Publication date: April 19, 2024
Japan to Pass Bill Promoting Clean Hydrogen Supply
Japan is taking action to promote hydrogen, which is a key plank in its 2050 net zero target. As reported in an article published by Nikkei, the Japanese government plans to spend an as yet unspecified amount over the next 15 years on schemes to establish a domestic supply chain for “clean” hydrogen production.
Legislation is being prepared to set a framework for these subsidies, while also introducing new regulations and standards for the hydrogen. In February the Cabinet approved the “Bill on the Promotion of the Supply and Utilization of Low-Carbon Hydrogen, for a Smooth Transition to a Decarbonized Growth Economic Structure”. It will be submitted to the 213th Ordinary Session of the Diet, currently in session, and is expected to be enacted into law in the coming months.
Implementation and Implications of Hydrogen Subsidies
The bill aims to certify and subsidize businesses that domestically produce, import, and supply “low-carbon hydrogen and its derivatives” for energy or use as a raw material. METI will oversee certification, with necessary funds and subsidies provided by the Japan Organization for Metals and Energy Security (JOGMEC). Japan aims to boost its domestic hydrogen supply by 50% from current levels to reach 3 million tonnes by 2030, with a further target of 20 million tonnes by 2050.
The main focus of subsidies will be to offset the cost disparity with fossil #fuels, which can be considerable. METI will provide subsidies to companies that produce “clean” hydrogen, which is defined as emitting no more than 3.4kg/CO2 per 1kg of hydrogen produced. There will also be assistance for hub development.
The terms of any subsidies granted stipulate that hydrogen production must commence by FY2030 and persist for at least a decade after the cessation of government financial support. Subsidies granted are also expected to fluctuate with time, based on the extent of clean hydrogen adoption across the economy. Once passed, the new bill will greenlight paths to obtain subsidies and eligible businesses are expected to be selected by the end of 2024. Subsidies will be funded from the GX Transition Bonds, which started being issued in February of this year.
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