Japan Hydrogen Basic Strategy

In June 2023, the Japanese government revised its "Hydrogen Basic Strategy" for the first time since its creation in 2017. The revised Hydrogen Basic Strategy sets out Japan's hydrogen strategy for the next five years.

Background

In 2017, Japan adopted the world's first national strategy relating to hydrogen. Since then, many other countries such as the United States, Australia and major European countries have adopted hydrogen strategies. The Japanese government held a meeting on June 6, 2023 among the relevant ministers and approved the revised "Hydrogen Basic Strategy"¹ (the "Basic Strategy"). The Basic Strategy will be revisited in five years.

The Basic Strategy covers not only hydrogen but also ammonia, synthetic methane (or 'e-methane'), and synthetic fuel.

Main Goals

The Basic Strategy sets out a number of goals relating to hydrogen and ammonia. In particular, it aims to achieve the following four main goals:

• increase supply of hydrogen and ammonia in Japan, to 3 million tons by 2030, to 12 million tons by 2040 and to 20 million tons by 2050;
• reduce hydrogen supply cost in Japan, to JPY 30 per Nm3 by 2030 and to JPY 20 per Nm3 by 2050;
• expand the number of water electrolysis equipment with Japan-made parts in them, to approximately 15GW globally by 2030; and
• attract public and private investments into the hydrogen and ammonia supply chain sector, of more than JPY 15 trillion over the next 15 years.

If Japan can achieve the above 12 million tons of hydrogen supply by 2040, then it would be sixfold from the current level. If it can achieve the above JPY 30 per Nm3 by 2030, then it would be around one-third of the current level. If it can also achieve the above 15GW by 2030, then it would be equivalent to around 10% of the world share at the time.

In terms of establishing an international supply chain, Japan intends to strengthen its ties with potential hydrogen exporting countries, such as those in North America, Middle East and Asia Pacific. The Japanese government understands that there may be various risks associated with the establishment of such an international supply chain and therefore intends to provide support with regards to the financing of projects related to the establishment of such supply chain. For example, it will encourage introduction of relevant insurance in the private sector and will also consider ways for Japan's public-sector agencies to take some of the above supply chain-related risks (though nothing more specific was mentioned in the Basic Strategy).

Hydrogen Industry Strategy

In order to achieve the above main goals, the Basic Strategy introduces a new concept called "Hydrogen Industry Strategy", which identifies specific areas where Japanese companies have advantages over their global competitors in terms of cutting-edge technology. In particular, it includes the following five areas:

• hydrogen supply (including hydrogen production and hydrogen supply chain);
• decarbonized power generation;
• fuel cells;
• hydrogen use (including iron/steel, chemical products and hydrogen-fueled vessels); and
• hydrogen compounds (including fuel ammonia and carbon-recycle products).

In terms of transportation of hydrogen, Japan will consider various options such as liquified hydrogen, MCH (methylcyclohexane), and ammonia. Japan will also support the development and use of large-scale hydrogen carrier vessels.

In terms of power generation, Japan will support the development of high-hydrogen-mixed combustion systems; in addition to the development of 30%-hydrogen-mixed combustion systems and 100%-hydrogen combustion systems.

In terms of fuel ammonia, Japan will support the development of new technologies relating to production of ammonia, and also new technologies relating to high-ammonia-mixed combustion systems. Japan also intends to support the use of ammonia as a carrier of hydrogen (as mentioned above).

Hydrogen Safety Strategy

In order to achieve all of the above, the Basic Strategy recognizes the importance of safety regulations when promoting hydrogen. It aims to re-organize and provide further clarity on the various existing safety regulations, under a concept called "Hydrogen Safety Strategy". In particular, it aims to do the following:

• to fully utilize scientific data;
• to implement new rules towards a hydrogen society; and
• to establish a hydrogen-friendly environment.

Conclusion

With the release of the revised Basic Strategy, it has become clear that hydrogen will play an important role in Japan's road to achieving carbon neutrality by 2050. The relevant ministries are expected to implement various measures to realize the goals and methods set out in the Basic Strategy, including the proposed JPY 15 trillion investment and the proposed supply chain financing support. The Basic Strategy will therefore have a significant impact on the entire hydrogen industry.

_{1 https://www.meti.go.jp/shingikai/enecho/shoene_shinene/suiso_seisaku/20230606_report.html}

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