacific carbon capture trade market.
Source: Nikkei Asia、METI、Wood Mackenzie
