Kyushu Electric Power Co., Inc. (Kyuden) is a publicly listed company headquartered in Japan. In 2019, its revenue was US$18.51 billion and installed capacity was 29.51 GW in 2018 (including purchased capacity). It mainly delivers power to seven prefectures in Japan but also has projects in other Asian countries, the UK and France. Kyuden has reduced emissions by restarting nuclear generation shut down after the Fukushima disaster in 2011, but it will struggle with long-term decarbonisation without a plan to phase out fossil fuel assets.
Kyuden reduced emissions intensity from 617 gCO2e/kWh in 2013 to 347 gCO2e/kWh in 2018, exceeding the 370.5 gCO2e/kWh by 2030 target it set collectively with other Japanese electric utilities as part of the Electric Power Council for a Low Carbon Society. To demonstrate its ongoing commitment to decarbonisation, Kyuden should set new emissions targets. The company’s well-below 2-degree pathway requires it to reach an emissions intensity of 159 gCO2e/kWh by 2030, so the targets should match this or be more ambitious. It should also set intermediary targets of no more than five years apart to incentivise short-term action as well as a long-term target to enable strategic consideration of the lifetime emissions of current and planned assets.
There are several gaps and inconsistencies in Kyuden’s low-carbon transition plan that suggest it will not deliver long-term decarbonisation. The company does not provide information on how it intends to finance its transition or what its future generation mix might be; it has not committed to phasing out coal generation and, in fact, completed a new 1 GW coal unit in 2019; nor has its conducted scenario analysis to identify its climate risks and opportunities. It is planning to expand its owned capacity outside of the Kyushu region by nearly 1 GW in Japan and 3 GW overseas by 2030. An unambitious target to increase renewable capacity from 2 GW to 2.5 GW by 2030 means this expansion is likely to be driven by fossil fuels. This will create locked-in emissions – that is, all of the emissions from the company’s installed and planned electric power plants up to 2033 – that will slow Kyuden’s decarbonisation for decades.
Kyuden states in its 2018 environment report that one of its priority initiatives is ‘environment-related research and technological development for renewable energy’. R&D into technologies with significant potential to mitigate climate change is an important indicator of a company’s commitment to decarbonisation. Kyuden should publish publicly how much it invests in low-carbon R&D, with a breakdown by technology type. It should aim to invest 5% of its total capital expenditure in this area.
Kyuden is awarded a trend score of -. If the company were reassessed in the near future, its score would likely worsen. Kyuden’s decarbonisation has largely been driven by restarting nuclear generation. However, its existing nuclear power plants still face regulatory risks, with the Sendai nuclear power plant recently halted due to Kyuden’s failure to implement anti-terrorism measures on time. Additionally, the company has not committed to phasing out coal or oil, which respectively accounted for 13% and 11% of capacity in 2018. Consequently, Kyuden is expected to exceed its carbon budget. The target to increase its owned renewable capacity from 2 to 2.5 GW by 2030 is unambitious. The company’s expansion plans outside of the Kyushu region therefore look likely to be driven by fossil fuels. That being said, some recent steps to develop renewables have been taken. Firstly, Kyuden signed a deal with Germany’s RWE to jointly develop offshore wind. Secondly, it acquired two geothermal companies based in the USA and Indonesia.
Kyuden aims to increase its owned capacity outside of the Kyushu region by nearly 1 GW in Japan and 3 GW overseas by 2030. It has set a specific target to increase renewable capacity from 2 GW to 5 GW by 2030 but will only have a 2.5 GW ownership stake.
Kyuden will increase its renewable capacity by building on its hydroelectric and geothermal power portfolio as well as building offshore wind and biomass power. It will also increase low-carbon generation by restarting nuclear power stations.
In 2019, Kyuden completed a new 1 GW coal-fired unit at Matsuura Power Station and acquired 0.12 GW equity capacity in a gas power plant in the USA. It also purchased two geothermal companies based in the USA and Indonesia, with the aim of strengthening its position as a leading geothermal power generator.
Kyuden made considerable progress in reducing its emissions intensity from 617 gCO2e/kWh to 347 gCO2e/kWh between 2013 and 2018. This means it has already exceeded its 2030 target of 370.5 gCO2e/kWh, as set by the Electric Power Council for a Low Carbon Society in Japan. This was largely achieved by restarting its nuclear generation, which had been shut down after the Fukushima disaster in 2011.
Kyuden’s recent emissions reductions have largely been achieved by restarting nuclear generation, rather than investment in new low-carbon capacity. Plans to expand are likely to focus on coal and gas generation, as Kyuden is targeting modest renewable growth of 0.5 GW. The company’s transition plan is not currently credible.