Can Hydrogen fuel Japan's economy

NIPPON NUGGETS, Feb 13, 2021

📚 MEGA TRENDS 📚 

Can hydrogen fuel Japan’s economy?

This year, the Ministry of Economy, Trade and Industry (METI) will update its Strategic Energy Plan. Prime Minister Suga has set the country on course to reach Carbon Neutrality by 2050 and there are growing calls from industry leaders (Japan Climate Initiative) to raise the renewable share in the Energy Mix to 50% as early as 2030.  

While this may seem like a relatively straightforward shift towards solar power, wind energy, and biofuels, METI appears to have other ideas and will reportedly propose lifting hydrogen and ammonia to 10% of the energy mix, from zero today. Nuclear will also remain on the agenda, despite the general public’s distrust.  

"Solar wasn't generating. Wind wasn't generating. I'm trying to persuade everybody that in the end we need nuclear power." - Japan’s Energy Minister talking to the FT about the cold snap! 

Why Hydrogen?

Hydrogen is the most abundant element in the environment and of course it is clean burning. However, it is not an abundant energy source as hydrogen needs to be separated from oxygen molecules in water through the process of electrolysis, or by splitting it off hydrocarbon chains in fossil fuels, a process that itself creates greenhouse gas emissions. 

Most of the hydrogen that is produced today is “grey” meaning that it has been split using non-renewables. Ignoring the environmental objections for a moment, a hydrogen economy would require billions of dollars of investment in terminals, power plants, storage facilities and pipelines. Ammonia has very similar disadvantages in that it is mostly “grey”, being produced from natural gas, although it is easier to store and transport. Despite the heavy investment burden, METI clearly wants hydrogen/ammonia to become a Second pillar (behind LNG) as a “new fuel” industry led by Japan.  

This new policy will not come cheap - METI estimated Japan's current 100% hydrogen power generation costs at 97 yen/kWh and 23.5 yen/kWh for ammonia. This compares with current solar PV auction prices awarded at 12.5 yen/kWh.  

Related Names

Ammonia - Chugai Ro (1964) Kimura Kakoki (6378), Sawafuji (6901), MHI (7011) 

Hydrogen – Iwatani (8088), KHI (7012), Japan Steel Works (5631) 

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