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© 2019. NYK Group. All rights reserved.© 2019. NYK Group. All rights reserved.

Bringing Value to Life- Action for ZERO Emission -

25th Feb 2020

NYK Line

Green Business Group

Senior General Manager

Toshi Nakamura

Japan-Norway Hydrogen Seminar 2020

© 2019. NYK Group. All rights reserved.

Who is NYK Group? Key Figure - Fleet & Facility -

Container ships95

Capesize bulkers110

Panamax bulkers88

Handysize bulkers163

Wood chip carriers42

Car carriers119

Tankers65

LNG carriers 29

Multi-purpose carriers42

Vessel Air Freighter

aircrafts8flights8,095 in 2017

755

*For the year ended March 31, 2018

Terminal

ports51Operating at

in 2018

Logistics Center

locations567m22.65million

*As of March 31, 2018

vessels

*from Factbook

Japan-Norway Hydrogen Seminar (25th Feb 2020) 2


Mid Term Strategy from 2018 to 2022

Staying Ahead 2022 with Digitalization and Green

Nippon Yusen Kabushiki Kaisha

Green Business Group was established on April 2019.New group aims to implement Green initiatives for driving future growth and value creation.


Hydrogen Offshore wind power LNG marine fuel supply

World’s first LNG bunkering vessel Japan’s first LNG bunkering vessel

World’s first LNG-fueled car carrier


Business strategy of Hydrogen

Aiming to participate in Hydrogen supply chain.

• Our target scope will be not only ocean transportation but also other parts of the chain. (e.g. production, supply etc.)

• Key issue is “How NYK can create demand for hydrogen”.


Renewableenergy

Production& Storage

Transportation In-land logistics Supply to vesselsConsume

as marine fuel

Hydrogen supply chain


CHAPTER

© 2019 NYK Group. All rights reserved.

NYK Zero-emission initiatives

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5


IMO: International Maritime Organization

• United Nations specialized organization• Established in 1958 in London • 174 countries (as of September 2019)

Vision Zero emissions as early as possible in this century

Target(vs 2008）

Fuel efficiency (ton-mile basis) GHG emissions

40% improvement

by 2030

70% Improvement(effort) by

2050

HalvedBy 2050

Early zero emissions

Mid-term measures

Agreed to 2030

Introduction of economic incentive methodIntroduction of low-carbon alternative fuel

Long-term measures

Agreed to 2060Introduction of zero-carbon alternative fuel



NYK Super Eco Ship 2050: ZERO-emission

Powered by hydrogen fuel cells

NYK’s action ①: built & operate “Zero-emission vessels”

NYK Super Eco Ship 2050

Shifting to alternative fuels to achieve our GHG reduction target

CO2Reduction

100%

67% reduction in energy from fuel*• Hull remodeling• Hull weight reduction• Energy conservation

*Compared with a 2014-built vessel



LNG Fuel as a Bridging Solution

NYK’s action ②: introduce LNG fuel for “low-carbon” shipping

• World’s first LNG-fueled car carrier delivered to United European Car Carriers (50% owned by NYK) in 2016

➢ LNG-fueled oceangoing ship

➢ LNG bunkering business

• Japan’s first LNG supply by “truck to ship” in 2015• World’s first LNG bunkering vessel in Zeebrugge in

2017• Japan’s first LNG bunkering vessel to start operation

in 2020

Based on our experience of LNG bunkering, problems to solve to introduce an alternative fuel are 1. Price of the fuel2. Supply chain3. Capital investment (propulsion engine)



CHAPTER


Green ammonia fuel for deep sea

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9


➢ Approval in Principle(AiP) for the design of Ammonia-Fueled 180,000 ton bulk carrier & Ultra-Large Container Ship (23,000TEU )

Design of Ammonia-fueled vessels

Lloyd’s Register has granted AiP to Chinese Ship yard and MAN for a 23,000 TEU ULCSconcept design (Dec 03, 2019) and a 180,000 DWT bulk carrier(Dec 10, 2019).

Entering “Design phase” for building Ammonia-fueled vessels.


MAN、Samsung(Shipyard)、Lloyd’s Register and MISKstarted FS project jointly from Jan 2020. As their plan, signing ship building contract on 2022 and delivery on 2024.

➢ Joint develop project for Ammonia-Fueled Oil Tanker


Technical challenges for achieving Zero-Emissions

1. Minimize pilot fuels➢ Co-Combustion with pilot fuels for the flame retardancy of

ammonia.➢ What kind of fuels will be used for pilot fuels ? ➢ How much pilot fuels will be needed ?

2. NOx reduction➢ More effective Selective Catalytic Reduction (SCR) for NOx

reduction to achieve IMO regulations (Tier3).➢ N2O(nitrous oxide) reduction also be a one of issue to be solved.

3. Develop ammonia fueled generator➢ Not only main-engine but also generator to be developed for

ammonia fuel.

Following 3 points are the challenges for achieving Zero-emissions of ammonia fueled vessels.



Commercial challenges for ammonia fuel

Fuel cost


Fuel storage Supply chain Safety

4 challenges for feasibility of ammonia fueled vessels.

FUEL


Challenge 1 : Fuel cost


Fuel cost Fuel storage Supply chain Safety

2020 2030

Total price Delivered price Carbon Tax

VLSFO 529 910 674 236

AMMONIA 355 422 (target) 422 0

Ammonia target price (USD/ton, delivered price at Singapore)

*VLSFO: Very Low Sulphur Fuel Oil*VLSFO total price ＝NYK estimated price + bunkering cost + carbon tax cost*Carbon Tax = USD75/ton(IMF recommendation) x 3.151*Above target price was calculated based on Japan-North America 30days round voyage case.

Nearly $420/ton (including delivery cost) can be as economical as heavy oil in 2030.



Challenge 2: Fuel storage



Heat Values

(MJ/m3)Compare with

VLSFO

VLSFO 36.00 1.00

LNG 21.00 1.71

NH3 12.57 2.86 LNG Fueled bulker vessel (Apr 2023 delivery)

LNG Fuel Tank

➢ Minimize impact on

1. cargo capacity2. shipbuilding prices3. operation profiles

Fuel tank will be 3 times bigger than current vsls.

A long-term commitment with charterers will be required for

building an ammonia fueled vessels.



Challenge 3 : Supply chain



Production Storage TransportationStorage &delivery

Bunkering to vessels

Consume fuel

Green ammonia supply chain

Bunkering infrastructure (including fuel bunkering vessels)

will directly impact to delivered price.


Production capacity

Transport capacity

Bunkering infrastructure

Bunkering infrastructure

Safety

CCS


Challenge 4 : Safety




1> Amendment marine safety standard➢ IGC Code (The International Code of the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk)

• This standard aims the safe carriage by sea in bulk of liquefied gases to minimize the risk to the ship, to its crew and to the environment.

• It was adopted by IMO and entered into force in 1986.• Current standards prohibit the use of toxic fuels.• This standard does not apply to non-ammonia carrier vessels such as

container vessels and bulk carriers.

2> Ensuring technical & operational safety ➢ We need to conduct a risk assessment and safety verification for corrosivity

and toxicity from the viewpoint of shipowner and operator.

For ensuring the safety for crew, vessels and environment, 2 actions will be needed.


As user of green ammonia for the marine fuel, we have both technical and commercial challenges to overcome.

Summary


Pilot fuels NOx Generator

In deep sea shipping industry, ammonia can be one of the most realistic solutions to achieve IMO target.

Collaboration with various partners such as charterers, shipping companies, shipyards, manufacturers and governmental authority (such as IMO) will be necessary.



CHAPTER


Future demand of ammonia as marine fuel

2Reference 1

18


Forecast for demand of ammonia fuel

According to DNV GL’s report, Ammonia accounts for 25% of total fuel demand in 2050. (=121million tons / year)

Data source: DNV GL Energy Transition Outlook 2019 (September 2019)



Forecast for ammonia-fueled vessels

According to DNV GL’s report, ammonia-fueled vessels will begin to be launched in 2037 and almost 100% of new buildings use ammonia by 2045. (with strict enforcement of the GHG regulations)

Data source: DNV GL Energy Transition Outlook 2019 (September 2019)



Around 40 vessels are under the regular service for ammonia transportation.(19.7 million tons/year in 2019)

Additional 185 Very Large Gas Carriers will be necessary for transpiration. (120 million tons/year in 2050)

Demand of green ammonia transportation

➢Where is the place of production and consumption ?

➢How about a capability of the production side for sustainable supply of green ammonia ? NYK MGC (LPG & Ammonia) M.V. Berlian Ekuator


Vessel size Very Large Gas Carriers Large Gas Carriers Multi Gas Carriers

NH3 cargo volume 47,000-55,000 ton 36,700-38,700 ton 22,500-24,500ton


CHAPTER


Company introduction

2Reference 2

22


Trade NameNippon Yusen Kabushiki Kaisha（NYK LINE）

EstablishedSeptember 29, 1885

Main ActivitiesGlobal logistics based on international marine transportation business, cruises, terminal and harbor transport, shipping-related services, real estate, and others

Paid-in CapitalJPY144,319,833,730

Employees35,711 (consolidated)

RevenuesJPY1,829 billions (=USD17billions)

Overview

*As of March 31, 2019

*FY2018 result



Medium-term management plan (2018-2022)

"Staying Ahead 2022 with Digitalization and Green".



Evaluation as Top Company Ready for Low-carbon Transition

NYK has been ranked the top shipping company on business readiness for a low-carbon transition in the “A Sea Change” report published on June 25 2019 by CDP, an international non-profit promoting environmental disclosure.



a Full-scale Demonstration Project on the World's First Global Hydrogen Supply Chain.

A Hydrogen Project, “AHEAD”

＜Organic chemical hydride method＞

• Hydrogen and toluene are converted into a liquid substance at room temperature and normal pressure called MCH (methylcyclohexane) by chemical reaction.

• In hydrogen demand countries, hydrogen is separated into toluene and hydrogen (dehydrogenation reaction) and supplied to consumers as a gas.

＜Brunei＞＜Kawasaki, Japan＞

Brunei H2 production plant

AHEAD outline

Members Chiyoda Corporation, Mitsubishi Corporation, Mitsui & Co. , NYK*Supported by NEDO

Business scale Max 210 tons / year (full charge for 40,000 fuel cell vehicles) (Transported by tank container in the demonstration experiment.)

the purpose & period

Aiming at commercial supply chain operation in anticipation of commercialization.Operation will start from 2020.

Advanced Hydrogen Energy Chain Association for Technology Development

Kawasaki deydrogenation plantOrganic chemical hydride method

Methylcyclohexane(MCH)

toluene

H2 H2



Getting to Zero Coalition

• The coalition committed to getting commercial deep-sea vessels powered by zero-emission fuels into operation by 2030.

• NYK has joined the Coalition on Oct 2019 to implement next-generation fuels to aid marine-fuel decarbonization and contribute to environmental preservation for maintaining a sustainable society.

• NYK try to share our experience and knowledge regarding “development of new fuel supply chain” through our LNG Bunkering business.

Alternative fuels…

Green ammonia (NH3)

Hydrogen (H2)

MCH

Methane (CH4)

Advanced biodiesel


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