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For the Environment Addressing Climate Change

We are undertaking efforts to address climate change, with the Earth Environment Subcommittee established under the CSR Committee, and the Energy Officers Conference in charge of implementation. We are working to conserve energy and to reduce carbon intensity through various measures, for example by utilizing our own environmental capital investment program.
We are also using carbon life cycle analysis (cLCA), which involves calculating a product's contribution to carbon dioxide emission reductions by quantitatively assessing the emissions throughout the product lifecycle and making a comparison with similar products. We also calculate our indirect carbon dioxide emissions (Scope 3) through the supply chain.

K KANEKA
J JAPAN
W WORLDWIDE

Energy Conservation Efforts

K J 

Our efforts at the Kaneka Group to address climate change include energy conservation, using the energy intensity index (see note 1) as an indicator for management.
The energy intensity index of all parent plants in fiscal 2016 was 92.1, a reduction of 2.3% from the previous fiscal year due to factors such as energy conservation activities and differences in the product mix. Annual reduction over the five years was 1.9% on average, which means we met our target.
Non-consolidated energy consumption (see note 2) was 418,000 kiloliters, a decrease of 2.6% from the previous fiscal year.

Notes:

1. Energy intensity index is a numeral value calculated by dividing the energy used in manufacturing (at all our parent plants) by the active mass and indexing it against the baseline year of fiscal 2013 as 100. The amount of activity is an index representing the production volume of all our parent plants. Energy consumption is calculated based on the Energy Saving Law (the Act on Rational Use of Energy).
This time, the base year was changed from fiscal 1990 to fiscal 2013, and past intensity indexes were recalculated.

2. This energy consumption is the total for Kaneka alone (manufacturing plants and other facilities), with the boundaries being consistent with the Act on the Rational Use of Energy and the Action Plan for a Low Carbon Society prepared by the Japan Chemical Industry Association.

■ Energy Consumption (Crude Oil Equivalents) and Energy Intensity

Initiatives to Cut Carbon Intensity

K J 

At Kaneka, we are working to reduce carbon intensity, using a carbon intensity index (see note 3) as an indicator for management, based on carbon dioxide emissions from energy consumption associated with production activities. Since the base year was changed from fiscal 1990 to fiscal 2013, the target was accordingly changed to "93.2 or below compared to fiscal 2013 (100) in fiscal 2020" without changing the target level.
The carbon intensity index of all parent plants was 93.4 in fiscal 2016, so we achieved our target of 97.0 for the year, based on a target of 93.2 for fiscal 2020.
Non-consolidated carbon dioxide emissions (see note 4) decreased by 4.3% from the previous fiscal year to 1,075,000 tons. Main factors in the decrease included activities to reduce carbon intensity, differences in the product mix, CO2 emission factors of purchased electricity, and so forth.

Notes:

3. The carbon intensity index is calculated as carbon dioxide emissions from energy consumption in production activities divided by activity volume, with the index set at 100 in the base year of fiscal 2013, using fixed numbers for Kaneka. It helps in the visualization of the impact of our activities, and was used to establish targets for fiscal 2020.

4. Carbon dioxide emissions are calculated as prescribed by the Act on Promotion of Global Warming Countermeasures, and as with energy the figure is a non-consolidated total for Kaneka.

■ CO2 Emissions from Energy Consumption and Carbon Intensity


Other greenhouse gases on a non-consolidated basis include carbon dioxide, methane, and dinitrogen monoxide from non-energy sources. Emission volumes are calculated in keeping with the Act on Promotion of Global Warming Countermeasures.

Investments in Energy-Efficient Facilities

K J 

To continue reducing energy intensity and carbon intensity, we are implementing our own environmental capital investment program, with an annual budget of 200 million yen for small and medium investments that have a relatively long payback period, through activities in three areas-addressing climate change, efficient use of resources, and reducing environmental impacts-that are priorities in Kaneka's environmental management program.
In fiscal 2016 we continued allocating a large portion of this fund to projects that address climate change, including broader initiatives such as visualizing energy consumption.
Going forward we will promote the use of this investment program for activities to reduce intensities.

■ Results of Our Own Environmental Capital Investment Program

Fiscal YearInvestmentsNumberReduced CO2 Emission
2012\200 million191,929 tons-CO2 per year
2013\200 million291,993 tons-CO2 per year
2014\200 million371,644 tons-CO2 per year
2015\200 million221,435 tons-CO2 per year
2016\200 million231,688 tons-CO2 per year

Energy-Efficiency Initiatives in Logistics

K J 

To achieve an annual 1% reduction in energy intensity as a specified consigner under the amended Act on Rational Use of Energy, in fiscal 2016 we continued working plant by plant on the theme of new reductions of energy intensity, with a focus on modal shifts and improved cargo load ratios.
In fiscal 2016 we worked to improve cargo load ratios and greater use of the Japan Freight Railway Company, but it resulted in a 3.3% increase in energy intensity compared to fiscal 2015. Carbon dioxide emissions decreased by 400 tons compared to fiscal 2015 due to active use of the Japan Freight Railway Company container transportation.

■ CO2 Emissions and Energy Intensity from Logistics

Fiscal 2006 is the base year for indexing the logistics energy intensity as 100.

Response to the Fluorocarbons Emission Control Law

K J 

The estimated leakage amount of fluorocarbons generated from our commercial freezing and refrigeration equipment and air conditioning units in fiscal 2016 was 13,547 tons - CO2, an increase of 4,154 tons - CO2 over the previous fiscal year.
The increase in the leakage amount was due to aging refrigerating machines.
There were no Group companies in Japan that exceeded 1,000 tons - CO2 estimated leakage amount of fluorocarbons.
To reduce the estimated leakage amount of fluorocarbons contributing to the greenhouse effect, we will ensure equipment inspections to detect leaks at an early stage and take necessary measures, as well as update aging machines producing a large amount of leakage.
For machine updating, we will select low-GWP (see note 5) fluorocarbons and promote fluorocarbon-free production activities.

Note:

5. GWP (Global warming potential) is a figure that shows, on the basis of carbon dioxide, how other greenhouse gases are capable of causing global warming.

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