Global leaders series explores national hydrogen strategies around the world
Excitement around hydrogen is growing fast in Canada. The federal government released a new Hydrogen Strategy last fall, and provinces have been following suit. This includes here in Ontario, where NII has been invited to participate in a new government working group that is developing a strategy for a hydrogen future.
But Canada is not alone in pursuing this energy source. In fact, many other countries are well ahead of us in developing national hydrogen strategies. A 2019 Australian report studied 19 of these strategies emerging across the world, and made an important observation: most jurisdictions are developing strategies independently, rather than building on the work already done by their peers.
Here in Canada, we don’t need to start from scratch with building a hydrogen economy. We can learn from the approach being taken from other global leaders on our path to becoming global leaders ourselves.
To that end, here at the Centre we are writing a series of articles exploring national hydrogen strategies around the world. This article is the first in that series and starts with one of the most prominent global leaders on hydrogen: Japan.
Japan’s approach to hydrogen
Hydrogen as a source of energy security
Japan has been investing in hydrogen since at least the 1970s, in the wake of the global oil crisis. Like many countries, Japan today sees hydrogen as a leading fuel for tackling some of the toughest emissions-reduction challenges, such as for vehicles, transport, and industry.
In late 2020, in one of his first acts in office, new Prime Minister Yoshihide Suga announced that Japan would join other nations in targeting net-zero emissions by 2050. He added, “We see hydrogen, of which there is inexhaustible deposits, as a new power source. We will create hydrogen airplanes and hydrogen cargo ships.”
But for Japan, securing clean energy sources is about more than just emissions reduction—it is a matter of energy security. As an island nation with little domestic energy capacity, Japan needs reliable and diversified energy sources to protect its economy. Today, Japan is heavily dependent on oil shipped from the Middle East via sea lanes in the South China Sea. These supply lines leave the country vulnerable to a host of geopolitical disruptions.
This helps explain why last year’s budget included over 70 billion yen (837 million CAD) devoted to hydrogen development, with next year set to be nearly 85 billion yen (one billion CAD). As part of COVID-19 stimulus, Japan has announced an additional 24 billion CAD for a green technology fund, which includes additional funding for hydrogen projects.
These streams of funding are focused on specific areas of hydrogen development.
Japan is investing heavily in fuel cell research and commercialization, expanding hydrogen distribution networks, and subsidies for commercial fuel cell vehicles.
The Tokyo Olympics were to be a demonstration for the country’s vision of a “hydrogen society”, with a section of the Olympic Village powered by hydrogen, and hydrogen-fueled buses shuttling visitors between locations. If the Olympics go forward in 2021, we may still see a version of this demonstration.
Building reliable supply
Given its lack of domestic energy capacity, Japan intends to be a major importer of hydrogen. The first ship in the world designed to carry hydrogen on the open ocean is set to make its inaugural trip from Japan to Australia this year.
The Suiso Frontier, built by Japan’s Kawasaki Heavy Industries, will carry hydrogen compressed into liquid at a temperature of minus 253 degrees Celsius. By 2030, Kawasaki Heavy plans to have a second ship also in operation, with the two bringing a combined 225,000 tons of hydrogen per year to Japan.
Another Japanese company, Chiyoda, has launched a demonstration project shipping hydrogen from Brunei to Japan. Rather than liquefying hydrogen, Chiyoda mixes their hydrogen with toluene to create a stable substance that can be transported using existing ships. The toluene is extracted before end use. Yet another company, Toshiba, opened a new solar power farm in 2020 dedicated solely to hydrogen production.
This budding hydrogen supply is used to supply a growing list of demonstration projects funded by the government, including a hydrogen-powered hotel, and a project to blend hydrogen with town gas.
Betting on fuel cells
Given Japan’s history in the automobile industry, it is no surprise that hydrogen fuel cell vehicles feature prominently in the country’s hydrogen strategy.
Globally, some observers have been skeptical of the potential of hydrogen-powered personal vehicles (Elon Musk has infamously called hydrogen-powered cars “mind-bogglingly stupid,” though there is no secret about his agenda). It is true that today fuel cell cars cost about twice as much as battery-powered ones and are more than twice as expensive to refuel. With their high price tag and the steep cost of building a new hydrogen refueling network, fuel cell vehicles have so far struggled to compete.
Japan has been betting that these challenges may yet be overcome. The country has the largest network of hydrogen filling stations in the world, at 135. Nearly 4,000 hydrogen vehicles are currently in service; most are owned by the government, while a few are bought by wealthy, environmentally conscious enthusiasts. The government has ambitious plans to see 200,000 of these vehicles on the road by 2025.
Japanese automakers have been pioneers in developing fuel cell vehicles. Toyota developed the first hydrogen vehicle in the world in 2014, the Toyota Mirai (meaning “future”), with a new line coming in 2021. Honda developed its own model, the Honda Clarity, in 2016.
Perhaps the market for these sedans will take off. But even if it doesn’t, Japan’s expertise in fuel cells may pay off in other ways. Fuel cells are more competitive than electric batteries when it comes to large and long-range vehicles. Another Japanese company, Toshiba, is also looking into demand for its fuel cells for railroads and ships, as well as power stations.
Solving for price
The greatest barrier to hydrogen adoption in Japan (as elsewhere), is not in the technology, but in the fuel price. The Japanese government estimates that to be competitive, the price of hydrogen needs to fall to 20 yen per cubic meter (close to the current price of liquid natural gas), down from 100 yen today.
The government believes the main barrier to this price is economies of scale—they contend that with a market of 10 million tons of hydrogen per year, market forces would push hydrogen prices down to the competitive level without the need for further government intervention. With government investment to initially grow the market, Japan believes this market size could be achievable by 2030.
The other major challenge to price is developing affordable carbon capture and storage technology. The most promising sources of hydrogen for Japan come from countries that produce hydrogen using fossil fuels, such as coal plants in Australia.
For this hydrogen to be a part of Japan’s climate ambitions, the emissions from these plants will need to be captured, ensuring the lifecycle of the hydrogen is both affordable and clean.
----- Keep an eye out for more of our investigations in the coming weeks, as we explore what Canada can learn from global leaders in the hydrogen economy.
Written by David Campbell, former Director at the Nuclear Innovation Institute.
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