Begin at the beginning (I/V): nexus-integrated policies for clean hydrogen production and integration into high-priority heavy industry sectors in Japan

This article is part one of a five-part series on clean hydrogen in heavy industry sectors in Japan. You can find part two here, part three here, part four here, and part five here.

Part 1. Introduction

Considering Japanese energy and environmental situations, this research paper evaluates the country's hydrogen (H2) strategy and proposes innovative policies to produce and integrate clean H2 into its high-priority heavy industry applications. On Earth, H2 exists naturally only in the compound form with other elements in the gaseous, solid, and liquid phases despite being the most abundant element in the universe (EIA, 2022). Therefore, an energy source must separate the element from the H2-containing feedstock (DOE, 2020a). The current H2 production is costly and energy-intensive since, due to the laws of thermodynamics, it takes more energy to obtain H2 than H2 provides when this element is converted into usable energy (Economist, 2021). Depending on various production methods and technological resources, H2 can be classified as 1) black/brown (black/brown coal via gasification), 2) gray (natural gas through steam-methane reforming), 3) blue (same technologies with added carbon capture and sequestration), 4) green (renewable sources through electrolysis, water-splitting); 5) pink (nuclear energy through electrolysis), and 6) turquoise (natural gas via pyrolysis, methane thermal splitting) (H2 Green Steel; Economist, 2021). According to Lazard (2023), clean H2 consists of blue, green, or pink H2. Unused tertiary effluents from wastewater treatment, as the preferred option over potable or desalinated water, have a substantial potential to lead to the sustainable and circular production of clean H2 (especially green H2), which does not lead to water competition and stress (Woods et al.; Tak et al., 2022).

Currently, H2 is widely used in the chemical industry (as a feedstock), in refining, the steel industry (as a reducing agent), and for specific applications in other industries (IEA, 2023a). Clean H2 presents a vital opportunity for Japan amid the decarbonization transition, displacing high-carbon energy sources and carriers with low-carbon ones (Corbeau et al., 2022). As a crucial player in reducing carbon intensity in some hard-to-abate sectors (Appendix, Figure 1), the industries where emissions are difficult to avoid (Chammard, 2022), clean H2 may complement energy efficiency improvements and other low-carbon technologies in Japanese decarbonization efforts (Hydrogen Council, 2021). Clean H2 can also continue Japanese renewable electricity's growth and contribute to other policy objectives: energy access, economic development, energy security, and local air pollution (IEA, 2019). 

Japan, as the world's third-largest developed economy, faces many environmental and energy issues. First, the Japanese energy security environment is vulnerable compared to the other Group of Seven countries. For example, in 2022, the country's primary energy self-sufficiency ratio was 11% versus that of the United Kingdom (75%), the United States (106%), and Canada (179%). The revised ratio (FY2021) is 13.3% (METI, 2022a; 2022b; 2023b). This low self-sufficiency ratio is based on the scarcity of domestic fossil fuels. The country has other energy resources but does not use them to their potential (geothermal, wind, solar, tidal, and wave). For example, in 2022, Japan depended on imports for 97% of its primary energy supply, exposing itself to the high global fossil fuel price volatility during the Russia-Ukraine war. Since it lacks global natural gas or oil pipelines, Japan relies on liquefied natural gas (LNG) carrier and tanker shipments of LNG and crude oil to meet its energy demand as the world's fifth-highest energy consumer. Although Japan's fossil fuel dependence is still high, the country's consumption has been declining. For example, fossil fuel's share of Japanese electricity generation decreased to 72% in 2021 from 89% in 2012 (Appendix, Figure 2). The leading replacement sources in the Japanese generation mix have been nuclear and renewables, especially solar. Furthermore, Japan's electricity demand is projected to decrease owing to the sizable aging population decline and energy efficiency improvements (EIA, Shiraishi et al., 2023; IEA, 2021). 

Second, although Japan had a high level of energy reliability, its recent situation deteriorated because typhoons and earthquakes caused large-scale and lengthy power outages. Lastly, Japan's energy resilience challenges, also worsened by natural disasters, happen due to the inadequately interconnected split electricity system. Fortunately, the 2020 legislation strives to strengthen the resilience of the electricity sector by advancing distributed grids and the partnership plan's stipulation for distribution and transmission operators for rapid disaster response. The future climate change effects and continued integration of variable renewable energy may further affect Japanese resilience and reliability (IEA, 2021a). 

The country must account for fluctuating environmental security, reliability, and resilience situations. Japan wrestles with the effects of global climate change, which continues to affect its ecosystems' resilience and reliability, as well as food security (Sekiyama, 2020; JMS, 2022). Water security is also crucial since, between 2020 and 2030, a quarter of the country's population will live in water-scarce areas (WDL, 2023). Such issues are critical in the energy transition context, which aspires to achieve carbon neutrality during concerns, namely, macroeconomic impacts, the global competition for critical minerals, the need for energy security, and the novel North-South divide. Such division is described as a "sharpening difference between developed and developing countries on how the transition should proceed" (Yergin, 2022, p. 11). Japan currently holds the #27 rank on the World Economic Forum's Energy Transition Index in contrast with the United States (#12) and China (#17) (WEF, 2023). Despite its unique constraints, Japan can still build on its robust record in innovation and favorable financial conditions to chart its “narrow but achievable” course to address its energy and environmental issues (Birol, 2021). 

This study is organized into five main sections. After an introduction in part 1, part 2 describes the qualitative methods employed in the papers. Part 3 evaluates the Japanese hydrogen strategy, especially concerning its heavy industry. Part 4 outlines the strategy for integrating clean H2 in the selected heavy industry applications. Part 5 concludes, addresses limitations, and provides further research considerations. The following section describes the methodology utilized in the research paper. 

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