The Japanese government has begun a month-long process to invite public comments on a set of draft basic principles and criterion for the country's new cost-for-difference hydrogen subsidy.
The government is seeking public comments from 6 pm local time (0900 GMT) on Aug. 7 until 6 pm on Sept. 11 on the set of draft government and ministerial ordinances pertaining to the basic principles and criterion associated with the country's Hydrogen Society Promotion Act.
The move comes as the government aims to enforce the ordinance around this summer, ahead of inviting applications for the cost-for-difference hydrogen subsidy, following the passage of the Hydrogen Society Promotion Act May 17.
In its draft basic principles sought by the Ministry of Economy, Trade and Industry and the Ministry of Land, Infrastructure, Transport and Tourism, the government has outlined requirements for low carbon hydrogen supply projects to be considered for the cost-for-difference hydrogen subsidy.
To be considered for the subsidy, hydrogen supply projects must have plans that contribute to Japan's stable supply by providing a minimum of 1,000 mt/year of low carbon hydrogen, producing low carbon hydrogen, helping diversify supply sources, fuels and production technology, and having high upstream participation by Japanese companies with stable pricing.
The projects should also contribute to Japan's industrial competitiveness under the Green Transformation policy by supplying hard-to-abate sectors, such as steel, chemical and transportation, contributing to domestic economic growth through expandability, and achieving a speedy investment decision or start-up compared with similar projects, among other conditions.
In its separate draft criterion sought by the METI, hydrogen suppliers contributing to Japan's low carbon hydrogen supply must set and announce their supply targets. The suppliers must have plans to minimize CO2 emissions from hydrogen production to below a certain level. Projects supplying hydrogen should use renewables as the energy source, capture CO2 emitted from using fossil fuels for storage or utilization, or offset CO2 emissions in the projects by obtaining Japan's Non-Fossil Fuel Certificate or using other means.
The latest move by the government comes as Japanese companies view the subsidy, which will cover the cost of difference for procuring hydrogen and ammonia over CIF LNG or coal import prices respectively for 15 years, as a key policy support to advance hydrogen projects.
In June 2023, Japan set a goal of 12 million mt/year of hydrogen use by 2040 in connection with amendments to the national hydrogen strategy to bridge the gap between its initial target of 3 million mt in 2030 and 20 million mt in 2050, as part of efforts to accelerate the development of low-cost hydrogen supplies.
Under the current sixth Strategic Energy Plan formulated in October 2021, Japan plans to introduce 1% of hydrogen/ammonia in its power generation fuel mix by fiscal year 2030-31 (April-March), when it also aims to begin 30% co-burning of hydrogen at gas-fired power plants or mono-burning of hydrogen for power generation, as well as commence 20% co-burning of ammonia at coal-fired power plants.
