Sumitomo Chemical Company, Limited (4005) Earnings Call Transcript & Summary

Hello, everyone. I'm Keiichi Iwata. Welcome to our ESG meeting, and thank you for joining us today. We'd also like to express our deepest appreciation to our investors and analysts for supporting and understanding our business. We are going to walk you through the major points in our presentation so that we can spend as much time as possible on Q&A. So let's get started. Please take a look at Page 4. Let me begin by bringing you up to date with the latest developments driving sustainability that have taken place around the globe. Many important international conferences on sustainability have been held since the beginning of this year alone. Last November, leaders at COP26 demonstrated their commitment to limiting global warming to 1.5 degrees Celsius, and many of them announced new targets for slashing GHG emissions. We're going to talk a lot about climate change today, but we think there is an equally important issue right behind climate change that we need to address, and that is the issue of preserving biodiversity, which is more complicated than climate change. So we need to take a broad approach to the preservation of the environment, not just simply focusing on CO2, but also taking care of the water and soil as we navigate our business going forward. Where are we today in our journey to become carbon neutral? According to one estimate, global greenhouse gas emissions reached at 52.5 gigatons in CO2 equivalent in 2019. And based on the NDC submitted at COP26, which are quite ambitious targets by themselves, global emissions are expected to reduce to about 40 gigatons by 2030. But even that is still far off from the 2030 target of 25 gigatons, so we really need to work much harder to slash GHG emissions. Having said that, however, I don't think it is sustainable and impossible to achieve a truly sustainable society by focusing on nothing but reducing GHG emissions. We need to grow the world economy, including emerging economies along the way at the same time. Of course, this is one of the issues at the heart of the COP26 discussions, and advanced economies and emerging economies are at odds how to achieve carbon neutrality. To achieve both economic growth and a carbon neutrality, we believe we need cooperation and coordination among nations such as to make technologies developed or to be developed in advance nations available to developing countries as well. For us, that will create a lot of business opportunities and is in perfect alignment with our corporate philosophy that our business must benefit society at large, not just our own interests. So exactly, how can and should those of us in the chemical industry contribute to the efforts towards carbon neutrality? Currently, fossil resources are utilized either as fuel to generate energy or as feedstock to manufacture chemical products and materials. In the area where fossil resources are used as fuel to generate energy, the way forward is clearly decarbonization or shifting to clear energy sources that do not emit carbon dioxide. For a feedstock to manufacture chemical products and materials at the bottom, the solution will be to recycle carbon resources, not stop using carbons at all. And that is what we are the best at. Those of us in the chemical industry dealing with carbon stay in and day out are the best at. There are role supply for the chemical industry that only we can fulfill, and those are the development and applications of technologies such as chemical recycling, CCU, et cetera. Now let me move on to explain our grand design toward achieving carbon neutrality by 2030. But before I dive into details, let me give you an overview of what we have done so far to address climate change. Our approach to climate change is predicated upon the understanding that this is one of the social issues that should be addressed by the chemical industry. Sumitomo Chemical study to take actions earlier than most of our peers, such as establishing dedicated teams and organizations more than 10 years ago. In 2017, we were among the first to declare support of TCFD recommendations immediately after these were announced. We were the world's first of diversified chemicals company whose emissions target was recognized by the SBT, science-based targets in 2018. And more recently, we established a Carbon-neutral Strategy Council and attuned to implement that strategy last year. We have also established a business development office for a circular system for plastics. And just a few days ago, we announced that our emissions target was recognized by SBT and as well below 2-degree Celsius target. I will come back to this point later and give you more details. Now this is the overview of our grand design. I set out 2 targets for a cross-functional team. One is that the team has to take actions in a distinctly and uniquely Sumitomo Chemical way. The other is to sort of boost a sense of hope that these difficult issues could be solved with the technologies of Sumitomo Chemical. Our vision is to fulfill both what we call obligations and contributions. The obligations mean our efforts to bring our greenhouse gas emissions to zero throughout our process of production and manufacturing. The contributions are our efforts to reduce global greenhouse gas emissions through our group's products and technologies. So we want to be carbon neutral by 2050, and we want to get there by fulfilling our obligations and contributions in a distinctly and uniquely Sumitomo Chemical way. The specific goals within our obligations included, first of all, to cut our group emissions by 50% compared to the 2013 levels by 2030 and ultimately to reach net-zero emissions by 2050. This new target of reducing 50% by 2030 is a very challenging one because our previous target was to cut 30% by 2030 compared to the 2013 levels. We have significantly raised our reduction target, and we have acquired SBT well below 2-degree certification recently. And if you look at the right-hand side of the slide, you will see that our new target by 2030 is an aggressive one that is closer to the level for the 1.5-degree certification. And now we are planning to apply for a more aggressive 1.5-degree certification going forward. Just so you know, there are approximately 1,000 companies in the world whose emissions target is recognized by SBT. But within the sectors with high carbon emissions, only 3 Japanese companies are awarded this SBT recognition, and we are one of them. So how do we get to the 50% reduction by 2030 and net-zero emissions by 2050? Details will be provided by Ueda-san in the next section. So I will just share with you sort of an outline of our journey to get there. In order to achieve the 2030 goal, s o far, we have been streamlining the processes at each plant for improved efficiency and restructuring our portfolio such as discontinuing ethylene production at Chiba Works with the liquid process of caprolactam production at Ehime Works. We're going to continue to put in place more energy-saving measures, but we will focus more on fuel conversions. The construction of an LNG power plant in Ehime Works and a high-efficiency gas turbine power generation facilities at Chiba Works is now underway, and these are good examples of our efforts. The year 2030 is just around the corner. So we cannot wait to see any new technology to bring us forward to achieve our goal. We have to use existing technologies to get us where we need to be all by ourselves. So the fact that we are poised to achieve the 50% reduction target by 2030 reflects our strong commitment and efforts towards carbon neutrality. For us to achieve net-zero emissions by 2050, however, we have to focus on developing new technologies. Those technologies will include, for example, the one that allows us to convert to CO2-free energy, electrification of our plants, circular carbon technologies or carbon-negative technologies. With respect to our contributions, it is certainly about contributing to global and societal efforts to reduce GHG emissions through products and technologies of Sumitomo Chemical Group. More specifically, there are 3 approaches that only a diversified chemicals company like us can take. From left to right, the first one is to provide our proprietary manufacturing technologies and products that help reduce GHG emissions such as our propylene oxide production method. I'm going to give you more details on that in the next slide. Also, although it's written in very small letters here at the bottom left, it is very important to put a structure in place to evaluate carbon footprint. It is one of the platforms that are needed to achieve carbon neutrality. And we have created our own system that allows us to calculate carbon footprint. This is very easy to use. So we have decided to provide the system for free, and we hope that more and more companies and organizations will use our system in the future. The second and the third approaches are more predicated upon the development of next-generation technologies. As you can see in the middle of the slide, we need to develop carbon resources recycling technologies such as material-recycling or chemical-recycling technologies and technologies that enable low GHG emissions processes for membrane-based separation in a wastewater treatment. We also need to work with our partners as well as lead the industry to promote the adoption of these technologies in different sectors and expand access to these technologies around the world. The third approach is to develop carbon-negative technologies such as the development of mycorrhizal fungi and other technologies that will allow us to take on long-term challenges as well. Again, these are the 3 approaches we are taking to continue to contribute to the global efforts toward a carbon neutrality. Let me give you just one example of our contributions. At the beginning, I said that carbon neutrality and the economic development of emerging countries should be realized simultaneously. And one of the solutions we are proposing is to license our technologies. Our proprietary technology for propylene oxide production produces 30% less GHG emissions than other methods. Propylene oxide is a feedstock for polyurethane used for automobile seats, heat insulation materials and so forth. By 2025, our license's annual production capacity of PO is expected to be around 1.3 million tons, and that will translate into about 2.2 million tons of GHG reduction every year at our licenses production sites, including those in emerging economies. The next thing I want to talk about is our investment to become carbon neutral. Our total investment for carbon neutrality from 2013 to 2030 is going to be about JPY 200 billion. Since 2013, we have already invested or decided to invest approximately JPY 80 billion so far. And we are planning to invest another JPY 120 billion by 2030. Most of the money will be invested in the development efforts, including the construction of the demonstration plant and other projects that we're going to work on before the full-scale commercialization. Let me also briefly explain what kind of structure we put in place to promote carbon neutrality. The people who actually roll up the sleeves and get to work are those in the carbon-neutral strategy cross-functional team in the blue line rectangle on the slide. We have assembled a team of experts within Sumitomo Chemical Group, who are ready to take action and are capable of execution. Next, I want to touch upon very briefly our social and governance efforts. I'm going to start with external evaluations related to ESG. The valuation criteria for CDP are raised almost every year. And in fact, only 200 companies received A for climate change in 2021, whereas 280 companies did so last year. Also out of over 13,000 companies around the world, the reported environmental data through CDP this year, only 54 companies received A for both climate change and a water security, and we are extremely proud that Sumitomo Chemical is 1 of the 18 Japanese companies that received A for both categories. When it comes to social, I want to draw your attention to the improvement in 2 metrics related to the empowerment of women in Sumitomo Chemical Group. The gray line represents the percentage of women in post of manager or above. It's been edging up for years and is expected to reach our target of 10% by 2022. The blue line just below represents the percentage of men taking family leave. This is also expected to hit our target of 70% by 2022. As you all know, the chemical industry, in general, needs to do a lot to catch up with companies in different sectors in terms of empowerment of women in the workplace, and we're working hard to hire more women in the manufacturing settings, although this is long overdue. With respect to governance, Sustainability Promotion Committee, which we created back in 2018, also meeting twice a year and discussed these kinds of sustainability topics, as you can see on the screen. I chair this committee. And from this year, we expanded the committee participation to include our outside directors and a corporate auditors. As for parent subsidiary listings, we understand that this continues to be one of the management issues. We explained our attitude towards this issue previously, and it remains unchanged, so I have nothing more to add at this time. This is the last slide of my presentation. I'd like to share with you a very brief overview of our next corporate business plan, which we will announce next March from the sustainability perspective. For the current corporate business plan, we identified our material issues, set up KPIs and laid out the structure for promoting carbon neutrality as well as plastic resources recycling. For the next corporate business plan, our focus will be on green transformation to further advance upgrading of our business portfolio. More specifically, our petrochemicals and plastics sector will focus on chemical recycling to continue to help realize its recycling society. Our high-performance materials sectors such as energy and functional materials or IT-related chemicals will focus on the development of 5G and EV-related materials that will enable Society 5.0 and next-generation energy systems. Our life sciences sectors will focus on biorationals. As green agriculture is gaining more momentum around the world, we're still going to continue to develop low-risk chemical crop protection products but we're going to put more resources on the development of naturally-derived crop protection products. We will continue to focus on driving the growth of businesses that will lead us to solve the issues that our society is facing, including, of course, issues around environment. That's it for me. Thank you very much.

So I will share with you more details about Sumitomo Chemical group's carbon neutral grand design. Just as Iwata-san explained earlier, Sumitomo Chemical Group is going to fulfill both applications and contributions to help realize a carbon-neutral world in 2050, leveraging and harnessing the power of chemistry. In order to reduce GHG emissions effectively, it is important to identify the sources of emissions and find the right solution to each different source. For example, if fossil resources such as oil are used as fuel to generate energy, the way forward is to shift to cleaner energy sources that do not emit carbons or decarbonization. On the other hand, when we look around, we are surrounded by things made out of carbon such as plastics. What we need to stop doing here is burning away these carbon-made products and emitting as carbon dioxide into the atmosphere. We must recapture, recycle and reuse our carbon resources wisely and completely. And this is exactly how Sumitomo Chemical Group is harnessing the power of chemistry to achieve carbon neutrality. With that said, first, let me give you more details and examples of our obligations or how we are going to reduce GHG emissions at Sumitomo Chemical Group. Well, this slide has already been explained by Iwata-san. So let's move on to the next slide. This slide describes the sources of GHG emissions at our chemical plants. Chemical plants utilize fossil resources as fuel to generate energy and as feedstock for manufacturing chemical products and in both processes to produce GHG emissions. In addition, chemical plants indirectly produce GHG emissions arising from the electricity they purchase from the third party. Now the pie chart on the right shows the breakdown of our GHG emission sources in 2020. 70% of our GHG emissions came from the energy used as fuel for in-house power generation, including cogeneration. 15% was produced from our manufacturing processes, and we are trying to reduce this 85% of our total GHG emissions as Scope 1. Our goal is to slash emissions arising from our activities at our plants by 50% by 2030. We are already taking actions to reduce GHG emissions from fuels. Both Ehime Works and Chiba Works will be shifting to fuel mix from coal, heavy oil or petroleum coak to LNG, less carbon-intensive source. Ehime Works will start using LNG from July 2022, and Chiba Works will have new facilities in place to use LNG sometime around autumn 2023. However, the conversion to LNG is only a temporary solution. And in order for us to become carbon neutral by 2050, the conversion to a clean fuel that emits no carbon dioxide is absolutely essential. Sumitomo Chemical group is looking at ammonia as a prospective clean fuel in the future, and it begins to explore ways to procure and utilize this compound. More specifically, we are working with Yara International in Norway, one of the world's largest ammonia producers, to promote the use of clean ammonia that is green and blue ammonia, which does not produce carbon dioxide. We will soon start exploring ways to use their clean ammonia as a feedstock for manufacturing chemical products and as a clean fuel to generate energy to power our plants. We will also explore more opportunities to work with them to ensure better access to clean ammonia in Japan. The utilization of our ammonia storage facility at Ehime Works, which is one of the largest in Japan, is certainly one of the ideas. And we are considering to work with other partners as well. Furthermore, we will be engaging the Japanese government's initiative to create carbon-neutral ports. The port of Niihama was selected in Shikoku region. We will provide our expertise and ideas necessary to put in place the logistics of ammonia supply in the future. Actions to reduce GHG emissions arising from our manufacturing processes are also being taken. Disposal of manufacturing waste consumes a lot of energy, and the treatment of wastewater is particularly problematic because it is necessary to reduce GHG emissions from the incineration of sludge produced during the wastewater treatment. What we have done to address this problem is that we have used our biotechnology that optimizes the effectiveness of microbial agents to successfully reduce the volume of the sludge. The picture above is the wastewater before treatment, and the one below is showing the water treated for several months. It becomes very clean. At our plant in Gifu, we have demonstrated that we can reduce GHG emissions from the wastewater treatment by 15% and even bring down the cost of treatment. This technology is still at the verification stage, but we are pushing ahead to deploy it at each of our plants in Japan as soon as possible. Similarly, we are taking actions to reduce GHG emissions arising from electricity we purchase Scope 2. Since November this year, all the electricity we purchase at Oita Works has been 100% renewable. By doing so, we have slashed the GHG emissions at Oita Works by 20% compared to the 2013 levels. We have also shifted the fuel from heavy oil to utility gas, cutting emissions by another 10%. So we have successfully reduced the GHG emissions at Oita Works by 30% in total. And we will continue to explore opportunities to shift to renewable energy at each of our plants, both at home and abroad. Next, I will explain our efforts in the contribution section. This is the slide that President Iwata presented earlier, and I will now introduce examples of initiatives from 3 viewpoints. First, viewpoint 1. We have developed and introduced many technologies and the products that contribute to the reduction of GHG emissions. As President Iwata introduced propylene oxide, I'd like to introduce another example of a heat storage material that utilizes our polymer material design technology. The material itself absorbs and stores heat as the external temperature rises mainly in the range around room temperature. When the outside temperature drops, the material releases the heat. In other words, the material itself adjusts its temperature automatically by moving heat in and out. There have been other materials with similar properties, but the greatest advantage of ours is that it can be processed into various shapes such as sheets or fibers. Taking advantage of this feature, we have begun to adopt it as functional building materials that are expected to be used in zero-emission houses or as a material for bedding. Since subtle temperature control is important for a good night sleep, our materials are expected to contribute to both carbon neutrality and well-being by helping to ensure restful sleep without use of air conditioners. The materials I introduced are called Heatorage and Conformer. Since FY 2015, we have been working on the destination of Sumitomo Chemical Group's technologies and products that contribute to global warming countermeasures and reduction of environmental impact in their entire life cycle as Sumika Sustainable Solutions and having promoting them to our customers. At present, 10 technologies and 47 products have been designated as the solutions. The total sales of these designated products are one of the material issues, KPIs for the group's sustainability promotion. We will continue to contribute to the realization of carbon neutrality in the world through the expansion and the promotion of Sumika Sustainable Solutions, the designated technologies and the products. In terms of providing solutions that contribute to carbon neutrality, I'd like to talk about something a little different. As you know, in order to reduce GHGs in society, it's important to evaluate the carbon footprint. In other words, how much CO2 a product has. However, calculating the carbon footprint is not an easy task as it requires a detailed analysis of the manufacturing process. The analysis of chemical product is particularly difficult because of the complexity of the manufacturing processes. Therefore, we have developed our own tool that allows anyone to easily calculate the CFP of a product. Until now, there have been software to evaluate CFPs. However, the handling of such software was complicated as it targeted not only the CFP, but also the entire LCA, and the content of the calculation was in the black box and the software license was expensive. As a result, it was not easy for anyone to calculate CFPs. To address this problem, we have developed a tool that can easily calculate CFPs by setting several calculation patterns for conditions specific to the chemical manufacturing process, such as recycling byproducts and selecting these patterns. Furthermore, since the tool is created in Microsoft access and Excel, anyone can use it immediately. We've already deployed this, too at our work sites and having reconducting CFP variations of their products. For example, we can calculate the CFP for about 1,200 products over Ehime Works in about 10 minutes using an ordinary notebook PC. We expect to complete the evaluation of CFP for our all 20,000 products by the end of this year with the tool. However, since there are some products for which CO2 derived from plastic raw materials is not available in the database, gate-to-gate evaluation will be used for those products. We plan to roll out this tool to our group companies in the future and aim to complete the CFP evaluation of our group companies products by the end of FY 2022. Furthermore, in order to contribute to GHG reduction through more efficiency evaluation in the entire industry, we plan to provide the tool we have developed free of charge to other companies who want to use it. Some companies have already expressed their interest in using that. Next, the viewpoint 2. Our efforts to drive the development of technologies that contribute to carbon neutrality and the rapid deployment into society. As for its main initiative of building a circular system for plastics, Mr. Sasaki, our Managing Director, will give an explanation later. Next, I'd like to talk about Viewpoint 3, that is the challenge of long-term issues such as carbon-negative technologies. In order to achieve the carbon neutrality by 2050, it is necessary not only to reduce future emissions as much as possible, but also to develop carbon-negative technologies to recover and fix the GHGs that have already been emitted into the atmosphere. The development of direct air capture, or D-A-C, DAC, a technology that captures CO2 directly from the atmosphere, is underway around the world. However, it requires electricity to operate, and securing renewable power is an issue. On the other hand, in the natural world, CO2 is fixed by photosynthesis in plants. Based on the technologies we have developed in our health and the crop science businesses, including crop-protection products, we are studying the possibility of using the power of nature to capture on the fixed CO2 from the atmosphere. In particular, we are focusing on mycorrhizal fungi, a type of useful microorganism that inhabits the soil. Mycorrhizal fungi coexist with plant roots and are known to promote plant growth in exchange for receiving carbon compounds produced through photosynthesis. The picture on the right shows the growth of a plant. Using this effect, we investigated the possibility of carbon fixation in soil by mycorrhizal fungi. As shown in this chart, we found that the symbiosis of mycorrhizal fungi with roots increases the amount of carbon compounds in the soil and promote carbon fixation. This carbon fixation by mycorrhizal fungi is expected to be effective, not only for CO2 capture from the atmosphere, but also for soil fertility. We expect the mycorrhizal fungi to contribute to both GHG reduction through CO2 capture fixation and to solve food shortage through soil fertility improvement. We can call this like mycorrhizal fungi as direct capture using the power of vehicle friendly organisms, which is why we named it EcoDAC. We are currently studying the details of the carbon fixation effect of the EcoDAC, and then we'll make preparations so that it can be widely used by our customers soon. We also regard CO2 as a useful carbon resource and actively engaged in the research and development of technology to produce alcohol, a basic material -- raw material to produce methanol, ethanol and other alcohols efficiently and economically from CO2. 2 technologies are key: catalysts and the processes to improve reaction efficiency. As for catalysts, we'll promote data-driven development in collaboration with Kyoto University in order to find useful candidates for catalyst quickly from the almost infinite number of metal compounds that exist by changing the combination of elements and the ratios. The development will be carried out by making full use of so-called Catalyst Informatics, which is a spiral up cycle of the construction of big data through high throughout experiments and simulations and the pursuit of principles through data science and the theoretical chemistry that support the analysis. As for the process, we are conducting research with Shimane University to dramatically improve the yield of alcohol synthesis by focusing on the process of internal condensation reactors. In the shift to green energy, hydrogen is likely to become a major fuel, and how to secure CO2-free hydrogen is a key for the future. While electrolysis using renewable energy is expected to become the mainstream, the production of green and blue hydrogen may be difficult in Japan, where the cost of renewable energy power is expensive and the suitable sites for CCS are limited. On the other hand, it is still fresh in the memory that the COP26 last month pointed out the importance of GHG reduction, not only CO2 but also methane, as the GWP of methane is 28x higher. In response to this, we are focusing on the study of manufacturing turquoise hydrogen, a technology to produce hydrogen from methane without CO2 emission. In cooperation with Microwave Chemical, we are planning to study the technology to efficiently reproduce hydrogen from methane with minimal electricity and without CO2 generation. To reiterate, we'll continue to contribute to the reduction of global GHG emissions through active collaboration with various partners based on the following 3 perspective: providing products and solutions that contribute to carbon neutrality; driving the development of technology that contribute to carbon utility and their rapid deployment into society; and taking on long-term challenges, including the development of carbon-negative technologies. To achieve carbon neutrality, we will pursue initiatives unique to the Sumitomo Chemical group based on technological, scientific, logical and qualitative approaches, both from perspective of responsibility and contribution. Thank you for your kind attention.

My name is Sasaki, in charge of the plastic-related business in the Petrochemicals division. I'd like to introduce our company's initiatives toward a circular system for plastic resources with the items listed here. Let's start with KPIs. One of our key management issues is to reduce our environmental impact, including plastic resource recycling. In order to promote further contribution to resource recycling and development and the social implementation of recycling technologies, we have set a KPI of the amount of recycled plastic resources used in the manufacturing process to be 200,000 tons per year by FY 2030. The amount of recycled plastic resources here refers to the amount of plastic waste or raw materials derived from plastic waste, and the manufacturing process includes the one for resin and compound as well as the recycling process that we implement ourselves. In order to achieve these KPIs, in material recycling, we'll promote partnerships with venous companies and commercialize recycling of parts and materials for automobiles. And in chemical recycling, we will promote recycling of waste-derived materials, specifically by strengthening the development of alcohol production technology from ethanol and CO2. And through the realization of optimal social implementation of material and chemical recycling technologies, we will promote carbon resource recycling. Here is an overview of plastic recycling. There are 3 ways to recycle plastics, reuse material recycling and chemical recycling. In reuse, there's a limitation based on consumer preference and product life expectancy for the use of the same product over and over again. In material recycling, there's a technology called horizontal recycling that keeps the quality constant. But in general, as with reuse, there are concerns about quality degradation due to recycling and there's also a limit to product life. In the case of reuse or material recycling, energy is ultimately recovered by combustion. So although it can be said that the amount of CO2 generated is lower than that of products that are not reused or materially recycled, CO2 is still generated in the end. On the other hand, in chemical recycling, the plastic is broken down into molecules and then recycled again. So we believe that we can solve the problem of degradation of quality due to recycling. In both material and chemical recycling, the important point is the amount of CO2 reduction in the end. Next, I'd like to explain our efforts for 3 Rs: reduce, reuse and recycle. We are striving to manufacture environmentally friendly products by reducing weight and increasing functionality of plastic products. In all of the 3 Rs, namely reduce, reuse and recycle of plastics, the group is making contributions through its products. Here, using polypropylene as an example, we listed applications of refillable pouches in the reduce, returnable boxes made on foamed sheet in the reuse and glass fiber reinforced recycled materials in the recycle. Through these efforts, we have achieved an annual reduction of approximately 6,000 tons of virgin polypropylene as our environmental contribution performance for fiscal 2020. Consequently, we were able to reduce our GHG emissions by approximately 15,800 tons in 1 year. We continue to contribute to the reduction of GHG emissions by promoting the 3 Rs through the provision of materials and the products with high environmental suitability and usage volume. Next, I'd like to explain the commercialization of our material recycling technology. In June, we started discussion for possible business alliance with Rever Group. The purpose of this initiative is to establish an integrated recycling system from resource collection to sorting, crushing, recycling and sales and to widely disseminate recycling technology and other products to the society by closely linking the arterial industry, which manufactures, and the sales products from natural resources, and the venous industry, which collects processes and recycles used products. The consideration for this business alliance is to realize material recycling of plastic waste by utilizing technologies from both of us, our plastic manufacturing technology and there waste recycling. For example, the amount of dismantled end-of-life vehicles in Japan is set to be 3.5 million tons per year, of which the amount of polypropylene resin used as automobile parts is approximately 200,000 tons per year. We are considering the social implementation of an efficient technology to recycle such waste plastics into automobile parts. We are working on the development of technology to sort out plastics derived from the end-of-life vehicles at the high level as well as technology to manufacture recycled plastics that can be applied to a wide range of products, and we are also assessing the environmental impact of these activities. We are also considering the use of such waste plastic materials in chemical recycling. Next, I'll explain the commercialization of chemical recycling. In April 2020, we set up the environmental impact reduction technology development group in the petrochemicals resource laboratory to develop technologies for reduction of environmental impact relevant to carbon cycle and GHG emissions by leveraging our technological competence in catalysts and chemical process design. The following are the 3 main themes of our technology development. The first is the technology for manufacturing polyolefin via ethylene using ethanol derived from waste supplied by Sekisui Chemical as a raw material. Utilizing the technology and know-how we have accumulated over the years, we have introduced a new ethylene production technology using waste-derived ethanol as a raw material and are now developing polyolefin production technology. The ethylene production plant will be commissioned in the next fiscal year, and we are aiming for full-scale launch of the commercial plant in 2025. The second is the technology for the highly selective decomposition of waste plastics into olefin monomers using a catalyst, which is a joint research project with Muroran Institute of Technology. The purpose of this technology is to produce olefin monomers such as ethylene or propylene at high selectivity by sorting waste plastics with high polyolefin content and using catalytic cracking reaction. We aim to establish this technology as soon as possible as an efficient way to recycle waste plastics into petrochemical raw materials. The third project is with Shimane University, a technology to synthesize methanol from CO2 and hydrogen with high efficiency. The purpose of this project is to chemically synthetize carbon dioxide or CO2 generated from various types of waste treatment into methanol, which can then be used as a raw material to produce plastic products. We are working with Shimane University to develop catalysts and industrialize the process aiming to establish a highly efficient methanol production technology. By using hydrogen derived from renewable energy sources as a raw material, we can reduce greenhouse gas emissions and produce useful industrial products at the same time. And we believe this technology will lead to CCU. Here, I'd like to introduce the chemical recycling technology of acrylic resin. The technologies I have introduced so far are using difficult-to-sort garbage and waste plastics as raw materials. But the technology I linked to this year is a recycling technology that utilizes the characteristics of acrylic resin. This technology was developed in collaboration with Japan Steel Works and is based on the continuous plastic decomposition technology using their twin-screw mixed extruder and our long accumulated knowledge of MMA monomer and acrylic resin. We have confirmed that the acrylic resin polymerized again by this technology has the same quality as virgin material produced from fossil-derived resources. It is also expected to reduce greenhouse gas emissions by more than 60%. A pilot facility will be constructed at the Ehime Works, and demonstrations are scheduled to begin next fall with samples to be provided in 2023. In parallel with this project, we'll establish a resource recycling system from the collection of used acrylic resin to its recycling and production, aiming for early commercialization. Lastly, I'd like to explain the Meguri brand. Meguri is the brand name for our various plastic products made by using our recycling technologies. Meguri means to link 3 cycles together. First, resource recycling will contribute to the realization of a cycle economy; second, the cycle of relationship with group employees customers and consumers; and third, circling back to the origin of our business spirits. In addition, circularity for all represents our firm determination to realize our circular economy. We plan to launch several products, including recycled acrylic resin from our demonstration facilities, waste-derived polyethylene and others under the brand name of Meguri. One of the business philosophy of the company is to contribute to the society through our business activities. We will continue to create both the economic and the social value in an integrated manner, achieving sustained growth and contributing to building a sustainable society. Thank you for your kind attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]