Two projects led by JERA and Mitsui & Co consortia have secured 35% ($6.8bn) of the Japanese government’s $19.2bn (¥3tn) hydrogen support programme, according to market analyst Wood Mackenzie. The projects will import approximately 772,000 tonnes of blue ammonia – produced from fossil fuels with carbon capture and storage (CCS) – annually (equivalent to 120,000 tonnes of hydrogen) from Louisiana, in the US, starting in 2030–2031.  

Around 65% of the funding pool remains unallocated, leaving scope for further awards as Japan accelerates efforts to meet its target of supplying 3mn tonnes of hydrogen by 2030.

Both Japanese consortia will source ammonia from the Blue Point facility in Louisiana, a 1.4mn t/y project being developed jointly with CF Industries. JERA holds a 35% equity stake and will offtake 500,000 t/y starting in February 2030, primarily for ammonia co-firing at its 4.1 GW Hekinan coal-fired power station in Aichi prefecture. Mitsui, which holds 25%, will supply 280,000 t/y from January 2031, largely to Hokkaido Electric Power’s 1,650 MW Tomato-Atsuma plant in Hokkaido prefecture, with remaining volumes destined for UBE Mitsubishi Cement and Tosoh facilities.

By securing more than half of Blue Point’s output, the Japanese buyers have significantly reduced commercial risk for the project, strengthening the investment case for large-scale blue ammonia production linked to export markets, according to Wood Mackenzie.

‘This CfD round represents a breakthrough, not a conclusion,’ said Shintaro Onishi, Principal Analyst, Hydrogen and Ammonia Research at Wood Mackenzie. ‘Japan is now backing large-scale international supply chains rather than just domestic demonstrations.’

The awards also build on Japan’s technical leadership in ammonia co-firing. JERA’s Hekinan power station achieved the world’s first demonstration of 20% ammonia combustion in a commercial coal unit in 2024, with full commercial operation targeted for 2029.  

‘Japan has grounded its hydrogen programme in tangible demand,’ added Onishi. ‘By linking imports to real use-cases such as power generation and industrial furnaces across utilities, cement and chemicals industries. These projects create cross-sector synergies that strengthen the business case for large-scale ammonia deployment.’

While the initial awards are significant, a much faster pace of procurement will be required to meet Japan’s 2030 ambitions. ‘Each supported project validates Japan’s commitment and builds towards an international hydrogen market,’ said Onishi. ‘But closing the gap to the 3mn tonnes target will require a substantial acceleration in awards and project development.’

CfD schemes are a proven energy policy tool used by governments across the globe to support developing energy markets. As an example, it is the UK government’s main mechanism for supporting low-carbon electricity generation, as seen in last week’s latest renewables auction (AR7) for offshore wind.

Japan’s CfD scheme works by bridging the cost gap between expensive low-carbon hydrogen and cheaper fossil fuels, providing long-term financial stability for suppliers through a mechanism where the government pays suppliers the difference if production costs exceed a reference price, while suppliers refund the difference if costs fall below, all under a 15-year contract. Administered by the Japan Organization for Metals and Energy Security (JOGMEC) under the Hydrogen Society Promotion Act, it encourages investment by guaranteeing a stable ‘strike price’, making low-carbon hydrogen competitive and supporting the build-out of supply chains for both domestic production and international markets.

Last year Japan’s Marubeni Corporation signed a long-term offtake agreement for approximately 250,000 t/y of low-carbon ammonia from ExxonMobil’s petrochemical facility in Baytown, Texas, US. The ammonia will mainly be supplied to the Kobe power plant in Japan, to co-fire with existing fuel.  

EU backs international hydrogen imports through German–Canadian scheme

Japan’s move towards overseas hydrogen procurement mirrors developments in Europe.

The EC has approved a €200mn ($234mn) German state aid scheme to support the production of renewable hydrogen and its derivatives in Canada for export to Germany and the wider EU. A further €200mn will be provided by Canada, with the scheme expected to support up to 300 MW of electrolysis capacity.

Aid will be awarded through a competitive bidding process, scheduled to conclude in 2027, and is expected to help avoid up to 2.47mn tonnes of CO₂ equivalent, contributing to Germany’s goal of reaching net zero by 2045.

The scheme uses a ‘double auction’ model, matching Canadian producers offering the lowest prices with EU buyers willing to pay the highest prices, with state resources bridging the gap, explained the EC.

Beneficiaries must comply with strict EU sustainability criteria for renewable fuels of non-biological origin (RFNBOs), including minimum lifecycle emission savings of 70%, it added. Recent amendments to the EU Renewable Energy Directive have raised the bloc’s renewable energy target to 42.5% by 2030.  

Amendments also introduced a target for 42% of the hydrogen used in industry to be renewable by 2030, increasing to 60% by 2035.