How Japan could spark up the global hydrogen market

Hydrogen was always dismissed for its high cost and inconvenience. But Japan could be the country that shakes the status quo, starting up a fire that might spark a movement on the entire planet. Here is the plan. 

The hydrogen market is expanding

Global hydrogen demand is forecasted to increase from 80  to 100 million tonnes per annum between 2021 and 2030. Green hydrogen – hydrogen made using renewable energy, which now only represents 0.1% of the global hydrogen market – is expected to grow by 10 million tonnes per annum during the same period.

The global growth of green hydrogen is mainly driven by projects in Western Europe and Asia Pacific, accounting for 82% of the market. Australia is however at the head, with 37 GW of electrolyser projects lined up. The development of commercial-scale hydrogen is driven by the acceleration of low-cost renewable energy capacity as well as new emissions targets adopted by countries and companies alike.

Asia Pacific may have fewer projects than Europe, but they are usually three times as large on average: indeed, the average green hydrogen project in Europe has a capacity of 550 megawatts, while those in Asia average 1.4 GW, according to analysts at Fitch Solutions. This is likely linked to a robust expected economic growth on the continent.  

Pros and cons of hydrogen

Hydrogen as a source of power has some key advantages and disadvantages, which can be summarized as follows:


  • It can be used in modified versions of existing power plants and other machineries designed to work with gas, coal, and oil. This is a strong financial argument in the sense that it bootstraps initial investment needs in the billions of dollars.  
  • It can be stored and used in fuel cells, devices that can store more power than traditional electric batteries. It makes hydrogen very interesting for planes, ships and trucks that need to travel longer distances.


  • The key issue with hydrogen is that it cannot be found in nature: it must be extracted from other compounds such as water or fossil fuel. This process is very energy hungry: indeed, more energy is consumed producing pure hydrogen than comes out when the said hydrogen is consumed.
  • Hydrogen is not the easiest gas to transport. At a normal temperature, it is a very light gas that take a lot of space. It therefore must be compressed or liquefied to be transported efficiently. But to turn liquid, the gas must be cooled to minus 253 degrees Celsius, which is only 20 degrees above absolute zero.
  • Finally, extracting hydrogen is a tough, costly project. And extracting green hydrogen – meaning, using renewable energy – is even costlier.  

 How green hydrogen is produced (Source: Hydro Tasmania)

How green hydrogen is produced (Source: Hydro Tasmania)

The adoption of hydrogen energy on a global perspective

According to the International Energy Agency (IEA), hydrogen use will be mandatory if the world wants to reach its 2050 zero emissions goal. They estimate that such fuels would account for 13% of global energy consumption and would cost $470 billion annually.

The US are a little behind. Some companies and states are investing in hydrogen projects such as fuel stations, but there does not seem to be any large-scale plans yet.

The European Union has recently laid out its plan to develop hydrogen on the continent. Europe hosts no less than 55% of all the hydrogen projects that exist. The plan is backed by major companies such as Royal Dutch Shell, BP, and Airbus. Fitch Solutions sees a positive influence from the European Recovery fund, which will make sure to encourage collaboration, knowledge sharing, save on costs and ensure supply and demand.

China has started the construction of a 500 megawatts feasibility and demonstration project of a wind-solar-hydrogen plant, part of a $3.7 billion plan for the country including natural gas pipelines and several industrial facilities.

One of the most important drivers for change will be prices. With the current price of fossil-based hydrogen stating between $1 and $2 per kilogram, and the price of green hydrogen between $3 and $6  carbon will have to be taxed right to ensure adoption. On the one hand, if it is too expensive, it will hurt companies’ results, but on the other hand, if too cheap, change will happen too slowly.  

How Japan could storm the market and establish a new adoption path

After having built the world’s third industrial power based on the importation of energy solutions such as oil, gas and coal, Japan is planning a shift towards hydrogen, an energy source that was long dismissed for its high cost and inefficiency.

Indeed, the country is starting to realize that to meet its zero-emission goal in 30 years, solar and wind energy alone will not make the cut. Hydrogen is interesting because it could replace fossil fuels in existing infrastructures, emitting water vapor instead of carbon when used. Japan has a new goal: that hydrogen and related fuels provide 10% of the country’s energy needs by 2050 – which is in line or even under the 13% estimated by the IEA on a global perspective. With the appropriate incentives (for hydrogen) and disincentives (against carbon), Japan hopes to make hydrogen part of everyday life.


Japan is now investing increasingly larger sum than the US in hydrogen-related research (Source: Wall Street Journal)Japan is now investing increasingly larger sum than the US in hydrogen-related research (Source: IEA)


Another argument for the adoption of hydrogen in Japan is that it would greatly help the Land of the Rising Sun to reduce its energy reliance on China, which is now emerging a major renewable energy supplier, with 80% of solar panels being produced there

According to David Crane, former CEO of NRG Energy Inc, and board member of JERA: “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 globally”. 

Japan’s secret weapon: ammonia

Ammonia, which is also known as NH3, is a colorless gas composed of hydrogen and nitrogen. It can be cracked over a catalyst to produce hydrogen, along with nitrogen, which is a non-toxic, non-greenhouse gas. It has a massive advantage over classic hydrogen: although more expensive to produce it is way easier to store, thanks to its high volumetric energic density. Thankfully, as it is used throughout the world for fertilizers, it is already produced in large quantities, and it could be an excellent short to medium-term solution in the adoption of hydrogen until infrastructures mature.

The zero-carbon emission roadmap laid out Japan’s Ministry of Economy, Trade and Industry had called for the import of millions of tons of ammonia. “It is a huge endeavour,” says Ryo Minami, director of METI’s oil, gas, and mineral resources department, which is leading its ammonia strategy. “Japan is embarking on something that’s never been done anywhere in the world."

Many actors criticize this plan. Greenpeace has called this ammonia plan an “expensive greenwash” as it still involves greenhouse gas emissions in its process and Volkswagen as well as Tesla’s CEO Elon Musk are not fans of hydrogen fuel cells cars. Many argue that this solution is simply not worth the effort, as generating electricity from pure hydrogen will cost around 8 times as much as from natural gas or solar power.

However un-perfect the plan is, Japan has but limited alternatives to become energy independent. Its population is averse to nuclear energy following the Fukushima catastrophe; they import 90% of the energy they use and have limited room for solar panels.

The main obstacle was scale. So long as there was not enough demand, any investment in the technology would prove to be financially unsound. And this is where Japanese companies stepped in with support. 

Which companies are involved in the plan?

The government is being embraced by many local corporations. Today, companies like JERA and IHI are leading the green war effort. JERA has calculated that switching Japan’s power to only renewables would ask for too important infrastructure changes. However, the existing grid could support half of the country’s demand, with the other half filled by the ammonia solution.

IHI also found that to create hydrogen from an ammonia-gas mix, all you had to do was to change the burner, which is only a small component of the infrastructure. Both companies are sponsored by the government to burn a 20% ammonia mix, and if it goes well, the plan is to gradually increase the ammonia amount. If all goes according to plan, Japan could consume 30 million tons of ammonia and 20 million tons of hydrogen per year by 2050. Note that as of today, only 20 million tons of ammonia are traded globally.

The challenge of supplying ammonia will be left to the companies that import fuel in the country today, like Mitsubishi and Mitsui & Co. Both companies are conducting the necessary talks to establish the plan, signing new import contracts, or looking to buy production plants.

Japanese shipping companies like Nippon Yusen Kabushiki Kaisha are designing boats running on this type of fuel: the world’s first liquefied hydrogen carrier is now waiting at the port of Kobe for a trial run to Australia – 115 meters is not nothing.

Other firms are investing in a direction where hydrogen will be democratized. Toyota Motor Corp. is pushing for more hydrogen-fueled vehicles, which had a low level of adoption so far, because of hight costs due to the lack of scale.


Japan plans to be the leader in fuel cell vehicles (Source: Statista)Japan plans to be the leader in fuel cell vehicles (Source: Statista)


Utility companies like Kawasaki Heavy Industries are developing the technology needed to handle liquefied hydrogen, including tanks and pipelines. They have also built a globe-storage tank on the bay, which could become Japan’s first liquefied-hydrogen loading terminal.

Price will be one of the main challenges to tackle, as it will cost around 24% more to produce electricity with a 20% ammonia mix rather than just burning coal. But executives are confident that they can make it work with incentives and government support.

Whether the plan works or not, things are changing, and countries are looking for solutions adapted to their capacity. Will Japan’s plan on hydrogen and ammonia pay out? Only time will tell, but things are moving.  


The globe-shaped storage built by Kawasaki Heavy Industries 


How Japan’s Big Bet on Hydrogen Could Revolutionize the Energy Market, in the Wall Street Journal

Green hydrogen's share of global H2 market could jump to 10% by 2030: Fitch Solutions, in Upstream

Ammonia—a renewable fuel made from sun, air, and water—could power the globe without carbon, in Science Magazine

Ambitious but controversial: Japan's new hydrogen project, in the Japan Times


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