Japan is pouring money into hydrogen fuel research to counter LNG

… May shrink Asian gas market for Nigeria, others

Nigeria’s revenue from Liquefied Natural Gas (LNG) sale may be impacted as Japan is pouring money into research and development of hydrogen fuel to secure energy independence.

Japan has emerged as a hot spot for the zeroemission hydrogen economy of the future, a vision shared both by the government and its leading automaker Toyota, who are betting on hydrogen, rather than batteries or fossil fuel, will power the emission-free cars of the future.

“None of us saw it coming but a country like Japan, which has no resources and relies on

LNG is today spending a lot of money to develop hydrogen and become independent,” Tony Attah, CEO, Nigeria Liquefied Natural Gas (NLNG), said at the last Businessday Energy conference.

Japan’s novel energy project researchers are “splitting” hydrogen gas from water by applying an electrical current sourced from wind power. They are also hosting a series of small-scale water splitters powered by rooftop solar.

“Hydrogen, as both a primary source and more importantly, a carrier of energy, must become cheaper and more easily affordable,” declared Japan’s Prime Minister Shinzo Abe in Davos. “My government is aiming to reduce the production cost of hydrogen by at least 90 percent by the year 2050, to make it cheaper than natural gas.”

Toyota plans to roll out 100 hydrogen fuel cell buses to shuttle visitors between venues, a stepping stone to a big rampup for the Beijing Winter Olympics, in 2022.

Hydrogen is “very much on the strategic agenda,” said Tim Buckley at the Institute for Energy Economics & Financial Analysis, a Sydney-based energy think tank. The postponement of the 2020 Olympics, he noted, gives Japan an extra year to make its hydrogen economy “more credible, rather than a show pony.”

The postponement of the Olympic Games, where Japan planned to make fuel- cell vehicles the official means of transport has done nothing to reduce the country’s quest to scale its budding hydrogen economy.

However, some analysts are sceptical given the huge cost involved and the lack of hydrogen infrastructure required sustaining the task ahead.

Prakash Sharma, Wood Mackenzie’s research director, said Japan’s hydrogen fuel cell vehicle target seems challenging to achieve in the time frame although the cost is the biggest challenge because green hydrogen currently costs two to four

times more than fossilfuel hydrogen.

“Japan aims to lower its green hydrogen price to $ 3/ kg by 2030. As a result, we expect Japan to pursue all options to procure clean hydrogen, including import of green and blue hydrogen,” Sharma said in a report.

If Japan succeeds in scaling production and achieving wider adoption of the energy source, it may shrink a significant global LNG market thus signalling fiscal challenges for gas-producers like Nigeria.

The Federal Government earned $3.102 billion from its 49 percent stake in NLNG between 2015 and 2018. Over the last 20 years, the company has paid Nigeria about $18 billion in dividends.

Hence, analysts are urging the government to move speedily to harness its over 202TCF of gas reserves before the world shifts away from gas.

“Gas can be Nigeria’s saving grace if we take huge advantage at the right time,” Ademuyiwa Adegun, an Abuja-based gas commercial advisor, said. “The world will not wait for Nigeria.”

Japan’s quest for energy independence is coming at a time when Nigeria, the world’s ninth top LNG producer, sorely needs gas revenues to stimulate its struggling economy and increase its depleting foreign exchange reserves.

The NLNG exports around 300 cargoes of liquefied natural gas annually from the Bonny plant, representing about 40 percent of the global LNG supply.