Japanese companies and organizations are gearing up to launch a significant initiative aimed at strengthening hydrogen supply chains, a move designed to enhance Japan’s economic resilience and security. According to sources familiar with the matter, a consortium comprising over 400 entities plans to establish a substantial $1 billion fund by the end of the fiscal half, tentatively scheduled for September.
The impetus behind this endeavor is the Japan Hydrogen Association, which boasts prominent members such as Iwatani, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group. The association intends to utilize the fund to invest in various aspects of hydrogen supply chains, including production, storage, and transportation, with a particular focus on ensuring safety protocols are robust. Operations of the fund will be primarily overseen by Advantage Partners, a Tokyo-based private equity firm.
Notably, the fund will also prioritize investments in members of the Indo-Pacific Economic Framework (IPEF), a coalition consisting of 14 nations including Japan, the United States, and Australia. Given the intricate nature of hydrogen supply chains, fostering cross-border collaboration becomes imperative for success.
Plans for establishing the fund were initially outlined by the Japan Hydrogen Association last autumn. It is expected that the fund’s unveiling will coincide with the upcoming IPEF Clean Economy Investor Forum, slated to take place on the sidelines of a ministerial meeting in Singapore, possibly on Thursday.
As part of the broader agenda toward fostering a “clean economy,” a core objective of the IPEF, members are set to deliberate on joint initiatives. These initiatives are aimed at leveraging the collective expertise and resources of member nations to drive sustainable economic growth. The forum will serve as a platform for exchanging information on potential projects and facilitating partnerships between interested companies, with annual investor forums planned for future engagements.
Hydrogen, particularly when produced through electrolysis using renewable energy sources, holds promise for significantly reducing production costs, especially in regions endowed with abundant clean energy resources. Establishing robust cross-border supply networks is deemed indispensable for scaling up the adoption of hydrogen fuel.
Japan’s commitment to advancing decarbonization efforts within the IPEF is underscored by its proactive stance in spearheading cooperative work programs focused on hydrogen technology. Recent endeavors have seen the bloc’s members agree to establish similar programs addressing clean electricity and sustainable aviation fuel.
While progress has been made on various fronts, challenges persist in advancing the framework’s agenda, particularly in the realm of trade. Despite agreements on “clean” and “fair” economic rules, and the formalization of a deal on supply chain cooperation, efforts to address trade-related issues have encountered obstacles.
