Japan considers funding hydrogen plan with $113 billion investment

Shoko Oda, Bloomberg April 04, 2023

(Bloomberg) – Japan will consider setting aside 15 trillion yen ($113 billion) in public and private-sector funds over the next 15 years to create hydrogen and ammonia supply chain to help clean up its energy sector.

The Asian nation will consider updating its basic hydrogen strategy from 2017, with a target to use roughly 12 million tons of the fuel source by 2040, according to a proposal from a panel in Cabinet Secretariat held on Tuesday. The Japanese government will put together a detailed plan on the strategy revision by the end of May.

The move comes as Japan doubles down on plans to use hydrogen and ammonia to reduce emissions and achieve carbon neutrality by 2050. Electricity generators like Jera Co. are working to burn small amounts of hydrogen and ammonia alongside liquefied natural gas and coal at thermal power plants, with a goal to eventually completely replace the fossil fuels.

Japan already has a goal to implement 3 million tons of hydrogen use by 2030, and 20 million tons by 2050. Both public and private sectors in the nation have formed partnerships with countries like the United Arab Emirates and Australia to create supply chains that would bring enormous seaborne cargoes of the fuel to the island nation.

Hydrogen and ammonia can be produced from renewable power sources to create carbon-free fuels, but technologies to make and transport them are still in early stages of development, with challenges like high costs that must be resolved before wider use is possible. 

Co-firing hydrogen and ammonia along with fossil fuels has also spurred debate among Group of Seven countries, whose energy and environment ministers are meeting later this month in Hokkaido, Japan. Critics say the plan is costly, inefficient and could increase emissions of other greenhouse gases even as it reduces carbon dioxide pollution.

The Japanese government also announced an action plan that includes speeding up development of domestically-made renewable energy, such as perovskite — a thin, flexible solar cell — and floating offshore wind. Japan will consider using its new sovereign bond to help fund development within the industry. 

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