Climate Change Scenario

Japan has declared to become carbon neutral by 2050. The outline of the “Green Growth Strategy Towards 2050 Carbon Neutrality (Draft)” is as follows.

Source: Excerpt from the points to be realized (summary) in the “Green Growth Strategy Towards 2050 Carbon Neutrality” (Draft) published by the Ministry of Economy, Trade, and Industry on June 2, 2021

4℃ Case

Government policies on climate change remain unchanged, power companies continue to generate electricity from fossil fuels, and CO₂ emission factors do not decline. In addition, technological development will not progress in the energy industries, such as for photovoltaic power generation systems, storage batteries, and fuel cells, and society and customer decarbonization do not progress. In the semiconductor and telecommunications businesses, etc., technological development will advance, and production capacity will expand, and digital technologies such as AI, IoT, and smart cities will continue to grow. As a result, energy-related businesses will slow down, and the actual physical risks that become apparent will increase business continuity plan (BCP) countermeasure costs and raw material procurement costs.
The cost of physical risk countermeasures will increase, so ultimately, the final profit will decrease. However, while the increase in profits of energy-related businesses is small, note that this scenario is unlikely to occur because each country is engaging in efforts to achieve carbon-neutral targets.

2℃ Case

Governments across the globe introduce support systems such as renewable energy, and electric power companies supply electricity with a low CO₂ emission factor. Furthermore, technological development progresses in industries related to energy-related technologies such as photovoltaic power generation systems, storage batteries, and fuel cells. In semiconductor and telecommunications businesses, etc., technological development advances and production capacity expands, and digital technologies such as AI, IoT, and smart cities will continue to grow.
Although the physical risk is smaller than the 4℃ case, as the risk is thought to be larger. we will promote BCP measures based on the WRI Aqueduct Water Risk Atlas and the hazard map of the national government. Transition risk increases operational costs, such as increased payments for decarbonization. The number of suppliers affected by physical risks will increase, and this will increase raw material procurement costs.
As a result, the profits of energy-related businesses will increase, we believe that the increase in profits is likely to be offset by the cost of risk countermeasures.

WB2℃ Case

Governments across the globe introduce support systems for renewable energy, and electric power companies supply electricity with a low CO₂ emission factor. In industries related to energy technologies such as solar power generation systems, storage batteries, and fuel cells, companies promote technological development, strengthen collaborative efforts with electric power companies, and advance the use of renewable energy such as VPP technology and engage in efforts to support the creation of regional microgrids. In the semiconductor and telecommunications businesses, etc., technological development will advance, and production capacity will expand. We will also see further expansion of digital technologies, such as AI, IoT, and smart cities, demand forecasting of production planning electric power through DX visualization, and the stabilization of renewable energy imbalances.
Physical risks are thought to present less damage than in the 2℃ case, and BCP measures will be promoted based on the WRI Aqueduct Water Risk Atlas.The risk of transition is likely to increase, for example, carbon tax payments.
As a result, revenues from energy-related businesses exceed the cost of risk management due to decarbonization of society, and the final profit increases.

1.5℃ Case

Governments across the globe introduce support systems such as for renewable energy, and electric power companies take efforts toward “Net Zero,” with decarbonization making further strides. In industries related to energy technologies, such as solar power generation systems, storage batteries, and fuel cells, companies collaborate with electric power companies and provide them with renewable energy, as well as engage in efforts to support the creation of regional microgrids. In the semiconductor and telecommunications businesses, technological development will progress, and production capacity will expand. In society, digital technologies such as AI, IoT, and smart cities grow, demand forecasting of production planning electric power through DX visualization and stabilizing renewable energy imbalance will be improved, and decarbonization will take further strides.
Physical risks are thought to be not so big, and BCP measures will be promoted based on the WRI Aqueduct Water Risk Atlas. As a result, decarbonization of society will increase the earnings of energy-related businesses and the impact of physical risks will be small, thereby the final profit increases.

Social Issues and Solutions

Technological Issues Secure locations where solar power generating systems can be installed, stabilize electric power from renewable energy, which is affected by weather conditions

Solution: Leverage self-consignment for the transmission of renewable energy from external sources

When a site cannot be secured for a solar power generating system, renewable energy can be used by the “self-consignment” of electric power from solar power generating systems located elsewhere.

Self-consignment

Solution: Clay-type Li-ion storage battery cells used in tandem with solar power generating systems

Kyocera plans to stabilize electric power from renewable energy by developing long life, very safe, low-cost storage batteries that are easy to link up and use in tandem with existing solar power generating systems. Private power consumption will also expand when surplus power produced by solar power generating systems and fuel cells is saved to storage batteries.

The 2030 energy mix proposal in Japan is based on the assumption that the Net Zero Energy House (ZEH) will be standardized energy-saving houses.

Means to resolve company issues

Policy, market, and reputation issues

Solution: Examine the renewal of our long-term environmental target

The Kyocera Group's long-term environmental target has been certified by SBT at the 2°C level, but due to social conditions, customer demands, and the expansion of the renewable energy business, we have established a Task Force on Examining the Renewal of Long-Term Environmental Targets. This Task Force is examining setting stricter targets than our long-term environmental target (30% reduction in CO₂ emissions in 2030 compared to FY2013).

Measures against physical risks

Solution: Risk analysis and implementation of countermeasures

With regard to acute physical risks, we will ascertain the possibility of disasters geographically, evaluate them using the formula below, and implement optimal measures such as installing water gates at each site.

Risk score = Σ (scope of damage impact, human damage, fires and explosions, environmental impact, recovery time, cost of damage to production, cost of damage to equipment) × coefficient of measures to avoid risks

For chronic physical risks, we will utilize the analysis results of international organizations such as Aqueduct Water Risk to examine measures for our entire supply chain.

Source: “Aqueduct Water Risk Atlas”, World Resources Institute (WRI), https://www.wri.org (viewed on: July 6, 2021)