[South Korea-China-Japan Hydrogen Battle for Dominance](1) "Japan's Hydrogen Ecosystem to Become Reality in Four Years... Government and Businesses Firmly Committed"

Japan clears a path for hydrogen with public-private partnerships and subsidies
Administers 2 trillion yen "Green Innovation Fund"
Interview with NEDO Vice President Yokoshima Naohiko

Editor's NoteHydrogen is beginning to be used not just as a future energy source but as a fuel that powers factories, ships, and cars. China and Japan are joining forces with businesses to gain an early foothold in the market for producing, transporting, and consuming hydrogen. China is building large-scale green hydrogen production facilities and industrial parks, while Japan is supporting businesses in commercializing hydrogen by compensating for the price gap with conventional fuels over an extended period. The competition has entered a new phase, moving beyond technology development to lowering costs and securing customers. South Korea, which has strengths in hydrogen vehicles and fuel cells, also urgently needs to respond to gain an early foothold in the market. The Asia Business Daily examines the hydrogen industry strategies of South Korea, China, and Japan and looks at the roles of governments and businesses in turning technology into market competitiveness.

Japan's Kawasaki Heavy Industries, Japan Engine Corporation (J-ENG), and Yanmar Power Solutions developed the world's first hydrogen-fueled engine for large commercial vessels last September with support from Japan's NEDO. The development commemorative ceremony was held on September 7 at J-ENG's head office factory. NEDO

Japan is focusing its policy efforts on reducing high costs and uncertain demand, which are obstacles to the commercialization of hydrogen. The government is encouraging business investment by lowering development costs and fuel expenses, while requiring companies receiving support to submit sales plans for after their technology has been developed.

Even with the technology to produce and transport hydrogen, it is difficult for the industry to grow if the fuel is too expensive or there is nowhere to use it. Japan aims to bridge this gap through government support and business investment and make hydrogen a commercial industry by 2030.

In an exclusive interview with The Asia Business Daily, Naohiko Yokoshima, vice president of Japan's New Energy and Industrial Technology Development Organization (NEDO), who visited South Korea on Nov. 4, said, "Our most urgent task is the commercialization of hydrogen technology."

NEDO President Naohiko Yokoshima is being interviewed by The Asia Business Daily at KINTEX in Goyang, Gyeonggi Province. Nov. 4, 2026. Photo by Kim Hyunmin

NEDO, a public research and development (R&D) management agency under Japan's Ministry of Economy, Trade and Industry, administers a 2 trillion yen (about 17 trillion won) Green Innovation Fund. The fund supports 74 projects across 18 fields, including hydrogen, energy, and industry.

Funding decisions are based on more than just the feasibility of developing the technology. They also assess what products companies will make using the technology and who they will sell them to. The agency reviews business plans from the support stage to help ensure that research results translate into actual sales.

Vice President Yokoshima said, "Companies receiving funding had to submit the technologies they planned to develop by 2030 when they applied for support, as well as plans for what products they would make with those technologies and which customers they would sell them to." He added, "If things proceed as planned, something will be produced four years from now, and there will definitely be someone ready to use it."

This support has led to demonstrations in the transportation and use of hydrogen. A leading example is a demonstration plant completed on Oct. 6 in Queensland, Australia, by ENEOS, Japan's largest integrated energy company. Using local renewable energy, the facility can produce up to 9 tons of methylcyclohexane (MCH), a hydrogen carrier, per day. The electrolyzer has a capacity of 1.2 MW.

Hydrogen is difficult to transport in large quantities as a gas because of its volume. MCH is a substance that chemically binds hydrogen and stores and transports it as a liquid at room temperature and atmospheric pressure. It can reduce the volume required for transport to about one five-hundredth that of gaseous hydrogen. The technology is needed to build a supply chain for bringing hydrogen produced overseas to Japan.

NEDO President Naohiko Yokoshima speaks with The Asia Business Daily at KINTEX in Goyang, Gyeonggi Province, on Nov. 4, 2026. Photo by Kim Hyun-min

Alongside preparations to import hydrogen, work is also underway to expand its uses. Kawasaki Heavy Industries and Japan Engine Corporation (J-ENG) completed development of the world's first hydrogen-fueled engine for large commercial vessels in September. By raising the hydrogen co-firing rate to at least 95%, the engine cuts greenhouse gas emissions by more than 95% compared with conventional engines. 

The engine will be installed on a 17,500-DWT multipurpose vessel jointly built by Mitsui O.S.K. Lines and MOL Drybulk, with onboard demonstration tests scheduled to begin in April 2027. The Green Innovation Fund has supported the technology development work at both ENEOS and J-ENG.

After securing the technology, companies must overcome the cost barrier. Even if businesses invest in hydrogen facilities, it will be difficult to replace existing fossil fuels if fuel costs remain high.

The Japanese government's Clean Hydrogen Support Program is designed to ease this burden. It compensates suppliers for the price difference between hydrogen and fossil fuels for up to 15 years, targeting businesses capable of supplying at least 1,000 tons of hydrogen and ammonia annually starting in 2030. The measure aims to grow both supply and demand, following the 2023 revision of the Basic Hydrogen Strategy and the enactment of the Hydrogen Society Promotion Act the following year.

The government has also strengthened the accountability of business executives to ensure that public support leads to actual projects. This reflects concerns that commercialization could stall if executives delay investment, even after development teams complete the technology.

He said, "We are very concerned that, even if a development team succeeds in developing a technology with NEDO's support, executives may decide not to commercialize it." He explained, "The Ministry of Economy, Trade and Industry holds a comprehensive review meeting every six months. All the companies' executives, including their presidents, attend, and we always check their commitment to commercialization."

He added, "Some may think this is too harsh on companies, but participating companies fully understand that the funding comes from taxpayers' money, and they share the understanding that, having used public funds, they must deliver on their commitments."

Demonstrations test not only performance and cost but also actual operating conditions. Drivers at a parcel delivery company participating in a hydrogen truck demonstration said the vehicle's large size made it difficult to drive on narrow roads, but noted that its low noise reduced the burden of operating in residential neighborhoods early in the morning.

Vice President Yokoshima said, "When we had drivers participate in the demonstration, I realized they naturally came to appreciate the appeal of hydrogen, and I learned that we need to help people understand hydrogen from the user's perspective." His remarks underscored that reflecting on-the-ground needs and lowering barriers to adoption after technology development are key challenges in commercialization.

This content was produced with the assistance of AI translation services.