Clifford Chance

Low-carbon H2 supply chain subsidy in Japan

12 August 2024

Japan is promoting international supply chains for low-carbon hydrogen and derivatives.

The immaturity of the markets for the supply of hydrogen and its derivatives, coupled with their higher cost of production compared with fossil fuels, pose a barrier to adoption and a risk for investors in the supply chain. To allay these concerns, the Japanese government is developing a subsidy scheme to encourage investment in robust international supply chains for low-carbon hydrogen and its derivatives pursuant to the Act on Promotion of Supply and Utilisation of Low-Carbon Hydrogen and its Derivatives for Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure (the Hydrogen Society Promotion Act), which was passed on 17 May 2024. Full details of the subsidy scheme will be provided in subordinate regulations, which are expected to be published in summer 2024.

This briefing summarises some key aspects of the proposed supply chain subsidy based on discussion materials published by the Japanese government up to 31 July 2024.

Download PDF