Japan’s latest policy discussions on how to promote hydrogen and derivatives, including ammonia, suggest Tokyo is leaning towards supply-side support for production, transport and storage of the fuels.

Systems for supporting commercial supply chains for hydrogen and ammonia were discussed at a meeting of policy subcommittees under Japan’s Agency for Natural Resources and Energy in October.

Rather than the Japanese government bidding for and buying hydrogen and ammonia, attendees at the meeting raised the idea of building a support system that incentivises companies to voluntarily create supply chains—something that is already partly underway.

Japan is planning to promote competition among the various carrier options—liquid hydrogen, ammonia, methanol, or synthetic methane—while supporting efforts to overcome technological challenges for each fuel.

The proposed strategy reflects how Japan wants to keep its technology options open and is not ruling out any potential hydrogen carriers due to the belief that it is too early to judge their long-term viability.

All the carrier options have pros and cons. Storing and transporting liquid hydrogen is complicated using today’s technology. Methanol and ammonia can use existing infrastructure, but reconversion costs are high. Synthetic methane can be used as a drop-in replacement for natural gas in heating and power generation but has high equipment costs.

Three-stage support

Resource-poor Japan aims to be the first hydrogen economy globally and is looking to boost hydrogen supply, including imports, to 3mn t/yr by 2030 from around 2mn t/yr now, rising to 20mn t/yr by 2050.

The support proposed in October’s meeting would cover production of clean fuels both in Japan and abroad, as well as marine transportation—including conversion costs for ammonia using dehydrogenation equipment after storage in Japan.

Three stages are envisaged: feasibility studies for plans to construct hydrogen and ammonia facilities; Feed work; and, finally, infrastructure construction.

At the feasibility study stage, the government will call for a wide range of proposals for potential locations, then narrow down the range of projects for which it will offer support through reviews at each of the three stages.

Support will be provided to suppliers taking on investment risks in hydrogen and ammonia ships, storage, transportation and dehydrogenation, as well as carbon capture, storage, and transportation technology in the synthetic methane supply chain.

Projects aiming to receive support will need to submit proposals that include expected CO₂ emissions. Grey hydrogen or ammonia projects that have no timetable to transition to green will not be eligible.

Room for improvement

But the proposal does not include support for customers’ purchasing costs, which could limit support for it, an industry source in Tokyo tells Hydrogen Economist.

“The reasoning for the absence of buyer-side support is that finely-delineated demand and significant variation in how long projects take to start up increases the uncertainties involved in constructing large-scale supply chains, which in turn lowers visibility on economic viability,” the source says.

Separately at the meeting, power utility Kansai Electric Power called for greater efforts from the government on green hydrogen. Tokyo should aim to secure appropriate locations, rights and technologies for the technology, which would provide the necessary lead time for upstream development and facility construction, company representatives said at the meeting.

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Author: Shi Weijun