Trial project planned for 'economic circulation system'
NGK INSULATORS, Ricoh Company, and IHI Corporation have announced their scheme in Ena City, Japan, to convert environmental value into credits and create a positive circulation between the environment and the economy.
NGK INSULATORS, Ricoh Company Ltd, and IHI Corporation will start a trial project in Ena City in late 2022 for a decarbonisation and 'economic circulation system' (also see 'circular economy' – an approach to production and consumption that involves re-using, remanufacturing, repairing, and/or recycling products). The system will convert the environmental value*1 gained by Ena City through the generation and sales of electricity from the renewable energy of the regional power producer and supplier Ena Electric Power into economically compensable value ('credits') and make use of those credits.
The credits generated will be used within Ena City, and a scheme will be developed to generate inflows of funds from outside the city. The system will help to turn Ena City into a zero-carbon city by promoting a cycle in which the scheme revitalises the local economy and encourages further expansion of the introduction of renewable energy.
Since April 2022, NGK and Ricoh have been conducting a trial project*2 for using blockchain technology to perform tracking of all processes of Ena Electric Power's renewable energy from generation to consumption, including charging and discharging of surplus energy to sodium-sulphur batteries for storing electricity. The project is tracking the consumption of renewable electric power generated and consumed in-house at Ena City’s public facilities, and it is deemed to represent environmental value held by the city in the form of carbon dioxide, or CO2, reductions.
The trial project to be initiated will use an environmental value platform*3 developed by IHI to convert this environmental value into credits through the J-Credit Scheme*4. The environmental value held by the city will be converted into credits and sold to businesses and producers in the city.
This will encourage the development of carbon offset products with added environmental value, and will help to boost the environmental brand power of Ena City, which has been selected as an SDGs Future City*5. In the future, the project aims to establish a positive environmental and economic circulation scheme that maximises environmental value by using the inflow of funds generated from outside the city through the project to encourage the further introduction of renewable energy and energy conservation.
In the past, there were mechanisms in place to generate and trade environmental value, such as CO2 reductions, through in-house consumption of renewable energy. However, these mechanisms were burdened by time-consuming procedures because they required manual and complex work, such as data collection and the filing of applications with various documents. This project will strive to streamline the procedures through to credit conversion by utilising Ricoh and IHI’s digital technologies and IoT technology*6.
Through this trial project, the project’s partners will help to turn Ena City into a zero-carbon city and establish a decarbonisation and economic circulation system that will serve as a model case for local governments across the country, with the aim of achieving carbon neutrality by 2050.
More information on the various ESG projects involved in this development can be found on this page from NGK's original press coverage.