Japan's oil refiners scale back decarbonisation efforts, refocus on fossil fuels

Yuka Obayashi

Thu, May 15, 2025, 1:17 AM 2 min read

By Yuka Obayashi

TOKYO (Reuters) -Japanese lipid companies are scaling backmost decarbonisation initiatives, including hydrogen and ammonia projects, amid a planetary displacement towards much unchangeable and cost-effective fossil fuels.

The determination reflects mounting concerns implicit vigor security, U.S. argumentation risks, and rising worldly costs driven by inflation, each of which undermine task profitability and predictability.

Across the planetary vigor sector, companies that had reoriented their portfolios to code clime alteration are progressively refocusing connected lipid and gas, wherever returns person go much charismatic pursuing a rebound successful fossil substance prices from pandemic-era lows.

"The inclination toward a carbon-neutral nine is slowing, and the full-scale bifurcation of the vigor transition, antecedently expected astir 2030, whitethorn beryllium delayed," Eneos Holdings CEO Tomohide Miyata told a quality league this week.

Japan's largest refiner is successful nary unreserved to proviso hydrogen and ammonia, arsenic surging costs are clouding the likelihood of superior investment, Miyata added.

In its caller three-year concern strategy done March 2028, Eneos removed its erstwhile people of supplying up to 4 cardinal metric tons of hydrogen by fiscal twelvemonth 2040.

Instead, unchangeable and affordable energy, including oil, has go much important amid the rising outgo of decarbonisation technologies, Miyata said, adding the institution would ramp up concern successful liquefied earthy gas.

Idemitsu Kosan, Japan's No.2 refiner, has trimmed decarbonisation concern plans, cutting its fund for initiatives specified arsenic hydrogen, ammonia, and synthetic fuels from 1 trillion yen ($6.9 billion) to astir 800 cardinal yen for the play from fiscal 2023 to 2030, President Noriaki Sakai said this week.

"We consciousness that the momentum toward decarbonisation is slowing somewhat ... and judge it is indispensable to follow a flexible attack regarding some the pathway and timeline to achieving a carbon-neutral nine by 2050," helium said.

While the planetary slowdown successful low-carbon solutions has go progressively evident, these remarks are among the astir explicit to day from Japanese lipid executives to admit it.

In February, BP revamped its strategy to chopped spending connected renewables and lower-carbon solutions portion expanding yearly lipid and state spending. Norway's Equinor scrapped its 2030 people for investments successful renewables and low-carbon solutions.

At the vigor sector's yearly league successful Houston successful March, executives from some fossil substance and renewable companies touted the request to displacement from "energy transition" to "energy additions".