Sumitomo Corporation (Head Office: Chiyoda-ku, Tokyo; Representative Director, President and Chief Executive Officer: Masayuki Hyodo) recently commenced construction in Vietnam on the Van Phong 1 coal-fired power project (hereinafter, “the Project”) in which it is involved through its wholly-owned subsidiary Van Phong Power Company Limited.
Entailing the construction of a new supercritical coal-fired power plant with a generation capacity of 1,320 MW (two 660 MW power-generation units) in the Van Phong Special Economic Zone in Vietnam’s Khanh Hoa Province, the Project is a build-operate-transfer (BOT) power generation project that will sell electricity to Vietnam Electricity (“EVN”), Vietnam’s state-owned power company, over a period of 25 years. Total project costs should reach about 280 billion yen, and the plant is scheduled to start commercial operation by the end of 2023.
Vietnam’s electric power demand has risen sharply in line with rapid economic growth, and resolving the serious power shortages expected in future has become a pressing issue. Under its revised National Power Development Plan VII originally formulated in 2016, the Vietnamese government is striving to meet power demand growing about 10% annually by stepping up its power generation capacity to 96,500 MW by 2025 and to 129,500 MW by 2030.
Climate change issues have now become important social issues, and efforts are being pursued worldwide to expand the use of renewable energies and otherwise alleviate climate change. The Sumitomo Corporation Group has revamped its policies toward climate change issues accordingly. As it works to reliably supply the energy essential to economic and industrial development in local communities, the Group’s power generation business will adopt such approaches as incorporating renewable energy into the Group’s own management resources as part of a sustained shift toward a power generation portfolio with a lower environmental impact. While the Group’s general policy is to refrain from building new coal-fired power plants, it has decided to make case-by-case assessments of projects deemed essential for the economic and industrial development of local communities that conform to policies established by Japan and the host country with due consideration for international efforts and trends toward mitigating climate change, and it was on this basis that this project was undertaken.
Sumitomo Corporation remains committed to dependably supplying the energy vital to economic and industrial development in Vietnam and to helping improve living standards and resolve power shortages in Vietnam.
■Policy for addressing climate change issues
The Sumitomo Corporation Group contributes through its business activities to resolving the climate change issues and to realizing a carbon-neutral society for the sustainable development of society.
Policy for business activities
●We aggressively promote the followings: 1) renewable energy business, 2) advanced energy management business, 3) the development of business models/innovations that contribute to the reduction of energy consumption, and 4) other businesses that contribute to mitigating or adapting to climate change. In addition, we put our effort on controlling greenhouse gas emissions associated with our business activities.
●In the power generation business, we provide a stable supply of the energy, essential for the economic and industrial development of local communities. At the same time, we continuously shift management resources to renewables and other energy sources with low environmental burden in the power generation portfolio.
(By the target year of 2035, we aim to shift the composition of the portfolio in terms of net ownership generation capacity as follows: coal 50%→30%; gas 30%→40%; and renewables 20%→30%)
●We will not have new development in the coal-fired power generation business. However, we make a decision individually about new development in cases where the project is essential to the economic and industrial development of the local community and where the project is complying with the policies of the Japanese and host country governments based on the international initiatives to mitigate climate change issues .*
●In the thermal coal mining business, we limit our equity share coal production to our current levels, and desist from new mine development projects.
* The Van Phong coal-fired power generation project in Vietnam is a project based on this policy.
For further details, please see “Efforts to Address Climate Change Issues” in the “Integrated Report 2019”.
■Sumitomo Corporation’s Material Issues
Sumitomo Corporation Group positions “Six Material Issues to Achieve Sustainable Growth with Society” as an important factor in developing business strategies and in the decision-making process for individual businesses. Going forward, we will pursue sustainable growth by resolving these issues through our business activities. This project especially contributes to “the Development of Local Communities and Industries” and “Establishing a Foundation for Comfortable and Enriching Lifestyles”.