Report: Japan's "hydrogen society" policy "has clearly been a complete failure"
In 2017, Japan created a pioneering national hydrogen strategy, envisaging a carbon-neutral "hydrogen society." But a Renewable Energy Institute report slams the policy as catastrophically misguided, with 70% of its 10-year budget "spent on bad ideas."
Despite the fact that it's been "revised somewhat" over the last 5-6 years, the REI claims Japan's strategy needs a complete overhaul if the country is to have any chance of catching up with Europe, China and other countries, let alone regaining any kind of early-mover advantage. Ideas like the futuristic Toyota/Woven Planet "Woven City" with its extensive use of hydrogen canisters for home energy and fuel cell vehicles for short-range transport are wildly misaligned with what this stuff is actually good for. A strategy that should be focused on decarbonization is actually pushing Japan toward higher emissions in some cases, and it's killing the country's fledgling green hydrogen industry.
The key issues in a report titled Re-examining Japan's Hydrogen Strategy: Moving Beyond the "Hydrogen Society" Fantasy can be broken down into three main areas.
1) Japan is targeting hydrogen at the wrong applications
Hydrogen is a wasteful and inefficient energy carrier compared with batteries and direct electrification, so most of the world has arrived at an understanding that hydrogen and its carriers are best targeted at things that can't be decarbonized in some other, easier way. Aviation, shipping, heavy transport and steelmaking are good examples of areas where hydrogen looks like a competitive solution.
Japan's strategy, on the other hand, pushes hydrogen heavily toward things like passenger cars (where consumers overwhelmingly prefer battery EVs) and combined "Ene-Farm" heat/power systems for buildings, when this sort of thing can be done cheaper and more energy-efficiently with heat pumps. Not to mention, who wants a situation where you're constantly having to replace hydrogen fuel canisters to keep your home powered up?
"Japan’s hydrogen strategy places 'bad idea' applications as its main focus," reads the report. As a result, the vast majority – around 70% – of the 460 billion Japanese Yen (US$3.5 billion) in primary government budgets for hydrogen programs are being directed toward things like fuel cell passenger cars, hydrogen refueling infrastructure and residential fuel cells.
The Japanese people aren't biting, despite this level of spending. Residential fuel cells will be lucky to reach one fifth of the strategy's sales target by 2030. Fuel cell cars are even less popular; at the current rate, they'll hit about 1/40th of their sales target by 2030. "The government's FCV strategy has clearly been a complete failure," reads the REI report.
2) Japan has prioritized dirty hydrogen
The strategy relies entirely on "gray" hydrogen until at least 2030, says the report. This can be produced using methane gas in a filthy Haber-Bosch process that makes nearly six tons of carbon dioxide per ton of hydrogen, while also burning methane for heat and contributing to fugitive methane emissions that are some 80-odd times worse for atmospheric warming than carbon dioxide over a 20-year period. Or you can produce it via gasification of brown coal, which is roughly twice as bad again for emissions – and that's the model Japan is exploring in partnership with Australian exporters.
The early stage supply is one thing; dirty hydrogen is more or less the only kind available in bulk quantities at the moment. But the report also slams Japan for having no real roadmap towards something cleaner. It's already allowing blue and even gray hydrogen to be classified as "non-fossil energy sources" regardless of their provenance, it's yet to lay out standards for blue or green hydrogen, and its government is busily writing legislation that treats any hydrogen as good hydrogen.
This leads to ridiculous situations; the country's sixth Strategic Energy Plan calls for methane gas-fired power plants to co-fire with 30% hydrogen gas by 2030. "But if gray hydrogen is used," reads the report, "GHG emissions will be 10% higher" than if the power plants just kept burning methane.
It also positions Japan incredibly poorly from an international trade perspective; other regions are placing hydrogen production under much stricter scrutiny, and end-to-end emissions totals will very much play a part in import tariffs and the like. Japan is incentivizing its industrial sector to increase emissions and tank its exports in an emissions-focused global trade market, and it's failing to lay out a roadmap that'll make businesses want to clean things up.
3) The country's green hydrogen production sector is lagging behind
Green hydrogen is currently several times more expensive to produce than blue or gray hydrogen, so it's no surprise that if all hydrogen is treated as good hydrogen, and there's no indication that this situation will change any time soon, Japan's domestic green hydrogen sector is struggling. "Europe and China are in the lead and looking at the latest developments of these countries, the extent of Japan's lag is appalling," reads the REI report.
Only two Japanese companies are looking to manufacture electrolyzers, for example, and one of these has made it to limited volume production. Equipment costs per kilowatt are about six times higher than the Chinese competition, and there's no indication Japan can close that gap on its current trajectory.
Perhaps this isn't surprising; Japan is a tough part of the world for renewable energy. Its solar potential is not great, its onshore wind sector is hobbled by tough approval processes, offshore wind is expensive, and nuclear power is unlikely to meet its targets due to some very understandable safety regulations, rising costs and public opposition in the wake of the Fukushima disaster. Renewable energy in Japan is expensive, so producing green hydrogen in Japan will not be cheap.
But, as the report points out, the alternative here is to pay Australia for filthy gray hydrogen that's often worse for the planet than whatever it's replacing.
"If Japan does not fundamentally revise its hydrogen strategy, the hydrogen business in Japan may lose its growth potential just like solar and wind did," concludes the report. "Japan must place its hydrogen strategy in its decarbonization strategy and rectify the idea that any type of hydrogen will do. Unless the country quickly establishes GHG emission standards for blue hydrogen that are internationally recognized, the international supply chain it is focusing efforts on will not earn trust.
"The government also needs to define what applications are truly needed to achieve decarbonization, and build a system to meet demand by supplying domestically produced hydrogen and partially supplementing that with imports in accordance with how fast renewable energy grows. If Japan changes its strategy and policies, it will be able to play an important role in the global green hydrogen business by leveraging Japanese companies’ experience gained from efforts in building a supply chain. But time is running out."