Sustainability

Initiatives Toward Carbon Neutrality

Preventing Global Warming

Initiatives to Reduce CO₂ Emissions

The NGK Group has been making steady progress toward achieving the CO₂ emissions reduction targets of our Fifth 5-Year Environmental Action Plan, by creating and implementing annual improvement plans in line with the business plans of each of our manufacturing sites both within Japan and overseas.
In FY2021, the first year of the NGK Group’s Fifth Five-Year Environmental Action Plan, we saw an increase in production volume in Environment Business Group and Digital Society Business Group amid the recovery from the COVID-19 pandemic. Given this, we have focused on a variety of initiatives following the NGK Group Environmental Vision which clearly stipulates the goal to achieve net zero CO₂ emissions in 2050.
In FY2021, NGK launched the Net Zero CO₂ Emissions Project as a cross-functional organization in effort to develop an organization dedicated to net zero. With the Senior Vice President responsible for Corporate Manufacturing Engineering serving as the project leader, working groups have been launched based on the four strategies for carbon neutrality to implement initiatives on various themes including improving energy conservation efforts, implementing internal carbon pricing, developing fuel conversion technology, and installing photovoltaic power generation systems.
To visualize energy consumption, we started collecting monthly energy data and sharing this data on an internal platform.
As a result of energy conservation efforts in FY2021, CO₂ emissions were reduced by 69,000 metric tons, including 12,000 metric tons in improvement per basic unit. Furthermore, in terms of the procurement of renewable energy, sites in Japan including Nagoya, Chita and Komaki, as well as NGK Ceramic Device headquarters have completely switched to carbon neutral LNG*, while renewable energy use is also expanding at overseas Group companies. As a result of these efforts, our CO₂ emissions in FY2021 totaled 620,000 metric tons, achieving the target for FY2021.
Starting in FY2022, we will further strengthen data-driven analysis to improve energy conservation activities. In an effort to expand the use of renewable energy, we have already installed photovoltaic power generation systems at production sites in Japan and overseas, with the plan to begin operation at NGK Ceramic Device Tajimi in FY2022. Reflecting these efforts, we have set our target CO₂ emissions for FY2022 at 600,000 metric tons. Meanwhile, we have started ceramic firing tests using hydrogen burner furnaces to promote hydrogen use aimed at further encouraging technical innovation that will help us achieve our net-zero CO₂ emissions target from 2030 onwards. At the same time, we are also planning to test carbon capture and storage (CCS) for storing the CO₂ we release.

Carbon neutral LNG is a type of LNG considered to have no CO₂ emissions because they can be offset with CO₂ credits.

CO₂ Emissions (all NGK Group production sites)

This graph illustrates trends in CO2 emissions. We reached the FY2021 target for CO2 emissions at 620,000 metric tons.

Adoption of Environmentally Friendly Production Processes

The NGK Group makes efforts to reduce environmental impacts resulting from production through the introduction of highly energy efficient equipment and the promotion of the recovery and use of exhaust heat and improved production efficiency. We are committed to creating even more advanced eco-processes, aimed at enhancing competitiveness.

Comparison of CO₂ Emissions from Continuous Kilns by Year of Introduction

This graph shows trends in CO2 emissions from continuous kilns by the year of introduction. With 1984 set as 100, emissions were reduced to 31 in 2015.

Change in per unit of CO₂ Emissions from continuous kilns, a typical production facility

Measures to Reduce CO₂ Emissions and Effects

As we strive to reduce CO₂ emissions of the Group as a whole, we have focused on developing company-wide organizations, sharing of basic unit targets and CO₂ reduction targets, collecting monthly energy data, and visualizing our efforts with the launch of an internal platform, which are steadily showing results. Our main initiatives and their effects are as follows.

Main Initiatives Aimed at Reducing CO₂ Emissions

Category	Measures	Effects (FY2021)
Enhance energy conservation promotion structure	Develop a Group-wide organization for energy conservation Collect monthly energy data and visualize efforts through internal platform commentary	CO₂ reduction effect Reduction from energy conservation activities: 12,000 metric tons Establishment of higher efficiency plants and streamlined operations from improved management: 57,000 metric tons
Increase efficiency of manufacturing processes	Main production efficiency initiatives at overseas sites Introduction of innovative production processes Facility improvements Operational improvements
Energy conservation support for Group companies	Promoting energy conservation at overseas sites Created an English version of the voluntary energy conservation guidelines and a best practice brochure and distributed to overseas sites Head Office staff visited overseas sites and conducted activities with local employees
Energy conservation activities for general equipment	Main improvements deployed across the Group Replaced boilers with higher efficiency models Prevented air and steam leaks and rationalized usage Switched to LED lighting Renewed air-conditioning equipment and rationalized air conditioning settings

Energy Conservation of General Equipment and Buildings

The NGK Group has been actively promoting energy conservation activities in relation to general equipment, such as lighting, air conditioners, boilers, and compressors. The Head Office plays a central role in this by sharing know-how among different manufacturing locations, thereby achieving more efficient activities. Whenever our buildings are built or altered, we ensure that large-scale energy-saving measures and ZEB principles are incorporated.

(1) Head Office Engineering supporting energy-saving activities at overseas production sites

The Head Office provides support for energy conservation measures on general equipment (compressors, boilers, air conditioners, etc.) at overseas production sites. These efforts have produced solid results at overseas Group companies, including NGK Adrec, which manufactures fire refractories, and NGK Ceramic Device, which manufactures electronics parts. Our initiatives include 1) energy conservation patrols (identifying leaks or waste and implementing measures) and 2) visualization of data (establishing appropriate values for energy intensity and conducting management). All of these initiatives are conducted jointly with local members and contribute to the increased energy conservation of manufacturing facilities and dramatic reduction in energy costs.

(2) Creating and distributing a printed version of the energy conservation brochure and guidelines

We have created a digital version (Japanese and English) of our energy conservation guidelines and brochure of best practices for distribution within the Group. We also distribute a printed version to each manufacturing site inside and outside of Japan to be kept on hand at worksites for quick reference. This is expected to help enhance voluntary activities and further reduce CO₂ emissions.

This is a photograph of the brochure of best practices distributed within the Group.

(3) Efforts to conserve energy of buildings

Whenever there is an opportunity to build or renovate a building, we actively endeavor to utilize high-efficiency equipment and introduce renewable energy, and carefully consider each location so as to effectively utilize any natural advantages, such as low-temperature waste heat from our adjacent factories and natural ventilation/lighting, to achieve significant energy savings. Efforts like these allowed the new administration/welfare wing, which was completed in Mizuho, Nagoya in January 2020, to be a zero energy building (ZEB)-oriented office facility whose CO₂ emissions are less than half of the official standard. This construction project has been lauded for its pioneering CO₂ reduction technology, and it was adopted as a Leading Sustainable Building Project (CO₂ Reduction) by Japan’s Ministry of Land, Infrastructure, Transport and Tourism.
We have many more construction and renovation projects lined up as part of our plans to restructure and update old buildings, all of which will include energy saving and ZEB measures.

This is a photograph of the new administration/welfare wing completed in Mizuho, Nagoya.

This figure illustrates the various energy conservation mechanisms adopted in the new administrative/welfare wing.

Global Warming Countermeasures by Group Companies

NGK Stanger, Energy Support, and Hokuriku Energys

We collect and recycle gas-filled switches that are disposed of by customers. These units contain sulfur hexafluoride (SF₆) for insulation purposes. As it has a very high global warming potential, the companies collect all SF₆ when disassembling the unit without allowing it to be released into the atmosphere. The total amount of SF₆ recovered in FY2021 was 730 kg, which is the equivalent of approximately 17,000 metric tons of CO₂.

This is a photograph of gas-filled switches discarded by customers that are recycled by NGK Stanger and Hokuriku Energys. The sulfur hexafluoride (SF6) is safely collected and recycled.

NGK Ceramics Polska

Since 2011, NGK Ceramics Polska has been focusing on improving processes for manufacturing SiC-based diesel particular filters (DPFs), its main product.
Target areas include particularly energy-intensive sintering and drying processes, for which we have carried out various measures to reduce CO₂ emissions. To further improve our performance, we will introduce new measures, including technologies provided by the Nagoya Site.

This is a photograph of an employee implementing improvement activities for CO2 reduction.

NGK Metals

NGK Metals is reducing CO₂ emissions by updating control systems and improving the operation of production equipment. Among these, automating the control units of the oil circulation system for rolling mills had a particularly positive effect. The automation eliminated unnecessary around-the-clock operation, a measure taken to address inefficient activation/deactivation processes, as well as simplified complex manual processing. This change helped reduce electric power consumption as well as CO₂ emissions.

Calculation of CO₂ Emissions in Life Cycle Assessment

Life cycle assessment (LCA) is a quantitative evaluation method for environmental impacts of products and services throughout their lifecycle (raw material extraction-raw material production-product manufacturing-distribution/consumption-disposal/recycling). In order to promote carbon neutrality, it is important to not only ascertain our company’s emissions in Scope 1 and Scope 2, but also assess the CO₂ emissions within the supply chain and implement reduction initiatives through working collaboratively with suppliers and customers. On top of Scope 3 calculations relevant to the entire company, the first step of our initiatives should be to understand CO₂ emissions from the LCA of our own products. Expanding Scope 3 calculation range and conducting life cycle assessment of major products are listed as targets in the NGK Group’s Fifth Five-Year Environmental Action Plan. In FY2021, we performed calculations of two major products (NAS battery and HONEYCERAM) based on ISO 14040. We will expand the target products and strive to achieve reductions within the LCA of each product going forward.

Reduction of CO₂ in Logistics Processes

NGK has worked to reduce CO₂ emissions from logistics with measures including improving loading efficiency and promoting a modal shift. In recent years, the basic unit per transport volume has been deteriorating due to a decline in the volume of goods transported by sea on account of a change in the product mix. In FY2021, we achieved an improvement in CO₂ emissions with a 2.4% reduction year-on-year.

This graph illustrates CO2 emissions in the supply chain. In FY2021, the basic unit per transport volume was 47,900 ton-kilometers.

Introduction of Renewable Energy

We need to expand the use of renewable energy to achieve the goal of net zero in 2050 under the NGK Group Environmental Vision.
Within the NGK Group’s internal Net Zero CO₂ Emissions Project, we are systematically promoting installation of photovoltaic power generation systems and procurement of renewable energy while being cognizant of the associated costs.
In FY2021, we procured 100% of electricity from renewable energy sources at all manufacturing sites in Europe (NGK Ceramics Polska, NGK Ceramics Europe, and NGK Berylco France). Specifically, fuel was procured from renewable energy sources at NGK Berylco France, which became the first manufacturing site within the NGK Group to use 100% renewable energy. As for North America, NGK-Locke. has switched over to using 100% renewable energy.
Meanwhile, in Japan, in addition to the purchase of green certificates to offset emissions, three NGK sites (Nagoya, Chita, Komaki) and NGK Ceramic Device headquarters have switched to LNG, which is completely carbon neutral.
The expanded use of renewable energy is equivalent to a CO₂ emissions reduction of 185,000 metric tons in FY2021.
Starting in FY2022, we will continue to expand the procurement of renewable energy as well as fully launch the installation of photovoltaic power generation systems. Going forward, we will continue to expand the use of renewable energy.

This is a photograph of a green certificate. Approximately 60% of the annual electricity used at the NGK Head Office building is covered by outsourced biomass power generation.

Introduction of Internal Carbon Pricing

Internal carbon pricing (ICP) refers to the establishment and use of in-house carbon pricing for the purpose of promoting decarbonization-focused investment and policies.
Starting in FY2022, NGK has introduced an ICP of US$130/metric ton-CO₂ to incentivize investment in high-efficiency equipment and facilities and renewable energy-related infrastructure that will realize the NGK Group Environmental Vision target of net zero CO₂ emissions by 2050. We are also evaluating the possibility of introducing equipment. Moreover, we are also considering the use of ICP as a factor for making business expansion decisions.