Japan: Putting Hydrogen at the Core of its Decarbonization Strategy

This chapter reviews Japan’s hydrogen strategy with a particular focus on its international elements. It begins by outlining Japan’s international commitment to reduce economy-wide greenhouse gas emissions. The chapter then reviews Japan's domestic policy settings designed to support the deployment of hydrogen in power generation, transport, and industrial uses. The chapter then reviews the strategy that the government is using to enable the development of international supply chains to enable the required imports to satisfy projected hydrogen use in the country. It outlines bilateral technology partnerships and international activities within multilateral forums. It concludes with a short discussion of the geopolitical implications of Japan's hydrogen strategy. Japan has been at the forefront of global efforts to increase the role of hydrogen and ammonia as an option for supporting decarbonization. Japan’s government is positioning hydrogen to play a large role in its overall decarbonisation strategy in support of its mid-century, net zero emissions reduction goal. In this context, the Japanese government is supporting the development of technologies on both the supply and demand side, informed by its understanding of feasible decarbonization pathways domestically and the industrial policy opportunities it has identified to promote Japan's technological leadership. Key features of Japan’s strategy are the central focus on the need to import hydrogen and ammonia and the emphasis domestically on the use of hydrogen and ammonia co-combustion in existing thermal power generation as a transition technology, which is not emphasised in other countries’ national hydrogen strategies. In addition, the Japanese government is championing hydrogen and ammonia internationally through forums such as AZEC, which includes proposing ammonia as a technology option for reducing emissions from the power sector in the Asia-Pacific. A key near-term focus on the supply-side is testing the feasibility of different technology options for hydrogen transport, based on the strong emphasis on hydrogen and ammonia imports within Japan’s hydrogen strategy. Coupled with the potential for exporting technologies for hydrogen use, this suggests that new patterns of trade and investment may emerge, although there remain crucial questions about commercial feasibility in addition to technical challenges. Indeed, Japan’s hydrogen strategy is predicated on the ability to build international supply chains at scale. These are currently being enabled by public investment in early-stage projects. These testing different technology options to enable the export of hydrogen to Japan to support domestic decarbonization. Another challenge lies in unlocking hydrogen demand given that processes using hydrogen and ammonia remain more expensive than alternatives in most cases. A case in point is FCVs, in which consumer demand remains far lower than envisioned. In response, the Japanese government is developing a series of policies to reduce the gap between hydrogen and ammonia and best available technologies. The revised 2023 NHS also signalled a shift towards emphasising Japan’s technology leadership in fuel cells and taking a more neutral approach towards end-use sectors. We can expect Japan’s national hydrogen strategy to continue to develop in response to the effectiveness of policies implemented domestically and internationally to increase the demand for, and supply of hydrogen and associated vectors.