Japan’s Hydrogen Society Promotion Act, which was enacted in Might this 12 months, got here into impact on October 23. Primarily based on Japan’s Fundamental Hydrogen Technique, revised in June final 12 months, the legislation goals to facilitate the promotion of low-carbon hydrogen and its derivatives, reminiscent of ammonia and methylcyclohexane (MCH), by subsidizing hydrogen enterprise operators that plan to contribute to creating hydrogen vitality provide chains and to establishing hydrogen infrastructure hubs. Notably, the subsidies concentrate on the worth hole between the prices for home or abroad hydrogen manufacturing and the worth of typical fuels. They’re additionally supposed to help engineering and development prices for the creation of home hydrogen-related infrastructure.
The enactment of this laws took longer than anticipated; the Japanese authorities had deliberate to implement the legislation by the summer season of 2024. Regardless of the delay, Japanese corporations have invested in hydrogen vitality companies, pursuing a hydrogen economic system. Japanese companies have been racing to enter the hydrogen market, leading to a hydrogen rush in Australia.
The Australian authorities launched its new Nationwide Hydrogen Technique on September 13, which was a revised model of the unique technique first formulated in November 2019. The 2019 Hydrogen Technique emphasised the significance of “clear hydrogen,” together with “blue hydrogen” (primarily produced by nationwide fuel, together with carbon seize and storage expertise or CCS). Alternatively, the 2024 Hydrogen Technique beneath the Albanese administration focuses on the manufacturing of “inexperienced hydrogen,” derived from renewable vitality. Due to this fact, it’s truthful to argue that Australia’s new Nationwide Hydrogen Technique was revised based mostly on the vitality and surroundings coverage of the Labor Occasion, which promotes inexperienced hydrogen moderately than blue hydrogen in addition to CCS expertise.
On November 14, Nikkei Shimbun reported that Kawasaki Heavy Industries (KHI) had needed to completely revise its plans for hydrogen growth in Australia. Though KHI had deliberate to construct a hydrogen vitality provide chain between Japan and Australia, as showcased within the Suiso Frontier undertaking, the procurement of hydrogen from Australia turned out to be unfeasible because of the delay in securing permission for development contained in the nation. KHI’s choice was not that stunning for hydrogen coverage analysts, given the Victorian authorities’s steady debate on the technological limitations of CCS. Victorian Vitality Minister Lily D’Ambrosio has challenged Japanese corporations, together with KHI, to show that they’ll seize carbon dioxide emitted within the technique of blue hydrogen manufacturing within the state.
On November 16, Nikkei Asia reported that Japan’s Kansai Electrical Energy had determined to withdraw from a inexperienced hydrogen manufacturing undertaking in Queensland, Australia, additionally involving Japanese buying and selling firm Marubeni, Japanese industrial fuel firm Iwatani, and Australian vitality infrastructure firm Stanwell. With a funds of 117 million Australian {dollars}, the undertaking aimed to provide 70,000 tonnes of inexperienced hydrogen by 2028. Because of the rising price of electrical energy lately, nonetheless, Kansai Electrical Energy got here to the conclusion that it might be troublesome for the undertaking to make a revenue. Though Marubeni and Iwatani stay concerned within the undertaking, it’s unsure that the opposite corporations can proceed with out the help of the enormous Japanese electrical firm.
KHI and Kansai Electrical Energy should not the one corporations that determined to tug out of hydrogen initiatives in Australia. As a matter of reality, some Australian corporations made the identical selections on their hydrogen initiatives. The Australian Monetary Overview revealed on July 14 that Fortescue would minimize 700 jobs and slim down its inexperienced hydrogen initiatives. Fortescue will not be giving up on its hydrogen vitality enterprise, however it has judged that inexperienced hydrogen initiatives are too costly given the vitality prices influenced and aggravated by the continued conflicts and geopolitical instabilities in Europe and the Center East.
Likewise, Australia’s ABC Information reported on October 3 that Origin Vitality has additionally introduced its retreat from a inexperienced hydrogen undertaking in Hunter Valley of New South Wales. It is likely one of the largest inexperienced hydrogen crops within the nation, however Origin Vitality defined that the “gas is just too costly to provide.” What’s extra, the corporate notified buyers that it “intends to stop work on all hydrogen growth alternatives” – disappointing Federal Local weather Change and Vitality Minister Chris Bowen, who has spearheaded the federal authorities’s hydrogen initiatives.
These selections might need a damaging impression on the Albanese authorities’s plan to make Australia a “hydrogen superpower” with greater than AU$8 billion of taxpayer-funded incentives. Relating to the withdrawal of main gamers from the hydrogen sector, Australian Shadow Minister for Local weather Change and Vitality Ted O’Brien argued that “we have to be shade blind in terms of low emissions applied sciences together with blue hydrogen and pink hydrogen [produced by nuclear energy]” with a view to make Australia a profitable hydrogen superpower.
Along with the Japanese and Australian main corporations, different vitality corporations of international nations have made related selections to reduce or withdraw investments in hydrogen companies across the globe. Shell was one of many first corporations to withdraw from a inexperienced hydrogen undertaking in Australia. Shell and Australian metal firm BlueScope had agreed to cooperate on the manufacturing of a inexperienced hydrogen electrolyzer plant on the Port Kembla Steelworks and the event of a hydrogen hub within the Illawarra, New South Wales in 2021. Nonetheless, Shell determined to step again from the inexperienced hydrogen initiatives within the following 12 months. In September this 12 months, Shell introduced it might scrap a blue hydrogen undertaking in Norway due to an absence of demand.
On August 15, Denmark’s Orsted introduced that it might cancel a inexperienced hydrogen-to-methanol undertaking in Sweden, two years after its closing funding choice. Furthermore, Orsted reportedly determined to withdraw from a number of wind-powered inexperienced hydrogen initiatives in Denmark.
Additionally, Reuters reported on September 20 that Norway’s Equinor had scrapped its undertaking to export blue hydrogen to Germany because of the excessive price and an absence of adequate demand. In January 2022, Equinor and Germany’s RWE had signed a memorandum of understanding for the blue hydrogen undertaking, which might make the most of the world’s first offshore hydrogen pipeline. In the long run, Equinor judged that the pipeline can’t be considered economically viable.
Apparently, main hydrogen vitality operators all over the world have been confronted with the issue of rising vitality prices and funding dangers within the growth of the hydrogen and ammonia companies and the creation of hydrogen vitality provide chains.
Does this imply the top of Japan’s hydrogen rush in Australia and the world? It’s nonetheless untimely to leap to such a conclusion at this stage; nonetheless, the Ishiba authorities must make additional coverage measures and provide monetary help for the event of home hydrogen infrastructure in addition to international hydrogen vitality provide chains. From the attitude of Japanese hydrogen vitality enterprise operators, the Albanese administration in Australia would additionally must rethink its hydrogen coverage in order that Australia might turn out to be a dependable hydrogen vitality accomplice of Japan.
Including one other complication, U.S. President-elect Donald Trump and adviser Elon Musk should not supportive of the event of hydrogen vitality, and the U.S. hydrogen technique beneath the Trump administration might be unsure. Each Japan and Australia ought to proceed to strengthen their vitality ties as they push for carbon neutrality in order that the bilateral hydrogen vitality provide chain might stay alive and sustainable within the Indo-Pacific period.