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The Role of Clean Hydrogen and Ammonia in Japan’s Power Sector Decarbonisation

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Japan has committed to reducing the country’s emissions by 46% by 2030 relative to 2013 and reach net-zero emissions by 2050, and has put hydrogen and ammonia co-firing at the center of its strategy.
Power generation remains Japan’s largest source of emissions. This heavy reliance on thermal power plants is mainly explained by the new coal-fired power plants built in recent years following the suspension of nuclear power plants following the Fukushima accident, and the challenge of developing renewable energy at sufficient scale and pace to support the energy needs of the Japanese economy.
Japan has been putting emphasis on hydrogen & ammonia co-firing in recent years, viewing it as the most imminent way to decarbonise its grid while ensuring a baseload and dispatchable power supply.
Two support mechanisms have been implemented by the Japanese government to incentivise the use of low-carbon hydrogen and ammonia as power sources:

➔ CfD scheme: 15-year support for bridging the gap between clean hydrogen & ammonia and fossil fuels (coal, natural gas)

➔ Capacity Auction: 20-year fixed capacity payments to ensure a stable revenue source to eligible power producers

The funds earmarked for these two programs demonstrate Japan's ambitions to be a champion of low-carbon hydrogen and derivatives imports, with a target consumption of 3mtpa and 20mtpa by 2030 and 2050, enshrined in the country's 'Basic Hydrogen Strategy'.
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