HYDROGEN AND FUEL CELLSIN JAPAN

JONATHAN ARIASTokyo, October 2019

EU-Japan Centre for Industrial Cooperation

ABOUT THE AUTHOR
Jonathan Arias is a Mining Engineer (Energy and Combustibles) withan Executive Master in Renewable Energies and a Master in
Occupational Health and Safety Management. He has fourteen years ofinternational work experience in the energy field, with several
publications, and more than a year working in Japan as an energy
consultant. He is passionate about renewable energies, energy transition
technologies, electric and fuel cell vehicles, and sustainability.
He also published a report about “Solar Energy, Energy Storage andVirtual Power Plants in Japan” that can be considered the first part ofthis document and is available in https://lnkd.in/ff8Fc3S.
He can be reached on LinkedIn and at jariasbecerro@gmail.com.

ABOUT THE EU-JAPAN CENTRE FOR INDUSTRIAL COOPERATIONThe EU-Japan Centre for Industrial Cooperation (http://www.eu-japan.eu/) is a uniqueventure between the European Commission and the Japanese Government. It is a non-profit
organisation established as an affiliate of the Institute of International Studies and Training(https://www.iist.or.jp/en/). It aims at promoting all forms of industrial, trade and investment
cooperation between the EU and Japan and at improving EU and Japanese companies’
competitiveness and cooperation by facilitating exchanges of experience and know-how
between EU and Japanese businesses.

(c) Iwatani Corporation kindly allowed the use of the image on the title page in this document.

Table of Contents

Table of Contents ......................................................................................................................... I
List of Figures ............................................................................................................................ III
List of Tables ...............................................................................................................................V
List of Abbreviations................................................................................................................. VI
1. EXECUTIVE SUMMARY ..................................................................................................... 1
2. INTRODUCTION: ENERGY SCENARIO AFTER THE GREAT EAST JAPAN
EARTHQUAKE .......................................................................................................................... 3
2.1. About Hydrogen ................................................................................................................. 7
3. HYDROGEN MARKET IN JAPAN ................................................................................... 11
3.1. Stationary Fuel Cells ........................................................................................................ 21
3.2. Mobility ............................................................................................................................ 32
3.2.1. Fuel Cell Vehicles ..................................................................................................... 34
3.2.2. Refueling Stations ..................................................................................................... 43
3.3. Power Generation ............................................................................................................. 55
3.3.1. Co-firing of ammonia in coal power plants............................................................... 65
3.4. Supply Chains and Hydrogen Carriers ............................................................................. 69
3.4.1. Energy Carriers ......................................................................................................... 73
3.4.2. Liquefied Hydrogen .................................................................................................. 80
From Australia’s brown coal ........................................................................................... 81
From Norway’s natural gas and renewable sources ........................................................ 84
3.4.3. Organic Hydride – Methylcyclohexane (MCH) ........................................................ 84
From Brunei’s natural gas ............................................................................................... 85
From Australia’s solar PV energy ................................................................................... 87
3.4.4. Ammonia ................................................................................................................... 88
From Saudi Arabia’s fossil fuels ..................................................................................... 90
3.4.5. Regional Renewable Hydrogen Supply Chains ........................................................ 91
3.5. Main Hydrogen Research Clusters ................................................................................... 99
3.5.1. Fukuoka Prefecture and Kyushu University ............................................................. 99
3.5.2. Fukushima Prefecture and AIST, FREA ................................................................. 104

I3.5.3. Yamanashi Prefecture and the Yamanashi Fuel Cell Valley................................... 107
3.6. Organizations and Associations ..................................................................................... 112
3.7. Main Private Companies ................................................................................................ 115
3.7.1. Potential Opportunities and Recommendations for European Firms ...................... 119
4. CONCLUSIONS ................................................................................................................. 122
5. REFERENCES .................................................................................................................... 124
ANNEXES ................................................................................................................................ 127

IIList of Figures
Figure 1: Targets for the Electric Power Supply-Demand Structure in Japan in 2030 ................. 4
Figure 2: Overview of Carbon-free Energy Storage Technologies ............................................... 8
Figure 3: Energy System ............................................................................................................... 9
Figure 4: Basic Scheme of Hydrogen Society............................................................................. 11
Figure 5: Strategic Roadmap for Hydrogen and Fuel Cells (June 2014) .................................... 13
Figure 6: Basic Hydrogen Strategy (December 2017) ................................................................ 14
Figure 7: Action Plan in the Strategic Roadmap for Hydrogen and Fuel Cells (March 2019) ... 16
Figure 8: Hydrogen Cost Targets ................................................................................................ 16
Figure 9: Hydrogen Cost Perspective of the Supply Project ....................................................... 17
Figure 10: Ongoing projects of METI and NEDO (Supply Side) ............................................... 17
Figure 11: Ongoing projects of METI and NEDO (Demand Side)............................................. 18
Figure 12: Operation of a Fuel Cell CHP .................................................................................... 21
Figure 13: Ene-farm Market Trends............................................................................................ 22
Figure 14: Dissemination of Ene-farms in Japan. Evolution of Costs and Subsidies ................. 24
Figure 15: Ene-farm Manufacturers Sales Volume Annually (only in Japanese) ....................... 26
Figure 16: Examples of Fuel Cell for Commercial and Industrial Application .......................... 28
Figure 17: Share of Next-generation Vehicles in New Passenger Car Registration (in %) ........ 33
Figure 18: Stock of FCEV as of end 2018 .................................................................................. 35
Figure 19: Targets for the Dissemination of FCVs and HRS in Japan ....................................... 35
Figure 20: How to Calculate the Subsidy for the Purchase of Clean Energy Vehicles in 2018.. 39
Figure 21: Fuel Cell Vehicles and Buses as Emergency Power Source...................................... 40
Figure 13: Stock of HRS as of end 2018 ..................................................................................... 43
Figure 23: Location and Number of HRS and FCVs in Japan as of the end of March 2019 ...... 44
Figure 18: Hydrogen Station SimpleFuelTM ................................................................................ 45
Figure 25: Members of JHyM as of May 2019 ........................................................................... 51
Figure 26: JHyM’s Business Scheme for HRS’s Construction ................................................... 52
Figure 27: JHyM’s Business Scheme for HRS’s Operation ....................................................... 53
Figure 28: Power-to-Gas ............................................................................................................. 55
Figure 29: NOx Emissions Using Water Injection during the Hydrogen and Natural Gas
Combustion ............................................................................................................... 57
Figure 30: P2G Demonstration Project in Hokkaido .................................................................. 58
Figure 31: Demonstration Project in Kobe.................................................................................. 60
Figure 32: Energy Chain Utilizing CO2-free Ammonia Test ...................................................... 61
Figure 33: Prospect for Power Generation and Ammonia Introduction in Japan (80% CO2
reduction target by 2050) .......................................................................................... 62
III

Figure 34: Estimation of Hydrogen Power Generation Cost in 2030 ......................................... 63
Figure 35: Estimation of Supply Cost of Hydrogen for Power Generation in 2030 ................... 63
Figure 36: Concept of Ammonia Decomposition Gas Turbine Cycle ........................................ 64
Figure 37: Estimation of Electricity Cost with Coal-fired, Ammonia-fired and a Mix-fired
Generation ................................................................................................................. 66
Figure 38: Global Hydrogen Supply Chain................................................................................. 69
Figure 39: Hydrogen Costs from Hybrid Solar PV and Onshore Wind Systems in the Long
Term .......................................................................................................................... 70
Figure 40: Cost of Hydrogen and Ammonia in Japan and exported from Australia to Japan in2030 ........................................................................................................................... 71
Figure 41: Production Cost of CO2-free Hydrogen in APEC Region in 2030 ............................ 72
Figure 42: Hydrogen Supply Cost for Power Generation and Required Hydrogen Fuel Price forCompeting with Fossil Fuel Thermal Power Generation in Japan in 2030 ............... 73
Figure 43: Hydrogen Fuel Cost for FCV in Japan in 2030 ......................................................... 74
Figure 44: Strategy of Energy Carriers – Development of CO2-free Hydrogen Value Chain .... 74
Figure 45: R&D Schedule until FY 2018.................................................................................... 76
Figure 46: Roadmap of CO2-free NH3 Supply Chain ................................................................. 80
Figure 47: Hydrogen Energy Supply Chain Pilot Project between Australia and Japan ............ 81
Figure 48: Cost of Imported Hydrogen from Australia ............................................................... 83
Figure 49: Chiyoda’s SPERA Hydrogen Technology ................................................................ 86
Figure 50: Chiyoda’s SPERA Hydrogen Supply Chain .............................................................. 87
Figure 51: Cost Comparison per Hydrogen Unit of Energy Carriers.......................................... 89
Figure 52: Roadmap for Establishment of CO2-free Hydrogen/Ammonia Supply Chain between
Japan and Saudi Arabia ............................................................................................. 91
Figure 53: Aichi Low-carbon Hydrogen Supply Chain 2030 Vision.......................................... 95
Figure 54: Chita City and Toyota City Renewable Energy-use Low-carbon Hydrogen Project 96
Figure 55: Hydrogen Energy System .......................................................................................... 98
Figure 56: Overview of the Hy-Life Project ............................................................................. 100
Figure 57: Kitakyushu Hydrogen Town (2011-2014) ............................................................... 102
Figure 58: Hydrogen Production from Sewage Sludge Demonstration Project ........................ 104
Figure 59: Fukushima Hydrogen Energy Research Field ......................................................... 106
Figure 60: FH2R System Structure ........................................................................................... 107
Figure 61: Power to Gas System. Long-term Electric Power Storage ...................................... 108
Figure 62: Key Characteristics of the Yamanashi Fuel Cell Valley ......................................... 109
Figure 63: Research and Development Organization................................................................ 110

IVList of Tables
Table 1: Budget of METI for Hydrogen and Fuel Cells Technologies ....................................... 19
Table 2: Number, Costs and Subsidies of Ene-farms in Japan.................................................... 25
Table 3: Subsidies for Ene-farms in FY 2019 ............................................................................. 30
Table 4: System Configuration of Ene-farms and Limit’s Increment ......................................... 30
Table 5: Next-generation Vehicles Target in 2030 ..................................................................... 32
Table 6: Next-generation Passenger Car New Registrations ...................................................... 33
Table 7: Breakdown of Retail HRSs in Japan as of the end of March 2019 ............................... 44
Table 8: Regulations, Standards and Guidelines for HRSs ......................................................... 50
Table 9: Support Program for HRS Construction by NeV (sponsored by METI) ...................... 52
Table 10: Support Program for HRS Operation .......................................................................... 53
Table 11: Physic-chemical properties of Hydrogen Carriers ...................................................... 75
Table 12: Komekurayama Facilities ......................................................................................... 108

VList of Abbreviations
Abbreviation

Meaning

AGT

Ammonia-fired Gas Turbines

AHEAD

Advanced Hydrogen Energy Chain Association for Technology Development

AIST

National Institute of Advanced Industrial Science and Technology

ANRE

Agency of Natural Resources and Energy

APEC

Asia Pacific Economic Cooperation

APERC

Asia Pacific Energy Research Centre

ARENA

Australian Renewable Energy Agency

BEV

Battery Electric Vehicle

CAPEX

Capital Expenditures

CCS

Carbon Capture and Storage

CCUS

Carbon Capture, Utilization and Storage

CDV

Clean Diesel Vehicle

CGS

Cogeneration System

CHP

Combined Heat and Power

COP

Conference of Parties

DR

Demand Response

EOR

Enhanced Oil Recovery

EU

European Union

EUR

Euro (an exchange rate of 123 JPY per EUR has been used)

EV

Electric Vehicle. Also PEV (BEV + PHEV)EVIElectric Vehicles Initiative

FC

Fuel Cell

FCCJ

Fuel Cell Commercialization Conference of Japan

FCEV

Fuel-Cell Electric Vehicles (or FCV)

FCV

Fuel-Cell Vehicles (or FCEV)

FDMA

Fire and Disaster Management Agency

FIT

Feed-in Tariff

FRA

The Japan Fisheries Research and Education Agency

FREA

Fukushima Renewable Energy Institute

FY

Fiscal Year (April to March)GAC

The Green Ammonia Consortium

GHG

Greenhouse Gasses

VI

GDP

Gross Domestic Product

GTCC

Gas Turbine Combined Cycle

GW

Gigawatt

HESC

Hydrogen Energy Supply Chain

HEV

Hybrid Electric Vehicle

HRS

Hydrogen Refueling Stations

HySTRA

CO2-free Hydrogen Energy Supply-chain Technology Research Association

HySUT

Association of Hydrogen Supply and Utilization Technology

IAE

Institute of Applied Energy

IEA

International Energy Agency

IEEJ

The Institute of Energy Economics, Japan

IFS

Institute of Fluid Science of the Tohoku University

INDC

Intended Nationally Determined Contribution

IRENA

International Renewable Energy Agency

JAMA

Japan Automobile Manufacturers Association

JHyM

Japan H2 Mobility

JPEC

Japan Petroleum Energy Center

J-POWER

Electric Power Development Co., Ltd.

JPY

Japanese Yen

JST

Japan Science and Technology Agency

KEPCO

Kansai Electric PowerKHI

Kawasaki Heavy Industries

kW

Kilowatt

kWh

Kilowatt Hour

LNG

Liquefied Natural Gas

MCH

Methylcyclohexane

METI

Ministry of Economy, Trade and Industry

MHPS

Mitsubishi Hitachi Power Systems

MLIT

Ministry of Land, Infrastructure, Transport and Tourism

MMBtu

Million British thermal unit

MOE

Ministry of the Environment

MOFA

Ministry of Foreign Affairs of Japan

MoU

Memorandum of Understanding

MPa

Megapascal

MW

Megawatt

MWh

Megawatt Hour

NEDO

New Energy and Industrial Technology Development Organization

VII

NeV

Next Generation Vehicle Promotion Center

NESTI

National Energy and Environment Strategy for Technological Innovation

NILIM

National Institute for Land and Infrastructure Management

NIMS

National Institute for Materials Science

Nm3

Normal Cubic Meter

NOx

Nitrogen Oxide

NPMC

Non-Precious Metal Catalyst

P2G

Power-to-Gas

PEFC

Polymer Electrolyte Fuel Cell (or PEMFC)PEMFC

Polymer Electrolyte Membrane Fuel Cell (or PEFC)

PEV

Plug-in Electric Vehicles (or EV)

PHEV

Plug-in Hybrid Electric Vehicles (or PHV)

PHV

Plug-in Hybrid Electric Vehicles (or PHEV)

PV

Photovoltaic

R&D

Research and Development

SIP

Strategic Innovation Promotion Program

SOFC

Solid-Oxide Fuel CellTEPCOTokyo Electric Power Company

TMG

Tokyo Metropolitan Government

Toshiba ESS

Toshiba Energy Systems & Solutions Corporation

UK

United Kingdom

US

United States

USD

United States Dollar

VPP

Virtual Power Plant

VRE

Variable Renewable Energy

V2H

Vehicle to Home

V2G

Vehicle to Grid

W

Watt

ZEH
ZEV

Zero Energy House
Zero-Emission Vehicles

VIII

EXECUTIVE SUMMARY

1. EXECUTIVE SUMMARY
Since the Great East Japan Earthquake of March 2011, the Japanese government has beenpromoting a low-carbon society through energy efficiency measures and the development of astable and reliable supply of renewable energy, reducing electricity costs and CO2 emissions.
After the adoption of the Paris Agreement, Japan announced its intention to reduce GHG
emissions by 26% by 2030 compared to 2013 in July 2015. Furthermore, in May 2016, the Planfor Global Warming Countermeasures established a long-term goal of an 80% reduction by
2050.
The Japanese government is also promoting the use of the hydrogen as a clean and alternative
energy vector. It is the key for reducing energy procurement and supply risks since it can beproduced from various energy resources, and for decarbonizing the Japanese energy supply anddemand structure, transport, heating (buildings), industry and power sectors.
The fast growth of variable renewable energy capacity provides an opportunity to complement
solar and wind installations with the production of hydrogen using the surplus that would
otherwise be wasted, keeping power systems flexible and helping to balance the grid. Hydrogen,in contrast to storage batteries, can be stored on a large scale and for the long term.
But its widespread adoption faces challenges, especially a high cost. Realize a hydrogen society
in Japan implies the necessity of both expanding hydrogen demand and the construction ofreliable supply chains to meet that demand at a low cost, and reaching the cost parity withtraditional fossil fuels, which will depend also on the application of a carbon price for thoseemitting CO2. The government has been supporting demonstration projects for building supply
chains from overseas to produce green hydrogen from renewable sources or from fossil fuels
plus the carbon capture and storage.
The government aims to establish also regional hydrogen supply chains using local unused
resources, including renewable energy, waste plastics, sewage sludge, and by-product hydrogen,which will contribute to improving the regional energy self-sufficiency rates and creating new
regional industries. The combination of low solar and wind costs, continuously in a downward
trend, and more efficient and cheaper electrolysis technologies are gradually making the largescale renewable electrolysis a viable option in the near future.
Power generation accounts for 40% of total national CO2 emissions, so the use of hydrogen inthis sector will greatly contribute to reducing them and will directly lead to massive hydrogenconsumption, which will contribute to cost reduction. Power-to-gas is expected to be one of thecountermeasures against problems related to grid stability and reliability due to the higher
penetration of renewables in Japan.

1

EXECUTIVE SUMMARY

In 2030, the government aims to reduce emissions by 39% in the residential sector and by 40%
in the commercial sector compared to the emissions in 2013. Stationary fuel cell systems, which
generate electricity and heat, are contributing to that goal, with around 300,000 units deployed
across the country. Large-scale SOFC systems for commercial centres and other buildings are
growing in importance.
The transportation sector contributed with 19% to entire CO2 emissions in Japan in 2015, andthe government’s target is to reduce it by 25% by 2030 increasing the popularization of thenext-generation vehicles and reaching a share in the new car sales between 50% and 70% by2030. Fuel cell vehicles offer a low emission driving performance, overcome electric vehicles’
weight, range and charging limitations, though their deployment is being slower because they
are more difficult to produce, they are much expensive, and there are not enough refuelingstations.
The main issues for the dissemination of HRSs are the high construction and operation costs ofand the strict regulations. METI is reviewing the regulation that affects to HRSs and working on
the standardization of equipment to achieve lower costs.
The government awaits the results of several demonstration projects around 2020 to start theoperation of hydrogen large-scale infrastructures. Demonstration projects must reveal thedeficiencies of the different technologies and allow to focus on the most technical and costeffective areas, taking into account their applicability in real operating conditions
This document can be considered the second part of the report “Solar Energy, Energy Storageand Virtual Power Plants in Japan”, published by the same author in October 2018 and available
in https://lnkd.in/ff8Fc3S.
In terms of content, this report begins by explaining the framework that caused the evolution of
the energy market in Japan, mainly the Great East Japan Earthquake and the Paris Agreement,
following by the main chapter that describes the current situation of the hydrogen and fuel cells
markets in Japan.
That chapter explains the main three hydrogen applications: stationary fuel cells, mobility andpower generation. Later, the characteristics and ongoing demonstration projects of the principal
energy carriers are described, as well as how the growing hydrogen demand will be fulfilled
through overseas and domestic supply chains.
Finally, the main research clusters of the country, organizations and associations, and mainprivate companies involved in the market are introduced, identifying which are the potential
opportunities for European companies, and including some recommendation for those willing toaddress the Japanese market.

2

INTRODUCTION

2. INTRODUCTION: ENERGY SCENARIO AFTERTHE GREAT EAST JAPAN EARTHQUAKE
Because of the earthquake in March 2011 and outage that followed, all 54 units were shut downin May 2012. Since then, 6 units declared decommissioning due to the accident, and 5 units
declared decommissioning in March 2015. Due to this reason, Japanese imports of fossil fuels,
coal, oil and especially liquefied natural gas (LNG), increased from around 81% in 2010 toaround 89% in 2016 [1]. Nowadays, Japan is still the world’s third-largest importer of coalbehind China and India, and the largest importer of LNG. This impacted all 3E’s, this is, energy
security, economy and environmental conservation:-

The energy self-sufficiency ratio decreased from around 20% in 2010 to 6.4% in 2014,
and it was still under 10% in FY 2017 [2].

-The electric power costs increased by about 38% for industries and about 25% forhomes. Although the downward trend since 2014, those rates were still higher in FY
2017, about 21% for industries and 16% for homes [2].
CO2 emissions increased by about 4% because of the higher electric generation by
thermal power plants [3]. In FY 2017, GHG emissions dropped to below the level of FY
2010, before the Great East Japan Earthquake [2], confirming the downward trend from2013, mainly because of the increased in the renewable energy generation and therestarting program of nuclear power plants.

The Government formulated the Strategic Energy Plan of Japan in April 2014, “Fourth Energy
Basic Plan” [3], under the Basic Act on Energy Policy, which entered into force in June 2002.
The plan presented the basic direction of Japan's energy policy, based on the fundamental
principles of safety, energy security, and improvement of economic efficiency andenvironmental suitability. It was followed by the Long-term Energy Supply and Demand
Outlook on July 2015 [4], which foresees the future energy mix towards 2030, with a 22-24%
ratio for the renewable generation (Figure 1). The objectives of the government in 2030 are thefollowing:-

Raise the self-sufficiency rate up to around 40% by 2030.

-

Reduce the dependence on fossil fuels to 56% on the basis of power source composition.

-

Substitute nuclear power by the expansion of renewable energy, especially geothermal,hydroelectric and biomass powers, which can be operated stably despite weather
conditions, and by improving the efficiency of thermal power generation.

3

INTRODUCTION-

Reduce the electric power demand by 17%, even with an expected economic growth of
1.7% real Gross Domestic Product (GDP) per year. In FY 2017, the Japanese economy
grew 1.4%, but the primary energy consumption slightly decreases by 0.1% due tocontinuous energy conservation efforts [5].
The Japanese government is promoting an energy-efficient society, with an integrated
implementation of the Act on Rationalizing Energy Use (Energy Conservation Act) andsupport measures. Energy conservation measures in the industrial, commercial,residential and transportation sectors are expected to improve the energy efficiency by
35% by FY 2030. Several measures such as Top Runner Programme and Zero Energy
House (ZEH) are carrying out by the government. Together with the maximum
renewable energy penetration, the government expects to cover about 40% of electricity
demand in FY 2030.
Top Runner Programme aims to improve the energy efficiency in equipment anddevices and has already contributed to greatly enhance the energy efficiency of
consumer electronics and automobiles in Japan. It covers around 70% of householdenergy consumption and it is mandatory for companies (manufacturers and importers),
encouraging competition and innovation among them without increasing market prices.

Figure 1: Targets for the Electric Power Supply-Demand Structure in Japan in 2030

Source: Ministry of Economy, Trade and Industry (METI) [4].

4INTRODUCTION

Keeping in mind the goals of increasing the energy self-sufficiency rate and creating a low
carbon society, the deployment of renewable energy has continued to be important for theJapanese government. The installed capacity of renewables has grown by 2.5 times since theintroduction of the feed-in tariff (FIT) scheme, being the solar photovoltaic (PV) energy thecentre of this revolution. The government aims to develop and utilize renewable energy as the
major power source by 2030. Efforts are being made to reduce costs and overcome systemconstraints. The development and deployment of high-performance low-price storage batteries
are also being promoted.
However, in order to achieve the S (Safety always comes first) and 3E’s targets in 2030, a
nuclear power generation ratio between 20 and 22% was established by the government (Figure1). One of the biggest issues of the Japanese energy market is that it depends on foreign fossilfuel supply, becoming easy to be affected by international situations. This, securing a stablesupply, is one of the reasons because nuclear power generation is indispensable nowadays inJapan. Other reasons are that its use reduces the CO2 emissions and electric power costs, eventaking into account the costs of the accident risk response. And it is an important baseload
power supply that contributes to the stability of the supply and demand structure of energy.
Therefore, the restarting of the nuclear power plants that have conformed to new regulatory
requirements evaluated by the Nuclear Regulation Authority is promoted [6]. The licensing
status of the Japanese nuclear facilities can be checked on the website of the Japan Nuclear
Safety Institute1. There are nine plants in operation and another seven that already received theapproval.
The 2015 Outlook was prepared with Paris’ climate change objectives in mind. After its
adoption, Japan announced its Intended Nationally Determined Contribution (INDC) in July
2015 to reduce the GHG emissions by 26% by FY 2030 compared to FY 2013 (a 25.4%
reduction compared to FY 2005). Furthermore, in May 2016, the Plan for Global WarmingCountermeasures was decided by the Cabinet of Japan, establishing a long-term goal of an 80%
reduction by FY 2050, and clarifying policies and measures to be implemented [7].
To support these promises, the government is working together with industry and academia topromote energy technology innovation under the Energy and Environment TechnologicalInnovation Plan, focusing on 2030 targets, and the National Energy and Environment Strategy
for Technological Innovation towards 2050 (NESTI 2050), in which hydrogen was listed as oneof the innovative energy-storage technologies.
In April 2016, the Cabinet Office also announced the Energy and Environment Innovation
Strategy. The main innovative technologies are related to the efficient power generation, thereduction of the cost of renewable energies, storage energy battery technologies beyond lithium,and efficient energy carriers such as hydrogen. In July 2016, The Long-term Global WarmingCountermeasures Platform, consisting of members from the government, industry and academia,
was established to discuss measures for reducing GHG emissions on a long-term basis [8].
1Japan Nuclear Safety Institute: http://www.genanshin.jp/english/facility/map/.

5

INTRODUCTION

Apart from the implementation of energy conservation measures and the maximum introductionof renewable energy, the government promotes the use of the hydrogen as a clean andalternative energy vector. It is the key for reducing energy procurement and supply risks since it
can be produced from various energy resources, and for decarbonizing the Japanese energy
supply and demand structure. Hydrogen will play an important role in applications such as
stationary and portable power, energy storage, and mobility, allowing also a higher penetrationof variable renewable energy sources. The government aims to build a hydrogen-based society,and in order to achieve it, it released the Strategic Roadmap for Hydrogen and Fuel Cells inJune 20142, revised in March 20163 and March 20194 , and the Basic Hydrogen Strategy inDecember 2017 [9].
The government is also promoting new businesses based on smart community-related
technologies such as the demand response (DR), virtual power plants (VPPs) and blockchain
technology as a way to increase the energy efficiency through distributed generation, storage
and trade of energy [6].
The Fifth Basic Energy Plan was released in July 2018 [10]. The Government kept the sametargets for FY 2030, describing the nuclear and coal-based thermal power stations as “important
baseload power sources” that contributes, in the case of the nuclear generation, to the stability of
the long-term energy supply and demand structure.
Critical opinions arrived from the Ministry of the Environment (MOE) and the Ministry ofForeign Affairs of Japan (MOFA) against the METI’s proposal of making expansive use of coal,keeping an unrealistic target for nuclear power, which will require extending the life of many
old reactors and building some new ones 5 , and give insufficient consideration to renewable
power. It seems contradictory to argue the use of nuclear energy to help create a decarbonizedenergy market and continue to promote the use of coal.
Coal-fired power plants are likely to face higher costs in order to take environmental
countermeasures in the future, while the cost of renewables continues to decrease. The adoptionof the Paris Agreement clearly showed the direction for decarbonisation, and coal-fired power
generation is the energy source that produces the largest amount of CO2 emissions. Most of thecountries in the world are phasing out the use of coal in power generation as an important step
to fight against global warming. More than 20 countries launched the Powering Past Coal
Alliance in 2017, that is committed to phasing out coal power by 2030, and utilities in 26 out of
28 EU member states signed an agreement to not build any more coal-fired power plants from2020 onwards [11].
Many financial and other institutions in the US and Europe ended their investments and loans tocoal-fired power projects. Nippon Life Insurance Co., the largest insurer in Japan, will no longer
extend loans for or invest in coal power plants at home and overseas due to environmental
2

METI, 24 June 2014: https://www.meti.go.jp/english/press/2014/0624_04.html.
METI, 22 March 2016: https://www.meti.go.jp/english/press/2016/0322_05.html.
4
METI, 12 March 2019: https://www.meti.go.jp/english/press/2019/0312_002.html.
5
The Asahi Shimbun, May 18, 2018: http://www.asahi.com/ajw/articles/AJ201805180028.html.
36

INTRODUCTION

concerns, except if they include CO2 capture and storage technology, an expensive option used
only in a few locations worldwide.
Japanese banks are among the largest financiers of coal-related projects globally, but that seems
to be changing, in addition to tightening lending criteria for coal power in the last months.
Sumitomo Mitsui Trust Bank Ltd. would stop providing financing for new coal power plants "asa basic rule", and Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group would also
revise lending to coal-power plants, leaving an open possibility for highly efficient projects6.
However, adding high-efficiency generating capacity fueled by coal would produce electricity ata higher cost than that produced from natural gas. Therefore, planned investments in coal-fired
generating capacity across several Japanese prefectures have been cancelled. In this context, theammonia-coal co-firing technology may be the key to the nearest future of the Japanese coalfired power plants7, with several successful demonstration projects in Japan in the last years(Chapter 3.3.1).

2.1. ABOUT HYDROGEN
Hydrogen is the most abundant and lightest of the elements but does not exist as a gas on Earth.
It is odourless and non-toxic, and has the highest energy content of common fuels by weight,
nearly three times that of gasoline.
It has the advantage of being produced from several energy sources, such as fossil fuels througha chemical process called reforming, the most common and least expensive method but
resulting in CO2 emissions, and through electrolysis of water using electricity from renewable
resources, a clean but expensive method. According to the International Renewable Energy
Agency (IRENA), over 95% of current hydrogen is produced from reforming of national gas,liquefied petroleum gas and coal gasification. Its largest use is in industry and refining as a byproduct from industrial plants.
The fast growth of variable renewable energy (VRE) capacity provides an opportunity tocomplement solar and wind installations with the production of hydrogen using the surplus thatwould otherwise be wasted, keeping power systems flexible and helping to balance the grid.
Hydrogen can be stored on a large scale and for a long term, similar to natural gas, in caverns,
tanks or pipelines, ensuring a reliable power supply when the renewable generation is notenough or prices are favourable to convert it back to power. Hydrogen and electricity are in fact
6

The Business Times, July 23, 2018: https://www-businesstimes-comsg.cdn.ampproject.org/c/s/www.businesstimes.com.sg/energy-commodities/japans-nippon-life-to-stopfinancing-coal-fired-power?amp.
7
Ammonia Energy, 18 July 2019: https://www.ammoniaenergy.org/the-evolving-context-of-ammoniacoal-co-firing/.

7

INTRODUCTION

complementary energy carriers: hydrogen can be converted to electricity, and electricity can beconverted to hydrogen. Storage batteries are only suitable for short-term storage since theelectric power stored in batteries continuously declines over time due to natural discharge(Figure 2). In Japan, Kyushu Electric Power Co. already asked the photovoltaic producers to
reduce their output due to the demand-and-supply unbalance, which is a utility’s right by law[6].

Figure 2: Overview of Carbon-free Energy Storage Technologies

Source: Hydrogen Council [12].

When it is compressed, it can be easily stored for long periods, transported over long distances,and used in many ways across the entire energy sector, supporting decarbonisation in transport,
heating (buildings), industry and power sectors. It can take advantage of existing energy
infrastructure. Up to a certain share, hydrogen can be injected into natural gas grids reducing theemissions of existing gas infrastructure, such as gas turbines for the power sector.
Hydrogen can be converted to electricity by a fuel cell through a chemical reaction with oxygenin the air, and with water and heat as the only byproducts. Fuel cells are scalable.
Hydrogen fuel cell electric vehicles, or just fuel cell vehicles (FCVs), offer a low emission
driving performance and can complement electric vehicles, overcoming their weight, range andcharging limitations.

8

INTRODUCTION

Therefore, hydrogen can link different energy sectors and energy transmission and distribution
networks, and thus increase the operational flexibility of future low-carbon energy systems.

Figure 3: Energy System

Source: International Energy Agency (IEA) [13].

According to its “Vision 2050”, the Hydrogen Council foresees that hydrogen market could
reach USD 2.5 trillion and create 30 million employment globally by 2050. Hydrogen could
contribute to 18% of energy demand and 20% of CO2 reduction, 6 billion tonnes of CO2 peryear. Hydrogen power generation will reach 1,500 TWh per year, and excess renewable energyof 500 TWh will be stored and utilized annually through hydrogen.
But its widespread adoption faces challenges, especially a still too high cost. At the moment,
hydrogen is mainly produced from natural gas (“grey” hydrogen) for industrial uses, which
generates significant carbon emissions. If the carbon emissions are captured and stored, orreused, then it is called “blue” hydrogen. “Green” hydrogen is the cleanest one since isgenerated by renewable energy sources without producing carbon emissions.
The main driver for grey hydrogen and blue hydrogen is the price of natural gas, which varies
around the world. Grey hydrogen is cheaper than the other two, estimated around EUR 1.50 per
kilogram8. But its CO2 emissions carry an additional cost that will gradually increase in the
future. As an example, CO2 cost in the European Union’s emissions trading system is about
EUR 20-30 per ton, and it will increase to between EUR 30 and 40 per ton over the next ten
8

IEA, 23 April 2019: https://www.iea.org/newsroom/news/2019/april/the-clean-hydrogen-future-hasalready-begun.html?utm_campaign=IEA%20newsletters&utm_source=SendGrid&utm_medium=Email9INTRODUCTION

years, which could add around EUR 0.50 per kilogram to the cost of grey hydrogen in Europe,
for a total cost of around EUR 2 per kilogram.
The second-most important driver for blue hydrogen is the cost of CO2 capture, utilization andstorage (CCUS), between EUR 50 and 70 per ton. Future innovations and scalability will pushdown the cost of CCUS, while the price of CO2 emission will increase in the coming years,
closing the cost gap between grey and blue hydrogen.
Finally, the current cost of green hydrogen is between EUR 3.5 and 5 per kilogram. One of themain reasons is the cost of electrolysis. Its total global capacity is limited and costly at the
moment, but it is growing, and according to IEA, if all the current projects come online by 2020,
cumulative capacity will rise from 55 MW in 2017 to over 150 MW. A significant pricereduction of around 70% is also expected over the next decade according to McKinsey, also as aconsequence of the sharp reduction of the price of renewable energy generation during the lastyears.
A study released in July 2018 [14] concluded that hydrogen produced from wind energy isalready cost-competitive with small- and medium-scale hydrogen supply produced from fossil
fuels both in Germany and Texas, but not with large-scale industrial sales, which will also
become competitive in the coming years. It pointed out the importance of the operating
flexibility in near real-time to either sell electricity at the current market price or convert it tohydrogen.
Besides, green hydrogen can be shipped around the world from places with cheap renewableenergy sources. In this sense, Japan is carrying out several important pilot projects withcountries including Australia, Saudi Arabia and Brunei (Chapter 3.3) to determine the best way
to transport green or blue hydrogen over large distances by ship.

10

HYDROGEN MARKET IN JAPAN3. HYDROGEN MARKET IN JAPANJapan is a poor country in energy resources. Hydrogen will allow Japan to achieve the “3E+S”
goals by reducing the supply and procurement risks, and carbon emissions in power generation,transportation, heating and industrial processes. The research, development and demonstrationof hydrogen technologies with industry-academia-government collaboration under theleadership of government will contribute significantly to solve energy and environment
problems in Japan. Eventually, it will also bring the world’s leadership in hydrogen utilizationand the related industries. Japanese hydrogen and fuel cell technologies are the world’s mostadvanced. Japan will keep expanding its technologies domestically and overseas promoting aworldwide collaboration that leads to cheaper costs and the realization of a hydrogen-basedsociety.

Figure 4: Basic Scheme of Hydrogen Society

Source: Cross-Ministerial SIP [15].

With the Tokyo 2020 Olympic Games as the first point of reference, it is estimated that themarket will reach JPY 590.3 billion (around EUR 4.8 billion), though the projections will vary11

HYDROGEN MARKET IN JAPANdepending on the success of the government`s support and regulations. According to NEDO’s
estimation, the hydrogen market will reach JPY 1 trillion (about EUR 8 billion) by 2030 and
JPY 8 trillion (around EUR 65 billion) by 2050.
Japan has more than 40-year history of hydrogen and fuel cell technology research anddevelopment (R&D) under projects such as the Sunshine Project and the Moonlight Project
launched in the 1970s, the Japan Hydrogen and Fuel Cell Demonstration (JHFC) Project and alarge-scale demonstration project for stationary fuel cells, accumulating world-leading
technologies, knowledge, and knowhow in its industrial and academic sectors [9].
The idea of intercontinental transport of liquefied hydrogen is also not new. The World Energy
Network (WE-NET), an international cooperation in R&D of clean energy systems withparticular emphasis on hydrogen, started in 1993 with the aim to construct a worldwide energy
network for effective supply, transport and use of renewable energy using hydrogen. The
program was launched by the National Institute of Advanced Industrial Science and Technology(AIST) with the New Energy and Industrial Technology Development Organization (NEDO) as
project coordinator of a joint industry-government-academia effort, and it was divided into threephases extending over a 28-year period from 1993 to 20209.
In December 2013, METI established the Council for a Strategy for Hydrogen and Fuel Cells,consisting of experts from industry, academia, and government, to study ideal approaches forthe future utilization of hydrogen energy. In April 2014, the government approved the Fourth
Strategic Energy Plan10, which described measures and goals to promote the use of hydrogen
toward the realization of a hydrogen society, and called for the formulation of a roadmap. In
June 2014, the Council formulated the Strategic Roadmap for Hydrogen and Fuel Cells11, which
described the pathway to follow until 2040 for realizing a hydrogen-based society through thefollowing three-step program, also shown in Figure 5:-

Phase 1: dramatic expansion of hydrogen use, by expanding the use of stationary fuelcells and FCVs, capturing the global market.

-

Phase 2: full-fledged introduction of hydrogen power generation and establishment of alarge-scale system for supplying hydrogen (by the second half of the 2020s). Further
expansion of the demand for hydrogen, while widening the scope of hydrogen sources
to include unused energy imported from other countries. Establish a new secondary
energy structure in which hydrogen will be added to existing traditional resources.
A basic approach is to combine cheap, unused energy from overseas with CCS (carbon
capture and storage) technology, or procure massive amounts of hydrogen from cheap,
renewable energy electricity in parallel to the establishment of international supply
chains through the development of storage and transportation infrastructure.

9

WE-NET: https://www.enaa.or.jp/WE-NET/contents_e.html.
METI, 11 April 2014: https://www.meti.go.jp/english/press/2014/0411_02.html.
11
METI, 24 June 2014: https://www.meti.go.jp/english/press/2014/0624_04.html.
1012HYDROGEN MARKET IN JAPAN-

Phase 3: establishment of a CO2-free hydrogen supply system by around 2040,
combining the technology for manufacturing hydrogen with CCS, or making use ofhydrogen derived from renewable energy resources.

Figure 5: Strategic Roadmap for Hydrogen and Fuel Cells (June 2014)

Source: METI.

Then, the Roadmap was revised in March 2016 to include new goals and specific explanationsof efforts to be made12. METI also establish a Working Group on CO2-Free Hydrogen under theCouncil aiming at the future expansion of CO2-free hydrogen utilization. The Working Group
compiled the results into a report on March 2017 13 , describing current challenges and the
direction of future efforts.
In April 2017, the Ministerial Council on Renewable Energy, Hydrogen and Related Issues held
its first meeting, promoting initiatives that will ensure Japan becomes the first country in theworld to realize a hydrogen-based society. Then, the plan was specified in the Investments for
the Future Strategy 2017 (Cabinet Decision on June 9, 2017). Based on the above background,
the government released the Basic Hydrogen Strategy in December 2017 [9], which includes anaction plan through 2030 and a future vision for the year 2050, and seeks also to reduce the costof carbon-free hydrogen to that of conventional fuels (Figure 6).

12
13

METI, 22 March 2016: https://www.meti.go.jp/english/press/2016/0322_05.html.
METI, 7 March 2017: https://www.meti.go.jp/english/press/2017/0307_003.html.

13

HYDROGEN MARKET IN JAPAN

Figure 6: Basic Hydrogen Strategy (December 2017)

Source: METI.

One of the main barriers for the dissemination of hydrogen use and the realization of ahydrogen-based society is its high procurement and supply costs. The current retail price ofhydrogen in Japan is about JPY 100 per Nm3 (around EUR 0.81), producing around 200 tons ofhydrogen annually in April 2018 14 . The strategy specifies the necessity to establish acommercial-scale hydrogen supply chain to procure 4,000 tons of hydrogen per year by 2020,
and 300,000 tons of hydrogen annually by 2030 (amounting to 1 GW in power generation
capacity), expanding its demand in the mobility and power generation sectors.
Therefore, the main objective of this strategy is to reduce the hydrogen supply cost to JPY 30
per Nm3 (about JPY 334 per kilogram, EUR 0.24 per Nm3 or EUR 2.7 per kilogram15) by 2030,
less than one-third of its current cost and similar than the traditional fuel sources, this is,gasoline in transport and natural gas in power generation, reducing the price. Japan seeks to cut
the hydrogen power generation cost to JPY 17 per kWh by that time.
Beyond that, the target is to procure between 5 and 10 million tons of hydrogen annually(amounting to between 15 and 30 GW in power generation capacity), heavily depending on the
14

METI, 26 December 2017: https://www.meti.go.jp/english/press/2017/1226_003.html.
One Nm3 of hydrogen gas is equal to 0.08988 kilograms or 1.2699 liters. One Nm3 of hydrogen has
approximately the same energy value than a third of a liter of gasoline. This is, burning 1 kilogram ofhydrogen releases the same amount of energy as burning 2.75 kilograms of petrol.
The exchange rate used in this document was 1 € equal to 123 yen.
15

14

HYDROGEN MARKET IN JAPANconsumption for power generation and with the intention of replacing the gas power generation.
The Institute of Applied Energy estimates that the hydrogen demand in Japan in 2050 will be 53
Mtoe (0.22 trillion Nm3), resulting in a 13% share of the total primary energy supply [16].
The cost gap with traditional energy sources after incorporating environmental cost adjustments
will be lowered, reaching a price of JPY 20 per Nm3 (about EUR 0.16 per Nm3 or EUR 1.8 per
kilogram) by expanding international hydrogen supply chains on the supply side and theindustrial use on the demand side. In this scenery, the production cost from brown coalgasification will be reduced to JPY 12 per Nm3.
This will require scaling-up and improving efficiency of brown coal gasifier, and scaling-up andimproving thermal insulation properties to increase the efficiency of liquefaction from 13.6
kWh/kg to 6 kWh/kg, and the capacity of the liquefied hydrogen tank until 50,000 m3. The
development of low-cost CO2 capture technologies such as physical absorption is also on thetable to reduce the cost of CO2 separation, from around JPY 4,200 per ton of CO2 in Japan toaround JPY 2,000 per ton of CO2.
After the Basic Hydrogen Strategy, the Fifth Strategic Energy Plan was also released in July
2018 [10], and the Tokyo Statement in October 2018. Because of these documents, and toensure the achievement of the goals toward a hydrogen-based society, the council reviewed theexisting roadmap in March 2019 16 . It defines new targets on the specification of basic
technologies and the breakdown of costs, the necessary measures for achieving these goals, andthat the government will convene a working group consisting of experts to review the status of
implementation in each area stipulated by the roadmap (Figure 7 and Annex A).
The updated Roadmap notes that, in order to achieve the grid parity, it is needed a hydrogencost lower than the price of natural gas, which is unpredictable, setting a target for the importedhydrogen of JPY 13.3 per Nm3 (about EUR 0.11 per Nm3 or EUR 1.2 per kg) to match thecurrent price of LNG on an energy-equivalent basis, equivalent to USD 10 per MMBtu, andwithout considering the environmental value. If the environmental value is added to the LNG,
the target price would increase up to JPY 16.8 per Nm3 (Figure 8 and Figure 9).
In the industrial sector, there is no hydrogen target in Japan, though it can benefit from thedevelopment of burners, boilers and turbines that use a mix of hydrogen and fossil fuels.
Hydrogen that is currently used for industrial processes such as steelmaking and oil refining is
produced from fossil fuels and could be replaced with CO2-free hydrogen in the future to reducecarbon emissions.

16

METI, 12 March 2019: https://www.meti.go.jp/english/press/2019/0312_002.html.

15

HYDROGEN MARKET IN JAPAN

Figure 7: Action Plan in the Strategic Roadmap for Hydrogen and Fuel Cells (March 2019)

Source: METI17.

Figure 8: Hydrogen Cost Targets

Source: METI [17].
17

METI, 12 March 2019: https://www.meti.go.jp/english/press/2019/pdf/0312_002a.pdf.

16

HYDROGEN MARKET IN JAPAN

Figure 9: Hydrogen Cost Perspective of the Supply Project

Source: METI [17].

The government awaits the results of several demonstration projects around 2020 to start theoperation of hydrogen large-scale infrastructures. Demonstration projects must reveal thedeficiencies of the different technologies and allow to focus on the most technical and costeffective areas, taking into account their applicability in real operating conditions. NEDO is themain player in the development of new technologies (Figure 10 and Figure 11).

Figure 10: Ongoing projects of METI and NEDO (Supply Side)

Source: METI [17].

17HYDROGEN MARKET IN JAPAN

Figure 11: Ongoing projects of METI and NEDO (Demand Side)

Source: METI [17].

In June 2019, METI and NEDO evaluated the hydrogen and fuel cells R&D projects conductedby NEDO in order to revitalize technology development across industry, academia andgovernment. Based on the issues identified, the Hydrogen and Fuel Cell Strategy Council
established the Hydrogen and Fuel Cell Technology Development Strategy in September 2019,
which identified ten technological development items in three areas that should be prioritized toachieve the targets set in the Strategic Roadmap for Hydrogen and Fuel Cells18. They are thefollowing:---

Fuel Cell Technology
 Automotive fuel cells.
 Stationary fuel cells.
 Auxiliary machinery and tank related systems.
Supply Chain Large-scale hydrogen production.
 Transportation and storage technology.
 Hydrogen power generation.
 Hydrogen stations.
Water electrolysis and others Water electrolysis technology.
 Other industrial applications.
 Discontinuous innovation technology.

18

METI, 18 September 2019: https://www.meti.go.jp/press/2019/09/20190918002/20190918002.html(only in Japanese).

18

HYDROGEN MARKET IN JAPANJapan will use the 2020 Olympics and Paralympics as a platform to show the potential ofhydrogen and fuel cells, as well as cutting-edge technologies. During this event, FCVs will be
used as official vehicles, which will be powered by CO2-free hydrogen produced in Fukushima(Chapter 3.5.2). Olympic Village will be completely powered by hydrogen fuel cells. Japanaims to involve resource-rich countries by sharing the outcome of several supply chain
demonstration projects.
Table 1 shows the hydrogen-related subsidies from METI in the last three fiscal years, with agreat growth of the budget for the projects that will create and secure the hydrogen supply chain
from overseas resources. Additionally, MOE is supporting the development of regional supply
chain with local renewable resources (Chapter 3.4.5), and the “SIP Energy Carriers” program,
under the Cabinet Office, has had a budget of around JPY 3 billion per year from FY 2014 toFY 2018 (Chapter 3.4.1). Prefectures and local governments also provide subsidies to thedissemination of residential fuel cells and FCVs.

Table 1: Budget of METI for Hydrogen and Fuel Cells Technologies

Phase

Concept

Budget in JPY Billion
FY2016FY2017FY2018

Stationary FCs(Accelerate the introduction and cost reduction of Ene-farm)

9.5

9.36

8.9

HRSs
(Support HRS installation and create FCV demand)

6.2

4.5

5.7

FCVs
Phase 1
(Installation Fuel Cell) R&D on FCs(Better performance and lower costs of FCs, and demonstratestationary FCs for business use)15
(also included other policy items)
3.7

3.1

2.9

4.15

4.1

2.4

2.8

4.7

9.4

R&D for producing, transporting and storingH2 derived from renewable energy(Develop technologies on high efficiency water electrolysis units,tanks for storing liquefied H2, etc).

1.55

1.0

0.9

Construction of a H2 energy network (Incl. other policy items)(Build a network that effectively connects multiple hydrogen
applications in the region)

4.5

-

-

R&D on HRSs
(Develop technologies for lowering costs and for a safety use of HRS,
and collect data for reviewing regulations).
H2 Supply Chain(Demonstrate the production of H2 from untapped overseas
Phase 2
(H2 Power Plant /Mass Supply Chain)andPhase 3(CO2-free Hydrogen)resources, transport it in the form of liquefied H2 or organic hydrideand use it to generate power. Implement tests on P2G, etc).

Source: Author, with data from METI and other sources.

On the other hand, and on a global level, Japan calls for global collaboration to lower costs andensure stable supplies. The Hydrogen Council was launched in January 2017 at the World

19

HYDROGEN MARKET IN JAPANEconomic Forum and comprises leading energy, transport and industry companies that haveteamed up to position hydrogen as one of the key solutions of the energy transition. It has 53
members across 11 different countries.
In October 2018, the first Hydrogen Energy Ministerial Meeting was held in Tokyo by METI
and NEDO and with over 300 stakeholders from around the world to talk about the realizationof a hydrogen society and future directions of related policies19. Accordingly, they shared theview that hydrogen can be a key contributor to the energy transition, and the importance ofcollaboration, information sharing and international joint research among member countries toachieve a hydrogen society, and works towards the harmonization of regulation, codes andstandards. Under this mutual recognition, The Tokyo Statement, the chairman’s summary of themeeting, was released.
Based on the recommendations from that meeting, a new international hydrogen partnership
was announced in May 2019 under the leadership of Canada, the United States, Japan, theNetherlands and the European Commission at the 10th Clean Energy Ministerial20. IEA will
coordinate efforts under this Hydrogen Initiative to collaborate on policies, programs andprojects to accelerate the commercial deployment of hydrogen and fuel cell technologies acrossall sectors of the economy. Leading industry stakeholders and collaborative forums such as theHydrogen Council will contribute to work undertaken through the initiative.
Based also on the results of that meeting, the G20 Ministerial Meeting on Energy Transitionsand Global Environment for Sustainable Growth, which was held in Japan in June 2019 under
the chairmanship of Japan, held discussions on the importance of the role played by hydrogen toachieve energy transition and de-carbonization. On the sidelines of this meeting, METI, theEuropean Commission Directorate-General for Energy (ENER) and the Department of Energyof the United States (DOE) signed a joint statement to strengthen the cooperation on hydrogenand fuel cell technologies, accelerate and expand the use of hydrogen globally21.
The second Hydrogen Energy Ministerial Meeting was held in September 2019. They
reaffirmed the view that hydrogen can be a key contributor to clean, safe and affordable energy
for the future, and the value of collaborating further to accelerate the progress in hydrogentechnologies. They recognized that the next ten years will be critical to enable wider
deployment of hydrogen by scaling-up production and use of hydrogen, as well as by bringing
down the cost. They set up a non-mandatory goal to produce 10 million hydrogen-powered
mobility systems, including vehicles, buses, trucks, trains and ships, and install 10,000
hydrogen refueling stations worldwide within 10 years22.

19

METI, 23 October 2018: https://www.meti.go.jp/english/press/2018/1023_007.html.
Clean Energy Ministerial, 29 May 2019: http://www.cleanenergyministerial.org/news-clean-energyministerial/countries-launch-new-international-effort-hydrogen-help-achieve.
21
METI, 15 June 2019: https://www.meti.go.jp/press/2019/06/20190615001/20190615001-1.pdf.
22
METI, 27 September 2019: https://www.meti.go.jp/press/2019/09/20190927003/20190927003-5.pdf.
2020

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

3.1. STATIONARY FUEL CELLS
In order Japan can achieve its GHG emissions target by 2030, it is essential to reduce theemissions from the residential and commercial sectors. In 2030, the government aims to reduce
emissions by 39% in the residential sector and by 40% in the commercial sector compared tothe emissions in 2013 [18].
Japan’s interest in residential fuel cell dates back to 1999, leading the research and developmentof this system. Through the Large-scale Stationary Fuel Cell Demonstration Project conductedby NEDO and subsidized by METI from FY2005 to FY2008, close to 3,000 residential fuel cell
micro combined heat and power (CHP) systems were installed in Japan. They extract hydrogenfrom LP gas and combine it together with ambient oxygen to generate electrical power, while
simultaneously capturing residual heat that is used to heat up water (Figure 12). In comparison
to conventional electrical supply grid systems, it has the capability for a very high-efficiency
ratio and significant reduction of CO2 gas emissions. They got around 23% reduction in primaryenergy use and 38% reduction in CO2 emissions, with a high potential to help the country
achieve its CO2 reduction targets with large-scale deployment and to become an important
power supply source in case of natural disaster [9].

Figure 12: Operation of a Fuel Cell CHP

Source: Japan LP Gas Association23.

23

Japan LP Gas Association: http://www.j-lpgas.gr.jp/en/appliances/.

21

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

Therefore, a consortium of major Japanese energy suppliers and fuel cell manufacturers, such as
Panasonic and Toshiba Fuel Cell Power Systems (Toshiba FCP) began the sales of commercial
products of the residential fuel cell co-branded as “ENE-FARM” from 2009, with support ofgovernmental subsidies for installation, and leading the world in this sector. Distribution andinstallation are done by the regional gas suppliers, such as Tokyo Gas and Osaka Gas.
There are several types, but the Polymer Electrolyte Fuel Cell (PEFC), or Polymer Electrolyte
Membrane Fuel Cell (PEMFC), from 2009, and the Solid Oxide Fuel Cell (SOFC), from 2011,
are the most used ones in Japan, with the first one reaching up more than 90% of cumulative
sales (Figure 13).
PEFCs are smaller and lighter because they can start quickly because of low operating
temperature and high power output, mainly used for household fuel cell cogeneration systems
and FCVs. With an electrical output between 700 W and 1,000 W, the system is not intended tocover the entire demand of an apartment or family house, but to significantly contribute to
reducing it, and to fully cover the hot water demand. SOFCs do not need an expensive precious
metal medium, such as platinum, due to their reaction easily progresses, whereas the operating
temperature could reach 1,000 ºC.

Figure 13: Ene-farm Market Trends

Source: Technova and the Fuel Cell Association [9].

Main manufactures of ene-farms in Japan are Panasonic (PEFC), which accounts for more than
50% of the market, about 140,000 units from 270,000 units by June 2018 [19], Aisin Seiki(SOFC) and Toshiba Fuel Cell Power Systems Corporation (PEFC), which stopped manufacture

22

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

and sales of ene-farm residential fuel cell systems in July 2017 but continued its pure hydrogenfuel cell system business24. Aisin Seiki’s models, between 50 and 700 W, have a rated power
generation efficiency of 52% and a total efficiency between 85% and 87%25.
Panasonic’s products, with an output from 200 to 700 W, have a combined efficiency of 95%,
with 5% of non-usable heat26. Its units provide a reduction of CO2 emissions of 1.3 ton per year,
and an annual saving between JPY 60,000 and 95,000 per year (EUR 500 - 770) on energy bills[19]. Panasonic expects to start the sales of its pure hydrogen fuel cells by 2021, with an output
power of 700 W and 5 kW, and power generation efficiencies of 53% and 57% respectively.
Panasonic is using ene-farms and other products in two projects to minimize the dependence on
the electric grid, increase the energy-saving and reduce CO2 emissions. These are Fujisawa
Sustainable Smart Town from 201427 and T-Grid from 2017. Ene-farms will become thus in
important resources for virtual power plants in Japan [6].
Toshiba Energy System & Solutions (Toshiba ESS) sells a pure hydrogen PEFC system called
H2REX with high efficiency (electric efficiency between 50 and 55%, and total efficiency of95%), that can start and stop in just a few minutes, facilitating the daily operation. It is available
in 700 W for residential applications (ene-farm), 3.5 kW, and 100 kW, and 1 MW is underdevelopment28. If no hydrogen is available, Toshiba’s H2OneTM system will produce and store
its own using renewable energy. Since it is an independent system, it could supply electricity
and hot water in times of emergency for evacuation sites to about 300 people for a week.
Besides, as a hydrogen local production and consumption system, it also contributes to regional
revitalization29. Toshiba started the demonstration operation of H2One at the Kawasaki Marien
public facility and Higashi-Ogishima-Naka Park in the Kawasaki Port area, in Kanagawa
Prefecture. Later, it was also installed at Musashi-Mizonokuchi Station on the JR Nambu Linein Kawasaki City, in the Rakuten Kobo Stadium in Sendai, in Tsuruga City in Fukui Prefecture,and in the Tokyu Construction Institute of Technology, Kanagawa Prefecture.
Toshiba ESS installed a pure hydrogen fuel cell system in a new Kawasaki King Skyfront
Tokyu REI hotel that helps to meet the energy needs and cogenerated hot water for the bath andshower in each room (Chapter 3.4.5). The hydrogen is provided by Showa Denko K.K. (SDK),a Tokyo-based chemical company that has developed a method of extracting hydrogen gas fromrecycled used plastic, using the gas as material for ammonia30.
Manufactures’ aim is the standardization of the product and the mass production to reduce thecost. On the other hand, they have continuously improved the performance of their products,
making them also more compact. For example, the first generation Panasonic’s model in 2009
weighed 125 kg, occupied 3.9 m2 and had a durability of 40,000 hours, while its fifth-generation
24

Toshiba, 14 June 2017: https://www.toshiba.co.jp/about/press/2017_06/pr1401.htm.
Aisin Seiki: http://www.aisin.co.jp/cogene/enefarm/products/ (in Japanese).
26
Panasonic: https://panasonic.biz/appliance/FC/lineup/select.html (in Japanese).
27
Fujisawa SST: https://fujisawasst.com/EN/.
28
Toshiba: https://www.toshiba-energy.com/en/hydrogen/product/fuel-cell.htm.
29
Toshiba, 20 April 2015: http://www.toshiba.co.jp/about/press/2015_04/pr2001.htm.
30
Toshiba, 30 May 2018: https://www.toshiba-energy.com/en/info/info2018_0530.htm.
25

23

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

model weighs 65 kg, occupies 1.7 m2 and has a durability of 90,000 h, with a cost reduction
ratio of 1/4 [19]. The frequency of maintenance has been reduced from once every five years toover ten years, increasing the maintenance’s period, that can be done also by remote, which
reduces this cost for the customers.
In March 2018, IHI Corporation, in collaboration with Kyoto University, Toyota Industries,
ceramics manufacturer Noritake Co., chemical companies Tokuyama, Nippon Shokubai, andMitsui Chemicals, announced the successful in the development of a residential SOFC of 1 kW
that directly uses ammonia for hydrogen power generation instead of natural gas without
requiring a reformer to convert the fuel to hydrogen. The efficiency was comparable to that ofresidential fuel cells already in use31. Based on that result, they aim to increase the size of thesystem for business and industrial applications. This project is part of the SIP’s Energy Carriers
program (Chapter 3.4.1).
The total number of ene-farms deployed (and subsidized) up to July 2019 was 289,125. They
are contributing to the energy conservation and emissions reduction in the residential sector, andthey could also become into important virtual power plant (VPP) resources [6].

Figure 14: Dissemination of Ene-farms in Japan. Evolution of Costs and Subsidies
289

300

276

3.000

235

200

2.500

195

2.440

2.000

154
150

1.400

113

1.190

100

1.500

JPY (1,000)

Number of Ene-farm (1,000)

3.030
250

3.500

1.000

71,8
940

50
2,55

10,0

2009

2010

19,3

430

37,5

500

0
2011

2012

2013

2014

2015

2016

2017

Fiscal Year

120
80
0
60
2018 2019(July)PEFC

SOFC

Cost PEFC

Cost SOFC

Subsidy PEFC

Subsidy SOFC

0

Source: Author, with data from METI.

31

IHI, 16 May 2018: https://www.ihi.co.jp/ihi/all_news/2018/technology/2018-5-16/index.html (inJapanese).

24

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLSAs the volume of installations increased, the average unit installation cost dropped 69% for
PEFC, from JPY 3.03 million in 2009 to JPY 940,000 in 2018, and 51% for SOFC, from JPY
2.44 million in 2011 to JPY 1.19 million in 2018. Therefore, the subsidy, which was initially set
at JPY 1.4 million in 2009 for PEFC and at JPY 430,000 in 2014 for SOFC, was also
progressively reduced over time until JPY 60,000 for PEFC and JPY 120,000 for SOFC in 2018.
From 2019, there is no fixed subsidy for PEFC since they reached their target price (Figure 14
and Table 2).

Table 2: Number, Costs and Subsidies of Ene-farms in Japan
Sale Price(JPY 1,000)

Units

SOFC

Subsidy(JPY 10,00)

FY

PEFC

SOFC

Total

Per Year

PEFC

PEFC

SOFC

2009

2,550

0

2,550

2,550

3,030

1,400

2010

9,998

0

9,998

7,448

3,000

1,350

2011

18,958324

19,282

9,284

2,530

2,440

1,050

2012

34,6282,897

37,525

18,243

2,170

2,250

700

2013

66,217

5,588

71,80534,280

1,720

1,970

450

2014

104,564

8,471

113,035

41,230

1,530

1,820

380

430

2015

142,494

11,182

153,676

40,641

1,360

1,750

300

350

2016

169,142

25,568

194,71041,034

1,130

1,350

150

190

2017

191,556

43,720235,276

40,566

1,020

1,280

110

160

2018

212,519

63,698276,21740,941

940

1,190

60

120

2019
(July)

216,460

72,665289,125

12,908080

Source: Author, with data from METI.

The fiscal year ends in March, which could bring discrepancies with data depending on thesource. There is also a slight difference compared to the total units shipped and delivered bymanufacturers (Figure 15), which include ene-farms that were installed without subsidies.
According to the Advanced Cogeneration and Energy Utilization Center Japan, the number ofunits shipped and delivered by manufactures was 313,891 by June 2019.
The target is to reach 1.4 million of cumulative sales of ene-farms by 2020, a number that willclearly not be met, and 5.3 million by 2030, equal to around 10% of households, which will
reduce the total residential energy demand by 3% and the emissions by 4% compared to the useof gas boilers and grid electricity. Later, it expects these products to replace traditional
residential systems. The government aims to lower the price to JPY 800,000 for PEFC (alreadyachieved) and to JPY 1 million for SOFC by 2020 to secure their later autonomous diffusion
and achieve a period for recovering the investment of between 7 and 8 by 2020, and of 5 years
by 2030. From 2030, the target is to diffuse pure hydrogen fuel cell cogeneration systems using
CO2-free hydrogen.

25

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

Figure 15: Ene-farm Manufacturers Sales Volume Annually (only in Japanese)

Source: Advanced Cogeneration and Energy Utilization Center Japan32.

To achieve these targets, Japan encourages technological development to further improve thepower generation efficiency for SOFC and the fuel heat utilization factor for PEFC. Japan will
also explore other markets such as apartment buildings, cold regions, Europe and other regions
out of Japan with high heat demand; expand initiatives to promote the surplus electricity trade;
promote the introduction of commercial and industrial fuel cells; and review the regulations for
simplifying, for example, the electrical work. From 2030, Japan will attempt to diffuse purehydrogen fuel cell co-generation systems using CO2-free hydrogen.
Indeed, major Japanese ene-farm manufacturers started sales overseas through an alliance withboiler manufacturers in Europe, though the devices require an adaptation to manage, forexample, the impure substances that the European natural gas has, and some regulatory
differences [19]:32

Advanced Cogeneration and Energy Utilization Center Japan:
https://www.ace.or.jp/web/works/works_0090.html (only in Japanese).

26

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS-

Panasonic: residential FC system jointly-developed with Viessmann, a major heating
German company, was released in Germany from April 2004, launching a new model
corresponding to wider gas types in April 2016. Under the initiative of ADEME, theFrench Environment & Energy Management Agency, Engie and Viessmann/Panasonictested the reliability and usability of FC systems all across France since 2015.

-

Toshiba: in the spring of 2014, Toshiba announced the development of residential FC
system and marketing alliance with BAXI Innotech GmbH, an affiliated company of
BDR Thermea Group, to provide PEFC units in Europe. They started distribution in
Korea in March 2015.

-

Aisi Seiki: Provided residential SOFC for Bosch in Germany as part of the Enefield
Project33.

Commercialization of cogeneration systems for industry and building use also started in 2017,
where SOFC occupies the majority of the market, and which it is expected to greatly contributewith the energy conservation and CO2 emissions reduction targets in the commercial andindustrial sectors. The government aims to have 1 GW of these larger systems by 2030.
As examples, Hitachi Zosen Corporation is conducting a NEDO’s demonstration test to evaluate
the safety and reliability of the SOFC power system for commercial and industrial use throughat least 4,000 hours of continuous operation. It installed the system in two locations in Osaka.
This demonstration test is part of Hitachi Zosen Corporation's efforts as a participant in the"H2Osaka Vision Promotion Conference", which is a joint effort between Osaka Prefecture andOsaka City that aims to create advanced hydrogen projects 34 . Hitachi Zosen had previously
signed a business development agreement with the Finish Wärtsilä in March 2010 to develop
and market fuel cell-based power plant solutions for distributed power generation applicationsin Japan. The combined heat and power applications, which can be run on either city gas orbiogas, feature the use of Wärtsilä’s SOFC technology35.
In October 2017, Miura Co., Ltd. started the sales of a 4.2 kW SOFC cogeneration system forcommercial use which achieved 48% electrical efficiency and 90% overall energy efficiency,
and which was developed based on the results of a NEDO project36 (Figure 16). In June 2019, it
announced the market launch of the new version with a higher electrical efficiency of 50% anddeveloped in partnership with the English Ceres Power. This unit will operate on mains gas
supply37.
33

Enefield Project was a promoting program to disseminate micro FC for CHP by installing about 1,000
units into houses in 11 participating European countries on a trial basis and validating its usefulness andeconomic efficiency from 2012 to 2017.
34
NEDO, 29 March 2017: https://www.nedo.go.jp/english/news/AA5en_100200.html.
35
Wärtsilä, 2 March 2010: https://www.wartsila.com/media/news/02-03-2010-wartsila-and-hitachizosen-sign-agreement-to-develop-and-market-fuel-cell-based-power-plant-solutions-in-japan.
36
NEDO, 7 August 2017: https://www.nedo.go.jp/english/news/AA5en_100255.html.
37
Ceres Power, 20 June 2019: https://www.cerespower.com/news/latest-news/miura-to-launch-new-chpfuel-cell-product-for-the-commercial-building-sector-in-japan/.

27

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLSIn June 2014, Mitsubishi Hitachi Power Systems, Ltd. (MHPS) and NGK Spark Plug Co., LTD.
(NGK), a manufacturer primarily of ceramic products, signed an agreement on a business tie-up
creating SOLIDIA and targeting cost-competitive mass production of cylindrical cell stacks,
power-generating elements used in SOFC 38 . Later, in September 2016 and under a NEDO
program, MHPS started demonstration testing of a pressurized hybrid power generation system
integrating a SOFC stack and a micro gas turbine that generates power and makes effective useof waste heat. The 250 kW system was installed in Tokyo Gas Co., Ltd. Senju Techno Station,
in Kyushu University Ito Campus, in a factory of Toyota Motor Corporation, which is jointly
developing the hybrid system, in a plant of NGK, and in a facility of Taisei Corporation. At thevarious venues, demonstration testing will focus on the operating efficiency, operability anddurability in diverse environments39. A new 1,000 kW class unit is under consideration.

Figure 16: Examples of Fuel Cell for Commercial and Industrial Application

Source: Technova [20].

Toshiba has also developed solutions for larger-scale applications, such as the Alkaline Water
Electrolysis Hydrogen Production System (AEC), which is cheaper than other methods because
does not contain noble metals and can operate in cold regions, and a next-generation waterelectrolyzer called Solid Oxide Electrolysis Cell (SOEC) for producing large quantities of highquality hydrogen, with a 30% higher efficiency and lower power consumption thanconventional PEFC. Its hydrogen energy storage systems, H2Omega™, employs SOFC and
SOEC and can supply 10,000 households with electricity for eight hours with its 5 MW of grid
power and 32 MWh of storage capacity40.

38

MHPS, 20 June 2014: https://www.mhps.com/news/20140620.html.
MPHS, 21 September 2016: https://www.mhps.com/news/20160921.html.
40
Toshiba: https://www.toshiba-energy.com/en/hydrogen/rd/index.htm.
39

28

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLSIn March 2019, four companies in the Morimura Group (Noritake, Toto, NGK Insulators and
NGK Spark Plug) concluded an MoU regarding the establishment of a joint venture foraccelerating the commercialization of SOFC in Japan41.
In September 2019, Toyota developed a stationary fuel cell generator based on the Mirai FC
system. It installed the generator at its Honsha Plant in Toyota City, Aichi Prefecture, with theaim of verifying its applicability in offices, plants, and other commercial scenarios42.
The Basic Hydrogen Strategy calls for improving the efficiency and durability of thiscommercial and industrial systems, achieving an efficiency over 55% by 2025 and over 65% in
the future, and a durability from 90,000 hours to 130,000 hours by 2025. It aims to realize ofgrid-parity in these sectors combining the utilization of exhaust heat by 2025 by developing offuel cell stack technologies for getting higher efficiencies and power densities, and for
eliminating the cause of degradation. For low voltage, the target is capital expenditures(CAPEX) of JPY 500,000 per kW and a power generation cost of JPY 25 per kWh, while forhigh voltage, it expects a CAPEX of JPY 300,000 per kW and a power generation cost of JPY
17 per kWh [9].
Regarding subsidies, the original plan of the government was to provide subsidies for five years,
which were extended later up to ten years. However, since ene-farms contribute to reducing theenergy consumption, it is one of the technologies that can get subsidies from the ZEH program,which is a hot topic in Japan [6]. The minimum subsidy for ZEH is JPY 700,000 (around EUR
5,600) in FY 2019, and it is available from different ministries and local governments.
From FY 2016, the government established an incentive program that depends on the difference
between the base price of the product and the target price, which is the level at which selfsustaining dissemination can be achieved, set at JPY 800.000 for PEFC and JPY 1 million for
SOFC. The fixed amount of subsidy paid is about 1/3 of that difference. Because the base priceis reduced year by year, the fixed subsidy also decreases. In the FY 2019 incentive program,
subsidies vary according to the reference and upper-limit prices shown in Table 343:
Therefore, the subsidy amount for SOFC is JPY 80,000 (JPY 120,000 in FY 2018) when the
total cost, including equipment and installation that has to be differentiated, is below thereference price. If the cost exceeds the base price but is below the ceiling price, the subsidy willbe the half, JPY 40,000. This means that customers are incentivized with higher subsidies topurchase cheaper systems in order to increase cost competitiveness. There is no fixed subsidy
for PEFC (JPY 60,000 in FY 2018) since the base price already got the target price set by thegovernment.

41

NGK Insulators, 4 March 2019: https://www.ngk-insulators.com/en/news/asset/20190304_1E.pdf.
Toyota, 18 September 2019: https://global.toyota/en/newsroom/corporate/29246629.html.
43
Fuel Cell Association: http://www.fca-enefarm.org/subsidy31/outline/page05.html.
42

29

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

Table 3: Subsidies for Ene-farms in FY 2019-

PEFC base price: JPY 800,000
PEFC ceiling price: JPY 960,000
SOFC base price: JPY 1,230,000
SOFC ceiling price: JPY 1,340,000
If the price isbelow the base
PEFC
SOFC

If the price isbelow the ceilingIf the price isabove the ceilingno fixed amountJPY 80,000(EUR 650)

none

JPY 40,000 (EUR
325)

none

Source: Author, with data from the Fuel Cell Association.

In addition, there are additional incentives of JPY 30,000 for units, both PEFC and SOFC,
installed in already built buildings, in apartments buildings, in regions classified as cold, and if
the fuel is LP gas. And the base and upper-limit prices may shift depending on the system
configuration shown in Table 4.

Table 4: System Configuration of Ene-farms and Limit’s Increment

Parameter

Increment (JPY)

Specification for cold regions
Equipment for independent operation+ 300,000
Type A: integrated+ 50,000

Type B: not integrated+ 40,000

Residential building(a steel frame reinforced concrete structure, divided intodwelling units independently occupied)+ 120,000

Small or medium-size gas supplier (classified as SMEs)+ 100,000

LPG+ 120,000

Domestic natural gas+ 60,000

PEFC- 270,000

SOFC- 300,000

Fuel used
Use of an existing water heater as a
backup water heater

Source: Author, with data from the Fuel Cell Association.

30

HYDROGEN MARKET IN JAPAN: STATIONARY FUEL CELLS

The total budget from the government for accelerating the dissemination and cost reduction ofene-farm, including the support for its business and industrial use from FY 2017, was JPY 8.9
billion in FY 2018, reduced from JPY 9.36 billion the previous year (Table 1).
Additionally, some regional/local governments also offer subsidies for the installation of Enefarms 44 . For example, TMG offers 1/5 of the equipment cost, with an upper limit of JPY
100,000 for detached houses and JPY 150,000 JPY for apartment complexes, Sapporo City
(Hokkaido Island) offers JPY 150,000 for houses, and Fukuoka City (Kyushu Island) offers JPY
50,000.

44

Kankyo-business: https://www.kankyo-business.jp/subsidy/enefarm/ (only in Japanese).

31

HYDROGEN MARKET IN JAPAN: MOBILITY

3.2. MOBILITY
The transportation sector contributed 19% to entire CO2 emissions in Japan in 2015, withvehicles (passenger cars and trucks) accounting for 85% of those. The government target is to
reduce it 25% by 2030 increasing the popularization of the next-generation vehicles andreaching a share in the new car sales between 50% and 70% by 2030 (Table 5). Expecting toeffectively reduce CO2 emissions and bringing new value, including contributions to disaster
response, METI published the Road Map for EVs and PHVs toward the Dissemination ofElectric Vehicles and Plug-in Hybrid Vehicles in March 201645.

Table 5: Next-generation Vehicles Target in 2030

Year

2017

2030

Conventional cars

63.97%

30 - 50%

Next generation cars

36.02%

50 - 70%

Hybrid Electric Vehicles (HEV)

31.2%

30 - 40%

Battery Electric Vehicles (BEV)

0.41%

Plug-in Hybrid Electric Vehicles (PHV)

0.82%

Fuel Cell Vehicle (FCV)

0.02%

3%

Clean Diesel Vehicle (CDV)

3.52%

5 - 10%20 - 30%

Source: Author, with data from METI [21].

The government set the target to increase the number of BEVs and PHVs to up to one million
by 2020, though, according to the Japan Automobile Manufacturers Association (JAMA), there
were only around 255,000 units at the end of 2018 (Table 6), so it looks difficult that Japan
meets that target, in contrast to the target for HEV that has already been achieved successfully.
Bloomberg’s estimation is that EVs will make up 17% of all new vehicle sales in Japan by 2030.
Therefore, at this stage, policy support from the government is still indispensable in Japan.
As an active member of Electric Vehicles Initiative (EVI), a multi-governmental policy forum
dedicated to accelerating the deployment of EV worldwide, and because of the Government
Fleet Declaration announced at the Marrakech Climate Change Conference in November 2016[23], the Japanese government is making efforts to ensure that all government vehicles will be
next-generation vehicles by 2030. As an intermediate goal, approximately 40% of thegovernment vehicle fleet, around 9.000 units, will be next-generation vehicles by 2020, which
will contribute to Japan’s one million target by 2020.

45

METI, March 23, 2016: http://www.meti.go.jp/english/press/2016/0323_01.html.

32

HYDROGEN MARKET IN JAPAN: MOBILITY

Table 6: Next-generation Passenger Car New Registrations
Year

HEV

PHV

BEV

FCV

CDV

Total

2008

108,518

0

0

0

0

108,518

2009

347,999

0

1,078

0

4,364

353,4412010

481,221

0

2,442

0

8,927

492,5902011

451,30815

12,6070

8,797

472,727

2012

887,863

10,96813,469040,201

952,5012013

921,045

14,122

14,756075,4301,025,353

2014

1,058,402

16,178

16,1107

78,822

1,169,519

2015

1,074,926

14,188

10,467411

153,768

1,253,760

2016

1,275,560

9,390

15,2991,054

143,468

1,444,771

2017

1,385,343

36,00418,092

849

154,8031,595,091

2018

1,431,980

23,23026,533

612

176,725

1,659,080

Total

9,424,165

124,095

130,853

2,933

845,305

10,527,351

Source: Author, with data from JAMA [22].

Figure 17 shows the share of next-generation vehicles in new passenger car registration in Japan
from 2008 to 2018.

Figure 17: Share of Next-generation Vehicles in New Passenger Car Registration (in %)Source: Author, with data from JAMA [22].

33

HYDROGEN MARKET IN JAPAN: MOBILITYIn April 2018, a Strategic Commission for the New Era of Automobiles was launched by METI
and has been studying the strategies that the Japanese automobile industry should take to lead
global innovations and proactively contribute to solutions to global issues including climatechange. In August 2018, METI released a report with the conclusions, setting long-term goals
such as having all new passenger cars be electric by 2050 and reducing GHG emissions of asingle passenger vehicle by 90% by 2050. Realize a “Well-to-Wheel Zero Emission” policy to
reduce vehicles’ total emissions footprint to zero, from fuel and power production to automobile
operation, is also a target. It established policies and key actions to achieve these goals46.
In April 2019, METI, in collaboration with 38 organizations including car manufacturers,
energy companies, municipalities and other entities proactively engaging in efforts for utilizingof next-generation vehicles and willing to share information on current situations of their own
efforts and challenges, decided to launch a new body called the “Council for Promoting Society
Utilizing of Electrified Vehicles” to advance dissemination of these vehicles47.
There is also a growing expectation in Japanese society about the function of BEVs, PHVs and
FCVs to supply electricity not only in case of disasters but also as important resources of theenergy system through the Vehicle-to-Grid (V2G) connection [6].

3.2.1. Fuel Cell Vehicles
Compared to BEVs, the deployment of FCVs is being slower because they are more difficult to
produce, they are much expensive, and there are not enough refueling stations. However,hydrogen features more energy density than lithium-ion batteries, what makes FCVs better thanother zero-emission vehicles for long-range transportation, especially useful for heavy goods
trucks and buses because they are very hard to electrify with batteries. FCVs can also berecharged in just some minutes. Therefore, their usability is comparable to that of gasolinepowered vehicles, which represents a high advantage compare to electric vehicles.
Globally, FCVs’ stock exceeded 12.900 units as of end 2018, showing an 80% increase
compared to the previous year. The US, mainly California, had the largest fleet with 5,899 units,
following by Japan and China, with 2,933 and 1,791 units respectively48 (Figure 18).
The Strategic Road Map for Hydrogen and Fuel Cells, including the deployment of FCVs, waspublished in March 2016, establishing a target of 40,000 FCVs by 2020, 200,000 by 2025 and
800,000 by 2030. Regarding the infrastructure, it included the installation of 160 refueling

46

METI, August 31, 2018: http://www.meti.go.jp/english/press/2018/0831_003.html.
METI, 8 April 2019: https://www.meti.go.jp/english/press/2019/0408_006.html.
48
IEA AFC TCP, 26 April 2019: http://www.ieafuelcell.com/fileadmin/publications/201904_AFC_TCP_survey_status_FCEV_2018.pdf
4734

HYDROGEN MARKET IN JAPAN: MOBILITY

stations by 2020, 320 by 2025 and around 900 stations by 2030, making them financiallyindependent by the second half of the 2020s (Figure 19).

Figure 18: Stock of FCEV as of end 2018

Source: Author, with data from the IEA Technology Collaboration Programme, Advanced fuel Cells.

Figure 19: Targets for the Dissemination of FCVs and HRS in Japan

Source: Japan Hydrogen Station Network Joint Company or Japan H2 Mobility (JHyM)49.

49

JyHM: https://www.jhym.co.jp/en/nav-about/.

35

HYDROGEN MARKET IN JAPAN: MOBILITY

According to The Association of Hydrogen Supply and Utilization Technology (HySUT), thenumber of FCEVs in Japan has grown until 3,433 as of the end of August 2019 [24], so it isclear than the government’s target by 2020 will not be met. The Japanese market is comprised
entirely of Japanese auto manufacturers, with 3,182 Toyota Mirai and 251 Honda Clarity.
Toyota Motor Corporation leads the Japanese mobility hydrogen market, releasing the first fuelcell vehicle, forklift and bus in Japan. In 2015, it allowed the royalty-free use of around 5,680
patent licenses during five years regarding fuel stacks, hydrogen tanks and fueling infrastructure
to stimulate the development of low-cost technology among domestic and international
manufacturers.
Toyota started sales of its Mirai (“future” in Japanese) fuel cell sedan model in December 2014.
It uses the Totoya Fuel Cell System (TFCS), which combines hybrid technology with fuel cell
technology and it is composed of Toyota FC stacks and two high-pressure (70 MPa) hydrogentanks with a total volume of 122.4 litres, which can be recharged in just three minutes. They
provide a travel range of about 650 km on one charge50, around 500 km under real conditions
according to the American EPA51. The TFCS is more energy-efficient than internal combustion
engines and does not emit CO2 or other substances of concern (SOCs) when driven. However,its main disadvantages are its price, JPY 7.24 million including taxes (EUR 58,900) minus thegovernment’s subsidy of JPY 2.02 million for environmentally friendly cars, and the lack ofrefueling stations.
Toyota and BMW have been cooperating on fuel cell technology since 2013. Under thispartnership, BMW is developing a way to compress hydrogen at ultra-low temperatures toincrease its storage volume, using as a base a fuel cell stack developed by Toyota. BMW
expects to have its own fuel cell model sometime after 202052.
Toyota aims to increase its annual sales of FCVs globally from around 3,000 units in 2017 to
30,000 units. In the Japanese market, it wants to reach sales of at least 1,000 units per monthand about 10,000 units annually from 2020 53 . To prepare for this growth, the company isbuilding two new facilities, one for expanding fuel cell stack mass production, and a new line in
an existing plant to manufacture high-pressure hydrogen tanks. Manufacturing both components
at scale is critical to achieving lower system costs and wider availability.
The other available model in Japan is the Honda Clarity Fuel Cell, which was launched in
March 201654, and has a travel range of around 750 km (580 km under real conditions according
to the American EPA) and a price of JPY 7.66 million (EUR 62,300). At the moment, this50

Toyota, 18 November 2014: https://global.toyota/en/detail/4198334.
Fueleconomy – US EPA: https://www.fueleconomy.gov/feg/fcv_sbs.shtml.
52
Reuters, 29 October 2015: https://www.reuters.com/article/autoshow-japan-bmw/bmw-plans-tomarket-sedan-fuel-cell-vehicle-after-2020-idUSL3N12T3TN20151029.
53
Toyota, 24 May 2018:https://global.toyota/en/newsroom/corporate/22647198.html?_ga=2.201033063.85894042.15577240271278002982.1557724027
54
Honda, 10 March 2016: https://global.honda/newsroom/news/2016/4160310eng.html.
51

36

HYDROGEN MARKET IN JAPAN: MOBILITY

model is available only for corporate lease for around JPY 100,000 per month, and if they areleased for a minimum of 4 years, they are also eligible for the same national and prefectural
subsidies calculated on a monthly basis [25].
Honda Motor Co. began leasing of the Honda FCX in 2002 in the US and Japan, including its
successor, the FCX Clarity. In July 2013, Honda and General Motors (GM) announced a longterm, agreement to co-develop next-generation fuel cell system and hydrogen storage
technologies, aiming for the 2020 time frame. The collaboration expects to succeed by sharing
expertise, economies of scale and common sourcing strategies55.
Finally, Nissan Motor Co., Ltd. signed a three-way agreement with Daimler AG and Ford
Motor Company in January 2013 for the joint development of a common fuel cell system tospeed up the availability of the zero-emission technology and significantly reduce investment
costs56. It also signed a partnership with the English Ceres Power, a fuel cell technology andengineering company, and The Welding Institute to further develop fuel cell technology for EV
application in the UK57.
In addition to the national subsidy of JPY 2.02 million provided by METI, each prefecture alsooffers a subsidy of up to half the national one, depending on its budget. For example, the Tokyo
Metropolitan Government (TMG) offers the full JPY 1.01 million subsidy for all FCVs,
reducing the cost of a Toyota Mirai to around JPY 4.21 million (EUR 34,200). Subsidies areslightly higher for taxi operators, with a national subsidy between JPY 2.23 and 2.36 million
provided by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), and local
subsidies between JPY 1.11 and 1.18 million, bringing the cost of the Mirai to between JPY 3.9
and 3.7 million [25].
In June 2019, TGM started an open call for car sharing and rental car businesses operators with
EVs and FCVs, subsidizing part of the operation costs. Those options are expanding in recent
years as an easy way of using cars in Tokyo. This measure will help TMG to achieve its targetof 50% of zero-emissions vehicles (ZEV) in new passenger car sales by 2030. The name of the
project is “ZEV introduction in car rental and car sharing promotion business”, and it is plannedfor 100 units, 60 EVs and 40 FCVs58.
In terms of fuel cost, a kilogram of hydrogen costs between JPY 1,000 and 1,200 (EUR 8.13
and 9.76). For example, in the centre of Tokyo, besides the famous Tokyo Tower, there is ahydrogen refueling station (HRS) owned by Iwatani with a fixed price of JPY 1,100 per
kilogram. One kilogram of hydrogen has approximately the same energy as one gallon of55

Honda: https://www.hondanews.ca/en/news/release/GM-Honda-to-Collaborate-on-NextGenerationFuel-Cell-Technologies
56
Renault Nissan Mitsubishi, 28 January 2013: https://www.alliance-2022.com/news/the-strategiccooperation-between-daimler-and-the-renault-nissan-alliance-forms-agreement-with-ford-to-acceleratecommercialization-of-fuel-cell-electric-vehicle-technology-2/.
57
Ceres Power: https://www.cerespower.com/news/latest-news/ceres-wins-7m-uk-funding-to-supportelectric-vehicle-application-with-nissan/.
58
TMG, 19 June 2019: http://www.metro.tokyo.jp/tosei/hodohappyo/press/2019/06/19/12.html.

37

HYDROGEN MARKET IN JAPAN: MOBILITY

gasoline. Because FCVs are two or three times as efficient as a gasoline vehicle, they do notneed as much fuel59. Given that Toyota Mirai holds approximately 5 kilograms of hydrogen, afull tank costs between JPY 5,000 and 6,000 (EUR 40.6 – 48.8), a similar price or even lower
than a gasoline vehicle tank, taking account an average cost per litre around JPY 140 in Japan(EUR 1.14).
It is obvious that the expansion of the FCVs will need a notable reduction in its price. The
government aims to achieve a cost similar than HEVs by around 2025, reducing the pricedifference from the current JPY 3 million to JPY 700,000. It has targets for reducing the cost of
the main components, such as the cost of the fuel cell system from around JPY 20 k/kW to JPY
5 k/kW, and the cost of the hydrogen storage system from around JPY 700,000 to JPY 300,000[9].
This effort will need cooperation among stakeholders, developing technologies for reducing theamount of platinum used, and the amount of carbon fibre used in the hydrogen storage system.
NEDO is developing technologies for reducing the amount of platinum in the electrode catalyst
and increasing the performance of the membrane electrode assembly used in the fuel cells.
Toyota is also working on an alternative platinum catalyst. It expects to cut platinum by twothirds in its next Mirai’s version to around 10 grams per vehicle, down from 30 grams in thecurrent model. This area also represents an opportunity for European stakeholders. For example,
Bosch signed a deal with Powercell Sweden AB to mass-produce fuel cells using only as muchplatinum as a diesel catalytic converter, which typically uses three to seven grams60.
Purchases of next-generation cars are also encouraged through taxation and subsidies. In Japan,
three kinds of taxes are imposed on vehicles: the acquisition tax imposed at the time of new orused vehicle purchase, the automobile tonnage tax imposed according to the weight of thevehicle at new registration and at every vehicle inspection, and the consumption tax, imposedon the owner every year. New next-generation vehicles including FCVs are exempt of theacquisition and tonnage (initial and first inspections) taxes, both called as the “eco-car tax
reduction”. The acquisition tax will be abolished effective from October 1, 2019, in tandem withthe scheduled rate increase to 10% in the consumption tax.
Additionally, Figure 20 shows how to calculate the subsidy for the purchase of a clean energy
vehicle depending on the type.
Toyota also introduced the first two fuel cell forklifts in 2017 at its Motomachi plant, Aichi
Prefecture, followed by an additional twenty in 2018 and fifty in 2019, and with a target of 170
or 180 units by around 2020. The Japanese government aims to increase the number of FC
forklifts to around 500 by 2020 and to around 10,000 by 2030, expanding this technology tooverseas markets. There were 160 units by June 2019.

59

Mirai Fueling: https://ssl.toyota.com/mirai/Mirai_Fueling.pdf.
Reuters, 13 May 2019: https://www.reuters.com/article/us-platinum-week-bosch-fuelcellsexclusi/exclusive-bosch-goes-for-platinum-light-fuel-cells-idUSKCN1SJ0FG.
6038

HYDROGEN MARKET IN JAPAN: MOBILITY

Toyota started the sales of its fuel cell bus, developed in collaboration with its bus and truck
subsidiary Hino Motors, to TMG in February 2017, and introduced the final version, the Sora
FC bus (Sky, Ocean, River, Air, representing the earth’s water cycle) in March 201861. It aims
to deliver over 100 units ahead of the Tokyo 2020 Olympic and Paralympic Games. It has acapacity for 79 people, and 10 tanks with a nominal working pressure of 70 MPa carrying 600
litres of hydrogen, which provide a travel range of around 200 km. There were 18 FC-buses byJune 2019.

Figure 20: How to Calculate the Subsidy for the Purchase of Clean Energy Vehicles in 2018

Source: Nex Generation Vehicle Promotion Center (NeV)62.

61
62

Toyota, 28 March 2018: https://global.toyota/en/newsroom/corporate/21863761.html.
NeV: http://www.cev-pc.or.jp/english/cev-subsidy.html.

39

HYDROGEN MARKET IN JAPAN: MOBILITY

With an external power feeding system of 9 kW / 235 kWh, this bus has also potential use as an
emergency power source following disasters, covering 4.5 days of power supply for an
evacuation centre. Figure 21 shows a comparison of the power supply capacity that fuel cells
buses and vehicles, and electric vehicles have for disaster response facilities in Japan, which are
hospitals, convenience stores and evacuation shelters (schools).
The bus costs around JPY 105 million (about EUR 854,000), though the subsidies from MoE of
JPY 35 million, one third of the cost, and from local governments, expected between JPY 35
and 50 million, would eventually reduce the price to between JPY 20 and 35 million (EUR
163,000 and 285,000) [25]. The targets of the government are to reduce that cost of JPY 105
million by half in the early 2020s, have 1,200 FC buses on the road by 2030, and expand theregions where they run. To achieve this, it promotes the deployment of refueling stations for FC
buses, the development of new technology that enhances fuel efficiency and durability, and the
expansion of types other than city buses.

Figure 21: Fuel Cell Vehicles and Buses as Emergency Power Source

Facility

Hospital

24/7 hConvenience
Store

Evacuation
Shelter(School)

FC Busesneededfor emergency(455 kWh/day)

FCVs neededfor emergency(120 kWh/day)EVs neededfor emergency(24 kWh/day)2 buses

8 FCVs40 EVs9,628
kWh/day

963 kWh/day(10% capacity:
emergency
equipment
only)

0.5 buses

2 FCVs10 EVs500
kWh/day

235 kWh/day(47% capacity:
refrigeration
only)

0.22 buses

0.83 FCVs

4 EVs

OrdinaryPowerConsumption

Emergency
Power
Consumption-

100 kWh/day(lighting, hot
water
for 200 people)

Source: Author, with data from METI63.

TGM plans to have 6,000 FCVs, 100 FC buses and 35 HRSs by 2020, spending around JPY
45.2 billion in subsidies to support efforts towards this target until the Tokyo 2020 Olympic and
METI, “About Fuel Cells Vehicles”, 4 March 2014:
https://www.meti.go.jp/committee/kenkyukai/energy/suiso_nenryodenchi/suiso_nenryodenchi_wg/pdf/00
3_02_00.pdf (in Japanese).
6340

HYDROGEN MARKET IN JAPAN: MOBILITY

Paralympic Games. It aims to have 100,000 FCVs and 80 HRSs by 2025, and 200,000 FCVs
and 150 HRSs by 2030 [26]. From June 2019, it subsidies up to JPY 50 million per FC bus,which can be combined with the national subsidy64. It also provides JPY 1.01 million to FCVs’buyers and more than 80% of the costs of building an HRS, capping the costs at around JPY 100
million, similar than building a gasoline station65.
Fukushima Prefecture also launched subsidies to support some of the costs for introducing FC
buses in the prefecture in June 2019 in order to promote the realization of the hydrogen society66.
In addition, the Japanese government will promote the development of guidelines andtechnologies for the expansion of hydrogen use in the fields of FC trucks, ships and trains.
Toyota provided two small fuel-cell trucks to convenience store chain Seven-Eleven in 2019 forrestocking outlets in the Tokyo metropolitan area, planning to deploy more after confirming
their performance. They have a load capacity of 3 tons, can cover 200 km per full charge and it
takes about 5 minutes to be charged 67 . Since trucks both for business and personal uses
accounted for 36% of the transport sector’s total CO2 emissions [9], there is great potential toreduce emissions for this category. Regarding the travel range, FC trucks have advantages overelectric trucks.
MOE has also been supporting the development of FC truck technology, collaborating with
Tokyo R&D Co., Ltd (FC truck’s basic performances and practicality, and demonstrated on
public roads for its mass production) and Flat Field Co., Ltd (developed a FC garbage truck,tested its basic performances and identified optimal uses in actual garbage collection).
Besides, Toyota is collaborating with truck maker Kenworth, a unit of Paccar Inc., to build ademonstration fleet of 10 FC trucks with a travel range of about 500 km and a capacity of 36 ton
to run at the Port of Los Angeles. They are part of a million-dollar initiative funded by
California Air Resources Board68. On the other hand, a group of companies including Toyota,
Shell, Hyundai, Nikola Motors, Norwegian hydrogen station builder NEL Hydrogen Fueling,
and French industrial gas maker Air Liquide signed an MoU to work together to standardizehydrogen-fueling components that could get FC trucks on the road faster. The group wants thefueling nozzle, vehicle receptacle, dispenser hose and other components to be useable in all

64

Tokyo-CO2: 28 June 2019: https://www.tokyo-co2down.jp/company/subsidy/fc-bus/index.html (inJapanese).
65
The Japan Times, 20 January 2015: https://www.japantimes.co.jp/news/2015/01/20/business/tokyo-tospend-%C2%A545-billion-on-hydrogen-stations-subsidies-ahead-of-olympics/#.XNp0EuUzbIV.
66
Kankyo-business, 14 June 2019: https://www.kankyobusiness.jp/news/022603.php?utm_source=mail&utm_medium=mail190617_d&utm_campaign=mail (inJapanese).
67
The Japan Times, 7 Junio 2018: https://www.japantimes.co.jp/news/2018/06/07/business/seven-elevenuse-toyota-fuel-cell-trucks-deliveries-next-year/#.XNpecuUzbIU.
68
Kenworth: https://www.kenworth.com/news/news-releases/2019/april/kenworth-toyota-pola/.

41

HYDROGEN MARKET IN JAPAN: MOBILITY

FCVs69. Nikola Motors Company developed an FC truck in the US with a travel range of 1,900
km, though its commercialization will not start until 202170.
Finally, Toyota is working with other entities on other mobility projects:-

With East Japan Railway Company (JR East) to create a hydrogen-based mobility
partnership between railways and automobiles. Discussions are centred on theconstruction of hydrogen stations on land owned by JR East, the introduction of FCVs
and FC buses for local transportation, and the application of fuel cell technologies inrailway carriages71. Indeed, JR East announced the test of FC trains from FY 2021,
spending around JPY 4 billion on this project, and aiming to commercialize it by FY
2024 72 . It tested the world’s first hydrogen FC train in 2006, but it cancelled thedevelopment.
Alstom’s Coradia iLint, the world’s first hydrogen-powered train already in operation inGermany 73 is an example that this will be also a real future in Japan with potential
opportunities.

-

With The Japan Fisheries Research and Education Agency (FRA) to develop a fishingboat powered by hydrogen fuel cells in FY 2019 that will be tested in FY 202274. It will
be used at a tuna farm on the Goto Island chain, in Nagasaki Prefecture. The hydrogen
will be produced through electrolysis with the surplus energy of a closed offshore windfarm that Toda Corp. constructed off Fukuejima Island.
The government will also prepare a roadmap for expanding fuel cells for ships andconduct demonstration tests based on that roadmap.
Between 2014 and 2016, Toda Corporation, with MOE’s support, developed and testeda scale model of a low-carbon small-sized ship that utilized fuel cells. It also developed
water- and salt-proof FC unit for vessels and demonstrated at sea.

-

Regarding with FC motorcycle, it was reported that Suzuki Motor Corporation started
testing its model on public roads in 201675, though there has not been news about acommercialization date. It also jointed Intelligent Energy Holdings, a British company,
to produce an FC scooter.

69

Trucks, 21 February 2019: https://www.trucks.com/2019/02/21/toyota-nikola-hydrogen-truck-fueling/.
Nikola Motors Company: https://nikolamotor.com/motor.
71
Toyota, 27 Septiembre 2018: https://global.toyota/en/newsroom/corporate/24687658.html.
72
The Japan Times, 5 June 2019: https://www.japantimes.co.jp/news/2019/06/05/business/corporatebusiness/jr-east-test-hydrogen-fuel-cell-trains/#.XPnaFNIzbIU.
73
Alstom: https://www.alstom.com/our-solutions/rolling-stock/coradia-ilint-worlds-1st-hydrogenpowered-train.
74
Fuel CellsWorks, 4 January 2019: https://fuelcellsworks.com/news/japan-to-power-fishing-boats-withtoyotas-hydrogen-fuel-cells/.
75
Nikkei Asian Review, 27 December 2015: https://asia.nikkei.com/Business/Companies/Suzuki-to-testhydrogen-motorcycle-on-public-roads.
70

42

HYDROGEN MARKET IN JAPAN: MOBILITY

3.2.2. Refueling Stations
The dissemination of FCVs depends greatly on the increasing number of accessible HRSs since
this is the main concern of users, apart from the higher price of FCVs compare to electric
options. However, the network of HRSs is not being deployed as fast as the electric charging
points due to the high initial costs derived from the stringent regulatory framework.
Worldwide, there were 376 hydrogen refueling stations in operation as of end 2018. Japan led
the deployment with 100 stations.

Figure 22: Stock of HRS as of end 2018

Source: Author, with data from the IEA Technology Collaboration Programme, Advanced fuel Cells.

According to HySUT [24], there are 109 HRSs in Japan as of end of August 2019, concentrated
in four hubs (see Figure 23): Tokyo (Kanto), Nagoya (Chubu), Osaka (Kansai) and Fukuoka(Kyushu), from which 17 stations have on-site H2 production, 53 stations have off-site H2
production, and 39 are mobile stations. In FY 2019, there are 21 HRS installation plans76. A
frequently updated list can be found in http://fccj.jp/hystation/index.html#list. This number does
not include private stations. The future goal is to replace the filling stations by 2050.
Table 7 shows that the main developers in Japan are JXTG Nippon Energy and Iwatani and thatmost of the hydrogen stations are integrated into a multi-fuel station.

76

JHyM, 8 May 2019: https://www.jhym.co.jp/en/wp-content/uploads/2019/05/EN-JHyM_20190508HRS-installation-plan.pdf.

43

HYDROGEN MARKET IN JAPAN: MOBILITY

Figure 23: Location and Number of HRS and FCVs in Japan as of the end of August 2019

Source: HySUT [24].

Table 7: Breakdown of Retail HRSs in Japan as of the end of March 2019
HRS Operator

Nº of HRS

Features

HRS

Multi-Fuel(Integrated gas station)

18 HRS by JXTG

Multi-Fuel(hydrogen, gasoline, CNG, LPG)

Nissin HRS by Toho Gas

4

Multi-Fuel (hydrogen, CNG)

2 HRS by Tokyo Gas

Toho Gas

3.5 *Multi-Fuel (hydrogen, LPG)

Otsu HRS by Iwatani

Tokyo Gas

3

Station with convenience store

2 HRS by Iwatani

Near the highway

4 HRS by JXTG
1 HRS by Toyota Tsusho

AirportNarita HRS by Idemitsu Kosan
Kansai Airport HRS by Iwatani

JXTG Nippon Energy

41 (1)

Iwatani21.5 (4) *Nippon Mobile Hydrogen Station Services
Air Liquide Japan

6
6 (2)

Seiryu Power Energy

Osaka Gas, Shikoku Taiyo Nippon Station,
Toyota Tsusho Air Liquide Hydrogen Energy,
Chubu Gas, Hiroshima Toyota Trading,Mie Hydrogen Station, Fukushima Hydroeach 2[Total 14]

Idemitsu Kosan, Oita EBL Hydrogen Station,
Air Water, Shizuoka Gas, Takamatsu Teisan,
Saibu Gas, Tomoe Shokai, Nemoto Tsusho,
Hiroshima Toyopet, Yamamoto Oileach 1[Total 10 (1)]Total

109 (8)The numbers in ( ) indicate the number of stations jointly operated
with Japan Hydrogen Station Network (JHyM).
** There is one station operated jointly by Iwatani and Toho Gas.

Source: Author, with data from HySUT [24].

Honda Motor improved its Smart Hydrogen Station design, which creates hydrogen on-sitefrom the electrolysis of water using solar power and other renewable energy resources. In
addition, the hydrogen gas is pressurized without using a mechanical compressor, making the44

HYDROGEN MARKET IN JAPAN: MOBILITY

stations small and quiet compared with other HRSs, and reducing also its cost. Honda says thisstation can be installed for just between JPY 50 and 70 million (around EUR 400,000 and
570,000), after taking into account the subsidies. Honda started its installation across thecountry in 2018, aiming to have around 100 stations by 2020 with the cooperation of local
governments77.
Toyota has been running a hydrogen station at Motomachi plant, Aichi Prefecture, since March2018 in conjunction with the increasing numbers of FC forklifts in use there. Additionally, from
April 2019, and thanks to the subsidy of MOE - "Subsidy for Business Costs, etc. for Measures
Combating Carbon Dioxide Emissions (Project to Promote Low Carbon Social Infrastructuresthat Utilize Renewable Energy-based Hydrogen)" – it also introduced SimpleFuel™. This is a
simplified hydrogen station that uses electricity from solar panels at the plant site to produce
and store hydrogen through the electrolysis of water, which is then supplied to FC forklifts78. It
can produce up to 99 Nm3/day of hydrogen, around 8.8 kg/day, enough to fuel seven or eight FC
forklifts. SimpleFuel™ is jointly manufactured by IVYS Energy Solutions and PDC Machines
in the US.

Figure 24: Hydrogen Station SimpleFuelTM

Source: Toyota.

And from March 2019, Toshiba ESS installed a similar technology, Toshiba ESS “H2PLAZA”,
at Toyota Takahama plant also in Aichi Prefecture. This facility produces hydrogen made from77

Nikkei Asian Review, 25 October 2017: https://asia.nikkei.com/Business/Companies/Honda-to-installfaster-filling-hydrogen-stations-across-Japan.
78
Toyota, 4 April 2019:https://global.toyota/en/newsroom/corporate/27528557.html?_ga=2.21332338.85894042.15577240271278002982.1557724027.

45

HYDROGEN MARKET IN JAPAN: MOBILITY

solar power panels and supplies it to 13 FC forklifts used at that plant79. The system controls theamounts of production and compression of hydrogen using Toshiba ESS’s hydrogen energy
management system, which includes a hydrogen demand prediction function that forecasts
supply requirements for each FC forklift, allowing efficient use of energy.
In Chapter 3.1, it was mentioned that Toshiba ESS’s H2OneTM system is able to produce andstore its own hydrogen using renewable energy, and given that it is an independent system, it
could supply electricity and hot water in times of emergency for evacuation sites. Localhydrogen production for local consumption.
In April 2018, Iwatani Corporation achieved to reduce cost and footprint by limiting the on-site
construction required through its Iwatani Hydrogen Refueling Station installed in Okayama
Prefecture, which uses a system that arranges major equipment into units and offers them as asingle package. Additionally, future increases in vehicle filling volume linked to the widespread
uptake of FCVs can be handled by increasing compressed hydrogen storage capacity. Therefore,
this station model is appropriate for regional cities as well as for urban areas subject tonumerous land restrictions80.
Chiyoda is also working on another project funded by NEDO for developing compact-type
dehydrogenation facilities for HRSs that will use methylcyclohexane (MCH), expecting tocomplete it by 2020 [27]. Each unit will have a capacity of 30 m3 of hydrogen per hour, andsince each FCV needs around 50 m3, Chiyoda expects to combine several units to process 300
m3 per hour. The company announced the intention to spend between JPY 200 and 300 million
to install a test equipment at Yokohama R&D site in 201781.
Nevertheless, the main issue for the dissemination of HRSs is the high cost of the initialinvestment required, around JPY 500 million (about EUR 4.06 million), meaning a cost fivetimes higher than a standard gasoline station. TMG, for example, is thus focusing on providing
financial assistance by taking advantage of support from both the national and metropolitan
governments, reducing the cost of building an HRS more than 80%, capping the costs at around
JPY 100 million (about EUR 813,000), similar than building a gasoline station 82 . The
metropolitan authorities aim to increase the number of HRSs to 35 by 2020, making it possible
to reach a station within 15 minutes from most places in the city.
In any case, both the construction cost, between JPY 400 and 500 million, and operation cost,
between JPY 40 and 50 million, were reported to be between two or three times higher than inEurope due to strict regulations from the government. Pressure accumulator, construction andcompressor are the highest costs for the installation of an HRS, while repair expense and79

Toshiba ESS, 5 October 2018: https://www.toshiba-energy.com/en/info/info2019_0322.htm.
Iwatani Corporation, 26 April 2018:
http://www.iwatani.co.jp/img/eng/pdf/newsrelease/88/20180426_news_e1.pdf.
81
Nikkei Asian Review, 16 March 2017: https://asia.nikkei.com/Business/Technology/Japan-sengineering-giants-aim-to-make-clean-energy-cheap.
82
The Government of Japan, Spring 2016:
https://www.japan.go.jp/tomodachi/2016/spring2016/tokyo_realize_hydrogen_by_2020.html.
80

46

HYDROGEN MARKET IN JAPAN: MOBILITY

employment cost are the highest costs of the HRS’s operation. Even with subsidies, profitability
is difficult to reach because of the low number of FCVs on the road nowadays. Subsidies areshown in Table 9 and Table 10 and are calculated based on the characteristics of the station(size, stationary or mobile, production of hydrogen on-site or off-site).
As an example, HySUT reported that the cost of an on-site station with a capacity of 300 Nm3/hor more was originally around USD 6 million, and thus its subsidy was USD 2.9 million
maximum, one half. That cost is currently around USD 4 million, and it is expected to keep
decreasing up to USD 2 million by 2020 though an improve of the technology, a higher numberof FCVs on the road and an appropriate regulation.
The Japanese government aims to make HRSs independent by the second half of the 2020s, andreduce the construction cost to JPY 200 million and the operation cost to JPY 15 million peryear by 2025, setting a cost target for each component. As an example, it expects to reduce thecompressor cost from JPY 90 million to JPY 50 million, and the high-pressure vessels cost fromJPY 50 million to JPY 10 million, what also supposes an opportunity for European
manufacturers. To achieve this progress, it is promoting a regulatory reform and technologicaldevelopments, such as the use of inexpensive steel material, the realization of the self-service
regulation with remote monitoring to extend the opening hours and thus to increase the benefit,
and to allow the installation in gasoline stations and convenience stores. Japan is also promotinginternational collaboration to achieve harmonization and international standardization, which
will help to reduce costs.
To achieve the costs reduction’s targets, NEDO has different projects to develop, for example,
polymer materials for gas seals and dispensing hoses, life-extension methods of ground storage
pressure vessels, refueling methods for reducing cost (possibility of higher temperature, etc.),
and a new type of compressors, such as electro-chemical compressor.
In collaboration with universities and private companies, NEDO is conducting R&D on lowcost equipment and parts for the next generation of ultra-high pressure hydrogen stations fromFY 2018 to 2022 through the “2018 Super High-Pressure Hydrogen Infrastructure Full-scaleTechnology R&D Project” 83 . This technology would allow a safe, inexpensive production,
storage and transportation of hydrogen about 1,000 times the atmospheric pressure, andcontributing to reducing hydrogen station maintenance and operation costs in anticipation of
full-scale spread and independence of HRSs. It will include domestic regulation optimization,
standardization of specifications and interfaces, high pressure hydrogen-compatible polymer
technology, electrochemical pumps, device packaging studies, new large-sized, thin-walled
high-pressure hydrogen tanks that contributes to the cost reduction of hydrogen stations, orultra-high pressure hydrogen trailers equipped with lightweight containers for the large-scaleand efficient hydrogen transport, among others.

83

NEDO, 10 May 2019: https://www.nedo.go.jp/activities/ZZJP_100144.html.

47

HYDROGEN MARKET IN JAPAN: MOBILITY

The strict Japanese regulation is one of the main reasons for the high cost of HRSs. Hydrogen isregulated as an industrial gas, with standards intended for large-scale chemical plants with highexplosive risks, but which are also currently applied to HRSs. Hydrogen cars need a prescribedspace around them during fuelling. Therefore, hydrogen stations are required to be surroundedby much more space than a standard gasoline station, which greatly increases the cost in cities.
However, hydrogen dissipates quickly into the atmosphere, and the stations are equipped withsensors that immediately shut down the pump if any leak is detected.
Operation staffs must be licensed in handling high-pressure gases, and there must be one
qualified supervisor under the High-Pressure Gas Safety Act., which limit the working hours of
the fueling stations, many of which close during the night or at weekends. And records must be
kept of who handles and purchases the fuel.
METI is reviewing the regulation that affects to HRSs to achieve lower costs. One point is therequirements for station supervisors, who having experience with natural gas and other highpressure gases will suffice. Another point that would reduce labour costs will be that stations
will no longer be required to have an employee who takes down cars' license plates and keeps
track of who buys hydrogen.
METI is also studying legalize self-service pumps with remote monitoring given that theprocess of filling a car is highly automated, which would extend the opening hours and thus thebenefit. The Japan Petroleum Energy Center (JPEC) released the Self-hydrogen Station
Guidelines (JPEC-TD 0004), which showed specific self-filling requirements and methods
under the current laws and regulations. In the future, and based on these guidelines, a contract
will be signed between the business operator and the driver, who will receive the safety
education required and training to mount and demount of the nozzle in order to fill the hydrogentank. Only in that case, the driver will be able to perform self-filling84.
Regarding stations themselves, some localities require for them to have roofs for keepinghydrogen storage vessels out of direct sunlight, but METI will waive that requirement if certain
conditions are met, such as having the vessels' temperature controlled. It will also reevaluate
safety standards by FY 2019, incorporating the latest technology and knowledge to avoid strict
rules85. Japan allows stations that fill FCVs at 70 MPa increase their storage pressure at 82 MPa
since 2016 in line with the international practice. Previously, HRSs stored hydrogen at 35 MPa
and 70 MPa [25].
According to the Fire Service Act., refueling stations for FCVs must be about 10 meters awayfrom a gas pump, which limits especially to the small stations. The separation distance betweenhydrogen dispensers and public roads is around 6 and 8 meters, which is longer than that forgasoline dispensers, between 4 and 5 meters. But METI is also revising the standards to let gas
84

Kankyo-business, 2 July 2018: https://www.kankyo-business.jp/column/020668.php?cat=hydrogen(only in Japanese).
85
Nikkei Asian Review, 22 September 2017: https://asia.nikkei.com/Politics-Economy/PolicyPolitics/Japan-to-speed-growth-of-hydrogen-refueling-stations.

48

HYDROGEN MARKET IN JAPAN: MOBILITY

stations set up hydrogen refueling terminals alongside gas pumps regardless of space. The code
would be relaxed on a trial basis while monitoring safety, with pilot programs likely to be
conducted in special deregulation zones. METI is also considering to allow the introduction of
convenience stores, supermarkets and package delivery depots in filling stations that would help
diversify their revenue streams86.
HySUT is also promoting a cost reduction through a new industry standard category based on
fueling capacity. The current standard category is based on the supply capacity, divided in
medium-scale (compressor capacity of 300 Nm3/h or more) and small scale (compressor
capacity between 50 Nm3/h and 300 Nm3/h). The new category will divide stations in large
scale (fueling capacity of 10 to 12 vehicles/h), medium-scale (fueling capacity of 5 to 6
vehicles/h) and small scale (fueling capacity of 1 to 2 vehicles/h) [28].
HySUT is an industrial association to develop and promote hydrogen infrastructure for FCVs,
ensuring a stable and safe supply of hydrogen by conducting technology development, research,
regulation review, industrial standardization and public awareness, and aiming to get a cost
reduction and a reliability improvement for the next generation of HRSs87. It was established in
February 2016, when its predecessor, The Research Association of Hydrogen Supply/Utilization
Technology, which was founded in 2009, finished its activity. HySUT has 46 members by
September 2019, including energy and engineering companies, automakers, hydrogen station
operators and two related organizations. It also supports activities to stimulate demand for FCVs,
and international cooperation for the development of ISO/TC197 Hydrogen Energy Technology
Standardization Project with NEDO’s support.
Because one of the HySUT’s activities is to develop new technologies to contribute to thefurther safety and security of hydrogen, and to research on cost reduction of HRSs, theHydrogen Technical Center was built in Kofu, Yamanashi Prefecture, under a NEDO project
and to carry out tests in a real environment (Chapter 3.5.3). Two examples are the increase of
the maximum operating pressure to 87.5 MPa (cylinder bundle, compressor, pressure vessel anddispenser), and the standardization of equipment, individually designed by each contractor, anddesign specifications.
In Japan, HRSs (layout, materials, manufacturing, inspection, safety distances, etc.) are under
the regulation of the High-Pressure Gas Safety Act. It regulates the production, storage,
consumption, disposal, sale and transportation of high pressured gas. METI is the regulatory
authority. MLIT is the regulatory authority of the Building Standards Act, which restricts thelocation of HRSs depending on use district, such as residential district, commercial district, or
exclusive industrial district, determined by city planning. The Fire Service Act regulates HRSs
which are installed in gas stations. The regulatory authority is the Fire and Disaster
Management Agency (FDMA) [29].

86

Nikkei Asian Review, 21 February 2018: https://asia.nikkei.com/Politics-Economy/PolicyPolitics/Japan-paves-way-for-gas-stations-to-charge-up-electric-cars.
87
HySUT: http://hysut.or.jp/en/index.html.

49

HYDROGEN MARKET IN JAPAN: MOBILITY

Table 8: Regulations, Standards and Guidelines for HRSs
Laws and Regulations

Technical Standards

Self-Guidelines• High Pressure Gas Safety Act• Exemplified Standard• HySUT> Security Regulation for General High Pressure Gas• Japan Industrial Standard (JIS)> Quality Control (HySUT-G 0001)> Ordinance on Safety of Gas Containers• International Standard (ISO/TC 197*)> Hydrogen Metering (HySUT-G 0002)> Ordinance on Designated Equipment Inspection• The High Pressure Gas Safety> Fueling Performance Validation> Ordinance on Safety of Industrial Complexes

Institute of Japan (KHK-S)(HySUT-G 0003)• Fire Service Act• Japan Petroleum Energy Center> Inspection Apparatus (HySUT-G 0004)• Building Standards Act(JPEC-S)> HPIT - Hydrogen Powered Industrial• Act on the Prevention of Disaster in Petroleum• Japan Industrial and Medical Gases

Industrial Complexex and Other Petroleum Facilities

Association (JIMGA-S)

Truck - (HySUT-G 0005)• Industrial Safety and Health Act• Road Transport Vehicle Act• Road Traffic Act

Safety of
HRSs

Reliability of
Retail HRSs

• Act on Port Regulations* ISO TC 197 is a technical committee developing international standards in the field of systems and devices for the production, storage,transport, measurement and use of hydrogen.

Source: Author, with data from HySUT [28].

To address the financing problem, in February 2018, a group of 11 Japanese companies
established the Japan H2 Mobility (JHyM) to build 80 stations nationwide for 4 years from FY
2018 to FY 2021, in line with the Strategic Roadmap of the government. It already installed 33
HRS by May 2019 and 21 stations more are planned for the FY 201988. Its ultimate goal is toimprove convenience for FCV users, contribute to accelerating the adoption of FCVs in the
country and to the efficient operation of hydrogen stations. It also collaborates with the Fuel
Cell Commercialization Conference of Japan (FCCJ) and the Association of Hydrogen Supply
and Utilization Technology (HySUT) to reduce costs by addressing issues such as thestandardization of equipment and revision of regulations.
Those eleven firms were the automakers Toyota, Nissan and Honda, the infrastructuredevelopers JXTG Nippon Oil & Energy, Idemitsu Kosan, Iwatani, Tokyo Gas, Toho Gas and
Air Liquide Japan, and the investors Toyota Tsusho and the Development Bank of Japan. Later,
seven more infrastructure developers (Nemoto Tsusho, Seiryu Power Energy, Tama Koun,
Toyama Hydrogen Energy Promotion Council, Nangoku Corporation, Fukuoka Oxygen, andMarui Transport) and five more investors (JA Mitsui Lease, Sompo Japan Nipponkoa Insurance,
Mitsui Sumitomo Finance & Leasing, NEC Capital Solutions Limited, and Mirai Creation Fund(Operator: SPARX Group)) joined the company, for a of 23 members, including 13 HRS firms.

88

JHyM, 8 May 2019: https://www.jhym.co.jp/en/wp-content/uploads/2019/05/EN-JHyM_20190508HRS-installation-plan.pdf.

50

HYDROGEN MARKET IN JAPAN: MOBILITY

Figure 25: Members of JHyM as of May 2019

Source: JHyM.

The requirements for infrastructure providers participating in JHyM are to install at least one
new HRS and to pay the annual fee. Each infrastructure provider has to submit an installation
plan according to JHyM’s Annual Hydrogen Station Development Planning Policy formulated
for each fiscal year, which includes, for example, the areas where stations will be built. Afterapproval, both the HRS firm and JHyM will jointly apply for subsidies. The infrastructure
provider will handle the construction, and once completed, JHyM will own the station while the
HRS firm operates it. Therefore, JHyM offers participants the business schemes shown in
Figure 26 and Figure 27, with the following benefits, especially a cost reduction between 10%
and 20%89:-89

A reduction of the initial cost by using METI’s subsidy, “Hydrogen Supply Facility
Installation Project for Fuel Cell Vehicles”, and investments from JHyM financial investors.
Furthermore, it has a special burden mitigation system for small and medium-sizedenterprises.

JHyM: https://www.jhym.co.jp/en/nav-about/.

51

HYDROGEN MARKET IN JAPAN: MOBILITY

Figure 26: JHyM’s Business Scheme for HRS’s Construction

Source: JHyM [24].

Table 9: Support Program for HRS Construction by NeV (sponsored by METI)

SupportMax. Amount(Million US$)On-site (for bus refueling)

1/2

3.9

Off-site (for bus refueling)

1/2

3.5

On-site (compact type)

2/3

2.9

Off-site (compact type)

2/3

2.5

On-site (others)

1/2

2.9

Off-site (others)

1/2

2.5

Mobile2/3

2.5

On-site (compact type)

2/3

2.2

Off-site (compact type)

2/3

1.8

On-site (others)

1/2

2.2

Off-site (others)

1/2

1.8

Mobile2/3

1.8

Gaseous Hydrogen Production and Shipping

1/2

0.6

Liquefied Hydrogen Shipping

1/2

0.4

Facility

Capacity

300 Nm3/h or more(medium scale)HRS

50 Nm3/h or more
andless than 300 Nm3/h(small scale)

Type

Source: HySUT [24].

-A reduction of the operation cost by using METI’s subsidy, “Fuel Cell Vehicle New
Demand Creation Activity Support Project”, and outsourcing expenses from JHyM,
providing the infrastructure companies with a long-term stable operation environment.

52

HYDROGEN MARKET IN JAPAN: MOBILITY

Figure 27: JHyM’s Business Scheme for HRS’s Operation

Source: JHyM [24].

Table 10: Support Program for HRS Operation

Program by NeV (sponsored by METI) - 2/3 of the total
Type

Max. Amount per HRS (Million US$)On-site HRS

0.22

Off-site HRS

0.22

Mobile (Refueling site: 1)

0.22

Mobile (Refueling sites: 2 or more)

0.26

Capacity (Nm3/h): 50 or more and less than 100

0.16

Program by HySUT (sponsored by automakers) - 1/3 of the total
Type

Max. Amount per HRS (Million US$)On-site HRS

0.11

Off-site HRS

0.11

Mobile (Refueling site: 1)

0.11

Mobile (Refueling sites: 2 or more)

0.13

Capacity (Nm3/h): 50 or more and less than 100

0.08

Source: HySUT [24].

The target areas for these subsidy programs from the government have been expanded to all
prefecture from FY 2019 from the four major metropolitan areas in order to create a nationwide
network of HRSs.

53

HYDROGEN MARKET IN JAPAN: MOBILITY

More companies are entering this market. Tokyo Electric Power Company (TECPO) is one
example, which will build one of the world’s biggest hydrogen stations in Tokyo before theOlympic Games in 2020 together with JXTG Energy 90 . Also, JERA, a fuel joint venture
between TEPCO and Chubu Electric Power, will build a production site to supply hydrogen to
FCVs and FC buses by 2020.

90

Reuters, 22 March 2019: https://www.reuters.com/article/japan-hydrogen/update-1-japans-tepco-toenter-hydrogen-fuel-business-with-jxtg-idUSL3N21928L.

54

HYDROGEN MARKET IN JAPAN: POWER GENERATION

3.3. POWER GENERATIONPower generation sector accounts for 40% of total national CO2 emissions [9]. Power-to-Gas
will allow to improve the domestic energy production rate and to reduce CO2 emissions in the
power generation sector, and thus help to decarbonize the power generation and heat demand
sectors in Japan. P2G, which converts renewable electricity (power) into hydrogen (gas) byelectrolysis, is generating a growing expectation as a way to use the surplus electricity generated
with variable renewable energy (VRE) and thereby produce inexpensive and local greenhydrogen. This hydrogen could work as a baseload power source in the same way as natural gas(regulated power supply and backup power source), allowing, in turn, a higher expansion of
VRE. Fukushima’s P2G demonstration project is the biggest in Japan (Chapter 3.5.2).
Hydrogen has the potential to store electricity for large scale and long-term applications, due tosmall energy loss over time and high expandability compared to battery storage systems (Figure2). Therefore, P2G is expected to be one of the countermeasures against problems related to gridstability and reliability due to the higher penetration of renewables in Japan. The government
aims to commercialize P2G technology from 2030 based on the achievements of the
Fukushima’s project (3.5.2). The hydrogen produced could also be injected into the natural gas
system in specific quantities, be synthesized into ammonia for used it directly as a fuel, or
combine with CO2 to get methane (synthetic natural gas or syngas) though the methanation
process. Syngas, which has 50% of the energy density of natural gas, can be used as a fuelsource or as an intermediate to produce other chemicals, and can use the existing energy supply
infrastructure, including city gas pipelines and LNG power plants.

Figure 28: Power-to-Gas

Source: NEDO.

55

HYDROGEN MARKET IN JAPAN: POWER GENERATION

Japan aims to commercialize hydrogen power generation by around 2030, cutting the hydrogen
power generation cost to JPY 17 per kWh. This will require to establish an internationalhydrogen supply chain to procure 300,000 tons of hydrogen annually, amounting to 1 GW in
power generation capacity, and reduce the hydrogen supply cost to JPY 30 per Nm3 by that time.
Beyond that, the target is to procure between 5 and 10 million tons of hydrogen annually at JPY
20 per Nm3, which will account between 15 and 30 GW in power generation capacity, replacing
the gas power generation. In this scenery, the production cost from brown coal gasification will
be reduced to JPY 12 per Nm3.
The Japanese government is considering clarifying the position of hydrogen use in the Energy
Conservation Act91 or positioning hydrogen power generation92 as a non-fossil power source inthe Energy Supply Structure Sophistication Act93 [9].
According to IEEJ [30], the renewable surplus electricity in 2030 (based on METI’s power
generation mix by 2030, with 64 GW of solar PV and 10 GW of wind) will be small to rely on it
to produce hydrogen. A reduction in the renewable power generation cost and capital cost ofelectrolysis will be also needed. Nevertheless, demonstration projects in this field are being
carried out, and the fast introduction of renewable generation, especially solar, during the lastyears because of the FIT program [6], could make bring it ahead of 2040 given that hydrogenproduction is one of the grid integration measures.
The fact that hydrogen gas can be blended into the existing natural gas pipeline network is an
economic advantage since investment can be avoided. However, and according to IEEJ [30],since Japan has been developing pipelines in connection with LNG receiving terminals, thepipeline network is still undeveloped and much less interconnected across the country, and theJapanese standard allows lower mixing concentrations than in Europe, for example. It also
pointed out that Japan has fewer underground storage facilities and new ones should beconstructed to receive the gas from P2G.
The power generation will directly lead to massive hydrogen consumption, which willcontribute to cost reduction. Due to the commercialization of hydrogen power generation is
included among the targets of the Basic Hydrogen Strategy by 2030, there are several R&D anddemonstration projects ongoing. However, its implementation still needs to reduce costs andincrease efficiency.
Electricity can be generated burning pure hydrogen or a hydrogen-based fuel such as ammonia,
or a mixture of hydrogen and natural gas or coal. Globally, Enel started the operation of the firstindustrial-scale pure hydrogen-fuelled combined cycle power plant at Fusina, Venice, in 201094.
91

Act on the Rational Use of Energy (Law nº 49 of 1979).
The government will consider issues regarding the Act on Promotion of Global WarmingCountermeasure (Law nº 117 of 1998).
93
Act on the Promotion of Use of Non-Fossil Energy Sources and Effective Use of Fossil Energy
Materials by Energy Suppliers (Law nº 72 of 2009).
94
Enel, 12 July 2010: https://www.enel.com/media/press/d/2010/07/enel-at-fusina-venice-inaugurationof-first-industrial-scale-hydrogen-plant-in-the-world.
92

56

HYDROGEN MARKET IN JAPAN: POWER GENERATIONIn Japan, three main technologies for hydrogen gas turbine power generation are being
developed in anticipation of the large consumption of hydrogen: the co-combustion of hydrogenand natural gas, and hydrogen firing power generation, both leaded by NEDO and with KHI and
MHPS working on that; and the direct use of ammonia for combustion, leaded by Strategic
Innovation Promotion Program, which is managed by the Cabinet Office [16]. Ammonia can bealso co-fired in coal-fired power plants to reduce coal usage and CO2 emissions.
There are also several issues during the hydrogen combustion that need to be solved, such as ahigher combustion temperature than that of natural gas (hot spot in the combustion chamber),which led to higher nitrogen oxides (NOx) emissions; a higher flame propagation velocity thanthat of natural gas, and a shorter flame quenching distance, which could led to structural burnout
and flashback [31].
CO2 is not generated when hydrogen burns, but NOx is, which is another GHG and an air
pollutant, and it is generated in a quantity almost two times higher than when natural gas isburnt if it is burnt in a gas turbine. This is due to hydrogen burns at a higher speed, destabilizing
burning, and because the flame temperature is high. As countermeasures against this, coolingthe flame by spraying water or diluting the fuel by inert gas is considered. Indeed, KHI provedthat NOx emissions can be suppressed to a lower level than the limit with water injection tolower the flame temperature, but this worsens the fuel economy [31] (Figure 29). Then, it
developed a pure hydrogen-fueled Dry Low NOx combustion technology in which the hydrogenis supplied in small doses that burn in “microflames” (“micromix” technology) and which allow
a 100% pure hydrogen-burn while suppressing NOx emissions without water injection [32].

Figure 29: NOx Emissions Using Water Injection during the Hydrogen and Natural Gas Combustion

Source: Kawasaki Heavy Industries [31].

57

HYDROGEN MARKET IN JAPAN: POWER GENERATIONIn November 2017, NEDO, Toyota Tsusho Corporation, NTT Facilities, Inc., KHI, Hrein
Energy Inc., company devoted to hydrogen storage and supply systems, Technova Inc., andMuroran Institute of Technology started a P2G hydrogen energy demonstration project at
Yuhigaoka Wind Farm "Furaibo" in Tomamae Town, Hokkaido, using hydrogen to maximize
wind power’s potential95 (Figure 30).
This demonstration aims to develop a new energy system and business model, which improves
the utilization of wind power, whose output power fluctuates depending on wind conditions, byeffectively converting unstable part of the power to hydrogen for thermal application, allowing
the production of low-CO2 hydrogen while also expanding the use of renewable energy.
Regarding the demonstration, operations will begin by using NTT Facilities’ forecasting system
to estimate the following day’s wind conditions and electricity output. Based on the forecast, thecontrol system, developed by KHI, splits the electric power into a stable part, fed into the grid,and an unstable part, fed to the water electrolyzer, which was developed also by KHI. Using
Hrein Energy’s hydrogenation system, the hydrogen produced by the electrolyzer reacts withtoluene to become MCH. After this, the MCH is delivered to the application site, where it isseparated into hydrogen and toluene by Hrein Energy’s dehydrogenation system. Finally, theregenerated hydrogen is mixed with liquid petroleum gas (LPG) to produce heat using a mixedfuel boiler96.

Figure 30: P2G Demonstration Project in Hokkaido

Source: NEDO.

Hrein Energy Inc. had already demonstrated a technology to store hydrogen in the form of
MCH under the project "Promotion for developing industrial technology aiming at the95

NEDO, 29 September 2017: https://www.nedo.go.jp/english/news/AA5en_100291.html.
Toyota Tsusho Corporation, 29 September 2017: https://www.toyotatsusho.com/english/press/detail/170929_004155.html.
9658

HYDROGEN MARKET IN JAPAN: POWER GENERATION

achievement of Kyoto Protocol Goals" by the International Center for Environmental
Technology Transfer in FY 2006 and 2007. In July 2008, and in collaboration with Wakkanai
Alternative and Renewable Energy Study Group, it demonstrated the same technology to
produce MCH from hydrogen generated through a water electrolysis power cell by a wind
power generation facility in Wakkanai, Hokkaido97.
In January 2018, MHPS successfully passed a firing test using a 30% hydrogen fuel mix withnatural gas in a large-scale 700 MW (with temperature at turbine inlet at 1600℃) of output gas
turbine used in power generation, achieving also a 10% reduction in CO2 emissions compared tostandard natural-gas-fired power generation, and meeting the threshold in NOx emissions. The
test results confirmed that by using MHPS's proprietary burner, which was newly developed toburn hydrogen, stable combustion can be attained even when hydrogen is mixed with naturalgas. As part of a project of NEDO, the test was carried out at MHPS’s Takasago Works using
actual-pressure combustion testing facilities98. A fuel mix of 20% hydrogen can be used without
any technological improvements.
The stable hydrogen-mixed firing technology applied in the large-scale gas turbine uses MHPS's
proprietary dry low-NOx combustor developed for this project as an improved version of thecompany's natural-gas-fired combustors. The combustor's fuel nozzle creates a rotational
airflow that enables the formation of a more uniform premixed gas, leading to low NOx. Other
than the combustor, the equipment currently in place can be used without modification, thereby
lowering the potential costs and other obstacles of converting a natural-gas-fired power plant toa hydrogen plant.
The next objective of MHPS is the CO2-free power generation with a 100% hydrogen power
generation technology. Indeed, it is taking part in a feasibility study in the Netherlands, where a
440 MW large-scale natural-gas-fired gas turbine combined cycle (GTCC) of Nuon /Vattenfall's Magnum power plant, in Groningen, is being converted into a 100% hydrogen-fired power
generation plant by 2023. This will reduce the current CO2 emissions around 1.3 million tons
per year, to almost zero. Within this project, Norwegian oil major Statoil will produce hydrogenby converting Norwegian natural gas into hydrogen and carbon dioxide. CO2 will be stored inunderground facilities off the Norwegian coast, allowing carbon-neutral production. European
natural gas pipeline operator Gasunie is carrying out research into how the hydrogen can betransported to and stored at the Magnum power station99.
In April 2018, Obayashi Corporation and KHI achieved the world's first delivery of electricity
and heat to four nearby facilities (Kobe City Medical Center General Hospital, Kobe Port Island
Sports Center, Kobe International Exhibition Hall, and Port Island Sewage Treatment Plant) in acity area generated using a gas turbine fueled by 100% hydrogen100 (Figure 31). This newly
97

Japan for Sustainability, 30 November 2008:https://www.japanfs.org/sp/en/news/archives/news_id028536.html.
98
MHPS, 19 January 2018: https://www.mhps.com/news/20180119.html.
99
MHPS, 8 March 2018: https://www.mhps.com/news/20180308.html.
100
NEDO, 20 April 2018: https://www.nedo.go.jp/english/news/AA5en_100382.html.

59

HYDROGEN MARKET IN JAPAN: POWER GENERATION

developed combustion technology enables the existing natural gas turbine to be utilized without
modifications to its main body, and the whole turbine system to be capable of adapting to thehydrogen’s unique combustion properties. Kansai Electric Power (KEPCO), Iwatani, Kenes,
Kobe City and Osaka University also cooperated in this project.
Tests had been carried out since the Kobe Port Island hydrogen cogeneration system (CGS)
demonstration plant was completed in December 2017. Previous tests demonstrated independent
generator operation using a mixture of hydrogen and natural gas, and hydrogen gas alone, as
well as heat and electricity delivery using natural gas as a fuel.

Figure 31: Demonstration Project in Kobe

Source: Kawasaki Heavy Industries [31].

The system is equipped with a 1.7 MW hydrogen gas turbine, and an integrated energy
management system (EMS) that comprehensively manages electricity and heat using hydrogenand natural gas as fuel to optimally control the supply from an economic and ecologicalstandpoint. Verification tests will continue with the aim to build a new energy supply systemthat will lead to efficient energy use in local communities.
It was part of a NEDO project carried out from FY 2015 to FY 2018 and called “Technology
Development Project for Building a Hydrogen-based Society / Technology Development
Project for Large-Scale Utilization of Hydrogen / Smart Community Technology Development
Project Utilizing Hydrogen Cogeneration Systems”.

60

HYDROGEN MARKET IN JAPAN: POWER GENERATIONIn May 2018, JGC Corporation, together with its subsidiary JGC Catalysts & Chemicals Ltd.,
the AIST, the National Institute of Technology, and Numazu College, developed a “newruthenium catalyst capable of efficiently synthesizing ammonia at a low temperature and low
pressure through the improvement of carrier and catalyst production methods using catalysts”.
They constructed a demonstration plant in Koriyama capable of producing 20 kg of ammonia
per day, where they verified the “enabling of a change in ammonia production volume throughrapid operational condition changes when using renewable energy”.
In late 2018, JGC Corporation announced the successful in demonstrating the synthesis of green
ammonia with hydrogen produced through the electrolysis of water by intermittent renewableenergy, and the generation of electricity at a demonstration plant of 47 kW of power generation
through gas turbines fueled by this synthesized ammonia (Figure 32). This project, which is partof the SIP’s Energy Carriers program (Chapter 3.4.1), demonstrated the feasibility of ammonia
for establishment of an energy chain without CO2 emissions from production to power
generation101.

Figure 32: Energy Chain Utilizing CO2-free Ammonia Test

Source: JGC Corporation.

JGC continues with the R&D toward cost reduction of ammonia, and it will perform acommercial-scale plant design and cost study in order to define the roadmap for deployment of
renewable ammonia production plants.
During 2016 and 2017, IEEJ conducted a study [33] to figure out how to reduce CO2 emissions
by 80% by 2050, concluding that the power generation sector, which emits nearly half of thetotal emissions, must achieve almost zero emissions by that date. According to that study, coal101

Ammonia Industry, 3 January 2019: https://ammoniaindustry.com/jgc-corporation-demonstratesworlds-first-carbon-free-ammonia-energy-cycle/.

61

HYDROGEN MARKET IN JAPAN: POWER GENERATION

co-firing with 20% 102 CO2-free ammonia will play an important role from 2030, and power
generation with ammonia-fired gas turbine combined cycles (GTCC) will do it after 2040.

Figure 33: Prospect for Power Generation and Ammonia Introduction in Japan (80% CO 2 reduction target
by 2050)

Source: IEEJ [33]IEEJ [34] estimated the power generation cost using hydrogen-related fuels in 2030 with a clear
conclusion: ammonia would be the cheapest option if it can be directly used for power
generation (Figure 34). The supply cost of hydrogen for power generation would be around JPY 35 per Nm3,

though in the case of direct combustion of ammonia, this price will be reduced up to around
JPY 25 per Nm3 (Figure 35).
This study concluded that for ammonia power generation to be comparable to LNG/coal-fired
power generation in Japan, the price of the CO2-free ammonia must be around JPY 35 per
kilogram (USD 350 per ton of ammonia) after delivery to the power generation sites, including
a CCS cost of around USD 50 per ton of CO2. It would be possible to achieve a price between
USD 250 and 350 per ton of ammonia for non-CO2-free ammonia. This price would be
acceptable for both suppliers and users, and would be lower than the target cost of hydrogen set
by the Strategic Plan of the government by 2030 for cost-competitive power generation, around
USD 3 per kilogram of hydrogen, or USD 480 per ton of ammonia (equivalent price in terms ofenergy contents).

102

A 50% co-firing study is being currently carried out.

62

HYDROGEN MARKET IN JAPAN: POWER GENERATION

Figure 34: Estimation of Hydrogen Power Generation Cost in 2030

Source: IEEJ [34].

Figure 35: Estimation of Supply Cost of Hydrogen for Power Generation in 2030

Source: IEEJ [34].

The world's first ammonia fuel power generation was realized in August 2014 using anammonia micro gas turbine with a maximum output of 50 kW at the test facility of The
Fukushima Renewable Energy Institute (FREA) of The National Institute of Advanced
Industrial Science and Technology (AIST) and in collaboration with the Institute of Fluid

63

HYDROGEN MARKET IN JAPAN: POWER GENERATION

Science of the Tohoku University (IFS) and Toyota Energy Solutions. Initially, they achieved astable power output of 21 kW burning a mixture of 70% kerosene and 30% ammonia. In
September 2015, they reached a power of 41.8 kW using both a methane-ammonia mixed gas,and 100% ammonia fuel, indicating that ammonia could be used as a fuel for thermal power103.
In both tests, it was possible to reduce NOx emissions well below MOE's NOx emission
standards by adding an appropriate amount of ammonia to the post-combustion exhaust gas andprocessing the NOx in a NOx removal unit.
Later, IFS found that using a combustion concept in two stages, rich and lean, NOx and unburnt
ammonia concentrations in the exhaust gas could be simultaneously reduced in a gas turbine
using the model swirl burner [35]. This study was supported by the Council for Science,
Technology and Innovation (CSTI) and the Ammonia Direct Combustion research theme of the
SIP’s Energy Carrier project (Chapter 3.4.1).
MHPS has been also participating in the SIP’s Energy Carrier program and studying gas turbine
systems using ammonia as a fuel in micro and small gas turbines. The system thermally cracks
ammonia to hydrogen and burns it in a gas turbine without efficiency reduction (Figure 36).
Because the major development equipment is the ammonia cracker, only relatively small
number of modifications on the gas turbine side, such in the hydrogen combustor, have to bedone, making this system applicable to high-efficiency large-capacity GTCC systems, andthereby contribute to a large reduction of the CO2 emissions by using CO2-free ammonia [32].

Figure 36: Concept of Ammonia Decomposition Gas Turbine Cycle

Source: MHPS [32].

The gas turbine power was enlarged to 2 MW power output by IHI in March 2018. IHI and IFS
developed the world’s first technology for direct combustion of ammonia in a gas turbine(ammonia-fired gas turbines - AGTs), establishing a technology for stably burning ammonia

103

Japan Science and Technology Agency: https://www.jst.go.jp/EN/achievements/research/bt111112.html.

64

HYDROGEN MARKET IN JAPAN: POWER GENERATION

while suppressing the production of NOx104 . They used a 20% NH3 co-firing with city gas(methane - CH4).
The roadmap of ammonia supply chain established the commercialization target of small size
AGTs, around 0.3 MW, by 2020, middle size AGTs, around 2 MW, in the mid-2020s and oflarge-scale AGTs, around 100 MW, in the late 2020s (Figure 46).
Regarding industrial furnaces, Osaka University and Taiyo Nippon Sanso Corporation
conducted joint research in 2016 about using ammonia as a fuel in industrial furnaces, achieving
a combustion technology that reduces CO2 emissions, NOx generation below environmental
standards, and increases the heat transfer from the flame 105. They used methane (CH4) and 30%
ammonia mixed fuel, achieving an equivalent heating efficiency of 55% with that of 100% CH4
fueled industrial furnace. For this experiment, Taiyo Nippon Sanso Co. built a burner foroxygen-enriched air designed for single ammonia combustion and methane co-combustion in a
10kW model combustion furnace.
Later, researchers from Taiyo Nippon Sanso Corporation, Nisshin Steel Co. Ltd., and Osaka
University, developed a burner for ammonia combustion that can be used for pretreatment(degreasing) of galvanized steel sheets. They verified that methane combustion with 30% ofammonia increased energy efficiency and reduce CO2 emissions by 50% compared to existing
furnaces, achieving also the same or even better level of degreasing than using only methane106.

3.3.1. Co-firing of ammonia in coal power plants
Japan aims to co-fire ammonia and coal at coal power plants by around 2020 and use ammonia
for gas turbines by around 2030. Co-firing ammonia in a coal-fired power plant is under
demonstration in Japan. IEA expects that around 1,250 GW of coal power plants worldwide
currently in operation or under construction could have an extra life after 2030 using a 20%
share of ammonia as fuel, reducing the same percentage of CO2 emissions [36]. In Japan,
reaching a 20% blending share would result in an annual ammonia demand of 35 million tonnes
and around 3% reduction of total national CO2 emissions, about 40 million tons per year107.
Coal accounts for about 30% of the national total power generation. Reconditioning old coal
power plants with ammonia combustion technology would probably increase energy generation

104

NH3 Fuel Association, 1 October 2017: https://nh3fuelassociation.org/2017/10/01/methods-for-lownox-combustion-in-ammonia-natural-gas-dual-fuel-gas-turbine-combustor/.
105
Research at Osaka University, 31 October 2016: https://resou.osakau.ac.jp/en/research/2016/20161031_5.
106
Research at Osaka University, 26 June 2017: https://resou.osaka-u.ac.jp/en/research/2017/20170626_2.
107
Ammonia Energy, 18 July 2019: https://www.ammoniaenergy.org/the-evolving-context-of-ammoniacoal-co-firing/.

65

HYDROGEN MARKET IN JAPAN: POWER GENERATION

costs by 30% to around JPY 7 per kWh, but still cheaper than the energy generated by nuclear
plants, around JPY 10 per kWh, and natural gas plants, about JPY 14 per kWh108.
According to the Japanese engineering company JGC [37], the current electricity cost of coalfired generation in Japan is around JPY 6.5 per kWh, increasing up to an estimated JPY 20.2 per
kWh if the cost of CCS in Japan is included. If ammonia for 20% co-firing rate (intermediategoal) is produced in the United Arab Emirates in combination with CCS, the electricity cost
would be about JPY 21.7 per kWh, being competitive compared to the previous option.
Furthermore, it estimated that burning imported green ammonia (ultimate goal) will have a costof around JPY 18.6 per kWh, what means that the cost of the hydrogen supply chain would belower than the target set by the Basic Hydrogen Strategy by 2030 (Figure 37).

Figure 37: Estimation of Electricity Cost with Coal-fired, Ammonia-fired and a Mix-fired Generation

Source: JGC [37].

In January 2017, the Central Research Institute Electric Power Industry (CRIEPI) disclosed
technical data of co-firing experiments. In these experiments, the feeding condition of ammonia
was studied to minimize NOx concentration by using the same type of pulverized coal burnerused in mayor coal power plants in Japan. When ammonia was injected into the appropriate
position from the sidewall of the furnace, co-firing of pulverized coal and 20% ammonia could
be performed stably without increasing NOx in the exhaust gas.

108

Nikkei Asian Review, 2 March 2017: https://asia.nikkei.com/Business/Deals/Japanese-utilities-teamon-CO2-reducing-tech-for-coal-plants.

66

HYDROGEN MARKET IN JAPAN: POWER GENERATIONIn March 2017, it was reported that KEPCO, Chubu Electric Power, Tohoku Electric Power andother three utilities joined efforts to commercialize the technology for co-firing ammonia withcoal in power plants in the early 2020s, which could reduce CO2 emissions by at least 20%109.
They are participating in the government’s research on ammonia as an energy source, based on
the results got by Tohoku University and other institutions. The project also seeks to limit NOx
emissions from ammonia to levels that can be handled with existing scrubber technology.
In July 2017, Chugoku Electric Power Corporation, with support from the Japan Science andTechnology Agency, conducted a text to co-firing ammonia and coal at Unit 2 of its Mizushima
power plant in Kurashiki City, Okayama Prefecture. This was the first time that ammonia wasburned in a commercial power plant in Japan, and it was part of the Ammonia Direct
Combustion project under the SIP Energy Carrier program110 (Chapter 3.4.1).
Ammonia was added continuously to the 155 MW coal-fired plant at the rate of 450 kg/hour,
equivalent to 400 kilograms of coal, representing 0.6% of total fuel in terms of total energy
content. The power efficiency was maintained with the addition of the ammonia even when adecrease in CO2 was observed. By reducing the plant’s output to 120 MW, the added ammonia
represented 0.8%, equivalent to 1 MW. It was not observed an increase of NOx nor NH3
concentration in the exhaust gas. Along with this, the concentration of NOx tended to decrease
under certain conditions in the combustion method. Therefore, it was proved that this ammonia
co-firing technology enables to reduce CO2 emissions from coal power generation utilizing
existing facilities, including existing denitration equipment, and thus will be cost-effective [38].
In September of that year, Chugoku announced that it had filed a patent application for a “cleanpower technology that involves co-firing ammonia with coal”. The announcement alsomentioned the company’s intention to develop the co-firing method so that mixtures of up to
20% ammonia could be applied111. Higher blending shares of up to 20% ammonia in energy
terms might be feasible with only minor adjustments to a coal power plant. In smaller furnaces
with a capacity of 10 MW thermal, blending shares of 20% ammonia have been achieved
without problems, and in particular without any slippage of ammonia into exhaust gas [36].
In December 2017, the Japanese manufacturer IHI Corporation started the demonstration of theco-firing of coal and 20% of ammonia at its large-capacity combustion facility of 10 MW in
Aioi City, Hyogo Prefecture. This is also part of the Ammonia Direct Combustion project under
the SIP Energy Carrier program112. It developed its own system for delivering ammonia to the
combustion zone, including the shape of the piping, optimized to suppress NOx emissions. In
March 2018, IHI announced that it reached the 20% goal maintaining NOx emissions at a
109

Nikkei Asian Review, 2 March 2017: https://asia.nikkei.com/Business/Deals/Japanese-utilities-teamon-CO2-reducing-tech-for-coal-plants.
110
Chugoku Electric Power Co., 8 September 2017: http://www.energia.co.jp/press/2017/10697.html (inJapanese).
111
Ammonia Energy, 12 April 2018: https://www.ammoniaenergy.org/ihi-first-to-reach-20-ammoniacoal-co-firing-milestone/.
112
IHI Corporation, 28 March 2018: https://www.ihi.co.jp/ihi/all_news/2017/technology/2018-328/index.html.

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HYDROGEN MARKET IN JAPAN: POWER GENERATION

similar rate that a coal-only firing, while greatly reducing CO2 emissions. In the meantime, it
has been studying pertinent aspects of co-firing combustion in collaboration with Osaka
University and Tohoku University.
IHI’s aim is to commercialize the system by 2020, considering also “the possibility of further
lowering NOx by evaluating the impact on boiler performance and selection of operating
conditions”. Its ultimate goal is to build a value chain that connects the production and use ofammonia, using it as fuel for gas turbines and coal-fired boilers, and for SOFC. It is also
proceeding with a demonstrating technology for producing hydrogen from biomass in Indonesia
by means of the twin IHI gasifier TIGAR113.

113

IHI Corporation: https://www.ihi.co.jp/csr/english/realize/future.html.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

3.4. SUPPLY CHAINS AND HYDROGEN CARRIERSRealize a hydrogen society in Japan implies the necessity of both expanding hydrogen demand
and the construction of reliable supply chains to meet that demand at a low cost. The Japanese
government has been supporting demonstration projects for building supply chains fromoverseas to produce green hydrogen from renewable sources or from fossil fuels plus the carbon
capture and storage. Indeed, the government has increased the budget for the hydrogen supply
chain year over year (Table 1). It was JPY 2.8 billion in FY 2016, JPY 4.7 billion in FY 2017
and JPY 9.4 in FY 2018. Australia, Brunei, Saudi Arabia and Norway are countries where
Japanese firms are working on the production, conversion, transportation, storage and utilizationof hydrogen, with the collaboration and funds from the government.
The use of brown coal and other fossil fuels implies environmental concerns that could
compromise their future unless combining with the CCS technology. On the other hand,hydrogen can be a way to transport renewable energy over long distances. This is, regions with
abundant and cheap renewable potential, such as Australia, Chile, Argentina, Canada or Middle
Eastern countries could produce hydrogen and transport it to regions with high demand but
either less renewable potential and/or higher costs of generating it, such as Japan and South
Korea.

Figure 38: Global Hydrogen Supply Chain

Source: Kawasaki Heavy Industries.

Though the government’s Strategy did not mention any supply chain for importing hydrogenproduced through renewable energies, there are two demonstration projects in Australia and69

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Norway studying this option. Additionally, New Zealand, another country rich in renewable
resources that could produce hydrogen for both domestic and export purposes, signed a
Memorandum of Cooperation on Hydrogen with Japan in October 2018114.
Research, development and demonstration of hydrogen technologies with industry-academiagovernment collaboration under the leadership of the government will contribute significantly tosolve energy and environment problems in Japan, and it will lead Japan a world leader inhydrogen utilization and related industries.
IEA forecasted that hydrogen produced in Australia through electrolyzers powered by solar andwind could replace 3% of the world’s gas consumption. The cost could come in at USD 3 per
kilogram of hydrogen in 2040 (Figure 39). This makes it cheaper than doing so using natural
gas through steam methane reformation when the costs of CCUS are included. IEA pointed outthat costs could be lower if the Australian’s government provided support for such projects, or
solar, wind and/or electrolyzer costs declined quicker than expected115.

Figure 39: Hydrogen Costs from Hybrid Solar PV and Onshore Wind Systems in the Long Term

Source: IEA [36].

According to IEA, domestic production of hydrogen in Japan using electrolyzers and its
distribution could cost around USD 6.5 per kilogram in 2030, while importing it from Australia
could cost around USD 5.5 per kilogram (Figure 40). The latter includes also the conversion,transportation and reconversion costs, around USD 1.5 per kilogram. In this sense, ammonia
will be even more attractive since it could be used directly, avoiding the additional costs ofreconverting it back into hydrogen, and becoming the cheapest mechanism for import hydrogenfrom Australia or other locations to Japan [36].

114

METI, 23 October 2018: https://www.meti.go.jp/english/press/2018/1023_006.html.
PV Magazine, 13 November 2018: https://www.pv-magazine-australia.com/2018/11/13/iea-worldenergy-outlook-highlights-viability-of-australian-green-hydrogen/.
115

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Figure 40: Cost of Hydrogen and Ammonia in Japan and exported from Australia to Japan in 2030

Source: IEA [36].

In September 2018, the Australian Renewable Energy Agency (ARENA) offered USD 22.1
million in funding 16 green hydrogen export research projects to nine Australian universities
and research organizations including: the Australian National University, Macquarie University,
Monash University, Queensland University of Technology, RMIT University, The University of
Melbourne, University of New South Wales, The University of Western Australia and theCommonwealth Scientific and Industrial Research Organization (CSIRO)116. ARENA pointed
out that Australia could build an export industry worth USD 1.7 billion by 2030, with
employment for 2,800 people, becoming the world’s largest producer and exporter of greenhydrogen using solar and wind power117. Additionally, the Queensland government launched a
USD 19 million five-year plan to help drive the development of a renewable hydrogen
industry118.
The Asian Renewable Energy Hub project will also build 7.5 GW of wind generation and 3.5
GW of solar generation in Western Australia, with 8 GW of those used to produce greenhydrogen for domestic and overseas markets119.
According to the estimations of the Asia Pacific Energy Research Center (APERC) in its
economic analysis of hydrogen supply in the APEC Region [39], the production of hydrogenfrom fossil fuels plus CCS will cost between USD 7 cents/Nm3 and 23 cents/Nm3 by 2030, andbetween USD 7 cents/Nm3 and 23 cents/Nm3 from renewable sources (Figure 41). Althoughseveral assumptions were done in that analysis that could lead to not accurate calculations that
116

ARENA, 12 September 2018: https://arena.gov.au/blog/22-million-to-unlock-hydrogen-potential/.
PV Magazine, 18 August 2018: https://www.pv-magazine-australia.com/2018/08/18/australia-has-bighydrogen-export-opportunity/.
118
PV Magazine, 1 June 2019: https://www.pv-magazine-australia.com/2019/06/01/queensland-launches19-million-hydrogen-strategy/.
119
The Asian Renewable Energy Hub: https://asianrehub.com/about/.
117

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

will need to be updated when more data become available, it is enough to get a reference about
which countries and sources will have the cheapest costs in the APEC Region. This is especially
important for Japan in order to estimate the feasibility of international supply chains that will
fulfil future demand.

Figure 41: Production Cost of CO2-free Hydrogen in APEC Region in 2030

Source: APERC [39].

According to that calculation, the cost of supply liquefied hydrogen (energy carrier selected for
all the options) for power generation would need to be between USD 16 cents/Nm3 and 27
cents/Nm3 or less by 2030 to compete with coal-fired power generation, between USD 17
cents/Nm3 and 22 cents/Nm3 or less to compete with LNG power generation, and between USD
44 cents/Nm3 and 53 cents/Nm3 or less to compete with oil-fired power generation (Figure 42).
They included the environmental cost of thermal power generation, this is, the cost of CO 2
emission countermeasures.
Hydrogen from Russia produced from natural gas combined with CCS would offer the lowest
price. The cost of importing hydrogen from Canada or New Zealand produced from hydropower
could be comparable to the one imported from Australia and produced from coal plus CCS,
saving the environmental implications and the risk of the CCS technology.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Figure 42: Hydrogen Supply Cost for Power Generation and Required Hydrogen Fuel Price forCompeting with Fossil Fuel Thermal Power Generation in Japan in 2030

Source: APERC [39].

Finally, supply CO2-free hydrogen for FCVs in a station with a capacity of 300 Nm3/h or less,the more extended in Japan, will cost between USD 69 cents/Nm3 and 105 cents/Nm3. For abigger one, the cost will drop to between USD 36 cents/Nm3 and 72 cents/Nm3 due to lower
maintenance and operation costs (Figure 43). Produce hydrogen from Japanese renewablesources could be comparable to import it from overseas when it is also produced fromrenewable sources, though more expensive when it is produced from fossil fuels plus CCS. This
cost is added to the hydrogen import cost mentioned above.

3.4.1. Energy Carriers
Since hydrogen is difficult to handle being gaseous at normal state, energy carriers are thetechnology to efficiently store and transport it, including liquid hydrogen, compressed hydrogen,methylcyclohexane (MCH) and anhydrous ammonia (NH3). Pipelines, trailers, ships andrailroads are transport means. Today, compressed or liquefied hydrogen are utilized for supply,
while liquid hydrogen, MCH and ammonia are regarded as the most promising hydrogen
carriers. Besides, ammonia is also available for direct use. Japan is also studying how best to73

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

disseminate methane, which is assumed to be available exclusively for direct use. It is produced
through the methanation process, which can use CO2-free hydrogen generated from renewable
resources. Figure 44 shows the strategy of the Japanese government to develop a CO2-freehydrogen value chain, and Table 11 shows the properties of the main energy carriers.

Figure 43: Hydrogen Fuel Cost for FCV in Japan in 2030

Source: APERC [39].

Figure 44: Strategy of Energy Carriers – Development of CO2-free Hydrogen Value Chain

Source: Cross-Ministerial SIP [15].

74HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Table 11: Physic-chemical properties of Hydrogen Carriers
LiquidHydrogen

Organic
Hydride (MCH)

Ammonia

Molecular Weight

2.0

98.2

17.0

H2 Content (wt %)

100

6.2

17.8

Volumetric H2 Density (kg-H2/m3)

70.8

47.3

121

Boiling Point (ᵒC)

-253

101

-33.4

H2 Release Enthalpy Change (KJ/mol-H 2)

0.9

67.5

30.6

High purity
Low energy
to pressurize

Existing oil
infrastructures
can be utilizedHigh H2 density
Direct use for
combustion

Conversion

Small scale: High
Large Scale: Low

MediumHigh

Tank Storage

High

High

High

Ship: Low
Pipeline: High
Trucks: High

Ship: High
Pipeline: High
Trucks: High

Ship: High
Pipeline: High
Trucks: HighHigh

MediumMediumMedium / High

MediumHigh

Other Properties

Process andTechnology
Maturity*

Transport
Reconversion
Supply Chain Integration* High = proven and commercial; Medium = prototype demonstrated; Low = validated or underdevelopment;
Small scale ≤ 5 tonnes per day; Large scale ≥ 100 tonnes per day.

Source: Author, with data from Cross-Ministerial SIP [15] and IEA [36].

Pipelines could become in the best way to transport massive amounts of hydrogen, and there areseveral projects going on about that. From 2030, local hydrogen networks will be needed incoastal regions in line with the commercialization of the international hydrogen supply chains.
At present, hydrogen for pipeline supply to residential, commercial and other ordinary users
must be odorized by law to allow verification of gas leaks, but odorants could damage the fuelcell stacks. The government is considering revising regulations on this area [9].
The government leads the industry-academia-government R&D collaboration program “SIP
Energy Carriers”, which was launched in FY 2014 and during five years, until FY 2018, as oneof the eleven themes of the Cross-ministerial Strategic Innovation Promotion Program (SIP),
created by the Council for Science, Technology and Innovation of the Cabinet Office. Its budget
is around USD 30 million per year.
The scope of the Energy Carriers program covers ten themes divided into five main topics thatencompass the full CO2-free hydrogen value chain, from basic research to practical applicationand commercialization, creating a competitive advantage for its national industries, and75

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

promoting the introduction of hydrogen and hydrogen energy carriers in society (Figure 45).
These are 1) the development of hydrogen production through solar thermal energy, 2) the
development of ammonia production/usage technologies, 3) the development of organic hydride
production/usage technologies, 4) the development of liquid hydrogen usage technologies, and5) the development of safety evaluation systems for energy carriers120.

Figure 45: R&D Schedule until FY 2018

Source: Cross-Ministerial SIP121.

Each of these ten projects is described in the following lines [15]:
1.

120
121

High-Temperature Solar Thermal Energy Supply System
Research Director: Yukitaka Kato - Professor Laboratory for Advanced Nuclear
Energy, Tokyo Institute of Technology.
Purpose: Development of high-temperature (650°C) solar thermal energy supply system toproduce H2 efficiently by the introduction of a new solar thermal corrector, collecting tube,
heat transfer media and thermal energy storage technologies.
Research outline: The team is aiming that ammonia which has high volume hydrogendensity is produced as an energy carrier by hydrogen produced from solar thermal energy
supply system. High-temperature (650°C) solar thermal energy collection system withmore than 70% of solar radiation and heat collection efficiency in which the temperature is
Cross-ministerial SIP: http://www.jst.go.jp/sip/ (in Japanese).
Cross-ministerial SIP: https://www8.cao.go.jp/cstp/panhu/sip_english/21-24.pdf.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

higher than the conventional solar thermal system is developed. Elemental technologies ofa solar corrector, heat transfer fluid, solar thermal energy correction tube, and thermalenergy storage for 24-hour heat supply to H2 production system are developed.
1.

Hydrogen Production Technology Using Solar Heat
Research Director: Nariaki Sakaba - Group Leader, HTGR Hydrogen & Heat Application
Research Center, Japan Atomic Energy Agency.
Purpose: Development of highly efficient hydrogen production technologies by water
splitting without CO2 emission using solar heat at around 650ºC.
Research outline: Development of elemental technologies and demonstration of technicalfeasibility will be performed for the following two hydrogen production methods: 1)
Membrane IS Process: hydrogen production by thermal water splitting using chemical
reactions with iodine and sulfur, and membrane technologies, and 2) New steam
electrolysis: hydrogen production by steam splitting with proton conducting oxide using
electricity and heat.

2.

Development of Ammonia Synthesis Process from CO2- Free Hydrogen
Research Director: Yasushi Fujimura - General Manager, R&D Center, Technology
Innovation Center, JGC Corporation.
Purpose: Development of high-efficiency ammonia synthesis process from CO2-freehydrogen produced from renewable energy or fossil fuel.
Research outline: Major R&D item is the development of ammonia synthesis catalyst withhigh activity at low temperature. The pilot plant will be constructed and operated in 2018 toconfirm the performance of the new catalyst and process.

3.

Basic Technology for Hydrogen Station Utilizing Ammonia
Research Director: Yoshitsugu Kojima - Director, Institute for Advanced Materials
Research, Hiroshima University.
Purpose: The purpose of this research is to develop ammonia decomposition and highpurity H2 supply system for a hydrogen filling station.
Research outline: High purity H2 supply system with low-cost hydrogen transportation is a
key issue to spread fuel cell vehicles (FCVs) and FC forklifts. In this theme, we focused onammonia as a hydrogen carrier because of high gravimetric and volumetric H2 densities.
We will develop a high purity H2 supply system, which satisfies hydrogen fuelspecifications for FCVs (ISO 14687-2) by NH3 decomposition and separation technologies.

4.

Ammonia Fuel Cell
Research Director: Koichi Eguchi - Professor, Graduate School of Engineering, Kyoto
University.
Purpose: Development and demonstration of highly effective ammonia-fueled fuel cellsystems.
Research outline: Developing the direct ammonia-fueled SOFC systems and demonstrating
1 kW-scale power generation systems (main target). Investigating the combined systems asfollows: (1) ammonia auto-thermal cracker and SOFC; (2) ammonia cracker and AEMFC77

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS(sub-target). Elucidating the compatibility of ammonia for the fuel cell systems and thedegradation behaviour of the ammonia-fueled fuel cells.
5.

Ammonia Direct Combustion
Research Director: Hideaki Kobayashi - Professor, Institute of Fluid Science, Tohoku
University.
Purpose: To develop ammonia direct combustion technology to utilize ammonia which is ahydrogen energy carrier as well as a CO2 - free fuel.
Research outline: Highly efficient utilization of ammonia combustion such as 1) Gas
turbine power generation using ammonia alone and ammonia/natural-gas mixed fuel, 2)Application of ammonia reciprocal engines for transportations, and 3) Heat utilization inindustrial furnaces using ammonia as a fuel This project performs technology development
and verification tests based on fundamental combustion research.

6.

Development of Hydrogen Supplying Technology Based on Organic Hydride
Research Director: Hideshi Iki - Principal Researcher, Central Technical ResearchLaboratory, JX Nippon Oil & Energy Corporation.
Purpose: To develop a practical hydrogen refueling station and hydrogen supplying system
based on organic hydride technology.
Research outline: The followings are focused to develop a modular dehydrogenation
system for hydrogen refueling stations: (1) Improving performance of the dehydrogenation
catalyst; (2) Improving efficiency & reducing the size of modular dehydrogenation system;(3) Developing low-cost hydrogen purification system; (4) Conducting safety assessments
Technologies for efficient organic hydride production are also being developed. A further
goal is to develop organic-hydride based hydrogen refueling stations and to promotewidespread adoption of FCVs.

7.

Development of Cargo Loading/unloading System for Liquid Hydrogen and the Relevant
Rules for Operation
Research Director: Tetsuya Senda - Deputy Managing Director, Japan Ship Technology
Research Association.
Purpose: This research aims to develop a loading and unloading system for liquidhydrogen and to establish relevant rules for the operation of the system.
Research outline: In the research, swivel joints and emergency release systems for liquidhydrogen are to be developed, based on the existing LNG handling technology, and aloading and unloading system for liquid hydrogen integrating the developed equipment will
be constructed. Operational safety measures are also specified and rules and standards willbe established for the safe operation of the world-first system. The rules and standards will
be internationalized, as necessary.

8.

Development of Hydrogen Engine Technology
Research Director: Masahide Kazari - Senior Manager, Technical Institute, Kawasaki
Heavy Industries, Ltd.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Purpose: We conduct the research for high efficiency and low-NOx emission hydrogenengine realization.
Research outline: We conduct the following research items for high efficiency and lowNOx-emission open-cycle hydrogen engine which shall be used for power generation or
ship propulsion: hydrogen combustion control technology; low-NOx technology; highpressure hydrogen injector; high-pressure hydrogen pump.
9.

Safety Assessment of Energy Carrier
Research Director: Atsumi Miyake - Professor, Center for Creation of Symbiosis Society
with Risk, Yokohama National University.
Purpose: The purpose is to build a vital society in which hydrogen energy can be operated
safely and sustainably within an acceptable cost in a suitable area.
Research outline: Risk assessment and management of the following three supply chain in
the transportation, storage, and supply processes are carried out not only from theperspective of the operators and manufacturers but also from the perspective of thecitizens: 1) Compressed hydrogen supply chain; 2) Liquid hydrogen supply chain; 3)
Organic hydride supply chain.

Ammonia is one of the promising energy carriers as a direct energy source, and the research of
its use has produced several accomplishments toward implementation in society. They
concluded: “We have found that ammonia has a high potential to play an important role towards
the hydrogen society”. Therefore, after the program ended in March 2019, The Green Ammonia
Consortium (GAC) was established to support the next phase and with the aim of developing acommercial CO2-free ammonia value chain toward low carbon society, mainly focusing of its
direct use as a CO2-free fuel.
GAC was originally established in July 2017, though at that time, it was under SIP andmembership was only open for the entities participating in SIP “Energy Carriers” 122 . The
members developed the Roadmap of Ammonia Supply Chain in 2018 (Figure 46). GAC became
an independent organization opened for the global industry in April 2019. By June 2019, it has
66 members among energy, trading, logistics, chemicals and materials, civil engineering,machinery and engineering companies, research institutions and public organizations. Five ofthem are foreign companies (Equinor ASA, KBR, The Hydrogen Utility, Woodside Energy andYara International).

122

JST, 25 July 2017: https://www.jst.go.jp/report/2017/170802_e.html.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Figure 46: Roadmap of CO2-free NH3 Supply Chain

Source: The Green Ammonia Consortium [38].

3.4.2. Liquefied Hydrogen
Liquefied hydrogen (LH2), as well as compressed hydrogen, have the highest purity among theenergy carriers, so they do not need to be processed and can be supplied to fuel cells. Purehydrogen can be blended into natural gas pipeline networks, though transportation infrastructurefrom overseas to Japan and nationwide has to be established. When cryogenically cooled to 253 °C, hydrogen changes its phase from a gaseous to a liquid state, shrinking to 1/800 of its
original volume. At its reduced volume, storage and transportation efficiency increases,
enabling much greater distribution of hydrogen.
Its main disadvantages are the energy loss during the conversion, between 25% and 45%, thehigh cost of the infrastructure for cryogenic temperatures and its maintenance, and the daily loss
between 0.5% and 1.0% due to boil-off, making LH2 less efficient for long-term storage
compared to other energy carriers [25]. For developers, the classification of LH2 as a highpressure industrial gas increases the compliance costs, including large space around fuelingstations and high-grade material for facilities. The Japanese government is reviewing theregulation (Chapter 3.2.2).

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Australia and Norway are on a race to supply Japan with liquid hydrogen. The Australian
project, producing hydrogen from brown coal, was already included in the national Strategy andhave several years of developing. Japan aims to establish basic technologies and develop aliquefied hydrogen supply chain through this project. However, Norway wants to produce itfrom renewable sources at a lower price, which could make the Japanese government change its
priorities since it is a climate-friendly method aligned with its long-term goals123.

From Australia’s brown coal
The Hydrogen Energy Supply Chain (HESC) is a world-first pilot project to establish an
integrated commercial-scale hydrogen supply chain from Victoria’s Latrobe Valley in Australia
to Japan (Figure 47). It will be developed in two phases, a pilot project over one year by 2021,
and the decision to proceed to a commercial phase in the 2020s, with operations targeted in the2030s, depending on the successful completion of the pilot phase, regulatory approvals, social
license to operate and hydrogen demand. During the pilot phase, 160 tonnes of inexpensive
lignite will be treated to produce 3 tonnes of hydrogen124. The brown coal reserves in Australia
have the potential to meet Japan’s electricity demand for several hundred years125.

Figure 47: Hydrogen Energy Supply Chain Pilot Project between Australia and Japan

Source: CO2-free Hydrogen Energy Supply-chain Technology Research Association (HySTRA)

Hydrogen will be produced from the gasification of brown coal at the newly constructedhydrogen production plant located at the AGL Loy Yang Complex in the Latrobe Valley. It willbe transported by conventional high-pressure tube trailer trucks to a liquefaction and loading
terminal at the Port of Hastings. A pipeline is envisaged for the commercial phase. There,hydrogen gas will be liquefied by cooling it to -253 ºC. Finally, liquid hydrogen will be shipped
to Kobe Airport Island, Japan, approximately once every three months using a world-first
123

Reuters, 28 April 2017: https://www.reuters.com/article/us-japan-hydrogen-race/norway-racesaustralia-to-fulfill-japans-hydrogen-society-dream-idUSKBN17U1QA.
124
HESC: https://hydrogenenergysupplychain.com/about-hesc/.
125
HySTRA: http://www.hystra.or.jp/en/project/.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

innovative carrier specifically developed for the task by Kawasaki Heavy Industries (KHI) withcryogenic tanks and vacuum insulation to contain the hydrogen and keep it at a very low
temperature.
Because there are no established regulations for transporting liquefied hydrogen by sea, theInternational Maritime Organization adopted tentative safety standards proposed by Japan andAustralia for liquefied hydrogen carrier ships in 2016. KHI and Japan will draft international
standards to secure stable liquefied hydrogen transportation.
The total project cost was reported to be USD 496 million, spending about half of thisinvestment in Victoria and the rest in infrastructure in Japan and shipping. The project isfunding by:-a Japanese portion, coordinated by HySTRA, established in February 2016 by KHI,
Electric Power Development Co., Ltd. (J-POWER), Iwatani Corporation and Shell
Japan Limited, which receive funds from the Japanese government. Marubeni
Corporation is also a current member. HySTRA is implementing the Demonstration
Project for Establishment of Mass Hydrogen Marine Transportation Supply Chain
Derived from Unused Brown Coal by NEDO.

-

an Australian portion, coordinated by Hydrogen Engineering Australia (HEA), a 100%
subsidiary of KHI which comprised of several partners including KHI, J-POWER,
Iwatani Corporation, Marubeni Corporation and AGL, and which receives USD 100
million in funds from the Australian and Victorian governments.

KHI estimates an import cost of around JPY 29.8 per Nm3 (about EUR 0.24 per Nm3), being thehydrogen production and liquefaction the two more expensive steps, while CCS cost will makeup only 10% (Figure 48).
However, this project is being criticized because of the environmental implications and becauseof its huge cost. While CCS will be a key aspect of the commercial-scale phase, it will notfeature during the pilot phase due to the small quantity of CO2 emitted, around 100 tonnes,
equivalent to annual emissions from approximately 20 cars. The related CarbonNet Project126,
which is jointly funded by the Australian and Victorian Governments, is investigating thepotential for establishing a commercial-scale CCS network from the Latrobe Valley to offshore
storage sites in the Gippsland Basin.
Without CCS, produce hydrogen from coal gasification is as polluting as the direct burning ofcoal for power generation, and experts claim that CCS technology will not be at a safe,
affordable and usable stage by the time the pilot project concludes, what increases the risk to126

Earth Resources, Victoria State Government: https://earthresources.vic.gov.au/projects/carbonnetproject.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

move towards the commercial scale 127 . The Australian National Audit Office (ANAO)
published a damning assessment of Australia’s CCS program, noting that more than USD 450
million were invested by the government over the past decade without achieving anything128.

Figure 48: Cost of Imported Hydrogen from Australia

Source: Kawasaki Heavy Industries.

Additionally, this project was negotiated about ten years ago, before the dramatic cost reductionof solar PV, wind and Lithium-ion battery technologies. To spend USD 500 million to get only
3 tonnes of hydrogen plus 100 tonnes of CO2 in one year looks no reasonable. Only in Australia,
there are projects that will use renewable sources to produce more hydrogen, cheaper andcompletely clean. Even KHI is also investing in producing hydrogen in Norway from renewablesources.
For example, in the biggest one, the French renewable energy developer Neoen is building a 50
MW electrolyzer powered by a 150 MW wind and 150 MW solar complex at Crystal Brook,north of Adelaide, including also a 400 MWh battery storage. It will cost USD 600 million, andit will produce at least 20 tonnes of hydrogen per day129.
Therefore, and although producing hydrogen from Victoria’s brown coal and importing it toJapan would be still cheaper than doing it locally, it seems that this project will have undeniablebarriers from both sides to continue in the commercial phase. It looks environmentally and127

Environment Victoria, 13 July 2018: https://environmentvictoria.org.au/2018/07/13/converting-browncoal-to-hydrogen-the-dirty-details-on-another-coal-boondoggle/.
128
Renew Economy, 15 December 2017: https://reneweconomy.com.au/audit-office-slams-australiasdud-investments-in-clean-coal-90953/.
129
Renew Economy, 7 March 2018: https://reneweconomy.com.au/neoen-plans-worlds-biggest-solarwind-powered-hydrogen-hub-in-s-a-53674/.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

economically more reasonable to continue with the demonstration of the conversion andtransportation of liquefied hydrogen produced just from renewables.
About this, an important person working at NEDO told the author that all the current projects
carrying out are in a research and development phase in which Japan will develop new
knowledge, technologies, regulations, etc. for future energy systems. Therefore, he claimed thatthe total cost of all those projects is worth for securing new knowledge. Because Japan has
limitations in renewables and CCS, it will need to import a huge amount of hydrogen in the
future, taking care of the cost and the carbon footprint of that hydrogen. Australia will have the
CCS part ready by 2030 when the commercial phase of this project could start operation.

From Norway’s natural gas and renewable sources
In April 2016, it was announced a feasibility study of the potential for large scale hydrogenproduction in Norway for export to the European and Japanese markets. Hydrogen would be
produced from natural gas including the CO2 capture and store as well as surplus
wind/hydropower. The project called HYPER has a budget of around EUR 2 million between
2016 and 2019130 and counts with the collaboration of KHI, Mitsubishi Corporation, Nel and
Shell, among others. SINTEF Energy Research is the host organization and the lead research
partner. Nel aims to deliver liquefied hydrogen to Japan for a minimum JPY 24 per Nm3,
cheaper than the hydrogen produced in Australia and mentioned before. If Norway’scommercial production goes rapidly, it might be earlier than the Australian one131, what could
make the Japanese government change its priorities since it is a climate-friendly method alignedwith its long-term goals.

3.4.3. Organic Hydride – Methylcyclohexane (MCH)
MCH (C7H14) is the hydrogenated side of a chemical pair that can be used to store and transporthydrogen. Toluene (C7H8) is the dehydrogenated part. Therefore, their advantage is theirreusability through repeated hydrogenation and dehydrogenation, though, on the other hand,their disadvantage is the additional heat required for dehydrogenation and the time needed tocarry out both reactions. This pair is one of a number that has been proposed and studied under
the rubric of “liquid organic hydrogen carriers” (LOHCs).
MCH is liquid at ambient temperature and pressure, being easy to handle and transport, andmaking it suitable for long-term storage. It can be compressed to 1/500 of its original volume.
130

SINTEF, 10 June 2016: https://www.sintef.no/en/projects/hyper/.
Reuters, 28 April 2017: https://www.reuters.com/article/us-japan-hydrogen-race/norway-racesaustralia-to-fulfill-japans-hydrogen-society-dream-idUSKBN17U1QA.
131

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERSTransportation, loading and unloading infrastructure, including tankers and tanks, is alreadyestablished, though it is needed to develop technologies for hydrogenation and dehydrogenation
facilities.

From Brunei’s natural gas
In July 2017, four major Japanese infrastructure, shipping and trading companies, Chiyoda
Corporation, Mitsubishi Corporation, Mitsui & Co. Ltd., and Nippon Yusen Kabushiki Kaisha,established the Advanced Hydrogen Energy Chain Association for Technology Development(AHEAD) and launched the world’s first global full-scale hydrogen supply chain demonstration
project, in collaboration with the Nation of Brunei132.
The project, a subsidized "Technology Development Project to establish Hydrogen
Society/Technology Development for the Utilization of Large Scale Hydrogen Energy", isfunded by NEDO, and demonstrates "The Hydrogen Supply Chain utilizing the Organic
Chemical Hydride Method". With an investment of up to USD 100 million, the pilot project will
run for a year to determine the commercial viability of the supply chain.
Hydrogen will be produced by steam reforming from the processed gas derived from the LNG
plant of Brunei (Brunei LNG Sdn. Bhd.), and will be supplied as the fuel for the Keihin
Refinery Thermal Power Plant, an affiliate of TOA OIL Co., Ltd., which is owned by Showa
Shell Sekiyu K.K. It is expected a maximum supply of 210 tons of hydrogen in 2020, equivalent
to filling 40,000 FCVs.
Chiyoda’s SPERA Hydrogen technology shown in Figure 49 utilizes the organic chemical
hydride method. In the supply country, hydrogen, chemically fixed to toluene, is converted into
MCH by hydrogenation reaction for safely and economically storage and transport by ship. In
the consumer country, gaseous hydrogen is catalytically extracted from MCH by
dehydrogenation reaction and used as power generation fuel in another demonstration project.
Toluene, a by-product of this process, is repeatedly recycled as a raw material for producing
MCH.
Previously, and after obtaining continuous stable performance of the proprietarydehydrogenation catalyst at laboratory scale, several verification tests for commercial use,
including catalyst life and catalyst durability tests, were conducted for around 10,000 hours at
the demonstration plant at Chiyoda’s Koyasu Office & Research Park in Yokohama. From thecommercial-scale demonstration tests, it was confirmed that MCH could be hydrogenated withtoluene with yields of over 99%, while hydrogen could be produced from the same MCH withyields of more than 98% through the dehydrogenation process133.

132
133

NEDO, 27 July 2017: https://www.nedo.go.jp/english/news/AA5en_100278.html.
Chiyoda Corporation: https://www.chiyodacorp.com/en/service/spera-hydrogen/demo-plant/.

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Figure 49: Chiyoda’s SPERA Hydrogen Technology

Source: Chiyoda Corporation134.

The construction of both the hydrogenation plant in Negara Brunei Darussalam and thedehydrogenation plant in the Kawasaki’s coastal region of Japan will be completed by 2019.
The demonstration transport of liquid hydrogen procured in Brunei will be conducted in 2020135.
SPERA Hydrogen can be inexpensively transported over long distances from any global
location. It can be stored in mass quantities for extended periods of time without losses, making
it well suited for strategic reserves. Therefore, Chiyoda expects that hydrogen produced fromlarge renewable energy facilities in Russia, Australia, New Zealand and other countries in future
projects will be converted into SPERA Hydrogen and transported to where it is needed.
Nevertheless, the concept of this project is wider since hydrogen could be produced from oil,coal and gas fields, but also from wind and solar farms through water electrolysis. In the firstcase, CO2 generated would be captured and stored, using it to increase oil recovery and thus the
production (Figure 50).
According to the Fire Defense Law in Japan, MCH and toluene are both designated ashazardous materials, the same as gasoline. Therefore, it is feasible to repurpose existing
petroleum distribution infrastructure for SPERA Hydrogen, thereby lowering capital investment
in realizing a hydrogen-based society.
Since the final goal is to use CO2-free for power generation, it can contribute to achieve theJapanese GHG emissions target. Power generation using a mix of hydrogen and natural gas can
reduce CO2 emissions by 6% compared with the use of natural gas alone (Chapter 3.3).
134
135

Chiyoda Corporation: https://www.chiyodacorp.com/en/service/spera-hydrogen/innovations/.
Chiyoda Corporation, 27 July 2017: https://www.chiyodacorp.com/meida/170727_e.pdf.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Figure 50: Chiyoda’s SPERA Hydrogen Supply Chain

Source: Chiyoda Corporation136.

From Australia’s solar PV energy
In March 2019, JXTG Nippon Oil & Energy Corporation, Chiyoda Corporation, the Universityof Tokyo and Queensland University of Technology (QUT) announced the successful testing of
the world's first production of CO2-free hydrogen at low cost in Australia and its transportation
to Japan137. They plan to develop and scale up this method.
ARENA announced a fund of USD 3.35 million for this project in 2018, as part of its Researchand Development Program – Renewable Hydrogen for Export138. Therefore, this JXTG projectis separate to but aligned with ARENA’s USD 7.5 million research project for extractinghydrogen from treated non-drinking water, such as seawater, using solar energy.
JXTG’s electrochemical synthesis of organic hydride technology simplifies the production
process of MCH, with a potential of reducing 50% the cost of MCH production equipment, and136

Chiyoda Corporation: https://www.chiyodacorp.com/en/service/spera-hydrogen/.
JXTG Nippon Oil & Energy, 15 March 15 2019 : https://www.noe.jxtggroup.co.jp/english/newsrelease/2018/20190315_01.html
138
QUT, 6 September 2018: https://www.qut.edu.au/research/article?id=135488.
137

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

thus, the cost of hydrogen. This project was also based on the technology of QUT, a highefficiency tracking solar photovoltaic power generation system, and Chiyoda’s dehydrogenation
technology, and it was conducted in social collaborative research aimed at building thehydrogen supply chain in The University of Tokyo.
QUT’s solar cell facility includes a concentrated photovoltaic array, tested in joint with
Sumitomo Electric Industries, as well as a standard Si-PV array currently operating at Redlands
Research Facility, in the south of Brisbane.

3.4.4. Ammonia
Ammonia (NH3) has been manufactured using fossil fuels and distributed as a fertilizer orchemical raw material. Around 95% of ammonia is produced from fossil fuel hydrogenworldwide, emitting over 1% of energy-related CO2 emissions. Recently, interest in
manufacturing ammonia using renewable energies such as solar power is growing, which could
make it become a carbon-free fuel with high hydrogen content but not carbon since burns
without releasing CO2. On the other hand, it is necessary to pay attention to NOx emissions
during NH3 combustion, though it has been demonstrated that they can also be controlled.
It can be easily liquefied by compression at room temperature or by cooling to minus 30ºC. In
its liquid state, ammonia can carry large amounts of hydrogen energy since it has a volumetrichydrogen density 1.5 times higher than that of liquefied hydrogen. And it has a clear advantage
compare to MCH since the energy density of ammonia is 2.5 times higher (18.6 MJ of energy
per kilogram) than the effective energy density of the hydrogen carried by MCH (7.4 MJ per
kilogram). This is because each molecule of MCH contains only six hydrogen atoms that can be
detached and turned into diatomic H2 molecules. This is, while the MCH molecule weighs 98
grams per mole, only six of these grams are composed of usable hydrogen. The result at scale isa ship loaded with 50,000 tonnes of liquid cargo which delivers only 3,100 tonnes of H 2, in
contrast to the 8,900 tonnes of H2 delivered by a ship loaded with 50,000 tonnes of ammonia139.
Besides, its transportation and storage infrastructure already exits (more than 18 million tons of
NH3 are traded per year globally), providing a big advantage for implementing in society earlyon with minimal capital investment. Therefore, it is expected to be an energy carrier suitable formass transport of hydrogen.
Ammonia can be used directly as a fuel for power generation without extracting hydrogen(dehydrogenation) from it, saving the energy that it requires. Ammonia has acute toxicity,strong smell and needs handling with care, but it has not chronic toxicity, it is easy to detect andsafety measures are common practice. Furthermore, there is always an ammonia tank at thermal
139

Ammonia Energy, 2 August 2017: https://www.ammoniaenergy.org/japan-brunei-mch-energy-carrierdemonstration/.

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power plants (and workers are skilled in the handling of it) for using it in the de-nitrationequipment, which removes nitrogen oxide by using ammonia with a catalyst. Finally, CCS fromammonia production plant is a feasible option, and, according to SIP’s Energy Carriers [40],energy equivalent cost of ammonia is estimated to be the most feasible option among the energy
carriers, as it is shown in
Figure 51.

Figure 51: Cost Comparison per Hydrogen Unit of Energy Carriers

Source: SIP’s Energy Carriers [40].

Therefore, and given its properties, the technical maturity of its supply network and the wide
range of end-use sectors, it looks that ammonia has a good chance to lead the beginning of thehydrogen society. In fact, the Hydrogen Strategy released in December 2017 seems to giveammonia the preference path in the race against LH2 and MCH 140 , calling for CO2-freeammonia to come into use by the mid-2020s. Japan aims to co-fire ammonia and coal at coal
power plants by around 2020 and use ammonia for gas turbines by around 2030. In contrast, thecommercialization plan for MCH will start from 2025 onwards after completion of verification,and the commercialization of LH2 around 2030.

140

Ammonia Energy, 11 January 2018: https://www.ammoniaenergy.org/ammonia-positioned-for-keyrole-in-japans-new-hydrogen-strategy/.

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From Saudi Arabia’s fossil fuels
Japan and Saudi Arabia are exploring the possibility of extracting hydrogen from Saudi fossil
fuel through reforming, including CCS and enhanced oil recovery (EOR), and transport it toJapan in the form of ammonia141.
In September 2016, Prime Minister Shinzo Abe and Deputy Crown Prince Mohammed bin
Salman established the Joint Group for Saudi-Japan Vision 2030, which includes nine themes,
being energy one of those142. Saudi Arabia has been the largest and stable oil supplier for Japan,
and Japan has been one of the largest customers for Saudi Arabia. Besides, it is the ninth-largest
producer of ammonia.
In September 2017, The Institute of Energy Economics, Japan (IEEJ) and Saudi Aramco, astate-owned oil company that is responsible for approximately 10% of the world’s petroleum
production, co-hosted a workshop on “CCS and hydrogen in the framework of collaboration instudies on technologies toward a low carbon energy system in Saudi Japan Vision 2030” inTokyo143. It was part of the “Study of a master plan for creating a low-carbon energy system in
Saudi Arabia” [34] adopted under METI's infrastructural development and study project for theacquisition of bilateral credits for FY2017 (Joint Crediting Mechanism144 (JCM) supported by
NEDO). METI pursues cooperation with oil-producing countries to promote thedecarbonization of fossil fuels.
This study postulated a supply chain for carbon-free hydrogen and ammonia produced from
Saudi Arabian fossil fuels and including CCS and EOR. The scope of evaluation includes thepotential of greenhouse gas mitigation, commercial viability, types of financing options, andeconomic performance, and included a roadmap towards the establishment of a Japan-Saudi
Arabia CO2-free hydrogen/ammonia chain (Figure 52).
After that, IEEJ conducted a feasibility study about this supply chain [33], and after examining
the different hydrogen carriers, Saudi Arabia expressed interest in ammonia given its maturity
in production, transportation and use, and its cost advantage over the others.
In July 2019, Saudi Aramco and IEEJ signed an MoU for a pre-feasibility study of carbon-freeammonia production in the Kingdom of Saudi Arabia during the Saudi-Japan Vision 2030
Business Forum145.

141

Ammonia Energy, 15 February 2018: https://www.ammoniaenergy.org/japan-saudi-arabia-exploretrade-in-hydrogen-ammonia/.
142
MOFA: https://www.mofa.go.jp/mofaj/files/000237093.pdf.
143
IEEJ, 11 October 2017: https://eneken.ieej.or.jp/en/jeb/171011.pdf.
144
The JCM was developed by the Japanese government to compliment the UN’s Clean Development
Mechanism (CDM). It allows Japan to account for its emission reductions by transferring low carbon
technology, services and products to developing countries whilst contributing to their sustainable
development (https://www.jcm.go.jp/).
145
Aramco, 10 July 2019: http://japan.aramco.com/en/home/news-and-media/news/ammonia.html.

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Figure 52: Roadmap for Establishment of CO2-free Hydrogen/Ammonia Supply Chain between Japanand Saudi Arabia

Source: IEEJ [34]3.4.5. Regional Renewable Hydrogen Supply Chains
The government aims to establish regional hydrogen supply chains using local unused resources,
including renewable energy, waste plastics, sewage sludge, and by-product hydrogen using theachievements of Fukushima’s project (Chapter 3.5.2) as an example. The development of theseregional supply chains will contribute not only to expanding the use of low-carbon hydrogen in
the future but also to improving the regional energy self-sufficiency rates and creating new
regional industries. However, hydrogen production from renewable sources was positioned in
the long term in the national strategy and will not be implemented on a full scale until around2040.
The barriers to regional hydrogen diffusion include the high cost of renewables, resources far
from cities, better economics if directly using biogas/electricity, and low hydrogen demand even
if the production is technically possible.

91

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERSThe combination of low solar and wind costs, continuously in a downward trend, and new
developments in the electrolytic technology, with cheaper and more efficient products, aregradually making the large-scale renewable electrolysis a viable option in a near future.
Therefore, further decline in the renewable generation cost is needed, as well as thedevelopment of new electrolyzers with higher efficiencies and durability. The government
expect to reduce the system cost from JPY 200,000 per kW to JPY 50,000 kW by 2030, and theenergy consumption from 5 kWh/Nm3 to 4.3 kWh/Nm3. To achieve that, Japan will promotesales also in overseas markets, including Europe where renewable energy expansion and cost
reductions progressed faster than in Japan [9].
Researchers from Japan’s National Institute for Materials Science (NIMS), The University ofTokyo and Hiroshima University have conducted a techno-economic analysis for hydrogenproduction from photovoltaic power generation utilizing a battery-assisted electrolyzer (batteryassisted low-cost hydrogen production from solar energy: Rational target setting for futuretechnology systems). With the use of the battery, the required capacity of electrolyzer is lowered
and the operating ratio of electrolyzer increases, resulting also in a lower hydrogen production
cost when the benefit of the two previous points exceeds the necessary investment for battery
installation. The results showed a hydrogen cost between JPY 17 and 27 per Nm3 (about EUR
0.14 and 0.22 per Nm3, or EUR 1.5 and 2.4 per kilogram), less than the government target146.
While METI is focusing on the large supply chains from overseas, MOE is supporting projects
to construct low-carbon hydrogen supply chains in several regions through the use of renewableenergy to promote decarbonization as part of its medium- to long-term global warming
countermeasures. The following eight projects, some of them also considered power-to-gas(P2G) demonstration projects (Chapter 3.3), are part of its “Projects for the Creation of
Hydrogen Society”:
1.

Introduction of fuel cell forklift at Keihin Coast Area and demonstration of cleanhydrogen utilization model construction
Description: Hydrogen is produced by water electrolysis using wind power generated at
Hama Wing, in Yokohama, Kanagawa. Stored in a tank and then compressed, it isdelivered by a hydrogen fueling vehicle and supplied to FC forklifts used in distribution
and refrigeration warehouses, and a fruit/vegetable market in the Keihin waterfront area.
Primary partner: Toyota Motor Corp.
Municipalities: Kanagawa Prefecture, Yokohama City, and Kawasaki City.

2.

The hydrogen energy supply chain demonstration project from livestock manure
Description: Hydrogen is produced from biogas originating from livestock manure in
Shikaoi, Hokkaido. After compression, it is delivered by pipelines or in gas tanks. The
hydrogen is used to supply electricity and heat to dairy farming facilities, and as fuel for
FCVs and FC forklifts.
Primary partner: Air Water Inc.

146

Science Direct - International Journal of Hydrogen Energy, volume 44, 15 January 2019:https://www.sciencedirect.com/science/article/pii/S0360319918337212.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERSStrategic partners: Kajima Corp., Nippon Steel Pipeline & Engineering Co., Ltd., and
Air Products Japan K.K.
Municipalities: Hokkaido Prefecture, Shikaoi Town, and Obihiro City.
3.

Build a model of regional cooperation and local energy production/consumption using
high purity waste hydrogen from caustic soda production
Description: High-purity by-product hydrogen produced at a caustic soda plant inShunan, Yamaguchi, is supplied to pure hydrogen fuel cells through pipelines orcompressed gas tanks to generate electricity and heat at a swimming club and a roadsidestation. Some of the gas is liquefied and delivered to a hydrogen fueling station for
FCVs and FC forklifts. The liquefied hydrogen is also transported to pilot fuelingfacilities in Shimonoseki by tanker truck.
Primary partner: Tokuyama Corp.
Strategic partners: Tosoh Corp., Yamaguchi Prefecture, Shunan city, and Shimonoseki
City.

4.

Low-carbon hydrogen demonstration project of a waste plastic regional circular model
Description: Hydrogen is produced from plastic waste at the Showa Denko Kawasaki
Plant. The hydrogen gas is carried to a hotel through dedicated pipelines to supply
electricity and heat with a pure hydrogen fuel cell. It is also transported to a hydrogenfueling station for FCVs on a compressed hydrogen tube trailer (Chapter 3.1).
Primary partner: Showa Denko K.K.
Municipality: Kawasaki City.

5.

Expanding the use of hydrogen produced from a small hydropower plant andestablishing a hydrogen utilization model suitable for the local characteristic of
Hokkaido
Description: Hydrogen is produced by electrolyzing water with electricity generated bya small-scale hydropower plant at Shoro Dam in Shiranuka, Hokkaido. Stored in a tankand then compressed, the hydrogen is delivered in high-pressure gas tanks to supply
electricity and heat through pure hydrogen fuel cells at various facilities including dairy
farms and a heated indoor swimming pool.
Primary partner: Toshiba ESS
Strategic partner: Iwatani Corporation.
Municipalities: Hokkaido Prefecture, Kushiro City, and Shiranuka Town.

6.

Demonstrate a low-carbon hydrogen supply chain using fuel cells and the existing
logistics network in Tomiya, Miyagi Prefecture
Description: Hydrogen is produced through electrolysis by solar power installed at thelogistic center of Miyagi Coop., in Tomiya City, Miyagi, stored in a hydrogenabsorbing alloy cartridges, and delivered to supply electricity and heat through purehydrogen fuel cells at a store, other facilities and several residential houses, by taking
advantage of the existing logistics network of Miyagi Coop. This delivery also involves
other goods.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Primary partner: Hitachi, Ltd.
Strategic partners: Marubeni Corp., Miyagi Coop., and Tomiya City.
7.

Demonstrate the production of hydrogen from electrolysis using wind power and its
energy storage, as well as the supply and use of hydrogen mixed with municipal naturalgas
Description: Hydrogen is produced through electrolysis using wind power in Noshiro,
Akita Prefecture, mixed with gas similar to municipal natural gas, temporarily stored ingas holders or tanks, and supplied through gas pipelines. The gas mixture is used instoves and other commercially available gas devices to demonstrate their compatibility
with this gas mixture.
Primary partner: NTT Data Institute of Management Consulting, Inc.
Strategic partner: Dainichi Machine and Engineering Co., Ltd.
Municipality: Noshiro City.

8.

Demonstrate a low-pressure hydrogen delivery system to promote hydrogen use inbuildings and city infrastructure
Description: Using electricity produced from wind power in Muroran, Hokkaido, waterelectrolysis produces hydrogen. It is then stored in a portable hydrogen-absorbing alloytank and transported by a delivery vehicle. A pure hydrogen fuel cell at a hot spring
facility supplies electricity and heat. To save energy, exhaust heat at the facility is used
to heat up the alloy for extracting the hydrogen.
Primary partner: Taisei Corp.
Strategic partners: Muroran City, Kyushu University, Muroran Institute of Technology,
Tomoe Shokai Co., Ltd., The Japan Steel Works Ltd., and Kita Koudensha Corp.

In addition to these projects, other local governments are also working on initiatives toward
creating a hydrogen society before the 2020 Tokyo Olympics and Paralympics. Some of them
are the following:-

Tokyo Metropolitan: the Tokyo Hydrogen Promotion Team was launched in November
2017 in cooperation with industry and academia to increase the use of hydrogen amongresidents. It partnered with private sector companies and municipal bodies to promote
the installation of hydrogen stations. TGM plans to have 6,000 FCVs, 100 FC buses and
35 HRSs by 2020, 100,000 FCVs and 80 HRSs by 2025, and 200,000 FCVs and 150
HRSs by 2030. At the end of July 2016, TMG opened an education centre to promote
the spread of information about hydrogen energy. It also helps small and medium
operators of hydrogen stations learn the skills necessary to operate their stations
successfully and safely [26].

-Aichi Prefecture: the Aichi Low-carbon Hydrogen Supply Chain Promotion Association,a body established in October 2017 which includes the prefectural government,
municipal governments and companies operating within the prefecture, developed the“Aichi Low-carbon Hydrogen Supply Chain 2030 Vision” (Figure 53) and the94

HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

corresponding roadmap to achieve it based on the national strategy. The three pillars ofthe 2030 Vision are a sustained development of a regional low-carbon hydrogen supply
chain; carbon reduction in the various fields of electricity, transport, heating andindustrial processes; and elimination of dependence on fossil fuels through the
expansion of hydrogen distribution volumes over a wider area.

Figure 53: Aichi Low-carbon Hydrogen Supply Chain 2030 Vision

Source: Toyota.

As a first step, in April 2018, Aichi Prefecture, Chita City, Toyota City, Chubu ElectricPower Co., Inc., Toho Gas Co., Ltd., Toyota Motor Corporation, and Toyota Industries
Corporation launched the Chita City and Toyota City Renewable Energy-use Lowcarbon Hydrogen Project 147 (Figure 54). The project is designed to construct a
subsistent low-carbon hydrogen supply chain to produce, supply, and use hydrogengenerated from renewable resources within the prefecture.
In this project, Toho Gas is expected to produce city gas using biogas generated fromsewage sludge at the Chita City Southern Sewage Treatment Center, which is thentransported to Toyota's Motomachi Plant through existing city gas pipelines. The city
147

Toyota, 25 April 2018: https://global.toyota/en/newsroom/corporate/22312931.html.

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gas derived from biogas is passed through gas reformers at the Motomachi Plant,
whereby low-carbon hydrogen, which is used to power the Toyota Industries fuel cell
forklifts (FC forklifts) in the plant, is produced, compressed, and stored. Additionally,by supplying Toyota with renewable energy from Chubu Electric Power generated at
the Toyota City Togari Clean Center through heat from waste incineration (biomass
incineration heat), CO2 emissions from city gas that would be used when there is abiogas shortage can be offset.

Figure 54: Chita City and Toyota City Renewable Energy-use Low-carbon Hydrogen Project

Source: Toyota.

The construction of hydrogen stations has progressed around the prefecture. From
December 2017, the introduction of FC forklifts in the cargo area of Chubu Centrair
International Airport is also subsidized.
-

Yamaguchi Prefecture: based on the “Yamaguchi Next-Generation Industrial Cluster
Concept”, it is promoting industrial development through the utilization of hydrogenwith the aim to become a leading hydrogen prefecture (Chapter 3.5.3). To expand therange of hydrogen-related industries within the prefecture, it strengthened the support
functions of the Yamaguchi Prefectural Industrial Technology Institute for hydrogenrelated technologies, and provide support to Yamaguchi’s SMEs.

-

Saitama Prefecture launched a project to produce sludge-derived CO2-free hydrogen atits sewage treatment plants. This is part of a bigger plan to produce biomass power
utilizing the sludge from sewage treatment plants. The prefecture plans to begin power
generation by burning the methane gas produced from sludge in 2019 and expand

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generation capacity by 2029 to a total of 25 million kWh, equivalent to the power
consumption of 5,000 households, reducing up to 12,000 tons of greenhouse gas
emissions annually.
The hydrogen will be supplied to FC forklifts working in distribution warehouses andFCVs. Hydrogen stations will be placed at the four sewage treatment plants planned tostart biogas power generation. In preparation for the 2020 project start date, Saitama
Prefecture is now conducting demonstrations using a model facility at the Nakagawa
River Water Recycling Center. The prefecture aims to introduce 6,000 FCVs and 17
HRSs by 2020 and increase them to 60,000 FCVs and 30 stations by 2025. The numberof stations to be established by 2025 may increase to 34 by adding the four stations to
be constructed in the sewage treatment plants148.
Fukuoka City is also carrying out a project to produce hydrogen with biogas extracted
from sewage sludge, which will be used for FCVs (Chapter 3.5.1). With thismethodology, sewage treatment plants across Japan have the potential to power up to
1.86 million FCVs149.
-

Toyama Prefecture: As part of a NEDO project, Alhytec Inc. started operations of ademonstration plant designed to separate the aluminium from waste composite materials
and generate hydrogen to be used for fuel-cell power generation at Asahi Printing Co.’s
Toyama Plant in April 2016. The demonstration plant has a production capacity of 2
kg/h, and the company plans to enhance the hydrogen generation to up to 5 kg/h. The
technology is expected to find applications at printing, packaging and metals factories150.

-

Sendai City: In March 2017, Tohoku Electric Power Co. started a research project toproduce and store hydrogen using electricity from a solar power system installed at its
R&D Center in Aoba Ward, Sendai City, and use it as fuel to generate electricity for theCenter151 (Figure 55). The purpose is to verify that hydrogen production technology canbe applied as a countermeasure for output fluctuations accompanying the expansion of
the VRE, similar to storage batteries, but for large scale and long-term storage (Figure2). It installed a solar power generation system of 50 kW, a water electrolysis hydrogenproduction equipment with a capacity of 5 Nm3/h, a hydrogen storage alloy tank of 220
Nm3 (300 kWh), a hydrogen fuel cell of 9.9 kW, and a secondary battery of 50 kW (67
kWh).

148

Smart Japan, 15 September 2015:
https://www.itmedia.co.jp/smartjapan/articles/1509/15/news041.html.
149
Japan Times, 1 January 2019: https://www.japantimes.co.jp/news/2019/01/01/national/hydrogentouted-clean-energy/?appsule=1#article_history.
150
NEDO, 22 April 2016: https://www.nedo.go.jp/english/news/AA5en_100204.html.
151
Tohoku Electric Power Co., 31 March 2016: http://www.tohokuepco.co.jp/news/normal/1191500_1049.html.

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HYDROGEN MARKET IN JAPAN: SUPPLY CHAINS AND HYDROGEN CARRIERS

Figure 55: Hydrogen Energy System

Source: Tohoku University [41]

In October 2018, and under a NEDO project, Tohoku University and Maekawa
Manufacturing Co., Ltd. also demonstrated the continuous operation for 72 hours (3days) of a combined power and hydrogen energy storage system at the Moteiwa Water
Treatment Plant in Sendai City. The combined system does not require fossil fuels, canstably supply high-quality power against long-term power outages in the event of alarge-scale natural disaster, and enables the effective use of renewable energy even withirregular fluctuations in solar power output and power consumption152.

152

NEDO, 25 October 2018: https://www.nedo.go.jp/news/press/AA5_101036.html (only in Japanese).

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

3.5. MAIN HYDROGEN RESEARCH CLUSTERS
This chapter describes the three main clusters in Japan, which are in the Prefectures of Fukuoka,
Fukushima and Yamanashi, and involved the collaboration of local and central governments,
industry and academia. All of them pursue a local economic impact, developing new industries,
human resources, etc., taking advantage of the regional characteristics to use local resources to
produce hydrogen, and create a national and even international centre of excellence in research(Institute, University) [42].

3.5.1. Fukuoka Prefecture and Kyushu University
Fukuoka Prefecture established the collaborative government-industry-academia organization
called the Fukuoka Strategy Conference for Hydrogen Energy 153 in August 2004 to take theinitiative in creating an environmentally-compatible, sustainable society based on hydrogenenergy. It is the largest in Japan with 795 members as of January 2017 (641 companies, 116
universities and 38 administrative, research and support organizations) 154 . METI designatedFukuoka as the “hydrogen hub of Japan”. It promotes and supports the development of new
local industries such as hydrogen gas impurity analyzer, hydrogen visualization stainless sheets,etc.
The prefectural government and the Conference launched the Fukuoka Hydrogen Strategy (HyLife Project), a unique initiative in Japan to build a world-leading hydrogen energy research
centre (Figure 56). It promotes the dissemination of hydrogen with activities such as R&D,
human resources development, promotion of new industries, builds an international hub forhydrogen knowledge, and community demonstrations, including the development of a
Hydrogen Highway and Hydrogen Towns.
To aims to build an advanced base of FCVs society in Fukuoka, the Fukuoka FCV Club was
also established in August 2014 by local businesses, industry organizations, universities andgovernments, to further the promotion of FCVs and the construction of hydrogen stations. The
Fukuoka Fuel Cell Vehicle Implementation Plan is being carried out centring on the Fukuoka
Strategy Conference for Hydrogen Energy for Fukuoka to continue playing a leading role inpromoting the spread of FCVs and hydrogen supply infrastructures.
On the Kyushu University Ito Campus, the Hydrogen Technology Research Center (current
International Research Center for Hydrogen Energy) was established in April 2004. Later, inJuly 2006, the Research Center for Hydrogen Industrial Use and Storage (HYDROGENIUS)
was also established there by AIST as the national hydrogen materials research laboratory. It is
153

Fukuoka Strategy Conference for Hydrogen Energy: http://www.f-suiso.jp/.
Fukuoka Strategy Conference for Hydrogen Energy: http://h2.kyushuu.ac.jp/common/PDF/web18(e).pdf.
15499

HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

the largest hydrogen-related research facility in the world and it is supported also by NEDO. It
contributes to the development of safe and economical hydrogen systems through theestablishment of design and evaluation methods, provision of data for standards and regulations,and data for risk assessment155.

Figure 56: Overview of the Hy-Life Project

Source: Fukuoka Strategy Conference for Hydrogen Energy [43].

Also, as part of a commitment to forming a global hydrogen research base in cooperation with
the Fukuoka Strategy Conference for Hydrogen Energy, the Hydrogen Energy Test andResearch Center (HyTReC) was established in March 2009 to contribute to private sector
development of hydrogen-related technologies and conduct product testing based on the
research results of HYDROGENIUS. Furthermore, the addition of the CRADLE Building(Center for Research Activities and Development of Large-scale pressure vessel Equipment) in
April 2014 has enabled testing of large-scale hydrogen storage tanks for hydrogen station
applications, in addition to testing small components such as valves and pipes used for FCVs
and other applications.

155

Kyushu University, HYDROGENIUS: http://h2.kyushu-u.ac.jp/common/PDF/web11(e).pdf.

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

Other additional hydrogen-related facilities at Kyushu University are the following156:-

The Fukuoka Personnel Training Center for Hydrogen Energy was established in
October 2005 to support human resources development to the hydrogen industry thoughcourses for engineers and business managers.

-

The International Institute for Carbon-Neutral Energy Research (I2CNER), the world’s
leading laboratory in the field of low-carbon energy, was established in December 2010.
Hydrogen manufacture, storage and use, and CO2 capture and storage are among its
areas of research.

-

The Next-Generation Fuel Cell Research Center (NEXT-FC), the world’s first industryacademia research hub focused on SOFC and other next-generation fuel cells, wasestablished in January 2012 to improve their durability, reliability and performance.

-

AIST-Kyushu University Hydrogen Materials Laboratory (HydroMate), for the
elucidation of the phenomenon of embrittlement of hydrogen materials anddevelopment based on new materials, was established in January 2017.

All these activities are now organized under the “Energy Research Platform” (Q-PIT: Kyushu
University Platform of Inter/Transdisciplinary Energy Research), established in October 2016.
It is focused on water electrolysis hydrogen production and energy storage materials, being thefirst in the world to develop a hydrogen storage alloy material capable of safely and compactly
storing a large amount of hydrogen, an important key to spreading its utilization.
The main four demonstration projects conducted in Fukuoka Prefecture were the following [43]:-

Build a “Hydrogen Highway” between Kitakyushu City and Fukuoka City by installinghydrogen stations at Higashida district (Kitakyushu; the first in Japan and based on byproduct hydrogen supplied through a pipeline from steel plants) and Kyushu University
Ito Campus (Fukuoka; based on water electrolysis using solar power), operational from
September 2009. It also included the incorporation of FCVs for official cars of Fukuoka
Prefectural Government and Kitakyushu City, being free for FCVs.
The Kyushu station was jointly established by Kyushu University, Kyushu ElectricPower Co., Taiyo Nippon Sanso Co., and Kyuky Co. The Kitakyushu station was
jointly built by Iwatani Co., Nippon Steel Co., and JXTG Nippon Oil & Energy.

-

Fukuoka Hydrogen Town, in the Minakazedai and Misakigaoka housing complexes in
Itoshima City. It is the world’s largest scale collective installation of 150 LPG-based 1
kW residential hydrogen fuel cells (ene-farms), that was completed in December 2009as a showcase of a society based on hydrogen for a future full-scale usage [43]. It

Kyushu University – International Research Centre for Hydrogen Energy: http://h2.kyushuu.ac.jp/english/index.html.
156

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

counted with the collaboration of JXTG Nippon Oil & Energy and Saibu Gas Energy
Co.
-

Hydrogen Town in the Higashida district of Kitakyushu City, the world’s first
demonstration of directly supplying by-product odour-mixed hydrogen produced in the
Yawata Steel Works, owned by Nippon Steel & Sumitomo Metal, to the city throughpipelines for a full-scale use in a region (Figure 57). It was implemented by HySUT,
Fukuoka Prefecture and Kitakyushu City in January 2011, and was funded by METI
through the “demonstration project for infrastructure in hydrogen-based society” [43].

Figure 57: Kitakyushu Hydrogen Town (2011-2014)

Source: HySUT157.

157

HySUT: http://hysut.or.jp/en/projects/index.html.

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

The project tested the hydrogen supply via a 1.2 kilometer long pipeline; the operabilityof 14 pure hydrogen fuel cells for multiple applications, installed in apartments,
commercial facilities and hydrogen fueling stations; fuel cell-powered small vehicles,
such as forklifts and bicycles; the electricity supply from FCVs to houses; and a smart
community power-sharing in the Higashida home for the elderly.
Although the test concluded in 2014, Fukuoka Prefecture and Kitakyushu City
announced their intention to restart the project in 2016 to demonstrate a low-costhydrogen supply. Later, the “Kitakyushu City Vision for Hydrogen Society” wasannounced in 2017 with the goal of creating a city hydrogen supply chain by 2030. In
addition to the Higashida district, it designates the Hibikinada area as a leading area inwhich many energy-related facilities and port infrastructure are located. It aims toimport hydrogen from overseas in that area, produce it through LNG reforming, andconstruct a storage and supply base for supplying hydrogen to Kyushu and other partsof Japan [18].
Kitakyushu’s initiatives have been recognized both in Japan and overseas, including its
selection as the first Green Growth City in Asia by the OECD in June 2011, as well as
an Eco-Model City, Future City, and SDGs Future City by the Japanese government.
-

Hydrogen production from sewage sludge: In March 2015, Fukuoka City, Kyushu
University, Mitsubishi Kakoki Kaisha, Ltd., and Toyota Tsusho Corporation
Collaborative Research Body installed a station where the hydrogen is produced frombiogas generated from the fermentation of sewage sludge at the Fukuoka City Chubu
Wastewater Treatment Center, the first station of its kind in the world (Figure 58). The
plant forces the biogas through a separation membrane to separate it into CH 4 and CO2
and produces hydrogen via steam reforming in which this methane is made to react withsteam. The purpose of this project is to verify the quality of the hydrogen produced andoverall production capacity.
The Fukuoka plant produces 300 kilograms of hydrogen per day, enough to fill 65 Mirai
vehicles, and it could grow to 600 vehicles if all the biogas at the plant is converted tohydrogen. According to MLIT, more than 11 million kilograms of hydrogen could be
produced annually if all treatment plants across the country use this technology, enoughto fill around 2 million FCVs. Nevertheless, this technology needs more R&D due to it
was not an economically viable option without the government’s subsidy given that toproduce a kilogram of hydrogen at the sewage plant costs around JPY 13,000 while
selling it at the station costs around JPY 1,100158.
This demonstration project, “Hydrogen Leader City Project - Demonstration of
Hydrogen Generation from Sewage Biogas Source”, was adopted in FY 2014. It is partof the Breakthrough by Dynamic Approach in Sewage High Technology (B-DASH)

158

Los Angeles Times, 31 July 2016: https://www.latimes.com/world/asia/la-fg-japan-hydrogen-carssewage-snap-story.html.

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

conducted by MLIT to accelerate the R&D, and commercialization of new technologies
to substantially reduce sewage service costs, create renewable energy and support
Japanese enterprises' overseas water business expansion159. Researches are conductedby private companies and the NILIM.

Figure 58: Hydrogen Production from Sewage Sludge Demonstration Project

Source: Asia Nikkei160.

3.5.2. Fukushima Prefecture and AIST, FREAAs an important component of the reconstruction and recovery efforts after the nuclear accident
in 2011, Fukushima Prefecture remains committed to becoming a national and international
center for renewable energy research, promoting its expansion, R&D, and clustering of related

159

NILIM, Wastewater and Sludge Management Division:
http://www.nilim.go.jp/lab/ecg/english/bdash.htm
160
Nikkei Asian Review, 12 November 2015: https://asia.nikkei.com/Business/Biotechnology/Sewagesludge-gaining-attention-as-biomass-resource2.

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

industries, and with the target of obtaining 100% of its energy demand through renewables by
2040.
The central government created the Fukushima Plan for a New Energy Society in September
2016 that meant additional support for maximizing renewables use in the Prefecture, anddevelop a model for realizing the new energy society of the future in Fukushima, wherehydrogen is produced from renewable energy, stored, transported and used. The three main
components of the plan were to expand the introduction of renewable energy, model
construction for realizing a hydrogen-based society and building smart communities [44].
The Prefecture also hosts several organizations promoting renewable energy, including the
Fukushima Renewable Energy Institute (FREA) in Koriyama, which is part of the National
Institute of Advanced Industrial Science and Technology (AIST). AIST is one of the largest
public research institutes in Japan and works to promote collaboration among industry,
academia, and government. FREA promotes collaboration with domestic and overseasorganizations, and the developed technologies at FREA are available for everyone. It has two
teams working on hydrogen technology:-

Hydrogen energy carrier team, which has been developing technologies for converting
renewable electricity into hydrogen or hydrogen energy carriers (organic chemical
hydride, ammonia, formic acid), and technologies on the combustion of all these
options for cogeneration engines and gas turbines.

-

Hydrogen and heat utilization system team, which is developing a high-efficiencyhydrogen production technology that directs direct current surplus power fromphotovoltaic systems to the water electrolyzer; and an inexpensive, safe, and large-scalehydrogen storage systems that is not subject to the High Pressure Gas Safety Act andFire Service Act because it uses a metal hydride that has a pressure of 1 MPa or less anddoes not ignite.

In August 2018, Toshiba ESS, Tohoku Electric Power Co., Inc., Iwatani Corporation and
NEDO announced the construction of Fukushima Hydrogen Energy Research Field (FH2R), a
large-scale CO2-free hydrogen production facility in Namie City, Fukushima Prefecture (Figure59). It will start operation in 2020, after final tests to verify the technologies, and in time forburning the Olympic torch and flame during the Games with this hydrogen, and promoting theuse of hydrogen internationally. This project represents the biggest P2G demonstration effort inJapan (Chapter 3.3).
The water electrolysis system will have 10 MW of maximum input power capacity, the largest
in the world, being 6 MW the rated power and 1.5 MW the minimum. It will be powered mainly
by a 20 MW solar plant, backed up by the grid. It will produce and store up to 900 tons ofhydrogen a year, which will be used to power FCVs and FC buses, and to support factory105

HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

operations161. The hydrogen production per hour will be 1,200 Nm3, which means that in a day,it will be enough fuel for 560 FCVs or 150 households.

Figure 59: Fukushima Hydrogen Energy Research Field

Source: Toshiba.

P2G utilizing hydrogen requires not only the grid balancing function to make the maximum useof fluctuating renewable energy, but also the optimal system operation function based on theforecasting of hydrogen supply and demand. FH2R will use a new control system to coordinate
the overall operation of the hydrogen energy system, the power grid control system, and thehydrogen demand forecast system, so as to optimize hydrogen production, hydrogen electricity
generation and hydrogen gas supply (Figure 60). Therefore, the project will seek to demonstratealso the advantages of hydrogen as a solution in grid balancing and as a hydrogen gas supply.
For that purpose, it will be liquefied and transported in compressed hydrogen trailers tolocations in Tohoku and beyond.

161

NEDO, 9 August 2018: https://www.nedo.go.jp/english/news/AA5en_100393.html.

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

Figure 60: FH2R System Structure

Source: NEDO.

3.5.3. Yamanashi Prefecture and the Yamanashi Fuel Cell Valley
Yamanashi Prefecture Government has been making efforts to become a national centre for both
energy storage and hydrogen fuel cell development by attracting companies such as Panasonic
Corp. or Toray Industries Inc.
In the Komekurayama Facilities of Kofu City (Table 12), a 1 MW solar power station (ElectricPower Storage Technology Research Site) was built for being available for developers ofstorage devices who wish to conduct tests under closed conditions, in a joint venture withTEPCO. Also the Yume Solar Hall Yamanashi exhibition hall for TEPCO and operated by the
Yamanashi Prefectural Public Enterprise Bureau was installed, and a 10 MW solar power plant[45].
One of the demonstration projects in the Komekurayama facilities is a P2G, which provides awide adaptation to the grid needs. The excess energy generated by the 10 MW Komekurayama
solar power plant, built nearby by TEPCO and the Prefecture in 2012, is used to produce purehydrogen through a 1.5 MW PEM electrolysis system developed by Kobelco Eco-Solutions Co.,a unit of Kobe Steel Ltd. Hydrogen is stored in a tank to be used by fuel cells installed by107

HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

Panasonic to produce electricity when the energy provided by the panels is not enough.
Hydrogen can be also compressed for transporting for LPG customers or injected to near thecustomer pipelines for using in pure hydrogen fuel cells and boilers (Figure 61).

Table 12: Komekurayama Facilities

Short-period(inertia, frequency)
Medium-period(voltage, peak shift)Long-period(electric energy amount)

Yume Solar Hall
(from FY 2011)
Electric double-layer
capacitor
Lithium-ion battery
Hydrogen electric power
storage

Storage Research Site(from FY 2012)
Superconducting flywheel
energy storage system
Hybrid hydrogen storage
systemPower-to-Gas system

Source: Author, with data from the Yamanashi Prefectural Enterprise Bureau [45].

Apart from NEDO, TEPCO, the Yamanashi Prefectural Enterprise Bureau, Panasonic andKobelco, other firms and institutions involved in this project are Toray, Takaoka Toko Co. Ltd.,HySUT, AIST, Nichicon, Miura, Hitz Hitachi Zosen, and JSW (The Japan Steel Works, Ltd.).

Figure 61: Power to Gas System. Long-term Electric Power Storage

Source: Yamanashi Prefectural Enterprise Bureau [45].

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HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

Therefore, the Yamanashi project is also boosting the prefecture’s efforts to become a “FuelCell Valley” and attract talent and investment (Figure 62). The Yamanashi Fuel Cell Valley is
included in the Yamanashi Hydrogen Energy Society Realization Roadmap, making the best useof the regional characteristics such as one of the highest solar power potential in Japan, and acluster of research institutes on hydrogen and fuel cells. The roadmap defines the following
three approaches: the expansion of the use of hydrogen energy, with a target to have 1,300
FCVs, 10 FC buses, 2 HRSs and 34,000 ene-farms by 2030; the construction of a CO2-freehydrogen supply chain, promoting the P2G from the solar generation; and the promotion ofhydrogen and fuel cell-related industries. The regional government expects 200 enterprises
entering, 5,000 employees and JPY 100 billion in sales by 2030 [42].

Figure 62: Key Characteristics of the Yamanashi Fuel Cell Valley

Source: NEDO [42].

As a Yamanashi University-affiliated facility, the Clean Energy Research Center was
established in April 2001 to promote research related to clean energy and contribute to theresolution of energy and global environmental problems. It has two divisions, Fuel Cell
Research, and Solar Cells and Environmental Science. The first one’s aim is to push forward
R&D on fuel cells and contribute to their full, large-scale market penetration, especiallyresidential fuel cells (ene-farms) and FCVs, in cooperation with the industry.
The Fuel Cell Nanomaterials Center was established in April 2008. The research was carried out
under the NEDO project “HiPer-FC” (High-Performance Fuel Cell) from that date with the fulluse of nanotechnology to establish basic technologies for fuel cells (catalysts, electrolyte
membranes, etc) that can simultaneously achieve higher performance, higher reliability, and109

HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

lower costs. From May 2015, “S-Per-FC” ((Superlative, Stable, and Scalable Performance Fuel
Cell) project, also funded by NEDO, aims to contribute to the large-scale proliferation of FCVs
based on these superior outcomes. Creation of a new concept for the cathode catalyst material,
for the electrolyte material and for next-generation anode catalysts with higher resistance toimpurities. As the project leader, the University of Yamanashi is collaborating with Tanaka
Kikinzoku Kogyo K.K., Kaneka Corp., Panasonic Corp., Nissan Arc, Ltd., Toray ResearchCenter, Inc., Iwate University, Shinshu University and Tohoku University162 (Figure 63).

Figure 63: Research and Development Organization

Source: Fuel Cell Nanomaterials Center.

The Fuel Cell Evaluation / Testing Facility at Yamanashi Industrial Technology Center was
established in April 2016 with the support of NEDO to R&D on technological advance, pricereduction and productivity improvement of fuel cells.
The Hydrogen Technology Center for HRSs was established in December 2017 also in Kofu
City. It was founded by NEDO and it is operated by HySUT. Its purpose is to develop newtechnologies to contribute to the further safety and security of hydrogen, to research on cost
reduction of HRSs, and to carry out tests in a real environment. Two examples are the increaseof the maximum operating pressure to 87.5 MPa (cylinder bundle, compressor, pressure vessel
and dispenser), and the standardization of equipment, individually designed by each contractor,
and design specifications (Chapter 3.2.2).
162

Fuel Cell Nanomaterials Center, University of Yamanashi: http://fcnano.yamanashi.ac.jp/english/img/nono_en2016.pdf.

110

HYDROGEN MARKET IN JAPAN: MAIN HYDROGEN RESEARCH CLUSTERS

Finally, some other universities and research institutes with research groups working onhydrogen, fuel cells and related materials are the following:-

Research Center for Advanced Science and Technology, The University of Tokyo.
Tokyo Institute of Technology.
Institute for Material Research, Tohoku University.
Department of Energy and Hydrocarbon Chemistry, Kyoto University.
Aichi Institute of Technology.
Nagoya University.
Hokkaido University.
Osaka University.

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HYDROGEN MARKET IN JAPAN: ORGANIZATIONS AND ASSOCIATIONS

3.6. ORGANIZATIONS AND ASSOCIATIONS
Government Organizations
Ministry of Economy, Trade and Industry (METI)
1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo 100-8901+81-(0)3-3501-1511
http://www.meti.go.jp/english

Agency for Natural Resources and Energy (ANRE)
1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo 100-8901+81-(0)3-3501-1511
http://www.enecho.meti.go.jp/en/

New Energy and Industrial Technology Development Organization (NEDO)MUZA Kawasaki Central Tower, 16F-20F, 1310 Omiya-cho, Saiwai-ku,
Kawasaki, Kanagawa 212-8554+81-(0)4-4520-5273
http://www.nedo.go.jp/english/index.html

Ministry of the Environment (MOE)
Godochosha No. 5, Kasumigaseki 1-2-2, Chiyoda-ku, Tokyo 100-8975+81-(0)3-3581-3351
http://www.env.go.jp/en/

Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
2-1-3 Kasumigaseki, Chiyoda-ku, Tokyo 100-8918+81-(0)3-5253-8111
http://www.mlit.go.jp/en/index.html

Ministry of Foreign Affairs of Japan (MOFA)
2-2-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8919+81-(0)3-3580-3311
https://www.mofa.go.jp/112

HYDROGEN MARKET IN JAPAN: ORGANIZATIONS AND ASSOCIATIONS

Cabinet Office
1-6-1 Nagata-cho, Chiyoda-ku, Tokyo 100-8914+81-(0)3-5253-2111
https://www.cao.go.jp/index-e.html

Related Associations
National Institute of Advanced Industrial Science and Technology (AIST)
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8921+81-(0)3-5501-0900
https://www.aist.go.jp/index_en.html

The Institute of Applied Energy (IAE)
Shimbashi SY Building, 14-2 Nishi-Shimbashi 1-Chome, Minato-ku, Tokyo, 105-0003
03-3508-8891
http://www.iae.or.jp/e/Japan Science and Technology Agency (JST)
Honcho 4-1-8 Kawaguchi Center, Kawaguchi City, Saitama Prefecture, 332-0012+81-(0)4-8226-5601
https://www.jst.go.jp/EN/

Central Research Institute Electric Power Industry (CRIEPI)
Otemachi Bldg. 7F, 1-6-1 Otemachi, Chiyoda-ku, Tokyo 100-8126+81-(0)3-3201-6601
https://criepi.denken.or.jp/en/index.html

The Association of Hydrogen Supply and Utilization Technology (HySUT)
2-10-5 Akasaka, Minato-ku, Tokyo 107-0052+81-(0)3-3560-2802
http://hysut.or.jp/en

Japan H2 Mobility (JHyM)
3-18-2 Kudan-minami, Chiyoda-ku, Tokyo 102-0074+81-(0)3-5214-6711
https://www.jhym.co.jp/en113

HYDROGEN MARKET IN JAPAN: ORGANIZATIONS AND ASSOCIATIONS

Fuel Cell Commercialization Conference (FCCJ)
Immeuble Kojima 2F,3-13-2 Higashi-Ikebukuro, Toshima-ku, Tokyo 170-0013+81-(0)3-5979-7355
http://fccj.jp/eng

Fuel Cell Association (FCA)
7F, SVAX TT Building, 3-11-15 Toranomon, Minato-ku , Tokyo 105-0001+81-(0)3-6689-0331
http://www.fca-enefarm.org/index.html

Next Generation Vehicle Promotion Center (NeV)
Nihonbashi Kimura Building, 16-3, Nihonbashi, Chuo- ku, Tokyo 103-0027+81-(0)3-3548-3231
http://www.cev-pc.or.jp/english/

Fuel Cell Development Information Center (FCDIC)
1-9-1 Kanda Awajicho, Chiyoda City, Tokyo 101-0063, Japón+81-(0)3-6206-0231
https://www.fcdic.com/?language=eng

The Hydrogen Energy Systems Society of Japan (HESS)
1-8-14, Kanda-Surugadai, Chiyoda-Ku, Tokyo 101-8308
Nihon University (College of Science and Technology)+81-(0)3-3259-0514
http://www.hess.jp/en/index.html

Fuel Cell Cutting-Edge Research Center Technology Research Association (FC-Cubic TRA)AIST Tokyo Waterfront Main Building, 2F, 2-3-26 Aomi, Koto-ku, Tokyo 135-0064(+81)-03-3599-2357
http://www.fc-cubic.or.jp/en/

The Japan Gas Association
Japan Gas Association Building, 9F, 1-15-12 Toranomon, Minato-ku, Tokyo 105-0001+81-(0)3-3502-0111
https://www.gas.or.jp/en/114

HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIES

3.7. MAIN PRIVATE COMPANIESThe Japanese hydrogen and fuel cells market is dominated by a wide variety of domestic
companies from different sectors including automakers, engineering, gas, power, manufacture,
construction or distribution companies, among others, already mentioned on previous chaptersand summarized in the following lines:
Stationary Fuel Cells
Panasonic
Toshiba ESS
Denso
Mitsubishi Hitachi Power Systems
Bloom Energy Japan
Fuel Cell Vehicles
Toyota Motor
Honda Motor
JR EastRefueling Stations
 Infrastructure developers:
JXTG Nippon Energy
Air Liquide Japan
Nippon Mobile Hydrogen Station Services
Toho Gas
Osaka Gas
Honda Motor
Nemoto Tsusho
Nangoku Corporation
Toyama Hydrogen Energy Promotion Council
 Investors:
Toyota Tsusho
Development Bank of Japan
Sompo Japan Nipponkoa Insurance
Mitsui Sumitomo Finance & Leasing,Power Generation
Mitsubishi Hitachi Power Systems
Toyota Tsusho
Hrein Energy Inc.
Muroran Institute of Technology
JGC Corporation

Aisin Seiki
Miura
Hitachi Zosen
Fuji Electric
NGK Spark Plug

Hino Motors
Nissan Motor

Iwatani Corporation
Seiryu Power Energy
Idemitsu Kosan
Tokyo Gas
Chubu Gas
Toshiba ESS
Tama Koun
Marui Transport
Fukuoka Oxygen

JA Mitsui Lease
Mirai Creation Fund
NEC Capital Solutions Limited

Kawasaki Heavy Industries
NTT Facilities, Inc.
Technova Inc.
Obayashi Corporation
IHI Corporation

115

HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIESJGC Catalysts & Chemicals Ltd.
Taiyo Nippon Sanso Corporation
Chubu Electric Power
Tohoku Electric Power
Supply Chains Liquefied Hydrogen:Kawasaki Heavy Industries
Electric Power Development Co., Ltd.
Marubeni Corporation

Toyota Energy Solutions
Kansai Electric Power
Chugoku Electric Power

Iwatani Corporation
Shell Japan

 Methylcyclohexane:
Chiyoda Corporation
Nippon Yusen Kabushiki Kaisha
JXTG Nippon Oil & Energy Corporation

Mitsubishi Corporation
Mitsui & Co. Ltd.

 Regional Supply Chains:
Toyota Motor Corp.
Nippon Steel Pipeline & Engineering Co., Ltd.
Tokuyama Corp.
Showa Denko K.K.
Iwatani Corporation
Marubeni Corp.
NTT Data Institute of Management Consulting, Inc.
Dainichi Machine and Engineering Co., Ltd.
The Japan Steel Works Ltd.
Chubu Electric Power Co., Inc.,
Toyota Motor
Alhytec Inc.
Muroran Institute of Technology

Air Products Japan K.K.
Kajima Corp.,
Tosoh Corp.,
Toshiba ESS
Hitachi, Ltd.
Miyagi Coop.
Taisei Corp.
Tomoe Shokai Co., Ltd.
Kita Koudensha Corp.
Toho Gas
Toyota Industries Corporation
Tohoku Electric Power

Nevertheless, there are several foreign firms that successfully accessed into the Japanesehydrogen market. Some examples are the following:-

Air Liquide Japan (France) is well established in Japan since 1907, and it was one of theeleven original members of JHyM (Chapter 3.2.2). It masters the entire hydrogen
supply chain, from production to storage and from distribution to the development ofapplications for end-users. In October 2013, it signed a partnership agreement with
Toyota Tsusho Corporation for a hydrogen supply business for FCVs, building two
HRSs in the Aichi area. The two companies established a new joint venture company

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HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIES

called Toyota Tsusho Air Liquide Hydrogen Energy Corporation163. Air Liquide also
installed and operates other four stations in Saga, Fukuoka, Hyogo and Kawasaki164.
-

Shell Japan (The Netherland) is involved in the transportation of liquefied hydrogenfrom Australia (Chapter 3.4.2).

-

Wärtsilä (Finland) signed a business development agreement with Hitachi Zosen in
March 2010 to develop and market fuel cell-based power plant solutions for distributed
power generation applications in Japan. The combined heat and power applications,which can be run on either city gas or biogas, feature the use of Wärtsilä’s SOFC
technology165.

-

Bloom Energy (US) and SoftBank Group established a 50/50 joint venture called
Bloom Energy Japan to deploy Bloom Energy’s SOFC technology in Japan 166 . In
November 2013, they installed the first 200 kW unit at SoftBank's M-Tower in Fukuoka
City, which provides 75% of the building’s electricity consumption167.

-

Linde Group (Germany) signed a deal with Iwatani Corporation in July 2014 for thedelivery of 28 HRSs with ionic compressors in Japan during the opening of the world's
first small-series production facility for HRSs of Linde in Vienna168.

-

Air Products (US) signed an agreement with NIPPON STEEL & SUMIKIN Pipeline &Engineering Co. Ltd. in 2014 to work together on Japan’s developing hydrogen fuelinginfrastructure market for automotive customers. In February 2015, it also signed anagreement with Suzuki Shokan, an industrial gas company, to work together on thedesign, construction and operation of hydrogen fueling stations for use in fuelingthe material handling vehicle market in Japan169.

-

H2 Logic (Norway), subsidiary of Nel, signed a binding technology transfer agreementwith Mitsubishi Kakoki Kaisha, Ltd. in July 2015. The collaboration included theadaption of the H2Station® CAR-100 product for the Japanese market with the aim tostrengthen Mitsubishi’s position in the supply and construction of HRSs and to provide
H2 Logic access to the Japanese market170.

163

Air Liquide, 28 October 2013: https://energies.airliquide.com/japan-air-liquide-signs-partnershiptoyota-tsusho-hydrogen-supply-fuel-cell-electric-vehicles.
164
Air Liquide, 6 November 2017: https://www.airliquide.com/japan/20171106kawasakihrs01e.
165
Wärtsilä, 2 March 2010: https://www.wartsila.com/media/news/02-03-2010-wartsila-and-hitachizosen-sign-agreement-to-develop-and-market-fuel-cell-based-power-plant-solutions-in-japan.
166
SoftBank Group, 18 July 2013: https://group.softbank/en/corp/news/press/sb/2013/20130718_01/.
167
SoftBank Group, 25 November 2013:https://group.softbank/en/corp/news/press/sb/2013/20131125_01/.
168
Linde, 14 July 2014: https://www.linde.nl/en/news_and_media/press_releases/news_20140714.html.
169
Air Products, 19 February 2015: http://www.airproducts.com/Company/news-center/2015/02/0219air-products-and-suzuki-shokan-to-develop-hydrogen-fueling-for-japan-material-handling-market.aspx.
170
Nel, 10 July 2015: https://nelhydrogen.com/press-release/h2-logic-as-and-mitsubishi-kakoki-kaishaltd-to-collaborate-on-hydrogen-fueling-for-japan/.

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HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIES-

Ceres Power (UK) signed a second two years joint development agreement with Honda
in January 2016 to jointly develop SOFC stacks using Ceres Power’s unique metalsupported Steel Cell technology based on the use of low-cost metal sheets for a range ofpotential power equipment applications. It included a third party who will consider the
future mass-production scale-up of the Steel Cell technology 171 . It also developed
SOFCs in partnership with Miura Co. Ltd. 172 (Chapter 3.1). Ceres Power set up a
representative office in Osaka.

-

Ballard Power Systems (Canada) signed a distribution agreement for fuel cell products
in Japan with Toyota Tsusho Corporation in August 2016173. In April 2018, Toyota
Tsusho sold five Ballard’s hydrogen fuel cells to be used as part of a renewable
emergency power system installed in Soma City, Fukushima Prefecture. The purpose of
the project led by IHI Corporation is to produce hydrogen for storage through excess
solar power generation 174 . Ballard also collaborated with Nisshinbo Holdings, anenvironmental and energy company, to develop a non-precious metal catalyst (NPMC)
for use in the world’s first commercialized NPMC-based PEMFC product175. They havejointly collaborated on the development of NPMC since 2013.

-

ITM Power (UK) signed a strategic partnership agreement with Sumitomo Corporationin July 2018 for the CO2-free hydrogen production in Japan through the introduction of
the ITM’s multi-megawatt PEM electrolyzers 176.

-

Energy Solutions and PDC Machines (US) jointly manufactured SimpleFuel™ to
Toyota, a simplified hydrogen station that uses electricity from solar panels at the plantsite to produce and store hydrogen through the electrolysis of water (Chapter 3.2.2).

In previous chapters, it was mentioned collaborations between Japanese and European
corporations also for the European market, such as Panasonic with Viessmann (Germany) andEngie (France), Toshiba with BAXI Innotech GmbH (Germany), Aisi Seiki with Bosch(Germany), Kawasaki Heavy Industries with Nel (Norway) and Shell (The Netherland), or
Nissan with Ceres Power (UK).

171

Ceres Power, 18 January 2016: https://www.cerespower.com/news/latest-news/new-jointdevelopment-agreement-with-honda/.
172
Ceres Power, 20 June 2019: https://www.cerespower.com/news/latest-news/miura-to-launch-new-chpfuel-cell-product-for-the-commercial-building-sector-in-japan/.
173
Ballard Power System, 18 August 2016: https://www.ballard.com/about-ballard/newsroom/newsreleases/2016/08/18/ballard-and-toyota-tsusho-sign-distribution-agreement-for-fuel-cell-products-injapan.
174
Toyota Tsusho Corporation, 5 April 2018: https://www.toyotatsusho.com/english/press/detail/180405_004158.html.
175
Ballard Power System, 12 September 2017: https://www.ballard.com/about-ballard/newsroom/newsreleases/2017/09/13/ballard-to-offer-world-s-first-pem-fuel-cell-product-using-non-precious-metalcatalyst.
176
ITM, 9 July 2018: http://www.itm-power.com/news-item/sumitomo-and-itm-power-announcestrategic-partnership-agreement.

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HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIES

3.7.1. Potential Opportunities and Recommendations for European Firms
Japanese hydrogen and fuel cells market will have great growth in the next decades, which also
represents increasing business chances for foreign companies with advanced products andtechnologies, or with expertise in these areas. According to NEDO’s estimation, the hydrogenmarket will reach JPY 1 trillion (about EUR 8 billion) by 2030 and JPY 8 trillion (around EUR
65 billion) by 2050. Foreign research institutions will also have good opportunities forcollaborating with Japanese institutions and universities that are looking for partners and foreign
researchers.
Japan has a leading position in some of the hydrogen and fuel cell technologies. The
government awaits the results of several demonstration projects around 2020 to start theoperation of large-scale infrastructures, though some technologies will not be commercialized
until around 2030. Japan will continue investing in and developing technologies for the
production, transportation, storage and use of hydrogen, aligned with the ten technologicaldevelopment items in three main areas (fuel cell technology, supply chain and waterelectrolysis) that were announced in the Hydrogen and Fuel Cell Technology Development
Strategy in September 2019 (Chapter 3). European technology has advanced faster during thelast years making European firms to be well-positioned for entering into the Japanese market.
Foreign companies have already entered into the refueling station business, with JHyM offering
easy procedures and lower costs. Since Japan needs to build a larger network of HRSs acrossthe country, this sector still offers opportunities for European companies with innovative andcheaper solutions. For example, polymer materials for gas seals and dispensing hoses, lifeextension methods of ground storage pressure vessels, or a new type of compressors, such as anelectro-chemical compressor. Also low-cost equipment and parts for the next generation ofultra-high pressure hydrogen stations, such as high-pressure hydrogen-compatible polymer
technology, electrochemical pumps, new large-sized, thin-walled high-pressure hydrogen tanks,
or ultra-high pressure hydrogen trailers equipped with lightweight containers for the large-scaleand efficient hydrogen transport.
The increasing importance of SOFCs for residential and commercial buildings represents
another opportunity for European companies. Indeed, some of them are already active in thissegment as it was mentioned before. SOFC technologies with higher electrical efficiencies,
durability and lower costs, PEFC technologies with higher durability and lower costs, and purehydrogen fuel cells technologies will be very welcome in Japan.
New materials and technologies for increasing the performance of membranes, membraneelectrode assemblies, electrodes and catalysts used in the fuel cells will have opportunities. For
example, alternative platinum catalysts with a lower amount of platinum. Also lighter materials
and more compact materials used in high-pressure storage tanks that allow increasing thecompression ratios of the gas, and technologies for reducing the amount of carbon fibre used in
the hydrogen storage systems.

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HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIESDevelop efficient technologies to produce low-cost CO2-free hydrogen through renewablesources is a priority for Japan. Therefore, innovative water electrolysis technologies with higher
efficiencies, durability and lower costs will have great opportunities.
Another priority is to develop highly efficient energy carriers and technologies for long-distancemass transportation and storage.
Finally, to enter the Japanese market, there are several important points to take into account:-Long-term commitment. There is no easy and quick way to succeed in Japan.
Research the Japanese market. There are significant differences between doing businessin Japan and in Europe. Japan presents challenges uniquely distinct from many othermarkets, so it is important to be familiar with the Japanese concept of businessnegotiation and corporate decision-making.

-

Understand regulatory requirements. There are three levels of government (national,
prefecture and local), and sometimes lack coordination between Ministries, that makes
difficult to understand what regulations are applicable to each case. Additionally, theJapanese government is reviewing different regulations about hydrogen and fuel cells
technologies. Language is also a barrier.
On the other hand, the European Union and Japan recently signed the Economic
Partnership Agreement (EPA), a free trade agreement for goods and services which willcontribute to facilitating the access of European companies to Japan.

-

Develop the right market entry strategy. Business partnerships, joint-ventures or
distribution agreement with Japanese firms can make business easier at the beginning(see examples above), while direct presence through a subsidiary may be the best longterm strategy.

-

Showing presence in Japan through industry fairs (Annex B) and conferences, andmeeting with potential partners. Now is a good time for positioning in the Japanesemarket, so it is advisable to strengthen business relations with relevant public andprivate organizations. Build networks may take some time, meaning that the strategy
should follow a mid to long-term strategy.

-

Adapt products to local needs, emphasizing the unique features and advantages of thetechnology, and the previous proven success in other markets. Japan is a highly
developed and industrially advanced market, and with similar offers, Japanesecustomers tend to choose local suppliers, who are culturally and geographically closer
and have no language barrier. Therefore, those companies that want to address it must
do so with innovative concepts and competitive technologies. The international
experience of the company is a key factor for success.

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HYDROGEN MARKET IN JAPAN: MAIN PRIVATE COMPANIES-

Offer high quality and extensive customer support and after-sales service system,
usually more demanding and expensive than in Europe. Serving the customer is part of
the Japanese business culture.

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CONCLUSIONS

4. CONCLUSIONS
Since the Great East Japan Earthquake, the necessity of suppressing power consumption on the
demand side rose in Japan, and the government has been promoting a low-carbon society
through energy efficiency measures and the development of a stable and reliable supply of
renewable energy, reducing electricity costs and CO2 emissions.
The Japanese government is also promoting the use of the hydrogen as a clean and alternative
energy vector. It is the key for reducing energy procurement and supply risks since it can beproduced from various energy resources, and for decarbonizing the Japanese energy supply anddemand structure, transport, heating (buildings), industry and power sectors. The fast growth ofvariable renewable energy capacity provides an opportunity to complement solar and wind
installations with the production of hydrogen using the surplus that would otherwise be wasted,
keeping power systems flexible and helping to balance the grid. Hydrogen, in contrast to storage
batteries, can be stored on a large scale and for the long term.
But its widespread adoption faces challenges, especially a high cost. Realize a hydrogen society
in Japan implies the necessity of both expanding hydrogen demand and the construction ofreliable supply chains to meet that demand at a low cost, and reaching the cost parity withtraditional fossil fuels, which will depend also on the application of a carbon price for thoseemitting CO2. The Japanese government has been supporting demonstration projects forbuilding supply chains from overseas to produce green hydrogen from renewable sources orfrom fossil fuels plus the carbon capture and storage.
Liquid hydrogen, methylcyclohexane (organic hydride) and ammonia are regarded as the mostpromising hydrogen carriers. Ammonia has the highest potential to lead the transition towards ahydrogen society due to its properties, the technical maturity of its supply network, it can beused directly as a fuel for power generation and its energy equivalent cost is estimated to be themost feasible option.
The government aims to establish also regional hydrogen supply chains using local unused
resources, including renewable energy, waste plastics, sewage sludge, and by-product hydrogen,which will contribute to improving the regional energy self-sufficiency rates and creating new
regional industries. The combination of low solar and wind costs, continuously in a downward
trend, and more efficient and cheaper electrolysis technologies are gradually making the largescale renewable electrolysis a viable option in the near future.
Therefore, hydrogen production, transportation and storage are potential areas for foreigncompanies with innovative technologies. Especially the water electrolysis market offers
opportunities for European companies with more efficient and cheaper solutions.

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CONCLUSIONSPower generation accounts for 40% of total national CO2 emissions, so the use of hydrogen inthis sector will greatly contribute to reducing them and will directly lead to massive hydrogenconsumption, which will contribute to cost reduction. Power-to-gas is expected to be one of thecountermeasures against problems related to grid stability and reliability due to the higher
penetration of renewables in Japan.
The three main technologies for hydrogen gas turbine power generation that are being
developed in Japan are the co-combustion of hydrogen and natural gas, the hydrogen firing
power generation, and the direct combustion of ammonia. Co-firing 20% ammonia in all theJapanese coal power plants would reduce around 3% the national CO2 emissions, about 40
million tons per year, though it would increase the coal energy generation cost by 30%, stillcheaper than the nuclear and natural gas generation. European technologies in the hydrogen
power generation market will have a lot of opportunities in Japan.
In 2030, the government aims to reduce emissions by 39% in the residential sector and by 40%
in the commercial sector compared to the emissions in 2013. Stationary fuel cell systems, which
generate electricity and heat, are contributing to that goal, with around 300,000 units deployed
across the country. Large-scale SOFC systems for commercial centres and other buildings are
growing in importance. However, the national strategy set a target of 1.4 million units by 2020
that will not be met, and thus, the Japanese government should continue subsidized them evenafter reaching their target prices. Pure hydrogen fuel cells are the next step. Fuel cell systems
market including components and material offers opportunities to foreign companies.
The transportation sector contributed with 19% to entire CO2 emissions in Japan in 2015, andthe government’s target is to reduce it by 25% by 2030 increasing the popularization of thenext-generation vehicles and reaching a share in the new car sales between 50% and 70% by2030. Fuel cell vehicles offer a low emission driving performance, overcome electric vehicles’
weight, range and charging limitations, and can be also used for power supply in case ofdisasters. However, compared to electric vehicles, the deployment of FCVs is being slower
because they are more difficult to produce, they are much expensive, and there are not enoughrefueling stations. The national target of 40,000 units by 2020 will not be met, and thus, at thisstage, policy support from the government is still indispensable in Japan.
The main issues for the dissemination of HRSs are the high construction and operation costs andthe strict regulations. METI is reviewing the regulation that affects to HRSs and working on thestandardization of equipment to achieve lower costs. To address the financing problem, Japan
H2 Mobility (JHyM) was established by several private companies. Some European companies
are already active in this segment, but the necessity of increasing the number of stations acrossthe country offers business opportunities for other firms.
The government awaits the results of several demonstration projects around 2020 to start theoperation of hydrogen large-scale infrastructures. Demonstration projects must reveal thedeficiencies of the different technologies and allow to focus on the most technical and costeffective areas, taking into account their applicability in real operating conditions.

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[4] “Long-term Energy Supply and Demand Outlook”. METI. July 2015.
[5] “Economic and Energy Outlook of Japan through FY 2018”. IEEJ. July 2017.
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Centre for Industrial Cooperation). October 2018.
[7] “Overview of the Plan for Global Warming Countermeasures”. Cabinet. May 2016.
[8] “Japan’s Global Warming Countermeasures”. Jun Takashina (METI). March 2017.
[9] “Basic Hydrogen Strategy”. Ministerial Council on Renewable Energy, Hydrogen and
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[10] “Strategic Energy Plan”. METI. July 2018.
[11] “Renewables 2018. Global Status Report”. REN21. 2018.
[12] “How Hydrogen Empowers the Energy Transition”. Hydrogen Council. January 17.
[13] “Technology Roadmap. Hydrogen and Fuel Cells”. IEA. June 2015.
[14] “The Prospects for Renewable Hydrogen Production”. Gunther Glenk (Technical
University of Munich) and Stefan Reichelstein (University of Mannheim). July 2018.
[15] “Energy Carriers”. Cross-Ministerial Strategy Promotion Program (SIP). May 2016.
[16] “Hydrogen Technologies and Developments in Japan”. Shigeki Iida and Ko Sakata (TheInstitute of Applied Energy). May 2019.
[17] “Challenges for Japan’s Energy Transition – Basic Hydrogen Strategy –“. Masana Ezawa(METI). June 2019.

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REFERENCES[18] “Accelerating the Popularization of Electric and Plug-in Hybrid Vehicles for Realizing a
Low-carbon Society in Japan”. CRIEPI – Tomohiko Ikeya. November 2016.
[19] “Evolution of Fuel Cell Technology for Hydrogen Society”. Toshiki Shimizu (Panasonic
Corporation). June 2019.
[20] “Japan’s ENE-FARM programme”. Aki Maruta (Technova Inc). October 2016.
[21] “Trend of Next Generation/Zero Emission Vehicle and Policy in Japan”. METI. April 2018.
[22] “The Motor Industry of Japan 2019”. JAMA. July 19.
[23] “Government Fleet Declaration”. The Clean Energy Ministerial - EVI. November 2016.
[24] “Activities for FCV and Hydrogen Infrastructure in Japan”. Tetsufumi Ikeda (HySUT).
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[25] “Japan’s Hydrogen Strategy and its Economic and Geopolitical Implications”. Monica
Nagashima (IFRI). October 2018.
[26] “Creating a Sustainable City – Tokyo’s Environmental Policy”. Tokyo Metropolitan
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[27] “Introduction of Liquid Organic Hydrogen Carrier and the Global Hydrogen Supply Chain
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[28] “Status of Hydrogen Fueling Station Technologies in Japan”. Tetsufumi Ikeda (HySUT).
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[29] “Update on Regulation Review for HRS Construction and Operations in Japan”. Takeshi
Yoshida - JPEC. October 2015.
[30] “Is Power to Gas Feasible in Japan?”. Yoshiaki Shibata – IEEJ. January 2016.
[31] “International Hydrogen Supply Chain and Hydrogen Gas Turbine”. Kawasaki Heavy
Industries. February 2016.
[32] “Hydrogen Power Generation Handbook”. Mitsubishi Heavy Industries Technical Review.
[33] “A Feasibility Study on the Supply Chain of CO2-free Ammonia with CCS and EOR”.
IEEJ. April 2019.

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REFERENCES[34] “FY 2017 Study of Infrastructure Development Project to Obtain Joint Credit, etc. (Studyof International Contribution Quantification and JCM Feasibility) - Study of Master Plan for
Creating a Low-Carbon Energy System in Saudi Arabia”. METI and IEEJ. March 2018.
[35] “Development of Low-NOx Combustor of Micro Gas Turbine Firing Ammonia Gas”.
AIST, Toyota Energy Solutions and Tohoku University. October 2018.
[36] “The Future of Hydrogen. Seizing Today’s Opportunities”. IEA. June 2019.
[37] “Cost Evaluation Study on Low Carbon Ammonia and Coal Co-Fired Power Generation”.
JGC Corporation. October 2018.
[38] “CO2 Free Ammonia as CO2 Free fuel and Hydrogen Carrier – Achievements of SIP“Energy Carriers” - ”. Bunro Shiozawa (SIP “Energy Carriers”). June 2019.
[39] “Perspectives on Hydrogen in the APEC Region”. Asia Pacific Energy Research Centre.
June 2018.
[40] “Development of Technologies to Utilize Green Ammonia in Energy Market”. Shigeru
Muraki – SIP Energy Carriers. November 2018.
[41] “Hydrogen from Regional Energy Management to Global Network of Renewable
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[42] “Hydrogen Clusters in Japan”. Eiji Ohira – NEDO. March 2019.
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[44] “The Fukushima Plan for a New Energy Society”. Council for Realizing the Fukushima
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ANNEXES

A. STRATEGIC ROAD MAP FOR HYDROGEN AND FUEL CELLS. SUMMARY.

127

128

129

130

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B.

RELEVANT EXHIBITIONS IN JAPANThe most relevant exhibitions related to the hydrogen and fuel cells market in Japan in 2019 arelist below:

11th Automotive World 2019, Tokyo edition
The world’s largest exhibition for the advanced automotive technologies, consisting in thefollowing six shows: CAR-ELE JAPAN－11th Int'l Automotive Electronics Technology Expo EV JAPAN－10th EV & HEV Drive System Technology Expo 9th Automotive Lightweight Technology Expo 7th Connected Car JAPAN CAR-MECHA JAPAN - 5th Automotive Components & Processing Technology Expo
 2nd Autonomous Driving Technology Expo
Tokyo Big Sight, Tokyo
January 16 - 18
http://www.automotiveworld.jp/en/

World Smart Energy Week 2019 – Tokyo Edition, consisting of the following nice shows: PV EXPO 2019 – 12th Int’l Photovoltaic Power Generation Expo 10th PV SYSTEM EXPO BATTERY JAPAN 2019 – 10th Int’l Rechargeable Battery Expo 9th INT’L SMART GRID EXPO FC EXPO 2019 – 15th Int’l Hydrogen & Fuel Cell Expo 4th INT’L BIOMASS EXPO THERMAL POWER EXPO 2019 – 3rd Next-generation Thermal Power Generation
Expo WIND EXPO 2019 – 7th Int’l Wind Energy Expo
 1st RESOURCE RECYCLING EXPO – Recycling technologies & Services for
Renewable Energy Resources Gather
Tokyo Big Sight, Tokyo
February 27 – March 1
https://www.wsew.jp/en-gb.html

World Hydrogen Technologies Convention - WHTC 2019
Tokyo International Forum, Tokyo
June 2 – 7
http://whtc2019.jp/

Renewable Energy 2019
Pacifico Yokohama, Yokohama
http://www.renewableenergy.jp/2019/english/

July 10 – 12132

International Congress on Advanced Materials Sciences and Engineering 2019 - AMSE
Ana Crowne Plaza Osaka, Osaka
July 22-24
http://www.istci.org/ICAMSE2019/index.asp

Advanced Materials Japan 2019 - 8th Annual World Congress
Session 3-4: Advanced Materials for Batteries Fuel Cells and Electrolyzer Technologies
Hyatt Regency Osaka, Osaka
July 22-24
http://www.bitcongress.com/wcam2019/default.asp

16th International Symposium on Solid Oxide Fuel Cells
Kyoto Terrsa, Kyoto
September 8 - 13
http://www.eguchi-lab.ehcc.kyoto-u.ac.jp/SOFC_XVI/

2st Automotive World Nagoya 2019 – Nagoya edition, consisting in the following 5 shows: CAR-ELE JAPAN Nagoya - 2nd Int'l Automotive Electronics Technology Expo Nagoya
 EV JAPAN Nagoya - 2nd EV/HEV Drive System Technology Expo Nagoya
 2nd Automotive Lightweight Technology Expo Nagoya
 CAR-MECHA JAPAN Nagoya - 2nd Automotive Components & Processing Technology
Expo Nagoya
 2nd Autonomous Driving Technology Expo Nagoya
Portmesse Nagoya, Nagoya
September 18 - 20
http://www.automotiveworld-nagoya.jp/en/

World Smart Energy Week 2019 – Osaka Edition, consisting in the following five shows: PV EXPO OSAKA 2019 – 7th Int’l Photovoltaic Power Generation Expo Osaka BATTERY OSAKA 2019 – 6th Int’l Rechargeable Battery Expo Osaka 9th INT’L SMART GRID EXPO OSAKA
 4th INT’L BIOMASS EXPO OSAKA
 THERMAL POWER EXPO OSAKA 2019 – 3rd Next-generation Thermal Power
Generation Expo Osaka
INTEX Osaka, Osaka
September 25 – 27
https://www.wsew.jp/en-gb.html

REIF Fukushima (Renewable Energy Industry Fair)
Three main themes: expanded introduction of renewable energy, model construction ofhydrogen-based society, and building smart communities.
Big Palette Fukushima, Fukushima
October 30 - 31
http://reif-fukushima.jp/english/index.php

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The 13th Pacific Rim Conference of Ceramic Societies
Symposium 2: Solid Oxide Fuel Cells and Hydrogen Technologies
Okinawa Convention Center, Okinawa
October 27 – November 1
http://www.ceramic.or.jp/pacrim13/

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DISCLAIMER AND COPYRIGHT NOTICE
The information contained herein reflects the views of the author, and not necessarily the viewsof the EU-Japan Centre for Industrial Cooperation, the views of the EU Commission orJapanese institutions. While the author believes that this paper is reliable and reasonably clear,no independent verification has been made, and the report may be subject tocorrection, completion and amendment. While utmost care was taken for the preparation of thisreport, the author and the EU-Japan Centre cannot be held responsible for any errors. Neither
the EU-Japan Centre for Industrial Cooperation, nor the author, nor any person acting on its
behalf is responsible for any consequences that may arise from the use by third parties, whether
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© 2019 EU-Japan Centre for Industrial Cooperation

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EU-Japan Centre for Industrial Cooperation