【News】Can Japan’s Hydrogen Strategy really lead to decarbonization?

On July 28, the Basic Policy for Realization of GX (Green Transformation) and the bill for promoting transition to the decarbonized growth economic structure, or the so-called GX Promotion Bill, were approved in a Cabinet meeting. The Japanese government positions hydrogen as one of the pillars of GX, which promotes the realization and implementation of carbon pricing. On June 6, Japan revised its “Basic Hydrogen Strategy” for the first time in six years, and announced that the public and private sectors would invest over 15 trillion yen over the next 15 years.

Revision of the Basic Hydrogen Strategy: Background

In recent years, hydrogen has been getting attention as a next-generation energy technology and as an alternative fuel for power generation. Japan has been involved in the development and demonstration of hydrogen-related technologies from a relatively early stage.

March 2015
New Energy and Industrial Technology Development Organization (NEDO) releases “Hydrogen Energy White Paper”
December 2017
Japanese government sets “Basic Hydrogen Strategy”
October 2018
Ministry of Economy, Trade and Industry (METI) and NEDO hold “Hydrogen Energy Ministerial Meeting, H2EM 2022
March 2019
Japanese government releases ”Strategic Roadmap for Hydrogen and Fuel Cells”
June 2023
Revision of the Basic Hydrogen Strategy

Following Japan’s 2050 carbon neutrality declaration announced in October 2020, the Sixth Strategic Energy Plan released in October 2021 stated that hydrogen and ammonia would cover about 1% of Japan’s energy in FY2030, and the Basic Hydrogen Strategy was revised in light of the rapid expansion of the global hydrogen market as hydrogen was positioned as an essential alternative fuel to achieve carbon neutrality.

Points of Japan’s Hydrogen Strategy

There are two major points in the Hydrogen Strategy revision: 1) the public and private sectors will invest 15 trillion yen over the next 15 years to build a supply chain for full-scale commercial use, and 2) to expand the hydrogen supply from the current 2 million tons to about 12 million tons – six times the current size – by 2040.

The Japanese government has targeted nine areas* with strategic technologies prioritized for support in which it will invest 15 trillion yen. It has also set a goal to supply 20 million tons of hydrogen by 2050, and is trying to promote the construction of hydrogen supply chains while supporting technological development, including the enlargement of vessels that transport hydrogen from overseas.

*These nine areas are: electrolysis, fuel cells, decarbonized power generation, decarbonized steel, decarbonized chemicals, supply chain, hydrogen fueled ships, fuel ammonia, and carbon recycling products.

Can hydrogen bring economic growth? 

The Japanese government emphasizes that promoting the use of hydrogen will lead not only to a stable supply of decarbonized energy, but also to economic growth, and so it aims to promote the large-scale use of hydrogen for both supply and demand sides under an integrated regulatory support system. Many Japanese companies are already promoting the business in their respective fields, including hydrogen production, transportation, and utilization.

Issues with Japan’s Basic Hydrogen Strategy

There are various issues that must be addressed in order for the Basic Hydrogen Strategy to be realized, including the development of hydrogen production technology, transportation, development of infrastructure such as hydrogen stations, safety in handling, and legislation. The selling price is another one of those issues. The Japanese government is considering a system to subsidize the price gap between hydrogen and fossil fuels and to provide support for lowering the selling price, with the ultimate goal of reducing the price of hydrogen to a level that is competitive with conventional energy sources. Additionally, the government plans to develop a system for efficient supply infrastructure, including the construction of about three large-scale and five medium-scale hydrogen supply centers over the next 10 years.

The government has stated that it will consider revising the price to an appropriate target price based on technology and international market trends, and will also consider establishing the necessary systems. However, the global competition to develop hydrogen is intensifying, and it is expected to become a bidding war to procure green hydrogen.

Will using hydrogen lead to decarbonization?

The Japanese government, which has included the use of hydrogen in its GX strategy, aims to achieve the “three birds with one stone” of decarbonization, stable energy supply, and economic growth, but if the expansion of hydrogen use goes against the decarbonization policy, this is just a case of putting the cart before the horse. Hydrogen can be made from water, but in order to provide inexpensive hydrogen to meet growing demand, most of the world’s hydrogen is currently made from fossil fuels (especially lignite and natural gas) via chemical reactions. In Europe and the United States, the use of green hydrogen (hydrogen made from renewable energy) is basically assumed, but in Japan, the use of gray (hydrogen derived from fossil fuels) or blue (hydrogen in which CO2 emitted in the manufacturing process is captured) is being promoted in favor of cheap and stable supply, which is considered problematic. Although gray hydrogen does not emit CO2 when it is burned, it does not contribute to decarbonization because it emits CO2 in the production stage.
Recently, because there has been an increase in the use of color-coding based on the manufacturing process, etc., a movement has emerged to instead evaluate hydrogen based on its emission intensity, rather than by color.

Questions regarding Japan’s Basic Hydrogen Strategy

From a decarbonization perspective, it is essential to use hydrogen that emits less or zero CO2 through its entire life cycle, not only during production. The US and European strategies focus on increasing the production of hydrogen from renewable energy sources. However, it is problematic that the Japanese strategy focuses on accelerating the construction and development of the hydrogen supply chain and for the time being accepts hydrogen derived from fossil fuels. Additionally, although the Basic Hydrogen Strategy indicates the expansion of hydrogen use and the target volume, it does not provide any indication when the goal is to switch to production of hydrogen from renewable energy sources, or how much of the target volume will come from renewable energy sources. This makes one wonder whether the expansion of hydrogen use under the Basic Hydrogen Strategy can be a true countermeasure to tackle climate change.


  • Until when will gray hydrogen be accepted? (When will the switch from gray to green hydrogen be?)
  • How much renewable energy-derived hydrogen will be increased by when (target year and quantity of hydrogen from renewable energy sources)?
  • Target figures are given for the amount of hydrogen used, but what is the target for increasing domestic production (from the perspective of energy security, when and how much will be dependent on imports)?
  • If the price of renewable energy does not fall, the price of hydrogen will not fall either. What measures are being taken to reduce the price of domestic renewable energy?


Basic Hydrogen Strategy (PDF)

Position Paper: Revised Basic Hydrogen Strategy Offers No Clear Path to Carbon Neutrality (Link)
IRA: Towards Clean Hydrogen Leadership in the U.S. (Link)
REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition* (Link)