Market Overview

Hydrogen can be produced from various resources such as water, biomass resources (sewage sludge, livestock excrement, etc.), and fossil resources without emitting CO2 when combustion. It is the energy that contributes to reducing CO2 emissions owing to energy, and to reinforcing energy security that safely supplies energy regardless of changes in politics, economy, or international situations.

In Japan, hydrogen is positioned as the key technology to realize carbon neutrality in the industrial and transportation sectors, expanding the technological development and demonstration that lead to propelling the use of hydrogen and increasing the hydrogen supplies. There are attempts by municipalities to create a hydrogen energy production model that utilizes local resources, aiming to achieve local production and local consumption of energy and BCP (Business Continuity Planning) measures when a disaster occurs.
In the future, together with increase in the number of hydrogen production plants that are planned to supply hydrogen mainly for various energy applications, such as electricity generation, machinery power source, heat supplies for factories, etc., the volume of imported hydrogen is expected to grow as well.  If the efforts on hydrogen energy by Japanese government, municipalities and private companies have been in progress as planned, the hydrogen energy supplies in Japan are expected to reach 1 million tons by FY2028, 2 million tons by FY2029, and 3 million tons by FY2030.

Noteworthy Topics

Business Models to Manufacture and Supply Green Hydrogen

Hydrogen that has been created by means of non-CO2-emitting methods is called “green hydrogen”. The representative method of creating green hydrogen is water electrolysis via electricity generated by renewable-energy sources. In Japan, such creation/supply of green hydrogen from water electrolysis is under consideration or is being implemented in Hokkaido, Fukushima, or Yamanashi, highly potential area for renewable energy.

In the areas where the business of green hydrogen manufacturing and supplying through water electrolysis has started, private companies, municipalities, and public offices are aligned to build supply chains and expand destinations of hydrogen.
While these attempts explore new clients for hydrogen supply, they have been pointed out with some challenges, such as stable operation of hydrogen production plants and reduction of hydrogen supply costs. To increase the volume of green hydrogen supplies in Japan, it is important to horizontally develop those business models that have been preceded, while addressing technological development that leads to solve the challenges.

Future Outlook

The regions such as Kanto and Tokai, which have large-scale industrial districts in their coastal areas have potential demand for vast volume of hydrogen energy for backbone electricity sources and factories. Because such areas need to stably procure a large amount of low-cost hydrogen energy, their utilization of hydrogen energy is likely to center on imported hydrogen at first. On the other hand, the regions like Hokkaido and Tohoku where there is high potential for producing renewable energy, it is possible to implement the local production and utilization of green hydrogen energy generated via water electrolysis.

In 2030s to 2040s, if Japan continues the new establishment and increase in hydrogen generation plants in and out of the country, while reducing costs for renewable energy, which is likely to spread green hydrogen generated via water electrolysis, the hydrogen energy supplies in Japan are projected to increment to 7 million tons by FY2035, 12 million tons by FY2040, and 20 million tons by FY2050.

Research Outline