The gas utilities in northeast Japan have been severely damaged by the devastating earthquake and tsunami which occurred on March 11 2011. For information on the status of the affected gas supply, please visit the Japan Gas Association's website at http://www.gas.or.jp/en/index.html

Rapid Introduction of Fuel Cell Vehicles toward Practical Use Following the introduction of fuel cell buses on regular services on the expressway between central Tokyo and Haneda Airport from December 2010, four city gas utilities and nine companies in the automobile manufacturing and energy sectors issued a "Joint Statement on the Release of Fuel Cell Vehicles to the Domestic Market and the Development of Hydrogen Infrastructure" in January 2011. Fuel cell vehicles (FCVs) (1) are fueled by hydrogen, (2) are driven by a motor that runs on electricity produced by chemical reactions between hydrogen and oxygen, and (3) travel without emitting CO2. Of the 1,280 million tons of greenhouse gas emissions from Japan in fiscal 2008, the transport sector accounted for 16% (about 200 million tons). There are high expectations for FCVs and other types of next-generation vehicle to help create a low carbon society. The Strategic Energy Plan of Japan (which defines national energy policies up to 2030), which was revised in June 2010, states the importance of promoting next-generation vehicles and includes FCVs as a next-generation vehicle to be promoted by the government because of their contribution to global warming prevention, energy security and the competitiveness of Japanese industry. This newsletter contains two articles on FCV projects and describes a related hydrogen town demonstration project in Kitakyushu City. Start of FCV Transport Services between Central Tokyo and Haneda/Narita Airports A Hydrogen Highway Project for connecting central Tokyo with Haneda and Narita Airports via FCV transport services, started on December 16, 2010. There is a single regular FCV limousine bus service each day in both directions between Haneda Airport and Shinjuku Station West Exit, and also between Haneda Airport and Tokyo City Air Terminal. In addition, hired FCV limousine services connect Narita Airport, Haneda Airport and central Tokyo. This project is operated by the Research Association of Hydrogen Supply/Utilization Technology (HySUT)*, and is a part of the Demonstration Program for Establishing a Hydrogen-Based Social System, sponsored by the Ministry of Economy, Trade and Industry. Mainly for the limousine bus between Haneda Airport and central Tokyo, Tokyo Gas has built the Haneda Hydrogen Station near Haneda Airport, next to a natural gas station for NGVs. At this hydrogen station, hydrogen is reformed from natural gas supplied by city gas pipeline. It is also planned to separate, recover and liquefy the CO2 produced in this process, and to supply it to industry. At another hydrogen station which serves hired FCV limousines between Narita Airport and the city center, hydrogen is supplied by JX Nippon Oil and Energy Corporation and Idemitsu Kosan. High pressure hydrogen gas generated in refineries is filled in hydrogen cylinders and transported by trucks. * Member companies/organizations: Tokyo Gas Co., Ltd., Osaka Gas Co., Ltd., Toho Gas Co., Ltd., Saibu Gas Co., Ltd., JX Nippon Oil and Energy Corporation, Idemitsu Kosan Co., Ltd., Iwatani Corporation, Kawasaki Heavy Industries, Ltd., Cosmo Oil Co., Ltd., Showa Shell Sekiyu K.K., Taiyo Nippon Sanso Corporation, Air Liquide Japan Ltd., Mitsubishi Kakoki Kaisha, Ltd., Toyota Motor Corporation, Nissan Motor Co., Ltd., Honda R&D Co., Ltd., and Engineering Advancement Association of Japan Joint Announcement of the Release of Fuel Cell Vehicles to the Domestic Market and the Development of Hydrogen Infrastructure On January 13, 2011, 13 companies including four major city gas utilities, automobile manufacturers (such as Toyota Motor Corporation) and energy sector companies, jointly announced the release of FCVs, as a type of next-generation vehicle, to the domestic market in 2015 and the development of hydrogen supply infrastructure. The contents of the state are as follows: 1. Automobile manufacturers are significantly reducing the cost of fuel cell systems through technological development. They aim to introduce mass-produced FCV models to the domestic market by 2015, mainly in the four largest cities of Japan (Tokyo, Nagoya, Osaka and Fukuoka) and to start selling them to consumers. After initial introduction, further marketing effort will then be made for popularizing FCVs as way of coping with energy and environmental problems. 2. To kick-start the market for mass-produced FCV models, hydrogen suppliers (city gas utilities, oil companies, etc.) will prepare the initial hydrogen supply infrastructure at about 100 locations by 2015, which will then be expanded in line with forecasted sales of FCVs. 3. To greatly reduce CO2 emissions from the transport sector, automobile manufacturers and hydrogen suppliers will jointly promote FCVs and hydrogen supply infrastructure throughout Japan. They expect the government to support them through government-private sector partnerships in creating FCV deployment strategies (*) including incentives and public acceptance measures. *: As a specific initiative for the time being, the 13 private companies will support the initial demand for mass-produced FCVs in the four cities, and will discuss FCV deployment strategies with various stakeholders including local governments, such as the optimal distribution of hydrogen supply infrastructure required for supporting the demand for FCVs. A subcommittee will be set up in each of the four cities to support these strategies including optimal deployment of hydrogen stations, and prepare specific plans for building the infrastructure. The Ministry of Economy, Trade and Industry commented: "Recognizing that this joint statement conforms to goals set forth in the Strategic Energy Plan of Japan, METI will take necessary steps to facilitate the launch in 2015 and subsequent nationwide dissemination." Demonstration Begins at Kitakyushu Hydrogen Town On January 15, 2011, the Ministry of Economy, Trade and Industry began distributing hydrogen to multiple users in Kitakyushu City in a demonstration "Hydrogen Town Project." This project is operated by the Research Association of Hydrogen Supply/Utilization Technology (HySUT), is a part of the Demonstration Program for Establishing a Hydrogen-Based Social System. In this project, hydrogen, produced at Nippon Steel Corporation's Yahata Steel Works, is distributed by pipeline to collective housing facilities, detached houses, commercial facilities and public facilities in the neighborhood, for use by pure hydrogen-fed fuel cell systems. The purposes of the project include: - Demonstration of technology for distributing hydrogen by pipeline (hydrogen is given an odor) - Demonstration of pure hydrogen-fed fuel cell systems - Demonstration of the combination of fuel cell systems with photovoltaic and power storage systems (verification of power distribution systems and demonstration of operability as emergency generators) - Demonstration of hydrogen filling to cartridges for fuel cell forklifts and fuel cell assisted bicycles, etc., using a low-pressure hydrogen recharge system at a DIY store in the area This is the world's first example of a community-oriented hydrogen distribution demonstration project, covering not only residential houses but also commercial and public facilities. Concept of the Hydrogen Town

Participation in GASEX 2010 GASEX 2010 was held in Taipei, Taiwan, for three days from October 24 (Wednesday) to 26 (Friday). GASEX is an international conference for the 15 Western Pacific countries/regions as members, and has been held once every two years since the first conference was held in Tokyo in 1990, to encourage the sound development of the gas industry through information exchanges and discussions among members. On the theme of "Pursuing Cooperative Paradigm on Energy, Environment and Economy," the participants at GASEX 2010 discussed and exchanged the latest information on various topics such as the outlook for the global gas market, the status of the natural gas industry (both upstream and downstream activities) in respective countries and regions, the progress of gas-related projects in the Western Pacific region and elsewhere in the world, and the latest news on technological development and environmental issues. The conference was attended by about 600 persons mainly from the 15 membership countries/regions. Mr. Torihara, JGA Chairman, delivering a keynote speech Mr. Takahashi, JGA Vice Chairman, presenting a member economy report JGA exhibition booth From Japan, Mr. Torihara, JGA Chairman, delivered a keynote speech on the second day entitled "Vision of the City Gas Industry toward 2030" describing the city gas industry's long-term efforts to reduce CO2 emissions. This is being done by promoting a shift to advanced use of natural gas in harmony between natural gas and renewables, developing smart energy networks, and creating a hydrogen-based society. The speech was well received by participants. On the same day, at the session for exchanging member economy reports, Mr. Takahashi, JGA Vice Chairman, gave a speech concerning Japan's energy policies and the situation surrounding the city gas industry in Japan and reported on specific examples of decarbonization efforts now being made by gas utilities, such as promoting fuel cells, gas air conditioning, the advanced use of natural gas in industrial sector, and gas cogeneration systems. His presentation attracted much attention from the participants. In addition, 13 participants from Japan joined panel discussions and breakout sessions, and engaged in lively discussions with participants from other countries/regions. At an exhibition space next to the conference hall, the JGA's booth displayed a mockup of ENE-FARM, a residential fuel cell system, and examples of actual devices developed for ubiquitous metering systems, which is an advanced metering infrastructure for the next generation that involves the use of ultrasonic meters. In addition, the JGA booth featured, mostly as panel exhibitions, gas appliances such as gas heat pumps, highly efficient water heaters and SOLAMO (solar-assisted gas hot water supply system). These exhibitions attracted many visitors who were keen to hear the explanations by the attendants and asked them various questions. The number of participants from Japan exceeded 100. The next GASEX conference will be held in 2012 in Bali, Indonesia. >>>Presentation by Mr. Torihara, JGA Chairman >>>Presentation by Mr. Takahashi, JGA Vice Chairman

Development of GHP XAIR, Extremely Highly Efficient Gas Engine Heat Pump Three gas utilities of Japan (Tokyo Gas, Osaka Gas and Toho Gas) have announced their plan to release a new gas heat pump (GHP) system called "GHP XAIR" in April this year. The new GHP system uses about 19% less primary energy and emits 20% less CO2 emissions than an earlier system. The three gas utilities developed GHP XAIR in collaboration with Aisin Seiki Co., Ltd., SANYO Electric Co., Ltd. and Yanmar Energy System Co., Ltd. The new GHP is an outstanding heat pump with, under optimum conditions, an efficiency rating of 5.6 in terms of the Annual Performance Factor (APF), making it the most efficient multi-split type air conditioning system for buildings. By advertising this great advantage in energy conservation, the gas utilities are eager to enter diverse sectors with GHP XAIR, including office buildings, commercial facilities, schools, hospitals and factories. City Gas Sales Volume in December 2010 and in the Three Quarters of Fiscal 2010 (April - December) The gas sales by the 211 gas utilities in Japan in December 2010 were 2.986 million m3(assuming 41.8605 MJ/m3), up 0.2% from the previous year. The monthly gas sales rose from the previous year for 14 consecutive months since November 2009. By sector: - The gas sales in the residential sector rose by 0.9% from the previous year due to factors such as relatively lower temperatures in November and the longer meter reading period for large general gas utilities than last year. (The monthly gas sales in the residential sector rose year on year for the first time in six months.) - The gas sales in the industry sector rose by 0.6% from the previous year mainly due to increased operating time of customer facilities. (The monthly gas sales in the industry sector rose year on year for 14 consecutive months.) - The gas sales in the commercial sector fell by 2.7% and the gas sales in the miscellaneous sector (hospitals, public facilities, etc.) fell by 1.5% from the previous year mainly due to decreased heating demand caused by higher temperatures in December than last year. (The monthly gas sales in the commercial sector fell from the previous year for two consecutive months. The monthly gas sales in the miscellaneous sector fell for the first time in 14 months.) The regional gas sales grew or fell by the following percentages from the previous year: -4.2% in Hokkaido, +2.4% in Tohoku, -1.9% in Kanto-Koshinetsu, +3.7% in Chubu-Hokuriku, +2.2% in Kinki, +1.5% in Chugoku, +12.1% in Shikoku, and +3.0% in Kyushu-Okinawa. The total number of customers is now 28,839 thousand, up 0.5% from the previous year. The total gas sales in the three quarters of fiscal 2010 (from April to December) were 24,715 million m3, up 5.9% from the same period of the previous year. By sector, this is broken down into 5,936 million m3 in the residential sector (up 1.2%), 13,096 million m3 in the industrial sector (up 8.0%), 3,500 million m3 in the commercial sector (up 3.5%) and 2,182 million m3 in the miscellaneous sector (up 10.8%). (These figures do not exactly add up to the total because fractions are rounded.) Gas Facts in Japan 2010

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