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Hydrogen Business in which European Municipalities are Focusing their Efforts and Japan's Position
[Published on November 6, 2024]
*This report is a partially edited version of a report published on LinkedIn on October 22, 2024.
In my last post, "The Disturbance I Felt on a Business Trip to Europe," I talked about my business trip to Europe in early September. At that time, I wrote about the political and economic turmoil I felt in Europe, but there was one more thing I felt. That is that major European countries are serious about fostering the hydrogen business.
This time, I met with the heads of the North Rhine-Westphalia (NRW) region in Germany, a leading industrial region in Europe, the Auvergne-Rhône-Alpes (AuRA) region in France, and the Occitanie region, home to Airbus, etc. In all regions, collaboration with Aichi Prefecture in the hydrogen business was an important theme for the conclusion of the MOU. Cooperation with Aichi Prefecture in the hydrogen business was a key theme of the MOUs (Memorandum of Understanding) signed.
Depending on what you generate hydrogen from, hydrogen is abundant in nature and does not emit carbon dioxide when burned, only water. If hydrogen is generated from renewable energy sources, it is a clean energy source that does not emit any carbon dioxide.
Hydrogen is a double-whammy for Europe's drive to decarbonize and de-Russianize natural gas. That is why municipalities such as NRW, AuRA and Occitanie, which boast one of the largest industrial clusters in Europe, are all focusing on green hydrogen business.
The reason Aichi Prefecture was chosen as the partner for this project is that Aichi Prefecture is the largest manufacturing industry prefecture in Japan, home to many of Japan's leading manufacturing companies, including the Toyota Group. The prefecture is also focusing on hydrogen, and established the Hydrogen Society Implementation Promotion Office within the prefectural government last December. As of June 2024, there will be 35 hydrogen stations in the prefecture, and the plan is to have about 100 stations in the prefecture by 2025.
Aichi Prefecture's Hydrogen Related Projects
As you know, fuel cell electric vehicles (FCEVs) are vehicles that use a chemical reaction between hydrogen and oxygen in a fuel cell to power a generator motor and are said to emit no carbon dioxide. The story of Toyota's provision of 500 Mirai FCEVs for the Paris Olympics held this summer is well known.
At present, high vehicle prices and a lack of hydrogen stations are hindering the spread of FCEVs, but these issues should be resolved in the near future. It is expected that FCEVs with high energy efficiency, especially hydrogen-engine vehicles, will be introduced to commercial vehicles such as buses and trucks, as well as special vehicles used at airports and ports.
In addition, Aichi Prefecture established the "Chubu Region Hydrogen and Ammonia Social Implementation Promotion Council" in February 2022 with the aim of achieving carbon neutrality by 2050. This organization is designed to promote the social implementation of hydrogen and ammonia in the Chubu region in cooperation with local governments and economic organizations. It has already formulated the "Chubu Region Hydrogen and Ammonia Supply Chain Vision. It is promoting efforts to build a supply chain for hydrogen and ammonia and to promote their utilization.
Furthermore, at the Hekinan Thermal Power Plant (Hekinan City, Aichi Prefecture), known as the largest coal-fired power plant in Japan, JERA, a major Japanese power generation company, is proceeding with a project to mix 20% ammonia with coal and burn it. Demonstration tests have already been successful, and the company aims to have one of the five thermal power units in commercial operation by 2027 and two by 2029.
Ammonia on the order of 500,000 tons per year is required for 20% co-firing of one coal-fired power plant, and securing global procurement routes is a major challenge, but we plan to increase the ratio of ammonia to 50% in the early 2030s and 100% by the 2040s.
I believe that it is because of the track record of these efforts that various European municipalities are trying to work with Aichi Prefecture.
While these developments are positive for Aichi Prefecture, Japan as a whole has not made progress toward launching a hydrogen business.
Project Management Required for Hydrogen Business
European countries that have made rapid progress in the development of offshore wind power are focusing on the production of green hydrogen using renewable energy generation. In fact, at the Arroyo Culebro Cuenca Media Alta sewage treatment plant that we visited in Madrid, Spain, construction of a plant to produce green hydrogen from sewage sludge is underway.
Similarly, in NRW, Germany, three companies, including ThyssenKrupp Steel Europe, a German steel giant, and Air Liquide Germany, a French industrial gas giant, have become project partners and started to utilize hydrogen in the production of pig iron in blast furnaces with the aim of utilizing hydrogen in steel production. The goal is to produce carbon-free steel in the future.
Although projects have been launched in Japan to promote the use of hydrogen, such as the one in Aichi Prefecture, the use of hydrogen energy at the manufacturing site has been slow. In addition, as symbolized by offshore wind power, the development of renewable energy is also lagging, and there are limits to the domestic supply of green hydrogen required by the market.
The hydrogen business involves not only the production of hydrogen, but also its storage, transportation, supply, and use in various phases. While it is important to have a company that is partially responsible for each of these processes, I feel that it would be difficult to launch a hydrogen business in Japan without the presence of a project manager who can manage the entire series of processes.
While trading companies and electric power companies have been named for this role, in the municipalities of Germany, France, and Spain, with which Aichi Prefecture works, as well as in Portugal, the hydrogen business is being promoted through public-private partnerships based on high institutional design.
Although Japan was ahead in the development of technologies for vehicle-mounted and large stationary storage batteries, it fell far behind China and other countries because it failed to make good progress in public-private partnerships for manufacturing and expanding utilization in preparation for the subsequent phase of scale-up. In order to avoid making the same mistake, and to realize a hydrogen society by 2050, I hope that the new administration will take speedy action.
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