Japan passed the Hydrogen Energy Society Promotion Act! 15 year subsidy will be provided for domestic and imported hydrogen

On May 17, the National Assembly of Japan formally passed the Hydrogen Society Promotion Act (HPA), paving the way for the country to provide 15 year subsidies for local production and import of low hydrocarbons.

The new law does not actually provide details of the upcoming support, but only stipulates that the Natural Resources and Energy Administration of the Ministry of Economy, Trade and Industry (METI) should provide subsidies to any type of "low hydrocarbon" suppliers.

However, Prime Minister Takeo Kishida has promised that, The government will provide 3 trillion yen (19.24 billion US dollars) to support the introduction of clean hydrogen according to the bill, which will take the form of differential contract subsidies.

Producers will receive an "execution price" that represents the cost difference between low hydrocarbons and ammonia and LNG and coal. This seems to be an endorsement of the Japanese energy company's plan to mix hydrogen and natural gas, ammonia and coal in existing power plants.

As long as the supply starts before 2030, these subsidies will be set separately for each specific project and paid to the producers within 15 years, but they must also commit to continue to supply clean hydrogen within 10 years after the end of the 15 year support period.

Importantly, each project also needs to ensure that its hydrogen (or derivatives) end users in Japan are eligible for subsidies.

Due to the difficulties in building large-scale renewable energy projects in densely populated Japan, imported hydrogen is expected to play a greater role in production than domestic hydrogen.

Tatsuya Terazawa, CEO of the Japan's Institute of Energy Economics, which is closely related to the Ministry of Economy, Trade and Industry of Japan, also said that international developers can simultaneously use Japanese subsidies and domestic production subsidies, such as the 45V production tax credit in the United States and the new hydrogen production tax subsidy in Australia.

He said: "The total budget of HPA (Hydrogen Society Promotion Act) is 3 trillion yen, which may trigger a large number of sales and make major contributions to the development of the global clean hydrogen market."

"The clean hydrogen framework under HPA is probably the most powerful framework in the world! It provides a huge opportunity to create a global clean hydrogen market."

Terazawa pointed out that the 15 year support period is higher than the 10 year period of the 45V tax credit in the United States and the subsidy of the European Hydrogen Bank in the EU.

He added: "To become a global player in clean hydrogen supply, I think it is of great strategic significance to be selected into the first batch of projects supported by (Japanese subsidies). Because the selection process will be highly competitive, it is necessary to 'maximize' the attractiveness of projects before the formal process is carried out."

"Although this may require substantial policy support from exporting countries, it will also play an important role in the factors of technology/participants used in production and transportation."

"Joining the first batch of commercial scale clean hydrogen suppliers will enable these projects to have strategic advantages and become leaders in the emerging clean hydrogen market. This opportunity cannot be missed!"

The new law needs to be formally promulgated by the government within six months from today, but Terazawa said that it may be formally implemented in late summer.

He added that once the bill was formally enacted, the formal project selection process would begin.

Japan's largest power company will invest tens of billions of dollars to ensure the supply of 7 million tons of hydrogen in the future

　　 With the implementation of government policies, Japan's largest power generation company JERA immediately announced a huge plan to invest 1 trillion to 2 trillion yen (6.4 billion to 12.8 billion dollars) in green and blue hydrogen and ammonia. Its dual goal is to process 7 million tons of hydrogen by 2035, and become "the pioneer of the global hydrogen and ammonia value chain".

Although the company's goal is to use ammonia for power generation in Japan, its strategy also includes selling hydrogen or ammonia to companies in Germany and Singapore, and burning 40% hydrogen in Linden Gas Power Plant in the United States.

JERA has spent 15 billion yen (96 million US dollars) on its hydrogen and ammonia business, including an ongoing pilot project to jointly burn 20% ammonia in its Hejinan 4 coal-fired thermal power plant.

Although JERA expects that 100% ammonia combustion will be possible from 2040 to 2050, the combined combustion of ammonia and coal is criticized as an inefficient and ineffective decarbonization approach, which extends the life of polluting assets rather than truly deploying renewable energy.

The Japanese power company has also set the goal of developing 20GW of new wind and solar energy by 2035, although it is unclear how many of them will be built in Japan, because this densely populated island country does not have a lot of idle land for large-scale renewable energy projects.

JERA gives two reasons why it continues to focus on hydrogen and ammonia for thermal power generation: power grid security and limited space.

The company said: "Due to the natural fluctuations of wind and sunlight, coupled with the lack of power storage technology and capacity, the intermittency of renewable energy means that low-temperature chamber gas heat will play a key role in the energy transition."

It is estimated that thermal power plants and nuclear power plants need to cover an area of 0.2-0.6 square kilometers per gigawatt, while 1GW solar power plants need 9 square kilometers, and wind power plants need 57 square kilometers (although these lands can be used for agriculture at the same time).

At the same time, the energy storage battery that can store and dispatch 1GW of electricity every day needs 2.7 square kilometers, and the monthly energy storage area will increase to 81 square kilometers.

JERA pointed out that in addition to the daily fluctuations of wind and solar energy, the demand in different seasons may vary by dozens of gigawatts. It added: "Large scale battery energy storage technology is still in its infancy, which means that thermal power generation is needed to achieve adjustable power output."

The company said it was in a "unique position" to optimize synergies between natural gas, renewable energy and hydrogen projects.

It added that the preliminary findings of its coal/ammonia co combustion pilot showed that the emissions of nitrogen oxides generated by co combustion were equal or lower, and nitrogen monoxide (a very powerful greenhouse gas) was not detected, while the emissions of sulfur oxides were reduced by 20% compared with those before conversion.

However, the company has not released any detailed information on whether co combustion has really significantly reduced carbon dioxide emissions.

(Material from: GEE/JERA global hydrogen energy network, new energy network integration)