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Japan to subsidise hydrogen technology development

  • : Emissions, Hydrogen
  • 21/04/28

The Japanese trade ministry (Meti) has proposed allocating up to ¥370bn ($3.4bn) to support hydrogen technology development in the next 10 years.

The allocation will come out of a ¥2 trillion government fund created to back green innovation projects in efforts to decarbonise its society by 2050.

The government has been discussing the allocation of the ¥2 trillion green innovation fund pledged by premier Yoshihide Suga as part of a strategy to smoothen Tokyo's 2050 decarbonisation roadmap. The fund is divided into 18 projects in three development areas of carbon-neutral power, energy transition and industrial structure change.

Meti today proposed allocating ¥300bn for development of large-scale hydrogen import and supply chain, aiming for long-term supply cost reductions, at a panel discussing the use of the green innovation fund in the energy transition area. The fund is expected to subsidise development and a demonstration project of hydrogen transport technology, as well as development of hydrogen liquefaction and hydrogenation technologies.

Japan's potential demand for hydrogen is projected to hit 20mn t/yr in 2050, compared with 3mn t/yr in 2030. Japanese consortium Ahead in December last year completed a global hydrogen supply chain demonstration project using methylcyclohexane as a hydrogen carrier. Another Japanese venture Hystra is also expected later this year to import hydrogen produced from brown coal, or lignite, at Australia's Latrobe Valley on the liquefied hydrogen carrier Suiso Frontier.

The ¥300bn allocated for hydrogen technology development includes ¥26bn used to subsidise a verification and demonstration project of a hydrogen-fired or co-fired gas turbine power generating technology. Some Japanese power firms have begun considering replacing part of their thermal power capacity with hydrogen-fired capacity, subject to completion of the technology development.

Meti also proposed allocating ¥70bn for developing a large-scale hydrogen production electrolyser as Japan targets to play catch-up with EU countries. Consortium FH2R is operating Japan's biggest 10MW electrolyser to produce hydrogen using power generated at a 20MW solar unit in Fukushima.

The ¥2 trillion green innovation fund is managed by state-controlled research and development institute Nedo. Part of the fund earmarked for energy transition projects is also expected to be allocated later for other projects including development of an ammonia supply chain and hydrogen use in steelmaking.


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25/01/03

US 45V update opens door to more H2 from natural gas

US 45V update opens door to more H2 from natural gas

Houston, 3 January (Argus) — The US Treasury Department's updated requirements for hydrogen production tax credits amends the way upstream emissions are calculated, potentially making it easier for natural gas producers to qualify for the lucrative subsidy. Previous guidelines used fixed assumptions about the rate of methane leaked from wells and pipelines rather than accepting data from individual projects. The industry argued that using uniform figures under the existing GREET model to calculate emissions would unfairly penalize companies that had taken steps to reduce methane leakage. In final rules released Friday , the Treasury Department creates a pathway for companies to submit project-specific emissions data, an amendment that had been advocated for by ExxonMobil and the American Petroleum Institute, among others. Without this change, some companies considering ammonia export projects along the US Gulf Coast said they would instead consider applying for 45Q tax credits for carbon sequestration, which cannot be used in conjunction with 45V. Previous guidance only provided a pathway for renewable natural gas (RNG) produced from landfills to qualify for lucrative tax credits. The new rules include wastewater treatment, animal manure and coal mine methane. By Jasmina Kelemen Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US relaxes rules for H2 production tax credits: Update


25/01/03
25/01/03

US relaxes rules for H2 production tax credits: Update

Adds information on state-specific additionality rules in paragraphs 6-8. Houston, 3 January (Argus) — The US Treasury Department has issued long-awaited tweaks to 45V hydrogen production tax credit (PTC) guidelines, relaxing rules in a bid to make it easier for producers to benefit from the subsidy. The final guidance released today retains the fundamental approach from the preliminary rules set out in December for the tax credits of up to $3/kg. The "three pillars" of additionality, temporal matching and regional deliverability remain in place for electrolytic hydrogen, but the Treasury has tweaked certain aspects. The additionality rule prescribes that hydrogen production facilities can only use electricity from clean power generation capacity that predated them by 36 months or less to encourage a further build-out of such capacity. But under the final rules, hydrogen made with power from existing nuclear plants can qualify for the credits under certain circumstances. Hydrogen producers can access the credits if nuclear power companies demonstrate that adding hydrogen production to their revenue stream extends the life of reactors otherwise slated for shutdown. Companies such as utility Constellation Energy have argued that using some of their nuclear capacity for hydrogen would provide a pathway for future relicensing of their reactors , but that this would hinge on access to the tax credits. The final guidelines now also consider existing fossil fuel-based power plants where carbon capture capabilities have been retrofitted within the 36-month window prior to starting up hydrogen production as additional capacity. This makes hydrogen output using electricity from these plants eligible for the tax credits. The guidelines also introduce a rule under which hydrogen production in certain states is eligible for the tax credit even if it is based on clean power generated from existing assets that do not meet the 36-month window. "Electricity generated in states with robust greenhouse gas emissions caps paired with clean electricity standards or renewable portfolio standards" that meet specific criteria will automatically be considered as additional, the Treasury said. This is because in these states "the new electricity load" from electrolysers "is highly unlikely to cause induced grid emissions," it said, adding that rules on temporal matching and regional deliverability still apply. For now, "California and Washington are qualifying states under these final regulations," but other states could qualify in the future, according to the Treasury. Hourly matching — which prescribes that hydrogen has to be made from clean power produced within the same hour to avoid increased grid emissions — will now be required only from the start of 2030 onwards rather than from 2028. Annual matching will continue to apply until the end of 2029. The new phase-in date for hourly matching at the start of 2030 brings it in line with EU rules , although the bloc requires monthly rather than annual matching before then. US industry participants have repeatedly argued that the hourly matching rules drive up production costs and stymie the nascent industry's development, while environmentalists have warned that strict rules are necessary to curb greenhouse gas (GHG) emissions. The regional deliverability rules require electrolysers to source clean power from within their operating region — as defined by the Department of Energy — to avoid grid congestions between regions resulting in use of emissions-intensive power for hydrogen production. But the final guidelines would allow for direct "cross-region delivery" of power for hydrogen production where this "can be tracked and verified… on an hour-to-hour or more frequent basis". Under certain circumstances, US hydrogen producers could now even be eligible for the tax credits if they use electricity generated in Canada or Mexico, the Treasury said. ‘Significant improvements' A lobbying group representing the interests of hydrogen producers called the updated guidance "significant improvements" and said it would allow the industry to move forward to the next planning stage. "After years of strategic engagement and persistent advocacy, the issuance of this final rule now affords project developers the basis for evaluating opportunities to scale clean hydrogen deployments," Fuel Cell and Hydrogen Energy Association chief executive Frank Wolak said. A raft of hydrogen projects were announced in the US after President Joe Biden announced billions of dollars in funding and tax credits for hydrogen with the 2022 Inflation Reduction Act. But much of that euphoria fizzled out during the long wait for clarity on the rules and concerns that the Treasury's guidelines would be too strict to allow competitive production. Many would-be producers paused or cancelled US plans in 2024 because of widespread uncertainty over which projects would qualify for PTC, leaving companies unable to make long-term investment decisions. By Jasmina Kelemen and Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US relaxes rules for H2 production tax credits


25/01/03
25/01/03

US relaxes rules for H2 production tax credits

Houston, 3 January (Argus) — The US Treasury Department has issued long-awaited tweaks to 45V hydrogen production tax credit (PTC) guidelines, relaxing rules in a bid to make it easier for producers to benefit from the subsidy. The final guidance released today retains the fundamental approach from the preliminary rules set out in December for the tax credits of up to $3/kg. The "three pillars" of additionality, temporal matching and regional deliverability remain in place for electrolytic hydrogen, but the Treasury has tweaked certain aspects. The additionality rule prescribes that hydrogen production facilities can only use electricity from clean power generation capacity that predated them by 36 months or less to encourage a further build-out of such capacity. But under the final rules, hydrogen made with power from existing nuclear plants can qualify for the credits under certain circumstances. Hydrogen producers can access the credits if nuclear power companies demonstrate that adding hydrogen production to their revenue stream extends the life of reactors otherwise slated for shutdown. Companies such as utility Constellation Energy have argued that using some of their nuclear capacity for hydrogen would provide a pathway for future relicensing of their reactors , but that this would hinge on access to the tax credits. The final guidelines now also consider existing fossil fuel-based power plants where carbon capture capabilities have been retrofitted within the 36-month window prior to starting up hydrogen production as additional capacity. This makes hydrogen output using electricity from these plants eligible for the tax credits. Hourly matching — which prescribes that hydrogen has to be made from clean power produced within the same hour to avoid increased grid emissions — will now be required only from the start of 2030 onwards rather than from 2028. Annual matching will continue to apply until the end of 2029. The new phase-in date for hourly matching at the start of 2030 brings it in line with EU rules , although the bloc requires monthly rather than annual matching before then. US industry participants have repeatedly argued that the hourly matching rules drive up production costs and stymie the nascent industry's development, while environmentalists have warned that strict rules are necessary to curb greenhouse gas (GHG) emissions. The regional deliverability rules require electrolysers to source clean power from within their operating region — as defined by the Department of Energy — to avoid grid congestions between regions resulting in use of emissions-intensive power for hydrogen production. But the final guidelines would allow for direct "cross-region delivery" of power for hydrogen production where this "can be tracked and verified… on an hour-to-hour or more frequent basis". Under certain circumstances, US hydrogen producers could now even be eligible for the tax credits if they use electricity generated in Canada or Mexico, the Treasury said. ‘Significant improvements' A lobbying group representing the interests of hydrogen producers called the updated guidance "significant improvements" and said it would allow the industry to move forward to the next planning stage. "After years of strategic engagement and persistent advocacy, the issuance of this final rule now affords project developers the basis for evaluating opportunities to scale clean hydrogen deployments," Fuel Cell and Hydrogen Energy Association (FCHEA) chief executive Frank Wolak said. A raft of hydrogen projects were announced in the US after President Joe Biden announced billions of dollars in funding and tax credits for hydrogen with the 2022 Inflation Reduction Act. But much of that euphoria fizzled out during the long wait for clarity on the rules and concerns that the Treasury's guidelines would be too strict to allow competitive production. Many would-be producers paused or cancelled US plans in 2024 because of widespread uncertainty over which projects would qualify for PTC, leaving companies unable to make long-term investment decisions. By Jasmina Kelemen and Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: Trump, macro issues ahead for US renewables


25/01/02
25/01/02

Viewpoint: Trump, macro issues ahead for US renewables

Houston, 2 January (Argus) — A combination of substantial policy shifts under president-elect Donald Trump and macroeconomic issues puts the US renewable power sector on uncertain footing to begin 2025. Analysts expect the federal tax credits that have bolstered new renewable generation during its substantial growth over the past decade will survive in some fashion, although Trump campaigned on repealing the Inflation Reduction Act (IRA). He also has promised 60pc tariffs on goods imported from China, a major player in the solar and battery storage supply chains. The ultimate effects may vary by project type and what the new administration is able to accomplish. Chinese solar products already face 50pc tariffs , which could temper any effects on the industry from Trump's protectionist trade policies, said Tom Harper, a partner at consultant Baringa specializing in power and renewables. But the new administration could make it more difficult to claim IRA incentives and could roll back federal power plant emissions rules , creating an environment that could slow the adoption of renewables. Utilities may become more cautious in using renewables because of higher costs, while others, such as companies with sustainability goals, might be able to weather the change, according to Harper. "There might be some very price insensitive corporate [power purchase agreement] buyers out there who are looking at a $45/MWh solar [contract] and now it's going to be $50/MWh after the tariff, and they'll be fine," he said. In addition, the US renewables industry is still weathering headwinds from supply chain constraints, increased borrowing rates and inflation, which have hampered new projects. For example, the PJM Interconnection — which spans 13 mostly Mid-Atlantic states and the District of Columbia — had approved more than 37,000MW of generation at the end of third quarter 2024, with only 2,400MW of that partially in service. Developers have blamed the delays on financing challenges, long lead times for obtaining equipment and local opposition to projects. Global problems, local solutions Changes to state procurement strategies could help. Maryland state delegate Lorig Charkoudian (D) next year will propose new state-run solar, wind and hydropower solicitations that would first target projects that have already cleared PJM's reviews. Her approach would echo programs in New Jersey and Illinois, and ultimately reduce utilities' reliance on renewable energy certificates (REC) procured elsewhere. "The idea is to give a path for these projects, so presumably they can be built within a few years," Charkoudian said. Utilities would use the new procurements for the bulk of their RECs, covering remaining demand by buying legacy Maryland solar credits and other PJM RECs on the secondary market. But a quick fix for Maryland's broader renewable energy objectives is unlikely after utilities used the alternative compliance payment (ACP) for two-thirds of their 2023 REC requirements. The fee for each megawatt-hour by which utilities miss their compliance targets serves as a de facto ceiling on REC prices. Maryland's ACP is low compared to neighboring states, where the qualifying REC pool overlaps, meaning that credits eligible in the state can fetch a higher price elsewhere. While lawmakers could raise the ACP to mitigate those issues, those costs would ultimately fall on utility customers. "As best as I can tell, the options are raise the ACP or adjust how we do it," Charkoudian said. "We're really concerned about ratepayer impacts, and so I don't think there's a real appetite to raise the ACP." In other states, the policy landscape is less certain. Pennsylvania governor Josh Shapiro (D) has no clear path for his proposed hike to the state's alternative energy mandate, should he choose to revisit it, after Republicans retained their state Senate majority in November. New Jersey state senator Bob Smith (D) has been working for two years to enshrine in law governor Phil Murphy's (D) goal of 100pc clean electricity, but the proposal failed to escape committee in 2024 after dying in 2023 over opposition to its support for offshore wind . Is the answer blowing in the wind? Offshore wind is a slightly different matter. Trump has been critical of the industry and federal regulators control much of the project permitting in the US. Moreover, as a burgeoning sector with higher costs, it could be more sensitive to the loss of the investment tax credit (ITC). Based on current expenses, Baringa's analysis suggests that losing the ITC could increase project costs by "at least" $30/MWh and push offshore wind REC prices in some cases near $150/MWh. That would be a "difficult cost for states to swallow", according to Harper. "We've seen a few offshore wind developers already say, 'Hey, we're not going to spend a dime more until we know what's going on,'" Harper said. Despite the challenging landscape, Charkoudian expects Maryland will move forward in areas it can control, such as expanding the onshore transmission, that will make offshore wind viable, whether it's now or "eight years from now". By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Pure green steel costs almost double NW EU HRC price


25/01/02
25/01/02

Pure green steel costs almost double NW EU HRC price

London, 2 January (Argus) — Zero emission hydrogen-fed electric arc furnace-produced crude steel would currently cost almost double the price of northwest EU hot-rolled coil (HRC), according to data launched by Argus today. The opex cost of green hydrogen-fed direct reduced iron/electric arc furnace (EAF) route steel was €1,074/t at the end of December, compared to a northwest EU HRC price of €558.25/t ex-works. That is also €544/t more than the cost of blast furnace/basic oxygen furnace (BOF)- produced crude steel, showing genuinely green steel would require a much higher finished product price than current blast furnace-based output, assuming a similar cost structure to today. Most current green offerings from EU mills are still produced via the blast furnace, with emissions reductions achieved through mass balancing, offsetting, or by reductions achieved elsewhere in the supply chain. Buy-side desire to pay premiums for this material has been limited, particularly given the downturn in the European market in the second half of 2024. This has contributed to the market for premiums remaining immature, illiquid and opaque, and complicated by the lack of a commonly agreed definition for green steel. Automakers have shown the most interest in greener steel, given their need to reduce emissions from the wider supply chain, as well as vehicle tailpipe emissions. Some automotive sub-suppliers suggest certain mills have been willing to reduce their green premiums to move tonnes — one reported paying a €70/t premium for EAF-based cold-rolled coil for a 2025 contract, but this was not confirmed. Europe's largest steelmaker, ArcelorMittal, said over the second half of last year it would pause its direct reduced iron (DRI) investment decisions ahead of the European Commission's Steel and Metals Action Plan, and as it called for an effective carbon border adjustment mechanism and more robust trade defence measures. Market participants largely agree that natural-gas fed EAF-based production is the greenest form of output currently available to EU mills, substituted with imports of greener metallics and semi-finished steels from regions with plentiful and competitively priced energy. Argus ' new costs show BOF steel is currently just over €31/t more expensive than scrap-based EAF production fed with renewable energy. Europe's comparatively high cost of energy is one key issue for transitioning to DRI/EAF fed production. Last month, consultancy Mckinsey said mills could rely on "green iron" hubs going forward, with iron-making decoupled from production of crude steel, enabling DRI production to be located in regions with low-cost gas and ore, and raw steel production in regions with access to renewable energy. The range of production costs, launched today, include five crude steel making pathways and are calculated using consumption and emissions data provided by Steelstat , in combination with Argus price data, including hydrogen costs. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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