· 35 min read
This article is part four of a five-part series on clean hydrogen in heavy industry sectors in Japan. You can find part one here, part two here, part three here, and part five here.
This study seeks to modify the Japanese H2 strategy by presenting a novel clean H2 production and deployment strategy in the chemical, refining, and steel sectors. The ambitious strategy, “Begin at the Beginning,” consists of three phases: 1) 2023-2030 (short-term scale-up), 2) 2030-2050 (mid-term steps), and 3) 2050-beyond (long-term growth). The strategy’s name is inspired by a children’s classic, “Begin at the Beginning: A Little Artist Learns about Life” (Schwartz, 2005). In short, the art teacher chose a little girl, Sara, to create a painting for an important art show. Sara decides to paint the whole universe but is puzzled about where to start. After careful thinking, the child decides to “begin at the beginning,” with a tree directly outside her window (Schwartz, 2005). Similarly, the strategy seeks to “begin at the beginning” by focusing on critical clean H2 heavy industry uses versus “painting the universe” using the limited amount of clean H2 as a panacea for all Japanese economic sectors.
The strategy uses Liebreich's (2023) model to identify the best uses for clean H2 deployment in the Japanese economy. The study focuses on Row A’s “no real alternative” cases (fertilizer, hydrogenation, hydrocracking, desulphurization) and Row B’s chemical feedstock and steel. The cases of chemical feedstock “biomass/biogas alternative” and steel “electricity/batteries alternative” are included since “the decent market share highly likely” for Row B (Liebreich, 2023). The strategy also utilizes the author's "nexus-integrated policies" concept for Japan (Anderson, 2023). Lastly, it is consistent with Japan’s G7 pledge to achieve “fully or predominantly decarbonized” electricity by 2035; UN Nationally Determined Contribution (NDC) target (GHG reduction by 46% in 2030 from its 2013 levels), 6th Strategic Energy Plan, and National Security Strategy of Japan (CS, 2022, METI, 2021; Shiraishi et al., 2023).
Table 1. Phase One: Short-Term Scale-Up (2023-2030)
| Guiding Principles (environment, economy, society) | Governance | Finance | Innovation |
| * Environment: While expanding clean H2 infrastructure for integration into chemicals, refining, and steel sectors (Baharudin and Watson, 2017), consider water/food security and nuclear waste issues (Japan NRG, November 20). *Environment: Support RE deployment with the smallest water footprints (solar, wind, geothermal) (UN Water, 2023) *Environment: While restarting and constructing new nuclear power reactors, consider water/food security issues with an effect on local communities. | * Revise Japan's H2 strategy by incorporating it as a part of a country's decarbonization strategy (Ishihara and Ohno, 2023) and set medium-term targets and avenues for public-private sector collaboration. Main focus of the strategy should be on green H2 (using wasterwater), and then pink H2 (using wastewater with mid-term/nuclear power roll-out) along the potential mid-term use (early 2030s) of blue H2 for integration into critical heavy industry sectors. Additionally, carbon intensity standards for clean H2 should be strengthened. | * Move H2 subsidies to focus on critical cleaner H2 applications in the "hard-to-abate" sectors; long-term hydrogen storage; and H2 derivatives (Bloomberg NEF, 2023). | * Along with power cost reductions for surplus electricity for green H2 production, focus on developing, promoting, and implementing technologies to lower electrolyzers' cost for clean H2 (especially, green H2 production). Increasing stack production with automated processes through economies of scale can reduce costs (METI, 2023a, IRENA, 2020). |
| * Economy: Increase awareness about water footprints and virtual water trades for consumers and suppliers to improve water security (Sullivan, 2021b). *Economy: Start creating energy, food, water, minerals circular economies. *Economy: Promote "Sound Hydrological Cycles;" conserve groundwater; reuse waste water for energy production; redevelop existing dams for better water storage and reallocation of water supply (MLITT, 2008). | * Expedite new renewable (RE) power project development by the following mechanisms: a) shorten and simplify permitting processes; enhance transparency of grid connection processes (timelines and costs); host larger and more frequent government-led offshore wind tenders; organize local government-led solar actions with guaranteed access to land and grid connection; and accelerate policy support for geothermal power generation by supporting domestic drilling companies and by introducing centralized (municipality-led) centralized auction system (Bloomberg NEF, 2023). | * Implement a contract for difference (CfD) scheme under the criteria for companies, identified during METI's joint advisory meeting on October 25, 2023: a) supply clean H2/ammonia and invest in related infrastructure in critical "hard-to-abate" sectors, such as chemicals and steel; b) contribute to Japan's carbon emissions reduction targets; c) contribute to global competitiveness of clean H2 production and use (Shulman, 2023). | * Prepare to set up an efficient circular economy, by utilizing the waste water streams (unused tertiary water effluents) from the water industry, in contrast to potable water or desalinated water, in the production of domestic green H2 at scale. WWTP will benefit from the production of oxygen, as a byproduct of the electrolysis proces, enabling the onsite reuse of oxygen for the treatment of wastewater (Woods et al., 2022). |
| * Environment/Economy: Prevent and mitigate cybersecurity and physical challenges during cleaner energy transition (METI, 2019) | * Set phaseout targets for existing unabated thermal power plants and encourage business participation for coal phaseout and renewable power deployment for 2030 and beyond to lessen market and policy uncertainties (Shiraishi et al., Ohbaiyashi, 2023). | * Execute a much firmer carbon pricing mechanism than the current one of ¥289 ($2) per ton of CO2 to support decarbonization, especially, in the hard-to-abate industrial sectors (chemicals, refining, steel) (Bloomberg NEF, 2023). | * During Phase 1 "Preparation of green H2 hubs," explore various technologies for green H2 production from wastewater (Woods et al., 2022; Tak et al., 2022; UNIDO, 2023). |
| * Society: Promote consumer behavioral changes for energy, food, and water conservation to accelerate access to limited resoures for the poorest. | * Retain natural gas power plants to balance seasonal and cross-day variations against solar and wind generation for energy reliability during clean H2 integration into critical heavy industry sectors (Shiraishi et al., 2023) | * Stimulate grid investment, particularly, from the private sector, through additional reforms/subsidies. Japanese government esimates cumulative investment to be ~($27.5 - 40.5 billion) by 2050 although Bloomberg NZS estimates $56 billion by 2050 for Japanese cumulative investment into interregional transmission grids by 2050, with $489.3 billion of grid investment over 2022-2050 (Bloomberg NEF, 2023). | |
| * Society: Invest in initiatives and workforce (knowledge of geology/environmental sciences) that can help understand, prepare, and adapt the country for the changing (reliable or disruptive) conditions of the environment that can affect other aspects of the country. | * Per 6th Strategic Energy Plan, implement the master plan in "push-type approach" to upgrade the cross-regional interconnection lines. The rules of use of power grids need to be reviewed so RE can use the bulk system preferentially to coal-fired power (METI, 2021) | ||
| * Support modernization of the existing power grids, installation of extra high voltage underground transmission cables for energy reliability (DOE, 2023b; IEA, 2021, IEA, 2023b) | |||
| * Provide policy support for building smart and more digitized grids to better match the supply and demand of electricity in real-time to assure grid reliability (ETS, 2023, IEA, 2023c). | |||
| * Provide policy support for energy storage integration (batteries; pumped hydro with 21,894MW capacity) alongside RE deployment (Shiraishi et al., 2023; IRENA, 2020). | |||
| * Per the 2023 revised H2 strategy, identify the best spots for coastal and inland clean H2 hubs (with emphasis on green H2, some blue H2 and pink H2) and start co-locating them close to wastewater treatment plants (WWTP) to utilize the unused tertiary water effluents in green H2 production (METI, 2023a, Anderson, 2022: Shulman, 2023; Woods et al., 2022). | * During Phase 1 "Preparation of green H2 hubs," focus on financial mobilization of resources. Financial support should be provided during additional activities: 1) Stakeholder engagement, 2) awareness-raising, 3) preparation of a strategy and a work plan of a hub, and 4) feasibility studies (UNIDO, 2023). | ||
| * Engage stakeholders in finding solutions for nuclear waste (Japan NRG, 2023). | |||
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* Devise policies to build a supply system, that combines importing and domestic clean H2 production, with a focus on green H2. Develop a market design that provides incentives to the chemicals/refining/steel sector for purchasing clean H2, especially, in preparation for the kick-off of the Carbon Border Adjustment Mechanism in 2026. * Build global clean H2 supply chain as a supplement during the domestic clean H2 growth (Ishihara and Ohno, 2023; METI, 2023a; Reuters, 2023; Nakano, 2021, 2022; Delatte, 2023; Collins, 2022; ASEP, 2017, Martin, 2023) |
Table 2. Phase Two: Mid-Term Steps (2030-2050)
| Guiding Principles (environment, economy, society) |
Governance | Finance | Innovation |
|
* Environment: While |
* If needed, continue revising Japan's H2 strategy as part of the country's decarbonization strategy (Ishihara and Ohno, 2023) and set long-term targets and avenues for public-private sector collaboration. Main focus of the strategy should be on green H2 (using wastewater), and then pink H2 (using wastewater with mid-term/nuclear power roll-out) along with possible mid-term (early 2030s) use of blue H2 for integration into the high-priority heavy industry sectors. | * Continue moving H2 subsidies to focus on critical cleaner H2 applications in the "hard-to-abate" sectors. Also, consider clean H2 applications in long-term hydrogen storage; and H2 derivatives (Bloomberg NEF, 2023). *If needed, support privately funded H2 infrastructure projects that will come online during this period. | * With the fall of clean H2 production costs, driven by continuing potential fall in the domestic electricity costs, R&D and economies of scale, continue on developing, promoting and implementing technologies for improvement of clean H2 (especially, green and pink) production and integration into high-priority industrial sectors (chemicals, refining, and green steel). |
| * Environment/Society /Governance: Accelerate the price of carbon to complete coal power phaseout in 2035. 1) Mitigate the socio-economic impacts of coal phaseout with transition assistance programs (local communities and businesses); 2) Utilize carbon revenues to reimburse businesses and households to reduce the tax burden by paying for part of the utility expenditures (Shiraishi et al., 2023). |
* Continue expediting new renewable (RE) power project development by the following mechanisms: a) shorten and simplify permitting processes; enhance the transparency of grid connection processes (timelines and costs); host larger and more frequent government-led offshore wind tenders; organize local government-led solar actions with guaranteed access to land and grid connection; and accelerate policy support for geothermal power generation by supporting domestic drilling companies and by introducing centralized (municipality-led) centralized auction system (Bloomberg NEF, 2023). | * Continue implementing CfD scheme under the criteria for companies, identified during METI's joint advisory meeting on October 25, 2023: a) supply clean H2/ammonia and invest in related infrastructure in critical "hard-to-abate" sectors, such as chemicals and steel; b) contribute to Japan's carbon emissions reduction targets; c) contribute to the global competitiveness of clean H2 production and use (Shulman, 2023). | * Set up an efficient circular economy, by utilizing the wastewater streams (unused tertiary water effluents) from the water industry, in contrast to potable water or desalinated water, in the production of domestic green H2 at scale (Woods et al., 2022). |
| * Economy/Environment: Focus on cleaner H2 (some blue and pink, primarily green H2) production for critical "hard-to-abate" sectors while considering water security issues. Prioritize green H2 (Ishihara and Ohno, 2023), especially, made using unused tertiary effluents from wastewater and obtaining the rest from global clean H2 suppliers. |
* Follow phaseout targets for existing unabated thermal power plants and encourage business participation for coal phaseout and renewable power deployment for 2030 and beyond to lessen market and policy uncertainties (Shiraishi et al., Ohbaiyashi, 2023). | * Follow a more stringent carbon pricing mechanism than the current one of ¥289 ($2) per ton of CO2 to support decarbonization, especially, in the hard-to-abate industrial sectors (chemicals, refining, steel) (Bloomberg NEF, 2023). | * Continue improving and finding new technologies for green and pink H2 production from unused tertiary effluents from wastewater. |
| * Environment: Continue restarting operable nuclear reactors (WNA, 2023); new reactors (SMRs) but consider water security issues. Desalination as a co-generation use can help water security. |
* Set policy design to deploy blockchain to improve secure transactive energy applications and improve smart grid cyber resiliency (Myrlea et al., 2017). | * Stimulate grid investment, particularly, from the private sector, through additional reforms/subsidies. Japanese government estimates cumulative investment to be ~($27.5 - 40.5 billion) by 2050 although Bloomberg NZS estimates $56 billion by 2050 for Japanese cumulative investment into interregional transmission grids by 2050, with $489.3 billion of grid investment over 2022-2050 (Bloomberg NEF, 2023). | |
| * Economy/Environment: Continue energy, food, water, and minerals circular economies. |
* Provide necessary policy support for continuing to build interregional transmission infrastructure and energy storage (Shiraishi et al., 2023) | ||
| * Economy/Environment /Society: Promote consumer behavioral changes for energy, food, and water conservation to enable better access to the limited resources for the poorest in the community |
* Per 2023's Revised H2 strategy, enter into Phase 2 of clean H2 hub development "Deployment of technologies for clean H2", especially, with a specific focus on green H2 and pink H2: a) commissioning of pilot projects for different types of clean H2; b) process adaptation, production, and use of clean H2 in chemicals, refining, and steel industrial processes; c) testing of pilot projects, d) commercial operation (UNIDO, 2023). Also, check if circular water economy set-up for using unused tertiary water effluents from wastewater is efficient / provide corrections based on iterations. | ||
| * Society: Apply concepts of water footprints and virtual water trades for consumers and suppliers in water security policies (Sullivan, 2021) that can also accelerate the access to water for the poorest. | |||
| * Environment / Society: Promote "Sound Hydrological Cycles;" conserve groundwater; reuse wastewater for energy production; redevelop existing dams for better water storage and reallocation of water supply (MLITT, 2008). | * Devise additional policies for supporting a supply system, which combines importing and domestic clean H2 production, with a focus on green H2. *Develop a market design that provides incentives to the chemicals/refining/steel sector for purchasing clean H2. *Build global clean H2 supply chain as a supplement during the domestic clean H2 growth (Ishihara and Ohno, 2023; METI, 2023; Reuters, 2023; Nakano, 2021, 2022; Delatte, 2023; Collins, 2022; ASEP, 2017) | ||
| * Environment: Strengthen minerals supplier relationships and diversify sources for electrolyzer production, including those from the Arctic (EEA, n.d.) | |||
| *Economy/Environment: Adapt, prevent, and mitigate cyber and physical security challenges in the cleaner energy transition |
Table 3. Phase Three: Long-Term Growth (2050-beyond)
| Guiding Principles (environment, economy, society) | Governance | Finance | Innovation |
| * Environment: While expanding clean H2 infrastructure for integration into chemicals and steel sectors (Baharudin and Watson, 2017), continue considering water/food security and nuclear waste issues (Japan NRG, 2023). * Environment: Support RE capacity additions (Shiraishi et. al., 2023) through private and private sector financing and involvement while considering water and food security issues. * Environment: While constructing new nuclear power reactors, consider water/food security issues with an effect on local communities. |
* If needed, continue revising Japan's H2 strategy as part of the country's decarbonization strategy (Ishihara and Ohno, 2023) and set long-term targets and avenues for public-private sector collaboration. Main focus of the strategy should be on green H2 (using wastewater), and then pink H2 (using wastewater with mid-term/nuclear power roll-out) along with possible mid-term (early 2030s) use of blue H2 for integration into the high-priority heavy industry sectors. | * A self-sustaining commercial market post-clean H2 subsidies should emerge at this point. If necessary, provide additional financing for new clean H2 projects. | *Maintain an efficient circular economy, by utilizing the wastewater streams (unused tertiary water effluents) from the water industry, in contrast to potable water or desalinated water, in the production of domestic green H2 at scale (Woods et al., 2022). |
| * Economy/Environment: Focus on cleaner H2 production, prioritizing the substantial increase of domestic green H2 and pink H2 co-located with WWTP. Diversify sources and suppliers. |
* Continue expediting new renewable (RE) power project development by the following mechanisms: a) shorten and simplify permitting processes; enhance the transparency of grid connection processes (timelines and costs); host larger and more frequent government-led offshore wind tenders; organize local government-led solar actions with guaranteed access to land and grid connection; and accelerate policy support for geothermal power generation by supporting domestic drilling companies and by introducing centralized (municipality-led) centralized auction system (Bloomberg NEF, 2023). | * Follow a stringent carbon pricing mechanism than the current one of ¥289 ($2) per ton of CO2 to support decarbonization, especially, in the hard-to-abate industrial sectors (chemicals, refining, steel) (Bloomberg NEF, 2023). | *Continue improving and finding new technologies for green and pink H2 production from unused tertiary effluencts from wastewater. |
|
* Economy/Environment:
|
* Follow phaseout targets for existing unabated thermal power plants and encourage business participation for coal phaseout and renewable power deployment for 2030 and beyond to lessen market and policy uncertainties (Shiraishi et al., Ohbaiyashi, 2023). | *Stimulate grid investment, particularly, from the private sector, through additional reforms/subsidies. Japanese government esimates cumulative investment to be ~($27.5 - 40.5 billion) by 2050 although Bloomberg NZS estimates $56 billion by 2050 for Japanese cumulative investment into interregional transmission grids by 2050, with $489.3 billion of grid investment over 2022-2050 (Bloomberg NEF, 2023). | * Continue improving and finding new technologies for green and pink H2 production from unused tertiary effluents from wastewater. |
| * Economy/Environment/ Innovation/Finance/Society: * Create policy tools and incentives to implement eventual oil phaseout; *Support energy efficiency, electrification, accounting for an impact on water/food security. * Mitigate socio-economic impacts of fossil-fuels phase out with transition assistance programs for communities and businesses. |
* Set policy design to deploy blockchain to improve secure transactive energy applications and improve smart grid cyber resiliency (Myrlea et al., 2017). | ||
| * Environment/Economy: Accounting for the water security impact, operate existing nuclear reactors; retire old models and bring new nuclear technologies to ensure cleaner and reliable baseload power source. Seawater desalination, as a co-generation use of nuclear generation will be helpful for water security. |
* Provide necessary policy support for continuing to build interregional transmission infrastructure and energy storage (Shiraishi et al., 2023) | ||
| * Economy/Environment /Society: Promote consumer behavioral changes for energy, food, and water conservation to enable better access to the limited resources for the poorest in the community |
* Per 2023's Revised H2 strategy, enter into Phase 2 of clean H2 hub development "Deployment of technologies for clean H2", especially, with a specific focus on green H2 and pink H2: a) commissioning of pilot projects for different types of clean H2; b) process adaptation, production, and use of clean H2 in chemicals, refining, and steel industrial processes; c) testing of pilot projects, d) commercial operation (UNIDO, 2023). Also, check if circular water economy set-up for using unused tertiary water effluents from wastewater is efficient / provide corrections based on iterations. | ||
| * Society: Apply concepts of water footprints and virtual water trades for consumers and suppliers in water security policies (Sullivan, 2021) that can also accelerate the access to water for the poorest. |
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| * Environment / Society: Promote "Sound Hydrological Cycles;" conserve groundwater; reuse wastewater for energy production; redevelop existing dams for better water storage and reallocation of water supply (MLITT, 2008). |
* Devise additional policies for supporting a supply system, which combines importing and domestic clean H2 production, with a focus on green H2. *Develop a market design that provides incentives to the chemicals/refining/steel sector for purchasing clean H2. *Build global clean H2 supply chain as a supplement during the domestic clean H2 growth (Ishihara and Ohno, 2023; METI, 2023; Reuters, 2023; Nakano, 2021, 2022; Delatte, 2023; Collins, 2022; ASEP, 2017) | ||
| * Environment: Strengthen minerals supplier relationships and diversify sources for electrolyzer production, including those from the Arctic (EEA, n.d.) |
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*Economy/Environment: Continue energy, food, * Society: Apply concepts |
* If needed, continue revising Japan's H2 strategy as part of the country's decarbonization strategy (Ishihara and Ohno, 2023) and continue setting long-term targets and avenues for public-private sector collaboration. Main focus of the strategy should be on green H2 and pink H2 (using wastewater), with nuclear power roll-out for integration into critical heavy industry sectors, such as chemicals and steel. *Chemicals (ammonia and other H2 derivatives) and green steel will be primary sectors for clean H2 integration, since refining sector, especially, desulphurization and hydrocracking, will be less necessary as fossil fuels are phased out. * Maintain renewable (RE) power project development by the following mechanisms: a) shorten and simplify permitting processes; enhance transparency of grid connection processes (timelines and costs); host larger and more frequent government-led offshore wind tenders; organize local government-led solar actions with guaranteed access to land and grid connection; and accelerate policy support for geothermal power generation by supporting domestic drilling companies and by introducing centralized (municipality-led) centralized auction system (Bloomberg NEF, 2023). * Create policy tools and incentives for the phase-out of "transition assets" and transfer into cleaner energy hubs by providing carbon credits or assisting in creating a carbon retirement portfolio (Bordoff and O'Sullivan, 2022a, 2022b; Handler and Bazilian, 2021) *Use blockchain to improve secure transactive energy applications and improve smart grid cyber resiliency (Myrlea et al., 2017). *Maintain and upgrade interregional transmission infrastructure (Shiraishi et al., 2017). *Provide policy support to continue modernizing and maintaining the electric grids and energy storage for resilience and reliability; focus on micro-grids. *Rely on nuclear energy as the main reliable zero-emission baseload power source (Andrews & Jelley, 2017). * Per 2023's Revised H2 strategy, enter into Phase 3 of clean H2 hub development "Upscaling the use of clean H2 in industry", especially, with specific focus on green H2 and pink H2: a) programs for uptake and challenges, b) development of clean H2 (especially, green H2)networks (UNIDO, 2023). Also, check if circular water economy set-up for using unused tertiary water effluents from wastewater is efficient / provide corrections with iterations. *Apply concepts of water footprints and virtual water trades for consumers and suppliers in water security policies (Sullivan, 2021) * Devise additional policies for supporting a supply system, which combines importing and domestic clean H2 production, with the focus on green H2. * Develop a market design that provides incentives to the chemicals/refining/steel sector for purchasing clean H2. *Focus on domestic green and pink H2 production but still maintain global clean H2 supply chain as a supplement (Ishihara and Ohno, 2023; METI, 2023; Reuters, 2023; Nakano, 2021, 2022; Delatte, 2023; Collins, 2022; ASEP, 2017) |
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