IEEJ：March 2019○ｃIEEJ 2019
Special Bulletin

A Japanese Perspective on the International Energy Landscape (418)March 8, 2019

Globally Growing Interest in and Hopes on Hydrogen
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan

From late February to early March, I toured London, Riyadh and New York to discussvarious energy topics with government officials, energy industry stakeholders and experts. Throughthese discussions, I felt that interest is globally growing in hydrogen as an innovative technology
option. Over the past several years, the Institute of Energy Economics, Japan, has continued to provide
an analysis on hydrogen in its annual long-term global energy outlook, IEEJ Outlook. Until three years
ago, however, such analysis had not necessarily attracted great global interest. Apparently, frank
responses to our decision to take up hydrogen in the annual outlook had not necessarily been favorable.
In the past few years, however, the situation has turned around, making hydrogen a key topic for global
discussions.

There are various background factors behind the turnaround. A basic factor among them isthat hydrogen has attracted attention anew as one of the innovative technology options to substantiallyreduce greenhouse gas emissions to promote decarbonization under the Paris Agreement. While urging
each country to set and attain a voluntary GHG reduction target known as nationally determined
contribution, the Paris Agreement calls for limiting the average global temperature rise to “well below
2℃” above preindustrial levels. It is well known that fundamental GHG emission cuts would beindispensable for realizing the temperature target. In the circumstances, major Western countries havecome up with targets for cutting GHG emissions by 80-90% by 2050. To attain such steep emission
reduction, the power generation sector among major GHG emitters will have to cut emissions to zero.
In this respect, hopes have globally grown on renewable energy as a zero-emission power source.

To cut emissions by 80-90%, however, the power generation sector’s reduction of emissions
to zero alone would not be enough. Transport, industry, buildings and other major sectors would haveto make fundamental decarbonization efforts. Hydrogen has attracted attention as an option for allthese sectors to contribute to decarbonization. A “hydrogen society” where hydrogen would play key
roles in various fields has attracted interest as a decarbonized society. Interest in hydrogen thus grows
more and more as decarbonization efforts become more serious. In this sense, serious decarbonization
1

IEEJ：March 2019○ｃIEEJ 2019
efforts have become a background factor for growing interest in hydrogen particularly in Europe.

The second factor behind growing interest in hydrogen is related to a hydrogen supply side
problem. Hydrogen contributing to building a carbon-free society must be free from CO2 as a matterof course. Manufacturing and providing massive CO2-free hydrogen efficiently holds the key to ahydrogen society. An attention-attracting potential option is green hydrogen made from renewableenergy. While falling costs for power generation using renewables such as wind and solar
photovoltaics are attracting global interest, manufacturing hydrogen from renewable energy is viewed
as significant for addressing the intermittency of renewables and utilizing surplus electricity. In thisrespect as well, Europe has achieved renewable energy diffusion and boosted interest in the effective
utilization of renewables.

Another matter attracting attention on the manufacturing and supply side for CO2-freehydrogen is the presence of fossil fuel producing and exporting countries. Fossil fuels covering oil,coal and natural gas account for about 80% of global primary energy supply and are predicted in major
long-term energy outlooks to remain a dominant energy source, though with their share of global
energy supply decreasing. However, it is pointed out that if energy transition toward a carbon-freesociety makes more rapid progress than expected, demand for fossil fuels may decelerate and decline.
In fact, we see anti-coal movements and arguments about peaking oil demand. If oil and coal demand
peaks and falls rapidly, oil and coal resources may become unburnable assets for their owners.
Then, a meaningful option for fossil fuel resource owners may be to utilize and export CO2free hydrogen that they will produce from fossil fuels while capturing and storing relevant CO2
emission with CCS technology. Such CO2-free hydrogen, called blue hydrogen, is now seen as one of
the survival options for fossil fuel resource owners amid transition to a carbon-free society. The
hydrogen option has thus become a great matter of interest in Australia, Brunei, Saudi Arabia and theUnited Arab Emirates. In Norway and the Netherlands among European countries, hydrogen option
plans using existing natural gas infrastructure have emerged.

In Europe, even the cleanest fossil fuel of natural gas has come under decarbonizationpressure. Under the recognition of natural gas as one of the fossil fuels, arguments are emerging for
decarbonizing gas continuing to be used in a carbon-free society. The blue hydrogen concept has
attracted attention in regard to the decarbonization of gas which I would like to take anotheropportunity to discuss.

To make great contributions to full-blown decarbonization, hydrogen will have to overcome
numerous challenges and hurdles. Hydrogen supply costs will have to be substantially reduced for theappropriate development of relevant infrastructure. Technological, economic and social hurdles are2

IEEJ：March 2019○ｃIEEJ 2019
too high to be cleared promptly or easily. For example, Japan’s basic hydrogen strategy includes atarget of cutting hydrogen supply costs to 30 yen/Nm3 or one-third of the present level and to 20yen/Nm3 or one-fifth. What specific initiatives Japan would take to attain such target as a top runnerfor hydrogen use is attracting global interest. Important for reducing costs and diffusing innovativetechnologies are the promotion of technological competition, international cooperation andtechnological support under integrated policies. In this respect, Japan initiated an international
ministerial conference on hydrogen last year and plans to promote discussions on hydrogen at a Groupof 20 summit this year while following up on the ministerial conference, attracting global attention.

At a time when interest in and hopes on hydrogen’s roles are growing globally, theimplementation of integrated long-term policies and strategies is becoming more important. Both thegovernment and private sectors are required to enhance competition for developing hydrogentechnologies, but at the same time are required to promoting appropriate international cooperation as
well. It is significant for Japan to strengthen relevant initiatives to play a central role in the hydrogenfield for the world.

Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3