Japan's carmakers, energy firms in joint venture to drive demand for hydrogen-powered vehicles

Japan H2 Mobility President Hideki Sugawara (fifth from left) and representatives of its joint establishment companies pose for a group photo after their joint press conference in Tokyo on March 5, 2018.
Japan H2 Mobility President Hideki Sugawara (fifth from left) and representatives of its joint establishment companies pose for a group photo after their joint press conference in Tokyo on March 5, 2018.PHOTO: AFP

TOKYO - Japan's top carmakers have teamed up with major energy companies and other key players to set up a consortium to reduce the costs and inconvenience of using hydrogen fuel-cell vehicles (FCVs) in a bid to boost demand.

The consortium of 11 companies - known as Japan H2 Mobility - aims to reduce the costs of installing and maintaining hydrogen refuelling stations, among other objectives.

It targets to have 80 new hydrogen stations by fiscal 2021 - in addition to the current 101 that have been built, planned or are undergoing construction by individual companies, president Hideki Sugawara said on Monday (March 5).

This is in line with national targets set last year for 160 stations by 2020, and 900 by 2030.

Tokyo also wants to increase the number of FCVs on its roads to 40,000 units by 2020, and to 800,000 units by 2030.

The hope is that more advanced technology and better cost efficiencies can help to drive consumer interest, with refuelling costs expected to be slashed by a third by 2030, Mr Sugawara said.

The joint venture company will also work to reduce the burden on infrastructure companies to build and maintain hydrogen stations through private and public funds.

Each station now has a price tag of 500 million Japanese yen (S$6.3 million), about five times the cost of a petrol station. Talks are ongoing to secure other investors.

The government plans to have at least 100 hydrogen-powered buses ferry athletes between venues at the 2020 Tokyo Olympic Games, in a show of Japan's concerted push towards adopting clean energy.

Yet, its current domestic take-up rate for FCVs, dubbed by Prime Minister Shinzo Abe as the "ultimate eco-car", has been slow. Only 2,400 such vehicles ply the roads - four years since Toyota became the world's first carmaker to mass produce such cars and two years after Honda entered the market.

Industry leaders spelt out a chicken-and-egg problem at a news conference on Monday. Demand for FCVs, seen as expensive and inconvenient, cannot grow without an adequate network of hydrogen refuelling stations which, by themselves, are white elephants with a lack of demand.

This led the 11 Japanese companies to band together to rev up national efforts to drive down the costs in installing and maintaining hydrogen stations.

The companies include three of Japan's motoring giants - Toyota, Honda and Nissan. There are also six major energy companies including JXTG Nippon Oil & Energy, Idemitsu Kosan and Air Liquide Japan. Also represented are trading firm Toyota Tsusho, and the government-backed Development Bank of Japan.

FCVs tap hydrogen and oxygen to power themselves. The only by-product is water, which can be discharged from the vehicle as vapour. As it is, Japan is already two years behind its initial target of 100 hydrogen stations by March 2016.

JXTG senior vice-president Yutaka Kuwahara, whose company runs about 40 per cent of Japan's hydrogen stations, said construction has been slowing due to a lack of users and the high building costs.

When asked how the new alliance will improve the situation, he said: "We need to lower the costs to remove the bottlenecks of high construction and operational costs, and in this sense, the joint venture marks a new 'all-Japan' business model."