Publication date: July 29, 2024
Hydrogen, Ammonia Support Schemes Likely to Accept Applications From August
Japan’s Ministry of Economy Trade and Industry (METI) and the Agency for Natural Resources Energy (ANRE) announced that they may start accepting applications for funding that will support hydrogen and ammonia suppliers, as early as next month. They will also subsidize feasibility studies for establishing production and import facilities nationwide, and possibly allow funding applications before the studies are complete. The objective is to begin supply of these fuels by FY2030.
The subsidy will provide differential support between the price of the fossil fuels being replaced and the cost of the new fuels to certified suppliers for a period of up to 15 years. It applies to suppliers of low-carbon hydrogen and its derivatives, which include ammonia, synthetic methane, and synthetic fuels. Both domestically produced and imported hydrogen are eligible for these subsidies and if applications open in August, project selections are expected to be made by the end of the calendar year.
Subsidization Strategies and Expected Impact
METI has opted to focus on providing price differential support to upstream projects and those that have longer lead times, but is considering using GX transition bonds to support the development of midstream infrastructure, with prices to be determined under a “contracts-for-difference” mechanism. Under the Hydrogen Society Promotion Act, this early-stage subsidization is expected to play a pivotal role in facilitating the establishment of robust hydrogen and ammonia supply chains.
By providing essential capital for infrastructure and technology, these subsidies can enable companies to invest in research and development, scale operations, and build partnerships. This financial support also facilitates market entry, workforce training, and compliance with regulatory standards, fostering innovation and differentiation within the industry.
With project selection expected by year-end, it will be interesting to see the number of projects that apply in the first instance and the criteria for their selection.
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