Japan’s leading oil refiners are scaling back investments in low-carbon fuels, shifting their focus back to fossil fuels amid high costs and slow adoption of green technologies.
According to Reuters, companies like Eneos Holdings and Idemitsu Kosan have recently announced reduced spending on clean energy initiatives such as hydrogen and ammonia. Executives cited rising costs and uncertainty in market demand as major challenges.
Eneos, Japan’s largest refiner, said that soaring costs for ammonia and green hydrogen have made planning capital expenditures difficult. CEO Tomohide Miyata announced at a recent press conference that the company has dropped its earlier goal of supplying 4 million metric tons of hydrogen by 2040. Instead, Eneos now plans to “consider” hydrogen production and distribution as part of a long-term supply chain for industrial and transport use.
Eneos also aims to grow its liquefied natural gas (LNG) business, expecting LNG demand to rise until at least 2040.
Miyata added that the transition to a carbon-neutral society is slowing, and the major shift in energy sources that was once expected by 2030 may now be delayed.
Idemitsu Kosan, Japan’s second-largest refiner, also revised its green energy strategy. The company is cutting its investment in low-carbon fuels—from $6.8 billion to $5.5 billion by 2030—due to similar concerns over cost and feasibility, said President Noriaki Sakai.
Japan, which relies almost entirely on imported crude oil, is balancing its climate goals with the need for energy security. This renewed focus on fossil fuels follows similar moves by major European oil firms. After facing weak returns on renewable projects, many of those companies have shifted back to their core oil and gas businesses.
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