Japan, a country heavily dependent on fossil fuel imports, is betting big on hydrogen in industry, power generation, vehicles, and shipping as it looks to reach net-zero emissions by 2050. The country’s new green strategy relies on hydrogen to cut the dependence on fossil fuels. Hydrogen has gained a massive amount of traction and hype in recent months as governments, international organizations, and oil and gas supermajors say that it could be the key to helping the decarbonization of emission-intensive industries in the energy transition.
Japan relies heavily on imported crude oil, natural gas, and coal, so its ambition to lessen the 90-percent dependence on fossil fuels was widely expected in the net-zero plans. Japan, however, unlike other major economies, cannot rely too much on solar or wind power because of the limited surface on which it can position solar and wind power farms. So Japan is turning to hydrogen with support for the industry and soon-to-be-unveiled possible targets for how much fossil fuels hydrogen could displace over the next 30 years.
The hydrogen bet is a huge gamble for Japan, considering the fact that hydrogen technologies—including electrolysis—will need a lot of investment to become easily scalable and, more importantly, cost-efficient.
But if Japan succeeds in gradually shifting its heavily dependent fossil-fuel-powered economy toward low-carbon sources, including a large share of hydrogen, it could show the world that a hydrogen economy could be achieved.
“The real game-changer here is that if there is a breakthrough in Japan and the entire value chain is figured out to service the Japanese market, I think there will be rapid adoption” of hydrogen around the world, David Crane, former CEO at US firm NRG Energy, who now sits on the board of Japan’s largest power generation company JERA Co, told The Wall Street Journal.
Japan’s Big Hydrogen Plans
Japan unveiled in December 2020 its ‘Green Growth Strategy’ to support its 2050 net-zero goal. The strategy includes efforts to “promote the development of technologies for Carbon Capture, Utilization and Storage (CCUS) and carbon recycling, as well as explore the exciting potential of hydrogen and ammonia as alternative fuels for power generation” to decarbonize the electricity generation sector.
Japan will continue to use nuclear power, but will aim to reduce its share in the mix and boost safety measures after the Fukushima disaster turned around the Japanese energy strategies and changed the public perception of a safe power source a decade ago.
Related: Oil Markets Baffled As The IEA Calls For More Production Hydrogen and ammonia are expected to account for around 10 percent of Japan’s decarbonized electric power generation, alongside up to 60 percent renewables, and around 30 percent nuclear power plus thermal power generation combined with CCUS, according to the strategy.
In its push to create “a smart decarbonized society,” Japan will also promote “electrification and hydrogeneration in sectors that are highly dependent on fossil fuels such as transportation and the consumer economy,” it says.
The country is expected to unveil this month a roadmap on how much that bet on hydrogen could cost.
Government Support Will Be Necessary
Meanwhile, Japan has pledged up to US$3.4 billion (370 billion Japanese yen) to support research and development of hydrogen technology in the next decade. The support for hydrogen is part of a wider US$18 billion (2 trillion yen) funding for green energy under a newly-established Green Innovation Fund.
Japan is also expected to include a significant increase in the number of its hydrogen refueling stations for fuel-cell vehicles in the strategy. The country, which currently has 160 such stations, plans to have 1,000 hydrogen refueling stations by 2030, Nikkei Asia reported last month.
Still, hydrogen when used for power generation is very expensive at present. Critics of the Japanese strategy for using ammonia in co-generation at coal plants, as JERA will pilot, say that this would only “lengthen the lifeline of coal power in Japan,” Greenpeace noted earlier this year.
“It is experimental, in its technological infancy and nothing but expensive greenwash,” Greenpeace said.
Japan Is Not The Only Major Economy Betting On Hydrogen
It’s not only Japan that seeks to achieve greater decarbonization by using hydrogen-technology solutions. Germany said last month it would fund 62 large-scale hydrogen projects with as much as US$10 billion in federal and state funds as it aims to become the world’s leader in hydrogen technologies.
Germany will provide US$9.72 billion (8 billion euro) to the 62 projects it has selected to reduce emissions in the transportation, steelmaking, and chemicals sectors.
Related: Soaring Demand Drives The Oil Prices Rally Higher
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The International Energy Agency (IEA) also says that hydrogen will play a key role in a net-zero path. In the notorious report suggesting no new oil and gas investment is needed ever again in a net-zero pathway, the IEA envisages that by 2045, “the vast majority of cars on the roads will be running on electricity or fuel cells, planes will be relying largely on advanced biofuels and synthetic fuels, and hundreds of industrial plants will be using carbon capture or hydrogen around the world.”
The IEA’s vision includes hydrogen and hydrogen-based fuels filling the gaps where electricity cannot easily or economically replace fossil fuels and where limited sustainable bioenergy supplies cannot cope with demand. These sectors are shipping, aviation fuel, and the steel and chemicals industries.
Yet, the IEA itself admits that “Net-zero by 2050 requires huge leaps in clean energy innovation,” including in hydrogen electrolyzers and systems to move hydrogen around and between ports and industrial zones.
It is quite clear that a hydrogen economy would need a lot of innovation and even more support and funding from governments. Japan’s support for hydrogen is a start, but a lot more would be needed to make hydrogen a viable, cost-efficient, low-carbon energy solution.
By Tsvetana Paraskova for Oilprice.com
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Hydrogen faces two major obstacles: hype and cost.
In 2020 roughly 87 Mt of hydrogen was produced worldwide accounting for a 0.54% of global primary energy. So the projections of hydrogen share in the final energy by the International Renewable Energy Agency (IRENA), the Brussels-based Hydrogen Council and the EU at 12%, 18% and 24% respectively by 2050 is pure hype.
Moreover, the current production of green hydrogen is minuscule. IRENA, in its energy transition roadmap to 2050, estimates that global production of green hydrogen must reach approximately 400 Mt, which would require a total installed electrolysis capacity of 5 terawatts (TW) or 5,000 GW by 2050. Today, total installed electrolysis capacity worldwide is approximately 8GW.
The cost is another obstacle. Producing green hydrogen from water by electrolysis using solar or nuclear energy is extremely expensive, at least twice that of fossil-based hydrogen and the quantity produced is minute. Also producing blue hydrogen from natural and grey hydrogen from fossil fuels is far more expensive than producing natural gas.
Whether green, blue or grey, hydrogen needs far more energy to produce than it will eventually provide. If this is the case, then why don’t we?
1- Skip the production of hydrogen altogether and use natural gas directly to generate electricity while employing carbon capture technologies to prevent CO2 being released?
2- Use solar electricity or nuclear energy employed in producing green hydrogen by electrolysis to enhance current electricity generation and make it cheaper to customers rather than using a convoluted process of electrolyzing it and then using it to generate electricity thus adding to customers’ costs.
3- Use steam generated from high temperatures produced by nuclear reactors to generate more electricity in a combined cycle for use in industrial plants instead of hydrogen.
Moreover, any utterances by the IEA on hydrogen could be ignored particularly after its la-la-land roadmap for net-zero emissions by 2050 has been overwhelmingly ridiculed and dismissed.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London