Japan Seeks Gas Past 2050 as AI, Data Centers Set to Lift Demand

ck1d42ajyn9b8(3a9}j4zi0(_media_dl_1.png Bloomberg

Article content

(Bloomberg) — Japan is encouraging energy importers to secure liquefied natural gas past 2050 — the deadline the second-biggest buyer of the fossil fuel has set itself for net zero emissions. 

Article content

Several of the country’s largest LNG buyers are considering 20-year supply deals with projects that would start after 2030, according to people with knowledge of the discussions, who asked not to be named as the negotiations are private. They aim to deploy technology such as carbon capture and storage to mitigate the emissions from burning the super-chilled fossil fuel under Japan’s national target. 

Article content

Article content

Article content

Article content

The government expects a boom in artificial intelligence, data centers and semiconductor chip-making factories to revive power demand, which has been tracking a declining population for years. It sees LNG as vital to energy security, even as it works on increasing renewable energy generation and restarting nuclear reactors idled after the 2011 Fukushima Dai-Ichi disaster. 

Article content

Article content

“During the transition period toward carbon neutrality by 2050, we believe LNG will continue to play an important role,” Nobuhiro Sugesawa, a senior managing executive officer at Tokyo Gas, said in an interview. “Even with 15- or 20-year contracts, long-term contracts should remain a core part of our strategy.”

Article content

In order to adhere to climate commitments and continue using gas-fired power plants, companies are looking to use carbon capture systems or mix the fuel with green ammonia and hydrogen. These technologies have yet to be deployed on a significant scale in Japan. 

Article content

The state-backed Japan Organization for Metals and Energy Security is providing financial support for importers seeking to invest in overseas LNG projects, but is also assisting with negotiations, said Hiroyuki Mori, an executive vice president at the organization. “We have to also take care of environmental issues,” like methane emissions control or carbon capture, he said.

Article content

Article content

Japan will require about 74 million tons of LNG by fiscal year 2040 if it only curbs greenhouse gas emissions by 61% from 2013 levels, the trade ministry said in an estimate released earlier this year. Japan imported 65 million tons last calendar year, according to ship-tracking data.

Article content

The companies are also looking for LNG supply that is flexible, like that being offered from the US Gulf Coast, as that will allow them to divert shipments to other nations should domestic demand falter, the people said.

Article content

“Even as we push forward with decarbonization, it remains extremely important to continue utilizing fossil fuels,” Yoshifumi Murase, the commissioner of the Agency for Natural Resources and Energy within the trade ministry, said at a conference in Tokyo this week.

Article content

—With assistance from Tsuyoshi Inajima.

Article content