Why global partnerships matter for scaling hydrogen

Delivering on global net-zero commitments will require energy systems capable of decarbonizing sectors where existing alternatives remain insufficient. Hydrogen and its derivatives, among them e-methane, green ammonia and low-carbon materials for steelmaking, have emerged as critical enablers of this transition.

Yet the pace of scale-up remains uneven. According to the International Energy Agency (IEA)’s Global Hydrogen Review 2025, higher input costs, global inflationary pressures and persistent gaps between supply and demand have delayed final investment decisions worldwide.

Unless these challenges are addressed through more coordinated action, hydrogen risks remain a promising solution that does not translate into system-level decarbonization. Aviation, maritime transport, steel and heavy manufacturing illustrate the stakes: each requires not only cleaner fuels, but a new industrial architecture linking production, logistics and consumption.

As highlighted in the the Hydrogen Council's Global Hydrogen Compass 2025 report, hydrogen can deliver meaningful impact when policy, capital, technology, supply and demand advance together.

Japan finds itself at a significant inflection point in this emerging landscape. With a high concentration of hard-to-abate industries and a structural reliance on imported fuels, the country’s exposure to energy security and decarbonization imperatives is considerable.

Hydrogen, therefore, represents an industrial and strategic pathway. Progress, however, is not without friction. Infrastructure remains incomplete across production, transport and end-use. Green hydrogen and its derivatives still entail meaningful cost premiums.

Long-term offtake agreements, essential to investment certainty, have not yet materialized at the scale required.

While Japan’s updated Basic Hydrogen Strategy (June 2023) and the Hydrogen Society Promotion Act (October 2024) have provided policy direction, further mobilization of private capital and deeper international cooperation will be necessary to achieve commercial maturity.

These issues align with insights from the IEA’s Hydrogen Breakthrough Agenda Report 2025, which emphasizes that hydrogen markets cannot be built through isolated technological demonstrations alone.

Rather, they require coordinated, system-wide progress. Japan nevertheless possesses the industrial depth, engineering capability and end-user demand profile to play a distinctive role in shaping how hydrogen ecosystems mature globally.

Several structural building blocks have begun to take shape. Japanese policy reforms have provided clarity on national intent, while the Japan Hydrogen Association, a cross-sector platform with more than 525 companies and municipalities, has created a mechanism for aligning stakeholders across manufacturing, energy, transport, finance and technology.

A further step towards institutional readiness occurred in 2024 with the launch of the Japan Hydrogen Fund (JHF). Established through collaboration between the Japan Hydrogen Association, Advantage Partners and Sumitomo Mitsui DS Asset Management, the fund seeks to channel domestic and international capital into technologies and projects fundamental to the development of a hydrogen economy.

Its mandate is straightforward – to create investable pathways for capital while supporting companies capable of delivering material progress in deployment.

A defining feature of JHF is its ability to integrate industrial insight, investment capabilities and demand visibility within a single platform. Its activities are organized around three main pillars:

Through these pillars, JHF serves not only as a capital provider to the hydrogen value chain, but also as a coordinating mechanism capable of accelerating the emergence of a functioning hydrogen ecosystem.

Japan’s hydrogen initiatives are moving beyond early demonstrations towards commercially relevant activity. With policy frameworks and investment platforms now in place, clearer pathways to scale are emerging. JHF has already committed capital to several early-stage and near-final investment decision projects, supporting infrastructure development and advancing technologies toward commercial readiness.

Strengthening ecosystem connectivity has been equally important. JHF’s knowledge-sharing forums and reporting structures have broadened collaboration across manufacturers, energy suppliers, logistics providers, financiers and technology innovators. As a result, demand visibility is improving, technology matching is more efficient and conditions for final investment decisions are gradually strengthening.

JHF is also serving as a bridge between Japan’s hydrogen ecosystem and global capital. The participation of a leading international player, TotalEnergies, as a limited partner underscores the growing relevance of Japan as a strategic market for early hydrogen deployment.

International technology leaders are also watching these developments with growing interest. JHF’s recent investments in Twelve, innovative CO₂ conversion technology provider and producer of eFuels, reflect the increasing alignment between Japan’s industrial demand and international innovation.

These examples highlight how reliable demand and sophisticated supply chain partners are key to commercializing carbon transformation at scale. Japan offers both – a strategic market with the industrial backbone and long-term commitment.

Japan’s early progress offers encouraging signals for how hydrogen markets can take shape globally. Hydrogen operates not as a single technology but as an integrated system in which production, logistics and end-use must advance together. When policy direction, capital flows, technological readiness and emerging demand align, the pathway to commercial scale becomes far clearer.

Strengthening long-term offtake commitments remains essential. Supply-side investment alone cannot unlock final investment decisions. It is durable demand visibility, especially in aviation, shipping, energy and steel, that gives developers and financiers confidence to proceed. Policy mechanisms such as Japan’s emerging contracts-for-difference and long-term decarbonization auctions can help bridge early cost gaps and accelerate capital deployment.

Japan’s approach shows how coordinated public ambition and structured private capital can reinforce each other. By pairing national frameworks with industrial capabilities and the Japan Hydrogen Fund’s ecosystem-wide perspective, early technological gains will begin to translate into broader market development.

Hydrogen will play a central role in global decarbonization. Japan’s evolving approach, grounded in policy alignment, industrial coordination and disciplined capital formation by JHF, offers a practical example of how countries can move from conceptual ambition toward system-level implementation.

For Japan, this represents both a domestic opportunity and an international responsibility. By illustrating how supply, demand, finance and policy can be integrated, the country is contributing a blueprint others may adapt as they progress toward net-zero goals.

Delivering a hydrogen society will require sustained leadership, investment and cross-border cooperation. Japan’s early progress indicates how these elements can converge and how a more resilient, diversified and sustainable energy system can begin to take shape – offering a pathway the international community can advance together.