One of the major instruments through which the Japanese government intends to achieve this transition to a low-carbon society is the Ministry of Economy, Trade and Industry (METI). METI is largely responsible for the country’s industrial and energy strategy, and works closely with private companies in the relevant sectors.
In its “Green Growth Strategy”, METI has targeted 14 priority sectors for the transition to a carbon-free economy, divided into three categories: energy, transport and industry, and home and office. Hydrogen is involved in four of the seven “transportation and industry” sectors and especially three of the four energy sectors:
Fig 1: Priority growth sectors identified by the Japanese METI; hydrogen-related sectors are indicated by an asterisk *.
The originality of Japanese strategy
If Japan is today one of the most advanced countries in the transition to a hydrogen economy, its strategy differs from those of other industrialized countries by the low priority given to the domestic production of hydrogen, whether decarbonized or not.
Indeed, Japan relies heavily on imports to supply its economy with hydrogen, and is already organizing its supply chain accordingly. The reasons behind this choice are notably the geographical constraints that weigh on the country for green hydrogen, such as the lack of space on the archipelago for the production of renewable energy, or seabeds that are not very suitable for offshore wind power, or the resistance and uncertainties about nuclear power for pink hydrogen.
Although Japan’s hydrogen strategy is ambitious and well underway, and has been widely embraced by Japanese private actors, the technical uncertainty associated with the various technologies for future large-scale use is leading the various actors to pursue various avenues of value chain development, particularly for international supply.
Unlike other developed countries, in particular the European Union, the actors of the Japanese energy transition seem to consider the green character (i.e. from renewable energy) of hydrogen as secondary, at least compared to the decarbonized character. Thus, the production of hydrogen from fossil hydrocarbons is considered acceptable, or even favored because of the lower costs; however, it seems that domestic production, which is in the minority, is restricted to green hydrogen for reasons of acceptability.
These partnerships are the result of coordination between industry, which directly contracts with and invests in overseas companies, and the government, which signs memorandums of cooperation with other national and regional governments and actively supports companies through technical and financial support and public-private consortia. Both the Japanese government and companies are thus willing to invest heavily in the infrastructure of the countries in the region to shape the future market for hydrogen and its derivatives, including ammonia.
Japan is thus leading a policy of developing hydrogen imports combining a selection of promising technologies and multiple source countries around the Pacific and up to the Indian Ocean.
Japan’s hydrogen import strategy opens up many opportunities for players around the Pacific Rim to take advantage of. In particular for companies in countries that can organize a public-private collaboration framework.