Japanese energy giant JERA has announced a comprehensive growth strategy centered on three key pillars: LNG, renewables, and hydrogen & ammonia.
With an investment of 1-2 trillion yen ($6-$12.9 billion) allocated to each pillar, JERA aims to lead the global energy transition by 2035, ultimately achieving zero emissions by 2050.
JERA targets over 35 million tons of LNG transaction volume by 2035, positioning itself as one of the world’s largest integrated LNG value chain players. While LNG remains a crucial transition fuel, the strategy reflects a balance between meeting current energy demands and transitioning to lower-carbon alternatives. However, the challenge lies in ensuring that LNG infrastructure investments do not lock in long-term carbon emissions, which could hinder progress towards net-zero goals.
JERA aims to achieve 20 GW of renewable energy capacity by 2035, aspiring to become a leading player in the renewable energy sector. This target is ambitious but achievable, considering the rapid growth in global renewable energy investments. For comparison, leading renewable energy companies like NextEra Energy and Iberdrola have set similar capacity targets. JERA’s success will depend on its ability to navigate regulatory landscapes, technological advancements, and market dynamics.
JERA plans to handle approximately 7 million tons of hydrogen and ammonia by 2035, seeking to pioneer the global value chain for these low-carbon fuels. Hydrogen and ammonia are pivotal for decarbonizing hard-to-abate sectors such as heavy industry and transportation. However, the current high costs and technological barriers associated with hydrogen production and storage pose significant challenges. JERA’s investment in this area aligns with the International Energy Agency’s (IEA) projection that hydrogen will constitute around 10% of global energy consumption by 2050, but achieving cost competitiveness will be crucial.
JERA’s financial strategy includes a total cash flow investment of 5 trillion yen ($32 billion), with flexibility to reallocate funds among the three pillars based on market conditions and technological advancements. This adaptive approach is prudent, given the rapid pace of change in the energy sector. Achieving a consolidated net profit of 350 billion yen ($2 billion) and an EBITDA of 700 billion yen ($4.5 billion) by 2035 will require effective capital management and strategic partnerships.
JERA has set ambitious decarbonization targets, aiming to reduce CO2 emissions intensity by 20% by 2030 and total emissions by 60% by 2035, eventually reaching zero emissions by 2050. This involves phasing out inefficient coal-fired power plants by 2030 and converting all remaining coal-fired power generation to ammonia by the 2040s. While these goals are commendable, the feasibility of such a large-scale conversion depends on advancements in ammonia combustion technology and the availability of sustainable ammonia supplies.
JERA emphasizes strategic collaborations with global partners to achieve its vision. The company’s focus on mutual goals, diversity, and openness is vital for fostering innovation and scaling up low-carbon technologies. Collaborations will be essential for accessing new markets, sharing risks, and pooling resources for large-scale projects.
