On the Prowl for A Molecule - But at What Cost?

Inside Japan's hydrogen industrial strategy

Japan is on the prowl for a molecule. A molecule that can decide the nation’s energy future. A molecule composed of two hydrogen atoms.

Toshiba and Toray are developing new technologies that would reduce the cost of producing green hydrogen. Panasonic too. Kansai Electric is considering buying hydrogen from Canada. A Japan-Australia joint venture set in motion the first steps toward a hydrogen supply chain. Hydrogen was on the agenda when Prime Minister Kishida visited Saudi Arabia and the UAE. The first hydrogen fuel station for taxis in Japan began opened for business. All of these things happened in the last five months.

Kawasaki’s liquefied hydrogen tank in Kobe (Newsweek)

Japan’s push for hydrogen is industrial policy par excellence. Industrial policy is the use of a set of policy tools to support particular industries that the state deems are strategically important.

In the post-Cold War western world, where free markets are ostensibly the norm, the term had an unfamiliar ring. Recently, industrial policy has returned. This time, it’s in the form of “green industrial policy,” the herculean effort to turn the massive ship of the fossil-based energy system to a low-carbon one. Japan’s fossil fuel ship is particularly massive — nearly 85% of the country’s total primary energy came from fossil fuels in 2022. Hydrogen is one of a whopping 14 sectors that the Japanese government has identified as “promising fields that are expected to grow” and are crucial for turning that ship.

Japan is no stranger to hydrogen. Public and private hydrogen initiatives have been ongoing in Japan since the 1970s. But what is 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, outlining quantitative targets for cost and scale of hydrogen use. Three years later in 2017, a comprehensive Basic Hydrogen Strategy introduced more quantitative targets for 2020, 2030, and the “long-term perspective of around 2050.” It’s the document - first in the world of this kind - that embodied the government’s approach to developing the hydrogen industry.

Finally, in early June this year, the Japanese government published an updated version of the Basic Hydrogen Strategy.

What is in the latest Strategy? How will it fare? At what cost?