MC has set GHG emissions reduction targets consistent with the Paris Agreement, which aims to limit global warming to well below 2°C, preferably 1.5°C above pre-industrial levels by the end of the century, and is advancing a variety of measures to achieve these targets. With a global network of approx. 1,700 group companies, we have set GHG emissions reduction targets on a consolidated basis and work closely with MC Group companies to collect GHG emissions data and advance emissions reduction initiatives on a consolidated basis. Furthermore, we utilize our environmental management system (EMS) to collect basic information for policy planning. In FY2020, we expanded the scope of the survey via a major update to our environmental performance survey system, and are continuously working to improve the accuracy and timeliness of both qualitative and quantitative data on our GHG reduction initiatives.
Targets
MC is committed to creating MC Shared Value by simultaneously decarbonizing and reinforcing its portfolio in accordance with the net zero by 2050 and the 1.5°C target, in line with the Paris Agreement. To this end, we have set the following Three goals toward the realization of a decarbonized society.
1) GHG Emissions Reduction Targets
- Net zero GHG emissions by 2050, and a FY2030 target with a detailed reduction plan
- Emissions halved by FY2030 (compared to FY2020 levels) through portfolio replacement driven predominantly by divestment of thermal power assets*.
*Applies to Scope 1 and 2 emissions as well as Scope 3 Category 15 (Investments, hereinafter ”Scope 3-15”)
We have been employing the equity share approach to calculate GHG emissions. However, in order to clarify the scope of responsibility for our emissions, we will adopt the financial control approach starting from FY2025. Under this approach, GHG emissions from our subsidiaries and joint operations will be disclosed as our Scope 1 and 2 emissions, while emissions from affiliate companies will be disclosed as Scope 3 Category 15 emissions, all of which will be included in our emissions reduction targets. (For information regarding the restatement of base year emissions in accordance with the change to the financial control approach, please refer to the section ”Our Past Initiatives”1 below.)
Our Progress to Date
MC is continuously tracking progress against our reduction targets. Actual performance figures of Scope 1 & 2 GHG emission towards our reduction target are as follows.
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*1
Base year emissions have been revised to 27.9 million tons in accordance with the change from the equity share approach to the financial control approach as well as an update to the emission factor for so-called “6.5 gases”. Furthermore, base year figures include emissions from thermal power generation and natural gas projects, which comprises (i) assumed peak emissions from pre-operational committed projects and (ii) projected full-capacity emissions for partially-operational projects.
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*2
In the event thatemissions reduction targets are not able to be achieved despite activereduction efforts, we will consider offsetting residual emissions throughinternationally recognized methods including carbon removal (e.g., carboncredits). Furthermore, plans and measures related to GHG emissions reductiontargets may be revised flexibly in accordance with developments related totechnology, economic feasibility, policy/regulatory support, etc.
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*3
Offsets will not be made using avoided emissions. Graphs for avoided emissions in the diagram are for illustrative purposes only. For actual figures, please refer to the ESG data disclosed separately.
2) Non-Fossil % in Power generation business
Aim to reduce existing thermal power capacity and switch to zero-emission thermal power, targeting 100% non-fossil by 2050.
3) Renewable Energy power generation capacity
Doubling MC's renewable energy power generation capacity by FY2030 (compared to the FY2020 level).
Avoided Emission
Our Efforts to Reduce Emissions
We regard avoided emissions as a quantitative indicator to measure how much we are making concrete contributions to the reduction of GHG emissions across society and the extent to which we are capturing business opportunities associated with the transition to a decarbonized society.
What are Avoided Emissions?
Avoided emissions are defined as the quantified contribution to the reduction or mitigation of GHG emissions by providing low-emission products and services that contribute to societal GHG emissions reduction, compared to providing existing products and services (baseline scenario).
The basic formula that we uses for calculating avoided emissions is as follows.
Evaluation of the amount of avoided emissions by calculating the difference between the CO2 emissions of our products manufactured in the evaluation year up to the end of their life and the CO2 emissions of the baseline scenario. This category covers avoidance in the form of materials and other products that are essential for EVs and other final products.
Stock basis (Single year)
Evaluation of the annual avoided emissions generated from our products within the year of evaluation. This category covers avoidance from renewable energy projects, etc.
The term “avoided emissions” includes not only the amount of carbon avoided by our products and services, but also the amount of carbon captured and removed.
*Contribution ratios are not taken into account at this point due to limitations in the calculation.
Our Avoided Emissions
We have chosen and assessed the following products that contribute to the transition to a decarbonized society and that generate quantifiable avoided emissions.
In principle, calculations are based on production and operating volumes, but forecasts are used for sales volumes and other data that have yet been compiled for certain products.
Examples of projects that contribute to avoided emissions that are in the planning stages or will begin operations in the near future
We have calculated the estimated values for FY2025 and beyond for the avoided emissions of projects that have not yet begun operations or provision of services, or are soon to begin operations. In the future, we will calculate the actual amounts of avoided emissions based on the operational performance of each project.
- Renewable Energy Power Generation Business
- Through operation of solar, onshore wind, hydro, and offshore wind power generation facilities on which we have already begun construction, we expect that the amount of avoided emissions will increase by approximately 470,000 tons/year on a stock basis.
Supplementary Information
【Points to note when calculating the Company's avoided emissions】
- In calculating the avoided emissions, we use actual (forecast) values and publicly known information as much as possible. However, when information is not readily available, assumptions and scenarios are set for calculation purposes.
- We will continue to refine calculations and disclosure of avoided emissions based on related ongoing international discussions and trends.
【Examples of guidelines used as reference】
- GX League "Basic Guidelines for Disclosure and Evaluation of Climate-related Opportunities" (2023)
- WBCSD/WRI "GHG Protocol Corporate Accounting and Reporting Standard" (2019)
- WBCSD/Net Zero Initiative "Guidance on Avoided Emissions: Helping business drive innovations and scale solutions towards Net Zero" (2023)
- Ministry of Economy, Trade and Industry "Guidelines for Quantifying GHG emission reductions of goods or services through Global Value Chain" (2018)
- The Institute of Life Cycle Assessment "Guidelines for Assessing the Contribution of Products to Avoided Greenhouse Gas Emissions" (2022)
- Japan Chemical Industry Association "Guidelines for assessing the Avoided Emissions" (2012)