Driven by ambitious government initiatives and a commitment to reducing carbon emissions, hydrogen energy plays an important role in Japan's energy mix. As the country aims for carbon neutrality by 2050, investments in hydrogen infrastructure and technology are rapidly increasing.

This creates a unique opportunity for businesses to enter a dynamic market with significant growth potential. With a supportive regulatory environment and rising consumer demand for clean energy solutions, now is the perfect time to capitalize on the burgeoning hydrogen sector in Japan. Innovators and investors alike can play a pivotal role in shaping a sustainable energy future.

The Current State of the Hydrogen Energy Industry in Japan

To understand the current state of the hydrogen power industry in Japan, we’ll have a look at its market size and top players in Japan.

Japan’s Hydrogen Energy Market Size

Hydrogen is poised to become a leading energy source. It can generate electricity and heat without emitting carbon dioxide. Moreover, it is abundant in water and various fossil energy sources.

Japan, with its limited energy resources, has taken the lead by introducing the Basic Hydrogen Strategy in 2017. This initiative focuses on advancing hydrogen-related technologies.

A report from the European Patent Office and the International Energy Agency highlights Japan's significant role in hydrogen innovation. From 2011 to 2020, Japan filed 24% of global hydrogen-related patent applications, ranking first. The report underscores Japan's technological edge as it develops and implements new hydrogen technologies ahead of others.

In June 2023, the Japanese government updated its Basic Hydrogen Strategy to support corporate efforts. This strategy highlights nine key technologies, including fuel cells and water electrolysis devices. The government plans to invest over JPY 15 trillion ($98.8 billion) over the next 15 years and targets an annual hydrogen usage of 12 million tons by 2040.

To support this goal, the Tokyo Metropolitan Government increased its hydrogen budget for fiscal year 2024 to JPY 20.3 billion ($134 million), a 1.8-fold increase from the previous year. Tokyo intends to boost the adoption of commercial fuel cell vehicles, like trucks and buses, which show great promise for hydrogen use.

Additionally, the government intends to expand large-scale hydrogen stations and build facilities on publicly-owned coastal land. These facilities will produce and supply green hydrogen using renewable energy sources.

Key Players in the Japanese Hydrogen Energy Sector

Let’s take a look at some important companies in Japan that are working with hydrogen energy: 

Nippon Steel

In December 2023, Nippon Steel made headlines using hydrogen in blast furnaces, achieving a groundbreaking 33% reduction in carbon dioxide emissions—setting a world record.

The company collaborated with Kobe Steel, JFE Steel, and the Japan Research and Development Centre for Metals to transcend this technology. Together, they aim to develop hydrogen-based steelmaking methods, including direct reduction of iron ore with hydrogen.

This hydrogen steelmaking initiative, called Green Innovation in Steelmaking, is part of the Green Innovation Fund projects launched by the Ministry of Economy, Trade and Industry. It seeks to decarbonize the steel industry through public-private collaboration.

ENEOS

ENEOS, one of Japan's largest oil and energy companies, is transitioning into the hydrogen energy market. The company is involved in the production, storage, and distribution of hydrogen fuel.

ENEOS is also expanding its network of hydrogen refuelling stations to support the growth of hydrogen-powered vehicles across Japan.

Kawasaki Heavy Industries

Kawasaki Heavy Industries is working to establish an international hydrogen supply chain, recognizing that domestic production alone may not meet future demand.

In 2010, the company articulated its vision to generate significant amounts of hydrogen by leveraging competitively priced renewable energy and exploring untapped resources internationally. They plan to transport it to Japan by ship for domestic use. This initiative began when hydrogen as a fuel was still largely unrecognized worldwide.

In spring 2022, Kawasaki Heavy Industries completed a successful pilot project, supported by the governments of Japan and Australia, to transport liquefied hydrogen from Australia to Japan by sea. Key to this success was the development of the world’s first and only liquid hydrogen carrier, the Suiso Frontier.

This vessel functions like a giant thermos, transporting large quantities of liquid hydrogen at an ultra-low temperature of minus 253 degrees Celsius without requiring additional cooling. Kawasaki aims to make hydrogen supply a viable business by 2030 and is working to scale up both ships and onshore storage tanks for mass hydrogen supply.

Iwatani Corporation

Iwatani is the leading hydrogen supplier in Japan, participating in all aspects of the hydrogen supply chain. They focus on hydrogen production, storage, and distribution, particularly in building refuelling infrastructure for fuel cell vehicles. Their work is pivotal in advancing Japan's hydrogen-powered transportation network.

Kobe Steel

Kobe Steel contributes to hydrogen infrastructure by developing materials and technologies crucial for hydrogen production and storage. The company also works on hydrogen-based steel production processes, aiming to decarbonize heavy industries in Japan.

Mitsui & Co.

Mitsui is actively engaged in international hydrogen projects, with investments in hydrogen production, storage, and transportation. They collaborate with global partners to create a robust hydrogen supply chain and are exploring large-scale hydrogen exports from Australia to Japan.

Sumitomo Mitsui Financial Group

As a financial services company, Sumitomo Mitsui supports the development of the hydrogen economy by financing hydrogen-related projects. This includes investments in hydrogen infrastructure, clean energy projects, and initiatives to promote sustainable energy solutions.

Kansai Electric Power

Kansai Electric is investing in hydrogen as part of its strategy to decarbonize the energy grid. The company explores hydrogen blending in thermal power plants to reduce carbon emissions and plans to integrate hydrogen into its long-term energy generation portfolio.

Toshiba

Toshiba plays a key role in hydrogen cell technology, particularly for commercial buildings. They manage hydrogen energy projects like the Hokkaido dam-based hydrogen production. Toshiba's innovations focus on using hydrogen in everyday life, including power solutions for hotels and restaurants.

Toyota Motor Corporation

Toyota is a global leader in hydrogen fuel cell technology, known for its Mirai hydrogen vehicle. The company is investing heavily in hydrogen infrastructure and innovative projects like Woven City, which will be powered entirely by hydrogen. Toyota is also coordinating multiple hydrogen projects in Japan's Chubu region.

Opportunities for Entering the Market

Looking at recent trends and favourable government initiatives, the hydrogen market in Japan is full of opportunities. Let's take a look:

Green Innovation Fund

In October 2020, Japan set a target to achieve carbon neutrality by 2050, aiming to reduce overall greenhouse gas emissions to zero. Achieving this goal requires more than ordinary efforts; it demands significant structural changes in the energy and industrial sectors, along with bold investments in innovation.

To support this transition, the Ministry of Economy, Trade and Industry (METI) established a Green Innovation Fund, amounting to 2 trillion yen. This initiative, part of the New Energy and Industrial Technology Development Organization (NEDO), focuses on specific goals shared by the public and private sectors. Over the next ten years, the fund will support companies and organizations committed to tackling ambitious challenges in areas such as research and development (R&D), demonstrations, and the social implementation of their innovations.

Basic Hydrogen Strategy

In 2017, the Japanese government introduced the “Basic Hydrogen Strategy.” This Strategy outlines a long-term goal to reduce CO2 emissions by 80 percent from 2013 levels by 2050. It includes an action plan covering the period up to 2030. 

In response to the “5th Strategic Energy Plan,” which was formulated in 2018, the Roadmap was revised for the third time. Japan’s current hydrogen program primarily relies on the Strategy and the most recent Roadmap to guide its initiatives and actions.

Japan Hydrogen Association (JH2A)

The Japan Hydrogen Association (JH2A) serves as a key national entity advocating for the interests of the entire hydrogen supply chain, boasting 453 members from various sectors, including industry leaders, academia, and other stakeholders involved in hydrogen initiatives.

Established in December 2020 by nine prominent Japanese firms, such as Toyota Motor Corporation, Iwatani Corporation, and Sumitomo Mitsui Financial Group, JH2A is dedicated to advancing a hydrogen-based society in Japan. 

Its objectives include promoting collaboration between public and private sectors and developing regulatory frameworks that facilitate hydrogen projects. The association’s overarching mission is to address global warming through the realization of a hydrogen society in Japan.

Important Factors to Consider When Entering the Japanese Market

Before entering the hydrogen energy market in Japan, there are some important factors you’ll have to consider:

Regulations  

Familiarize yourself with the regulatory framework surrounding hydrogen energy in Japan. This includes laws related to safety, environmental impact, and energy supply. Key regulations to understand include the Hydrogen Energy Law, which governs production, storage, and distribution. 

Compliance with safety standards established by the Ministry of Economy, Trade and Industry (METI) is also essential. 

Certifications  

Identify the necessary certifications for your hydrogen technologies and products. This may include ISO certifications and specific Japanese standards for safety and quality, such as JIS (Japanese Industrial Standards). Research the application process for these certifications, as it may involve rigorous testing and documentation. 

Technical Modifications  

Given Japan’s seismic activity, ensure your technology meets local standards for earthquake resilience. This may involve redesigning equipment to withstand tremors. Additionally, assess how your hydrogen solutions will integrate with existing infrastructure, such as pipelines and distribution systems. Modify your technology to ensure compatibility with local energy systems and practices. 

Key Events  

Participate in relevant trade fairs, such as the Hydrogen and Fuel Cell Expo, to showcase your technology and connect with potential partners. Attend seminars organized by industry associations or government bodies to stay updated on market trends and regulatory changes. These events also provide networking opportunities with industry leaders and policymakers. 

Collaboration Opportunities  

Explore partnerships with Japanese research institutions that focus on hydrogen technology. Collaborating with local experts can provide valuable insights and accelerate development. 

Additionally, form strategic alliances with Japanese companies in the hydrogen sector. These partnerships can enhance your market entry strategy by leveraging local networks, resources, and distribution channels. Consider joint ventures or technology-sharing agreements to strengthen your position.

Conclusion

The Japanese hydrogen energy market indeed presents exciting opportunities for growth and innovation. With a strong regulatory framework and increasing demand for hydrogen solutions, both local and international players can thrive. To succeed, it's crucial to develop a tailored market entry strategy. 

This includes understanding local regulations, forging partnerships with established hydrogen companies, and adapting services to meet the unique needs of Japanese consumers.

We at GlobalDeal specialize in facilitating market entry into Japan and might be the local partner you are looking for. We offer comprehensive services, including the development of business and marketing strategies, and connections with local partners. If you’re looking to expand into the Japanese hydrogen market, don’t hesitate to reach out for a free consultation!