April 30, 2008


Reducing CO2 Emissions with Energy Efficient Products -- The Story of Daikin Industries Ltd.

Keywords: Newsletter 

JFS Newsletter No.68 (April 2008)
Toward a Sustainable Japan--Corporations at Work Article Series No.71

Promoting Eco-friendly Lifestyles Globally with Japanese Technology

A sea change is occurring in Europe in the heating systems industry, as the use of heat pumps -- which draw heat extracted from outside air and transfer it indoors (and vice-versa) -- is quickly becoming more popular than conventional heating systems that burn oil or natural gas. Heat pump technology is attracting a lot of attention for its potential contribution to the mitigation of global warming, because it can halve the amount of carbon dioxide (CO2) emissions, compared to systems using natural gas by efficiently generating a large amount of heat, while it only uses a small amount of electricity.

The Daikin Group, whose main company is Daikin Industries Ltd. -- an Osaka-based manufacturer of air conditioners and fluorine-based chemicals -- is dramatically increasing its efforts to popularize heating systems that use heat pump technology. As the world's only company that produces both air-conditioning systems and the fluorocarbon gas used as the refrigerant in air conditioners, Daikin is proactively contributing to reducing CO2 emissions at home and abroad by developing and selling products that employ cutting-edge, energy saving technology.

It should be noted that the use of heat pumps in Japan is not new. The technology is already widely used in home and commercial air conditioning units and refrigerators. At the same time, while measures to mitigate global warming are urgently needed, it has been getting renewed attention because of dramatic improvements in energy efficiency in recent years due to technological innovations.

These innovations have been brought about thanks to Japan's "top runner" system, which was introduced to industries when the Japanese government revised the Act Concerning the Rational Use of Energy in 1999. Under this system, the energy efficiency level of the most efficient product on the market in each product category is set as the benchmark, or top-runner standard, and any new products developed by manufacturers and imported products must comply with the standard from the target year set for each category. Since the top-runner standard was adopted for air conditioners, the development and introduction of new technologies in the industry have accelerated remarkably. As a result, energy efficiency doubled in only ten years compared to the efficiency level prior to the law's revision.

Top Runner Program
An Overview of Efforts in Japan to Boost Energy Efficiency

In order to introduce the high-efficiency heat pump technology first developed in Japan into products for European markets, Daikin Europe N.V. developed its Altherma heat pump for hot water heaters and heating systems for residential use in 2006. This product can heat rooms and supply hot water, even at sub-zero temperatures, so it can be used without worry in Northern Europe and other extremely cold climates. "In Northern Europe, where winters are long, heaters are never turned off from winter through spring. It means that the higher the energy efficiency of a product, the lower the CO2 emissions from the product," says Tomoko Nakagawa of Daikin Industries' CSR & Global Environment Center.

It should be noted that conventional heating systems that burn fuels are still widely used in Europe, and not many people are very familiar with heat pump technology. Therefore, Daikin Europe marketed the high-energy efficiency performance of their product by showing simulations comparing it with regular combustion-heating methods, and then showing the energy savings obtained using the Altherma system. These efforts to market it certainly paid off, because shipments in 2007 exceeded 10,000 units.

Daikin's Forestation Activities Link the Company and Customers Together to Reduce Environmental Impacts

The development of energy saving products to reduce environmental burdens is part of the five-year Environmental Action Plan that the Daikin Group established in 2006. Under the plan, which focuses on preventing global warming, Daikin is directed to develop and market energy saving products, as well as takes various measures to reduce environmental burdens during manufacturing, shipping, and after-sales processes.

In Japan, households that use air conditioners are generally recommended to adjust their temperature setting according to the outside temperature in order to maximize the energy saving performance of the unit. To increase the awareness of households and reward positive behavior, Daikin started a unique forestation project, called the Eco-Point System, which is linked to the energy savings generated by optimum operation of its air-conditioners.

The reward system was first proposed by an employee during Daikin's in-house Idea Contest, and then was introduced to buyers of home air-conditioners marketed in Japan in November 2007. The concept of winning eco-points, which has been generally adopted by many companies and governments recently, is a system where people receive points for making eco-friendly choices, such as purchasing energy saving products or using public transportation, and they can be exchanged for benefits such as partial payment for a new product. In the Daikin Eco-Point System, customers obtain points by using their air-conditioners in the energy saving mode. As they accumulate points, the remote-control display screen shows a virtual tree growing.

When a customer accumulates a certain number of points and reports it to Daikin, the company then contributes to forestation and forest conservation activities in the north of the island of Java in Indonesia, mainly organized by local people in the Gunung Gede Pangrango National Park. In this context, Daikin's Eco-Point System is a global environmental conservation activity supported by its customers. Its overall aim is to reduce CO2 emissions related to the use of air-conditioners, conserve and restore valuable forest ecosystems, and help curb global warming. According to Daikin, actual forestation activities can be expected to start one to two years after the sale of an air-conditioner.

Efforts to Use Advanced Technical Expertise to Properly Handle Refrigerants

As an air-conditioning equipment manufacturer, the Daikin Group's global warming countermeasures include its proactive approaches to proper handling of the chlorofluorocarbons (CFCs) used as refrigerants in air conditioners, which account for more than 80 percent of the company's greenhouse gas emissions in CO2 equivalent. Daikin therefore strives to minimize the leakage of CFCs when filling air conditioners, etc., in its Air Conditioning Manufacturing Division. While in the Chemicals Division, where fluorine chemicals are produced, systems have been improved so that the CFCs are collected in the production process and then properly decomposed. As a result, the Group's greenhouse gas emissions were reduced by an impressive 70 percent to 2.81 million tons (CO2 equivalent) in fiscal 2007, compared to the fiscal 2001 level.

Utmost caution is required when handling CFCs -- not just in the production process but also in the disposal process -- because they have a high global warming coefficient and cause a significant greenhouse effect if they are released into the atmosphere without proper treatment. Due to this fact, in accordance with the Law for Recycling of Specified Kinds of Home Appliances (2001), manufacturers of discarded residential air conditioners in Japan are responsible for collecting refrigerants and recycling raw materials and components. At the same time, however, CFCs in business-use air conditioners are not always collected and decomposed properly and thoroughly, mainly due to the cost, even though the proper handling of such air conditioners is also stipulated by the Law Concerning the Recovery and Destruction of Fluorocarbons. Therefore, the recovery rate for old business-use air conditioners in Japan is presently not very high.

In light of this situation, the Daikin Group has linked up with waste treatment businesses capable of not only recycling and discarding waste but also collecting and decomposing refrigerants, in order to establish a system to properly recover and destroy refrigerants from business-use air conditioners. This system was started in the Osaka, Chukyo, and Niigata regions in fiscal 2004, and in the Kyushu, Kanto, and Chugoku regions in fiscal 2005.

At the same time, Daikin still faces challenges outside Japan. For instance, there are not enough facilities to properly decompose collected refrigerants, and it is almost impossible to bring the refrigerants all the way back to Japan to handle them. In China, for example, since it is prohibited to transport wastes across provincial borders, Daikin would need to build decomposition facilities in each province to properly treat used refrigerants. The company considers overcoming this problem its biggest challenge in terms of recovery and decomposition of refrigerants, and is now exploring the feasibility of handling refrigerants overseas. Nakagawa says, "We are not sure if this problem can be tackled by a sole company, but we seek to make a start in some way, with our spirit of aiming to become the best global company, for the very reason that we produce both air conditioners and refrigerants."

(Written by Kazuko Kojima)