There are a few countries actively promoting hydrogen as a versatile energy carrier that can be produced with low CO2 emissions, but the developments in Japan, which strives to secure a pioneering position here, are particularly interesting to follow. The Hydrogen Ministerial Meeting, which took place in Tokyo in autumn, brought together more than a thousand attendees, including ministers, entrepreneurs and experts to discuss global rules for the production and sale of liquefied gas and carbon capture and storage (CCS) technologies.
Japan's Basic Hydrogen Strategy
Japan was the first country to adopt a "Basic Hydrogen Strategy" as early as 2017. This strategy primarily aims to achieve cost parity with competing fuels such as gasoline in the transportation sector or liquefied natural gas (LNG) in power generation and covers the entire supply chain from production to downstream market applications.
To this end, the government already six years ago began investing in R&D and providing, including support for low-cost, zero-emission hydrogen production, an expansion of the hydrogen infrastructure for import and transport abroad within Japan, and an increase of hydrogen use in various areas such as mobility, cogeneration of power and heat, as well as power generation.
However, even in Japan the hydrogen market is not yet economically viable. At present, almost all hydrogen and fuel cell technologies are highly dependent on public funding. The retail price for hydrogen is currently around 100 yen per cubic metre (yen/Nm3). The goal is to reduce it to 30 yen/Nm3 by 2030 and to 20 yen/Nm3 in the long term.
Increasing international cooperation anticipated
Japan's strategy could have a positive global impact and in particular contribute to the creation of new synergies regarding international energy trading and business cooperation. These will be crucial to drive development and make technologies more affordable.
Japanese companies are already involved in international hydrogen projects such as in Brunei, Norway and Saudi Arabia. Just recently Kawasaki Heavy Industries also announced the construction of a liquefaction plant, storage facility and loading terminal for hydrogen export to Japan in the Australian state of Victoria as a pilot project for 2020/2021.
The fact that hydrogen is obtained from lignite, as in the case of Australia, does not seem to be of concern. For the Japanese government, the top priority is for hydrogen to become a cheaper energy carrier and thus more attractive for the industry. According to the roadmap of the Japanese Ministry of Economy, Trade and Industry, Japan expects hydrogen technologies to become profitable by 2030. Only afterwards the Japanese government plans to focus more on emission-free hydrogen production.
A good example of green hydrogen production is the Fukushima Hydrogen Energy Research Field (FH2R) project, which will be completed next spring and will become the world's largest plant for the production of hydrogen from renewable energy sources. Equipped with a 10’000 kW hydrogen production plant and using renewable energy such as solar power, up to several hundred tons of hydrogen will be produced every year.
Market growth expected to reach JPY 408.5 billion by 2030; special focus on hydrogen fueling stations
According to a 2019 study by market research company Fuji Keizai, the hydrogen market in Japan is expected to grow 56-fold to JPY 408.5 billion (approx. CHF 3.7 billion) by 2030. Increasing demand for hydrogen will have a particular impact on the market for hydrogen filling stations. This market is expected to grow 6.5 times to JPY 37.2 billion (approx. CHF 328 million) by 2030. The number of fueling stations will approximately rise from 111 at present to 581 by 2025, and then to 1.321 throughout Japan by 2030.
Toyota, Honda, Nissan, Tokyo Gas and Iwatani Corp. together with 6 other companies, including Japanese infrastructure developers and investment companies, founded the joint venture “Japan H2 Mobility (JHyM)” in 2017 to accelerate the deployment of hydrogen filling stations throughout Japan with the help of government subsidies. In cooperation with the Japanese government, JHyM plans to build a total of 80 new hydrogen filling stations by early 2022. The joint venture now has more than 20 participating companies.
The Association of Hydrogen Supply and Utilization Technology (HySUT) draws attention to the fact that in for the number of hydrogen fueling stations to increase, there need to be both a reduction in costs and an increase in reliability. One of the most important factors to achieve this would be the establishment of a supply chain, in which all filling station components such as production unit, control panel, safety equipment and dispenser are offered under uniform hydrogen component standards, which is not the case at the moment. Uniform standards would also contribute to shortening design and production times and to being more flexible, when it comes to combining components from different manufacturers.
The Japanese government also plans to adopt reforms to the current regulations to facilitate further construction of hydrogen stations. For example, in February 2018, METI (Ministry of Economy, Trade and Industry in Japan) began to relax the provisions of fire safety legislation that previously hindered the expansion of such stations. This will help gas station operators to install hydrogen stations in the immediate vicinity of conventional filling stations and thus integrate the new technology into existing locations.
According to Japan's Roadmap, repair and operating costs of hydrogen fueling stations are to be halved by the end of 2020 as compared to 2016, and further reduced by 2025 with the help of technological innovations. This will bring opportunities for cost-reducing products from abroad as well.
Increasing use of fuel cells in various industries
The number of fuel cell vehicles worldwide was 12,900 at the end of 2018, of which Japanese companies, led by Honda and Toyota, produced about a quarter. According to the Fuji Keizai study, by 2030 the use of vehicles with built-in fuel cells in Japan will increase to 636,900, in detail 621,000 cars, 1,300 buses and 14,600 forklifts. The roadmap of the Japanese government envisages a decline in the price premium for fuel cell vehicles compared with hybrid vehicles from JPY 3 million (approx. CHF 26’500) to JPY 0.7 million (approx. CHF 6’200) by 2025.
In order to increase general acceptance of hydrogen among the population, fuel cell vehicles will also be used as official means of transportation during the Tokyo Summer Olympics 2020; Japan aims at operating 100 fuel cell buses; in addition, Toyota will provide 500 of its Mirai vehicles for transport between the venues. Furthermore, hydrogen energy from Fukushima will be actively used for the Olympic Village, which will serve as a model for the realization of a hydrogen society.
Toyota Motor recently commissioned compact solar hydrogen generators ("SimpleFuel") at its Motomachi plant in anticipation of an increasing demand for fuel cell forklifts. Using such a generator, 7-8 FC forklifts per day can be refueled. The company plans to replace its current forklifts with hydrogen forklifts in order to reduce CO2 emissions at its production site.
Another project of the near future is a hydrogen train; JR East Japan announced that it would develop a rail vehicle powered by a hybrid system that combines fuel cells and lithium-ion batteries. First test runs are planned for 2021. JR East will spend approximately JPY 4 billion (CHF 35.3 million) on the development of the two-wagon train and plans to commercialize fuel cell trains by 2024. The train will have a maximum speed of 100 km/h and is expected to cover about 140 kilometers per hydrogen tank. The test runs are going to take place on several JR East lines in the greater Tokyo area.
In terms of the home market sector, manufacturers such as Panasonic have been producing fuel cells for single-family homes, so-called "Ene Farms", which municipal gas suppliers have been developing together with technology groups since ten years. These technical developments have already progressed so far that the business is now completely independent of government subsidies, and companies have been initiating exports to foreign markets, as well.
Fuel cells for larger buildings are also slowly gaining ground. Toshiba Energy Systems & Solutions recently started supplying stations, hotels and baseball stadiums, as well as their newest client, Asahi Breweries with its H2One ™ hydrogen cell. "H2One ™" is a fully integrated stand-alone system that is CO2-free and environmentally friendly.
Market opportunities for Swiss companies
Strong growth is expected for the rising hydrogen market in Japan in the coming years. By entering the market early, Swiss producers in this sector, in particular manufacturers of components for hydrogen fueling stations, could secure the advantage of getting in touch with Japanese companies before the supply chains in this sector become fully established.
The "International Hydrogen and Fuel Cell Expo" (FC Expo), which takes place during the "Smart Energy Week" in Tokyo, offers a good forum for an initial peek into the Japanese market. (next date: 26.-28.02.2020)