Japan's ambitious goal of carbon neutrality by 2050 hinges on a robust green hydrogen economy. Hydrogen and ammonia are expected to play a crucial role in decarbonising power generation by co-firing them in existing coal and gas plants. The revised Basic Hydrogen Strategy outlines these goals, targeting 12 million tons of annual hydrogen supply by 2040, backed by a significant public-private investment of 15 trillion yen. This strategy emphasises establishing a comprehensive hydrogen supply chain by 2030, encompassing all stages – production, storage, and transportation – to meet domestic consumption needs. While aiming for both blue and green hydrogen, securing cost-competitive green hydrogen imports is a key challenge. To achieve this, Japan needs to reduce the cost of the imported hydrogen to under JPY30/cm3.

International cooperation is critical to Japan's hydrogen strategy. Key partners include Australia, New Zealand, and Central Asian countries. The cornerstone lies in the Japan-Australia partnership, which is focused on a long-term clean energy alliance. The successful pilot project using the world's first liquefied hydrogen carrier, "Suiso Frontier," to transport hydrogen from Australia to Japan exemplifies this collaboration.

Australia's abundant sunshine and vast land make it a prime candidate for cost-effective green hydrogen production via large-scale solar-powered electrolysis plants. However, the initial investment required to develop the necessary renewable energy capacity is significant. New Zealand boasts similar advantages with its excellent solar and wind resources, but its smaller scale might limit cost-effectiveness.

Central Asia presents a diverse picture. Kazakhstan's immense wind and solar potential offers opportunities for green hydrogen production. Additionally, Turkmenistan's rich natural gas reserves open possibilities for blue hydrogen production with carbon capture technology. Central Asia's final production cost equation will depend on political stability and infrastructure development. Here, Japan is actively accelerating efforts to promote green hydrogen initiatives with support from partners like the Asian Development Bank.

The optimal storage and transportation method depends on cost and distance. For long distances like those between Japan and Australia, converting hydrogen to its liquid form (LH2) allows the utilisation of existing maritime infrastructure. However, the energy-intensive liquefaction process adds to the overall cost.

Ammonia, a readily transportable chemical, could be a more cost-effective alternative leveraging existing infrastructure. The drawback lies in the additional processing needed at the receiving end to convert ammonia back to usable hydrogen fuel. Pipelines offer the ideal scenario for geographically close partners, enabling direct hydrogen transfer. Unfortunately, this option is not feasible for Japan's long-distance connections.

In the short term, Japan may prioritise ammonia imports from geographically closer regions like Central Asia. Established infrastructure and potentially lower costs compared to LH2 shipping from Australia make this a strategic initial step. In the long run, advancements in LH2 carrier efficiency, coupled with decreasing costs for large-scale solar and electrolysis, will help Australia to become a significant green hydrogen supplier for Japan.