Remarks at Press Conference Announcing Leadership Changes2023/02/22

Chairman Sano
I would like to explain the change in leadership that was decided at today’s meeting of the Board of Directors.

Report of Decision
It was decided that, effective 1 April 2023:
• I (Chairman Sano) will resign as Chairman,
• President Onoda will resign as President,
• Vice President Kani will be appointed Global CEO, and
• Vice President Okuda will be appointed CEO and COO.

Background to the Change
Let me first provide some background for this change of leadership.
Since my appointment as Chairman in 2019, I have focused my energies, together with Mr. Onoda, on the smooth post-merger integration of our existing thermal power businesses. The scale of this integration, bringing 26 thermal power plants and more than 3,000 employees together in a single organization, is unprecedented in the electric power industry.
This integration has now been successfully completed and there is no longer any sense internally that it makes a difference which parent organization one came from. Furthermore, JERA has achieved management autonomy, with expanded local hiring at overseas locations, a growing number of employees hired mid-career for their specialized knowledge and experience, and—beginning last April—the arrival of employees hired directly by JERA as new graduates.
Therefore, now that we have successfully completed the integration of our existing thermal power businesses, and with JERA moving on to its next stage as a company, in consultation with Mr. Onoda I have reached the conclusion that the role of steering the company should be entrusted to new leadership.

Reasons for Selection and for the Co-CEO Structure
Next, I would like to explain the reasons for selection and for the co-CEO structure.
The energy environment has changed dramatically since Russia’s invasion of Ukraine, prompting the re-emergence of securing a stable supply of energy as a top priority. At the same time, the need for decarbonization over the medium to long term is only more urgent. To solve such problems, we must consider solutions within both the overseas context of competition for energy resources and the domestic context of ensuring stable supply amid electricity deregulation.
We have decided that resolving a variety of management issues simultaneously—short-term and medium- to long-term, overseas and domestic—and fulfilling our original objective of growing into a global energy company will require a strong executive structure. To this end, we are implementing a co-CEO structure that establishes a mutually complementary relationship between Mr. Kani and Mr. Okuda and leverages their respective strengths.

Mr. Kani has a wealth of overseas experience securing resources, developing energy projects, and leading local subsidiaries. I am confident in his ability to establish a global management structure, taking a global perspective in developing relationships with partners and appropriately linking the intensifying competition for resources with the worldwide decarbonization movement.
Mr. Okuda has a wide range of experience grounded in corporate planning at electric power companies but going beyond the field’s traditional boundaries to include alliances with other companies. I am confident in his ability to lead the debate about reforming the domestic electric power system, ensuring a stable energy supply, and decarbonizing the energy industry.
The two have worked closely together for a decade starting with the merger negotiations, each employing different strengths as a key player at the company, and we intend to entrust the company’s helm to them jointly.

President Onoda
At today’s Board of Directors meeting we decided to entrust management to new leadership.
Looking back on the time since I became president in 2019, I see four years of constantly going up against the extremely challenging issue of ensuring a stable supply of energy while also promoting decarbonization.

With electricity deregulation moving forward, we have been confronted with the difficult situation of intensifying competition for resources in the wake of Russia’s invasion of Ukraine. We have, however, made every effort to ensure stability of supply through various management efforts such as restarting thermal power stations where operations had been suspended and securing large volumes of LNG.
In addition, in 2020 we announced JERA Zero CO2 Emissions 2050. As Japan’s largest power producer, we are challenging ourselves to achieve net-zero CO2 emissions by 2050 and have drawn up a road map to get us there.
There have been many challenges, and we could not have come this far without the understanding and cooperation of local communities, business partners, government officials, our executives and employees, and so many others, for which I would like to express my deep appreciation.

I am confident that Mr. Kani and Mr. Okuda are exactly the right people to lead JERA into the next stage of becoming a global energy company. Both played key roles in JERA’s establishment, and I believe in their demonstrated ability to leverage their respective strengths to cooperate in overcoming any difficulty.
I look forward to the continued support of our stakeholders for the new management structure with Mr. Kani and Mr. Okuda as joint leaders.

Vice President Kani
My name is Kani. As Mr. Sano explained, I have been appointed to the position of Global CEO. Please allow me to say a few words.

About a decade ago, Okuda and I committed ourselves to creating a global energy company in Japan. Since then, we have been running at full speed with many senior colleagues and peers, and now, having been entrusted with leading JERA, we have reaffirmed our original aspiration.

Fortunately, JERA has a mission and a vision to guide us.

To provide cutting edge solutions to the world’s energy issues

This mission is our reason for being. I make it a practice to return to this mission whenever I feel undecided.

JERA also has a vision of transforming the world into a decarbonized society starting from Japan by combining renewable energy with thermal power that has been decarbonized by using hydrogen and ammonia.

To achieve this mission and vision, I will mainly emphasize three things going forward:

• building an optimal structure for JERA as a whole from a global perspective,
• building a team to breathe life into that structure, and
• cultivating a flat organizational culture that values diversity and enables the structure and team to function like two wheels of a cart.

When our mission talks about the world’s energy issues, I believe it means the problem of how to simultaneously achieve sustainability for a cleaner world, affordability for lower prices, and stability of supply. Russia’s invasion of Ukraine has made it clear that balancing these three elements is a global challenge.

What, then, can JERA do in Japan, an island country that lacks resources?

First, we will leverage our world-leading LNG procurement capability to build an LNG value chain—stretching from gas field development, liquefaction, transportation and LNG terminals to gas-fired thermal power—that will function like insurance for Japan, enabling it to respond to unexpected changes both domestic and overseas.

From there, we will develop large-scale renewable energy sources including solar, onshore wind, and offshore wind, and move forward in building a hydrogen/ammonia value chain with the aim of a balanced transition to decarbonization.

To cultivate the three pillars of LNG, renewables, and hydrogen/ammonia in preparation for an uncertain future, I want us to build as many energy supply options as possible by 2030. I want us to be able to provide cutting-edge solutions by combining multiple options to suit local or national circumstances rather than pushing a single product like LNG or onshore wind.

However, building every energy supply option not only requires a great deal of time but also brings huge risks and requires an enormous investment of capital. This is not a challenge to be undertaken by one company on its own. Collaboration with a broad range of stakeholders, including national governments, will be even more essential than before.

Corporate culture is the key to being chosen as a partner or by an employee. Assembling teams of diverse colleagues who can come up with ideas, make decisions quickly, and work as a team, nimbly repeating the process when they hit a wall—once such a flat corporate culture that values diversity has taken root, I believe achieving our vision will be in sight.

This is easy enough to say, but an extremely difficult mission to accomplish. Ten years ago, of course, few people thought we would even be able to establish JERA. It is in this context that Mr. Okuda and I have worked together with the support of so many others. Now we will now continue working together to create a global company that, starting from Japan, will take the lead in decarbonizing the world.

Vice President Okuda
My name is Okuda. As Mr. Sano explained, I have been appointed to the positions of CEO and COO. Please allow me to say a few words.

I would like to talk about issues in the energy business as seen from Japan and how we can overcome them.

The main issue for Japan, I believe, is creating a new platform for delivering stable, economical clean energy under any circumstances. Given that Japan has few resources and is not blessed with potential sources of renewable energy, in doing so we must—as Mr. Kani said—prepare a platform that includes a variety of options. JERA will lead the way.

There are three things in particular on which we should focus our efforts for the time being.

The first is achieving zero-emission thermal power.
We will begin by co-firing hydrogen and ammonia at existing thermal stations, ensure a co-firing rate of at least 50% by the 2030s, and then replace this with zero-emission thermal by the 2040s. At the end of next fiscal year, we will conduct a large-scale demonstration of 20% ammonia co-firing at Hekinan Thermal Power Station. This will be our final test on the way to practical application and commercialization. We are confident in success and expect it to be a first-in-the-world, epoch-making event.

The second is building a supply platform that is strong even during emergencies.
To achieve this, we will move steadily forward with power plant replacement and work in cooperation with related parties to establish a scheme that enables us to procure fuel flexibly and reliably even in times of emergency. Tight supply and demand constraints and rising electricity prices currently create a burden, one we will reduce by advancing these initiatives.

The third is providing new value by using digital technologies.
Until now, electricity has been metered, sold by the kW or kWh. Creating a new supply and demand platform that more precisely balances stability of supply, decarbonization, and economics will also require a mechanism for trading that reflects environmental value, yes, but also delivers the value of flexibility in responding to various short- and long-term supply and demand fluctuations.
This kind of trading is only possible when digital technology is used to measure such values. JERA will provide diverse values to society through renewable energy and zero-emission thermal power. Therefore, we will take the lead in building digital platforms that allow fair and equitable trading of such values.

I have just described three areas that will be a particular focus for the time being, but our ability to deliver these values requires safe, disaster-resistant sites as a prerequisite. I want us to build on the expertise cultivated by electric power companies so far, utilizing digital and other technologies to create sites that even in global terms have the highest levels of safety, disaster prevention, and resilience.

Last, but not least, these options that will solve Japan's problems can only be realized through cooperation with the world. Using hydrogen and ammonia as fuel for power generation in Japan will only be possible with the establishment of a global supply chain. It is in this spirit that I will cooperate closely with Mr. Kani in steering company management.
I have known Mr. Kani for a decade and have never met another Japanese person with his ability to take initiative in acting globally. I respect and place my full faith in this talent of his, one that I lack myself. As we have so far, based on our strong, mutually complementary relationship, we will continue to solve energy problems in Japan and around the world while elevating corporate value.