The Kishida administration has promoted the establishment of international hydrogen supply chains in cooperation with countries in the Indo-Pacific, Europe, and the Middle East. Both the public and private sectors in Japan have already developed partnerships with countries such as Australia and the United Arab Emirates. In particular, Australia has been regarded as one of the most important hydrogen energy partners for Japan as demonstrated in the successful project for the world’s first liquefied hydrogen transportation vessel, the Suiso Frontier.
As mentioned by Chief Cabinet Secretary Matsuno Hirokazu at a cabinet meeting on June 6, the Japanese government considers hydrogen to be “an industrial sector that can make a triple achievement of decarbonization, stable energy supply and economic growth in one shot.” On the same day, the Kishida administration announced Japan’s new hydrogen strategy, its first in six years.
Previously, the Abe administration formulated the country’s first-ever national hydrogen strategy (the Basic Hydrogen Strategy) in December 2017. It stimulated the creation of energy policies in other countries; Australia, the European Union, Canada, Chile, France, Germany, Hungary, the Netherlands, Norway, Portugal, South Korea, and Spain all formulated their own hydrogen strategies after Japan.
At the same time however, there was negative feedback and criticism on the Abe administration’s hydrogen strategy. For example, the Renewable Energy Institute (REI) based in Tokyo harshly criticized the 2017 hydrogen strategy, pointing out that it prioritized fossil-fuel based gray or blue hydrogen. REI argued that the feasibility of establishing a so-called hydrogen society is unattainable in reality, calling the government’s vision a “fantasy.” The REI moreover contended that the government’s strategy on fuel cell vehicles (FCVs) was clearly a “complete failure,” calling for fundamental revision of the 2017 hydrogen strategy.
The 2023 hydrogen strategy is composed of five chapters. The introductory first chapter describes the Basic Hydrogen Strategy as the nation’s will to achieve carbon neutral goals and a hydrogen-based society. The Basic Hydrogen Strategy deals with not only hydrogen but also ammonia and other hydrogen-related energy. It states that it will be revised in about five years.
In the second chapter, Japan’s basic hydrogen policy is specified. First, it reconfirms that Japan’s hydrogen policy is based on the premise of S+3Es (safety + energy security, economic efficiency, and environment) amid the Russia-Ukraine War and the global energy crisis. The chapter then outlines the hydrogen polices of the United States, European countries, China and other Asian countries, and Australia.
The third chapter outlines Japan’s basic strategy on hydrogen and ammonia with the following specific goals: expansion of supply and creation of demand, transition to low-carbon hydrogen, hydrogen production using renewable energy and the establishment of a supply chain in Japan, establishment of international hydrogen energy supply chains, use of hydrogen and ammonia in power generation, mobility of hydrogen energy including FCVs and development of hydrogen stations, and the use of hydrogen in industries such as green steel production and automobile production. In addition, the use of e-methane is considered as a pragmatic effort.
To this end, the government plans to fill a cost gap between hydrogen-ammonia and fossil fuels by providing necessary subsidies. “First movers” shall be able to receive the subsidy for 15 years in principle. Moreover, the government plans to subsidize the development of infrastructure for hydrogen energy, such as tanks and pipelines. It plans to financially support three large-scale points in major cities and five middle-scale areas.
The fourth chapter sets forth a strategy to improve hydrogen’s competitiveness in industries. The Hydrogen Industry Strategy prioritizes the following five areas in which Japanese companies have advantages over foreign competitors in light of cutting-edge technology: hydrogen supply (hydrogen production and hydrogen supply chain), decarbonized power generation, fuel cells, hydrogen use (iron/steel, chemical products and hydrogen-fueled vessels), and hydrogen compounds (fuel ammonia and carbon-recycle products). Furthermore, nine strategic areas, such as electrolysis development, fuel storage batteries, and large-scale tankers for the transportation of hydrogen, are specified as targets of investment.
In the final chapter, the Hydrogen Safety Strategy is stipulated to enhance the safety of hydrogen energy. The Hydrogen Safety Strategy attempts to improve the existing safety regulations with the following three aims:to fully utilize scientific data, to implement new rules toward a hydrogen society, and to establish a hydrogen-friendly environment.
In essence, the 2023 Hydrogen Strategy has four goals: First, to increase the supply of hydrogen and ammonia in Japan from 2 million tons to 3 million tons by 2030, then to 12 million tons by 2040, and reaching 20 million tons by 2050. Second, the strategy seeks to reduce hydrogen supply costs in Japan from 100 Japanese yen per normal cubic meter (Nm3) to 30 yen per Nm3 by 2030 and to 20 yen per Nm3 by 2050. Third, the strategy seeks to expand the amount of of water electrolysis equipment made by Japanese companies to approximately 15 GW by 2030 on a global scale. And finally, the strategy aims to attract public and private investments into the hydrogen and ammonia supply chain sector, setting a goal of more than 15 trillion yen ($107.5 billion) over the next 15 years.
The new hydrogen strategy also makes it clear that the Japanese government will subsidize the establishment of the hydrogen supply chain and the development of infrastructure based on “carbon intensity.” This means that the Japanese government will subsidize projects based on threshold of clean hydrogen, based on carbon intensity, rather than “color” of hydrogen. The threshold of clean hydrogen is defined as 3.4 kg of C02 emissions per kg of hydrogen on a Well-to-Gate basis, and the threshold for ammonia is defined as 0.84 kg of c02 emissions per kg of ammonia on a Gate-to-Gate basis.
At a press conference, Minister of Economy, Trade and Industry Nishimura Yasutoshi stated, “We would like to steadily build a supply chain for hydrogen in Asia and the Indo-Pacific region by further expanding Japan’s (hydrogen) technology, which has been world-leading.” In order to promote Japan’s policy toward hydrogen and ammonia, the Ministry of Economy, Trade and Industry (METI) established a new division for hydrogen and ammonia policy separately from the hydrogen and fuel cells strategy office in July 2023.
Thus, although there has been critical feedback on the Japanese government’s hydrogen policy, it is fair to observe that Japan has sought to achieve the hydrogen-based society as well as decarbonization goals toward 2050. Likewise, it can be argued that Japan’s new hydrogen strategy is one of the commitments by the Kishida government to facilitate the establishment of international hydrogen supply chains in the midst of the global energy crisis.