The Japanese government has hatched a plan to generate ¥15trn ($107bn) of public and private investment in the country's hydrogen supply chain over 15 years, as part of its long-awaited national H2 strategy update.

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The revised Basic Hydrogen Strategy, released today (Tuesday) also envisages a sixfold increase in the size of the hydrogen supply targeted by the country, rising to 12 million tonnes by 2040, up from the two million tonnes used today — with the help of what appears to be a contracts for difference (CfD)-style subsidy scheme.

Billed as “introductory” and subject to revision, the 12-million-tonne target includes volumes of ammonia, although this is likely to be measured in terms of the weight of hydrogen used to produce it.

The new target appears to act as an interim target amid the previous strategy’s goals of reaching three million tonnes by 2030, and 20 million tonnes by 2050.

To this end, Japan revealed it is now mulling the introduction of a subsidy programme, similar to the contracts for difference-style scheme recently proposed by Germany, that would close the price gap between low-carbon H2 and its cheaper, fossil-based equivalent.

The scheme under consideration would “provide long-term support for (part or all of) the difference between the price expected to generate a reasonable return and the reference price (the parity price of existing fuel)”, the strategy update read.

But the government has not said how much it would put aside to finance this proposed programme — although it noted it has already spent ¥800bn ($5.7bn) subsidising hydrogen-related technology as part of its Green Innovation Fund.

So far, it appears to be banking on the new target and strategy alone to mobilise the ¥15trn it says it wants in public and private hydrogen investment.

Demand-led

The update — six years in the making — follows a similar ideological thread to the previous strategy, emphasising the importance of incentivising domestic demand for hydrogen over stimulating production.

In pursuit of this goal, the document outlines plans to establish five industrial hydrogen clusters over the next ten years, including at least three large-scale bases in metropolitan areas as well as two smaller clusters.

And, recognising that Japan’s relative resource-scarcity would limit domestic production of H2, the country is instead honing in on exporting the country’s technological prowess — introducing a new target of 15GW of electrolyser capacity installed by “Japanese-affiliated” companies across the world by 2030.

“We will support not only research and development but also mass production of hydrogen production equipment, and we would like to grow the hydrogen-related business into a major industry that can be expanded not only in Japan but also overseas,” said the document.

This would give Japanese companies an 11% share of the 134GW global electrolyser capacity Tokyo’s strategy estimates will be operational by 2030.

Japanese companies have long taken this tried-and-tested technology export approach, most recently marketing and co-financing ammonia co-firing technology in coal-dependent south Asian countries — an effort that facing accusations that they are “peddling false narratives” to keep smaller, poorer countries hooked on polluting coal.

But Japan has also been developing this technology for use at home, with a view to keeping its existing coal and gas assets on line.

The new strategy commits to demonstrating up to 30% of ammonia co-firing in a large gas turbine, as well as 50% in a large coal turbine by 2030, as well as developing “mono-combustion” technology — likely 100% ammonia burn — in small gas turbines of 2MW or less.

“In the context of the energy crisis, hydrogen is attracting attention around the world, and countries around the world are now fiercely competing over hydrogen,” Japan’s minister for economy, trade and industry, Yasutoshi Nishimura, said at a press conference today, describing the strategy as “unprecedented [and] comprehensive... with integrated regulation and support”.

He added: "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.”

Similar to the previous strategy, this update also places a strong emphasis on reducing carbon intensity of hydrogen use, rather than focusing on the means of production — so it does not favour renewable hydrogen over blue hydrogen made with fossil gas and carbon capture and storage.

Instead, the new document incorporates Japan’s definition of low-carbon hydrogen of 3.4kg of CO2-equivalent per kilogram of hydrogen produced, on a well-to-gate basis (up to and including the point of production).

This is on a par with European definitions of low carbon hydrogen (which is 3.38kgCO2e/kgH2) but stricter than US or South Korean definitions of “low carbon” hydrogen — 4kgCO2e/kgH2.