The climate change issue will have a significant impact on the management and business continuity of Idemitsu group, whose core business is energy. We have therefore set 2050 as a long-term target based on the Paris Agreement, and has prepared a number of long-term energy business environment scenarios towards that year.

Scenario analysis identifies energy demand and the effects of climate change in the Asia-Pacific region and the business environment in 2050 is assumed. Four scenarios were prepared, including a scenario in which the increase in energy demand exceeds the trend toward low-carbon emissions due to the high growth of the Asian economy, and a scenario in which the targets of the Paris Agreement are achieved. (Figure 1) We are drawing up the medium-term management plan and examining specific priority topics with a strong awareness of the "Prism" scenario (Cases where the power to seek environmental measures has increased and the government or companies have responded to such demands), in which the company is expected to take stronger environmental measures.

In the "Prism" scenario, energy demand in the Asia-Pacific region and Japan was estimated.

Figure 2 shows the outlook for demand for oil and electricity in the Asia-Pacific region. Although demand for oil will peak in 2030 and will be on a downward trend thereafter, demand is expected to remain almost unchanged in 2050.

Electricity demand will double in 2040 and will continue to rise thereafter.

On the other hand, Figure 3, which shows the outlook for domestic demand for oil and electricity, shows that demand for oil is expected to decline by 30% in 2030, and then by 70% in 2050 as the population declines and the shift to EVs progresses. Although demand for electricity is expected to remain stable, the ratio of non-fossil power sources is expected to increase to 50% and the ratio of distributed power sources to 20% in 2040, indicating significant progress in the shift to renewable energy and the diversification of power sources.

Based on these projections, we recognize that the threats we face as an energy supplier coexist with opportunities for business expansion into 2050. Based on this recognition, we have formulated the medium-term management plan.

The environment surrounding Idemitsu group, including the energy situation, is complex and diverse, making it difficult to accurately forecast the 2050 year future. However, every scenario is expected to follow a similar trajectory through 2030. We have set 2030 as a relatively reliable milestone, aiming to become a company that is flexible and resilient no matter what future comes.

Based on these scenarios, we see the business environment in 2030 from 3 perspectives: "Structural changes to energy demand," "Advancement of technological innovation" and "Changing lifestyles and demands from society."

Based on the recognition of the business environment given on page 12, Idemitsu group established 2 basic policies toward 2030: "Realizing a resilient business portfolio" and "Building a business platform suited to the needs of society." In addition to promoting business activities based on them, we will also work to resolve social issues.

Over the next 10 years, we will steadily secure cash flow in the petroleum business, which is our revenue base. With this cashflow, we will use M&As in growth fields such as functional materials businesses to expand our business scale and scope. At the same time, with a view to responding to changes in society, diversifying customer needs, and reducing environmental impact, we are working to create next-generation businesses, including the development of next-generation service stations, the development of decentralized energy businesses, and the creation of circular businesses.

As specific targets for the harmony with the global environment, we have set quantitative reduction targets for GHG (Greenhouse Gas) and our own monitoring indicators. In particular, we will give top priority to reducing CO₂ emissions, which account for more than 90% of GHG emissions in Japan. In order to be a company that can earn the trust and expectations of shareholders and all other stakeholders, we will not only strengthen our governance functions, but also use digital technology to enhance our operations and create new values for our customers. We are also working to create an environment in which every employee can continue to work and grow according to his or her life stage.

At present, we established the following quantitative targets for the period of the medium-term management plan and for 2030. However, we intend to make revisions and disclose new targets in light of changes in the business environment brought about by the COVID-19 pandemic and developments in Japan’s basic energy plan.

At present, we established the following quantitative targets for the period of the medium-term management plan and for 2030. However, we intend to make revisions and disclose new targets in light of changes in the business environment brought about by the COVID-19 pandemic and developments in Japan’s basic energy plan.