On June 30, 2026, the Ministry of Economy, Trade and Industry (METI), in coordination with the Ministry of Land, Infrastructure, Transport and Tourism, announced its decision to grant financial assistance for the establishment of a supply chain for ammonia to co-fire with coal through the price difference support system under the Hydrogen Society Promotion Act (specifically, the Act on Promotion of Supply and Utilization of Low-Carbon Hydrogen and its Derivatives for Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure).
The purpose of the price gap subsidy is to provide financial support to make up for the price gap between low-carbon hydrogen / ammonia and conventional fuels. The price differential support system supported ammonia co-firing at a coal-fired power plant for the first time in December 2025.
Supporting the development of ammonia supply chain for seven companies
The approved project plans to supply low-carbon ammonia produced through water electrolysis using renewable energy by the ACME Group in Odisha, India, to seven Japanese companies. The plan includes using ammonia as a fuel for power generation, and as feedstock for chemical and other industrial applications. While the project is intended to align with decarbonization goals, the emission reduction effect is not expected to be significant as the ratio of coal is high when power companies co-fire ammonia in coal-fired power plants.
| Participant companies | Outline of project | Supply of Ammonia | Project period |
| IHI Corporation Kobelco Power Kobe, Inc. Sumitomo Chemical Co., Ltd. Nippon Beet Sugar Manufacturing Co., Ltd. Hokkaido Electric Power Co., Inc. Mitsubishi Gas Chemical Company, Inc. UBE Corporation | Low-carbon ammonia produced in India is supplied to Japanese companies. The low-carbon ammonia will be used for co-firing in coal-fired power plants and as a raw material for chemical products etc. | 228,000 tons/year | Sept 2030 – Aug 2055 |
The Tomakomai region of Hokkaido received approval for support in March 2026 regarding a plan to establish a low-carbon ammonia supply base by FY2030.
Project plans to preserve significant amount of coal-fired power under co-firing
Allocating long-term decarbonization funding to co-fire ammonia with coal contradicts the original purpose of such policies, as ammonia co-firing has limited greenhouse gas (GHG) reduction effects and serves as a life-extension measure for coal-fired power plants. Even if the imported ammonia is produced with renewable energy, as long as the co-firing rate remains at 20%, it still preserves a significant amount of coal-fired power generation.
Ammonia co-firing relies on government subsidies
Kobelco Power Kobe plans to advance its ammonia co-firing plan. Similarly, Hokkaido Electric Power has presented a roadmap to co-fire the supplied ammonia in its Tomato-Atsuma Power Station.
Out of the participating companies, Kobelco and Hokkaido Electric Power have previously won bids in the Long-term Decarbonization Power Source Auction (LTDA), a system designed to achieve both a stable power supply and decarbonization. Kobelco Power Kobe won the bid to retrofit its Kobe Power Plant No. 1 unit for 20% ammonia co-firing, and Hokkaido Electric Power has received support to begin 20% ammonia co-firing in FY2030 and a plan to aim for 40% ammonia co-firing in FY2032. Despite uncertainties of ammonia co-firing, these plans are now receiving additional governmental support.
The project lacks transparency in supply volume breakdowns
This project plan has demonstrated the economic irrationality of ammonia fuel. Directing finances from both the LTDA and price difference support under the Hydrogen Society Promotion Act presents significant financial risk, especially with unstable and unpredictable ammonia prices. Moreover, the project plan only specifies the annual supply volume during the subsidy period and participating companies have not published breakdowns of support granted, which contributes to the lack of transparency regarding the decision. Committing public funds to such long-term plans under uncertain and unclear conditions raises concerns, as the plan has not stated its actual reduction effect. There are concerns that ultimately, the costs of governmental subsidies are eventually borne by consumers through their electricity bills.
METI’s announcement states the business plan’s implementation period to run from September 2030 to August 2055, with an annual supply of 228,000 tons of low-carbon ammonia. However, METI and the participating companies have not disclosed the planned distribution amounts.
Overall, it seems unlikely that a long-term plan to co-fire imported ammonia with coal will align with the timeline of Japan’s 2050 carbon neutrality roadmap.
There are various ways to utilize ammonia. With increasing demand for low-carbon ammonia in the chemical industry and long-distance shipping, importing large quantities of overseas ammonia for fuel use can be described as a short-sighted strategy. When co-fired with coal, even green ammonia has limited emission reduction effects. Regardless of supply chain development issues, the strategy of using price difference support schemes to cover the cost gap between green ammonia and conventional fossil fuels, so that green ammonia can be co-fired with conventional fossil fuels at coal-fired power plants, is jeopardizing the achievement of decarbonization goals.
References
- Agency of Natural Resources and Energy, METI: Hydrogen Society Promotion Act, Outline of the low-carbon hydrogen supply project (in Japanese, June 30, 2026）