Efforts to Reduce GHG Emissions

To reduce GHG emissions, INPEX implements energy-saving activities tailored to the site’s circumstances and avoids continuous flaring and venting during routine operations at operator projects. At our head office in Tokyo, we effectively use renewable energy for 100% of our energy needs. We also implement reduction measures together with partner companies for non-operator projects. In addition to using 100% clean power at our onshore facilities in Abu Dhabi, we are working with ADNOC to adopt clean power, including using onshore clean power to supply offshore facility power needs. In Norway, we are supplying power from a floating offshore wind farm to our production facilities in the northern part of the North Sea.

Efforts to Use Energy Efficiently in Japan

In Japan, we are rationalizing the use of energy according to the Act on Rationalization of Energy Use and Shift to Non-fossil Energy and the Act on Promotion of Global Warming Countermeasures. Based on Japan’s laws and regulations, we report energy usage, the state of other energy use, and studies and efforts related to the rationalization of energy use in the activities of our organizations.

Regarding the Act on Rationalization of Energy Use and Shift to Non-fossil Energy, we have set ourselves the target of reducing average net carbon intensity by 1% or more per year over five years. We have also developed a mid- to long-term plan to achieve this target, and we assess our progress each year and report to the Ministry of Economy, Trade and Industry.

Research Study for Saving Energy

At the Naoetsu LNG Terminal, we reviewed the value of the LNG pump minimum flow setting to limit the generation of boil-off gas (BOG)¹ in LNG tanks and reduce the power consumption of BOG compressors. We also introduced LED lighting at the Nagaoka Field office to reduce power consumption.

¹BOG is gas that evaporated due to the entry of natural heat from the external environment when low-temperature liquids such as LPG and LNG are being transported or stored.

Education and Training to Improve Energy Efficiency

Regarding the rationalization of energy use, we appoint energy management planning promoters and assistants to improve and monitor the maintenance of facilities that consume energy and methods of energy use. Based on the Act on Rationalization of Energy Use and Shift to Non-fossil Energy, energy management planning promoters and energy management assistants undergo legally required training courses related to knowledge and skills necessary for the rationalization of energy use.

Efforts to Reduce Fugitive Methane Emissions

Our target is to maintain our methane emission intensity at its existing low level (about 0.1%). In FY2024, our methane emission intensity was 0.05%, which is below our target level.

We have joined the Oil & Gas Methane Partnership 2.0 (OGMP 2.0), a reporting framework for methane emission reductions by oil and gas companies. OGMP 2.0 was established as an international reporting framework under the United Nations Environment Programme (UNEP), providing member companies with a framework for comprehensive, measurement-based reporting to promote methane emission reductions. Since FY2024, we have been reporting methane emission reductions through the OGMP 2.0 framework and have achieved the Gold Standard for Pathway which is given to companies that meet the standards stipulated in OGMP 2.0. Through this reporting, we will ensure the accuracy and transparency of our methane emission reporting, and actively pursue technological innovations and share of case studies with other member companies with the aim of measuring and reducing methane emissions.

To manage and reduce methane emissions, we have been collecting and reporting data on fugitive emissions based on international methods before joining OGMP 2.0.

Starting from FY2019, we have surveyed and identified inspection points for fugitive emissions from equipment and facilities at our projects in Japan, establishing a structure for data collection and reporting. Subsequently, we brought in a laser methane detector to enable inspections at almost all applicable points. We also introduced vehicle-mounted methane detectors and drones which we can inspect all 1,500 kilometers of our gas pipelines in Japan. Fugitive emissions detected through this inspection process are rectified immediately.

At our overseas projects, we carried out inspections of fugitive emissions through a leak detection and repair (LDAR) program using infrared cameras. At the Ichthys LNG Project, we inspected the central processing facility (CPF) and floating production, storage, and offloading (FPSO) facility in FY2022, and the onshore gas liquefaction plant in FY2023.

We are exploring the possibility of implementing similar inspections at other projects and will continue to take further action to reduce fugitive emissions across the Group.

Efforts to Reduce Flaring

We have set a target of zero routine flaring at our operator projects by 2030, and we are examining flare reduction measures through collaboration among relevant departments. In Japan, as part of our research and development of flaring reduction measures, we are exploring the implementation of methane pyrolysis technology (see the diagram below) for a reduction of atmospheric CO₂ emissions by solidifying carbon in flare gases. Since FY2022, we have also been managing our flaring divided into two categories – routine and non-routine flaring – in accordance with the Flaring Management Guidance for the Oil and Gas Industry developed by Ipieca, IOGP, and the Global Gas Flaring Reduction Partnership (GGFR).

Methane Pyrolysis to Reduce Flaring

As small quantities of non-condensable gas from oil production fields encounter challenges in feasible utilization, such gas is often incinerated in the flare system with CO₂ emissions. The application of methane pyrolysis technology enables the extraction of solid carbon from flare gases and consequently reduce CO₂ emissions by flaring.

Efforts to Reduce Emissions in Supply Chain—Toward Scope 3 Reduction

Efforts with Contractors and Suppliers

Our HSE Policy states that we will “pursue every effort to manage and reduce Greenhouse Gas (GHG) emissions based on our ‘Corporate Position on Climate Change’.” In line with our efforts to reduce emissions across the supply chain, our contractor and supplier agreements include a clause requiring compliance with our HSE Policy. Our Supplier Code of Conduct established in July 2022 establishes the undertaking of voluntary environmental initiatives, such as measures to reduce GHG emissions, as an expectation on our suppliers. We also collect information about our suppliers’ efforts regarding the reduction of GHG emissions by asking them to answer our CSR self-assessment surveys.

Promotion of Carbon Offset Product Sale

We promote the sale of carbon offset products to our customers. Carbon offset products comprise LNG, natural gas, LPG, and jet fuel we sold for which the GHG emissions produced across the life cycle – from extraction through transportation and combustion – are offset by the equivalent volume of carbon credits, resulting in net zero GHG emissions. By supplying these carbon offset products, we contribute to our customers’ efforts to reduce their supply chain carbon footprints.

Past Efforts

• 2018: Published the Corporate Position on Climate Change (since then, regularly reviewed and revised)
• 2020: Made the Climate Change Strategy Working Group an advisory body to the Sustainability Committee
• 2021: Established target to achieve net zero by 2050 (Scope 1 and Scope 2)
• 2022: Announced the Long-term Strategy and Medium-term Business Plan (INPEX Vision @2022) and established the five net zero businesses
• 2023: Joined the Oil & Gas Methane Partnership 2.0
• 2024: Joined the Oil and Gas Decarbonization Charter
• 2025: Announced INPEX Vision 2035 and revised the Corporate Position on Climate Change (latest version)

Case Study: Promotion of Forest Conservation Targeting Net Zero Emissions

Materiality of Forest Conservation and Afforestation in Tackling Climate Change

We continue to see nature-based solutions – such as forest conservation and afforestation projects – as fulfilling an important role in tackling climate change.

The role of forests not only reduce CO₂ emissions by preventing deforestation and forest degradation and increase CO₂ absorption through afforestation, but also offer co-benefits by safeguarding critical biodiversity, conserving water sources, reducing soil erosion, and raising the living standards of local communities, thereby contributing to achieving the United Nations’ Sustainable Development Goals (SDGs).

INPEX’s Forest Conservation and Afforestation Initiatives

We are reducing GHG emissions through our businesses by providing CCS, hydrogen, ammonia, and other lower-carbon solutions. Besides these businesses, we are also promoting forest conservation and afforestation. We are focusing on credits obtained through CO₂ absorption achieved by forest conservation and afforestation as a complement to our initiatives to achieve net zero emissions through cleaner oil and gas businesses, a transition to natural gas, CCS, and renewable energy. One example is the signing of a partnership agreement with Gunma Prefecture’s Numata City and other parties such as forest associations to create J-Credits from forests owned by Numata City. Through this partnership, we seek to define new environmental and economic value of the forests in Numata City and contribute to the sustainability of the forests and the local community. We will continue to promote efforts after taking into consideration the progress of our businesses, both in Japan and overseas, and the legal systems of each country, among other factors.

Approach to Procuring and Utilizing Carbon Credits

We use carbon credits for our carbon offsets on GHG emissions in accordance with the approach of the Mitigation Hierarchy. We plan to use credits certified under highly trusted domestic and international schemes and those we receive in return for support and participation in forest conservation projects. Therefore, we work to understand the trend of carbon-related regulations in countries where our assets are located. At the same time, we also track the latest developments in the carbon credit market such as initiatives in Japan and overseas and assess the mid- to long-term performance of our projects. Through these efforts, we work to procure high-quality credits. We select and use carbon credits certified under the schemes shown below.

Verified Carbon Standard (VCS): Verification standard established by Verra, an international body for setting carbon offset standards

Joint Crediting Mechanism (JCM): Japanese Government-led bilateral credit program for reduction and removal of GHG emissions in cooperation with developing countries, with both sides sharing the benefits of reduction and removal

J-Credit: Scheme designed to certify the amount of GHG emissions reduced and removed in Japan, with credits certified by the Japanese Government.

Australian carbon credit units (ACCUs): Australian carbon credits issued according to Australia’s emissions reduction act

Efforts to Procure High-quality Credits

1. Internal Project Assessments
   To ensure acquisition of high-quality carbon credits from top-grade projects, we first assess projects before making a final selection and purchase. These assessments are designed to identify any permanence² concerns, potential issues with local communities and other stakeholders, and to verify that land ownership and usage rights are unambiguous and guaranteed to extend beyond the life of the crediting period. We make a comprehensive judgment on projects by considering the results of these internal assessments alongside the results of credit assessments by external assessment companies.
2. Priority on Projects with Co-benefits
   In addition to the effectiveness of reducing CO₂ emissions and absorbing CO₂, we give preference to projects with the Sustainable Development Verified Impact Standard (SD VISta)³ and Climate, Community & Biodiversity Standards (CCB Standards)⁴ that deliver co-benefits by contributing to the United Nations’ SDGs

²The concept that refers to the need to ensure that CO₂ reduction and absorption volumes are nonreversible, with no risk of release into the atmosphere.

³A framework for certifying a project’s contribution to the SDGs.

⁴A framework for certifying projects that simultaneously deliver tangible climate, community, and biodiversity benefits.