Key highlights
- 1The Japan hydrogen market is expected to reach USD 26 billion by 2036, at a CAGR of 17.5% from 2026 to 2036.
- 2Japan's Basic Hydrogen Strategy targets hydrogen and ammonia supply of 3 million tonnes by 2030, 12 million tonnes by 2040, and 20 million tonnes by 2050.
- 3The strategy targets more than JPY 15 trillion of public and private investment over 15 years.
- 4The Hydrogen Society Promotion Act, passed on 17 May 2024, introduced a 15-year contract-for-difference (CfD) price-gap subsidy and hub development support.
- 5Power generation through ammonia and hydrogen co-firing, and mobility and stationary fuel cells, are the main demand areas.
- 6In 2026, Japan awarded its first international low-carbon hydrogen and ammonia CfD support, of about USD 6.8 billion, to projects led by JERA and Mitsui & Co.
- 7In March 2026, JERA was certified as a low-carbon hydrogen and derivatives supplier under the Hub Development Support Scheme.
- 8Ammonia import hubs at Hekinan (Aichi) and Tomakomai (Hokkaido) were approved for hub development support.
- 9Key companies include Toyota Motor Corporation, Kawasaki Heavy Industries, Ltd., Iwatani Corporation, ENEOS Holdings, Inc., and JERA Co., Inc.
Report Overview
The Japan hydrogen market covers the production, import, supply, and use of hydrogen and hydrogen carriers, including ammonia and organic carriers, together with the equipment and infrastructure involved, such as fuel cells, electrolysers, hydrogen and ammonia power generation, refuelling stations, and import terminals. Japan was the first country to adopt a national hydrogen strategy and has set targets to increase hydrogen and ammonia supply from about 2 million tonnes to 3 million tonnes by 2030, 12 million tonnes by 2040, and 20 million tonnes by 2050, supported by more than JPY 15 trillion of planned public and private investment over 15 years. The Hydrogen Society Promotion Act, passed in May 2024, introduced a 15-year price-gap subsidy and hub development support, and the first international supply awards were made in 2026. This report examines the market's size, drivers, segmentation, regional hubs, pricing, competition, recent developments, and outlook, and provides recommendations for participants.
Market dynamics
Drivers
- 01Japan's target of net-zero emissions by 2050 requires low-carbon fuels for sectors that are difficult to electrify, including power generation, heavy industry, and parts of transport, and hydrogen and ammonia are central to Japan's plans for these sectors.
- 02Energy security is a further driver as Japan imports most of its energy and sees hydrogen and ammonia as a way to diversify supply.
- 03Government support is substantial: the Basic Hydrogen Strategy sets supply targets and more than JPY 15 trillion of planned investment, and the Hydrogen Society Promotion Act provides a 15-year price-gap subsidy and hub support that reduce the cost gap between hydrogen and conventional fuels.
Opportunities
- 01Because domestic low-carbon hydrogen is limited and costly there is an opportunity to build international supply chains for hydrogen and ammonia, and Japan's first international CfD awards in 2026 support imports of low-carbon ammonia.
- 02Ammonia and hydrogen co-firing in coal and gas power stations offers a large near-term use, and Japanese companies are developing the co-firing technology and import infrastructure.
- 03There is also an opportunity for Japanese firms to supply technology including fuel cells, electrolysers, hydrogen turbines, and liquefied-hydrogen and ammonia handling equipment, in Japan and abroad.
Trends
- 01Ammonia is being used as a carrier and fuel because it is easier to transport and store than hydrogen, and it is being co-fired in power stations.
- 02The Hydrogen Society Promotion Act's price-gap subsidy has begun to support international procurement of low-carbon hydrogen and ammonia, with the first awards in 2026.
- 03Import and supply hubs are being developed at coastal industrial sites including Hekinan and Tomakomai, to receive and distribute ammonia and hydrogen.
Report Summary
| Base Year | 2025 |
|---|---|
| Forecast Period | 2026-2036 |
| Market Size (2025) | USD 4.5 billion |
| Market Size (2026) | USD 5.2 billion |
| Market Size (2036) | USD 26 billion |
| CAGR (Value) | 17.5% (2026-2036) |
| Segments Covered | By Source (Grey, Blue, Green, Imported Carriers); By Carrier / Form (Gaseous Hydrogen, Liquefied Hydrogen, Ammonia, MCH / Organic Carriers); By Application (Power Generation, Mobility, Stationary Fuel Cells, Industry, Others); By End User (Power & Utilities, Transport, Industry, Residential & Commercial) |
| Regions Covered | Kanto (Tokyo Bay), Chubu (Aichi), Kansai (Kobe), Tohoku (Fukushima), Hokkaido (Tomakomai), Kyushu, and Rest of Japan |
| Key Companies | Toyota Motor Corporation, Kawasaki Heavy Industries, Ltd., Iwatani Corporation, ENEOS Holdings, Inc., Chiyoda Corporation, JERA Co., Inc., Mitsubishi Heavy Industries, Ltd., IHI Corporation, Panasonic Holdings Corporation, Toshiba Energy Systems & Solutions Corporation |
Segmental analysis
By Source
- Grey hydrogen produced from fossil fuels without carbon capture, accounts for most current hydrogen use in Japan, mainly in refining and industry.
- Blue hydrogen produced from fossil fuels with carbon capture, and green hydrogen, produced from water electrolysis using renewable electricity, are the low-carbon sources supported by policy, though domestic low-carbon production is limited.
- Imported carriers including low-carbon ammonia and liquefied hydrogen from overseas, are a central part of Japan's plans because domestic production is limited and costly.
Grey hydrogen leads current use, while low-carbon and imported sources grow under policy support, and the source mix is shifting toward low-carbon supply.
By Carrier and Form
- Gaseous hydrogen is used in industry and mobility.
- Liquefied hydrogen in which Japanese companies have developed transport and handling technology, allows long-distance shipping.
- Ammonia is used as both a carrier and a fuel particularly for power-sector co-firing, and is easier to transport and store than hydrogen.
- Organic carriers such as MCH allow hydrogen to be transported using existing liquid-fuel infrastructure.
Ammonia is central to near-term plans for power generation, while liquefied hydrogen and organic carriers support other uses, and the carrier mix reflects the practicalities of transporting hydrogen to Japan.
By Application
- Power generation through ammonia and hydrogen co-firing in coal and gas stations, is a central near-term application supported by policy.
- Mobility including fuel-cell vehicles, buses, trucks, and forklifts, and refuelling stations, is an established application in which Japanese manufacturers are active.
- Stationary fuel cells including residential and commercial systems, are a long-standing application in Japan.
- Industry including refining, steel, and chemicals, uses hydrogen as a feedstock and, increasingly, for decarbonization.
Power generation and industry account for the largest volumes, while mobility and fuel cells are established applications, and the mix reflects Japan's focus on hard-to-abate sectors.
By End User
- Power and utilities through co-firing and hydrogen power generation, are a central end user.
- Transport including vehicle manufacturers and fleet operators, uses hydrogen for fuel-cell vehicles and other mobility.
- Industry including refining, steel, and chemicals, uses hydrogen as a feedstock and fuel.
- Residential and commercial users use stationary fuel cells for power and heat.
Power, utilities, and industry account for the largest demand, while transport and residential and commercial use are established, and the end-user mix reflects Japan's plans to use hydrogen across sectors.
Market Dynamics in Japan
- 1
National Strategy and Targets
Japan's national hydrogen strategy shapes the market. Japan was the first country to adopt a national hydrogen strategy, and its Basic Hydrogen Strategy targets hydrogen and ammonia supply of 3 million tonnes by 2030, 12 million tonnes by 2040, and 20 million tonnes by 2050, with more than JPY 15 trillion of planned public and private investment over 15 years. The strategy and its targets set the direction and scale of the market and underpin investment across the supply chain.
- 2
Policy Support and the Hydrogen Society Promotion Act
Policy support, through the Hydrogen Society Promotion Act, shapes the market. The Act, passed on 17 May 2024, introduced a 15-year price-gap subsidy (contract for difference) for suppliers of low-carbon hydrogen and derivatives, whether produced domestically or imported, and support for the development of hydrogen and ammonia hubs. In 2026, the first international CfD awards, of about USD 6.8 billion, were made, and further awards are expected from the remaining pool. This support reduces the cost gap between hydrogen and conventional fuels and is central to the market's development.
- 3
Regional Hubs and Import Infrastructure
Regional hubs and import infrastructure are being developed at coastal industrial sites. Import and supply hubs for ammonia and hydrogen are being developed at Hekinan in Aichi, for co-firing at JERA's coal-fired power station, and at Tomakomai in Hokkaido, for supply to Hokkaido Electric Power and industry, both approved for hub development support in 2026. Other hubs and demonstration sites include the Kobe liquefied-hydrogen terminal, the Fukushima hydrogen research field, and industrial areas around Tokyo Bay and Chubu. These regional hubs, concentrated at coastal industrial sites, form the infrastructure through which hydrogen and ammonia will be imported and distributed.
- 4
Demand Across Sectors and Regions
Demand is distributed across power, industry, transport, and residential use, and across Japan's industrial regions. Power-sector demand is concentrated at coal and gas stations adopting co-firing, industrial demand at refining, steel, and chemical sites, and mobility and fuel-cell demand across urban and industrial areas. Japan's industrial regions, including Kanto, Chubu, Kansai, and Kyushu, and northern regions such as Tohoku and Hokkaido, are centres of demand and infrastructure. This distribution of demand across sectors and regions shapes the development of the market throughout Japan.
Pricing Analysis
Hydrogen and ammonia prices in Japan are shaped by production and transport costs, the price gap with conventional fuels, and policy support. Low-carbon hydrogen and ammonia currently cost more than the fossil fuels they replace, and this price gap is the main barrier to use. The Hydrogen Society Promotion Act's price-gap subsidy (contract for difference) is designed to bridge this gap for eligible low-carbon supply over 15 years, and is central to making projects viable. Import costs, including production overseas, conversion to a carrier such as ammonia or liquefied hydrogen, shipping, and reconversion, shape delivered prices, and ammonia is often more economical to transport than hydrogen. Carbon-intensity thresholds determine which supply qualifies as low-carbon and is eligible for support. Scale and technology development are expected to reduce costs over time.
Overall, prices are shaped by the cost gap with conventional fuels and by the subsidy support designed to close it.
Competitive landscape
The Japan hydrogen market includes energy and utility companies, industrial and equipment manufacturers, trading companies, and vehicle manufacturers. Competition and cooperation center on companies developing hydrogen and ammonia supply chains, power-sector co-firing, fuel cells and electrolysers, and import infrastructure, often in consortia supported by government schemes. Participants compete and cooperate on technology, project development, access to international supply, and eligibility for support, and Japanese companies are also active in supplying hydrogen technology abroad. As the market moves from demonstration to supported commercial supply, project development and access to low-carbon supply and support have become central.
Companies active in the market include energy and utility companies such as JERA Co., Inc., which is developing ammonia co-firing and was awarded CfD support in 2026, ENEOS Holdings, Inc., and Iwatani Corporation, a leading hydrogen supplier and station operator, industrial and equipment manufacturers such as Kawasaki Heavy Industries, Ltd., which develops liquefied-hydrogen technology, Chiyoda Corporation, which develops organic-carrier technology, Mitsubishi Heavy Industries, Ltd., IHI Corporation, Panasonic Holdings Corporation, and Toshiba Energy Systems & Solutions Corporation in fuel cells and electrolysers, and Asahi Kasei Corporation in electrolysis. Vehicle manufacturers Toyota Motor Corporation and Honda Motor Co., Ltd., and trading companies Mitsui & Co., Ltd. and Mitsubishi Corporation, are also active. These companies compete and cooperate across the hydrogen supply chain.
Voice of Customer
Primary interviews conducted for this study noted that policy support is essential to closing the cost gap, that ammonia is the practical near-term carrier, and that international supply is central. Three representative perspectives are summarized below.
"The price gap with conventional fuels is the main obstacle, so the contract-for-difference support is what makes low-carbon supply viable for us. Without it, projects do not proceed." — Executive, power generation company
"Ammonia is the practical carrier for the near term because it is easier to ship and store, and it can be co-fired in existing power stations. That is where the early volume is." — Manager, energy supply company
"Most of our low-carbon hydrogen and ammonia will be imported, so securing international supply and the infrastructure to receive it is as important as the technology." — Director, trading company
Analyst perspective
In our assessment, the Japan hydrogen market is shaped by a clear national strategy and, from 2024, by concrete policy support, and 2026 marks the start of supported commercial supply. Japan set out its hydrogen strategy earlier than most countries and has consistently treated hydrogen and ammonia as central to decarbonizing sectors that are hard to electrify, particularly power generation and heavy industry, and to diversifying an energy supply that is mostly imported. The main obstacle has been cost, as low-carbon hydrogen and ammonia are more expensive than the fuels they replace, and the Hydrogen Society Promotion Act's 15-year price-gap subsidy is designed to address this. Two features stand out. First, Japan is relying heavily on ammonia as a near-term carrier and fuel, particularly for co-firing in power stations, because it is easier to transport and use in existing plants than hydrogen. Second, most low-carbon supply will be imported, so international supply chains and import hubs, such as those approved at Hekinan and Tomakomai in 2026, are central. We expect the market to grow as the subsidy scheme supports supply and as co-firing scales, though the pace depends on the cost of low-carbon supply and the level of continued support.
Key Strategic Developments
- March 2026 — JERA certified under the Hub Development Support Scheme: JERA Co., Inc. was certified as a low-carbon hydrogen and derivatives supplier under Japan's Hub Development Support Scheme. Impact: advances the development of ammonia and hydrogen import hubs.
- 2026 — First international low-carbon hydrogen and ammonia CfD awards: Japan's Ministry of Economy, Trade and Industry awarded its first international CfD support, of about USD 6.8 billion, including projects led by JERA Co., Inc. and Mitsui & Co., Ltd. to import about 772,000 tonnes per year of low-carbon ammonia from the United States from 2030-2031. Impact: begins large-scale international procurement of low-carbon hydrogen and ammonia under the price-gap scheme.
- 2026 — Tomakomai ammonia import hub approved: a consortium was approved for hub development support to import up to 280,000 tonnes per year of low-carbon ammonia and to develop an import and supply hub at Tomakomai in Hokkaido, with supply to Hokkaido Electric Power and industry. Impact: establishes import infrastructure in northern Japan.
- 2026 — Hekinan ammonia import hub approved: the ammonia import hub at Hekinan in Aichi, supplying JERA's coal-fired power station for co-firing, was approved for hub development support. Impact: supports the scale-up of ammonia co-firing in power generation.
- 2026 — CfD pool largely remaining after first awards: after the first international awards, about 65% of the CfD funding pool of around USD 19.2 billion remained available, with further awards expected. Impact: signals continued procurement of low-carbon hydrogen and ammonia.
Strategic Recommendations
- Use policy support to close the cost gap. Because low-carbon hydrogen and ammonia cost more than conventional fuels, participants should structure projects around the 15-year price-gap subsidy and hub support, which are central to viability.
- Secure international supply and import infrastructure. As most low-carbon supply will be imported, invest in international supply chains for ammonia and liquefied hydrogen and in the import hubs that receive them, such as Hekinan and Tomakomai.
- Prioritize ammonia co-firing for near-term volume. Focus near-term deployment on ammonia and hydrogen co-firing in existing power stations, which offers the largest early demand and uses existing assets.
- Develop and supply hydrogen technology. Build on Japanese strengths in fuel cells, electrolysers, hydrogen turbines, and liquefied-hydrogen and ammonia handling to supply technology in Japan and for export.
- Align with carbon-intensity thresholds. Ensure supply meets the carbon-intensity thresholds required for low-carbon status and subsidy eligibility, which determine access to support.
- Plan for regional hubs and demand centres. Locate projects around coastal industrial hubs and demand centres in Kanto, Chubu, Kansai, Kyushu, and northern Japan, where infrastructure and demand are concentrated.
Sustainability impact
Decarbonizing Hard-to-Abate Sectors
Hydrogen and ammonia provide a low-carbon fuel for sectors that are difficult to electrify, including power generation and heavy industry, supporting Japan's target of net-zero emissions by 2050. By replacing fossil fuels in these sectors, low-carbon hydrogen and ammonia reduce emissions.
By providing a low-carbon fuel for hard-to-abate sectors, hydrogen and ammonia support the decarbonization of power generation and industry, a central part of Japan's climate goals.
Improving Energy Security
By adding hydrogen and ammonia to its energy mix and building international supply chains, Japan can diversify an energy supply that is mostly imported. Diversified supply reduces reliance on a narrow set of fuels and sources.
By diversifying its energy sources through hydrogen and ammonia, Japan can improve energy security, an important dimension of a stable and sustainable energy system.
Building Low-Carbon Supply Chains
Government support, including the 15-year price-gap subsidy, is directed at low-carbon hydrogen and ammonia that meet carbon-intensity thresholds, supporting the development of low-carbon supply chains. Support is tied to the carbon intensity of supply.
By tying support to carbon intensity, Japan directs investment toward genuinely low-carbon supply chains, supporting the environmental integrity of the transition to hydrogen and ammonia.
Developing Technology and Industry
Japan's hydrogen programme supports the development of technology and industry, including fuel cells, electrolysers, hydrogen turbines, and carrier handling, which can be supplied in Japan and abroad. Technology development supports industrial capability.
By developing hydrogen technology and industry, Japan's programme supports industrial capability and the supply of low-carbon technology, contributing to the wider transition to low-carbon energy.
Table of contents
15 chapters · 110 pages · click to expandFrequently asked questions
The Japan hydrogen market was valued at USD 4.5 billion in 2025 and is projected to reach USD 26 billion by 2036, at a CAGR of 17.5% from 2026 to 2036, supported by the national hydrogen strategy, decarbonization and energy-security goals, and the price-gap subsidy and hub support.