Japan Companies to Launch $1bn Fund for Hydrogen Supply Chains

ANNA NISHINO wrote . . . . . . . . .

A coalition of more than 400 Japanese companies and organizations plans to set up a $1 billion fund as early as the fiscal half ending September to bolster hydrogen supply chains, with an eye on Japan’s economic security, Nikkei has learned.

The Japan Hydrogen Association — which counts Iwatani, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group among its members — is looking to invest in the production, storage and safe transport of hydrogen through the fund. The fund will be operated mainly by Tokyo-based private equity firm Advantage Partners.

The fund will also set a quota for investments in members of the Indo-Pacific Economic Framework, a group of 14 countries including Japan, the U.S. and Australia. Hydrogen requires complex supply chains, so forging cross-border links is critical.

The Japan Hydrogen Association had outlined this past autumn its plans to set up the fund.

The IPEF will soon start considering joint projects toward building a “clean economy,” one of four pillars of the grouping. The new fund could be unveiled Thursday at the IPEF Clean Economy Investor Forum on the sidelines of a ministerial meeting in Singapore.

IPEF members will exchange information on potential projects through their governments and look to recruit interested companies at IPEF investor forums, which are slated to be held annually. The hope is that this will lead to more projects entering the pipeline.

Hydrogen produced through electrolysis can be made with renewable energy, possibly lowering production costs in countries with an abundance of clean power. Setting up cross-border supply networks will be essential to promoting use of the fuel.

To support decarbonization efforts by IPEF countries, Japan in May 2023 spearheaded the creation of a cooperative work program focusing on hydrogen technology. The bloc more recently agreed to set up similar programs for clean electricity and sustainable aviation fuel.

This past November, the IPEF reached agreements in principle on “clean” and “fair” economic rules, and officially signed a deal on supply chain cooperation, though little headway was made on the framework’s first pillar of trade.

Source : Asia Nikkei