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Energy Highlights: Listening to Key Persons
Initiatives for the Achievement of Carbon Neutrality (Chapter 2)

Diverse initiatives are currently underway to establish a carbon neutral society. However, a mountain of problems that require innovation lie in the way of achieving carbon neutrality.
In the series, Listening to Key Persons, Tatsuya Yamada, a Hitachi, Ltd. official in charge of policy proposals and new business development, asks experts and people in the field about how they view the current situation surrounding the issues that need to be overcome to build a carbon neutral society and how they are moving toward solutions to them.

In Chapter 2, continuing from Chapter 1, University of Tokyo Vice President Hiroshi Ohashi spoke about the future direction of energy innovation toward achieving carbon neutrality, including "CO2 visualization" using digital technology, and "platforms that integrate and manage various resources," which will not only ensure a stable energy supply but also encourage consumer participation and help promote renewable energy.

Need to Plan Policies Based on Data-Supported Evidence

Yamada:In the previous chapter of this interview, you said discontinuous jumps are necessary for achieving carbon neutrality, and it is important that each and every one of us change our perception and behaviors to realizing these jumps. What do you think will be the key for making these changes?

Ohashi:I think the first premise is the awareness shared by all people that carbon neutrality is an obligation that the members of the current generation have for the next generation.

However, it's not easy to change our current actions by imagining the future in a period like this, when consumers can freely choose many different types of merchandise. To begin with, we don't know what actions we should take to achieve carbon neutrality. We don't know the volume of CO2 emitted in the manufacturing of a particular product and its delivery to a store or home. We must first prepare systems that tell us the volume of CO2 emitted by our actions or the degree of contribution to CO2 emissions reduction we can achieve by changing our actions. The introduction of digital technologies is extremely effective for preparing systems that track and visualize CO2 emissions. I think this point lends strength to the argument that digital transformation (DX) is necessary to advance initiatives for the achievement of carbon neutrality.

Promoting Energy Conservation through DX
Reference: Hitachi Social Innovation Forum 2021 - Expert Session presentation material

Meanwhile, we must ensure that energy is supplied stably as well. We must find a way to stabilize supply, ensure economic efficiency, protect domestic employment and enable the continued growth of the economy while advancing initiatives to achieve carbon neutrality. In other words, we must solve a complex optimization problem which imposes many constraints. We are still in a stage where we must refine our actions to address constraining factors such as stable supply. In this environment, H-UTokyo Lab. must continue to discuss these subjects.

I think quantitative trial calculations will be the basis for these discussions. I think the quantitative investigation of questions, such as whether or not all power supplied should be from renewable energy is the best choice from the perspective of environmental load and cost and to what degree the use of nuclear power can reduce CO2 emissions and costs, and the application of findings to future forecasts will be essential for the achievement of carbon neutrality.

Building a Platform and Services to Prepare for Consumer Participation

Yamada:What do you think are issues in the way of increasing renewable energy?

Ohashi:Weather conditions affect both photovoltaic generation and wind generation at present. Accordingly, we must use other power sources such as thermal power or reduce demand when the volume of power generated is small. However, I think we can overcome a good part of this problem by applying storage cells and heat pumps and advancing the development of direct-current transmission and other technologies.

Yamada:As you said, the characteristics of generators differ depending on their types. I think the optimization of whole systems in consideration of this will be the next big issue. The issue calls for a cooperation and control platform for the integrated management and control of the many resources distributed throughout a local community based on energy data. I think this kind of platform could solve problems with renewable energy, including physical distance between generation and consumption locations and time distance between consumption and generation hours.

Figure 1:Cooparative / Control platform
Reference: H-UTokyo Lab. the Industry-Academia Collaboration Forum
Proposal "Toward Realizing Energy Systems to Support Society 5.0" Ver.4

The platform works particularly effectively in places where many resources exist, in other words, places on the demand side. The image is to feed all information, including information about solar panels and storage cells, to the platform and operate it in an optimal way. Hitachi is already providing services that contribute to the optimization to electric power business operators in nine areas across Japan using its supply-demand adjustment system. I think Hitachi can contribute more to the wider use of renewable energy if it can divert these services to the consumer side. With their diversion, I think Hitachi can draw a picture that is different from past responses including requests that consumers reduce power consumption due to the tightening supply-demand balance.

Ohashi:To achieve this, Hitachi must steadily develop its aggregation business for controlling distributed power sources, supply for consumers and demand from consumers while fully leveraging the platform. There is still large ground for Hitachi to develop, including technologies for platforms and the establishment of new business models. At the same time, Hitachi will be increasingly asked to be agile in its handling of ever-changing supply-demand conditions and power source procurement realities like the situation in Ukraine.

Together with the platform, I personally expect the reduction of carbon footprints to be enabled through digitization, in other words, the visualization of CO2 emissions. CO2 is invisible to the human eye. However, it becomes possible to quantitatively grasp emissions we can trace CO2 using digital technologies. When that is achieved, things like the volume of CO2 emitted before a certain product reaches a consumer through a supply chain become visible. Consumers will also become able to choose products that emit less CO2 from a large number of products.

Figure 2:Carbon Visualization through Data Utilization and Choice by Consumers
Reference: H-UTokyo Lab. the Industry-Academia Collaboration Forum
The 4th Symposium of "Toward Realization of Energy System to support Society 5.0."
Pfrof. Ohashi’s presentation material "Systems and policies to harmonize sustainable society and industry with carbon neutrality"

In that sense, we can say services toward the goal of carbon neutrality and technologies that support these services have not been sufficiently developed to date. I think that changing consumer perceptions through the provision of services may be essential for business operators.

Yamada:We share your view that visualization is extremely important. The quantitative visualization of efforts to reduce CO2 emissions is extremely important. We have already started providing a service for visualizing CO2 emissions. However, providing only tools is not a long-term solution. For that, we must design an incentive of some kind that leads to continued motivation. We are thinking about realizing this incentive through collaborative creation with our partners good at services.

Application of Digital Technologies Is Essential for Transformation

Yamada:How do you think the ways the industry has operated will change if a cooperation and control platform is prepared and the aggregation business makes progresses in the energy field?

Ohashi:I think the acceleration of the corporate green transformation (GX) through initiatives for the achievement of carbon neutrality will cause a shift to a horizontally-connected structure, which can be called stratified (layered) industries, instead of the conventional vertically-divided structure for each industry. I think procuring fuels such as synthetic fuels and hydrogen cross-sectionally in all industries centered on industrial complexes is more efficient than procuring them industry by industry. I also think it's a good idea to recover CO2 and use it effectively across industries. I think that, in this way, the value chains of Japanese industries will change from their previous state with GX as a starting point.

As I mentioned in the first chapter of this interview, H-UTokyo Lab. initially discussed energy centered on electric power. H-UTokyo Lab. has subsequently expanded the scope of its discussions to energy as a whole and then to the value chains of industries as the heart of the discussions has shifted to carbon neutrality. The lab has expanded the scope of its discussions not only because the replacement of existing facilities and the establishment of new power generation facilities will be necessary, but also because changes such as chemical complex restructuring will be necessary for the procurement of raw materials to generate power using fuels such as hydrogen and ammonia.

The need to build new unprecedented value chains will arise if carbon dioxide capture and storage (CCS) technologies for recovering CO2 and burying it underground in the end are established and practically used in the future. To state this in another way, I think that companies that have stayed outside the scope of cooperation will connect with each other in various ways across fields and begin to show themselves as new industries.

Our lifestyles will change in step with these trends toward GX, too. For example, the sandwiches we buy at convenience stores are wrapped in films that repel oils and fats now. The elimination of things like this may be considered better for our shift toward carbon neutrality. Carrying a Tupperware with us in addition to a reusable shopping bag may become necessary for going shopping in the near future. The guarantee of hygiene, safety and security is an important matter. We may find ourselves in a situation where we have to pick the option of sacrificing convenience and efficiency to a certain degree. We must accumulate the wisdom needed for the development of economic and social activities together with carbon neutrality while sharing an image of the society and economy that carbon neutrality requires.

Yamada:In that sense, I feel discussions regarding the introduction of daylight-saving time, which had been repeated several times in the past, may be appropriate now from the viewpoint of using energy. Daylight-saving time was not implemented in the past because forces resisting it existed. However, the situation has changed significantly from those days. In point of fact, many advanced nations have adopted daylight-saving time.

Ohashi:Nothing leads to a great change in our way of thinking more than a change in something we have always assumed will remain the same.

In any event, energy is the foundation of a nation. Energy has an extremely large effect on industries that employ people and assist the lives of every citizen. How should we produce and use energy while protecting the economy of each region and the affluence of our lives? The question reminds us that it would be a waste to not use the power of digital technologies. Using digital technologies, we can think up a wide variety of efficient contracts based on modes of energy use by skillfully combining a large number of power sources, instead of using energy in a uniform manner as we have done in the past. We can work to increase efficiency and achieve decarbonization on the premise of the stable supply of energy if we can control multiple power sources autonomously. This control leads to the realization of a resilient society, too.

Needless to say, the establishment of support structures and systems and the design of new services are sought as the premise for this vision of the future. The introduction of daylight-saving time is one idea for these systems. I believe we can move ourselves closer to the achievement of carbon neutrality assuming stable supply if we can reduce scenes in which power loads concentrate as a result of actions such as simultaneous power use by all people, and design a picture for society that embraces diverse economic entities using resources such as digital technologies.

H-UTokyo Lab.
The University of Tokyo and Hitachi, Ltd. established H-UTokyo Lab. in 2016 by creating a new industry-academia collaborative creation scheme for the goal of realizing the “Super Smart Society” (Society 5.0) proposed by the Japanese government.
The Laboratory is advancing research and development projects through a new way of creating and transmitting a vision and solving problems that represents a drastic change from the conventional approach of industry-academia cooperation for solving problems.
Further, information on the joint projects as well as their achievements will be actively shared with society through various channels including open forums.

Hiroshi Ohashi
Vice President, The University of Tokyo, Professor, the Graduate School of Public Policy, the University of Tokyo and Professor, the Graduate School of Economics, the University of Tokyo.
Ohashi graduated from the Faculty of Economics, the University of Tokyo. He also graduated from Northwestern University in the United States in 2000 (earned a Ph. D. in economics).
Ohashi assumed his present positions in 2022 after serving as an assistant professor at the Sauder School of Business, The University of British Columbia in Canada and an associate professor at the Graduate School of Economics, the University of Tokyo. Ohashi specializes in industrial organization theories and competition policies.
He has served as a member of various committees, including the Advisory Committee for Natural Resources and Energy and the Electricity and Gas Market Surveillance Commission.
He has received include the Miyazawa Kenichi Prize (Fair Trade Institute) and the Enjoji Jiro Prize (Japan Center for Economic Research).

Tatsuya Yamada
Division General Manager, Energy Business Administration Division and Business Planning & Strategy Division, Hitachi, Ltd.
Yamada joined Hokuriku Electric Power Company in 1987, and was seconded to The Institute of Energy Economics, Japan in 1998 before joining Hitachi, Ltd in 2002.
He has engaged in tasks involved in the planning of strategies for energy-related businesses, and became Director of the Management Planning Office, the Strategy Planning Division in 2014, Senior Manager of the Business Planning Division, the Energy Solution Business Unit in 2016, General Manager of the Business Planning Division, the New Age Energy Business Co-create Division in 2019, and assumed his present positions in 2020.