Challenges and Uncertainties Surrounding Japan’s Hydrogen Strategy

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Japan’s ambitious National Hydrogen Strategy, launched in 2017, has encountered obstacles and setbacks, with a substantial portion of the allocated funds being spent on unsuccessful initiatives. 

“When Japan embarked on its National Hydrogen Strategy in 2017, it had ambitious plans for widespread use of hydrogen to transform and decarbonise its economy. Since then, a review of the US$3.4 billion spent in 2021 revealed that “70% of the funds spent on the Hydrogen Society Vision was spent on bad ideas,” mentioned Institute for Energy Economics and Financial Analysis.

Notably, relying on fossil hydrogen, the Hydrogen Energy Supply Chain (HESC) project has proven to be a failure within Japan’s hydrogen plans.

In response to these challenges, Japan has released an updated Basic Hydrogen Strategy with a renewed commitment to invest over US$100 billion and collaborate with Australia’s hydrogen supply chain. 

However, the HESC pilot project, which received funding from the Australian and Victorian governments and Japan’s Green Innovation Fund, requires additional investments to achieve commercial scalability.

A significant hurdle lies in the project’s carbon capture and storage (CCS) component, which demands substantial financial resources similar to the Gorgon project. Coal-based hydrogen production, which is emissions-intensive, relies on sub-seabed offshore geological storage to sequester CO2 emissions. Yet, the availability and effectiveness of offshore storage sites and the oversight of carbon sequestration still need to be determined.

Forecasts indicate that renewable-based hydrogen will become more cost-effective than coal-based hydrogen by 2030. However, transporting hydrogen over long distances presents challenges, including substantial energy losses during shipping and regasification. 

The costs associated with transportation alone may exceed the target price for delivered hydrogen, even if production costs are low.

These complexities raise questions about the viability of the HESC project. Prioritising hydrogen production closer to end-use locations, rather than relying on low-cost hydrogen delivered over long distances, is a more favourable approach. 

Japan holds great potential to meet its energy needs through clean power from renewables, facilitating pollution reduction and emissions mitigation.

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