Idemitsu has outlined the expansion of growth businesses, creation of next-generation businesses, and harmony with the global environment and society as priority topics. To promote the creation of new business in particular, we established the Next Generation Business Department, which promotes business development that addresses social issues and meets customer needs, in November 2019; the Digital Transformation Department (currently Digital ＆ ICT Department), which promotes the use of digital technologies, in January 2020; and the Innovation Strategy Planning Department (currently Innovation Strategy Department), which promotes technology-driven business development, in April 2020. We have crafted strategies that consolidate company- wide technologies and actively draw on external technologies with the aim of quickly achieving the creation of new businesses with an eye toward changes in society, diversifying customer needs, and decreasing environmental burden.

Technological innovation is indispensable to achieving the goals of the Paris Agreement, which is an international framework related to climate change. The Idemitsu Group is using the technological development capabilities it has developed over many years of operations to continue generating innovation that will help solve various social issues, including climate change.

Our R&D system is composed of Advanced Technology Research Laboratories, which are responsible for corporate R&D, and research laboratories in each department. Each of them carries out specialized development. In addition, we established the Research & Development Committee as a company-wide organization to not only examine the direction of research and development, strategies, and issues throughout the organization, but also to deepen cooperation among laboratories and to strengthen technological capabilities.

Research field		Name of laboratory		Japan	Over seas	Outline of Initiatives
Corporate R&D		Advanced Technology Research Laboratories	Environment & Energy Research Laboratory	●		Development of technologies to reduce GHGs and recycle resources (biofuels, bio-chemicals, and CO2 recycling) and bio-materials
			Advanced Organic Materials Research Laboratory	●		Development of advanced functional materials (organic macromolecule materials)
			Advanced Inorganic Materials Research Laboratory	●		Development of advanced functional materials (inorganic materials)
			Analytical Technology Center	●		Providing advanced analysis and solutions to a wide range of fields throughout the Group (including computational science)
			Idemitsu Kosan Collaborative Research Cluster for Advanced Materials	●		Creating next-generation materials, enhancement and expansion of technologies
Production engineering		Technology & Engineering Center		●		Technology development in the area of engineering design, construction, operation, quality control & assurance, and asset integrity & reliability  Technology-driven contribution to existing and new businesses
Lubricants		Lubricants Research Laboratory		●		Research and development of lubricants and tribology (lubrication technology)
		Idemitsu Lubricants America Corporation R&D Center			●	Locally based research and development of lubricants  Global development of lubricants products and technologies with the Lubricants Research Laboratory (Japan) as the mother research center  Rapid product development and provision of technical services to meet local needs overseas
		Idemitsu Lube (China) Co., Ltd. Research & Development Center			●
		Idemitsu Lube Asia Pacific Pte. Ltd. R&D Center			●
		NIPPON GREASE Co., Ltd. Technical Research Laboratory		●		Research and development of grease, heat treatment oil, metalworking oil, etc.
Advanced materials & performance chemicals		Performance Materials Laboratories		●		Development of advanced materials through high-value-added petrochemical raw materials  Research and development of special polycarbonate resins and functional coatings
		Idemitsu Unitech Co., Ltd. R&D Center for Plastic Products		●		Research and development of molded plastic products
		IDEMITSU FINE COMPOSITES CO., LTD. Composite Materials Research Laboratory		●		Design, development, and analysis of customer grades of composite materials that meet customer needs
Electronic materials		Electronic Materials Development Center		●		Research and development of OLED materials
		Idemitsu Research and Business Development Europe AG			●
Bitumen		Technology Section		●		Basic and applied research on asphalt and its applications  Development of high-performance asphalt
Agri-bio		SDS Biotech K.K. Tsukuba Research & Technology Center		●		Development of safe and useful products for the protection of livestock and plants and prevention of diseases Development of active ingredients for pesticides and feed additives derived from microorganisms and natural products
Lithium-ion battery materials		Battery Material Development Center		●		Development of sulfide-based solid electrolyte materials, which are key materials for all-solid-state lithium-ion batteries, and development of manufacturing processes  Development of next-generation battery materials
		Technology & Engineering Development Center		●		Aiming to commercialize the aforementioned solid-state electrolyte materials, development of large-scale commercialization processes as well as design and construction of equipment
Photovoltaic power generation		Solar Frontier K.K. Kunitomi Office		●		R&D to commercialize recycling solar panels, including crystal silicon panels
Coal and the environment		Coal & Environment Research Laboratory		●		The only private research institute specializing in coal  Provision of technical services and development of clean coal technologies for a low-carbon society, such as biomass fuels to help reduce GHGs, carbon recycling, and high-efficiency combustion technologies

We conduct R&D related to petroleum, functional materials, and resources as well as new business creation. Under our R&D system, our departments pursue R&D activities in close mutual cooperation.

• (Millions of yen)

R&D expenses		20,468
R&D expenses by Business Segment	Petroleum	1,947
	Basic Chemicals	0
	Functional Materials	12,357
	Power and Renewable Energy	996
	Resources	187
	Others	4,979

Our technologies are highly appreciated by the international community. As an example, for four consecutive years since 2017 Idemitsu and Showa Shell have been ranked 1st in the world in their industry subgroup* for “Opportunities in Clean Tech,” which is one of the items evaluated by MSCI, an ESG evaluation organization. (Table below)

We will continue to make the most of our advanced R&D capabilities to contribute to the solution of global issues through collaboration with others.

• * Within GICS (Global Industry Classification Standard), Idemitsu Group belongs to the Oil & Gas Refining and Marketing industry subgroup.

Ranking	2020	2019	2018	2017
1	Idemitsu	Idemitsu	Idemitsu	Idemitsu
2	Company A	Company A	Company A	Company A
3	Company B	Company D	Showa Shell	Showa Shell
4	Company C	Company B	Company D	Company C
5	Company D	Company E	Company B	Company D

Promotion of Open Innovation

To accelerate development of advanced materials and create carbon neutral transformation centers at complexes, we are promoting open innovation that actively utilizes external knowledge.

1. The Innovation Strategy Department is in charge of open innovation in technological fields, accelerates and promotes external cooperation, and consolidates the Group’s technologies across departments.
2. We participate in funds operated by venture capital and work to discover technological seeds owned by venture startups in Japan and overseas. In November 2020, we invested in the open innovation fund operated by the Swiss clean technology-related venture capital Emerald Technology Ventures (head office: Zurich, Switzerland).
3. We are working to create next-generation materials and train personnel at the Idemitsu Kosan Collaborative Research Cluster for Advanced Materials, which was opened at the Tokyo Institute of Technology in April 2020.

Developing innovative technologies to promote the shift to solar power as a primary energy source

Under the New Energy and Industrial Technology Development Organization (NEDO) programs “Technological Development for Promoting Solar Power Generation and Making It a Major Power Source” and “Technological Development for Creating New Markets for Solar Power Generation,” we are promoting the development of new technologies to expand the places where solar panels can be installed. In particular, in the development of new technologies to install solar cells in regular electric vehicles, Idemitsu is working with multiple other organizations to develop solar cell modules for installation in vehicles to increase efficiency and reduce costs. Among the solar cell modules being developed, Idemitsu is focusing on CIS bottom cell technologies.

In addition, these projects’ respective themes will be pursued via the application of CIS solar cells (solar cells made using a compound of copper, indium and selenium) from Solar Frontier K.K., an affiliate company of Idemitsu.
 

Creation of next-generation materials via industry-academia collaboration

On April 1, 2020, our company and the Tokyo Institute of Technology (Tokyo Tech) co-founded Idemitsu Kosan Collaborative Research Cluster for Advanced Materials on the premises of Tokyo Tech’s Suzukakedai campus. Since the beginning of the 2000s, our company and Tokyo Tech have been engaged in joint research in polymer materials and other fields encompassing a range of technologies and have achieved outstanding results, including the development of new fiber and film materials. The newly established research base is expected to promote large-scale and comprehensive R&D that involves ongoing interorganizational collaboration and transcends the traditional framework of joint research for individual projects. In this way, we will help develop next-generation materials while nurturing human resources.

While our company boasts strengths in functional materials (lubricants, advanced materials & performance chemicals, electronic materials, and others) and a track record in marketing them in wide-ranging fields, Tokyo Tech possesses a breadth of sophisticated academic expertise with regard to substances and materials and is equipped with leading-edge scientific and engineering technologies. Bringing together these resources, our company and Tokyo Tech will take on the ongoing challenge of creating new value.

Utilization of collagen and mucin derived from jellyfish

Although the jellyfish displayed at aquariums are popular among onlookers due to their beautiful and mysterious outward appearance, their swarms sometimes negatively impact commercial fishing and other business activities undertaken in coastal areas. Moreover, disposing of jellyfish caught in nets results in significant costs. Because of this, there is a growing call to find ways to use jellyfish as a resource. Jellyfish Research Laboratories, Inc., an affiliate, has invented a technology to utilize useful ingredients extracted from jellyfish. Collagen derived from jellyfish has been confirmed to be effective in promoting the regeneration of the epidermis, which is considered to be difficult to regenerate, and is expected to be used in the fields of regenerative medicine and beauty treatment. Mucin derived from jellyfish is also expected to have potential as a treatment for knee osteoarthritis.

Jellyfish Research Laboratories proposes to use jellyfish-derived ingredients in cosmetics and the healthcare fields and aims to conduct trials to label jellyfish collagen as a functional food to reduce joint pain. By recasting jellyfish as an effective material, we aim to contribute to a circular economy, blaze a new trail in the life science field, and help people around the world enhance their quality of life. Furthermore, the initiatives discussed above were covered by Circular Yokohama, an online media outlet focused on drawing public attention to local businesses engaged in innovative endeavors aimed at realizing a circular economy. The Jellyfish Research Laboratories are also registered as a Kanagawa SDGs Partner because its SDG initiatives are in alignment.

• * Circular Yokohama: A platform that introduces initiatives for circular economy realization in Yokohama City.