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31st May 2002

1 February 2005

Carbon Disclosure Project (CDP) Greenhouse Gas Emissions Questionnaire

We request as full a reply as possible to the following questions by no later than 31st May 2005. Please send your response electronically, in English, to the Project Coordinator at info@cdproject.net. If you already publish the relevant information, please indicate for each question how this can be accessed. If at this stage you can only provide indicative information we would still welcome this; “a best guess” is more valuable to us than no response. If you are unable to answer any of these questions please state the reasons why. This is the third CDP information request (CDP3); for previous respondents, please highlight developments and trends since CDP2. 

  1. General: Do you believe climate change, the policy responses to climate change and/or adaptation to climate change represent commercial risks and/or opportunities for your company?
  1. Responsibility: Do you allocate specific responsibility to executive and independent directors for climate change related issues?

“Yes”

The President of Nippon Steel serves as a vice president of environmental affairs (chairman of the global warming task force) of the Japan Business Federation and plays a leading role in Japan’s actions against global warming

  1. Innovation: What are the relevant technologies and/or processes that can be employed in your company/sector to achieve emission reductions? Have you taken any steps to develop/implement these technologies and do you anticipate being able to profit from their commercialisation?

Nippon Steel has been engaged in hydrogen energy project as an alternative to fossil fuels and developing   “Separation and storage of CO2” technology. Additionally, our most advanced technologies contribute to resource and energy saving for instance, almost 100% recycle of waste plastics by the coke oven chemical materials process and waste tire recycle by steelmaking process.  We believe that they would contribute to our revenue when they are commercialised.   

1. Hydrogen energy project; Since 2001, Nippon Steel has been working on the five-year national project, “the development and verification of a technology enabling efficient hydrogen production using sensible heat emitted during the steelmaking processes”.   This project centers on the technology that allows hydrogen to be produced from coke oven gas (COG) by combining heat emitted in the steel making process, ceramic films for oxygen separation and catalysts needed to trigger reactions for hydrogen separationIn addition, verification tests are in progress at the facilities for the development of liquefied hydrogen production, which were completed at Nippon Steel’s Kimitsu Works in March 2004 as an integral part of the hydrogen and fuel-cell verification project administered by the Ministry of Economy, Trade and Industry.  This project involves the production of liquefied from COG for use by fuel-cell powered vehicles and its delivery to the Ariake hydrogen station.   Nippon Steel’s Nagoya Works supply hydrogen to the World Expo Aichi 2005 for fuel-cell powered vehicles.  Nippon Steel is committed to the creation of a hydrogen-based society by tapping its engineering capabilities to mastermind the entire range of hydrogen supply systems, including hydrogen production facilities, and by demonstrating its excellence as a manufacturer of materials by developing materials for the transportation and storage of liquefies hydrogen(Please refer to Nippon Steel Sustainability Report 2004, page 12) 

2. Technological development for the separation and storage of CO2; As a participant in the R&D Project for CO2 Geological Sequestration promoted by the Research Institute of Innovative Technology for the Earth (RITE), Nippon Steel has extended cooperation primarily in the engineering sphere to the verification test for CO2 injection.  From July 2003 to March 2005, the verification test called for an injection of about 10,000 metric tons of compressed CO2 over a period of one and a half years (or 20 metric tons per day) into an aquifer in Nagaoya City, Niigata Prefecture. Nippon Steel has also been involved, since fiscal year 2004, in a project for the technological development of CO2 separation and recovery using low-grade waste heat. In order to further contribute to the development of practical innovative technologies against global warming, Nippon Steel provides the process gas and low-grade waste heat in the steel plants to encourage low-cost CO2 separation technologies(Please refer to Nippon Steel Sustainability Report 2004, page 12) 

3. Almost 100% recycle of waste-plastic by using the coke oven chemical materials process: Nippon Steel is seeking effective means of utilizing waste plastics used in the iron making process. If achieves, this will contribute toward resource conservation, energy savings and lower CO2 emissions while also helping prevent global warming. At the Nagoya and Kimitsu Works, waste plastics have been recycled since 2000 using the company’s coke oven chemical materials process.  Nippon Steel’s waste plastic recycling network now covers the entire nation, with the addition of similar facilities in the Muroran and Yawata Works in April 2002 and Oita Works in April 2005.  In fiscal year 2004, the four locations collectively processed 160,000 tons of waste plastics and in fiscal year 2005 Nippon Steel will process 160,000 tons of waste plastics and packaging out of 470,000 tons which local governments collect from households.  The volume of waste containers and packaging intended for recycling is expected to increase.  The steel industry, which is equipped to accept the largest portion of such plastic waste, has to assume greater responsibilities in society.  Decisions have been made by the steel industry to set up an adequate structure to accommodate one million tons of waste plastics by 2010.  (Please refer to Nippon Steel Sustainability Report 2004, page 20)  

4.  Converting waste tires into recyclable resources by utilizing steelmaking process:  Nippon Steel’s waste tire recycling facility at Hirohata work now covers the entire nation processing about 12% of waste tires (some 120,000 ton) of about a million tires which are discarded annually.  Despite the fact that waste tires had been recycled as a fuel since it was difficult to be processed in any other way, Nippon steel have combined different recycling process, the cold iron-resource melting furnace (SMP), steelmaking process and gasification recycling facilities using external heating rotary kilns, which enables to recycle massive amount of waste tires almost 100% within the same site    

To convert steel cord, carbon, and rubber which are constituent of waste tires exhaustively into resources and fuels for steel products by utilizing steelmaking process, the cold iron-resource melting furnace (SMP) is world’s first technology.  Furthermore, external heating rotary kilns pyrolyzes waste tires into gases, carbon residues, oil and iron wires. By combining these two technologies, Nippon Steel enables to process 120,000 ton of waste tire within the same site, which unprecedented recycling technology. (Please refer to Nippon Steel Sustainability Report 2004, page 19) 

[Remark]

Resource saving effects when combined following measures; creating steelmaking material using SMP (60,000 ton/year since 1999) and recycling of waste tires using gasification facility (60,000 ton/year since July 2004)

Above mentioned resource saving effects are equivalent to oil 100,000 k l/year which represents five-month energy consumption of Himeji city where 480,000 people inhabits.   

  1. Emissions Trading: Do you have a strategy regarding emerging greenhouse gas emissions regulation and trading initiatives such as the EU Emissions Trading Scheme and the Chicago Climate Exchange?

“Yes”

Nippon Steel thinks Japan should utilize Kyoto Mechanism in order to achieve the targets set by Kyoto Protocol.  We believe that projects such as CDM and JI and international emissions trading would contribute to worldwide prevention of global warming.  It is important to urge CDM committee to approve projects with CO2 reducing effect such as energy saving and heat efficiency improvement as CDM projects as well as designing a strategy to utilize Kyoto Mechanism.  It is also important to prepare for getting a credit as a safety net for the compliance with Kyoto Protocol.

However, steel industry in Japan has already accomplished world top-level energy efficiency by continuous energy saving effort since oil crisis in 1973.  Furthermore, unlike EU Japan is surrounded by the countries without any duties to reduce emissions set by Kyoto Protocol.  Despite these conditions if the national emission trading which allocate GHGs emissions limit to each Japanese company is introduced and reinforcement of regulation by agreement with government is done, competitive conditions will be distorted compared to neighboring nations without duties.  We need to recognize that this would lead Japanese steel industry to lose its competitiveness in the international markets under the uneven competing conditions.  

Measures taken to the date: In January 2004 Nippon Steel completed a blast furnace hot-stove exhaust heat recovery system for Tata Steel in India.  Commissioned as New Energy and Development Organization (NEDO)’s model project for energy conservation, the facilities are now operational.  The energy efficiency attained by the facilities, converted into the amount of CO2 reduced, is estimated to be around 22,000 tons of CO2 per year.

For the same steel plant, Nippon Steel is working for a CDM-based project approval for the creation of Coke Dry Quenching system, with an expected CO2 reduction 140,000 tons per year.

Nippon Steel has decided to join two carbon funds. Decision has been made that Japan Iron and Steel Federation (JISF) will fund $ 5million for Japan GHG Reduction Fund.  It has been also decided that JISF will fund $ 5million for Bio Carbon Fund of World Bank. Nippon Steel is a major member of JISF and will be responsible for about one third of its payment in each fund. 

  1. Operations1: What is the quantity in tonnes CO2e of annual emissions of the six main GHGs2 produced by your owned and controlled facilities in the following areas? 
 
  1. Products and services: Do you estimate the emissions associated with:
 
  1. Emissions reduction: Do you have emission reduction programmes in place? 
  1. Emissions intensity: Do you measure emissions intensity against production, sales or other output measures?

“Yes”

1 We evaluate our progress in energy saving by using energy base unit per steel production.

2 We have set the year of oil crisis, 1973 as a base and achieved 21.8% of improvement by 1990 and 28.9% by 2003 (7.1% of improvement from 1990 to 2003).

3 Our target is to achieve 10% of energy saving by 2010 compared with 1990.  The apparent energy base unit of 2003 is 24GJ/t (= 729PJ/30,140,000t).  

  1. Energy costs: What percentage of your total revenue is represented by the costs of fossil fuels and electric power?

We consumed 21,300,000 tonnes of coals, 830,000kilo litre of petroleum fuels and 2,480,000,000 KWH of utility power to produce 30140000 t of steel in 2003.  These costs account for circa 7% of our sales.

1 Please specify the methodology and boundaries used for measuring emissions e.g. www.ghgprotocol.org. Explain if these data are audited and/or externally verified. If responding for the first time please supply data for the last three annual measurement cycles.

2 Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), Hydroflurocarbons (HFCs), Perfluorcarbons (PFCs) and Sulphur Hexafluoride (SF6).

3 For example, if you are a financial services company, do you take into account the emissions related risks and/or opportunities of the companies you invest in, lend to, or insure.