Hydrogen & Ammonia Economy

Japan's hydrogen-ammonia push has three converging structural drivers in 2026. First, the February 2026 Iran conflict and Strait of Hormuz closure exposed the severity of Japan's oil import dependence (93-95% of crude from Middle East, ~74% transiting Hormuz) and forced an emergency reserves release of 80 million barrels. METI established an Iran Situation Energy Response Headquarters and accelerated the Seventh Strategic Energy Plan, which targets raising the fossil-fuel self-development ratio from 37% to 60%+ by 2040. Second, Japan's GX (Green Transformation) plan — ¥150 trillion in public-private investment over 10 years — allocates ¥15 trillion specifically to the hydrogen-ammonia supply chain, supported by ¥3 trillion in CfD price-gap subsidies under the 2023 Hydrogen Society Promotion Act. December 2025 marked the first CfD certifications: JERA and Mitsui were approved for 772,000 tonnes/year of blue ammonia from Louisiana's Blue Point facility (CF Industries), underpinning Japan's 3 million tonne/year ammonia import target by 2030. Third, JERA achieved the world's first commercial-scale 20% ammonia co-firing test at Hekinan Unit 4 (1 GW) in April 2024, validating the technology path. Commercial 20% co-firing at Hekinan targets FY2029, scaling to 50% co-firing demonstration by ~2028. Japan aims for hydrogen + ammonia to reach 10% of electricity generation by 2050. Japan is the only nation with a commercially demonstrated ammonia co-firing programme at large scale and has built the world's first liquid hydrogen import supply chain (Suiso Frontier, Kawasaki-Brunei 2020). The supply chain from overseas green/blue ammonia production through specialist carriers to co-firing power plants is the key investment arc for the decade to 2035. Sources: METI Basic Hydrogen Strategy June 2023; S&P Global JERA/Mitsui CfD Dec 2025; Ammonia Energy Association JERA Hekinan; CSIS Iran conflict Japan analysis Apr 2026.