Contribution to the Environment... · equipment maintenance and systematic renewal of equipment to improve eﬃciency. Heat sales intensity at district

The Tokyo Gas Groupʼs Approach to Environmental Action

Tokyo Gas Group has established an Environmental Philosophy based on its Management Philosophyand Corporate Action Philosophy, a set of medium- to long-term Environmental Policies drawn up onthe basis of its Challenge 2020 Vision, and Environmental Protection Guidelines that set targets forenvironmental activities. With this commitment, the Group is working as one to actively protect theglobal and local environments.

■Environmental PhilosophyThe Tokyo Gas Group will promote more sustainable ways of energy use to contribute to theprotection of regional and global environments as well as to the sustainable development of society.

■Environmental PoliciesReduction of the Environmental Impact of Customers' Energy UseTokyo Gas will actively and continuously attempt to reduce the environmental impact ofcustomers' energy use by promoting the use of environmentally friendly energy (natural gas)and providing highly efficient appliances and systems.

1.

Reduction of the Total Environmental Impact of Tokyo Gas's Business OperationsTokyo Gas will continuously reduce energy intensity and resources used in its businessoperations through the implementation of efficient and effective environmental management tocontribute to the realization of a sustainable society. At the same time, we will reduce ourbusiness operations' overall environmental impact by aggressively promoting "green purchasing"and the 3R initiatives (Reduce, Reuse, and Recycle).

2.

Strengthening of Environmental Partnerships with the Local and InternationalCommunitiesTokyo Gas will strengthen its environmental partnerships with both the local and internationalcommunities by engaging in a wide variety of programs, such as participation in localenvironmental events and technology transfers to developing countries.

3.

Promotion of Green Technology R&D Programs Tokyo Gas will promote R&D programs for environmental technologies, including renewableenergy, to protect regional and global environments.

4.

Biodiversity Conservation and Sustainable Use Tokyo Gas will recognize the benefits of nature, and will monitor and mitigate the impact of ourbusiness activity on biodiversity, promote sustainable use of resources, and conserve biodiversityin partnership with local communities in order to ensure the continued enjoyment of thosebenefits in the future.

5.

Compliance with Environmental Law and Fulfillment of Social ResponsibilitiesTokyo Gas will comply with environmental laws, ordinances, agreements, and other relevantstandards and regulations, and all employees will practice social responsibility in accordance withglobal standards.

6.

Contribution to the Environment

■Environmental Protection GuidelinesWe are working to meet the targets set by the guidelines in accordance with our EnvironmentalPolicies to create a low-carbon, resource-saving society that coexists with nature.

Overview Image of Environmental Protection Guidelines*

* The Guidelines for Promoting Green Purchasing were discontinued in fiscal 2017, and green purchasing is now being pursued in

accordance with the newly introduced Basic Requirements for Purchasing.

＜Link＞

▶ Benefits of Natural Gas

Framework for Establishing the Guidelines Index

The framework for establishing quantitative indices for the Environmental Protection Guidelines isexplained in the following section.

Guidelines for Global Warming CountermeasuresIn our city gas business, the amount of CO2 emissions at customers' sites far exceeds that fromour business operations. Thus, reducing the amount of CO2 emissions at customers' sites is theutmost importance, and our targets have been established accordingly.Regarding the CO2 emissions from our own business operation, our primary goal is to reduce theenergy usage intensity of city gas production at our LNG terminals, which have the highestenergy usage. We also reduce absolute emissions from energy usage at our offices, etc. Targetshave also been set for reducing CO2 emission factors and the heat sales intensity of powergeneration and heating and cooling business.

Guidelines for Promotion of Resource SavingThe gas industry is involved in three waste management fields: industrial waste, general waste,and excavated soil.In particular, industrial waste is managed by: efforts to achieve zero emissions targets atproduction plants of Tokyo Gas Group, and by promoting the 3Rs (Reduce, Reuse, Recycle); andefforts to enhance recycling rate of industrial waste generated from locations other than thoseproduction plants.Under the Guidelines revised in fiscal 2014, we are stepping up such efforts by further dividingindustrial waste from locations other than production plants into that from construction sites andthat from offices and other locations.When conducting construction work of gas pipeline, roads and other surfaces must be drilled,which results in the generation of excavated soil (soil, asphalt concrete, etc.). Thus, we areinvolved in efforts to reduce, reuse, and recycle in order to reduce the amount of excavated soilgenerated.

Guidelines for Promoting Green PurchasingWe strive to reduce our overall environmental burden not only by working to improve our ownoperations to use less energy and produce less waste, but also by helping to reduce theenvironmental burden in upstream activities through the promotion of green purchasing. Amongour efforts, we are indexing and controlling the green purchasing rate targeting overall purchasesfrom electronic catalogs (however, this excludes difficult to acquire eco-friendly items such astools, safety items, and physics and chemistry equipment).


*

Global Warming Countermeasures

<Reasons for identification of material aspects>To fulfill our duty as an energy company to minimize the impact on global warming.

Performance in FY2016: Overview and AssessmentCriteria for evaluating indicators

Target achieved (100% or above)Target not achieved but improved from previous fiscal year (not 100% achieved but improvedfrom previous fiscal year)Target not achievedQualitative indicators with no evaluation axis are evaluated on the basis of whether or notprogress has been made since the previous fiscal year.

Target (CSR indicator)

FY2016 results Evaluation

<Customers' sites>Reduction of CO2 emissions atcustomers' sites: 3.7 million tons*

We aim to reduce CO2 emissions atcustomers' sites by 8 million tons byFY2020. This will be achieved throughefforts implemented by the Group sinceFY2011 to promote the use of natural gasand to develop and disseminate gasappliances and systems that have higherefficiency and lower environmental load.

CO2 emissions reduced to 3.94 milliontons at customers' sites

CO2 emissions resulting from customers'use of gas were reduced by 3.94 milliontons thanks to the promotion of natural gasuse and the development anddissemination of gas appliances andsystems that have higher efficiency andlower environmental load, including Eco-JOES and gas cogeneration systems.Increased use of gas to generate electricitydue to the spread of natural gas powergeneration made an especially significantcontribution to reduced CO2 emissions,allowing us to achieve our target.

<Electric power business>Reduction of emission factor at theretail level in the electricity businessWe aim to source more electricity fromhigh-efficiency thermal and renewableenergy power plants, and work to reducethe emission factor at the retail level (revised FY2016).

Increased sourcing of electricity fromhigh-efficiency thermal power plants,renewable power plants, and othersources


<Business activities 1>Energy usage intensity at LNGterminals: 215 GJ/million m3*

We aim to achieve an energy usageintensity (consumption of primary energyper gas production unit) of 250 GJ/millionm3 at our LNG terminals by FY2020.

Energy usage intensity at LNGterminals: 206 GJ/million m3

More energy-efficient operation of facilitiesand other strategies allowed us to meetour target despite an increase in energyusage intensity due to the raising of send-out pressure in response to growth in gasdemand.

<Business activities 2>Heat sales intensity at district heatingand cooling centers: 1.33 GJ/GJ*

We aim to achieve a heat sales intensity(consumption of primary energy per heatsales unit) of 1.19 GJ/GJ at districtheating and cooling centers by FY2020.

Heat sales intensity at district heatingand cooling centers: 1.31 GJ/GJ

We achieved our target thanks toimprovements in facility efficiencycombined with a rise in cooling towerefficiency and more efficient use ofrefrigeration systems resulting from acooler than average summer.

<Business activities 3>Energy usage at Tokyo Gas offices,etc.: 915 TJ*

We aim to hold down energy usage(primary energy usage) at our offices,etc. to 910 TJ by FY2020.

Energy usage at Tokyo Gas offices, etc.:938 TJ

We missed our target due to increaseddurability testing of gas engines underdevelopment and commercial waterheating systems.

<Promotion of wider use of renewableenergy>We aim to contribute to the realization ofa low carbon society through efforts tomaximize the implementation ofrenewable energy. Such efforts includeproviding products and services thatutilize renewable energy, supplyingrenewable energy (including powergeneration businesses), and promotingboth area-wide and networked use ofenergy.

Active adoption of renewable energy■Continued to make maximum use ofrenewable and unused energy sources invarious smart energy network projects.■625,000 m3 of biogas derived from foodwaste was fed to city gas distributionpipes.

* Numerical target for FY2016.

Key Future Initiatives from FY2017


Key initiatives

<Customers' sites>Reduction of CO2 emissions atcustomers' sites: 3.9 million tonsWe aim to reduce CO2 emissions atcustomers' sites by 8 million tons byFY2020. This will be achieved throughefforts implemented by the Group sinceFY2011 to promote the use of natural gasand to develop and disseminate gasappliances and systems that have higherefficiency and lower environmental load.

Promotion of wider and more advanced use ofnatural gas■Expanding the use of distributed energy systems,including high-efficiency CGS and ENE-FARM, thatcontribute to lower peak load, save energy, andreduce CO2 emissions.■Fuel switching using advanced natural gasutilization technologies.■Promotion of high-efficiency natural gas-firedpower generation.■Wide-area development of the natural gasinfrastructure to provide a platform for the abovemeasures.■Promotion of smart energy networks and supportservices for energy conservation, etc.

<Electric power business>We aim to source more electricity fromhigh-efficiency thermal and renewableenergy power plants, and work to reducethe emission factor at the retail level.

We will secure and increase sourcing fromenvironmentally friendly, economical,dependable power sources to expand electricitysales.■We will work to reduce the emission factor byusing high-efficiency LNG power plants andelectricity generated by renewables.■We will work to raise the operating efficiency ofthe Groupʼs power plants.

<Business activities 1>Energy usage intensity at LNGterminals: 220 GJ/million m3

We aim to achieve an energy usageintensity (consumption of primary energyper gas production unit) of 250 GJ/millionm3 at our LNG terminals by FY2020.

Promotion of more energy-efficient facilities andoperation■Active promotion of more energy-efficientoperation and equipment management to limitgrowth in energy usage intensity associated with therise in send-out pressure to meet growing gasdemand, enhancement of our facilities, and otherfactors.■More specifically, promote optimal operationaccording to the availability factor and forms ofoperation of production plants, appropriateequipment maintenance and systematic renewal ofequipment to improve efficiency.

<Business activities 2>Heat sales intensity at district heatingand cooling centers: 1.33 GJ/GJWe aim to achieve a heat sales intensity(consumption of primary energy per heatsales unit) of 1.19 GJ/GJ at district heatingand cooling centers by FY2020.

Promotion of more energy-efficient facilities andoperation■Promotion of optimal operation throughoperational improvements, etc.■Installation of high-efficiency equipment whenupgrading facilities.

*

<Business activities 3>Energy usage at Tokyo Gas offices, etc.:920 TJWe aim to hold down energy usage(primary energy usage) at our offices, etc.to 910 TJ by FY2020.

Promotion of more energy-efficient facilities andoperation■Implementation of energy-saving activitiescentered on an electricity conservation campaign.■Steady pursuit of energy-saving measures at newoffices established due to growth in the areas inwhich we do business.■Sharing of information on and horizontal roll-outof good energy-saving practice at buildings.

<Promotion of wider use of renewableenergy>We aim to contribute to the realization of alow carbon society through efforts tomaximize the implementation of renewableenergy. Such efforts include providingproducts and services that utilize renewableenergy, supplying renewable energy(including power generation businesses),and promoting both area-wide andnetworked use of energy.

Promotion of renewable energy business■Proposal of energy systems that make maximumuse of renewables for smart energy networkprojects.■Use of zero-emission power plants such as solarand wind farms.■Popularization of solar water heating systems,solar cooling systems, and dual power generationusing photovoltaic and fuel cell technologies.

Promotion of Resource Saving

<Reasons for identification of material aspects>To contribute to the creation of a resource-saving society by promoting resource recycling throughthe 3Rs (emission reduction, reuse, and recycling), thereby reducing the impact on localcommunities of waste and excavated soil emissions generated by business activities and atcustomers' sites.





<Industrial waste 1>Maintaining of zero emissions atproduction plants (final disposal rateof less than 0.1%)*

Production plants operated by Tokyo Gasand its subsidiaries will maintain zeroemissions (defined as a final disposal rateof less than 0.1%) until FY2020 throughthe reduction, reuse, and recycling ofindustrial waste.

Final disposal rate of industrial waste atproduction plants: 0.3%

Although we managed to reduce emissionsand made progress on the final disposalrate, we missed our target as thereremained scope in some cases for furtherrecycling.

<Industrial waste 2>（1）Maintaining of recycling rate forconstruction waste at 98% or above*

We will maintain the recycling rate forconstruction waste generated frombusiness activities by our company and itssubsidiaries at 98% or above untilFY2020.

（2）Recycling rate for industrialwaste generated at offices: 88% orabove*

We will achieve a recycling rate of 90% orabove for industrial waste generated atoffices of our company and itssubsidiaries by FY2020.

（1）Recycling rate for constructionwaste: 97.8%

The target recycling rate was missed dueto unexpectedly high emissions of sludge,which has a high reduction rate (lowrecycling rate).The final disposal rate for constructionwaste was 0.8%.（2）Recycling rate for industrial wastegenerated at offices: 86.7%

The target recycling rate was missed dueto low emissions of highly recyclableconstruction rubble.The final disposal rate for industrial wastegenerated by offices was 5.2%.

<Excavated soil>Reduction of the amount of excavatedsoil from gas pipeline construction to16% or less*

We will work to reduce, reuse, andrecycle excavated soil arising fromroadside construction work ordered byour company and its subsidiaries.Through these efforts, we will maintainthe amount of excavated soil at 16% orless until FY2020.

Reduction of the amount of excavatedsoil from gas pipeline construction to16.5%

We improved on the previous fiscal year byholding emissions down to 16.5% of theamount that it is estimated would havebeen generated had no action been taken.This was achieved by reducing the amountof soil excavated through shallow-laying ofpipes in narrow trenches and use of non-open-cut construction methods, as well asby reburying excavated soil and increasingthe use of improved soil and recycled roadsurface materials. However, we still fellshort of our target due to an increase incases in which excavated soil could notfeasibly be reburied.

* Numerical target for FY2016.

*


Target(CSR indicator)

Key initiatives

＜Industrial waste 1＞Maintaining of zero emissions atproduction plants (final disposal rate ofless than 0.1%)Production plants of our company and itssubsidiaries will maintain zero emissions(defined as a final disposal rate of less than0.1%) until FY2020 through the reduction,reuse, and recycling of industrial waste.

Promotion of recyclingFurther strengthening collaboration with disposalcontractors and continuation of efforts to reduce thefinal disposal rate.

<Industrial waste 2>(1) Maintaining of recycling rate forconstruction waste at 98% or aboveWe will maintain the recycling rate forconstruction waste generated from businessactivities by our company and itssubsidiaries at 98% or above until FY2020.

(2) Recycling rate for industrial wastegenerated at offices: 88% or aboveWe will achieve a recycling rate of 90% orabove for industrial waste generated atoffices of our company and its subsidiariesby FY2020.

(1) Promotion of recycling in business activitiesFurther strengthening collaboration with disposalcontractors and continuation of efforts to reduce thefinal disposal rate.

(2) Promotion of recycling at business officesFurther strengthening collaboration with disposalcontractors and continuation of efforts to reduce thefinal disposal rate.

<Excavated soil>Reduction of the amount of excavatedsoil from gas pipeline construction to16%We are working to reduce, reuse, andrecycle excavated soil arising from roadsideconstruction work ordered by our companyand its subsidiaries. Through these efforts,we will maintain the amount of excavatedsoil at 16% or less until FY2020.

Promotion of encouragement of further reuseand recyclingWe will work to reduce soil emissions from gaspipeline-laying work by (a) reducing the amount ofsoil excavated by using methods such as shallow-laying of pipes in narrow trenches and non-open-cutconstruction, and (b) continuing our efforts to obtainapproval from and negotiate a relaxation ofconditions with those authorities that have not yetapproved the reburial of generated soil and the useof improved soil and recycled road surface materials.

Promotion of Biodiversity Conservation

<Reasons for identification of material aspects>To conserve biodiversity by reducing the impact of our business activities on ecosystems andpursuing social action programs in recognition of the fact that creating rich ecosystems is of crucialunderlying importance to our business.





1. Monitoring and minimization ofimpact on ecosystems along valuechains

2. Reduction of environmentalfootprint, practice of the 3Rs, andpromotion of biodiversity-friendlysustainable use in own businessactivities

3. Engagement in conservation ofbiodiversity in partnership withstakeholders

4. Forest conservation at NaganoTokyo Gas Forest (owned by TokyoGas)

5. Wide publication and sharing withsociety of information on the Group'saction on biodiversity andcontributions to the development of asustainable society(Revised FY2016)

LNG terminals and gas pipelines■Conducted a follow-up survey ofdevelopments in action on biodiversity atthe gas fields that supply us with LNG, andconfirmed that there were no particularproblems at the 15 projects surveyed(including those under construction ordevelopment).■Continued to control ballast water duringtransportation of LNG in vessels owned ormanaged by Tokyo Gas.

LNG terminals and gas pipelines■Surveyed biodiversity of green spaces atour four LNG terminals. New insights weregained by taking into consideration area-wide linkages between variousenvironmental factors, with the resultsused to assist green space management.■Practiced the 3Rs to reduce disposal ofsoil excavated during gas pipeline layingwork, and reduced the impact onecosystems by avoiding use of pit sand.

Nagano Tokyo Gas Forest, etc.■Forest conservation work and habitatsurveys were carried out at Nagano TokyoGas Forest.■Provided support to NPOs and otherbodies through the Tokyo Gas EnvironmentSupport Fund, etc.



Key initiatives

1. Monitoring and minimization ofimpact on ecosystems along valuechains

2. Reduction of environmental footprint,practice of the 3Rs, and promotion ofbiodiversity-friendly sustainable use inown business activities

3. Engagement in conservation ofbiodiversity in partnership withstakeholders

4. Forest conservation at Nagano TokyoGas Forest (owned by Tokyo Gas)

5. Wide publication and sharing withsociety of information on the Group'saction on biodiversity and contributionsto the development of a sustainablesociety

(1)Procurement and transportation of LNG■Conduct a follow-up survey of developments inaction on biodiversity at the gas fields that supply uswith LNG.■Continue to control ballast water duringtransportation of LNG in vessels owned or managedby Tokyo Gas.

(2) LNG terminals and gas pipelines■Development of green space following the adviceof NPOs commissioned to conduct habitat surveys ofgreen space at four LNG terminals.■Practice of the 3Rs to reduce emissions of soilexcavated during gas pipeline laying work andreduce the impact on ecosystems by avoiding use ofpit sand.

(3)Nagano Tokyo Gas Forest■Performance of forest conservation work andhabitat surveys at Nagano Tokyo Gas Forest.

*

Promotion of Environmental Technologies Development

<Reasons for identification of material aspects>To contribute to forward-looking amelioration of global environmental issues as a total energycompany.





Promotion of development of lowcarbon technologies including fuel celland other cogeneration systems, high-efficiency gas air conditioners, andtechnologies for using hydrogen andrenewables (revised FY2016).

Improvement of efficiency and valueadded of gas cogeneration systems , airconditioners, fuel cells, etc.<Efficiency enhancements to airconditioners>■Realized and brought to marketefficiency enhancements and otherimprovements achieved through jointdevelopment of CGSs and air conditioners.

<Link> ▶ Provision of Better Products andServices

■The super-high-efficiency GHP XAIR IIwas awarded the Japan Institute ofEnergyʼs 2016 Progress Award (in theTechnology category).

<ENE-FARM and other fuel cells>■March: Commenced demonstration trialof commercial SOFC in Tokyoʼs ArakawaCity. .

Development of engineering, services,systems, and infrastructure for smartnetworks■Pursued R&D with the long-termpotential to transform business andcontribute to development of a low carbonsociety, including possible new energymanagement services to promote energyconservation and the use of renewables.

Hydrogen-related developments andCO2 management■Developed related technologies throughcommercial operation of Nerima, Senju,and Urawa hydrogen stations.



Key initiatives

Promotion of development of low carbontechnologies including fuel cell andother cogeneration systems, high-efficiency gas air conditioners, andtechnologies for using hydrogen andrenewables.

Improvement of efficiency and value added ofgas cogeneration systems, air conditioners, fuelcells, etc.■Development of strategic gas cogenerationsystems models according to capacity and market■Pursuit of development of a high-efficiency next-generation GHP air-conditioning system thatachieves 20% better annual operating efficiencythan the 2015 model, combined with thedevelopment of new services designed to facilitatefurther energy savings, such as an energyconservation guarantee plan.■Technical evaluation and field trial in preparationfor market launch of a commercial SOFC duringFY2017.

Development of engineering, services, systems,and infrastructure for smart networks■Promotion of R&D with the long-term potential totransform business and contribute to development ofa low carbon society, including possible new energymanagement services to promote energyconservation and the use of renewables.

Hydrogen-related developments and CO2

management■Development of related technologies throughcommercial operation of Nerima, Senju, and Urawahydrogen stations.

Guidelines for Promoting Green Purchasing

■Contributing to the realization of a low carbon society through purchasing activitiesconducted in concert with our business partnersEfforts in FY2016We continued our efforts to reduce delivery distances through batch delivery of constructionmaterials.

■Contributing to the realization of a resource-saving society through purchasing activitiesconducted in concert with our business partnersEfforts in FY2016388 thousand (34%) of the 1,139 thousand meters newly installed were reused, reducing waste by1,614 tons, while 100% of waste gas pipes were recycled. We are also continuing efforts to recyclewaste paper generated by our company into paper for printing and other uses through the TokyoGas Recycled Paper Program.

■Green purchasing rate for purchases through electronic catalogs *1

We achieved our target with a green purchasing rate of 78.5%. This was thanks to a combination ofmeasures, including promoting the placement of environmentally friendly items in electroniccatalogs, system modifications to give priority to environmentally friendly products in searches, anddata disclosure by sector. As of the end of fiscal 2016, 17,862 items had been registered asenvironmentally friendly.

Green Purchasing Rate

*1 Subject items consist of all items purchased through electronic catalogs, including office supplies, office furniture, office fixtures, business

cards, envelopes, and printed materials (but excluding tools, safety items, laboratory instruments, etc.). Calculation was made based on the

purchase amount.


Guidelines for Promoting Resource Saving

■Promoting resource saving of general waste（1）Efforts to separate and recycle general wasteWe recycled 76% of our general waste, including 94% of our paper waste, in fiscal 2016, exceedingthe target rate for the year of 75% or over. Alongside more rigorous sorting of waste for recycling,employees are becoming more aware of the importance of cutting emissions and recycling more.We will continue to work to maintain and raise the recycling rate for general waste as a whole.

General Waste Generation and Recycling Rate

（2） Efforts to reduce usage of copy paperWe met our target for copy paper usage with a reduction of 4.1% from the previous fiscal year. Wewill continue to practice the 3Rs by replacing paper documents with electronic ones by, for example,scanning documents, promoting paperless meetings, and making it easier for employees to keeptrack of their paper usage.We will continue to reduce copy paper usage in order to achieve the challenging target set for fiscal2020.

Copy Paper Usage and Reduction Rate*2

*2 Amount of copy paper sheets is calculated based on A4-sized paper.

Guidelines for Promoting Environmental Communication

■Environmental Activities at the Local Community LevelWe provided information on the Group's activities and suggested ways to save energy in everydaylife through a variety of channels, including by participating in environmental events organized bylocal governments, organizing seminars, presentations, and workshops, and publishing informationon our website. We further aided NPOs and other organizations through the Tokyo Gas EnvironmentSupport Fund, passed on environmentally friendly dietary tips through our "eco-cooking" program,and contributed to the creation of community green spaces through the Tokyo Gas Tree PlantingProject.

■Education on energy and the environment for the next generationTokyo Gas employees taught 792 special classes in elementary and junior high schools and assistedthe provision of energy and environmental education by providing training for 890 teachers.Our Gas Science Museum too serves an educational purpose by hosting school field trips and givingyoungsters an enjoyable introduction to the science behind energy and the environment and howthey impinge on our everyday lives.The Donguri (Acorn) environmental education project is a hands-on environmental educationprogram that encourages participants to think about forest ecology and the part that forests play inour everyday lives, and to apply what they learn to lead more environmentally friendly lives.Activities this year were organized in the Sayama Hills of Saitama Prefecture.Through all these activities, we helped provide the children upon whom the future depends withenhanced opportunities to learn about energy and the environment.

■Cultivating environmental consciousness among Tokyo Gas Group employees and theirfamiliesWe provided a range of programs for Tokyo Gas Group employees, including environmentaleducation and eco-driving courses.We also again presented our Environmental Program PromotionAward to honor the environmental contributions made by Tokyo Gas Group members and businesspartners, and continued to run the Tokyo Gas Tree Planting Project participated in by employees andtheir families. Through these initiatives, we have cultivated environmental consciousness amongTokyo Gas Group employees and their families, and encouraged environmentally friendly practice inthe home and in communities.

▶ Environmental Protection Guidelines（2017-2020）（PDF：231KB）

Continual Improvement of Environmental Management System

In order to promote environmental protection activities in line with our Management Philosophy,Corporate Action Philosophy, Our Code of Conduct, and Environmental Policies, Tokyo Gas hasdeveloped and is operating an environmental management system (EMS) that complies with theISO 14001:2004 international standard. We ensure that resource and energy conservation andvarious other activities to protect the environment are practiced properly and systematically byapplying solid PDCA principles. These initiatives offer the additional benefit of reducing costs. Wehave now commenced operation of an ISO 14001:2015-compliant EMS, and our transition isscheduled to be audited in September 2017. Operation of a new EMS that embraces both our corebusiness and environmental activities will further raise employeesʼ environmental awareness andensure legal compliance.

Environmental Management System 2017

EnvironmentalCommittee

Chairman: Executive Officer in charge of the environmentMembers: General Manager of related divisionsRoles: Deliberations on environmental policies, plans, etc., and their unifiedand effective promotion

EnvironmentalLiaisonMeeting

Chairman: General Manager of the Environmental Affairs Dept.Members: Group Managers in charge of the environment of related divisionsRoles: Preliminary review and exchange of opinions regarding contents fordeliberation at the Environmental Committee


■Efforts of the GroupTokyo Gas Group has introduced EMS, including certification to ISO14001 and Eco-Action 21standards, at consolidated subsidiaries and affiliates and other group companies that have a majorimpact on the environment in order to enhance environmental management throughout the Group.Today 95% of the Group (in terms of sales) practices environmental management in accordancewith ISO 14001 standards. Looking ahead, we will explore new arrangements for implementing EMSthat are suited to individual companies' scales and lines of business as we construct our new groupformation, and the Group will work as one in pursuing steps to improve the environment.

Status of implementation of Environmental Management System by Tokyo Gas and itsconsolidated subsidiaries (May 1, 2017)Tokyo Gas Co., Ltd. [ISO]<Residential Sales and Service Division>Living Engineering Co., Ltd. / Tokyo Gas Remodeling Co., Ltd. / Tokyo Gas Lease Co., Ltd. / TokyoGas Telemarketing Co., Ltd. (In July 2017, the company changed its name to "Tokyo Gas CustomerSupport Co., Ltd.") / Tokyo Gas Living Line Co., Ltd. / Tokyo Gas Lifeval Nishi-Ota Co., Ltd. / TokyoGas Lifeval Minami-Setagaya Co., Ltd. / Tokyo Gas Lifeval Chiba Co., Ltd. / Capty Co., Ltd.(Residential Sales and Service Division) [ISO]

<Energy Solution Division>Tachikawa Toshi-Center Co., Ltd. / Capty Co., Ltd. (Energy Solution Division) [ISO]

<Regional Development Division>Washinomiya Gas Co., Ltd. [ISO] / Shoei Gas Co., Ltd. [ISO] / Nagano Toshi Gas Co., Ltd. [ISO] /Tokyo Gas Yamanashi Co., Ltd. / Showa Unyu Co., Ltd.

<Pipeline Network Division>Capty Co., Ltd. (Pipeline Network Division) [ISO] / Capty Tech Co., Ltd. *1 / Kawasaki Gas PipelineCo., Ltd. *2 / Tokyo Gas Pipeline Co., Ltd.

<Gas Resources & Energy Prodution Division>Tokyo Gas Baypower Co., Ltd. (Sodegaura Power Station) [ISO] *2 / Tokyo Gas Yokosuka Power Co.,Ltd. / Ohgishima Power Co., Ltd. / Tokyo LNG Tanker Co., Ltd. [ISO] *2

<Power Business Division>Nijio Co., Ltd.*2

<IT Division>Tokyo Gas i Net Corp.

<Other>Tokyo Gas Engineering Solutions Corporation / Tokyo Gas Communications, Inc. / Tokyo Gas AutoService Co., Ltd. / Tokyo Gas Urban Development Co., Ltd. [ISO] #1 / Tokyo Gas Facility Service Co.,Ltd. [ISO] #2 / Tokyo Gas Site Development Co., Ltd. / Tokyo Gas Liquid Holdings Co., Ltd. / TokyoGas Chemicals Co., Ltd. / Tokyo Oxygen And Nitrogen Co., Ltd. / Tokyo Carbonic Co., Ltd. / TokyoRare Gases Company, Ltd. / Japan Super Freeze Co., Ltd. [ISO] / Niccho Operation Co., Ltd.*3 / ParkTower Hotel Co., Ltd. / Tokyo Gas Energy Co., Ltd. [Eco-Action]/ Enelife Carrier Co., Ltd. / TokyoAuto Gas Co., Ltd. / Tokyo Gas LPG Terminal Co., Ltd.(Total of Tokyo Gas Co., Ltd. and 43 consolidated subsidiaries in Japan)[ISO] ISO14001:2004 certification

*1 Included in the EMS activities of Capty Co., Ltd.

*2 Included in the EMS activities of Tokyo Gas Co., Ltd.

*3 Included in the EMS activities of Japan Super Freeze Co., Ltd.

Note1 The ISO registration scope covers operational activities of the building of Shinjuku Park Tower (excluding the hotel).

Note2 The ISO registration scope covers the head office and the management division of the Park Tower.

In addition to the ISO-compliant EMS, the Group runs an "Eco-Action 21" program, an EMS program for subsidiaries and affiliates developed

by Tokyo Gas, a LIFEVAL EMS program, and EMS programs developed independently by individual group companies.

■Result of Internal AuditIn fiscal 2016, an internal audit of 41 divisions' conformance in the areas set forth in our internalauditing plan found no instances of non-conformance with the requirements of the ISO 14001:2004standards, and EMS was found to be functioning effectively.

Measures Taken against Environmental Risks

■Measures Taken against Environmental RisksTokyo Gas believes that being actively involved in both regional and global environmental issues isan important aspect of our corporate management, and we conduct our business activitiesaccordingly. We identify the latent environmental risks present in our business activities, and wepractice proper management to mitigate them and prevent them from having a serious impact onthe environment. We also voluntarily research and publish information on the environmentalimpacts and pollution caused by our operations in the past, and we believe that we must take swiftaction to address any concerns that arise in order to protect the environment. When serious environmental risks manifest themselves, we take swift emergency action andmeasures to prevent a recurrence according to their risk level in accordance with our EmergencyResponse Organization Regulations, and we also standardize management flows to ensure thatsecondary risks do not arise.

■State of compliance with environmental regulations and finesAs some members of the Group erroneously overcharged for recycling appliances covered by the Acton Recycling of Specified Kinds of Home Appliances, details were published and appropriate actionwas taken in response.

Measures Taken for Soil Remediation

Since fiscal 1999, we have been conducting soil tests and groundwater surveys on all land currentlyor formerly owned by Tokyo Gas on which soil contamination may have occurred, such as the sitesof old plants. When the presence of contaminants has been confirmed, we have proactively releasedthe relevant information by a variety of methods, including by reporting the issue to the relevantauthorities, explaining the situation to local residents, and issuing press releases, and takenappropriate action to deal with the contamination.According to the circumstances, contamination is dealt with in practice by preventing the dispersalof contaminated soil by, for example, excavating and removing it or surfacing roads, and bypreventing the dispersal of groundwater by, for example, pumping up groundwater and installingimpermeable walls. Presently too when we carry out excavation work, we file notifications andconduct surveys as required by the Soil Contamination Countermeasures Act and associatedordinances, and we continue to practice environmental management by taking steps to prevent thedispersal of contaminated soil and disposing of excavated soil properly.Prompted by the actʼs revision in 2010, we now also treat naturally occurring contamination andcontamination thought to have been caused by landfill activity the same as contamination caused byour activities, and deal with it appropriately in accordance with the law.

Management of Chemical Substances

Although only small quantities of hazardous chemicals are used in the process of producing andsupplying gas, the Group will continue to manage chemical substances in accordance with applicablelaws and regulations and take action to reduce emissions.

■Response to the PRTR ActIn fiscal 2016, the Group handled or otherwise dealt with the following amounts of substancessubject to reporting under the PRTR Act. In fiscal 2016, no subsidiaries were required to file reportsunder this act.

Tokyo Gas(Unit: kg)

Substance Amount handled Release Transfer Remarks

Xylene 4,090 0.1 0.0 Refueling

1,2,4-Trimethylbenzene 2,015 0.0 0.0 Refueling

Toluene 8,800 0.9 0.0 Refueling

N-hexane 3,445 2.2 0.0 Refueling

■Measures for fluorocarbonsTokyo Gas identified and inspected specified products (commercial air conditioners, refrigerators,and freezers) for which it is responsible as manager under the Act on Rational Use and ProperManagement of Fluorocarbons, which came into force in April 2015. In fiscal 2016, estimatedleakages at Tokyo Gas and one subsidiary exceeded 1,000 t-CO2, and so a report was submitted tothe minister with jurisdiction for the operations in question. As a registered fluorocarbonsfilling/recovery operator, Tokyo Gas also collected and appropriately disposed of fluorocarbonsremoved during inspections and maintenance of GHP products.The electric chillers introduced in the past few years use low GWP (greenhouse warming potential)fluorocarbons. Low-GWP chillers will continue to be adopted.

Estimated Leakage as ManagerTokyo Gas

(Unit: t-CO2eq)

Substance Estimated leakage

HCFC 48.3

HFC 739.3

CFC 456.3

Total 1,243.6

Subsidiaries (1 company)(Unit: t-CO2eq)

Substance Estimated leakage

HCFC 467.0

HFC 604.5

Total 1,071.5

Amounts Filled, Recovered, and Destroyed by Tokyo Gas as a Registered FluorocarbonsFilling/Recovery Operator

(Unit: kg)

Substance Filled Recovered Destroyed

HFC 7.0 2.8 2.8

■VOC measuresSince 1991, Tokyo Gas has been working on reducing VOCs (volatile organic compounds) emissionwhen painting items such as gas holders. Recent efforts include the transition to a painting methodthat uses weak solvent-based paints (low VOC paint method). We will continue to work on furtherVOCs emission reduction.

Paintwork on gas holder

■Hazardous waste managementHazardous waste held by Tokyo Gas that contains PCBs is centrally stored at the Negishi LNGTerminal and other sites, and managed appropriately in accordance with the Act on SpecialMeasures concerning Promotion of Proper Treatment of PCB Wastes. Items such as high-level PCB-contaminated high voltage transformers and capacitors and low-level PCB-contaminated waste areprocessed properly in line with administrative processing schedules and policies. The state ofdisposal in fiscal 2016 is as shown in the table below. High-level PCB-contaminated capacitors andstabilizers of less than 3 kg were pre-registered with JESCO in the second half of fiscal 2016 and areto be appropriately disposed of in fiscal 2018.

Disposal of PCB Waste in FY2016

Type of waste Disposal amount

Large low-level PCB-contaminated transformers 4 units

Transformers for DC withstand voltage testing 1 unit

Action on Climate Change

The Group recognizes concerns that climate change may affect our business activities as follows,and is taking appropriate action in response.

■Global warming countermeasures (mitigation)In order to reduce emissions of greenhouse gases, which are considered to be a cause oftemperature rise, the Group has formulated Guidelines for Global Warming Countermeasures andwill act to reduce emissions from our main sources of emissions, namely city gas productionfacilities, district heating and cooling centers, power plants, and offices, as well as work to reduceemissions at customers' sites.

＜Link＞▶ Global warming countermeasures

■Natural disaster countermeasures (adaptation)Among the possible effects of climate change (heavy localized downpours, storm surges, etc.) aredamage to city gas facilities and delays to or interruption of LNG supplies in transit. Tokyo Gas istherefore hardening its production and supply facilities against disasters, and is making active use ofprivate-sector weather forecasts to help prepare for and prevent wind and flood damage. Inaddition, we believe that diversifying the sources of the LNG we use to make city gas will help limitdisruption to supply chains in the event that a source is struck by a natural disaster.

■Response to stricter legal regulation to combat climate changeRegulations in areas such as carbon emission trading and carbon taxes may impose constraints onthe use of fossil fuels. However, by stepping up efforts to encourage fossil fuel users to switch fromoil and coal to cleaner natural gas, promote wider adoption of highly energy efficient equipment andsystems such as cogeneration systems, encourage renewable energy use, and develop smart energynetworks, we are committed to contributing to the realization of a low carbon society.

Action to Address Water Risks

The Group recognizes threats to water resources as a business risk and therefore manages theamount of tap water, industrial water, and seawater it uses in order to conserve freshwater andcontrol wastewater emissions. In fiscal 2016, we used a total of 5,017 thousand m3 of freshwater atthe LNG terminals where city gas is produced, district heating and cooling centers (DHCs), powerplants using LNG, offices, and other facilities in Japan. We are working to reduce process waterconsumption at LNG terminals, DHCs, and power plants by optimizing boiler operation, reducingsteam loss, replacing chillers with more efficient electric turbo types, and more. To reduce our useof tap water at offices and similar facilities, we are making greater use of wastewater, installingwater-saving toilets, and encouraging employees to conserve water. Regarding wastewater, wemeasure emissions and manage indicators of water quality, including pH, COD*, and nitrogen andphosphorus concentrations, in accordance with local government ordinances, agreements, and otherrelevant standards. Seawater is used mainly at LNG terminals and power stations as a heat source,and is returned in its entirety to the sea. Looking overseas, although we are not presently doingbusiness in any regions subject to high water risk, we will monitor the business risks associated withwater use wherever we establish operations and respond appropriately as we accelerate ourglobalization in the years ahead.In fiscal 2016, water risk assessments were conducted at two locations̶a city gas production plantin Japan and a business unit in Thailand̶and these found that risks in these regions are notespecially high.* COD: Chemical Oxygen Demand

Water Resource Inputs of Tokyo Gas Group (tap/industrial water)

Efforts to Prevent Global Warming

As an energy company, Tokyo Gas Group recognizes its duty to prioritize action to prevent globalwarming. We have therefore established Guidelines for Global Warming Countermeasures that setconcrete numerical targets, and are working as a group to put them into practice. As CO2 emissionsfrom LNG value chains are highest at the city gas consumption stage, i.e., customers' sites, we placea strong focus on curbing emissions at this point and are pursuing a variety of strategies to achievethis, including the development and adoption of low-carbon systems. In the electric power segmentof our business activities (see diagram below) we are taking steps to generate power usinghighefficiency thermal power plants, and generate and procure more power produced usingrenewable energy. We are also monitoring the impact on global warming of our LNG procurementactivities, and are working with group companies to deploy high-efficiency LNG tankers to reduceemissions from transportation by sea.Looking ahead, we will contribute further to the fight against global warming by rolling out our lowcarbon technologies to other countries and other means in order to meet social needs andexpectations in the wake of COP21.

Greenhouse Gas Emissions along the LNG Value Chain (FY2016)


Action along the LNG value chain (FY2016)

*1,2 Calculated based on emission intensity analyzed following the LCA (life-cycle assessment)

*3,4 Standards for calculation and reporting of greenhouse gas emissions:

Scope 1: Business's own direct emissions of greenhouse gases.

Scope 2: Indirect emissions from consumption of electricity and heat supplied by others.

Scope 3: Indirect emissions other than covered in Scope 1 and 2 (emissions by other parties involved with business's activities).

＜Link＞▶ Tokyo Gas Group Business Activities and Material Balance

2

Reduction of CO2 Emissions at Customers' Sites

As gas use by customers is the largest source of CO2 emissions along the LNG value chain, TokyoGas Group places a particular focus on reducing CO2 emissions at customers' sites. Specifically, weare pursuing a number of strategies to achieve this, including not only encouraging users to switchfrom other fuels to natural gas, but also the development and dissemination of highly energy-efficient equipment and systems, the support of renewable energy use, and the development ofsmart energy networks. We also suggest ways our customers can use energy more efficiently intheir daily lives through activities including the provision of "Eco-Life" proposals and energy andenvironmental education for the next generation.

Reduction of CO2 Emissions at Customers' Sites*1,2

*1 Reduction of CO2 emissions relative to fiscal 2011 achieved by promoting wider use of natural gas through introduction of high-efficiency

appliances and systems (including Eco-JOES water heaters and gas cogeneration systems), substituting natural gas for other fuels, supplying

gas to power stations, and other measures.

*2 Reduction resulting from the spread of gas cogeneration and natural gas-fired power generation, calculated using marginal coefficients

(0.69 kg-CO2/kWh for the demand side and 0.65 kg-CO2/kWh for the transmission side).


In the residential sector, we are developing and encouraging wider use of gas stoves fitted withhighly energy-efficient burners, high-efficiency latent heat recovery gas water heaters, and homegenerators that utilize waste heat at the same time as they generate electricity.

Popularization of high-efficiency Eco-JOES water heaters

Whereas conventional residential gas water heaters have a maximum heating efficiency of80%*,*high-efficiency Eco-JOES home water heaters come equipped with an exhaust heat andlatent heat recovery system that boosts this figure to 95%.* Assisted by the industry-wide “Eco-JOES Adoption Campaign” to promote the adoption of Eco-JOES, the number of home installations isrising by the year. As of the end of fiscal 2016, the number shipped by the industry as a whole hadreached some 7,240,000. Our estimates show that these units produce 13% lower CO2 emissionsthan conventional models. We are also adding EneLook functionality to our water heater remotecontrols to display how much gas and hot water is being used, helping our customers to save waterand energy.* Calculated on higher heating value (HHV) basis.

How Eco-JOES High-Efficiency Water Heaters Work


Home generator ~Residential cogeneration system~

■Residential cogeneration systems: ENE-FARM fuel cells for home useIn a world first, the ENE-FARM residential fuel-cell cogeneration system designed for use indetached dwellings went on general sale in May 2009. ENE-FARMs can cut CO2 emissions by about1.3 tons per year compared with conventional systems producing an equivalent amount of electricity(0.7 kWh) and heat (1.01 kWh). They are expected to play a key role in taking the fight againstclimate change into the home.The ENE-FARM lineup for detached dwellings underwent facelifts in 2011, 2013, and 2015, and anew fifth generation of models offering enhanced resilience functionality for emergencies wasreleased in April 2017. The new resilience model*1 with built-in self-sustaining power generationcapability is capable of continuously generating electricity in a power outage for up to about eightdays (up from the four days or so achieved by previous models), and can be started up even duringa grid outage using a commercially available storage battery or generator*2 as an AC 100 V powersource. The new models can be connected to the Internet to make them part of the Internet ofThings. With the launch of our new network connection service in August 2017, it is now possiblefor users to switch baths, floor heating, and power generation systems on and off and to checkenergy usage when they are away from home by using a smartphone app. In a world first, an ENE-FARM model designed specifically for use in condominium buildings was also launched in April 2014.Due to the more restrictive installation conditions found in condominiums than in detached homes,this model's main unit was made more airtight, allowing it to be installed in the pipe shafts of openhallways in condominium buildings. So that it could be installed on higher floors as well, it was mademore earthquake resistant by strengthening the legs used to anchor the unit, and the supply andexhaust structure was modified to improve wind resistance and allow operation in strong winds. InJuly 2016, the ENE-FARM lineup for condominium buildings was expanded by the addition of newmodels offering added functionality such as built-in self-sustaining power generation capability. As ofthe end of March 2017, total sales had reached approximately 79,500 units.

*1 Like existing products, the fuel cell unit comes in two models: a resilience model that offers built-in self-sustaining power generation

capability, and an ordinary model without this capability.

*2 ENE-FARMs are not guaranteed to be capable of being started up by all commercially available storage batteries and generators. For

startup, a power supply must meet certain conditions. These include: AC 101 V ± 6 V, at least 1 kW of power, and at least 500 Wh of

capacity.

"ENE-FARM" residential fuel cell cogeneration systemCO2 emissions (g-CO2)(Assumptions for estimates)(1) CO2 emission factor: 0.65 kg-CO2/kWh for electricity (average factor for thermal power in FY2013 according to the Plan for Global

Warming Countermeasures (May 2016)), 2.29 kg-CO2/m3 for gas (Tokyo Gas data)

(2)Annual load: 16.6 GJ for hot water, 1.3 GJ for bath reheating, 2.2 GJ for cooking, 6.4 GJ for AC (cooling), 12.7 GJ for floor heating, 5.5

GJ for AC (heating), 12.5 GJ for lighting, etc. (for a four-person family living in a detached dwelling with a total floor area of 120 m2)

(3)Electricity demand for a dwelling supplied with both gas and electricity (using conventional systems): 4,223 kWh (including power

consumed by gas water/space heater)

(4)Equipment used for conventional system: gas water/space heater, gas hydronic floor heating (living room), gas stove, electric AC used

for cooling and heating in other rooms

ENE-FARM: ENE-FARM, gas hydronic floor heating (living room), gas stove, electric AC used for cooling and heating in other rooms

* Figures may not sum due to rounding.

■Active utilization of solar energyTokyo Gas offers two solutions that combine use of gas and renewables: Dual Power Generation,which combines photovoltaic power generation with an ENE-FARM home generator, and SOLAMO,which combines solar heating with an Eco-JOES high-efficiency water heater. Both of these solutionsprovide the backup systems needed when actively utilizing solar energy, which is subject tofluctuations in output, and they can make a major contribution to reducing households'environmental footprints.

Schematic of Dual Photovoltaic and ENE-FARM Power Generation

* The photovoltaic system is not a Tokyo Gas product.

Schematic of Water Heating System Using Solar Heat

Development and promotion of high-efficiency air-conditioning systems

In the commercial air conditioning market, we are promoting the GHP XAIR gas heat pump air-conditioning system, which cuts annual energy consumption compared with previous models, and"natural chillers" which use natural refrigerant for building use. We are also encouraging adoption ofSuzuchu cool kitchen systems, which reduce heat and air-conditioning load in locations such asrestaurants and hotel kitchens.

■Popularization of high-efficiency gas heat pumps (GHPs)GHP air-conditioning systems both save power and conserve energy, and we have been working topromote the XAIR series of GHPs, which are the most efficient of all. In October 2015 we launchedthe even more energy-efficient GHP XAIR II with 20% lower annual primary energy consumptionthan its predecessor. This is made possible by its lower engine speed in the light load zone thataccounts for much of the system's running time, allowing it to function even more efficiently.

Annual Energy Consumption Compared to the XAIR

* Comparison between 15-year-old model and XAIR based on actual past performance. Comparison between XAIR and XAIR II based on

Tokyo Gas estimates.

Our Green Help Pro*service achieves energy savings without sacrificing comfort by allowing GHPs tobe controlled over the Internet so that they can be operated more efficiently and their operatingstatus can be tracked at a glance. Since April 2016, we have also offered Smart Multi air-conditioning systems, which help lower energy consumption, CO2 emissions, and peak load bycombining a GHP with an electric heat pump (EHP) using the same refrigerant system. These can beoptimally controlled by the ENESINFO remote control service, also launched that same month.* Green Help Pro is a registered trademark of Tokyo Gas.


Development and popularization of high-performance industrialfurnaces and steam systems

In the industrial sector, we are dramatically cutting CO2 emissions by enabling energy users toswitch from fuels such as oil and LPG to natural gas, and to use natural gas in more sophisticatedways.We are also helping businesses reduce their energy use, CO2 emissions, and costs bydelivering a variety of solutions. These include TG Miru Net, which monitors and analyzes facilitiesonline so that customers can keep track of their energy usage at a glance, and the Steam Fit steamenergy service, which helps customers optimize their generation, supply, and use of steam.

■Promotion of high-efficiency burners for industrial furnacesRegenerative burner systems work by capturing the heat from exhaust gas in a heat reservoir andusing it to preheat an air feed, resulting in extremely high combustion efficiency coupled with lowNOx emissions. Up to 50% more energy efficient than conventional systems, these systems aredrawing attention for the crucial contribution that they can make to reducing CO2 emissions fromindustrial furnaces.

Regenerative burner system

Reducing CO2 emissions by switching to natural gas and using it more efficiently

Switching from fuels such as oil and LPG to natural gas can reduce CO2 emissions by about 25%.However, emissions can be slashed even further by switching to more efficient equipment andsystems and making more sophisticated use of natural gas.

Development and popularization of gas cogeneration systems

Gas cogeneration systems (CGSs) are distributed energy systems that generate electricity by meansof a high-efficiency engine powered by clean natural gas, a turbine, and a fuel cell, while capturingthe waste heat generated in the process to produce steam or hot water, which is then supplied,along with electricity, in the location of installation. Systems of this kind are very environmentallyfriendly, enhance energy security (by providing power source redundancy), and help conserveelectricity. At the end of fiscal 2015, 1,943 MW of CGS capacity (excluding the residential sector)was in operation in Tokyo Gas's service area.

Developing a sustainable society requires not only reducing CO2 emissions as has long been sought,but also society-wide action to conserve electricity and ensure energy security.As one means of solving issues such as these, Tokyo Gas Group is promoting the development of"smart energy communities" to make smarter use of energy by connecting the buildings in acommunity via a heat and electric power network. At the same time, we are pursuing improvementsat the building level to turn homes, office buildings, and factories into smarter energy users.

Creating Smart Energy Communities

Smart energy communities are created by developing smart energy networks (SENs). Thesecombine a gas cogeneration system for generating and consuming heat and electricity locally withthe use of renewable and untapped energy resources to create a heat and electricity network acrosswhich energy supply and demand is optimized by energy management using ICT. Making waste-freeuse of heat and electricity at the community level in this way serves to raise energy efficiency in thecommunity as a whole, allows business activities and everyday life to be sustained in the event of apower outage, and enhances cities' value.Energy-smart community development is spreading throughout the Tokyo metropolitan area, furtherpropelled by central and local government policies.

<Link>▶ Contribution to Local Communities / Building Communities and a Way of Life that is Safe andSecure

Making Life Smarter

To promote smarter energy use in everyday life, we built an employee dormitory in Isogo-ku,Yokohama, that makes maximum use of renewable energy and distributed energy systems, andconducted demonstration tests there for three years from April 2012 to March 2015.The tests involved sharing energy at the housing complex level and operating systems efficiently bymeans of integrated control. Residents were encouraged to save energy by providing incentives andby enabling them to keep track of their energy usage at a glance by means of a home energymanagement system (HEMS). The tests confirmed the energy-saving effect of these measures inresident-occupied areas. Demand response using ENE-FARM and storage battery cell systems wasalso tested under real-world conditions designed to replicate power shortages at the local level.*The project achieved an approximately 30% reduction in energy consumption and a 38% reductionin CO2emissions overall thanks to the installation and efficient use of ENE-FARMs and otherequipment. We also achieved a 7% energy saving in resident-occupied areas as a result of changesin resident behavior brought about by the installation of HEMS. In addition, peak load was cut by58% in summer and 49% in winter as a result of demand response.* This is a means of adjusting electricity demand on the user side in response to a request to limit power use. Supply and demand for heat

and electricity in an entire residential building is controlled by an integrated control system. When a demand response signal is received

from the local energy management system during peak load periods, the system tells the building's ENE-FARM fuel cells to maximize output.

At the same time, individual households are asked to conserve electricity by the home energy management system.


Isogo Smart House Demonstration Project A 24-unit Tokyo Gas employee dormitory consisting of four stories above ground and a basement. It was also usedfor the FY2011 Next-Generation Energy and Social Systems Demonstration Project and the FY2010 MLIT House andBuilding CO2 Reduction Pioneer Project.

Housing Complex Smart House Demonstration Project

Promotion of Smart Office Buildings and Factories

We are pursuing ways of enabling visual tracking of energy usage in office buildings, factories, andother facilities by using building energy management systems (BEMS) and smart meters. We arealso working to enhance energy services to enable, for example, optimized operation and control ofcogeneration systems, renewable energy, air conditioners, and boilers in order to reduce energyconsumption and CO2 emissions at customers' sites.

Schematic of an Energy Smart Commercial Building

■Visual tracking of energy use by TG Green MonitorsThe TG Green Monitor service provides data on energy use measured at the customer's end bydisplaying it using easily understood graphs and other visual aids. Customers access the service viaa special section of our website. Providing customers with an easy means of tracking their energyusage is an effective way of encouraging them to save energy.

■Saving energy and electricity at commercial buildings with Raku-Sho BEMSRaku-Sho (Easy Conservation) BEMS ("the winning way to save energy") is a service launched infiscal 2013 by which Tokyo Gas monitors customers' equipment and energy usage to help them saveenergy and electricity. This system centrally manages the operation of electrical facilities (airconditioning, ventilation, lighting, etc.) and gas equipment (GHPs, natural chillers, boilers, etc.) atprimarily small and mediumsized commercial facilities, helping them to save energy and conserveelectricity. Control of GHP, ventilation systems, and other equipment has led to energy savings atcustomer facilities (commercial multitenant buildings) where Raku-Sho BEMS is used, reducing gasconsumption by approximately 11% and electricity consumption by approximately 4%. Customershave also been able to cut their peak demand by approximately 6% (as of March 2017).

Typical Energy Savings Achieved by Using Raku-Sho BEMS at a Customer Facility(Commercial Multi-Tenant Building)

Example of a Raku-Sho BEMS System

Typical TG Green Monitor Screenshot

Safe and Secure Ways of Life and Urban Development

■Promotion of Smart Networks Built around Cogeneration SystemsWe are pursuing the development of "smart energy communities" that use energy smarter byconnecting buildings in the community with a heat and electric power network. Communities can bemade "energy smart" by building smart energy networks (SENs), which link supply and demand in acommunity into a single heat and power network based around a gas cogeneration system (CGS).Energy supply and demand throughout the network are optimized by an energy center, whichprecisely manages the network's heat and power use. By using such networks to provide low-carbon, disaster-resilient energy tailored to local characteristics, we will contribute to makingcommunities both more environmentally friendly and resilient to disasters.

Work started in Block II-2 (West area) in the northern district adjacent to Tamachi Station'seast exitTokyo Gas Group is developing an SEN in the northern district adjacent to Tamachi Station's eastexit (East area in Minato-ku, Tokyo) in partnership with the Minato ward authorities with the goal ofreducing the area's carbon footprint and making it more disaster resilient. Supplies of heat andpower have been progressively rolled out to three facilities - Minato Park Shibaura (a public facility),Aiiku Hospital, and a childcare support facility - since November 2014. The project is the first newurban development project in Japan to incorporate development of an SEN. In October 2015, workstarted on the TGMM Shibaura Project (provisional name) in Block II-2 (West area) in the northerndistrict adjacent to Tamachi Station's east exit. This project will create a multipurpose businesscenter on land owned by the company, and we plan to build a second smart energy center for thenew center to be operated in tandem with the first as the district undergoes further development,thereby reducing CO2 emissions in the entire northern district adjacent to Tamachi Station's east exitby some 45% relative to 1990.

Key Advantages of SEN in the Northern District Adjacent to Tamachi Station East Exit

Linkages among multiple facilitieswith different purposes

Public facility, hospital, etc.

Maximum adoption and effectiveuse of renewables, untappedenergy, etc.

Use of solar heat and heat of underground tunnel water forair conditioning (first application in Japan for districtheating)

Contribution to BCP

Capable of uninterrupted power supply to disastermanagement base (Minato Park Shibaura) anduninterrupted heat supply to Aiiku Hospital during poweroutages

Optimal supply/demand controlby SENEMS

Optimization for area-wide heat and power according tooutside air conditions and energy usage (first in Japan)

Smart Energy Network in the Northern District Adjacent to Tamachi Station's East Exit

Reduction of Carbon Footprint of Transportation

Among the types of automobile that are currently commercially viable, Tokyo Gas is working topopularize the use of clean, low CO2-emitting natural gas vehicles (NGVs). We are also helping todevelop the hydrogen supply infrastructure to assist the spread of fuel cell vehicles, which emit noCO2 at the combustion stage, in order to diversify fuel use.

■Popularization of NGVsThere are presently about 46,000 NGVs on Japan's roads (as of March 2017), and their numbers aresteadily growing. In fiscal 2016, a further 532 NGVs (primarily trucks and garbage trucks) appearedon the roads in our service area alone. As of the end of March 2017, there were 16,737 NGVs inoperation in our service area. In addition, there were 75 natural gas stations (including 13 fuelingstations used solely by buses or delivery vehicles) in our service area.

Number of NGVs in Use(in Tokyo Gas's Service Area)


■Environmental friendliness of NGVsAs NGVs use natural gas as fuel instead of diesel or gasoline, they emit only small quantities of NOxand virtually no black smoke or SOx. They produce about 10%-20% fewer CO2 emissions thangasoline vehicles and are receiving positive coverage as environmentally friendly vehicles.

NGV Exhaust Performance

* Diesel limits are for diesel vehicles weighing over 3.5 tons GVW.

New long-range heavy-duty CNG truck launched (Isuzu Motors Limited)

NGVs' environmental friendliness and superiority in terms of improved energy security makethem a highly viable alternative to gasoline vehicles, and NGV cargo trucks, buses, garbagetrucks, vans and other vehicles are already in widespread use on urban roads. With fueldiversification needed in the long-distance inter-city road haulage sector, too, Isuzu MotorsLtd. released a new heavy-duty CNG truck in December 2015, followed by additional modelsin November 2016. As a result, CO2 emission reductions and fuel diversification can now beachieved throughout the logistics sector.

EneLook remote control

Proposal of Energy-Saving Lifestyle Solutions to Pursue with OurCustomers

We provide lifestyle solutions, including means of "visualizing" energy use and approaches to savingenergy, to enable our customers to make smarter use of energy in their everyday lives.

"Visualization" of Energy Usage

The meter reading slips distributed every month to customers' homes indicate their gasconsumption at the same time a year before so that they can compare it with their current usage.Customers can also check their monthly gas and electricity bills and usage online by accessing themyTokyoGas service, which displays their data in an easy-to-understand graph. We also provideways of better "visualizing" energy usage through technologies such as the EneLook remote control,which displays the gas and water used by home water heaters, to enable customers to keep a visualtrack of their energy use. Tokyo Gas's high-efficiency Eco-JOES water heaters with latent heatrecovery come with EneLook remote control as a standard feature, and we are equipping all ournew products with eco-mode functionality to help customers conserve water and energy. Lookingahead, we aim to promote energy-saving, low-carbon behavior by our residential customers byenabling them to keep a visual track of their usage of all forms of energy in the home, including gasand electricity, by incorporating the results of our real-world trials of home energy managementsystems (HEMS).


Research on effectively promoting energy-saving behavior

Tokyo Gas is a member of the Lifestyle Creation Workshop (an organization of experts andhousing-related groups organized by the Japan Gas Energy Promotion Council) and the alliedEnergy Saving Behavior Workshop. In addition to researching and surveying ways ofpopularizing energy-saving behavior, we are developing easy-to-disseminate resources toeffectively promote energy-saving behavior among home-related businesses and ordinaryconsumers.The resources we have developed to date include "green action" playing cards (which providea simple introduction to energy-saving behavior through card games), a home improvementboard game (which demonstrates the effects that home improvements can have as playersprogress through the game), and The Energy Saving Starter Book (an instructor's textbookwith worksheets for use when incorporating the topic of energy-saving behavior into schoollessons). We are working to promote the use of these resources, and will work to assess howtheir use can affect every-day behavior.

"Green action" playing cards with tips on how to save energy

Home improvement board game

The Energy Saving Starter Book

Action at the City Gas Production and Supply Stages

Natural gas drilled overseas is liquefied and transported by carrier in the form of LNG at atemperature of -162 °C. Tokyo Gas produces city gas at its terminals in Negishi, Sodegaura,Ohgishima, and Hitachi for supply via a network incorporating mutual backup arrangements.Little energy is used in the process of making city gas from LNG, and energy efficiency at theproduction stage is at least 99%. As city gas is supplied directly to where it is used in gas form,energy loss during production and supply is negligible.We are making even further efforts to conserve energy by, for example, using the cold energy ofLNG.

Ohgishima LNG Terminal

High Efficiency of the City Gas System

Utilization of LNG Cold Energy

One kilogram of -162 °C LNG has sufficient cold energy to freeze 2.5 kg of water. We are using thiscold energy at various temperature levels for applications including power generation, cold storage,and the production of dry ice. In all, 2,678 thousand tons was used in this way in fiscal 2016. At theNegishi LNG Terminal, about 38% of the electricity used is generated from cold energy. In fiscal2016, 32,134 MWh was generated from cold energy, resulting in a CO2 emission reduction of about22,000 tons.

Cold Energy Use in FY2016

Purpose of use LNG used for cold energy (1,000 tons)

Supplied to subsidiaries and affiliates 820

Electricity generated using cold energy 785

BOG* processing 1,073

Total 2,678* Boil-off gas. This is gas generated by the vaporization of LNG in tanks caused by heat leaks from the atmosphere.


Action to Reduce Methane Emissions

Methane accounts for less than 1% of Tokyo Gas Groupʼs greenhouse gas emissions.As these emissions largely occur when city gas is produced and work is carried out on pipelines,Tokyo Gas Group is working to further reduce methane emissions by such means as reducing theamount of sampling gas used for product gas analysis, preventing venting when calorific valueadjustment systems are shut down, scheduling pressure reductions to reduce emission into theatmosphere when work is carried out on pipelines, and developing gas adsorption recovery systems.

Tokyo Gas Group has to date contributed to preventing global warming by actively expanding its useof renewable energy sources, such as wind power, to generate electricity to supplement its high-efficiency, environmentally friendly natural gas power plants. Now that the electricity retail markethas been completely liberalized and we are also an electricity retailer, we will strive to increaseprocurements from high-efficiency thermal and renewable power plants as well in order to lower ouremission factor at the retail stage. We have been a participant in the Electric Power Council for a LowCarbon Society since its inauguration, and through our involvement we will work with otherelectricity utilities to build a low carbon society.

Cutting-Edge High-Efficiency Natural Gas Power Plants

Tokyo Gas currently has stakes in power plants operated by Tokyo Gas Baypower Co., Ltd. (100,000kWh, wholly owned by Tokyo Gas, 50% maximum efficiency on an LHV basis at the generatingend), Tokyo Gas Yokosuka Power Co., Ltd. (240,000 kW, 75% owned by Tokyo Gas, 51% maximumefficiency), Kawasaki Natural Gas Power Generation Co., Ltd. (420,000 kW x 2 units, 49% owned byTokyo Gas, 58% maximum efficiency), and Ohgishima Power Co., Ltd. (400,000 kW x 3 units, 75%owned by Tokyo Gas, 58% maximum efficiency).In addition to these sources, in September 2014 we decided to receive the entire output(approximately 1,200,000 kW) of the Moka Power Station, which Kobelco Power Moka Inc. (a whollyowned subsidiary of Kobe Steel, Ltd.) is preparing to build in Moka, Tochigi Prefecture. (The plant'sfirst unit will be completed in late 2019, and its second in early 2020.)These plants are all highly energy-efficient natural gas power plants that generate electricity usingcutting-edge gas turbine combined cycle technology.Using the electricity generated by these newly built high-efficiency power plants in place ofelectricity produced by less efficient existing thermal power plants will help reduce ourCO2 emissions by the resulting difference in CO2 emissions per unit of electricity generated.

Ohgishima Power Station now

■Gas turbine combined cycle technologyCombined cycle power plants that use liquefied natural gas (LNG) as fuel achieve higher generatingefficiency by using the heat captured from a gas turbine to convert water to steam, which is thenrecovered to drive a steam turbine that also generates electricity.

Steps in the Power Generation Process


Promotion of Renewable Energies

The Group is expanding its procurements of electricity from renewable sources in order to contributeto the development of a low carbon society.Wind power plants' generating costs have come down in recent years, thanks in part to increases inscale, and they are increasingly expected to become one of the most important sources ofrenewable energy. We built a wind power plant with an output of 1,990 kW at our Sodegaura LNGTerminal and have been generating wind power since 2005. The Sodegaura wind power facility wasdecertified under the Act on Special Measures Concerning New Energy Use by Operators of ElectricUtilities in March 2013, and certified instead as a facility under the Act on Special MeasuresConcerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities.Electricity generated is sold to ENNET Corporation, an electricity retailer.

Wind power facility at Sodegaura LNG Terminal

Our second venture into the wind power business began with the announcement in April 2011 ofour investment in Shonai Wind-Power Generation Co., Ltd. Shonai Wind-Power Generation nowoperates two wind power plants in Yamagata Prefecture, including the Yuza Wind Power Plant(operational since December 2010), which have a combined power generating capacity of 16,360kW.

Yuza Wind Power Plant

On January 19, 2015, we signed a power purchasing agreement with Kuroshio Furyoku HatsudenK.K., and we have been purchasing approximately 12,000 kW of electricity under this agreementsince April 2015. This electricity is generated by two plants operated by Kuroshio Furyoku Hatsudenin the Kanto region: the Choshi Takada-cho Wind Power Plant, which entered service in 2006 andhas one 1,990 kW turbine, and the Shiishiba Wind Power Plant, which entered service in 2009 andhas five 1,990 kW turbines.In February 2017, we entered a capital and business partnership with Shizen Energy Inc., adeveloper of solar farms and other renewable power systems, and we will be carrying out jointdevelopment work to achieve 60 MW of photovoltaic power generating capacity as soon as possible.Looking beyond wind power generation, we plan to investigate wind power generation, biomasspower generation (which has a high capacity factor), abundant photovoltaic power, and variousother renewable power sources to continue our contribution to the creation of a low carbon society.

Efforts in the District Heating and Cooling Business

Tokyo Gas Group operates District Heating and Cooling plants (including small-scale spot heatsupply centers) in 54 districts. Steam and heated and chilled water are produced by various naturalgas systems, including gas cogeneration systems, absorption chillers, and boilers, and are suppliedwithin specific areas. To increase energy efficiency, we are working to fine-tune operation of thesefacilities and make them more efficient.

Makuhari District Heating and Cooling Center

■Initiatives at the Makuhari District Heating and Cooling CenterWe are upgrading heat source equipment at the Makuhari District Heating and Cooling Center inorder to convert it from a conventional heat-only district heating and cooling center into acommunity energy center that also generates electricity in order to help conserve energy andreduce CO2 emissions throughout the area as a whole. Using the latest high-efficiency large-scalegas cogeneration system (with a total capacity of 15.7 MW), electric turbo chiller, boiler, andabsorption chiller, we have achieved the "best mix" of heat and power supply systems, resulting in a19% reduction in fuel consumption and 19% reduction in CO2 emissions (based on performance infiscal 2015).

Schematic of Makuhari District Heating and Cooling Center

* Only when demand cannot be met by the cogeneration system.


DHC service to Makuhari Shintoshin area

2

Other Efforts to Reduce CO2 Emissions

■Forest Conservation and Greenification ActivitiesNagano Tokyo Gas Forest was opened in Kitasaku-gun, Nagano Prefecture, by Tokyo Gas as ameans of engaging in forest development and conservation activities in order to contribute to thefight against global warming in fulfillment of its duties as an energy supplier. The forest celebratedits 10th anniversary in 2015, and in the 10 years since its inception some 300,000 saplings havebeen planted and 40,000 thinned out to promote forest regeneration. The plan for the future is toclearly quantify how much CO2 the forest sequestrates so that this can be offset against emissionsfrom other business activities using the J-Credit Scheme in order to promote conservation activities.In addition, we are supporting the conservation and expansion of precious green space in theGroup's service areas through the Tokyo Gas Tree Planting Project.

Nagano Tokyo Gas Forest administration building, a mountain lodge called Ohisama House

Trees are thinned, pruned, and otherwise maintained to conserve the forest, while the forest's administrationbuilding, a mountain lodge called Ohisama House, has been designed to make maximum use of natural energy

sources (such as wind, sun, and water to generate power and a pellet stove for heating).

Tokyo Gas Tree Planting Project Trees have been planted along a section of Tokyo Metropolitan Route 306 (Oji Senju Minami-sunamachi) through a

donation to the "My Tree" program organized as part of the Tokyo Metropolitan Government's Green TokyoFundraising Campaign.


Only when demand cannot be met by the cogeneration system.

Tokyo Gas uses reductions in greenhouse gas emissions accredited under the J-CreditScheme*1 administered by the Japanese government to offset carbon emissions*2 from eventswithin and outside the company in order to contribute more to the environment. For example,we provided 100 tons of J-Credits for the G7 Ise-Shima Summit in May 2016,*3 and 250 tonsfor Japan's annual Intercity Baseball Tournament in July. Then in 2017, we providedapproximately 150 tons in credits for three “carbon offset matches” played by J.League soccerteam FC Tokyo in May and June.

*1 This is a program by which reductions and sequestrations of greenhouse gases such as CO2 achieved by, for example, forest

management and installing energy-saving equipment are certified by the government as "credits." Credits created under this

scheme can be used in various ways, including to attain targets set by commitments for achieving a low carbon society and to offset

carbon emissions.

*2 For the Ise-Shima Summit held in Mie Prefecture on May 26-27, 2016, the Ministry of Economy, Trade and Industry, the Ministry

of the Environment, and the Ministry of Agriculture, Forestry and Fisheries (which together run the J-Credit program) partnered

with the Ministry of Foreign Affairs to enable the buying and selling of carbon offsets by the public and private sectors through the

J-Credit Scheme and related arrangements. Enterprises and local governments were invited to take part in the project. This public-

private partnership on carbon offsetting demonstrated to the international community Japan's positive commitment to tackling

climate change, and also contributed to fostering public understanding of and involvement in action against climate change in

Japan.

*3 Once CO2 emissions at the Summit have been confirmed, offset credits up to the amount offered by each company will be

finalized.

Effective Use of Energy by Gas Cogeneration Systems

Tokyo Gas has long been interested in saving energy at our offices. We equipped ourHamamatsucho Head Office Building with its first gas cogeneration system as far back as 1984, andupgraded it in fiscal 2008 to take advantage of the latest cogeneration technology,* with the newsystem entering operation in April 2009. As a result, our head office building CO2 emissions havebeen cut by some 1,400 tons annually.When all-out efforts were needed to save power during the summer of 2011 following the GreatEast Japan Earthquake, all the Group's gas CGSs were put to work and achieved significant powersavings.* Upgraded gas CGS: 930 kW-class gas engines x 2, total efficiency of 72% (38% power generation, 32% waste heat capture)


Making Old Buildings Both Energy Efficient and Environmentally Friendly

In fiscal 2010, Tokyo Gas introduced a set of design guidelines for buildings that call attention toimproving energy conservation, seismic safety, and building lifespans. The new guidelines have beenincorporated into improvement plans for buildings owned by Tokyo Gas Group.


Motion sensitive lighting Fluorescent LED lighting

Saving Energy by Improving Facilities

We are installing more efficient lighting and air-conditioning equipment at our offices and facilities,focusing on those where the greatest energy savings can be achieved. On the lighting front, we areinstalling high-efficiency LED and HF-ballast fluorescent lighting. Significant savings have also beenachieved in recent years by using LED lights instead of mercury lights for outdoor lighting and in theexperimental area at the Senju Techno Station's B Block.Paying particular attention to buildings' outer skins, we retrofitted a number of the windows in ourHamamatsu Head Office Building with double glazing in fiscal 2013.


Data visualization at Tokyo Gasʼs Hamamatsucho HeadOffice Building

Information being displayed at head office

Saving Energy by Improving Use

Tokyo Gas is working with the owners of the buildings it occupies, their facility managers, and thespecific departments that are tenants in these buildings to implement effective ways of savingenergy. These measures include the establishment of energy conservation committees,management of lighting levels, and maintenance of humidity and temperature at appropriate levels.Since fiscal 2014, we have also been installing displays in some of our buildings to make it easier tovisualize energy usage and raise awareness of energy conservation.

■Raising energy conservation awareness through "visualization"Visual data on actual electricity usage and information on energy conservation are displayed atTokyo Gasʼs Hamamatsucho Head Office Building, Tokyo Gas Tachikawa Building, and Tokyo GasHiranuma Building, and Tokyo Gas Hon-Chiba Building supplies online data on energy usageprovided by the Raku-Sho (Easy Conservation) BEMS service, along with analyses of the results, toother Tokyo Gas offices.Alongside these activities, we also organize a power-saving campaign every summer and winter toencourage employees to save electricity. In fiscal 2016, the result was a 1.1% reduction from a yearearlier in electricity usage at our Hamamatsucho Head Office Building.


Promotion of Eco-Driving

Eco-driving information (such as information on avoiding idling) is provided to employees byinstructors and through our intranet and other channels. We also offer eco-driving courses, andstudies of fuel consumption before and after taking these courses shows that drivers become atleast 10% more fuel efficient.

Explaining the keys to eco-driving

Introduction of fuel cell vehicles

We are adopting the use of low-emission and fuel-efficient vehicles in order to reduce nitrogenoxide (NOx), particulate matter (PM), and CO2 emissions produced when driving. As of theend of March 2016, we had introduced three fuel cell vehicles.


Green Procurement of Energy

The Green Power Certificate System is a system for turning electricity generation using naturalenergy sources (such as biomass and wind power) into "environmental value" that can be traded inthe form of "green power certificates" in order to promote wider adoption of natural energy sources,energy conservation, and reductions in CO2 emissions. We have purchased green wind powercertificates from the Japan Natural Energy Company Limited since April 2002, and allocate them toour corporate museums and offices. We are making a positive contribution to the fight againstglobal warming at the local level as well, and since April 2007 have been a "Yokohama-GreenPartner" in Yokohama's Hama Wing wind power project.

Green Power Purchases and Use in FY2016

Facilities using green power Electricity(kWh)

Head-office building, Tokyo Gas Senju property (Tokyo specified anti-globalwarming facility) 450,000

Shinjuku Showroom 106,000

Earth Port (Tokyo Gas Kohoku New Town Building) 90,000

TG Hiranuma Building 90,000

Yokohama Showroom 90,000

TG Tachikawa Building 90,000

Gas Science Museum 80,000

TG Kannai Building 38,576

CSR Report 2016 (Japanese and English print editions) 3,900

Ohgishima Power 1,000

The Ultra Energy Saving Handbook (print edition) 600

Total 1,040,076


Toward the Creation of Resource-Saving Society

Practicing the 3Rs (reduce, reuse, and recycle) is essential to creating a resource-saving society. Themost important of these is controlling the generation of waste.In addition to limiting emissions by, for example, producing zero emissions at production plants(defined as a final disposal rate of less than 0.1%) and reducing the amount of soil excavated duringgas pipeline construction, Tokyo Gas Group practices the 3Rs at every stage of its business activities,including reusing gas meters and recycling used gas pipes and gas appliances, in order to recycleand reuse waste and other resources.

Tackling Waste Emissions from Production Facilities and ConstructionWork

■Tackling Waste Emissions from Production FacilitiesTokyo Gas Group is working to achieve zero waste emissions (defined as a final disposal rate of lessthan 0.1%) at not only its city gas production facilities, but also at power plants, gas appliancefactories, district heating and cooling centers, and plants making products such as systems that usethe cold energy of LNG. In fiscal 2016, total waste emissions came to 809 tons, the amountdisposed of by landfill was 2 tons, and the final disposal rate was 0.3%.**Excluding asbestos and other non-recyclable industrial waste.

■Tackling Waste Emissions from Construction WorkThe Group generates waste (mostly construction rubble and sludge, scrap metal, and wood chips)as a result of activities performed under direct contract for gas utilities (such as the construction ofgas facilities), gas pipeline work at customersʼ sites, installation of air conditioning, space heating,and water heating systems, and home improvement work. In fiscal 2016 we generated 139,856tons of waste, 98% of which was recycled.

Action in the Gas Supply Field

We pursue a range of activities in the gas supply field to contribute to the development of aresource saving society. These include 3R activities to deal with emissions of byproducts during gaspipeline work, and the reuse and recycling of gas meters.

■Reuse, Reduction, and Recycling of Excavated SoilRoads must be dug up when gas pipelines are laid, producing emissions of excavated (residual) soiland asphalt concrete lumps. The Group takes a "3R" approach (reuse, reduce, and recycle) todecreasing the amount of excavated soil by, for example, shallow-laying of pipes in narrow trenchesand use of non-open-cut construction methods, as well as by reburying excavated soil and makingincreased use of improved soil and recycled road surface materials. When it is necessary to re-excavate the same location, we are using a new kind of temporary backfill called "Eco-balls," andwider use is being made of other newly developed materials and construction methods as well. Infiscal 2016, 0.64 million tons of excavated soil was disposed of, which is 16.5% of the 3.88 milliontons (estimated baseline disposal) that would have had to be disposed of had conventional methodsbeen used. As a result, our use of trucks to transport excavated soil was also reduced, cuttingCO2 and NOx emissions.


Eco-ball temporary backfillPipeline work using Eco-balls

■Recycling of Used Gas PipesIncreased recycling of used gas pipes removed when pipes were replaced enabled us to once againachieve a 100% recycling rate in fiscal 2015. We established a system for recycling polyethylene(PE) pipe* scrap and excavated sections of pipes in fiscal 1994, and in fiscal 2016 recycled a total of260 tons as raw materials for use in the gas business and for making stationery. In the gasbusiness, these materials are used to make items such as labels for customers' gas metersexplaining how to restart the meters after an emergency. Regarding steel and cast-iron pipes, wecollected a total of 6,126 tons in fiscal 2016, and the entire amount was recycled as raw materialsfor use by electric furnace manufacturers and other users.*PE gas pipes are highly earthquake and corrosion resistant, and were rapidly adopted following the Great Hanshin-Awaji Earthquake.

Used PE Gas Pipe Recycling Process

Trend in Reduction in Emissions of Excavated Soil Relative to Estimated Baseline

■Gas Meter Reuse and RecyclingTokyo Gas has led the gas industry, and other industries, in its reuse of gas meters ever since it firstbegan installing them.The gas meters installed at customers' sites are replaced before their certified life (normally 10years) expires. We collect the removed meters, replace all expendable parts, and recertify them,allowing them to be used for three cycles (30 years) in total. All replaceable parts have beenassessed for durability and design changes made where necessary, with the result that now almostall reusable parts are reused. In fiscal 2016, 388 thousand (34%) of the 1,139 thousand metersnewly installed were reused, enabling us to reduce the amount of waste generated by 1,614 tons.Meters that have completed three cycles are recycled through our own recycling channels and usedas material for new products by electric furnace manufacturers and other companies.

Steps in Reuse of Gas Meters

Gas meter

Action on Waste at Offices

■Tackling Waste Emissions at OfficesTokyo Gas Groups' offices and other facilities produce all kinds of industrial waste, including wasteplastic from containers and packaging and waste generated in the course of developingtechnologies, providing education and practical training, and performing maintenance work atcustomers' sites. The Group strictly sorts and stores waste, which it then ensures is recycled orproperly disposed of. In fiscal 2016, our offices and other facilities produced a total of 3,565 tons ofindustrial waste (87% of which was recycled). We fell short of the target set in our ResourceRecycling Guidelines (revised in fiscal 2014), and we will redouble our recycling efforts to meet thisgoal.Our offices are working to reduce their consumption of copy paper, cut emissions of waste paper,and recycle more used paper. Following the attainment of a 95% waste paper recycling rate by theGroup as a whole in fiscal 2013, our Environmental Protection Guidelines were revised in fiscal 2014to expand the scope of waste management to cover general waste (such as food waste) so as toincrease our rate of recycling of waste other than waste paper. As a result, the Group as a wholeproduced only 2,931 tons of general waste in fiscal 2016, meeting its target with a recycling rate of76%.

Careful sorting of wastepaper Collected waste paper

■Paper Recycling by Tokyo GasIn fiscal 2003, Tokyo Gas launched a program to collect old documents and waste paper and havethem turned into recycled paper for our own use. In fiscal 2016, we purchased 339 tons of paperthat had been recycled in this way, and used it to produce sales pamphlets, leaflets, calendars,reports, and other literature. Unlike ordinary recycled paper, the paper that we use ̶which we call"Tokyo Gas Recycled Paper"̶ is made from materials both provided (i.e. waste generated) and thenpurchased back by us. This independent program observes green purchasing practices and isdesigned to promote the "greening" of the paper product chain. We work with a wide range ofcompanies at every stage of the paper product lifecycle, including waste paper haulers, waste paperwholesalers, paper wholesalers, and paper manufacturers at the waste paper distribution through tothe recycled paper production stages, and production companies and printing firms at the printingstage. Internally as well, all of our employees carefully separate waste to make it possible for us toprovide high-quality waste paper for recycling.Tokyo Gas Recycled Paper is certified to be made from legally sourced lumber that has been tracedfrom the felling stage.In the case of printed materials that cannot be made from Tokyo Gas Recycled Paper, we supportthe use of sustainable forest resources by recommending the use of FSC-certified paper in order toensure that it has been sourced in an environmentally friendly manner (by, for example, payingattention to forest conservation).

How Tokyo Gas Waste Paper is Recycled

Tackling Waste Emissions at Customers' Sites

We promote the reduction, reuse, and recycling of materials at customers' sites in a variety of ways.These include reducing waste emissions by making our products more environmentally friendly fromthe design stage, and collecting used appliances and parts via our own collection channels.

■SRIMS for Used Gas Appliances, Etc.Since August 1994, Tokyo Gas has operated its own waste collection and recycling system, calledthe Saving & Recycling Innovative Model System (SRIMS). This system enables us to reduce theimpact on the environment and cut costs by collecting waste at the same time we deliver gasappliances, parts, and piping materials to partner companies. Under SRIMS, we are working tocollect used gas appliances and waste materials produced when equipment is replaced or gasinstallation or renovation work is carried out at customers' sites.In fiscal 2016, we collected 8,296 tons of waste and recycled 7,883 tons.

How SRIMS Works

■Action under the Act on Recycling of Specified Kinds of Home Appliances

Tokyo Gas-branded residential gas air conditioners and clothes dryers are subject to the Act onRecycling of Specified Kinds of Home Appliances ("Home Appliances Recycling Act"). They aretherefore collected and recycled by a consortium of companies (known as the "A Group") led byPanasonic Corporation and Toshiba Corporation. In terms of gross weight, 90% of our air conditioners and 87% of our clothes dryers were recycledin fiscal 2016 (exceeding the respective legal minimums of 80% and 82%).

Action under the Home Appliances Recycling Act

UnitFY2016

Air conditioners Clothes dryers

Number received at designated collection points Number 13,309 6,896

Number transported to processing plants Number 13,338 6,879

Recycling

Number recycled Number 12,828 6,893

Weight undergoing recycling Tons 528 274

Weight post recycling Tons 478 241

Recycling rate ％ 90 87

FluorocarbonsWeight recovered kg 8,523 ー

Weight destroyed kg 2,100 ー

In addition, specified residential waste appliances collected from customers by partner retailers areproperly transported to specified collection points in accordance with our Saving & RecyclingInnovative Model System (SRIMS).

■Reduction of Waste Containers and PackagingIn order to reduce emissions of waste containers and packaging at customers' sites, we meticulouslycollect unwanted containers and packaging generated when gas appliances are sold and installed byour partners.Containers and packaging collected from customers' sites are recycled mainly via SRIMS. In fiscal2016, approximately 636 tons of corrugated cardboard and 14 tons of expanded polystyrene werecollected and recycled in their entirety. We are also reducing the quantity of containers andpackaging used for gas appliances in several ways. These include reducing the amount of cushioningrequired by redesigning corrugated cardboard packaging, using less corrugated cardboard byemploying shrink wrap packaging, and using returnable packaging (tops and bottoms that can becollected and reused).

Corrugated cardboard boxesdesigned to use less cushioning Shrink wrap packaging Returnable containers

Activities to Conserve Biodiversity

■Biodiversity Conservation and Sustainable UseMany species are facing imminent extinction due to human activities, and natural ecosystemsaround the world are being disrupted at an alarming rate. Tokyo Gas Group considers the realizationof rich ecosystems to be one of our important business bases in order to protect the globalenvironment while sustaining our business, and has formulated its Guidelines for PromotingBiodiversity Conservation. Specifically, we are monitoring conditions along each value chain tomitigate their impact on ecosystems, practicing forest conservation at our own Nagano Tokyo GasForest, and engaging in a variety of other initiatives.In fiscal 2016, we added an item on biodiversity conservation to our Environmental Policies, and wewill be both ramping up our efforts in this area and adopting a more global approach to protectingbiodiversity as our own business activities become more globalized.

▶ Impacts on biodiversity and responses along LNG value chain (PDF: 880KB)

Action along Our Value Chains

We are monitoring conditions and working to conserve biodiversity at every stage of our valuechains, from procurement of natural gas to transportation, production, and supply.

■ProcurementEfforts being made at the site of procurementThe companies from whom we procure LNG (liquefied natural gas) are taking a variety of measuresto protect biodiversity in their gas fields, including protection of endangered wildlife, forestconservation, afforestation, and protection of marine life. In the case of our LNG project inIndonesia, for example, action is being taken to protect an endangered species of painted terrapincalled the Sea Tuntung and a mangrove restoration program is also underway. Similarly at an LNGproject in Qatar, a coral reef growing in an area of pipeline construction was relocated, and it hasbeen confirmed that the coral has reattached and is regenerating in its new environment.At LNG projects in Australia, meanwhile, data generated by monitoring surveys and other studies issupplied to the Industry-Government Environmental Meta-database (IGEM), a collaborative researchportal formed by the oil and gas industries, government, research bodies, and other investors, inorder to facilitate sharing of environmental knowledge.

Immature Sea Tuntung terrapins(Source: KOMPAS.COM-Pertamina dan YSCLI Selamatkan Tuntong Laut dari Kepunahan)


LNG tanker Hard clams not previously found in Japanesewaters

Local bird, insect, and plant life being surveyed Japanese rice fish living in an artificial pond

Making LNG transportation more environmentally friendlyConcerns have been raised about the possible impact on ecosystems of aquatic organisms containedin the ballast water (seawater used to provide additional weight when a vessel is not fully laden)discharged by vessels at ports when they are loaded with LNG. Tokyo Gas is already working toaddress the problem by, for example, having its tankers replace their ballast water on the openseas. Due to the entry into force in September 2017 of the International Convention for the Controland Management of Shipʼs Ballast Water and Sediment, 2004, adopted by the International MaritimeOrganization, however, LNG tankers owned and operated by Tokyo Gas (including those underconstruction) will be progressively fitted with ballast water treatment systems to further reduce theimpact on ecosystems.

■ProductionWe are creating more green space at our LNG terminals at Sodegaura, Negishi, Ohgishima, andHitachi by allowing vegetation in grassy areas to grow more and cutting back on our use ofherbicides. Employees are also planting trees themselves.We aim to create green areas that blend with the local natural habitat, and to this end the JumokuKankyo Network Society (NPO) has been helping us survey local bird, insect, and plant life. Theresults of these surveys are used to determine where thinning and other forest maintenance work isrequired, while the stacking of fallen dead wood and other matter to form “eco-piles” has led to anincrease in flower varieties and is having a beneficial impact on insect life. Japanese rice fish, whichhave been designated an endangered species, have also been found to be breeding naturally inartificial ponds at our LNG terminals.

Employees planting trees

■SupplyWe are reducing the amount of excavated (residual) soil produced by gas pipeline laying work. Forexample, we lay pipes in shallower, narrower trenches than used to be the norm, and use non-opencut construction (a method of laying pipelines without digging up road surfaces). Holes are conventionally refilled using pit sand. We have reduced the excavation of pit sand by, forexample, refilling holes with the soil that was excavated from them, using improved soil andrecycled road surface materials as refilling materials, and using a new type of backfill to temporarilyrefill holes that will be soon be excavated again.

Pipeline construction using non-open-cut methods

The amount of soil excavated is reduced by a method that allows gas pipes to be laid without digging up roadsurfaces. (The photo shows a shaft through which gas pipes are thrust into place)

Pipeline construction using "Eco-balls," a new type of temporary backfill

Pit sand use is reduced by employing a new kind of temporary backfill called "Eco-balls" to refill holes that will soonbe excavated again.

Recycling Excavated Soil

Soil generated from gas pipeline work (excavated soil) is processed at the soil improvement center, and reused asrefilling soil. This helps to protect the ecosystems of mountains and other environments.

■OfficesWe are planting trees on rooftops and creating "green curtains" at our offices and corporatemuseums.

Rooftop greenification at the Gas Science Museum

The museum is used to promote effective communication with customers and local communities, including their elementary schools.

Green curtain of bitter gourd plants at the Kumagaya Building

At our Kumagaya Building, greenery is grown on the walls and outside windows to provide shade and keep roomscooler.

Nagano Tokyo Gas Forest and Other Measures

We protect woodland at Nagano Tokyo Gas Forest (opened in 2005) and conserve biodiversitythrough projects undertaken in partnership with our customers such as the Donguri (Acorn) Projectand the "My Forest" Project. We also support biodiversity conservation groups through the TokyoGas Environment Support Fund and our involvement in the Keidanren Committee on NatureConservation.

■Conservation of biodiversity at Nagano Tokyo Gas ForestWe engage in ongoing forest conservation work, including thinning and pruning, in order tocontribute to the environment and prevent global warming by developing woodlands. In February2016, the project was registered under the J-Credit Scheme.* We are also working in partnershipwith local NPOs on flora and fauna surveys, such as surveys of mammal habitat conditions, in orderto contribute to the conservation of biodiversity.* A program by which reductions and sequestrations of greenhouse gases such as CO2 are certified by the Japanese government as

“credits.”

Timeline of Flora and Fauna Surveys

Survey year Survey details

2007 Mammal fauna survey (confirmed presence of 16 species of mammals)

2008 Flora survey (confirmed presence of 324 species of plants)

2009 Ornithological survey (confirmed presence of 61 species of birds)

2010 Dietary analysis of Japanese marten from fecal remains

2011 Stationary camera survey (confirmed presence of 30 species of wildlife)






Birdeye speedwell Purple dead-nettle

Dogwood berries Hare

Japanese marten Raccoon dog

Wren

Changes in Animals Recorded between 2007 and 2016

Effective Use of Biomass

Biomass is the generic term for plant and animal-derived organic resources (excluding fossilresources)that can be recycled into energy and material. Examples of biomass are rice straw, forestand fishery products such as livestock excrement, food waste, sewage sludge, and waste wood.Dried-biomass can be combusted directly to obtain heat and electricity from the steam thusgenerated, and also wet-biomass can be fermented to produce biogas for use as energy by, forexample, cogeneration systems. As the CO2 emitted as a result of combusting biomass or biogas isCO2 that had been absorbed from the atmosphere by photosynthesis during organic processes,using energy from biomass in place of energy derived from fossil resources can make a majorcontribution to reducing total CO2 emissions, which is one of the greenhouse gases driving globalwarming.We aim to expand and popularize the use of biomass to help reduce greenhouse gas emissions bypromoting not only the technologies for using biogas that we have developed to date (such as mixedcombustion of city gas and biogas), but also technologies for generating biogas more economicallyand efficiently through methane fermentation of biomass such as food waste, together withtechnologies for upgrading the biogas into higher quality gas.

Pilot methane fermentation plant at a research institute

■Development of biogas utilization technologiesTokyo Gas Group possesses technologies for digesting biomass such as food waste and sewagesludge for use as fuel for boilers and power generators, and is currently using biogas generated atcustomers' sites primarily as fuel for generating electricity by CHP (onsite use). As biogas is a leanfuel consisting of approximately 60% CH4 and 40% CO2, CHP must be specially designed to run onit. We were the first in Japan to begin upgrading biogas, adjusting its calorific value, and odorizing itso that it could be injected to city gas grid. In fiscal 2015 we received 675 thousand m3 of biogas(equivalent to an approximately 1,151-ton reduction in CO2 emissions) derived from food waste intoour pipelines.

How Biogas is Fed into Gas Pipelines


In addition to the above, we have been engaged in joint research with Yokohama City since fiscal2013 with the goal of broadening the use of biogas generated at the North Yokohama SludgeRecycling Center. For this project, research is being conducted on ways to remove CO2 fromdigestion biogas using separation membranes to produce concentrated methane, and we are alsostudying ways of using biogas in high-efficiency CHP such as solid oxide fuel cell (SOFC) systems.This project to extract methane from sewage gas using separation membranes is one of the longest-running of its kind in Japan. It was awarded the Japan Institute of Energyʼs Award forEncouragement when it was unveiled at the instituteʼs 25th annual conference in August 2016.

Test biogas refiner at the Yokohama City Hokubu Sludge Treatment Plant

Development of the Hydrogen Supply Network

■Construction and operation of hydrogen stationsWe are building and operating hydrogen stations and contributing to the development of thehydrogen supply infrastructure in order to promote wider use of fuel cell vehicles. Our goal is toreduce carbon emissions and diversify fuels in the transportation sector.Having previously built and operated two hydrogen stations (one in Senju and another in Haneda)for R&D and demonstration purposes, we began building our first hydrogen stations for ordinarycommercial use in fiscal 2013. The first to be completed was the Nerima Hydrogen Station, whichbecame the Kanto region's first commercial hydrogen station when it opened in December 2014. Itwas followed by the Senju Hydrogen Station, which was repurposed for commercial use in January2016. One month later, in February 2016, we opened our first hydrogen station in SaitamaPrefecture, the Urawa Hydrogen Station.The Nerima Hydrogen Station uses an "offsite" system for receiving hydrogen produced elsewhereand supplying it to fuel cell vehicles onsite. Our Senju and Urawa stations, on the other hand, are"onsite" stations that supply fuel cell vehicles with hydrogen produced onsite from city gas.Moving forward, we will pursue more efficient use of hydrogen production systems through thecommercial operation of hydrogen stations and seek to strengthen coordination between stations inorder to supply hydrogen more reliably.(There were approximately 1,800 fuel cell vehicles on the road and 88 hydrogen stations in Japan atthe end of fiscal 2016.)

Nerima Hydrogen Station Senju Hydrogen Station Urawa Hydrogen Station

From city gas to hydrogen supply (an onsite hydrogen station)Taking advantage of city gas's low CO2 emissions and limited impact on the environment, Tokyo Gasis reforming it to generate hydrogen.

* A device for cooling hydrogen to prevent the temperature in an FCV's fuel tank from rising during refueling.

■Development of hydrogen technologiesTokyo Gas is pursuing R&D on hydrogen stations for supplying hydrogen fuel to fuel cell vehicles asa participant in the FY2013-17 research and development project on hydrogen utilization technologyrun by the New Energy and Industrial Technology Development Organization (NEDO). Through thisprogram, we are investigating methods of controlling the quality of hydrogen fuel dispensed to fuelcell vehicles, assessing measurement accuracy when refueling, and studying ways of refueling fuelcell vehicles other than passenger cars (i.e., buses and motorcycles). We are also developingindustry guidelines on these methods and are working to have them incorporated into internationalstandards. We are further exploring efficient ways to run commercial hydrogen stations and toreduce maintenance costs.

Refueling a Toyota MIRAI FCV

Innovations in gas cogeneration technology

■Improvement of generating efficiency and total efficiencyGas cogeneration systems (CGSs) are the object of growing customer interest because of thecontribution that they can make to environmental performance, energy conservation, and BCP, andimprovements to their economic competitiveness and energy security are expected to drive theirwider adoption. In the future, gas cogeneration is likely to be made even more efficient by the useof high-temperature solid oxide fuel cells (SOFCs).As of the end of March 2017, pilot-scale testing was being conducted in association withmanufacturers on SOFCs (ranging in capacity from several to hundreds of kilowatts) at Tokyo GasSenju Techno Station. We are also assessing durability and the reductions in energy consumptionand CO2 emissions achieved in use by installing SOFCs at various types of business facilities, andmanufacturers aim to bring commercial models to market during fiscal 2017.

Commencement of 5 kW-class commercial fuel cell demonstration trial at a publicfacility in Arakawa

In March 2016, we installed a 5 kW-class commercial fuel cell at the Arakawa Sogo SportsCenter in Arakawa, Tokyo, and a demonstration trial is now underway. The approximatelyone-year trial will run until the end of March 2017 and is being conducted under an agreementon real-world testing of 5 kW-class commercial fuel cells signed between Arakawa and TokyoGas at the end of 2015. It is the first trial of its kind to be conducted at a public facility inJapan.Electricity generated by a commercial SOFC will power first-floor lighting at the center, whilewaste heat will be used to produce some of the hot water for locker room showers. During thetrial, a monitor will be displayed showing the amount of electricity generated by the SOFC,and visitors will be able to experience the hot water produced for themselves. The project willbe used to raise awareness of fuel cells and the contribution that they can make to creating alow carbon society.

Presentation on the 5 kW-class commercial fuel cell demonstration trial

Breaking the 80% power generation efficiency barrier: Successful development of atheoretical design for an innovative concept to dramatically improve solid oxide fuel cell efficiency

In a joint study, Kyushu University's Next-Generation Fuel Cell Research Center (NEXT-FC) andTokyo Gas have succeeded in designing an innovative concept to dramatically improve theelectrical efficiency over 80% LHV (lower heating value) of SOFCs and proving its mechanismin a world first. This result was published in July 2015 in Scientific Reports, Nature's sisteronline publication.Super-efficient energy conversion from fossil fuel to electricity is expected to make a majorcontribution to reducing CO2 emissions and provide the core energy technology for creating ahighly environmentally friendly smart energy society. In addition, super-efficient powergeneration systems are potentially far more adaptable to market needs because they produceso little waste heat during the power generation process that they can eliminate the need tomake use of waste heat.

Schematic of Innovative Concept for Further Improving the Electrical Efficiency

Documents

Contribution to the Environment... · equipment maintenance and systematic renewal of equipment to improve eﬃciency. Heat sales intensity at district