Idemitsu Kosan

Idemitsu’s emissions reduction targets are unambitious. The first is to reduce absolute scope 1 and 2 emissions by 15% between 2017 and 2030. However, the company needs to nearly triple this target to be aligned with its 1.5°C pathway. Idemitsu is also aiming for net zero CO2 emissions for scope 1 and 2, though the company plans to use an unspecified amount of offsets to achieve this. The third target is to reduce scope 1, 2 and 3 CO2 emissions intensity by 30% by 2050 compared to 2017. This target lags far behind the national net-zero targets in Japan and Norway, two of Idemitsu’s key operating regions. The company also appears to include avoided emissions, e.g. where gas supplied by Idemitsu displaces coal, towards the achievement of its targets, which obfuscates its actual emissions impact.

While Idemitsu’s current upstream oil and gas business is relatively small compared to its refining business, the company’s plans to develop oil production in the Norwegian Arctic and gas production in Vietnam mean that it will exceed its upstream oil and gas carbon budget by an massive 145%. This is only based on the company’s existing fields and reserves and does not account for the development of new, unapproved oil and gas fields. According to the International Energy Agency (IEA), no new oil and gas fields can be approved for development under a 1.5°C scenario. Despite this, Idemitsu has not committed to ending exploration for new fossil fuel resources.

Idemitsu’s scope 1, 2 and 3 emissions intensity is estimated to have stayed largely stable from 2014 to 2019 rather than decreasing. Furthermore, its absolute scope 1, 2 and 3 emissions are estimated to have risen by nearly 59% between 2018 and 2019 due to the acquisition of Showa Shell. The company also has no plans to phase out its emissions intensive coal mining business, which accounted for almost 16% of its total scope 1, 2 and 3 emissions in 2019.
Idemitsu is exploring co-firing coal with wood pellets, a solution with questionable sustainability credentials. The company also does not disclose its low-carbon revenue, and its recent acquisition of Showa Shell has increased its dependence on fossil fuels rather than decreasing it.

Idemitsu lacks a policy governing engagement with trade associations on climate change. This is a significant gap, which could undermine the credibility of the company’s statements on climate change, as it has not set out clear actions to be taken when the trade associations it is a member of oppose climate policy. For example, Idemitsu continues to remain a member of the American Petroleum Institute (API) and Keidanren, two trade associations that have been reported to have opposed climate policy.

By setting out clearer plans to develop low-carbon business activities, which include targets for growth, profitability and deployment, Idemitsu can start to transition to a lower-carbon business model. It has 0.2 GW of renewable generation capacity and aims to increase this to 4 GW by 2030. The company should raise the ambition of this target and establish a clear plan to achieve it. Idemitsu is also involved in solar panel production through its subsidiary Solar Frontier K.K., though it does not report targets for Solar Frontier’s future growth. The company is also exploring hydrogen and carbon capture and use, but again, does not report clear plans to develop these into profitable business activities.

Idemitsu has two unambitious emissions reduction targets. The first is to reduce absolute scope 1 and 2 emissions by 15% between 2017 and 2030. The second is to reduce scope 1, 2 and 3 emissions intensity by 30% by 2050, though this only covers CO2 emissions and includes avoided emissions.

Idemitsu is aiming to increase its own consumption of zero-emissions electricity power, as well as generate 4 GW of solar power by 2030. It is also seeking to develop innovative low-carbon and mitigation technologies, although it does not disclose its research and development spending on these.

Idemitsu acquired Showa Shell in 2019, a large oil refiner and retailer in Japan, which is estimated to have increased its scope 1, 2 and 3 emissions by 59%. The company states it uses an internal carbon price but has not published what this is.

Between 2014 and 2019, the company’s scope 1 and 2 emissions intensity saw a marginal increase and its scope 1, 2 and 3 emissions intensity remained largely stable. The company has made little progress to date in developing low-carbon business activities.

Idemitsu’s weak emissions reduction targets and a transition plan without key details such as capital expenditure (CapEx) dedicated to low-carbon and mitigation technologies are unlikely to drive a significant change in its emissions and activities.