PROJECT FRONTLINE JBIC’s new finance office advancing the realization of a decarbonized society: Energy Transformation Strategy Office
Expectations are growing for hydrogen as a solution in the realization of a decarbonized society. A new finance office has been established in JBIC to promote hydrogen supply chain creation. HIDAKA Yoshitaka and TSUJI Naoki from the new office, speak about its role and share their enthusiasm for their work.
(left) Director,
Energy Transformation Strategy Office,
Energy and Natural Resources Finance Group
HIDAKA Yoshitaka Joined the bank in 2003. After assignments including the Representative Office in London, study at Columbia University, and the Japanese Ministry of Economy, Trade and Industry, he worked in project financing for renewable energy and other power generation projects. In the Treasury Department, he was also in charge of JBIC’s first green bond issuance.
(right) Deputy Director,
Energy Transformation Strategy Office,
Energy and Natural Resources Finance Group
TSUJI Naoki Joined the bank in 2016. After working in sovereign credit assessment at the Country Credit Department, and project financing for nuclear energy and other power generation projects in the New Energy and Power Finance Department I, he was seconded to the Ministry of Finance where he dealt with multilateral development banks including the World Bank.
For Japan to take the lead in utilizing new energy
“As one of the generation responsible for the future, I was excited to be involved in a new business field at the opportunity to be at the forefront of hydrogen finance,” says TSUJI Naoki of the Energy Transformation Strategy Office, which was established in July 2022. On the other hand, its director HIDAKA Yoshitaka recalls, “I was frantically searching for what needs to be done in this new mission.”
HIDAKA Yoshitaka, Director of Energy Transformation Strategy Office
There are high expectations globally for hydrogen and its derivatives such as ammonia in realizing carbon neutrality and promoting green transformation (GX). Although many challenges exist in the use of hydrogen, international competition in the field is now intensifying, due in part to the energy crisis triggered by the situation in Ukraine. Many Japanese companies are also working to take on the challenge of building a hydrogen-based society.
It was against such a background that JBIC’s Energy Transformation Strategy Office was established to take charge of projects related to global hydrogen supply chain creation and development. “By handling all projects related to hydrogen production, transportation and utilization, it has become possible for us to both consolidate information and respond smoothly to customers,” says HIDAKA.
However, they had to start from scratch. For the first six months, the focus was on disseminating information and letting people know about the new finance office. Potential customers around the world were identified and divided up between the staff, who visited them one by one. This led to the signing of memorandums of understanding (MOUs) for cooperation and collaboration with governments and government agencies of countries which could be producers of hydrogen, and with major hydrogen-related businesses overseas. Some 20 MOUs have already been concluded.
“We are also working actively disseminating information by making presentations at international conferences to explain our initiatives. Going forward, I wish to structure projects that will involve Japanese companies in the entire supply chain, with this not only contributing to Japan’s zero emissions, but economic growth as well,” says TSUJI proudly.
Being the first in the world to create a hydrogen supply chain from scratch
Hydrogen can be made from renewable energy sources or fossil fuels and does not emit CO2 when burned. When Japan announced the “Basic Hydrogen Strategy” in 2017, it was the first country with such a plan, and is a world-leader in hydrogen technology. But transportation is a major issue for Japan, which lacks both renewable energy sources and fossil fuels, for the large-scale use of hydrogen.
The main producers of hydrogen will be the United States, the Middle East, Australia, India, as well as South America and Africa. To get hydrogen to Japan, it must be shipped in the form of liquid hydrogen (minus 253 degrees Celsius), a liquid organic hydrogen carrier (LOHC) such as methylcyclohexane (MCH), ammonia or synthetic methane.
The transportation sector, however, is one area where Japan can demonstrate its strength. “More than 50 years ago, Japan was the first country in the world to successfully build a global-scale supply chain for liquefied natural gas (LNG). I hear that there were more than a few who questioned its economic efficiency at that time, but today, LNG is utilized across the globe,” emphasizes HIDAKA. “JBIC has knowledge and expertise in this area from its long years of supporting the development of LNG supply chains. So, I also want JBIC to lead the way in new forms of financing for building a hydrogen supply chain.”
If used for hydrogen-single fuel power generation, each power plant would require the equivalent of 2 to 5 million fuel cell vehicles’ hydrogen consumption. But financing to build a supply chain for large-scale introduction of hydrogen does not yet exist. The mission of the Energy Transformation Strategy Office is to create this system from scratch.
Taking the leadership in connecting players while maintaining a proactive mindset
Was there any hesitancy in taking up this new challenge? HIDAKA takes a positive approach: “I am working on this proactively, without fear of failure, so that Japan can lead the world in this field.” TSUJI adds, “I am proud to be involved in an important effort to achieve zero emissions, a challenge not just for Japan but for the whole world.”
TSUJI Naoki, Deputy Director of Energy Transformation Strategy Office
A business model has not yet been established, making public support, including JBIC financing, a key element in realizing the hydrogen project. But the main players are of course the businesses in the industry. In order to be a presence that businesses can always depend on, HIDAKA and TSUJI stress that they wish to respond in a flexible manner that is not bound by convention.
As a policy-based financial institution, it is JBIC’s role to actively take risks in new fields such as hydrogen. For TSUJI, now in his eighth year at the bank, every day is busy but fulfilling. “Being able to take the lead in connecting policy and business from a neutral position is the real thrill of working at JBIC. Also, I often go on business trips alone to confer with overseas governments and companies. It is very rewarding to be entrusted with such work at a young age.”
One year has passed since the establishment of the office, and they are now seeing projects that will soon lead to loans. These two talented individuals are spreading their wings and taking on the challenges of this new field, on which rests not only the future of Japan, but that of our planet as well.
In July 2022, the Energy Transformation Strategy Office was established within the Energy and Natural Resources Finance Group as a finance office responsible for dealing with hydrogen, ammonia, and other new energy sources to help achieve a decarbonized society and green transformation (GX).
