Japan’s telecommunications group Nippon Telegraph and Telephone is poised for a radical transformation as the global trend towards decarbonization accelerates.
As part of its new strategy, NTT has partnered with the town of Miyako in Iwate Prefecture, whose power grids were cut off in 2011 following the devastating earthquake and tsunami. Learning from this bitter experience, the city now uses renewable energy sources to meet around 30% of its electricity needs. It plans to increase this proportion to 100% by 2050 thanks to its merger with NTT.
NTT consumes 1% of the electricity produced in Japan to run its huge telecommunications infrastructure. It now plans to use this infrastructure as part of its new decarbonization activities. For example, NTT plans to install batteries in its 7,300 telecommunications service buildings across Japan to store electricity produced from local renewable energy sources such as sunlight and wind power. This offers a solution to the main weakness of renewables: their volatility and intermittence due to unstable weather conditions, causing difficulties in matching supply and demand.
In addition, if the more than 10,000 vehicles NTT owns are replaced with electric vehicles, they can serve as back-up power sources for critical facilities such as hospitals during disasters.
“We will increase renewables by ourselves and play the role of adjusting energy supply and demand in various regions of the country,” said Jun Sawada, president and CEO of NTT.
Together with the large Japanese trading house Mitsubishi Corp, NTT will also enter the virtual power plant business, connecting distributed renewable energy with high technology. By fiscal year 2030, NTT expects to be able to supply renewable-based electricity on a scale comparable to that of a large utility company, providing businesses and local governments .
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Besides NTT, other large companies are flocking to the field of green transformation. Of the 225 companies whose stock prices are used to calculate the closely watched Nikkei Stock Average, at least 39 have implemented zero-emission targets. Together, they make up about 20 percent of the combined market capitalization of the 225 companies.
The trend was sparked by Prime Minister Yoshihide Suga’s announcement shortly after taking office last September that Japan would achieve net zero carbon emissions by 2050.
The engagement was to arouse opposition from manufacturers. Steelworkers, who produce a large portion of Japan’s industrial carbon emissions, are close to the ruling Liberal Democratic Party and contribute large sums to the political fundraising organizations of PLD lawmakers.
But Mr Suga, among others, may have calculated that this engagement would lead to structural changes in Japanese industry and boost the economy while gaining popular support.
His decision pushed Japanese companies to join the bandwagon towards carbon neutrality. All over the world, green transformation is already affecting the corporate values of companies.
For example, the large Danish electricity producer Orsted has already sold its electricity and domestic gas retail business with the aim of becoming a company that derives its profits from renewable energies, in particular offshore wind energy. .
In October 2020, Henrik Poulsen, then Managing Director of Orsted, declared the completion of its conversion to a global renewable energy company.
Orsted used to generate electricity from fossil fuels. Mr Poulsen called it a typical “dark energy” company because it was responsible for a third of Denmark’s greenhouse gas emissions.
Around 2009, Orsted began to advance decarbonization programs under the slogan “from black to green” promoted by Mr. Poulsen, who took the helm in 2012.
Although Mr. Poulsen stepped down at the end of 2020, Orsted is not changing his plan to spend DKK 200 billion ($ 33 billion) on renewable energy in the seven years from 2019. The company aims to increase its production capacity from renewable energies by more than 30 million kilowatts and reduce its carbon emissions by 98% by 2025 compared to the 2006 level.
As investors welcomed Orsted’s strategic change, its market capitalization has increased by around fivefold compared to 2016, when it was first listed on the stock market, and surpassed that of BP, which was previously much larger.
In the United States, renewable energy company NextEra Energy temporarily overtook ExxonMobil in terms of market capitalization.
The era has arrived when business growth strategies are strongly affected by zero carbon investments.
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A version of this article was first published by Nikkei Asia on January 5, 2021. © 2021 Nikkei Inc. All rights reserved.