The Japanese government plans to provide financial support to encourage Japanese companies to produce hydrogen and ammonia. The government will enable trading companies and others to invest in and guarantee loans on overseas projects via the Japan Oil, Gas and Metals National Corporation (JOGMEC), an organization under the jurisdiction of the Ministry of Economy, Trade and Industry (METI). Hydrogen and ammonia have gained attention as carbon-free fuels that do not emit carbon dioxide (CO2). The government plans to ensure a stable supply of these fuels by providing public assistance.
To date, JOGMEC supports Japanese companies to develop and procure petroleum, natural gas, and mineral resources. The law on which JOGMEC is founded did not have stipulations on hydrogen and ammonia, both of which are said to be next-generation fuels. In order to enable JOGMEC to give financial support to hydrogen and ammonia projects, the government started deliberations to amend the law, which will allow JOGMEC to invest and guarantee loans on projects to produce such fuels.
The Japanese government has announced goals to reduce greenhouse gases by 46% compared with 2013 figures by 2030, and reduce these gases effectively to zero by 2050. The government is pressed to make extensive use of decarbonized fuels including those for thermal power, which is expected to be in demand.
About 40% of Japan’s CO2 emissions are due to thermal power. The effect of reducing greenhouse gases will be large if decarbonized fuels such as hydrogen and ammonia can replace coal. The Green Growth Strategy, which the government announced at the end of 2020, set a benchmark that 10% of the 2050 energy mix be composed of hydrogen and ammonia-powered thermal energy. It is expected that much of the hydrogen and ammonia will be procured from overseas, and it will be essential to establish a stable procurement route at an early stage.
The Japanese government provides funds of about 50 billion yen via JOGMEC to petroleum and natural gas projects. The government will divert necessary funds to hydrogen and ammonia projects depending on their number. This plan will be part of the next Strategic Energy Plan to be formulated in the summer of 2021.
Hydrogen and ammonia do not emit CO2 upon combustion. Current methods to produce hydrogen and ammonia use fossil fuels, however, and CO2 is emitted in the production process. METI will allow JOGMEC to invest and guarantee loans in carbon capture and storage (CCS) projects to recover CO2 emitted during hydrogen production to store underground. Project costs can range from one hundred to several hundred billion yen. Some resource-rich countries have mandated CCS in the development of their resources.
The government will launch a project to search for overseas locations suitable for CCS using the research vessel Tansa. Oil and gas fields after extraction are possible locations. The project will survey whether the geological strata of candidate locations can support stable CO2 storage. Although technology for CO2 storage has been established, there may be competition to gain rights to locations for stable storage in the future. The government plans to strengthen relations with resource-rich countries with suitable locations.