Is the world’s biggest renewable hydrogen plant a white elephant?

In Japan’s Fukushima Prefecture, not far from the destroyed nuclear power plant, lies the small town of Namie. The area was heavily affected by the earthquake, tsunami and radioactive fallout in 2011. It is now being rebuilt. Not many of the old...

In Japan’s Fukushima Prefecture, not far from the destroyed nuclear power plant, lies the small town of Namie. The area was heavily affected by the earthquake, tsunami and radioactive fallout in 2011. It is now being rebuilt. Not many of the old inhabitants have yet moved back but the government have recently built a huge new facility to produce green hydrogen. The facility, called Fukushima Hydrogen Energy Research Field (FH2R), is said to be the world’s biggest renewable hydrogen plant.

I visited FH2R when I joined the Nordic ambassadors on their energy study trip to Fukushima Prefecture in November 2020. The destroyed nuclear power plant was of course part of the itinerary but that’s another story.

FH2R was impressive. The technology was mindboggling for a non-scientist like me. It was new and clean. We even had to switch to slippers to observe the control room. Outside, the grass was cut immaculately, and you could hear the birds sing in the sea breeze. But something was amiss, I just couldn’t put my finger on it and then it struck me. There was no activity at FH2R. No trucks came to transport away all the hydrogen gas stored at the facility. Hardly no staff were about, and those who were onsite didn’t seem to be in a hurry.

The manager proudly told us that we were standing in the middle of the world’s largest water electrolysis facility, measuring 180 thousand square meters and using electricity from a 20-MW solar power facility. The 10 MW FH2R has the capacity to produce about 200 tons of hydrogen annually. Of course, they had an outreach program aimed at the local community and school children as well.

FH2R was inaugurated by Prime Minister Abe in March 2020. It is supposed to showcase technology to convert surplus solar energy into hydrogen, storing and using it. The stated aim is to establish globally cutting edge, highly efficient, low-cost technology to produce hydrogen towards the commercialisation of water electrolysis. The problem though is that there is no demand for green hydrogen the manager told us. At least for the moment. Japanese heavy industry is still demanding cheap and abundant energy. Alas, he was not optimistic for the future either.  This was because of the high costs of producing green hydrogen and energy losses when converting to and from hydrogen. Was this a white elephant, I wondered as we left the facility.

Japan’s hydrogen strategy – goals and reality

In 2017, the Japanese government proudly announced what it called the world’s first Basic Hydrogen Strategy. The government’s vision was to position hydrogen as a new affordable energy option.

Hydrogen will be important for the implementation of Prime Minister Suga’s vision for Japan to achieve net zero greenhouse gas emissions by 2050. In its third supplementary budget proposed to parliament in late December 2020, the Government set aside about 20 billion USD for achieving a green society. Hydrogen is of course included in that.

The Basic Hydrogen Strategy encompasses several parts including hydrogen supply chains, transportation and gas to power. The FH2R pilot project is part of the supply chain program. Another pilot project in the supply chain program is already underway in Australia. Kawasaki Heavy Industries, Shell Japan and the electric utility company J-Power have joined Australia’s AGI Energy and other international partners in trying to extract hydrogen from brown coal. Estimated cost for this project is 370 million USD. Another project concern extracting hydrogen from unused gas in Brunei. In June 2020 the engineering company Chiyoda Corporation succeeded to ship hydrogen in a chemical form, methylcyclohexane, from Brunei to Japan as fuel for power generation.

When it comes to the transport sector, Toshiba Energy Systems & Solutions, Kawasaki Heavy Industries, shipping company NYK Line, ship classification society Nippon Kaiji Kyokai and petroleum company Eneos have recently announced that they will join in a demonstration project for the commercialization of high-power Fuel Cell (FC) vessels. The project, which began in the autumn of 2020, is Japan’s first effort to develop a commercially available FC vessel. The companies will develop an about 150-ton class (passenger capacity approximately 100) high-power FC vessel that will function as a medium-sized tourist ship, and in 2024 carry out a demonstration operation of the FC vessel together with a demonstration supply of hydrogen fuel.

Furthermore, Kawasaki Heavy Industries launched in 2019 the world’s first liquefied hydrogen carrier. It remains to be seen if hydrogen will be the preferred fuel for shipping, while there are high expectations for hydrogen carriers.

When it comes to road transportation Japan has set itself ambitious goals of:

  • 40 thousand fuel cell vehicles (FCVs) by 2020; 200 thousand FCVs by 2025; and 800 thousand by 2030. In 2030 the city of Tokyo will not allow the sale of new fossil fuel cars.
  • 320 hydrogen refuelling stations by 2025; and 900 by 2030.
  • 100 fuel cell buses by 2020; and 1200 by 2030.

 The reality looks a bit different though. In Japan there are currently:

  • 3800 FCVs (after six years on the market).
  • 135 hydrogen refuelling stations.
  • 91 fuel cell buses and 250 fuel cell forklifts.

As regards the program on hydrogen power generation ongoing pilots include developing combustors for hydrogen gas turbines and a demonstration project with hydrogen gas turbines providing heat and power. Household fuel cells (solid oxide fuel cells) were introduced to the market in 2009. These produce heat and power for use in homes, from hydrogen derived from city gas or liquified petroleum gas and oxygen derived from the air. Approximately 275 thousand units were in use in 2019.

Was FH2R a white elephant? The jury is still out

My conclusion is that is too soon to answer if FH2R is a white elephant or not. I sure hope it isn’t. Green hydrogen is such an appealing idea.

It is clear to me that Japan is a hydrogen frontrunner in terms of mobilizing research and development across various sectors and has successfully completed many first of a kind demonstration projects.

In fact, Japan is now on its third hydrogen wave. The first wave was in the early 1990s, the second wave in the 2000s and the third wave started around 2015. In pursuit of finding a way to be independent from fossil fuel produced in the Middle East, Japan made a deliberate choice to develop a hydrogen-based society already in the 1990s. The question is will Japan succeed in this national project? The climate crisis has made Japan’s success a global concern.

Even though there has been a lot of buzz and hype around hydrogen, the fact is that demand hasn’t taken off. The main challenges are in reducing hydrogen’s costs and expanding applications that generate hydrogen demand. Overall, despite Japan’s lack of domestic energy resources, the competitive edge of hydrogen may well prove challenging to materialize, especially in a low-cost oil, gas and coal environment.

The 2020 Olympics were supposed to be used to promote Japanese hydrogen technology to the world by using fuel cell vehicles and buses and powering the athletes’ village with hydrogen. That didn’t happen due to COVID-19. I sure hope that the Tokyo Olympics in the summer of 2021 will prove to be a second chance for green hydrogen as well as for the athletes.

Guest blogger: Sven Östberg, Counsellor (Trade & Economy), Embassy of Sweden, Japan