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

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By Venera N. Anderson

· 12 min read

This article is part five 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 four here.


This research paper strives to modify Japan's H2 strategy by proposing clean H2 production and integration nexus-integrated policies for its high-priority heavy-industry sectors, such as chemicals, refining, and steel. The ambitious "Begin at the Beginning" strategy is intended to become a potential part of the Japanese portfolio of decarbonization approaches to reach net-zero GHG emissions by 2050. At the same time, the strategy incorporates nexus-integrated policies, which also account for specific energy and environmental security, reliability, and resilience challenges related to clean H2 production and deployment. Lastly, the study strives to educate the pragmatic climate tech investors that "sectors considered hard to abate today will, in time, become hard to resist" (Vaitheeswaran, 2023).

The strategy consists of three phases:

1) 2023-2030 (short-term scale-up), 
2) 2030-2050 (mid-term steps), and
3) 2050-beyond (long-term growth).

First, during the short-term scale-up (2023-2030), Japan should revise its current H2 strategy by establishing it as a part of the national decarbonization strategy (Ishihara and Ohno, 2023) and set medium-term targets and avenues for public-private sector collaboration. The strategy's primary focus should be preparing for the production of green and pink H2 production from unused tertiary effluents from domestic wastewater treatment plants (WWTP) and the integration into chemicals, refining, and steel sectors. The potential use of blue H2 is also considered before and during the early 2030s. During this period, regarding clean H2 production, Japan should focus on setting an efficient circular economy by preparing the clean H2 clusters and co-locating them next to WWTPs.  Regarding clean H2 integration, Japan should execute a much firmer carbon pricing mechanism to support decarbonization in these hard-to-abate sectors. Additional policies are described in Table 1.

Second, during the mid-term steps (2030-2050), clean H2 production costs will continue to decrease, driven by the fall in domestic electricity costs, R&D, and economies of scale. The complete package of policies is described in Table 2. During this time, Japan will primarily focus on producing, adapting, and using clean H2, mainly green H2, especially replacing today's carbon-intensive H2 in the chemical, refining, and steel sectors. If needed, Japan should provide additional policy support and financing to privately funded H2 infrastructure projects coming online at that time.  

Lastly, during the long-term growth (2050-beyond), the focus of the H2 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.  The refining sector applications, especially desulphurization and hydrocracking, will be less necessary as fossil fuels are phased out.  A self-sustaining commercial market post-clean H2 subsidies should emerge during this period driven by the availability of low-cost cleaner electricity, equipment cost declines, developed H2 infrastructure, and at-scale H2 storage.  If necessary, Japan should provide additional policy and financial support for new clean H2 production and integration projects (Table 3). 

As with every research, this study has limitations. First, the limitations of the study's methodology are connected to the knowledge gaps in SEI's nexus framework, namely a lack of a harmonized analytical framework or "nexus database" that can be used for trade-off or monitoring analyses; no blueprint for overcoming power imbalances and institutional disconnect among sectors, and the lack of clarity about dealing with the accelerating level of complexity that comes with advanced levels of integration (Hoff, 2011). Second, in Section 3, this analysis may benefit from an additional discussion about why the author omitted the cement sector in the clean H2 integration strategy into Japanese key heavy industry sectors. Based on Liebreich's (2023b), the author assumes that current start-ups will successfully commercialize the technologies for cement kilns' electrification and thermal storage (up to 1600C) high enough to utilize in cement clinker production. In other words, although clean H2 may still be combined with electricity in selected cases, the author believes heat electrification will be a better solution for that sector. Third, as mentioned earlier, the author's original framework of Japanese "nexus-integrated policies" also has limitations: a) lack of consideration of the political uncertainty connected to the policies' implementation, and b) potential overlap of some proposed actions, which also may not fit into the time categories entirely or uniquely. Despite the shortcomings, no studies in the public domain present nexus-integrated policies for clean H2 production and heavy industry integration for Japan while considering the country’s energy and environmental challenges.

Finally, this closing section proposes a few future research directions about clean H2 production and deployment in the chemicals, refining, and steel sectors. First, the researchers may build upon this study's ideas and use rigorous heavy industry modeling tools to develop better recommendations and projections regarding the production in clean H2 hubs co-located with wastewater treatment plants. Second, the analysts can also add quantitative methods to the clean H2 integration strategy into the sectors. Third, the analysts may devise a similar strategy that includes additional complexities, feedback loops, and probable rebound effects when the prices for competing resources and technologies change due to clean H2's influence on their market shares. Lastly, as clean H2 production/integration into heavy-industry sectors continues to improve and develop, future researchers may develop nexus-integrated strategies for coordinating similar activities in using clean H2 and its derivatives in Liebreich's Ladder (2023) additional uses, such as long-duration grid balancing, shipping (as ammonia or methanol), and jet aviation (as e-fuel or Power and Bio to Liquid – utilizing biological carbon integrated with green or pink H2).

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.


Figure 1. Japan’s Greenhouse Gas Emissions by Sector (2020)

Japan’s Greenhouse Gas Emissions by Sector

Note: Greenhouse gas emissions by sector, Japan, 2020. From Japan: CO2 Country Profile by Our World is Data by Ritchie, H. and Rosa, M., 2023.

Figure 2. Japan’s generation by source of energy, 2012-2021

Japan’s generation by source of energy

Note: Japan’s generation by source, 2012-2021 (Figure 6). From Country Analysis Brief: Japan (p.9) by U.S. Energy Information Administration, 2023. 

Figure 3. Clean Hydrogen Ladder, Version 5.0.

Clean Hydrogen Ladder, Version 5.0

Note: Clean Hydrogen Ladder, Version, 5.0, 2023.Concept credit: Adrian Hiel, Energy Cities. CC-BY 4.0.  From Hydrogen Ladder Version 5.0. by Michael Liebreich/Liebreich Associates (Liebreich, 2023).

Figure 4. Nexus-Integrated Policy Outcomes for Japan

Nexus-Integrated Policy Outcomes for Japan

Note: Summary of nexus-integrated policy outcomes for Japan. From Policies to Improve Energy and Environmental Security, Resilience, and Reliability: A Case Study on Japan V/V (Anderson, 2023). 


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About the author

Following her tenure on Wall Street at Salomon Smith Barney, Bank of America, Goldman Sachs, and Credit Suisse, Dr. Venera N. Anderson is now an independent global strategy advisor and published author on sustainability and climate issues. She creates and implements innovative solutions that address the most pressing global problems, such as climate change, economic development, and humanitarian challenges. Venera is a member of the Harvard Business Review Advisory Council, Rotary International's Paul Harris Fellow, a global speaker, and an international expert in "Women in Green Hydrogen." She is a co-author of the book "Touching Hydrogen Future," author of "The Fight Against Poverty in the BRICS Countries," and co-author of five books on poverty in transitional economies.

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