Thank you for joining us today despite the hot weather. This is Miyama from CCS Project Department of JX Nippon Oil and Gas Exploration. Today, I would like to talk about our CCS business strategy. I'd like to share our thoughts around making CCS another earnings pillar in addition to our traditional business of oil and gas exploration, so this is today's agenda, so after providing an overall explanation of the domestic and international situation surrounding CCS business, I will touch on our group's carbon neutral strategy, the challenges faced by the CCS business in general, our measures to address them, and our strengths, so let me start with a basic explanation about what CCS and CCUS are. As many of you may know, CCS captures and stores CO2.
In other words, it separates and captures CO2, transports them to a storage site, and injects and stores them 1,000-3,000 m underground, while CCUS utilizes separated and captured CO2, as represented by CO2 -EOR. Just switching to renewable energy wouldn't be enough for the realization of carbon neutrality. According to an IEA report, there are great expectations for CCS and CCUS to account for 15% of the cumulative CO2 reduction by 2070, and will reduce 6.9 billion tons CO2 emissions annually. By the way, as of 2023, there are 41 projects in operation around the world, with a storage capacity of 49 million tons, and 351 projects under construction or planning, with a storage capacity of 310 million tons.
This slide summarizes support systems and examples for CCS projects in North America, Europe, and Australia, which are advanced CCS, CCUS countries. I won't touch on each case, but I'd like your attention to their support systems. Since a CCS business model has not been established, not only in Japan, but around the world, so governments around the world are providing a large amount of subsidies for CapEx and OpEx, tax credits, price difference support against carbon prices, et cetera, in order to establish CCS businesses. In Japan, METI, the Ministry of Economy, Trade and Industry, has announced that it is considering government support measures following the examples of Western countries.
The nature of this government support will have a major impact on the future of CCS projects in Japan, so we are closely monitoring how it goes, and at the same time, we are working through industry organizations to create an easy-to-use scheme. Next, let me share the current status and trends of CCS and CCUS in Japan. As you know, in April 2021, then Prime Minister Suga announced the goal of reducing CO2 emissions by 46% compared to 2013 by 2030, and aiming for a higher target of 50%. In October, the Cabinet approved a global warming countermeasure plan that includes a 46% reduction in 2030 and carbon neutrality for 2050.
In response to this, a long-term roadmap review committee, consisting of public and private sector experts, was held, where a business model building phase was set through 2030 to prepare the business environment for CCS projects and start the CCS injection during 2030. Then, the plan is to expand the project in full scale to reduce CO2 emissions by 120-240 million tons by 2050 using CCS. As part of this, the CCS business law was promulgated on May 24th, 2024. The law regarding exploration for selecting storage sites went into effect on August 5th, but the ministerial ordinance regarding test drilling to verify whether CO2 storage is actually possible will be enacted within six months after the promulgation, and a ministerial ordinance regarding CO2 pipeline transportation and storage will be implemented by May 2025, in two years.
This is also a document from the Roadmap Review Committee, showing the government's action plan up to 2030. Let me briefly go over six key points. First of all, the government has set out a policy to support advanced CCS projects in order to achieve the injection of 6 million-12 million tons of CO2 by 2030, and a project commissioned by JOGMEC has already started in 2023. The advanced CCS project here refers to a project that can begin injecting at least 500,000 tons of CO2 emitted from multiple industries by FY 2030. Next, regarding cost reduction, CCS projects require huge infrastructure investment and working capital, so cost reduction will be a major challenge. If each project is operated separately, it'll be inefficient and increase costs, so JOGMEC is taking the initiative to standardize ship types for CO2 transportation and reduce costs.
In the future, standardization across the entire value chain will likely become a challenge. The third point is to increase public understanding of CCS projects. When you hear the word offshore wind power in the environmental context, I think everyone can immediately picture what it's like. But most people don't know what CCS is, wondering why we need it. So due to such a lack of public understanding, further promotion will be needed in the future. The fourth is a promotion of overseas CCS business. Since it is not realistic to store all CO2s within Japan, we'll need to take them to large-scale storage sites overseas at the same time. The Japanese government recently ratified the London Protocol to create a framework to enable CO2 export, while we also see moves to conduct joint studies with Malaysia and Australia. The fifth issue is legislation I explained earlier.
The sixth point is how to incorporate the CCS Business Act into actual action plans. Now that the act has been promulgated, plans are expected to be developed gradually, so this map of Japan shows results of the 2024 public call for proposals for the advanced CCS project I mentioned earlier. Currently, nine projects have been selected as candidates. Two of which are our group's projects, one off the coast of Western Kyushu and another off the coast of Malay Peninsula. For your information, FY 2023 had seven projects, five domestic and two overseas, but this year received nine projects, five domestic and four overseas. The left explains the CCS large-scale demonstration test in Tomakomai. As Japan's first full-scale CCS, it is a national project that covers the value chain of separation and capture, transportation, storage, and monitoring.
It started in 2016, achieved 300,000 tons of CO2 injection by 2019, and is currently being monitored. Next is about the current status and plans for our CCS business. Before sharing company goals of JX Nippon Oil & Gas Exploration, let me briefly cover ENEOS Group's carbon neutrality plan, announced in May 2023. As we explained to our analysts last year, CCS plays an important role in our company's GHG reduction efforts. In addition, we aim to promote carbon circularity beyond our own in reducing GHG emissions for society as a whole. This slide translates the plan I just explained into numbers. To achieve a 46% reduction in 2030 compared to 2013, 3 million tons of CO2, and to achieve carbon neutrality in 2040, 11 million tons of CO2 will need to be stored underground using CCS.
This is a plan for JX Nippon Oil & Gas Exploration. In addition to the conventional oil and gas exploration business, in order to make the CCS business another axis of earnings, we aim to inject 5 million tons of CO2 through 2030, and 15 million tons in 2040s, and 50 million tons in 2050. In order to convert this into an earnings pillar, the ENEOS portion alone will not be enough, so the numbers are assuming to store other companies' portions as well. By implementing CCS ahead of other players, we hope to secure a competitive advantage and expand our business to include not only industrial CCS, but also blue hydrogen, blue ammonia, blue electricity, et cetera, that utilize CCS. So why CCS out of all the various environmentally friendly businesses out there?
Because CCS is a technology that is compatible with existing oil and gas exploration, and it is a technology for which we have sufficient know-how. In 2000, in Abu Dhabi, associated gas that had previously been burned through flares was buried back underground, thereby reducing CO2 emissions and enhancing the crude oil recovery. This was the first such attempt in the Middle East. In 2007, we achieved the world's first CDM project in this industry in Vietnam, and in 2011, we successfully conducted the first offshore CO2- EOR pilot test in Southeast Asia. In 2017, we implemented the Petra Nova CCUS project in the United States, which you saw on a video at the beginning. This is the world's largest CO2 capturing project from combustion exhaust gas.
We are currently working on a project off the coast of Western Kyushu as an advanced CCS project. Based on these factors, we hope that you've understood why we are committed to CCS, and our pioneering and competitive advantages in this field. Next, this is a diagram of the CCS value chain from CO2 separation and capture, transportation, storage, and monitoring. We have learned how to select suitable storage sites using underground technology gained through oil and natural gas development, and also acquired knowledge on separation and capture at the Petra Nova project, and knowledge on transportation and monitoring at the West Ranch oil field. Additionally, last year, we fully subsidized JDC, Japan Drilling Co., Ltd., the only offshore drilling company in Japan, in an effort to strengthen the CCS value chain.
There will be more explanations to come, but JDC owns three jackup rigs and one semi-sub rig, and as we continue to develop CCS business, we hope that this will be a major source of income other than the storage business. So this slide explains CCS project off Western Kyushu, which was selected as an advanced CCS open call project in FY 2023. We have formed a consortium with J-POWER and ENEOS, with the aim of storing CO2 emitted from J-POWER's coal-fired power plants in Western Japan and ENEOS' refineries in Western Japan. We are currently working diligently for the implementation in 2030 after launching of the West Japan Carbon Dioxide Storage Survey. We are currently in the process of selecting candidate sites towards the target implementation in 2030.
After trial drilling in 2025 and 2026 to evaluate the storage potential and investment decision, FID will be made in FY 2026 , followed by construction work, and CO2 injection will be accomplished in FY 2030 We also have technical challenges. As oil and gas fields are quite limited in Japan, it is not realistic to inject CO2 into depleted oil and gas fields like in other countries, so it is not easy to select a stable and large-scale injection and storage site, and it is also a challenge to design CO2 transportation and optimize storage monitoring to maximize and optimize profitability and safety. Furthermore, given the time constraints till 2030 implementation, we need to move forward with the project in tandem with not only the storage, but also the CO2 separation and capture, along with its transportation.
So if a situation occurs where the storage site's been prepared, but the CO2 does not arrive, or conversely, the CO2 has been separated and captured, but the storage site isn't ready, and there is nowhere for CO2 to go, the entire project will fail. This means that high-level project management for the value chain is required. Furthermore, after FID, in order to actually begin construction work, it is extremely important to obtain agreement from the local government, community, and fishing industry stakeholders to proceed with the project. I just introduced the first project, but with this project alone, we won't be able to achieve our goals of 5 million tons in 2030, 15 million tons in 2040, and 50 million tons in 2050 mentioned earlier. Therefore, it is essential to simultaneously search for projects that will be launched in 2030 or later.
This map of Japan was created by JCCS based on RITE data and shows storage potential. Areas marked with orange and pink colors seem to have a potential, so further studies are currently being conducted to store CO2 emitted by hard-to-abate industries such as steel manufacturing and cement, where it's difficult to reduce CO2 emissions, diverted to the Pacific Coast and coastal waters along the Sea of Japan in the future. As it is considered to be difficult to achieve the national goal of 120-240 million tons in 2050 within Japan alone, we are also considering the possibility of overseas storage in parallel with the development of domestic storage sites.
In addition to a project to bring CO2 emitted from Tokyo Bay to Malaysia, already selected as a candidate for this year's advanced CCS project, we are also studying with partners on CO2 storage offshore and onshore in Australia. And we plan to start small and gradually increase the scale. Having a storage site overseas can be considered as a backup for emission operators to be able to move CO2s to overseas if they cannot be stored domestically. So we believe this will provide support for FID for separation and capture facilities. These are export-type projects, not take Japan's CO2 overseas, but we'll also pursue local production and consumption-type project, where CO2 generated in Petra Nova project or gas fields in Malaysia can be stored locally, leading to increased production of crude oil and gas.
From here on, I'd like to explain not issues specific to our company, but issues related to the CCS business in general, and how we'll address them, and we recognize that there are four major challenges in the CO2 value chain. The first is to provide carbon neutrality solutions for hard-to-abate industries in separation and capture, and the second is to best match emission sources and storage sites, and promote G2G negotiations in overseas export projects. The third is building a business model, including government support measures, and the fourth issue is strengthening the capacity of the entire value chain. Let me explain one by one in detail in the following slides, so let's start with carbon neutral solutions offered to the hard-to-abate industry in separation and capture.
We believe that unless the system is easy to use, not only for the storage operators, but also for emitters who use the system, the CCS project may turn out to be a pie in the sky. As an underground specialist, we can accept a certain degree of risk regarding the potential of underground storage, but it is difficult to accept the risk of CO2 accumulation. In other words, even if storage operators develop a site that can store 2 million tons per year for 20 years, there is a risk of failed storage business for not accumulating enough CO2, unless there is certainty of continuous operation for 20 years by each of the emission sources by emitters.
Even if the business continues, CCS will not expand if they determine that it is more economical to pay the carbon tax, which will be introduced in the future, rather than to pay us a fee to bury CO2, making carbon neutrality for Japan as a whole more difficult. Therefore, through industry organizations, we are requesting a national initiative for local governments and industrial complexes in each region to come together to establish a scheme that allows emitters to separate and capture CO2 stably over the long term. By building this scheme, we aim to maintain important industries essential for Japan, while at the same time establishing CCS infrastructure, realizing the smooth business promotion, and building a win-win relationship for emitters and storage operators. Next is the best matching of emission sources and storage sites, and the promotion of G2G negotiations in overseas export projects.
In the nine advanced CCS projects, while we are promoting a storage project in Western Kyushu, there is also a project that will bring CO2 from Kyushu to the Tohoku region on the Sea of Japan side, or CO2 from the same coast of Tokyo Bay is planned to be exported to Malaysia in a project, while other consortia plans to store off the coast of Chiba, so the reality shows that the emission sources are not best matched with storage sites. We understand that this is unavoidable, because the country is making CO2 injection in 2030 a major priority, and trying to speed up the project by fixing the emission source and storage area among each consortium, but we think we need to have a system that best matches emission sources and storage areas in the future.
The recently promulgated CCS business law stipulates that CO2 storage operators and transport operators cannot deny access by third parties without justifiable reasons, meaning they must transport and store anyone's CO2 when asked, so we expect that the system will be fine-tuned in the future. I earlier mentioned that four out of the nine advanced CCS projects this year were export-oriented projects, of which three are destined for Malaysia. In all cases, the Malaysian government will be the point of contact for storage, whereas Japanese side has three private parties, Mitsubishi Corporation, Mitsui, and JAPEX, who are negotiating with Malaysian government individually, weakening overall Japanese bargaining power. As paying storage fees to Malaysia would mean that Japanese wealth to outflow into overseas.
For the sake of national interest, the Japanese government should have a G2G negotiation with the Malaysian government to obtain good terms for minimizing the outflow of national wealth. Next is about business models being further studied, including government supports. This is probably the part of your great interest for everyone here today, but as I explained with examples from various countries around the world, a CCS business model has not yet been established worldwide. Governments are currently trying to put things on track by providing direct and, indirect support, and Japanese government is also considering government support measures based on examples from the U.S. and Europe. Under these circumstances, the advanced CCS business, which already started with the aim of starting CO2 injection in 2030 , has not yet established a business model.
We'll seek for subsidies for both the CapEx up to the start of operation and the OpEx after the start of operation in full. In other words, although we'll have to invest human resources without profit expectation until 2030, we keep accumulating knowledge in the CCS business through government subsidies without using our own cash to secure a competitive advantage during the expansion phase in the 2030s. We recognize that, for so-called second mover projects starting in 2031, we need a scheme that can be profitable as a storage business. Since we cannot take the exploration risk when selecting a storage site, we'll seek to fully subsidize costs up to FID, including trial drilling.
After FID, we realize that it'll be unrealistic from a national budget standpoint to cover everything with state subsidies, and conversely, if we were 100% subsidized, it would be impossible for us to obtain a profitable IRR as a business operator. Therefore, with regard to CapEx and OpEx after FID, we understand that we need to draw out private investment through a system that can secure a certain level of return. In other words, as a storage operator, our stance is not to get involved in CCS business unless we can ensure profits. Finally, we'll strengthen the capacity of the entire value chain. I explained earlier that our project off the western coast of Kyushu is scheduled to have an FID around the end of FY 2026, but we hear that other project will also have an FID around the same time.
This means that nine projects will be rushed to EPC contractors, vendors, rig companies, shipping companies, and service suppliers from the beginning of FY 2027. It is predicted that the workload will exceed their capacity, creating a risk that CCS will not be implemented in time for 2030. Therefore, in order to be able to start CO2 injection in 2030, after FID in 2026, it is necessary to create an environment at an early stage to allow contractors, vendors, shipping companies, et cetera, safely invest in equipment before 2026, even within this fiscal year, and strengthen the capacity of the entire value chain. We'll reach out to the government on these matters, just like the business model. We have explained so far how we'll grow in our core storage business.
But now I would like to explain business opportunities in the value chain other than storage along the project life cycle. When selecting a storage site, it is necessary to drill a test well, and after FID, to drill a CO2 injection well. In order to achieve the national goal of 120 million tons in 2050, even if each well could inject 300,000 tons per year, a huge number of 400 injection wells would be required over 20 years, creating potential of 20 drilling works every year for 20 years. So from this perspective, we believe that we'll have great business opportunities as we own JDC, the only offshore drilling company in Japan. Also, the Business Act requires monitoring after CO2 injection, but there are only three main companies who can address this in Japan, INPEX and JAPEX, other than us.
While each company can work on its own, it is also a realistic option for three companies to jointly invest and create a monitoring company to reduce costs. We also need to seek for a possible business model to allow three companies to jointly handle the supply of materials necessary for drilling wells or construct platforms required for injecting CO2 from the sea, not only acting individually, which will significantly reduce costs while achieving appropriate returns. Furthermore, we are currently discussing with Nippon Yusen and Mitsui O.S.K. Lines about vessel transportation, a potential joint work for the future. As such, in addition to generating profits from our main storage business, we are actively seeking business opportunities in the CCS value chain in order to make the CCS business a pillar of earnings, alongside oil and natural gas exploration.
Lastly, from January 2025, our company name will change from JX Nippon Oil and Gas Exploration to ENEOS Xplora. We look forward to your continued guidance and encouragement. Thank you for your attention.