R&D Management of NEDO

1. September 2, 2013 Yoshiaki Ohisa Director-General, International Department R&D Management of NEDO

2. What’s NEDO As Japan's largest public management organization promoting research and development as well as the dissemination of energy, environmental and industrial technologies, NEDO has a crucial mission to carry out. • Addressing energy and global environmental problems • Enhancement of Japan’s industrial competitiveness Chairman: Mr. Kazuo Furukawa Organization: - Incorporated administrative agency under the Ministry of Economy, Trade and Industry (METI) of the Japanese government - Established in 1980 Location: Kawasaki City, Japan Personnel About 800 Budget Approximately 1.2 Billion USD (2013 fiscal year) (100Yen/USD)

3. Organization (as of July, 2013) General Affairs and Policy Planning Department Personnel Affairs Department Accounting Department Inspection and Operational Management Department Assets Management Department Chairman Auditors Information and Systems Department President Auditor Support Office Evaluation Department Public Relations Department Executive Directors Energy and Environment Center Energy Conservation Technology Department New Energy Technology Department Head Office International Affairs Department Smart Community Department Environment Department Kyoto Mechanisms Promotion Department Industrial Technology Center Technological Development Promotion Department Electronics, Materials Technology and Nanotechnology Department Biotechnology and Medical Technology Department Overseas Offices Washington, Silicon Valley, Europe, Beijing, Bangkok, New Delhi Branch Offices Kansai

4. Overseas Offices Washington (USA) Beijing (China) Kawasaki head office (Japan) Europe (Paris, Brussels) Silicon Valley (USA) Bangkok (Thailand) New Delhi (India)

5. Status of NEDO • As an incorporated administrative agency under the jurisdiction of the Ministry of Economy, Trade and Industry(METI), NEDO draws on the combined efforts of industry, academia and government as well as its sophisticated management know-how. Ministry of Economy, Trade and Industry: METI Coordination with policymaking authorities NEDO Citizens • Promotion of R&D projects • Advanced R&D project management • R&D activities with flexible and agile project management Dissemination of information Improved Accessibility Success-oriented Operation Industry Universities Public research laboratories

6. NEDO’s Role

7. 1.0 1,036 8.0 NEDO Budget for FY2013 100 ※ Technology Seed Development Activities National Projects (Mid- to long- term high risk research and development) Practical Application and Commercialization Promotion Activities ※Supplementary budget for 2012 (Innovation Promotion Program) ●Storage Batteries and Energy Systems 〈77〉 ●New Energy 〈291〉 ●Energy Conservation Technology 〈96〉 ●Clean Coal Technology (CCT) 〈44〉 ● Electronics, Information and Communication 〈130〉 ● Environment and Resource-saving 〈15〉 ●Biotechnology 〈37〉 ●Materials and Nanotechnology 〈36〉 ●Robot technology 〈9〉 ●Support of international expansion〈260〉 ※including Global Warming Mitigation Technology Promotion Project ●Crossover and Peripheral Fields 〈16〉 ●New manufacturing technology 〈9〉 ● IT integration 〈15〉 Global Warming Countermeasures Administrative and general expense ● Kyoto Mechanisms Credit Acquisition Program ● Global Warming Mitigation Technology Promotion Project Unit : Million USD 136 65 7

8. NEDO’s project management cycle • Define project scope and develop project basic plan based on industrial technology policy • Compile outcomes from evaluations and improve project management ability • Plan • Project Planning = • Do • Project Implementation • Action • Improvement • Feed-back Optimal Project Management = = Check Project Evaluation • Select and formulate project implementer(s) • Decide project implementation structures = • Define and establish Project Evaluation System according to PDCA cycle.

9. NEDO R&D Management Reflection of Assessment results Dissemination of achievements in society Project Planning Project Formation Implementation Interim evaluation And Post project Evaluation Follow-up Monitoring and Evaluation Extract technical issues by exploring seeds and creating roadmaps Perform project management activities such as schedule control, project progress review, etc. Conduct interim assessment while projects are in progress and reflect assessment results in subsequent project management activities such as the implementation system revision of target, etc. For completed projects, identify cases where achievements are reflected in commercialization and identify and analyze success factors Draw up basic plans by setting project technical targets and examining possibilities for commercialization, intellectual property strategies, etc. Plan and select project based on Japan’s energy and industrial technology policies Survey and compare peripheral technologies Select best candidates for implementing projects from industries, academia and government through public solicitations and screening Examine process from strategy formulation to commercialization and carry out publicity activities, etc. After project completion, perform ex-post assessment to identify achievement and reflect them in future project planning and implementation Implement management activities such as team organization, role assignment, etc.

10. Typical Lifecycle of NEDO’s Projects • Close relationship with industry through regularly conducted “Interview with Companies and Universities.” • Analysis of technology and industry trends • Utilization of “Strategic Technology Roadmaps” and human network during the technology development process. • Project planning based on the public opinion. • Extraction of important technology targets Feedback • Selection of project implementer • Decision of project implementation structure Compilationof management know-how • Public solicitations and screening. • Refer to the result of the evaluation committee. • Concentration on successful projects based on interim evaluations • Readership of Project leader • Reflection of interim evaluation results. • Project acceleration funds. • Final evaluation and follow up monitoring and evaluation. • Share the knowledge and know-how and reflect them to related projects. • Dissemination of achievements and follow-upmonitoring

11. Strategic Technology Roadmap NEDO revises Roadmap every year with support from over 800 experts. The Strategic Technology Roadmap consists of three elements: Dissemination scenario for “new energy development” Scenario for Dissemination Shows the paths through which R&D outcomes go out into the world as well as relevant measures involved. Technology overview for “new energy development” Technology Overview Gives an overview of technologies in each industrial technology field. Key technologies are also described. Technology roadmap for “new energy development” Technology Roadmap Shows, on the axis of time as milestones, what functions, among others, need to be improved or advanced. ( Total 31 fields ) （Source: The Strategic Technology Roadmap 2010） URL: http://www.meti.go.jp/english/press/data/20100614_02.html )

12. Screening process for project implementer Implementer (Companies, Universities, etc) public solicitation Submit Proposal N E D O Evaluation Committee for Proposal selection • External experts selected evaluate the proposals based on criteria that NEDO determined • 5-7 External experts are selected by NEDO Committee for contract review • NEDO board members determine project implementer referring to the result of Evaluation Committee for Proposal selection 12

13. Implementation Structure for R&D Projects NEDO uses a transparent public solicitation process to select project participants. In addition, NEDO identifies and establishes the most suitable research structure and supports projects by providing process management and external information and by facilitating international standardization. • Examples of project implementation structures: II. Different groups entrusted with different research themes • R&D entrusted to • industry-academia consortium NEDO NEDO PL Entrustment or subsidy PL Entrustment Entrustment Theme 1 Theme 2 Theme 3 University D XX Research Association Company A Company D Company G AIST Joint research Secondment Secondment Secondment Company B University E University H Company A Company B Company C University C University F University I • Leveraging industry/academia know-how allows difficult technology issues to be resolved • Flexible R&D for each theme • Competitive R&D among different research teams 13

14. NEDO Example of National Project Implementation Structure Project Leader (PL) Promotion and Advisory Committee 1. Project Development of Technologies for Hydrogen Production, Delivery and Storage Systems 2. Project Duration 2008-2012 3. Budget 7.4 Billion yen (for 5 years) Example of target equipment and systems

15. Pre-project evaluation During project planning (One year before starting) Interim evaluation In the middle of project term (3rd year) Post-project evaluation One year after project completion Follow-up monitoring & evaluation For five years after project completion ▼ ▼ ▼ ▼ Project implementation (5 years) Post-project activity NEDO Project Evaluation System(National Project/ Medium- to Long-term, High-risk) <Peer Review/Panel> <Questionnaire/Interview> • Identifying the effects of national project implementation • Improve accountability • ・Improve management • Modification (e.g., acceleration, expansion, reduction or suspension) of project process • Evaluation of achievements • Lessons will be reflected in new project formation • Project basic plan • Identifying relevant international and domestic technology trends • Decision of the midterm and final targets Show viewpoints ☆Compile lessons learned from evaluations in “NEDO R&D Project Management Guideline” to improve NEDO project management ability. Feedback

16. Standard Evaluation Criteria *Only for interim evaluations

17. R&D Evaluation Methodology (Rating Method) Evaluation Criteria Average Rating by evaluator 1. Political positioning and necessity 2.3 A A B B B B 2. Project management 1.8 A B C B C B Example 3. R&D achievements 1.5 B C C C B B 4. Prospect for practical application and commercialization 1.2 B B D C C C • Purposes and Utilization of the Rating Method: • To clearly indicate evaluation results. • To use as a reference for discussion when compiling evaluation reports. • To use as complementary material for evaluation reports. • To use as a criteria to determine the accomplishment level of NEDO’s mid-term plan. • Rating Method: • Each evaluator grades A, B, C or D for each evaluation criteria. • A: Excellent, B: Good, C: Acceptable, D: Not acceptable • A=3, B=2, C=1, D=0 • An average rating of evaluators is used as an indicator.

18. Utilization of Evaluation Results • Interim Evaluations (Key of Plan-Do-Check-Action approach) • Interim evaluation is conducted to improve an ongoing NEDO project. • Interim evaluations may result in modification or termination of projects. • Responses to Interim Evaluation Results • The total does not equal the sum of individual evaluations because multiple evaluations would be applied for a project (e.g. evaluation per themes)

19. Responses to Interim Evaluation Results（Example） • High Molecular Polymer Project • FY2001～2007／75M$ • Interim Evaluation FY2004 • Responsesto Interim Evaluation Results • Selecting and Focusing • Themes: 51 →　15 • Companies: 22 →　16 • Modification • Stage Gate Evaluation (every year) • Milestone Target As the result of post project completion Practical Applications in 6 companies

20. Utilization of Evaluation Results Score Results for Post-project Evaluations (Example) Excellent X+Y=4 60% Excellent (X+Y≥4.0, all 4 criteria evaluated ≥1.0) X+Y=3 Good Prospects for practical application (Y) 80% 60% 20% = + Good (X+Y≥3.0, all 4 criteria evaluated ≥1.0) R&D achievements (X) NEDO targets an excellent rating of 60% and a good rating of 80% for Post-project Evaluation Results for five years.

21. Collaboration with Industry ■Domestic alliance that includes a broad range of sectors and industries ■Planning and promotion of the following activities: ・Developing overseas ties/enhancing strategies ・Improve measures toward global standardization ・Establish roadmap 397 JSCA member companies (As of Nov. 2012) ・Governments, municipalities ・Manufacturers ・Universities　　　　　　 ・Infrastructure ・Developers 　　・Services, ・Utilities other JSCA general meeting held in Tokyo in June 2011 JSCA established in April 2010 at the Japan Federation of Economic Organizations Hall

22. Conclusion • NEDO is not only funding agency, but also project management agency. • Promotion of R&D through “selecting and focusing” and acceleration funding are based on Project Management.

23. Thank you for your kind attention. http://www.nedo.go.jp