Memo We will delve deeper into SAF and GX-related issues. SAF has a clear policy calendar, with mandatory implementation in 2030, meaning that capital investment by major oil companies will be concentrated between 2026 and 2029.
We will delve deeper into SAF and GX-related issues. SAF has a clear policy calendar, with mandatory implementation in 2030, meaning that capital investment by major oil companies will be concentrated between 2026 and 2029. We will further explore SAF and GX-related issues. The policy calendar is clear, and it's a structural theme where capital investment by companies will be concentrated between 2025 and 2029.
Structural Drivers: Demand Inevitability Determined by the Policy Calendar
Global Regulatory Schedule
Region/Framework Content Timing
EU ReFuelEU Aviation: Mandatory Use of SAF (Surface-Aided Fuel) Starting in 2025 (2% → 6% by 2030 → 70% by 2050)
ICAO CORSIA: Mandatory International Aviation CO2 Offsetting, Expanding to All Member States from 2027
Japan: 10% of Domestic Aviation Fuel to be SAF by 2030
USA: SAF Grand Challenge, Target of 100 billion gallons by 2050, 3 billion gallons by 2030
ICAO LTAG: International Aviation Carbon Neutrality 2050
At the 39th ICAO General Assembly (2016), CORSIA (Coronavirus and Alcoholic Aid in Decarbonization) was adopted for 2035. At the 41st ICAO General Assembly (2022), the Long-Term Aggregate Decarbonization Target (LTAG), aiming for carbon neutrality by 2050, was adopted, and a decision was made to change the baseline used to calculate CORSIA offset amounts.
Specific details of Japan's numerical targets: Domestic demand for SAF (Sustainable Agricultural Fuel) in 2030 is estimated to be equivalent to 10% of domestic jet fuel consumption. Estimated supply in 2030 is approximately 1.92 million kL, based on publicly available information from SAF manufacturers and suppliers such as oil refiners. However, there are uncertainties regarding raw material procurement and technological development.
Price Barrier
Existing Jet Fuel: 100-120 yen per liter
SAF: 300-400 yen per liter (2-3 times higher)
The price of SAF is said to be approximately 2-3 times higher than existing fossil fuel-derived jet fuel.
This price difference will be bridged by a 20 trillion yen upfront investment support through GX Economic Transition Bonds.
GX Economic Transition Bonds: A 20 trillion yen investment promotion framework
System Framework: Support through GX Economic Transition Bonds will be implemented based on a different approach and framework from conventional support measures, such as the "Basic Principles of National Investment Promotion Measures," toward the realization of GX. Specifically, as "bold upfront investment support" to realize GX investment through public-private partnerships, the government will require supported companies to make appropriate commitments to GX, such as participating in the GX League, and will implement these measures in conjunction with regulatory and institutional measures from the perspective of effectively realizing GX investments.
In order to realize GX investments exceeding 150 trillion yen through public-private partnerships over the next 10 years, the government needs to implement long-term, multi-year support measures to increase predictability for private businesses. Therefore, by utilizing GX economic transition bonds, the government will implement bold upfront investment support on a scale of 20 trillion yen.
SAF-related target projects:
SAF manufacturing facility construction subsidy
Hydrogen supply chain
Industry-government-academia collaboration project to promote the strengthening of autonomous resource recycling systems
Strengthening of semiconductor manufacturing supply chains
February 2025: Selection of 4 SAF companies: ENEOS (Wakayama), Idemitsu (Tokuyama), Cosmo (Sakaide), and Taiyo Oil (Okinawa) were selected. Cabinet Decision to Support the Production and Supply of Sustainable Aviation Fuel (SAF) Using GX Transition Bonds
Cosmo Energy Holdings (5021): Pioneer of Domestically Produced SAF
Details of the Sakai Refinery Plant: SAFFAIRE SKY ENERGY, a joint venture established by Cosmo Oil, JGC Holdings, and Revo International, held a completion ceremony on March 6, 2025, at the construction site (within the Cosmo Oil Sakai Refinery) to celebrate the completion of its domestically produced SAF manufacturing facility using waste cooking oil as a raw material.
Construction of the SAF manufacturing base in Sakai City, Osaka Prefecture, began in May 2023, and the completion ceremony was held on March 6, 2025. The Sakai plant is expected to produce approximately 30,000 kiloliters annually. Cosmo Energy Group aims to supply 300,000 kiloliters of SAF annually by 2030.
Business Structure
Roles and Responsible Companies
Raw Material (Waste Cooking Oil) Collection and Pre-treatment: Revo International
SAF Manufacturing Plant Construction and Operation: JGC Holdings
Mixing and Supply with Jet Fuel: Cosmo Energy Group
Plant Design: JGC Holdings
First Year Supply Destinations
From FY2025 onwards, the entire SAF supply chain, from procurement of waste cooking oil (raw material) to SAF manufacturing, quality control, and supply to airlines, will be established domestically.
Japan Airlines (JAL)
All Nippon Airways (ANA)
DHL Express (German logistics giant)
On September 13, 2025, SAF manufactured by SAFFAIRE SKY ENERGY will be used in the Blue Impulse's demonstration flight at the National Stadium.
Cosmo's Second Base: Sakaide Logistics Base
Cosmo Holdings is also considering manufacturing SAF and biodiesel at its Sakaide Logistics Base (former Sakaide Refinery) in Sakaide City, Kagawa Prefecture. Using plant-derived alcohol as a raw material, the annual production volume is 167,000 kiloliters, more than five times that of the Sakai City project. A decision on whether to invest will be made in fiscal year 2026. The manufacturing technology will utilize that of a US company in which Mitsui & Co. has invested.
This bioethanol → SAF technology is called "ATJ (Alcohol to Jet)" and is the next mainstream technology after HEFA.
Additional ATJ manufacturing project plans: A new SAF production project using bioethanol as a raw material is planned, aiming for a production of 150,000 kiloliters in collaboration with Mitsui & Co.
Current status of piping infrastructure: In April, Cosmo Energy HD began mass production of SAF, the first of its kind in Japan, at its Sakai refinery. Approximately 2 kilometers of waste cooking oil piping running east-west and north-south through the refinery, along with large storage tanks, are scattered throughout the site.
Idemitsu Kosan (5019): Aiming for a 500,000 kL system by FY2028
Tokuyama Plant Project: Idemitsu Kosan proposed the "Project for the Installation of Manufacturing Facilities and the Establishment of a Supply System for Sustainable Aviation Fuel (SAF) Using the HEFA Process" at its Tokuyama Plant (Shunan City, Yamaguchi Prefecture) as part of the Ministry of Economy, Trade and Industry's investment promotion measures utilizing GX Economic Transition Bonds. This proposal was adopted on February 20, 2025. The main use of the subsidy is for the construction of an SAF (Saturated Fats) manufacturing facility (250,000 kL per year) at the Tokuyama Plant.
Idemitsu aims to begin SAF production at the Tokuyama Plant by fiscal year 2028, and is currently conducting basic design work towards a final investment decision on the SAF manufacturing facility within fiscal year 2025.
Company-wide Strategy: The SAF business is one of the four priority businesses that Idemitsu will focus on towards 2030, aiming to establish a domestic supply system of 500,000 kL per year. To manufacture and supply SAF stably and economically over the long term, diversification of raw material procurement methods and manufacturing methods is considered crucial, making SAF production at the Tokuyama Plant an essential measure.
Manufacturing Method: HEFA (Hydroprocessed Esters and Fatty Acids): Hydrogenation treatment of vegetable oil and waste cooking oil. Certified under ASTM D7566 Annex 2.
ENEOS (5020): Wakayama - Largest Scale at 400,000 kL
Wakayama Manufacturing Plant Project: ENEOS will implement large-scale SAF (Steel-Assisted Fuel) manufacturing equipment installation and modification of existing equipment at its Wakayama Manufacturing Plant in Arida City, Wakayama Prefecture. The manufacturing method will be HEFA (Heavy-Efficient Fat-Assisted) using waste cooking oil, oils, and other waste and by-products as primary raw materials. The project anticipates producing approximately 300,000 tons (400,000 kL) of SAF annually from FY2028 onwards, with some naphtha and diesel components.
Collaboration with Mitsubishi Corporation: On the same day, ENEOS and Mitsubishi Corporation agreed to jointly conduct basic design work for the construction phase of the SAF manufacturing project at the Wakayama Manufacturing Plant. By combining ENEOS's manufacturing technology, raw material procurement expertise, and sales network with Mitsubishi Corporation's domestic and international expertise in SAF raw material procurement, the aim is to establish a mass production and supply system for SAF in Japan.
Mitsubishi Corporation's global procurement network for waste cooking oil and oils will mitigate the risk of raw material shortages.
Pioneering Investment in Synthetic Fuel (e-fuel): ENEOS has developed Japan's first plant capable of producing one drum of synthetic fuel per day from CO2 and hydrogen, embodying world-class technology. Design and construction were handled by Chiyoda Corporation, Chiyoda Ex-One Engineering, and Nippon Steel Engineering.
Going beyond HEFA, ENEOS is at the forefront of e-SAF (electric-SAF, synthetic fuel) in Japan.
ENEOS's Corporate Strategy: ENEOS Holdings aims to reduce its group companies from 651 (as of March 2025) to less than half by the end of March 2028. Through cost reductions and other measures, the company aims to improve operating profit by 43 billion yen. This will be used for investment in next-generation fuels such as recycled aviation fuel (SAF).
This is a "selection and concentration" strategy to generate SAF investment funds through the restructuring of existing businesses.
Taiyo Oil (Unlisted): Development in Okinawa
Okinawa SAF Project
Taiyo Oil's main bases are its Shikoku Plant in Imabari City, Ehime Prefecture, and its Okinawa Plant (Nansei Oil, Naha City).
Planning SAF production at the Okinawa Plant
Considering the introduction of ATJ (bioethanol → SAF) technology
Taiyo Oil's Positioning
Fifth largest oil refiner in Japan (after ENEOS, Idemitsu, Cosmo, and Fuji Oil)
Although direct investment in shares is not possible due to its unlisted status, benefits can be obtained through suppliers such as JGC Holdings, Mitsui E&S, and Kurita Water Industries.
JGC Holdings (1963): The king of SAF plant EPC (Engineering, Procurement, and Construction)
A near-monopoly position in SAF plant EPC
Sakai SAF Plant (Cosmo x JGC x Revo)
Candidate for Basic Design (FEED) of Tokuyama SAF Plant (Idemitsu)
Candidate for FEED of Wakayama SAF Plant (ENEOS)
Candidate for EPC of Okinawa SAF Plant (Taiyo Oil)
ACT FOR SKY: ACT FOR SKY, a volunteer group established by JGC HD in March 2022 to promote the commercialization of domestically produced SAF across industries, has expanded from 16 companies to 46 (as of February 6, 2025).
Fry to Fly Project: An initiative to collect waste cooking oil from households and restaurants and convert it into SAF. The number of participating municipalities and companies, which was 29 at its start in April 2023, has increased to approximately 200 in one year.
Plant construction contract price: Hundreds of billions of yen per plant. The EPC market for SAF plants, totaling 500-800 billion yen across four domestic companies, is concentrated within JGC Holdings.
Mitsubishi Heavy Industries (7011) and IHI (7013): Equipment, Catalysts, and Plant Equipment
Mitsubishi Heavy Industries
Giant Compressors: Essential for the hydrogenation treatment equipment in the HEFA process
Heat Exchangers
Catalytic Reactors
Supplying key components for SAF plant equipment
IHI
High-Pressure Reactors
Plant Peripheral Equipment
Hydrogen Supply Chain Equipment
Mitsui E&S (7003)
Mitsui E&S receives order for compressors for domestic SAF manufacturing. From JGC Corporation (July 10, 2023)
Compressor delivered to Sakai SAF Plant
Catalyst Manufacturers
JGC Catalyst Chemicals: Hydrogenation catalysts
Clariant (Foreign company)
Honeywell UOP (USA): Prototype supplier of HEFA technology
Topsey (Denmark)
Major Engineering Companies
JGC Holdings: Leading player in EPC
Chiyoda Corporation (6366): Synthetic fuel plants, hydrogen plants
Toyo Engineering Corporation (6330): Chemical plants
Nippon Steel Engineering: Plant equipment
Water Treatment and Purification Equipment: Kurita Water Industries (6370) and Organo (6368)
Water Treatment Needs in SAF Manufacturing Processes
Pretreatment of Waste Cooking Oil (Dewatering and Impurity Removal)
Water Treatment After Reactor
Pure Water and Ultrapure Water in the Purification Process
Wastewater Treatment
Kurita Water Industries (6370)
Japan's leading manufacturer of water treatment chemicals and equipment
Rapidly growing in the semiconductor sector, also capturing water treatment demand in SAF plants
FY2026 Sales Forecast: Around 400 billion yen
Organo (6368)
Strong in pure water and ultrapure water equipment
Supplies to semiconductor, pharmaceutical, and SAF plants
Market capitalization is smaller than Kurita, but ROE is high
Other Water Treatment Related Companies
Miura Industries (6005): Boilers, Water Treatment
Daiki Axis (4245): Water Treatment
Metawater (9551): Water and Sewerage
Raw Material Supply Chain: Competition for Waste Cooking Oil
Domestic Waste Cooking Oil Supply: In Japan, approximately 40% of waste cooking oil is supplied annually.
We will delve deeper into SAF and GX-related issues. SAF has a clear policy calendar, with mandatory implementation in 2030, meaning that capital investment by major oil companies will be concentrated between 2026 and 2029. We will further explore SAF and GX-related issues. The policy calendar is clear, and it's a structural theme where capital investment by companies will be concentrated between 2025 and 2029.
Structural Drivers: Demand Inevitability Determined by the Policy Calendar
Global Regulatory Schedule
Region/Framework Content Timing
EU ReFuelEU Aviation: Mandatory Use of SAF (Surface-Aided Fuel) Starting in 2025 (2% → 6% by 2030 → 70% by 2050)
ICAO CORSIA: Mandatory International Aviation CO2 Offsetting, Expanding to All Member States from 2027
Japan: 10% of Domestic Aviation Fuel to be SAF by 2030
USA: SAF Grand Challenge, Target of 100 billion gallons by 2050, 3 billion gallons by 2030
ICAO LTAG: International Aviation Carbon Neutrality 2050
At the 39th ICAO General Assembly (2016), CORSIA (Coronavirus and Alcoholic Aid in Decarbonization) was adopted for 2035. At the 41st ICAO General Assembly (2022), the Long-Term Aggregate Decarbonization Target (LTAG), aiming for carbon neutrality by 2050, was adopted, and a decision was made to change the baseline used to calculate CORSIA offset amounts.
Specific details of Japan's numerical targets: Domestic demand for SAF (Sustainable Agricultural Fuel) in 2030 is estimated to be equivalent to 10% of domestic jet fuel consumption. Estimated supply in 2030 is approximately 1.92 million kL, based on publicly available information from SAF manufacturers and suppliers such as oil refiners. However, there are uncertainties regarding raw material procurement and technological development.
Price Barrier
Existing Jet Fuel: 100-120 yen per liter
SAF: 300-400 yen per liter (2-3 times higher)
The price of SAF is said to be approximately 2-3 times higher than existing fossil fuel-derived jet fuel.
This price difference will be bridged by a 20 trillion yen upfront investment support through GX Economic Transition Bonds.
GX Economic Transition Bonds: A 20 trillion yen investment promotion framework
System Framework: Support through GX Economic Transition Bonds will be implemented based on a different approach and framework from conventional support measures, such as the "Basic Principles of National Investment Promotion Measures," toward the realization of GX. Specifically, as "bold upfront investment support" to realize GX investment through public-private partnerships, the government will require supported companies to make appropriate commitments to GX, such as participating in the GX League, and will implement these measures in conjunction with regulatory and institutional measures from the perspective of effectively realizing GX investments.
In order to realize GX investments exceeding 150 trillion yen through public-private partnerships over the next 10 years, the government needs to implement long-term, multi-year support measures to increase predictability for private businesses. Therefore, by utilizing GX economic transition bonds, the government will implement bold upfront investment support on a scale of 20 trillion yen.
SAF-related target projects:
SAF manufacturing facility construction subsidy
Hydrogen supply chain
Industry-government-academia collaboration project to promote the strengthening of autonomous resource recycling systems
Strengthening of semiconductor manufacturing supply chains
February 2025: Selection of 4 SAF companies: ENEOS (Wakayama), Idemitsu (Tokuyama), Cosmo (Sakaide), and Taiyo Oil (Okinawa) were selected. Cabinet Decision to Support the Production and Supply of Sustainable Aviation Fuel (SAF) Using GX Transition Bonds
Cosmo Energy Holdings (5021): Pioneer of Domestically Produced SAF
Details of the Sakai Refinery Plant: SAFFAIRE SKY ENERGY, a joint venture established by Cosmo Oil, JGC Holdings, and Revo International, held a completion ceremony on March 6, 2025, at the construction site (within the Cosmo Oil Sakai Refinery) to celebrate the completion of its domestically produced SAF manufacturing facility using waste cooking oil as a raw material.
Construction of the SAF manufacturing base in Sakai City, Osaka Prefecture, began in May 2023, and the completion ceremony was held on March 6, 2025. The Sakai plant is expected to produce approximately 30,000 kiloliters annually. Cosmo Energy Group aims to supply 300,000 kiloliters of SAF annually by 2030.
Business Structure
Roles and Responsible Companies
Raw Material (Waste Cooking Oil) Collection and Pre-treatment: Revo International
SAF Manufacturing Plant Construction and Operation: JGC Holdings
Mixing and Supply with Jet Fuel: Cosmo Energy Group
Plant Design: JGC Holdings
First Year Supply Destinations
From FY2025 onwards, the entire SAF supply chain, from procurement of waste cooking oil (raw material) to SAF manufacturing, quality control, and supply to airlines, will be established domestically.
Japan Airlines (JAL)
All Nippon Airways (ANA)
DHL Express (German logistics giant)
On September 13, 2025, SAF manufactured by SAFFAIRE SKY ENERGY will be used in the Blue Impulse's demonstration flight at the National Stadium.
Cosmo's Second Base: Sakaide Logistics Base
Cosmo Holdings is also considering manufacturing SAF and biodiesel at its Sakaide Logistics Base (former Sakaide Refinery) in Sakaide City, Kagawa Prefecture. Using plant-derived alcohol as a raw material, the annual production volume is 167,000 kiloliters, more than five times that of the Sakai City project. A decision on whether to invest will be made in fiscal year 2026. The manufacturing technology will utilize that of a US company in which Mitsui & Co. has invested.
This bioethanol → SAF technology is called "ATJ (Alcohol to Jet)" and is the next mainstream technology after HEFA.
Additional ATJ manufacturing project plans: A new SAF production project using bioethanol as a raw material is planned, aiming for a production of 150,000 kiloliters in collaboration with Mitsui & Co.
Current status of piping infrastructure: In April, Cosmo Energy HD began mass production of SAF, the first of its kind in Japan, at its Sakai refinery. Approximately 2 kilometers of waste cooking oil piping running east-west and north-south through the refinery, along with large storage tanks, are scattered throughout the site.
Idemitsu Kosan (5019): Aiming for a 500,000 kL system by FY2028
Tokuyama Plant Project: Idemitsu Kosan proposed the "Project for the Installation of Manufacturing Facilities and the Establishment of a Supply System for Sustainable Aviation Fuel (SAF) Using the HEFA Process" at its Tokuyama Plant (Shunan City, Yamaguchi Prefecture) as part of the Ministry of Economy, Trade and Industry's investment promotion measures utilizing GX Economic Transition Bonds. This proposal was adopted on February 20, 2025. The main use of the subsidy is for the construction of an SAF (Saturated Fats) manufacturing facility (250,000 kL per year) at the Tokuyama Plant.
Idemitsu aims to begin SAF production at the Tokuyama Plant by fiscal year 2028, and is currently conducting basic design work towards a final investment decision on the SAF manufacturing facility within fiscal year 2025.
Company-wide Strategy: The SAF business is one of the four priority businesses that Idemitsu will focus on towards 2030, aiming to establish a domestic supply system of 500,000 kL per year. To manufacture and supply SAF stably and economically over the long term, diversification of raw material procurement methods and manufacturing methods is considered crucial, making SAF production at the Tokuyama Plant an essential measure.
Manufacturing Method: HEFA (Hydroprocessed Esters and Fatty Acids): Hydrogenation treatment of vegetable oil and waste cooking oil. Certified under ASTM D7566 Annex 2.
ENEOS (5020): Wakayama - Largest Scale at 400,000 kL
Wakayama Manufacturing Plant Project: ENEOS will implement large-scale SAF (Steel-Assisted Fuel) manufacturing equipment installation and modification of existing equipment at its Wakayama Manufacturing Plant in Arida City, Wakayama Prefecture. The manufacturing method will be HEFA (Heavy-Efficient Fat-Assisted) using waste cooking oil, oils, and other waste and by-products as primary raw materials. The project anticipates producing approximately 300,000 tons (400,000 kL) of SAF annually from FY2028 onwards, with some naphtha and diesel components.
Collaboration with Mitsubishi Corporation: On the same day, ENEOS and Mitsubishi Corporation agreed to jointly conduct basic design work for the construction phase of the SAF manufacturing project at the Wakayama Manufacturing Plant. By combining ENEOS's manufacturing technology, raw material procurement expertise, and sales network with Mitsubishi Corporation's domestic and international expertise in SAF raw material procurement, the aim is to establish a mass production and supply system for SAF in Japan.
Mitsubishi Corporation's global procurement network for waste cooking oil and oils will mitigate the risk of raw material shortages.
Pioneering Investment in Synthetic Fuel (e-fuel): ENEOS has developed Japan's first plant capable of producing one drum of synthetic fuel per day from CO2 and hydrogen, embodying world-class technology. Design and construction were handled by Chiyoda Corporation, Chiyoda Ex-One Engineering, and Nippon Steel Engineering.
Going beyond HEFA, ENEOS is at the forefront of e-SAF (electric-SAF, synthetic fuel) in Japan.
ENEOS's Corporate Strategy: ENEOS Holdings aims to reduce its group companies from 651 (as of March 2025) to less than half by the end of March 2028. Through cost reductions and other measures, the company aims to improve operating profit by 43 billion yen. This will be used for investment in next-generation fuels such as recycled aviation fuel (SAF).
This is a "selection and concentration" strategy to generate SAF investment funds through the restructuring of existing businesses.
Taiyo Oil (Unlisted): Development in Okinawa
Okinawa SAF Project
Taiyo Oil's main bases are its Shikoku Plant in Imabari City, Ehime Prefecture, and its Okinawa Plant (Nansei Oil, Naha City).
Planning SAF production at the Okinawa Plant
Considering the introduction of ATJ (bioethanol → SAF) technology
Taiyo Oil's Positioning
Fifth largest oil refiner in Japan (after ENEOS, Idemitsu, Cosmo, and Fuji Oil)
Although direct investment in shares is not possible due to its unlisted status, benefits can be obtained through suppliers such as JGC Holdings, Mitsui E&S, and Kurita Water Industries.
JGC Holdings (1963): The king of SAF plant EPC (Engineering, Procurement, and Construction)
A near-monopoly position in SAF plant EPC
Sakai SAF Plant (Cosmo x JGC x Revo)
Candidate for Basic Design (FEED) of Tokuyama SAF Plant (Idemitsu)
Candidate for FEED of Wakayama SAF Plant (ENEOS)
Candidate for EPC of Okinawa SAF Plant (Taiyo Oil)
ACT FOR SKY: ACT FOR SKY, a volunteer group established by JGC HD in March 2022 to promote the commercialization of domestically produced SAF across industries, has expanded from 16 companies to 46 (as of February 6, 2025).
Fry to Fly Project: An initiative to collect waste cooking oil from households and restaurants and convert it into SAF. The number of participating municipalities and companies, which was 29 at its start in April 2023, has increased to approximately 200 in one year.
Plant construction contract price: Hundreds of billions of yen per plant. The EPC market for SAF plants, totaling 500-800 billion yen across four domestic companies, is concentrated within JGC Holdings.
Mitsubishi Heavy Industries (7011) and IHI (7013): Equipment, Catalysts, and Plant Equipment
Mitsubishi Heavy Industries
Giant Compressors: Essential for the hydrogenation treatment equipment in the HEFA process
Heat Exchangers
Catalytic Reactors
Supplying key components for SAF plant equipment
IHI
High-Pressure Reactors
Plant Peripheral Equipment
Hydrogen Supply Chain Equipment
Mitsui E&S (7003)
Mitsui E&S receives order for compressors for domestic SAF manufacturing. From JGC Corporation (July 10, 2023)
Compressor delivered to Sakai SAF Plant
Catalyst Manufacturers
JGC Catalyst Chemicals: Hydrogenation catalysts
Clariant (Foreign company)
Honeywell UOP (USA): Prototype supplier of HEFA technology
Topsey (Denmark)
Major Engineering Companies
JGC Holdings: Leading player in EPC
Chiyoda Corporation (6366): Synthetic fuel plants, hydrogen plants
Toyo Engineering Corporation (6330): Chemical plants
Nippon Steel Engineering: Plant equipment
Water Treatment and Purification Equipment: Kurita Water Industries (6370) and Organo (6368)
Water Treatment Needs in SAF Manufacturing Processes
Pretreatment of Waste Cooking Oil (Dewatering and Impurity Removal)
Water Treatment After Reactor
Pure Water and Ultrapure Water in the Purification Process
Wastewater Treatment
Kurita Water Industries (6370)
Japan's leading manufacturer of water treatment chemicals and equipment
Rapidly growing in the semiconductor sector, also capturing water treatment demand in SAF plants
FY2026 Sales Forecast: Around 400 billion yen
Organo (6368)
Strong in pure water and ultrapure water equipment
Supplies to semiconductor, pharmaceutical, and SAF plants
Market capitalization is smaller than Kurita, but ROE is high
Other Water Treatment Related Companies
Miura Industries (6005): Boilers, Water Treatment
Daiki Axis (4245): Water Treatment
Metawater (9551): Water and Sewerage
Raw Material Supply Chain: Competition for Waste Cooking Oil
Domestic Waste Cooking Oil Supply: In Japan, approximately 40% of waste cooking oil is supplied annually.
Approximately 100,000 tons of commercial waste cooking oil and about 100,000 tons of household waste cooking oil are generated annually. However, some of the commercial waste from restaurants and other establishments is exported overseas, while the majority of household waste cooking oil is discarded.
The Core of the Problem
Domestically Recoverable Waste Cooking Oil: Approximately 500,000 tons per year
2030 SAF Demand: 1.92 million kL → This requires 5-7 million tons of waste cooking oil alone.
Absolute Insufficient
The Problem of Overseas Export
A considerable amount of Japanese commercial waste cooking oil is exported to Singapore and Europe.
Nestlé's SAF for Europe is a major destination.
Increased demand for SAF in Japan is intensifying competition for domestic supply.
Expansion of Municipal Cooperation: Agreements with Tokyo Metropolitan Government (August 2023), Sakai City, Osaka Prefecture (November 2024), Suita City, Osaka Prefecture (March 2025), and Shimonoseki City, Yamaguchi Prefecture (February 2026).
Establishing a system for collecting household waste cooking oil through municipalities is urgently needed.
Collaboration with Iwatani Corporation: Leveraging Iwatani Corporation's nationwide network of approximately 3.4 million LP gas customers and industrial network, we will establish a waste cooking oil collection system to strengthen raw material procurement for a stable supply of domestically produced SAF (Sustainable Atomizing Fuel).
Diversification of Raw Materials: HEFA → ATJ → e-SAF
Three SAF Manufacturing Technologies
Technology | Raw Material | CO2 Reduction Rate | Commercialization Stage | HEFA | Waste cooking oil, vegetable oil | Approx. 80% | Commercialized (Sakai) | ATJ | Bioethanol | Approx. 70% | Commercialized 2026-2028 | e-SAF (Synthetic Fuel) | Hydrogen + CO2 | Over 90% Practical Application in the 2030s
Limitations of HEFA
Absolute shortage of raw materials (waste cooking oil)
Price surge (increased global demand)
HEFA alone will not be sufficient by 2030
The rise of ATJ
Over 100 million tons of bioethanol are produced globally annually
Diverse raw materials including corn, sugarcane, and cellulosic waste
LanzaJet (USA) and Cosmo x Mitsui & Co. (Japan) are leading the way
The potential of e-SAF
FT (Fischer-Tropsch) method and FT-SPK process for chemical synthesis from hydrogen and CO2
Developed by Sunfire (Germany), Twelve (USA), and ENEOS (Japan)
Theoretically, an inexhaustible supply of raw materials is possible
However, costs are 2-3 times higher than current SAF, and practical application is expected after 2030
Future SAF market composition (2030 forecast)
HEFA: 60-70%
ATJ: 20-30%
e-SAF: 5-10%
Supply and Demand Balance in 2030: Domestic Production Alone Will Be Insufficient
Domestic SAF Demand and Supply Forecast for 2030
Item Quantity Required SAF in 2030 (Domestic) Approx. 1.92 million kL Expected Domestic Production Approx. 1.15 million kL Shortfall (Supplemented by Imports, etc.) Approx. 770,000 kL
Construction Plans of 4 Domestic Companies (Scheduled to be operational in 2028-2029)
Company Name Site Production Capacity (Year) Technology Cosmo Sakai Refinery 30,000 kL (Operating) HEFA Cosmo Sakaide Logistics Base 167,000 kL ATJ Idemitsu Tokuyama Plant 250,000 kL HEFA ENEOS Wakayama Plant 400,000 kL HEFA Taiyo Oil Okinawa Scale Undisclosed Undecided Other (Fuji Oil, etc.) - - -
Import-dependent structure
Requires imports from Singapore, the United States, and Europe
Risk of price-setting power being held by overseas manufacturers
Energy security challenges
Spillover to related "GX themes"
It is necessary to consider not only SAF alone, but also related themes driven by GX economic transition bonds.
Hydrogen Supply Chain
Kawasaki Heavy Industries, Mitsubishi Heavy Industries (Liquefied Hydrogen Carriers)
Iwatani Corporation (Hydrogen Stations)
Toho Gas, Osaka Gas, Tokyo Gas (Hydrogen Co-firing/Dedicated Firing)
Subsidies: Support Project Focusing on Price Differences
CCUS (CO2 Capture, Utilization, and Storage)
JX Metals, Japan Petroleum Exploration
Chiyoda Corporation
Mitsubishi Corporation (Tomakomai CCS Project)
Electrification/Biofuels
Renewable Diesel (HVO)
Methanol Fuel (Marine)
Semiconductor Manufacturing Supply Chain
Support Project for Strengthening the Semiconductor Manufacturing Supply Chain to Realize GX
Already functioning as a subsidy for Rapidus and TSMC Kumamoto
Domestic Manufacturing of Power Semiconductors
Risks and Points to Note
Raw Material Securing Risks
Due to increased global demand, the supply of waste cooking oil is insufficient, and prices are soaring. Efforts to secure a stable supply of raw materials are essential.
Competition for HEFA raw materials is putting pressure on profit margins.
Vegetable oil-derived raw materials raise questions about sustainability due to the palm oil problem (deforestation).
Price competitiveness
Japanese-produced SAF is more expensive than European and US-produced SAF.
US producer tax credits (IRAs) make US-produced SAF significantly cheaper.
The EU has a larger market than Japan, with a 6% SAF blending rate until 2030.
Policy change risk
The continuation of the Takaichi administration's GX policy is uncertain.
The industry is resisting the pass-through of costs to electricity and industrial gas rates (GX surcharges).
The possibility of "postponing the mandatory SAF implementation" cannot be ruled out.
Uncertainty of investment recovery
Capital investment is several hundred billion yen per plant.
Risk that the operating rate will not be 100% as planned.
Risk that profitability will deteriorate due to soaring waste cooking oil prices.
Mistakes in Technology Selection
Choosing the wrong choice between HEFA, ATJ, or e-SAF could result in wasted investments of hundreds of billions of yen.
If later technologies (such as e-SAF) become dominant, the earlier HEFA technology will become obsolete.
Limitations of Market Size
The annual production volume of the SAF facility in Sakai City is enough to make 700 flights between Tokyo and London if mixed with existing jet fuel at a 30% ratio. However, this is only about 2% of the 2030 demand estimated by the Ministry of Economy, Trade and Industry.
The global aviation fuel market is over 250 million tons per year; even 10% of that is 25 million tons.
Japan's SAF production capacity (approximately 1 million tons per year in total future plans) is only a small part of the global market.
Clarification of Investment Stance
Top Picks: The three major oil companies
Cosmo Energy HD (5021): First-mover advantage, aiming for a 200,000 kL annual production system in Sakai + Sakaide. Due to the relatively small size of companies compared to the market size, the impact of SAF is comparatively large.
Idemitsu Kosan (5019): 250,000 kL supply capacity in Tokuyama, 500,000 kL supply system by 2030, one of four key businesses.
ENEOS (5020): Largest scale with 400,000 kL in Wakayama, collaboration with Mitsubishi Corporation, and a leader in e-SAF.
Plant EPC/Equipment
JGC Holdings (1963): Dominant position in SAF plant EPC
Mitsui E&S (7003): Compressor supply
Chiyoda Corporation (6366): Synthetic fuel/hydrogen plant
Water treatment/Peripheral equipment
Kurita Water Industries (6370): Comprehensive water treatment capabilities
Organo (6368) : Pure water/ultrapure water
Mitsubishi Heavy Industries (7011) / IHI (7013): Plant equipment
Trading companies (raw material procurement)
Mitsubishi Corporation (8058): Collaboration with ENEOS, global procurement network for waste cooking oil and fats
Mitsui & Co. (8031): Collaboration with Cosmo, US ATJ technology partnership
Itochu Corporation (8001): Logistics handling
Marubeni (8002): Agricultural products/vegetable oils
Waste cooking oil collection
Iwatani Corporation (8088): Waste cooking oil collection utilizing LP gas customer network
Revo International (unlisted)
Niche
NGK Insulators (5333): Ceramic catalyst carriers
JGC Catalysts & Chemicals: Hydrogenation catalysts (JGC Holdings subsidiary)
Investment Calendar
Timeline/Event
April 2025: Commercial supply of SAF begins at Cosmo Sakai Refinery
September 2025: SAF used by Blue Impulse (first in Japan, domestically produced SAF)
Within FY2025: Final investment decision (FID) for Idemitsu Tokuyama SAF
FY2026: Investment decision for Cosmo Sakaide ATJ, full effect of EU SAF mandate begins
2027: ICAO CORSIA expands to all member states, Japanese government designs for mandatory SAF supply
FY2028: Mass production of SAF begins at Idemitsu Tokuyama, mass production of SAF begins at ENEOS Wakayama
2029: Domestic SAF production capacity reaches 800,000-1,000,000 kL
2030: SAF mandate in Japan (10% blend), demand 1,920,000 kL
2035: Full-scale offsetting against CORSIA baseline
2050: Zero aviation net, full-scale deployment of e-SAF
Takao's Sales Hook from a Business Perspective
SAF/GX-related products involve a combination of high temperature, high pressure, hydrogen, and corrosive bio-based raw materials, making them an area where electronic science's materials testing technology can be directly utilized.
Hydrogen Embrittlement Test of HEFA Plant Hydrogenation Equipment
The HEFA process hydrogenates waste cooking oil in a high-pressure hydrogen atmosphere at 300-400°C.
Hydrogen embrittlement of reactors, piping, and valves is the greatest risk during long-term operation.
Fatigue Evaluation of 25Cr-1Mo Steel, 9Cr-1Mo Steel, and Austenitic Stainless Steel in High-Temperature Hydrogen Environments
Conventional evaluation methods are insufficient for delayed fracture due to hydrogen, and new test standards are needed.
Target: Idemitsu Tokuyama, ENEOS Wakayama, Cosmo Sakai
Thermal Fatigue Test of Reactors and Heat Exchangers
SAF plant reactors undergo many thermal cycles of start-up and shutdown.
Thermomechanical fatigue evaluation of welded and bolted joints.
Evaluation compliant with JGC HD's design standards and API 579/ASME Section VIII.
Target: JGC HD, Mitsui E&S, Mitsubishi Heavy Industries, IHI
Corrosion Evaluation of Bio-Raw Materials
Waste cooking oil contains free fatty acids (FFA), chlorine, and phosphorus.
The corrosive environment is more severe than that of conventional petroleum refining equipment.
Corrosion testing of 304/316 stainless steel, evaluation of new alloys
Addressing seasonal fluctuations in raw materials (variations in waste cooking oil quality)
Reactor Evaluation of the ATJ (Alcohol to Jet) Process
Three stages: Bioethanol → Olefin → Hydrogenation
Long-term reliability of catalysts and reactors at each stage
Cosmo Sakaide (FY2026 investment decision), US LanzaJet technology
Mechanical strength evaluation of catalyst supports (zeolite, alumina)
Ultra-high temperature materials for e-SAF (Synthetic Fuel) Plants
Reverse water-gas shift reactor (RWGS) operates at over 700°C
Long-term fatigue of FT synthesis (Fischer-Tropsch) reactors
Fatigue testing of heat-resistant alloys (Hastelloy, Inconel)
ENEOS Synthetic Fuel Plant, Chiyoda Corporation's testing needs
Hydrogen Supply Chain Equipment
Liquefied Hydrogen Tanker (Kawasaki Heavy Industries, Kobe Test Site)
Accumulators for Hydrogen Stations
Hydrogen Liquefiers, Hydrogen Transport Pipelines
Combined Testing of Hydrogen Embrittlement + Cryogenic Temperature (-253°C)
Evaluation of Thermal Insulation Structure of Liquefied Hydrogen Tankers
Material Evaluation of Water Treatment Equipment
Kurita Water Industries, Organo Water Treatment Equipment
Corrosion of Piping and Fittings in High-Temperature, High-Pressure Pure Water
Mechanical Strength of Ion Exchange Resins
Application of SAF (Surface-Assisted Foam) Technology for High-Purity Water Treatment Common to Semiconductors
Mechanical Strength and Fatigue of Catalyst Supports
JGC Catalysts & Chemicals, Nippon Chemical Industrial Co., Ltd., Clariant
Compressive Strength and Abrasion Resistance of Catalyst Pellets
Evaluation of Catalyst Abrasion Due to Flow and Impact in Reactors
Main Target Companies
Company Location Sales Timing Cosmo Energy HD Sakai Refinery (Operating), Sakaide Logistics Base (Investment Decision in 2026) Capital Investment Period after Sakaide FID Idemitsu Kosan Tokuyama Plant (Shunan City, Yamaguchi Prefecture) ENEOS Wakayama Plant (Arida City) - FEED design in 2025-2026, construction in 2026-2028; Taiyo Oil Okinawa and Shikoku Plants - peak capital investment in 2026-2028; JGC Holdings Yokohama Head Office, Plant Design Department - EPC order stage for four companies (2026-2028); JGC Catalytic Chemicals Kitakyushu, Niigata - ongoing catalyst development; Mitsubishi Heavy Industries Kobe Shipyard, Nagasaki Shipyard, Takasago - plant equipment manufacturing stage; IHI Yokohama, Soma, Kure - hydrogen-related equipment; Mitsui E&S Chiba, Tamano - compressor supply; Chiyoda Corporation Yokohama - e-SAF and synthetic fuel plant; Kurita Water Industries Moriya, Yasu, Kawasaki - water treatment equipment; Organo Tokyo, Tsukuba Pure Water Systems
Most Promising Sales Angle
Idemitsu Tokuyama FEED Design Phase (2025-2026): Since test specifications are determined during the design phase, this is the ideal timing for proposing test equipment and contract evaluation services.
ENEOS Wakayama Construction Phase (2026-2028): The largest domestic facility with a capacity of 400,000 kL; significant demand for test equipment due to the establishment of a quality assurance system.
Strategic Collaboration with JGC Holdings: Proposing a standard test process to JGC Holdings, which designs all four companies' SAF plants, increases the possibility of adoption across the entire supply chain.
Evaluation of Hydrogen Supply Chain Equipment: Proposing a combined liquefied hydrogen x hydrogen embrittlement test to Kawasaki Heavy Industries (Kobe) and Iwatani Corporation's hydrogen-related equipment.
Linkage with Existing Refinery Modifications: Many oil companies are modifying existing petroleum refining equipment for SAF production.
Specific order opportunities include residual life and fatigue evaluation during modification.
e-SAF/cutting-edge evaluation of synthetic fuels: ENEOS's Yokohama Central Technical Research Institute and Chiyoda Corporation's R&D department have material evaluation needs for next-generation processes.
Potential for contract testing business
In the SAF/hydrogen field, new standards and test methods are still under development.
Denshi Kagaku's strategy is to concentrate orders for contract testing from JGC Holdings and four major oil companies as the "GX Material Reliability Evaluation Center".
In particular, accelerated testing methods for hydrogen embrittlement are not yet established internationally, giving them a position to lead standardization originating in Japan.
Ripple effects from other industries
Hydrogen-related: Fuel cell vehicles (Toyota MIRAI, Honda), hydrogen stations, liquefied hydrogen tankers
Biofuels: Renewable diesel (HVO), marine methanol
CCS/CCUS: CO2 injection plants, CO2 capture materials
All require evaluation of fatigue, hydrogen embrittlement, and corrosion, and the know-how established in SAF can be applied horizontally.
Summary: GX is a highly probable "policy calendar-driven" theme
Structural Points
There is a clear policy deadline: mandatory SAF (10%) by 2030.
The four major oil companies will benefit from the 20 trillion yen in upfront investment support through GX economic transition bonds.
Capital investment will peak in 2026-2028, with a concentration of order opportunities.
Japan holds a world-leading position in plant EPC (JGC Holdings) and equipment (Mitsubishi Heavy Industries, IHI, Mitsui E&S).
Waste cooking oil shortage and price competitiveness are structural challenges.
e-SAF (synthetic fuel) is the main focus in the 2030s, with ENEOS leading the way.
Conclusion from an Investor's Perspective
The three major oil companies (ENEOS, Idemitsu, Cosmo) are attractive in terms of both dividends and SAF upside.
JGC Holdings is the sole EPC company designing all of the four companies' SAF plants. Key Beneficiaries
Kurita Water Industries and Organo are solid performers with their dual driver of semiconductors + SAF.
Mitsubishi Corporation and Mitsui & Co. are key players in raw material procurement, and their trading company functions will be re-evaluated in the SAF era.
Iwatani Corporation is a comprehensive GX stock with hydrogen + waste cooking oil recovery + LPG.
Conclusion of Perspective
SAF requires the combined evaluation of hydrogen embrittlement, thermal fatigue, and corrosion, making it a core area of testing technology.
Capital investment will peak between 2026 and 2028, presenting an excellent sales opportunity for testing equipment and contract evaluation.
The bases of the four major oil companies (Sakai, Sakaide, Tokuyama, Wakayama, and Okinawa) are sources of new demand for testing equipment.
Strategic collaboration with JGC Holdings enables the proposal of standard testing processes across the entire supply chain.
Expansion into hydrogen and e-SAF puts them in a leading position in new testing technologies in the 2030s.
Summary of All 8 Categories
All eight themes covered in this research (AI data center power infrastructure, next-generation power semiconductors, humanoids, defense industry, semiconductor manufacturing equipment and materials, optoelectronic convergence, aerospace, SAF/GX) share the common characteristic of having their investment and implementation peak in 2025-2030.
Overall Winning Strategies for Japanese Companies
While they may not gain market share in finished products (GPUs, EV batteries, humanoid bodies, rockets, SAF raw materials), they are world leaders in materials, equipment, components, and testing technologies.
Investment in equipment will be concentrated due to government GX economic transition bonds, semiconductor budgets, and increased defense spending.
2026-2028 will see peak demand for testing equipment and contract evaluation in each sector.
Priorities from a Business Perspective
AI Data Center Power Infrastructure: Transformer and SiC/GaN power semiconductor testing
Semiconductor Manufacturing Equipment and Materials: Rapidus and advanced packaging substrates
Aerospace: GCAP engines, Boeing structures, and more Ket Materials
Photoelectric Fusion: CPO Thermomechanical Fatigue, Optical Devices
SAF/GX: HEFA Plant Hydrogen Embrittlement, Hydrogen Supply Chain
Defense Industry: Artillery, Missiles, Naval Vessels
Humanoid Robots: Gearboxes, Bearings, Actuators
Next-Generation Power Semiconductors: SiC/GaN Semiconductor Evaluation
Summary of Overall Strategy
Short-Term (2026-2027): Secure equipment and testing orders during the peak period of capital investment
Medium-Term (2028-2030): Take the lead in standard testing processes and standardize them within the industry
Long-Term (2030s): Explore new areas in e-SAF, photoelectric fusion, and mass production of humanoid robots
