Dialogue (1) The Unlimited Potential of Industrial Gases

Takeo Kikkawa
Professor of the Graduate School of
International Management,
International University of Japan /
Kenji Nagata
Member of the Board,
Nippon Sanso Holdings Corporation
Representative Director and President,
Taiyo Nippon Sanso Corporation

Takeo Kikkawa
Professor of the Graduate School of
International Management,
International University of Japan

Kenji Nagata
Member of the Board,
Nippon Sanso Holdings Corporation
Representative Director and President,
Taiyo Nippon Sanso Corporation

Industrial gases make a huge contribution to the development of industry around the world. In this section, Professor Takeo Kikkawa, who has a deep knowledge of the industrial gases business, talks with director Kenji Nagata of the Group about how to draw out the latent potential of the industrial gases business going forward.

The Essential Role of Industrial Gases in Economic Development

Kikkawa: I have authored company histories for roughly 30 companies in my capacity as an expert on the history of entrepreneurship. From 2013 to 2019, I served as an outside director for Mitsubishi Chemical Holdings Corporation. Industrial gases is something of an invisible industry—not only because the products are invisible, but because there are only a very limited number of companies that sell industrial gases themselves, despite their being indispensable to chemical and steel companies. Nevertheless, these companies play an essential role. This is just one of the things I find interesting about industrial gases, and I believe that the adoption of gases among industries throughout the world will be an important theme going forward.

Nagata: Industrial gases will always be needed for the development of industries. They are basically produced at the site of consumption. For example, steel and automobiles can be manufactured in advanced countries and then shipped, but transportation of large volumes of industrial gases requires them to be liquefied, which creates difficulties in terms of control and long-distance transportation. The industrial gases business needs to contribute to the economic activity of a region by developing strong roots there, which I think is where industrial gases manufacturers find their social purpose. I feel they have an extremely important role and function not only for business but for economic development at the national level.

Kikkawa: I think this is one of the background reasons why the industrial gases business is particularly stable from a business perspective.

Nagata: In connection with this, I think that originality has been extremely important in the successful industrialization of oxygen. For example, even if an automaker manufactures mass-market vehicles, the mass production or design may be changed afterward; but industrial gases themselves do not change, which is one of their strengths, and the industry has grown and expanded by changing the application to suit the needs of the age. This is the potential of industrial gases, and I think it also relates to the stability that you mentioned. There are differences in products according to the industry structure of each country, but whether we are talking about Japan, Singapore, or Thailand, the global supply format is more or less the same. While there are differences in language and business customs, the industry is surprisingly suited to globalization.

Kikkawa: I hear that a team from your Group company Matheson Tri-Gas, Inc. in the United States played a role in the acquisition of Praxair Inc.’s European business in 2018. While the industry may be suited for globalization, I think that it is because of the success of your progressive expansion into the United States since the 1980s, and that you were chosen to make the acquisition because you have the ability to compete with global super majors.

The HyCO Business as a Powerful Tool for Achieving Goal 13 of the SDGs

Kikkawa: I think the way that gases can be used to combat global warming will be an important point, and I suspect the industrial gases industry will garner more attention going forward. I have the highest hopes for the HyCO business*. Goal 13 of the SDGs is a goal for specific countermeasures against climate change. One of the powerful tools in this effort that has been touted by the Ministry of Economy, Trade and Industry (METI) is carbon dioxide capture, utilization, and storage (CCUS), which involves the separation, storage, and use of CO2 emitted from power stations and chemical plants. In the HyCO business, carbon is recovered in the form of hydrogen and carbon monoxide, which means that like CCUS it converts carbon into a resource. The HyCO business, which recovers carbon in the form of hydrogen and carbon monoxide rather than CO2, has great potential to be a technology that can help save the human race.

Nagata: That’s right. HyCO changes hydrocarbon resources, separating them into hydrogen and carbon monoxide, which can then be used. Hydrogen is used for converting heavy oil into light oil, removing impurities, and other purposes. By adding hydrogen when these petroleum products are consumed, the sulfur content can be reduced to zero or heavily reduced. This reduces the environmental impact when the products are consumed as fuel. Therefore, in the HyCO business, in the process of separating natural gas and so forth into hydrogen and carbon monoxide, some CO2 is emitted, but then by adding the product created by the HyCO business, the environmental impact at the consumption stage is reduced. Furthermore, among the process options for HyCO, there are some that enable the recovery of high-pressure CO2 for separation or CCUS. This makes it possible to generate electricity with reduced CO2 emissions, as you have pointed out. Setting HyCO aside, I think that we can talk about reducing environmental impact in relation to all products, such as oxygen and nitrogen. I mean, by applying oxygen to combustion technology we can reduce energy consumption by improving combustion efficiency. In the case of nitrogen, we can improve quality and productivity by preventing its oxidization. So, we can talk about the connection to reducing waste products and improving energy efficiency. We do not sell oxygen and nitrogen, but rather the effects and functions of oxygen and nitrogen. To sell these functions we are also promoting technology developments, such as gas hybrid technology and devices that use it. This is what I consider to be the industrial gases business.

Kikkawa: Looking further ahead, it seems likely that hydrogen will need to be used for electricity generation if we are to achieve a hydrogen society. If demand for hydrogen-powered electricity generation is established, the HyCO business will have even further potential for development. I think it is very possible that this could be realized by 2050.

Nagata: While we are not yet ready to start operating hydrogen stations, we are now working on the development and installation of stationary and mobile equipment. We would like to focus on hydrogen in terms of using it as a carrier in combustion technologies for ammonia and the like.

Kikkawa: Japanese power companies have chosen to use ammonia rather than hydrogen-based electricity generation, but this process requires nitrogen, which should offer opportunities for Nippon Sanso Holdings. After all, your strength is in your ability to meet all needs related to gases.

Nagata: Given the extremely matured state of the Japanese economy, I don’t expect to see much growth in demand for oxygen, hydrogen, argon, and so forth. For this reason, I think it is most important to promote businesses that are focused on the SDGs and sustainability, which are key trends in the world today.

* “HyCO” stands for hydrogen (H2) and carbon monoxide (CO), which are separated from natural and other gases through a technology called Steam Methane Reforming (SMR). The HyCO business provides large-scale supply of H2 and CO to oil refining and petrochemical industries by way of a pipeline.

Industrial Gases Have Potential in Numerous Scenarios

Nagata: Members of the public may not feel that they have any points of contact with industrial gases. However, atmosphere control, which is a gas control technology, is playing an extremely important role in the field of 3D printing, which is capturing the public eye in numerous applications. We do not make 3D printers but we aim to contribute to widespread uptake of 3D printers in Japan through atmosphere control, working in partnership with 3D printer manufacturers. Moreover, recently industrial gases are being used in a growing range of applications in fields related to aquaculture. By dissolving high-pressure oxygen in water, rather than air, we expect to improve the cultivation environment. We supply a considerable volume of oxygen to the Norwegian salmon farming industry and the Japanese eel farming industry. Another application that has been prominent lately in the area of food and water issues is modified atmosphere packaging (MAP). By injecting a mixed gas of nitrogen and CO2, this technology slows down the oxidization of food and helps to prolong the expiry dates of ready-made salads and similar products sold at convenience stores.

Kikkawa: This is a safe way to extend the expiry date rather than using a hypochlorite additive, isn’t it?

Nagata: It’s safe because it is nitrogen and carbon gases that are present in the air. By extending the expiry date, we aim to reduce food loss as much as possible. What’s more, as the weather was particularly bad this year, driving up the price of leafy vegetables, there were a growing number of cases where vegetables were frozen at the production site to preserve them before shipping. Since the Group has a long track record in refrigeration technology, we were able to use our technologies to reduce food loss at production areas as well. Going forward, I think that industrial gases will be able to contribute even more in the area of food.

Kikkawa: How about the medical field?

Nagata: In the medical business, we are focusing on Water-18O, a stable isotope used as a diagnostic reagent for cancer. It can now be used to diagnose Alzheimer’s disease as well. In our medical business, we also use a lot of CO2. For example, in endoscopic surgery, CO2 gas is injected to expand the intestine. Medical CO2 makes laparoscopic surgery much easier to perform. So various kinds of gases are used in the medical field—not only the oxygen used for ventilators that people would generally think of. In the case of a disaster, for example, we continue to supply these gases stably without stopping. In this way, we also aim to contribute to the medical field.

Kikkawa: So, the trend toward adopting gases has reached the agriculture, aquaculture, and medical fields. That’s very interesting. I expect that the industrial gases industry will surprise us with even more unexpected ways for using gases going forward. It truly is an invisible industry, or rather, it has a lot of invisible latent potential. I think that Japan is extremely fortunate to have a global gas major such as Nippon Sanso Holdings.

Nagata: If we can fully realize the potential of the industrial gases business and continue contributing to the development of industries and the solution of social issues, then we are sure to achieve sustainable growth. I want to apply the power of industrial gases across a wider range going forward, including social issues and new fields following the development of industries. Pursuing this goal is our direction as an industrial gases manufacturer.

Takeo Kikkawa

Born in 1951 in Hajikamimura (now Arita City) in Wakayama Prefecture. Graduated from the Faculty of Economics, The University of Tokyo, and obtained a PhD in Economics from the Graduate School of Economics, The University of Tokyo. Served on an expert panel for METI discussing the composition of electric power sources for 2030. Professor, Graduate School of International Management, International University of Japan. Professor Emeritus, The University of Tokyo. Professor Emeritus, Hitotsubashi University.

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