Solutions for visualizing, understanding, and streamlining carbon emissions from various angles, such as business sites and products, corporate activities, and consumer behavior.
Efforts to conserve energy have been underway for several decades, but in recent years, the methods used have become more sophisticated, including AI and other technologies and billing methods based on usage. These solutions optimize energy usage.
Solutions related to batteries and hydrogen, such as electrification (EV) of mobility (means of transportation) such as cars and buses, which used to be fueled by gasoline, to reduce CO2 emissions, and to extract hydrogen for industrial use and to encourage its practical application.
Solutions related to batteries and hydrogen, such as electrification (EV) of mobility (means of transportation) such as cars and buses, which used to be fueled by gasoline, to reduce CO2 emissions, and to extract hydrogen for industrial use and to encourage its practical application.
Solutions that contribute to the fixation and absorption of CO2 in the atmosphere through forest protection and forest management, and offset the amount of greenhouse gas emissions that cannot be fully reduced through the purchase of carbon credits.
One solution is to reduce emissions in society as a whole by recycling metals, plastics, and other resources and products at various stages of economic activities.
Creating 5 million tons of "Forest J-Credits" to protect and nurture Japan's forests together with companies.
Japan has abundant forest resources, but there are issues such as the aging of postwar plantation trees and the low rate of reforestation. One solution is the "Forest J-Credit," which values the amount of CO2 absorbed by forests as carbon credits. We will look at the appeal of this system, which is linked to the return of funds through credits and the cultivation of forest resources that lead to carbon neutrality.
In October 2023, the carbon credit market was launched on the Tokyo Stock Exchange. There are four major types of J-credits, but interest in forest J-credits, which are derived from forest absorption, is rapidly growing due to the rapid increase in the amount of J-credits generated and the fact that they are related to "regional contributions" and "natural capital. Here, we spoke with them about the current status of "forest J-credits" and their appeal.
J-credits derived from "forest management" utilizing the knowledge of "Mitsui's Forests"
--First of all, please tell us about the Climate Market Office, where you two are working.
Maeda: In the field of carbon credits, we are engaged in the entire process from creation to sales, both in Japan and overseas. In the field of forest J-credits, we are involved in everything from aerial and satellite surveying to credit creation and sales.
Takuya Maeda
Deputy General Manager, Energy Solutions Business Unit, Carbon Solutions Business Div, Climate Markets Dept, MITSUI & CO., LTD.
Joined the company in 2014. After joining the company, he was in charge of new business creation in the Digital Strategy Department, and will promote the forest J-credit business at the current headquarters from 2022.
--To reiterate, please tell us about "Forest J-Credits".
Akutsu: This is a system under which the government certifies the amount of CO2 absorption generated by the proper management of forests based on set rules.
Masae Akutsu
Carbon Credit Manager, Energy Solutions Business Unit, Carbon Solutions Business Div, Climate Markets Dept, MITSUI & CO., LTD.
Responsible for energy-related (mainly logistics) business; promoting forest J-credit business at current headquarters from 2023
Maeda: There are three methodologies in forestry, but the one we are working on is derived from "Forest Management". The amount of absorption is based on the forests subject to NDC(*1) reporting, and only the amount of absorption from forests where the forests are managed in an appropriate manner, a "Forest Management Plan" is prepared, and the forests are managed based on the plan after the project is completed is covered.
*1 NDC = National greenhouse gas emission reduction targets submitted by the government
--Please tell us why Mitsui focused on forest-based carbon credits.
Maeda: We own "Mitsui Bussan Forests," company-owned forests in 75 locations across Japan, totaling approximately 45,400 hectares. In a conversation with our wholly owned subsidiary Mitsui Bussan Forest Co., Ltd. that manages the forests, they shared with us that one of the challenges in creating credit is the time-consuming manual surveying process. We thought that if we could create credits on a large scale using digital surveying, we would be able to draw out the value that lies dormant.
Streamline credit creation by utilizing digital transformation such as aerial and satellite surveying
--What specific methods did you employ?
Maeda: In the past, we used a sample site every 30 hectares (e.g., 20m x 20m) to manually acquire "tree species and height" data on site, but the scale was limited. However, the scale of the data was limited. Therefore, we used aerial surveying with a partner company to irradiate a laser beam from the sky and acquire data for each tree in the entire area of the forest to be credited, down to a few centimeters, which enabled us to create a large-scale credit.
--Have you done anything else in terms of digital transformation?
Maeda: In order to certify and issue J-credits, it is necessary to conduct annual patrols to check the condition of the forest. In the past, people used to enter the site and take photos, but we have built a system that automatically extracts the amount of annual change by utilizing satellite images and AI. We have also developed a system that automatically identifies credit-eligible forests where thinning and other operations have been conducted in the past based on satellite data. This "satellite patrol" approach has been patented.
Mitsui & Co., Ltd to jointly generate more than 50% of the estimated amount of forest J-credits, or approximately 5 million tons of CO2
--I hear that in addition to the J-credits derived from the company-owned Mitsui's forests, you are also creating credits jointly with local governments and other entities in various regions. Could you tell us how this works?
Maeda: For forest owners and managers with forests of 5,000 hectares or more subject to forest management plans, we provide comprehensive support from aerial surveying to credit registration assessment and sales. Currently, more than 50% of the total amount of forest J-credits registered and expected to be certified comes from "Mitsui's jointly generated projects," and we plan to generate approximately 5 million tons of CO2 by 2035.
--About 5 million t-Co2 is an impressive amount. How were you able to gain a 50% market share?
Akutsu: In addition to the fact that we were the first player in the project, we were also recognized for our sales performance, which was based on the propagation of good reputation among local governments based on the results generated in each project, our ability to generate accurate credit using digital technology including satellite applications, and our customer network and marketing capabilities cultivated over many years since the Kyoto Protocol era. The company's sales performance has been highly evaluated.
--It is generally said that forestry is not profitable and that it cannot do without subsidies. How much can the creation of carbon credits contribute to supporting forest management?
Maeda: It is not as if the forest management will become profitable all at once. It is correct to describe it as gaining a little additional revenue.
-which means that the business will be more mission-driven than profit-driven?
Maeda: That's right. I was uncomfortable with the fact that the environmental value of nature and forests in Japan is not properly evaluated and returned as economic value. By properly evaluating the value of forests, converting it into economic value, and circulating it, the richness of nature will be economically valued. We hope to create such a society.
Attractiveness of Forest J-Credits from the Perspective of "Contribution to Local Communities" and "Natural Capital
--We hear that more and more companies are paying attention to forest J-credits, including from the perspective of "contribution to local communities" and "natural capital. Mazda, an automobile manufacturer, has concluded a long-term forest J-credit purchase agreement with us for the "Okayama Forest Maintenance Corporation," a project jointly created by MITSUI & CO., LTD.
Akutsu: One of the most common motivations for purchasing forest J-credits is the "community contribution" aspect. We believe that forest J-credits, which contribute to the protection and cultivation of local forest resources, will be one of the candidates for companies considering credit procurement because of its compelling story.
- - are there any disadvantages?
Akutsu: Although this may be a regulatory issue, forest J-credits can be used for fewer purposes and are a bit more expensive than those derived from renewable energy generation and other sources. However, we believe that the advantages outweigh this.
Maeda: Many people are unaware that the planned supply of forest J-credits is more than 5 million t-CO2, so I believe that if awareness spreads with this article, more people will have the option.
Purchasers are partners in nurturing Japan's forests
--What kind of companies do you recommend for forest J-credits?
Maeda: J-Credits are GX-ETS eligible credits along with JCM (Bilateral Crediting Scheme), and we have received expressions of interest from companies participating in the GX League. A good example is the use of domestic forest absorption for a portion of Scope 1 emissions that cannot be reduced by any means. We would like to increase the number of partners who are willing to grow domestic forests together with us, rather than just purchasing credits.
--What exactly does it mean to nurture forests together?
Akutsu: In addition to purchasing forest J-credits, we would like to work with our company and the forest owners from whom the credits are generated to form reforestation projects and projects that create new environmental value, and return the proceeds to the forest.
--Lastly, what is your dream that you would like to achieve through this business?
Maeda: We would like to realize the circulation of funds to forests in Japan to leave abundant forests. I also hope to use the forest J-credits as an opportunity to solve decarbonization issues with various domestic companies and contribute to the decarbonization of Japan.
Akutsu: We would like to regenerate Japan's forests while utilizing forest J-credits. Furthermore, we would like to provide value to our customers through the network of the MITSUI & CO., LTD. group, thereby energizing Japan.
