Mid-term Environmental Targets up to Fiscal 2010 and Results

Nippon Kayaku achieved its mid-term environmental targets for four items in the three areas outlined in its Corporate Master Plan for the Environment running up to fiscal 2010, including the reduction of VOCs.*1Although only the amount of landfill waste had not reached the target slightly, since this is influence of waste lagoon treatment, it is transient.

• *1Volatile Organic Compounds (VOCs)

New Mid-term Corporate Master Plan for the Environment Established for the Period Running up

Nippon kayaku have formulated a new set of mid-term environmental targets for the period running up to fiscal 2020 that consist of six items in the same three areas, in order to tackle global environmental issues on a greater company-wide basis. Using the three core areas that formed the basis for previous mid-term environmental targets, including “Reducing Our Chemical Substance Footprint,” “Prevention of Global Warming,” and “Reduction of Waste,” we have newly added the reduction of COD emissions to the chemical emissions reduction area and the improvement of our recycling rate to the reduction of waste area. We have also changed the name of the “Reduce Landfill Waste” item to the “Reduce the Zero Emission Rate”*3 item.

• *2COD: Chemical Oxygen Demand. An indication of the amount of oxygen needed to oxidize a subject compound by oxidizing subject compounds under a predetermined condition using oxidizing agents, then measuring the amount of oxidizing agents used in the process. A high COD level means that the water contains a large amount of organic chemical substances that consume oxygen. With lower oxygen content the water cannot sustain biological life, which stops the natural purification process leading to a muddied and odorous water environment.
• *3Zero emission rate: The amount of internal and external landfill waste produced as a percentage of total waste produced.

Harmful Air Pollutants

Under the initiative of the Japan Chemical Industry Association, the industry is taking action to voluntarily manage and reduce emissions of 12 control substances*4 that are deemed to be harmful air pollutants. Of these 12 control substances, we still use five, but stopped the use of benzene in 1995. Emissions of chloroform and ethylene oxide, on the other hand, have been cut to zero since fiscal 2007. Emissions of dichloromethane had also been cut to zero since fiscal 2007, but in fiscal 2010, dichloromethane emissions amounted to 3.3 tons. Formaldehyde emissions have also dropped with each passing year and totaled just 0.03 tons in fiscal 2010. Compounds we currently emit that are included in the 12 control substance are dichloromethane and formaldehyde only, and going forward we are will continue to work toward reducing the use and emissions of these compounds further.

• *412 control substances subject to voluntary controls: acrylonitrile, acetaldehyde, vinyl chloride monomer, chloroform, 1,2-dichloroethane, dichloromethane, tetrachloroethylene, trichloroethylene, 1,3-butadiene, benzene, formaldehyde, and ethylene oxide.

Complying with the VOC Regulation

The 2004 revision to the Air Pollution Control Act marked the start of emissions controls for volatile organic compounds (VOCs). Nippon Kayaku, which possesses a single facility subject to the VOC emissions controls, implemented VOC reduction activities aimed at achieving the target set in its Corporate Master Plan for the Environment to cut emissions of VOCs into the atmosphere by 50%, over fiscal 2000 levels, to less than 70 tons in fiscal 2010. VOC emissions in fiscal 2010, the final year of the Corporate Master Plan for the Environment, totaled 54 tons, which represents a 61% reduction over fiscal 2000 levels and clears the target laid out in the master plan.

The new medium-term environmental targets running up to fiscal 2020 expand the scope of data compilation to include all chemical substances discharged into the atmosphere. The new scope includes chemical substances that are produced through reactions as well as the chemical substances conventionally subject to government ordinances and the Japan Chemical Industry Association voluntary standards. The target for VOCs is to reduce emissions into the atmosphere to less than 45 tons by fiscal 2020. The Nippon Kayaku Group stands committed to making the self-initiated efforts needed to achieve this target.

PRTR^*5 Initiatives

Since 1995, the Nippon Kayaku Group has participated in the Japan Chemical Industry Association led initiative to reduce compounds identified in the PRTR regulation, working to reduce its emissions of PRTR controlled compounds into the environment.

In fiscal 2010, our emissions of PRTR controlled substances totaled 39 tons, and increased 39 % from 28 tons of the previous year. Although toluene represents the largest source of PRTR controlled emissions, toluene emission decreased from 21.8 tons in fiscal 2009 to 17.4 tons in fiscal 2010. Moreover, the rate of toluene emission also decreased from 78 % to 44 % of the total.

• *5PRTR: Pollutant Release and Transfer Register. The PRTR regulation is designed to prevent occurrences of environmental safety incidents by encouraging businesses to improve their own chemical substance management.

Preventing Air Pollution

Air pollutants sulfur oxide (SOx)*6 and nitrogen oxide (NOx)*7 are emitted during boiler operations. To date, the Nippon Kayaku Group has gradually shifted the fuel for its boilers from Bunker C heavy oil with high sulfur content to other lower sulfur content fuels such as Bunker A, as well as LPG and natural gas, which are sulfur free. We continued this transition in fiscal 2010 as well. In fiscal 2008, we successfully made significant reductions in our SOx emissions, and by fiscal 2010 we had cut these emissions in half. The Nippon Kayaku Groups is firmly committed to reducing its air pollutant emissions further through proper maintenance practices as well as regular inspections and upkeep.

• *6SOx (sulfur oxide): SOx is emitted when fossil fuels that include sulfur are burned. SOx reacts with water in the atmosphere to form sulfuric acid and sulfurous acid, which are causes of air pollution and acid rain.
• *7NOx (nitrogen oxide): NOx is produced when burned chemical substances react to nitrogen in the air and when fuels and chemical substances that include nitrogen compounds such as coal are burned. Not only a major cause of air pollution including photochemical smog and acid rain, but NOx have a harmful effect on the human respiratory system. In addition, NOx is also known to include the greenhouse gas dinitrogen monoxide.
• *8Dust: Dust mainly refers to fine particular soot found in dust smoke produced when burning fossil fuels. In addition to a major cause of air pollution, humans can contract pneumoconiosis or other harmful health effects when breathing dust in high concentrations.

Preventing Water Pollution

The Nippon Kayaku Group has set voluntary wastewater discharge control standards that are tougher than requirements laid out in national laws and local ordinances.

The Nippon Kayaku Group has made efforts to reduce its COD emissions by employing activated sludge treatment equipment at plants with high levels of COD emissions. On a non-consolidated basis, COD emissions during fiscal 2009 were reduced to 124 tons thanks to the effects of installing and updating new waste liquid treatment equipment. In fiscal 2010, however, COD emissions rose to 159 tons due to minor changes in the production mix. At the same time, nitrogen emissions also increased from 62 tons in fiscal 2009 to 170 tons in fiscal 2010. As a result, we are currently implementing activities geared toward reducing our COD as well as nitrogen emissions.

The Nippon Kayaku Group carries color material-related products including dyes and ink jet printer ink, among others. Our Tokyo and Fukuyama plants, where color material-related products are manufactured, fully decolorize colored wastewater before it is discharged.

• *9SS ( Suspended Solids ) : SS is a water-quality indicator generally referring to insoluble substances of 2 mm or less in diameter suspended in water. The organic matter and metal originating in particulate-like mineral, animals-and-plants plankton and its corpse, a sewer, factory effluent, etc. are contained. The increase in SS worsens transparency, and influences underwater photosynthesis by un-penetrating of light.

Noise Prevention

We conduct our business with a conscious effort to minimize noise pollution in the areas surrounding our factories. We regularly measure noise levels around our factories, making every effort to be a positive member of the local community. As such, any feedback or requests that we receive from local residents at company-sponsored events such as community round-tables are treated with the utmost priority. We also conduct regular work environment measurements in the factory to protect our employees from excessive noise.