It was March 2020. As the crowd gathered and the cameras rolled, the late Prime Minister Abe Shinzo stepped out of the brand new hydrogen-powered Toyota MIRAI. Wasting no time, he walked to the podium. “The world’s largest facility that creates hydrogen from renewable energy is about to start its operation,” he said. 200 tons of carbon-free hydrogen — enough to power more than half of the fuel cell cars in Japan for one year — will be produced at the facility.
The year before, Abe traveled to the World Economic Forum in Davos, where he announced that his government is aiming to lower hydrogen’s production cost by at least 90% by 2050. That would make hydrogen cheaper than natural gas in many parts of the world.
“The center stage for that ambitious goal is here,” he told his audience from the podium. “In Fukushima.”
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Today, Fukushima conjures up images of the trifecta of earthquake, tsunami and nuclear disaster. In the last several weeks, it’s also garnered attention as the origin of the treated water that Tokyo Electric Power Company began releasing into the ocean (with extensive review and approval by the International Atomic Energy Agency and the broader scientific community).
Yet when Abe took the podium, it wasn’t about any of these things. Instead, he was celebrating Fukushima’s revival as a leader in renewable energy. More specifically, he was exhorting Fukushima’s future as a green hydrogen hub.
This address was the centerpiece of the opening ceremony of the Fukushima Hydrogen Energy Research Field — shortened to FH2R — in the town of Namie in the Fukushima Prefecture.
FH2R will play a pivotal role — maybe the only role — for Japan to domestically produce green hydrogen (hydrogen created from renewable energy). Japan is already making strides in building hydrogen supply chains across the world. Sadly, most of it won’t be from clean power sources. FH2R may be the singular hope in Japan’s ambitious yet flawed hydrogen strategy.
Fukushima Hydrogen Energy Research Field
The town of Namie is a mere 4 km away from the Fukushima Daiichi Nuclear Power Station. Anyone who’s seen the March 11, 2011 tsunami can imagine the devastation that the town suffered. The 21,000 residents of the town were forced to evacuate, scattering across the country as a result. Only 2,000 people have returned.
Journalist Francesco Bassetti recently wrote how Fukushima bounced back from the triple disaster as a renewable leader. It wonderfully documents the prefecture’s commitment to building up mega solar farms as a part of its reconstruction effort. FH2R is built on this abundance of renewable energy capacity.
In 2016, three corporate giants joined arms to unveil FH2R. The companies — Toshiba, Iwatani, and Tohoku Electric Power — plus the government-backed New Energy and Industrial Technology Development Organization (NEDO) began construction in July 2018. By March 2020 and $189 million later, the project was complete. That’s when the late prime minister drove up to the opening ceremony in the blue Toyota MIRAI.
2020 was a symbolic year for the project’s completion. It was the year when the Tokyo Olympics were set to take place. Japan wanted to dazzle the world by using hydrogen from FH2R to light the Olympic flame 🔥, powering the vehicles to carry athletes, and generating the electricity to be used in the Olympic Village. Though somewhat derailed by the COVID pandemic, this plan came to fruition in the summer of 2021.
At the time, these companies and the government boasted that FH2R is the largest hydrogen-producing facility in the world. Using its 20MW solar array built on a 180,000 square meter site along with grid electricity to power a 10MW electrolyzer, its developers say FH2R can produce 1,200 normal cubic meters (Nm3) of hydrogen per hour. With a 260MW electrolyzer coming online in China this year, FH2R is no longer the world leader. Yet, there’s still no doubt that FH2R is a massive solar and green hydrogen endeavor.
The town of Namie has welcomed the project and the allure of a hydrogen society more broadly. As Sonal Patel at POWER Magazine has written, the town has committed to using hydrogen in commerce, agriculture, transportation, and education. This includes a roadside fuel cell station using hydrogen produced at FH2R. A 3.5kW Toshiba fuel cell at the roadside station generates a portion of the power and heat in the facility.
Despite the hype, it should be noted that the green hydrogen from FH2R hasn’t been commercialized yet. The government and the private-sector partners are working to lower production cost and are aiming for commercialization in 2026.
Japan’s Hydrogen Strategy
This big project in the small town is pivotal for Japan’s national hydrogen strategy. Public and private R&D on hydrogen has been going on in Japan since the 1970s. But in the last decade, hydrogen has garnered unprecedented attention. What’s new is the focus on hydrogen as a Swiss army knife of the clean energy transition and as a centerpiece of a national-level industrial policy.
The Japanese Ministry of Economy, Trade and Industry (METI) put out a Strategic Roadmap for Hydrogen and Fuel Cells in June 2014, three years after the Fukushima disaster forced the shut-down of the country’s nuclear fleet.
Then, in 2017, the government introduced a comprehensive Basic Hydrogen Strategy. Today, a total of 41 governments across the world have a hydrogen strategy in place. Japan was the first. The Strategy set quantitative targets for 2020, 2030, and 2050. It was industrial strategy par excellence. It was a statement of the government’s ambition to create a “Hydrogen Society.”
In early June this year, the Kishida administration published an updated version of the 2017 Strategy. In a nutshell, the revised Strategy sets ambitious goals for hydrogen’s use, production, and cost:
Use: Hydrogen (and ammonia, a derivative of hydrogen that makes hydrogen storage and transport easier) consumption of ~3 million tons/year by 2030, ~12 million tons/year for 2040 and ~20 million tons/year by 2050 🇦🇪
Production: Japanese companies’ combined electrolysis capacity of 15 GW by 2030
Cost: Lowering hydrogen’s supply cost from the current ¥100/ normal cubic meter (NM3) to ¥30/Nm3 by 2030 and to ¥20/Nm3 by 2050. (Or if you’d like, ¥334/kg and ¥222/kg, respectively) The ultimate goal is to make hydrogen price competitive with LNG.
Through the successive hydrogen initiatives, government ministries and private firms have been acting in concert to establish hydrogen supply chains both internationally and domestically to turn Japan into a “hydrogen society.”
As it turns out, FH2R is a crucial link in this ambitious plan. It’s one of few green hydrogen production projects in Japan (the other one is in Yamanashi Prefecture, as well as planned projects in Hyogo Prefectures and Kawasaki City). METI is asking the government for a budget of $58 million for next year to promote hydrogen R&D and transport, and FH2R is the cornerstone of its vision for a domestic hydrogen hub.
Cautious Optimism for the Hydrogen Hype
Hydrogen is undoubtedly a necessary ingredient in the decarbonization cocktail. The IEA estimates that, to achieve net-zero emissions by 2050, the world would use 530 million tonnes by then, a six-fold increase from 2020. 60% of that demand should be satisfied by hydrogen made from renewables, and the rest from natural gas with carbon capture. In a decarbonized world, hydrogen will be used to curb emissions in sectors where batteries aren’t (yet) up to the task, and solar cells and wind turbines can’t directly. That means sectors like shipping, long-haul transport, heavy industry, chemicals. In climate jargon, these are often called “hard-to-abate” sectors.
The proliferation of hydrogen strategies across the world over the last decade is one of the most astonishing wave of industrial policies in history. I regard it with cautious optimism. Japan’s strategy, particularly so.
I welcome that Japan is flexing its industrial muscle to make more of the carbon-free fuel. But disingenuousness, regulatory capture, and lack of urgency about the climate crisis got the best of Japan’s policymakers. The hydrogen strategy they crafted takes an all-of-the-above approach in both demand and supply. It envisions that hydrogen will be used in power generation, light-duty as well as heavy-duty transport, heavy industry, chemicals, and residential fuel cells. It also commits to producing hydrogen using both renewables and fossil fuels, with and without carbon capture.
Broadly speaking, there are two fundamental problems with this.
First, like everything in real life, there are trade-offs. Serious, potentially irreversible trade-offs. An all-of-the-above approach sounds prudent on paper. But outside the hard-to-abate sectors, there is little question that electrification is a better decarbonization option. In power generation, passenger transport, and the household sector, the more efficient and cheaper ways to decarbonize are solar, wind, batteries, heat pumps, and electric vehicles. Japan’s strategy risks wasting enormous capital, brainpower, specialized know-how, physical materials, as well as the future competitiveness of the companies involved.
The second problem is that the hydrogen supply chains that Japan is building are unlikely to lead to greenhouse gas reductions. Most of the increase in production will rely on natural gas and coal in Japan and abroad. To be sure, the Basic Hydrogen Strategy is careful to point out that the government will support the development of carbon capture capacity to limit emissions from these projects. But as the Renewable Energy Institute of Japan explains in depth, the emissions reduction potential of this solution is far from assured. Independent research has also found that emissions from “blue” hydrogen (made from gas with carbon capture) are likely to be more than 20% higher than burning natural gas or coal for heat.
And again, there’s a trade-off problem here, too. You can’t pour billions into supply chains that originate in fossil fuels and expect to switch over to renewables. There are lock-in implications. This problem isn’t unique to Japan. As Wenting Cheng and Sora Lee show, most countries’ hydrogen strategies take the “scale first and clean later” approach. This is why my optimism is tempered with caution.
FH2R at a Crossroads
I’m bullish on FH2R. But I’m cautious here, too. Japan’s hydrogen strategy does pay lip service to the need for domestic hydrogen supply chains based on renewables. Today, that means FH2R.
Asahi Kasei, the chemicals company tasked with developing an alkaline electrolyzer technology, aims to develop the current 10MW electrolyzer capacity into a 100MW system. That’s good news.
But then there’s METI's expansion plans for FH2R that continue the government’s emphasis on increasing the use of hydrogen for passenger transport. NEDO, for its part, is partnering with Asah Kasei and JGC to build a green chemicals plant at FH2R, where they hope to make carbon-free chemicals, particularly ammonia, by 2031. One important destination for ammonia is in the power generation sector, where the government hopes to mix it with fossil fuels in the hopes of reducing emissions. This is a strategy that, as you’re probably aware, has garnered much international criticisms of late.
I don’t doubt the late Prime Minister Abe’s words when he declared that Fukushima will be the epicenter of Japan’s Hydrogen Society. After all, the history of Japan’s economic growth is a history of successful public-private partnerships in industrial policy. But I don’t think Japan’s use of hydrogen will be wise, or that it will help the country — and the countries from which it will import hydrogen — achieve its climate goals.
With that, I’ll let Ukedon, the Namie town mascot, thank you for reading this post.