Representatives of participating companies and ministries at the launch of the Conference for Realizing the Hydrogen Backbone Concept, Chuo Ward, Tokyo, June 4, 2026. (©Sankei/Noboru Ikeda)
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Winning on technology but losing in business, ceding market dominance to China. Is Japan about to repeat the same pattern it fell into with lithium-ion batteries and solar panels? The sector teetering on that edge is hydrogen technology—indispensable to achieving a decarbonized society.
On June 4, private companies, including Toyota Motor and Kawasaki Heavy Industries, together with the government, launched the Conference for Realizing the Hydrogen Backbone Concept, a public-private partnership aimed at drawing on lessons from past failures to chart a winning path for Japanese hydrogen technology.
Hydrogen is expected to see significant market growth as a clean energy source that emits no CO₂. Japanese companies hold world-leading technologies across the hydrogen sector. These include water electrolysis equipment from Asahi Kasei and Mitsubishi Heavy Industries, proton exchange membranes from Toray, FCVs from Toyota and Honda, and hydrogen carrier ships from Kawasaki Heavy Industries.
Yet momentum for hydrogen adoption within Japan remains sluggish. Prices are high, demand hasn't grown, and as demand remains weak, prices haven't come down—a vicious cycle.
China, The World's Largest Consumer
Meanwhile, China is making rapid practical advances in hydrogen technology. The country accounts for roughly 30% of global hydrogen demand and is the world's largest consumer.
State-owned Sinopec already operates hydrogen production facilities with an annual capacity of 20,000 tonnes. FCV sales, centered on logistics trucks, have exceeded 10,000 units in just two years, compared to roughly 9,000 units in Japan over ten years.
A Toyota executive confided that China's hydrogen technology is closing in on Japan's—and the pressure is being felt acutely.
It is against this backdrop that the Conference for Realizing the Hydrogen Backbone Concept was launched, with the goal of breaking the deadlock between domestic hydrogen prices and demand.
The plan envisions a trunk transport network of approximately 1,300 kilometers connecting Fukushima Prefecture and Fukuoka Prefecture using large FCV trucks.
Over the next decade, 30 large-scale hydrogen refueling stations—on par with the Iwatani Cosmo Hydrogen Station Heiwajima in Ota Ward, Tokyo, one of Japan's largest are to be built along expressways and similar routes, with around 1,500 trucks operating.
The model projects that hydrogen prices can be brought down from the current ¥1,600-¥2,000 ($11-14) per kilogram to approximately ¥1,000 ($6.90)—equivalent to the cost of conventional diesel fuel—while keeping station operations in the black, thereby establishing hydrogen-powered logistics as a viable business.
Significant Investment Burden
Land acquisition for large stations and a stable supply of FCV trucks at prices acceptable to shippers and transport operators will require considerable investment. Securing enough shippers to generate demand is no simple matter either.
Nevertheless, Sato Koji, Toyota Vice Chairman and co-chair of the Japan Hydrogen Association —a body bringing together companies, financial institutions, and local governments—said the group was committed to taking firm responsibility for the administration's growth and crisis-management investment strategy as it works to advance hydrogen's social implementation.
A Turning Tide
With the Trump administration pivoting toward expanded fossil fuel production, global decarbonization efforts have lost momentum. Japanese companies find it difficult to commit to commercial hydrogen investments where real demand remains uncertain.
But Sato sees the tide turning under Prime Minister Takaichi Sanae's administration, which places strong emphasis on energy security and economic security.
Hydrogen can also be combined with CO₂ and other compounds to produce naphtha, a petrochemical feedstock. As tensions in the Middle East drive naphtha shortages, push up prices, and complicate procurement for food packaging and coatings, Kawasaki Heavy Industries has begun proposing the production of naphtha from hydrogen.
The company holds the distinction of having delivered the world's only commercial plant—located in Turkmenistan—that produces gasoline from hydrogen derived from natural gas and other inputs. That same technology, it says, can be applied to manufacture naphtha.
Aligned with Takaichi's Strategy
For Japan, hydrogen—which can be produced domestically through water electrolysis and can also yield naphtha—is a critical resource to secure on both energy security and economic security grounds.
Moreover, given the broad range of companies involved, gaining export competitiveness in this field would strengthen the foundations of domestic manufacturing, including small and medium-sized enterprises. Hydrogen investment aligns squarely with the Takaichi administration's growth strategy.
On the geopolitical risks now shaping the global economy, Takahiro Mori, Vice Chairman and Executive Vice President of Nippon Steel, says the world is locked in a struggle for supremacy spanning cutting-edge technologies such as semiconductors and AI, energy, and critical materials supply chains. "That is the essence of what is happening," he said. Hydrogen is caught in the middle of that contest—and ceding dominance to China is not an option.
Ahead of the public-private council meeting on May 28, Sato and colleagues presented Prime Minister Takaichi with a hydrogen policy proposal, calling on the government to seriously consider regulatory demand-creation measures such as mandatory hydrogen usage requirements.
The proposal reflected recognition of the limits of subsidy-dependent approaches and a willingness to position industry itself as a hydrogen consumer to drive investment.
The association has also raised the banner of procuring 1% of energy needs from hydrogen. Complementary policy support and a broadening circle of hydrogen adoption are now eagerly anticipated.
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(Read the article in Japanese.)
Author: Noboru Ikeda, The Sankei Shimbun
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