Japan faces no room for abandoning hydrogen, confirms SMBC's sustainability chief
Japan is firmly committed to a low-carbon future, with hydrogen playing a significant role in its decarbonization strategy. However, the path to this goal is fraught with challenges, primarily high costs, infrastructure limitations, and reliance on imported fossil fuels.
One of the main obstacles is the high costs associated with hydrogen production, storage, and distribution, particularly for green hydrogen produced from renewable electricity rather than fossil fuels. The lack of widespread hydrogen storage and transport networks further complicates commercial-scale adoption.
Another issue is the continued dominance of fossil-fuel-based power generation, including coal plants and LNG, which risks locking Japan into high emissions and expensive electricity, reducing competitiveness. Additionally, the country's dependence on imported hydrogen and ammonia fuels increases vulnerability and costs.
To address these issues, Japan is pursuing several solutions. Comprehensive policy frameworks, such as the Hydrogen Society Promotion Act (2024) and the GX2040 Vision, are being developed to integrate decarbonization with economic growth and incentivize low-carbon hydrogen adoption alongside carbon capture technologies.
International cooperation and funding are also crucial. The Breakthrough Energy partnership, for example, supports biomass and green hydrogen research, aiming to scale decarbonized fuels and reduce fossil dependency.
Investment in renewable energy expansion, including solar, wind, and hydropower, coupled with energy storage solutions, is another key strategy. This approach aims to enhance grid flexibility and reduce the need for costly hydrogen-fired power generation.
Steps to improve market and regulatory conditions are also being taken. Auctions to promote hydrogen/ammonia power with adjusted price ceilings and community engagement mandates to streamline project approvals are being implemented.
While hydrogen is central to Japan's long-term carbon neutrality goal, experts caution that current reliance on fossil fuels for power and hydrogen production remains a major barrier. Priority is recommended on genuine decarbonization through renewable energies and robust infrastructure build-out to realize the promise of low-carbon hydrogen economically and sustainably.
In the United States, the Influsion Reduction Act (IRA) has created euphoria around clean hydrogen, but the future for the sector is uncertain due to economic uncertainties and potential changes in legislation. Meanwhile, in Europe, many companies are waiting to invest in green hydrogen projects until there is long-term economic certainty, supported by carbon pricing, subsidies, and consumer demand.
Despite these challenges, Japan's commitment to low-carbon hydrogen is unwavering. Companies like SMBC, which has been involved in promoting hydrogen-related initiatives, including establishing the Japan Hydrogen Association and co-leading the country's first equity fund for hydrogen, are leading the charge.
Even in the face of setbacks, such as Australian mining billionaire Andrew Forrest's Fortescue Metals axing 90 jobs in its green hydrogen division and adjusting project timelines for its green hydrogen facilities, the pursuit of a low-carbon hydrogen future continues.
In conclusion, Japan's pursuit of low-carbon hydrogen is a complex and challenging journey, but with comprehensive policy frameworks, international cooperation, investment in renewable energy, and improvements in market and regulatory conditions, the country is making strides towards a cleaner, more sustainable future.
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