Japan Takes A Step Forward Passing Key Hydrogen And CCS Acts

On Friday 17 May 2024, the Hydrogen Society Promotion Act and the CCS Business Act were passed in the Parliament of Japan.

As discussed in our previous publication, the Hydrogen Society Promotion Act addresses the higher cost associated with producing, importing and supplying hydrogen when compared to fossil fuels. Under the Act, the Japanese government will accept applications for support, providing subsidies to help close the price gap between hydrogen and the existing fossil fuels.¹ For more details, while we have to wait for subordinated regulations to be provided by METI, subsidies will be granted to selected projects for, in principle, 15 years, provided production commences prior to 2030. This aims to promote the use of hydrogen and its derivatives as alternatives to fossil fuels.

The CCS Business Act also focuses on bolstering Japan's decarbonisation efforts by supporting companies to launch carbon capture and storage businesses in Japan by 2030. The Act seeks to achieve this by establishing licencing regimes for rights such as carbon storage and exploratory drilling, providing greater legal certainty for CCS businesses.

When asked about the Hydrogen Society Promotion Act during a press conference on 14 May 2024, Ken Saito, the Minister for Economy, Trade, and Industry, stated that the Act aims to promote further utilisation of hydrogen, and "create a supply chain for low carbon-hydrogen and other types of energy that will be pioneering and highly likely to sustain integrally on the demand and supply side". Minister Saito also stated that after the Bill is enacted, applications for support may be starting around this summer and they aim to provide subsidies for selected projects within this year.²

Further details regarding the support available under this legislation are expected over the coming months.

These new laws present exciting opportunities for private sector investors seeking to enter the green hydrogen and CCS markets. Our team is experienced in advising clients on renewable energy projects and can assist you to explore how this new legislation could support your project development.

Footnotes

1. Cabinet Approvals on the "Bill for the Act on Promotion of Supply and Utilization of Low-Carbon Hydrogen and its Derivatives for Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure" and the "Bill for the Act on Carbon Dioxide Storage Businesses" (meti.go.jp)

2. Press Conference by Minister Saito (Excerpt) / METI Ministry of Economy, Trade and Industry

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