Tianwan NPP – the largest object of economic cooperation between Russia and China

In the PRC, there are currently 50 operating industrial nuclear reactors with a total electrical capacity of 47.5 GW. According to this indicator, China is second only to the United States and France. Although, unlike the latter, where nuclear power accounts for over 70% of the country’s total electricity generation, China has only 5%; seven years ago, the figure was two times lower, and the capacity of all power units was 16 GW.

Russia has made and continues to make a significant contribution to the development of the PRC’s nuclear power industry. Through the efforts of Rosatom, the Tianwan nuclear power plant is being built. It is located in the area of ​​the same name in the Lianyungang city district of Jiangsu province. At the moment, its capacity is 5.5 GW. The facility is the largest within the framework of Russian-Chinese economic cooperation.

Start of construction

The construction of nuclear power plants in eastern China began in 1999. Then the operating capacity of nuclear power in the Asian country was only 2 GW. The Russian company had signed a general contract for the construction of the facility two years earlier with the newly formed JNPC ( Jiangsu Nuclear Power Corporation ).

© 风 之 清扬 / CC BY-SA 3.0 (Construction of the Tianwan NPP, 2010)

Atomstroyexport CJSC – Engineering Division of Rosatom State Corporation – according to the agreements, it was to complete the project of the future plant, supply the necessary materials and equipment, carry out construction and installation work and train Chinese personnel for the further operation of the nuclear power plant.

The AES-91 project, developed by specialists from the St. Petersburg Institute Atomenergoproekt ( now JSC Atomproekt ), was taken as a basis . On its basis, the detailed design of two power units with VVER-1000/320 reactors was carried out. They were put into operation as part of the first stage in the summer of 2007.

At the Tianwan NPP, Russian specialists for the first time used a system of passive protection that was new at that time. Called the Melt Localization Device. This tapered metal structure is installed under the reactor vessel. In the event of a severe accident, retains the melt and solid fragments of the destroyed core, providing insulation for the foundation under the vessel and the reactor building. Thanks to the introduction of the new technology, six years after the launch of the nuclear power plant, its first two power units were recognized as the safest in China. The station began to generate 15 billion kWh annually.

Second stage

Successful cooperation contributed to the continuation of joint work. Russia and China agreed on in the fall of 2009, and in March 2010 they signed a new contract worth $ 1.7 billion for the construction of the second stage. These are power units 3 and 4. According to official publication of Rosatom reported that the negotiations were not easy.

© Mihha2 / CC BY-SA 3.0 / wikimapia.org (Construction of the Tianwan NPP)

By this time, Beijing was cooperating with the Americans, Japanese and French in the field of nuclear energy. Their own projects were also developed. Therefore, the competition for the construction of the next two power units at the Tianwan NPP was serious. The Russian side hoped to sign the treaty back in 2008, but the discussions dragged on.

As a result, taking into account the level of safety and technical and economic indicators, the Chinese side still gave preference to the Russian project. Moreover, it was refined from the technical and operational sides, based on the experience of the accident that occurred in March 2011 at the Fukushima-1 NPP.

The second stage was launched in December 2012. Power unit No. 3 was commissioned at the beginning, and No. 4 at the end of 2018. Everything related to the operation of the nuclear reactor was designed by JSC Atomproekt, the construction, installation and commissioning works were carried out by the Chinese with the participation of specialists from Russia. Chinese President Xi Jinping called the Tianwan NPP an exemplary cooperation project.

New stage

The third stage was implemented by China on its own. The ACPR1000 reactors were installed on the blocks No. 5 and No. 6, which are based on the French project of the M310 reactor.

In the year of completion of the second stage, another agreement was concluded with the Russian side. According to which Atomstroyexport will be engaged in the design of Units 7 and 8. Later, a general contract was signed for construction. These will be new power units with pressurized water power reactors of generation “3+” and with a capacity of 1150 MW each ( VVER-1200 ). Then it was reported that the pouring of the first concrete of power unit No. 7 will begin in 2021. In March of this year, the head of the State Atomic Energy Corporation “Rosatom” Alexei Likhachev confirmed that work on the construction of the fourth stage of the nuclear power plant should begin in late spring.

After the fourth stage is completed, the Tianwan NPP with a total capacity of 8.1 GW will become the largest nuclear power plant on the planet. Until 2011, this was the Japanese Kashiwazaki-kariva ( 8.2 GW ), but after the accident at Fukushima-1, all seven of its units were stopped for modernization. This year, the sixth and seventh are to be restarted, but the fate of units 1-5 is still unknown, it is quite possible that they will never resume work.

Hypocritical US puts pressure on China over the environment…

Hypocritical US puts pressure on China over the environment… but it’s happy for Japan to dump radioactive waste

By Tom Fowdy

The US is framing China as a partner on climate change. However, in reality, its bid to make Beijing reduce emissions is politically motivated. And its approval of Japan’s plans to dispose of Fukushima waste exposes its dual standards.

Despite the growing stand-off between the United States and China, John Kerry is in town to talk climate change. Appointed by Joe Biden as the US special envoy on climate. Kerry landed in Shanghai on Thursday seeking commitment from China on carbon emissions.

The Biden administration has talked about the need to secure ‘cooperation’ from China on tackling global warming, but there’s little good faith to be found. Sparks won’t fly here. The environment is ultimately just another front to vilify Beijing.

Earlier this week, the US raised eyebrows as it gave open backing to Japan’s bid to release contaminated nuclear water from the Fukushima power plant into the sea. Predictably, the move drew angry protest from both China and South Korea. Yet, on the other hand, when Kerry arrived in Shanghai, he said he wanted to hold China to account on its climate pledges. A clear case of double standards in Beijing’s eyes, and also demonstrating that even so-called ‘cooperation’ is being framed with tough talk.

It’s clear the US isn’t asking China to be a partner on climate change. It is in Shanghai solely to make demands and talk down to it.

Scapegoating of China

While the Biden administration is, objectively speaking, more concerned about global climate issues than President Trump ever was, having re-joined the Paris climate accord, scapegoating China on the environment has remained a consistent theme within Washington, and there is a political incentive in doing so.

Despite the fact that China actually files more renewable energy patents than any country in the world. And despite China steaming ahead on electric cars, buses and other sustainable resources. The country is persistently stereotyped by the mainstream media as being a gigantic and notorious polluter. The Trump administration aggressively pursued this narrative in order to ramp up the idea of China as a threat. Former Secretary of State Mike Pompeo even going as far as accusing Beijing of killing people in other countries through air pollution.

Of course, objectively speaking, there is a serious middle ground. We cannot deny the reality that China has an enormous population and the world’s largest industrial base. In terms of global carbon emissions obviously it matters a great deal. One cannot defeat climate change without securing China’s participation.

But one cannot also play down the notion that Beijing is being singled out on this matter. Why was Washington so quick to overlook Tokyo’s proposed dumping of radioactive waste, despite the implications it could have for the ocean? Why is it ignored that there are places with far worse air quality than China such as New Delhi, as well as cities in Bangladesh or Pakistan? Climate change is a global issue, which requires global participation. However, China is being given special treatment.

The goal is to constrain China’s development

The climate change debate is a convenient way to try to constrain China’s development by attempting to force it away from the one thing it needs the most right now, despite its strides in renewables – coal.

As a developing industrial nation, China’s need for energy is constantly surging. Coal is the most affordable and accessible commodity. Making it essential for sustained GDP growth, but it accounts for 40% of its carbon emissions. Renewables matter, but they cannot overnight satisfy the needs of 1.4 billion people and ‘the world’s factory’.

It’s for this reason that China is the largest importer of coal in the world. And so it should come as no surprise that John Kerry is demanding that China stop building new coal-fired fuel stations. A recent study found that if China is to meet its target of zero net emissions by 2060, it needs to reduce most of its capacity.

This makes for a difficult dilemma for China, which has committed to reducing emissions. However, it cannot easily divert from its existing development model. After all, if it ain’t broke, don’t fix it.

Therefore, even though Kerry’s visit is depicted as a mission to seek accord, in reality, it is political and subtly confrontational. Plus smacks of hypocrisy, given America’s tolerance of Japan’s Fukushima decision. It’s clear that while the Earth might be warming up, the freezing of the relationship between China and the US continues apace as the new Cold War intensifies.


Tom Fowdy is a British writer and analyst of politics and international relations with a primary focus on East Asia.


This is the chart that western media does not want you to see

Watch out! Biden wants to save the planet

Technology choices will decisively impact whether climate-pivoted economic policy brings benefit or disaster

By JONATHAN TENNENBAUM

President Joe Biden’s climate plan is a grandiose vision. Combining deliberate echoes of Franklin Roosevelt’s New Deal with the crash-program approach to development of technology. Exemplified by the Apollo program of the 1960s. If it works, planet Earth and the US economy will be saved at the same time.

Biden has vowed to establish US leadership in saving the planet from an impending climate apocalypse. His appointments of establishment climate activists to high positions in his administration, along with his opening salvos of executive orders, confirm his intention to make climate the central topic in all spheres of US government activity.

He calls it the “Whole of Government Approach to the Climate Crisis.”

Among other things Biden ordered a National Intelligence Estimate (NIE) of the threat that climate change poses for US national security. He made climate officially the priority focus of US foreign policy. 

One has the distinct impression that the Biden Administration intends to use the climate crisis as an occasion for reasserting the primacy of US power in international affairs. Far beyond rejoining the Paris Agreement on his first day in office, Biden has made clear that the United States will act as global enforcer of CO2 reduction measures. And, needless to say, he intends to focus especially on China. 

Biden has committed himself to making climate the center of US domestic economic policy. The recent executive orders already contain elements of his campaign promise to channel $2 trillion into building a “clean” national infrastructure. And thereby creating millions of new jobs and driving innovation and economic growth.

If all goes according to plan, by 2035 the US should have 100% CO2-free electricity generation. By 2050 total net emissions should reach zero.

“Social Cost System”

Among the first concrete steps is to initiate planning for replacing the entire fleet of over 600,000 vehicles used by federal government and the US Postal Service to zero-emission vehicles.

A key move, which has so far attracted little attention in the news media, is to implement the so-called “social cost system” as a guiding criterion for daily government decision-making. The social cost system is based on attaching a numerical value to the “global damage” attributed to emission of a given amount of carbon dioxide – in the production of a given commodity, for example.

This will have a big economic impact through the choice of products and vendors for government purchases, on which Washington spends about $600 billion a year.

The $2 trillion climate plan – whose funding must, of course, be approved by Congress – would follow on the heels of a $1.9 trillion American Rescue Plan to help the US economy and population recover from the effects of Covid-19.  

All in all, the degree of concentration of a US government on a single theme is practically unprecedented in peacetime. Were it not for the Covid-19 pandemic there would doubtless be much more discussion about this radical course.  People who believe that global warming is the greatest crisis of our time might easily overlook problematic, even ominous implications of declared policies.   

I wish to emphasize that I am not motivated by political opposition to the Biden Administration. Nor, of course, do I oppose rational measures to reduce and eventually eliminate the world’s one-sided dependence on fossil fuels.

One should also keep an open mind in respect to any new administration, which carries contradictory interests and impulses with it into office. It may adjust its course as it confronts reality.

Taking Biden’s declarations very seriously

But there are reasons to take Biden’s declarations very seriously.

Firstly, to all appearances Biden and his close advisors truly believe that the world is headed toward an unprecedented catastrophe through global warming. And that the clock is ticking and that urgent action is necessary to reduce CO2 emissions world wide. Not only the US but other nations as well must do so. Especially the largest COemitters, with China in first place.

Countries that refuse to reduce their emissions by the necessary amounts voluntarily must be forced to do so. The logic is inescapable. 

Secondly, as Biden has emphasized for the United States, replacing the world’s entire fossil fuel infrastructure with “clean technology” over the next 30-40 years creates a new market of colossal dimensions. Assuming that the nations and populations are able to pay for it. 

Thirdly, immense amounts of financial capital have already been committed to the expectation of radical climate policies. CO2 emissions are being monetized and a vast financial machinery created, tying asset valuations to parameters such as “carbon intensity” and “sustainability indices.”

Climate projections are being built into long-term risk strategies and the premium structures of insurance companies. The volume of carbon trade is growing exponentially. With it, the market for climate-linked financial instruments such as green bonds (already at $500 billion) and other so-called green assets.

Shaping global investment patterns and financial flows

Thereby, climate policy becomes a powerful instrument for shaping global investment patterns and financial flows. In his 2020 “Open Letter to CEOs” Larry Fink, the Chairman of the world’s largest asset management company, BlackRock, declared: “I believe we are on the edge of a fundamental reshaping of finance.”

In the meantime BlackRock, several of whose executives have been named to high positions in the Biden Administration. And announced that it is making climate change central to its investment strategy for 2021.

Thus, in all probability the Biden Administration will indeed pursue the radical course announced during his campaign and signaled by initial executive orders.

What will that mean?

From the positive side, I have reason to expect that areas of science and technology that are critically important for the future – nuclear fission and fusion, new materials, hydrogen technologies, high-density energy storage, applications of high temperature superconductivity and much more – will receive greater support under the new administration, than has been the case under preceding ones.

This is a crucial point. Leaving many other factors aside, the choice of technologies employed in the promised rebuilding of US infrastructure. Assuming it actually occurs. It will have a decisive impact on whether Biden’s climate-pivoted economic policy will benefit the nation or lead to disaster.

Following this introductory article no. 1, further installments in the series will take up the following concerns:

  • Green imperialism: Is the Biden Administration turning the climate issue into a vehicle for great-power geopolitics? 
  • Will Biden’s climate policy serve, defacto, as a vehicle for financial interests that are positioning themselves to profit from the tectonic shifts in global financial flows, arising from a forced move away from fossil fuels? Is this a “BlackRock Administration”?
  • Will overheated climate measures set the stage for a financial crisis? Major bets are being placed on the future of the world energy system, and market stability faces the dual menaces of a “green bubble” of climate-linked financial assets and a “carbon bubble” of potentially worthless fossil fuel assets.
  • Consider the risk of a California-like horror scenario: economically ruinous over-expansion of so-called renewable energy sources and ideologically-driven environmentalist measures, leading to exploding energy prices, blackouts, economic austerity, productivity losses and growing poverty. Will ill-conceived climate measures generate a political backlash and a resurgence of the Republicans, at latest by the 2024 Presidential elections?
  • Will the United States descend into economic and social crisis when the temporary, government money injections-induced “high” begins to wear off?
  • What’s the danger that ill-conceived measures by the Biden Administration, in the name of saving the planet, will undermine the capability of the United States and other nations to cope with climate changes in the future?
  • At the end I shall make some remarks concerning what a rational approach to the climate issue would look like.

Jonathan Tennenbaum received his PhD in mathematics from the University of California in 1973 at age 22. Also a physicist, linguist and pianist, he is a former editor of FUSION magazine. He lives in Berlin and travels frequently to Asia and elsewhere, consulting on economics, science and technology.

Don’t like CO2? Nuclear power is the answer!

Renewable wind, solar, hydro and bio-fuels cannot fill the gap

by Jonathan Tennenbaum

So you don’t like CO2? What you need to know, then, is that there’s no alternative to advanced nuclear power.

Concern about the climate effects of man-caused CO2 emissions has prompted gigantic investments into so-called renewable energy sources: wind, solar, hydropower and biofuels. Meanwhile, in a huge mistake, nuclear energy – a reliable CO2-free power source producing 14% of the world’s electricity – has been left far behind.

Germany provides a bizarre example, albeit not the only one. Here the government’s commitment to its so-called climate goals has been combined, paradoxically, with the decision to shut down the country’s remaining nuclear power plants by 2022.

Would it not be more rational, if we believe that human emissions of CO2 are destroying the planet, to expand nuclear energy as quickly as possible, rather than shut it down?

Last December the influential German magazine Der Spiegel ran a story with the title, “Can New Reactor Concepts Save Us from the Climate Collapse?” The article reports on how numbers of international investors and firms, including Bill Gates and his TerraPower, are engaged in a race to develop advanced nuclear reactor technologies as the key to eliminating world dependence on fossil fuels. A goal that could never be attained by the so-called renewable sources alone.

What should we fear most?

Addressing readers who remain terrified of nuclear energy, Spiegel writes: “According to estimates, 800 000 people die every year from the smoke produced by coal, containing toxic substances such as sulfur dioxide, nitrogen oxides, mercury or arsenic. But concepts must also be demonstrated for how to dispose of the toxic substances contained in used-up photovoltaic cells.”

The magazine explains that “energy generation nearly always claims victims and creates some pollutants. The question is, what costs and risks are we ready to accept? What should we fear most? Global warming, which is sure to come, or a possible regional reactor catastrophe? The objections to nuclear energy are justified. But in view of climate change, is it right to reject nuclear technology altogether?”

New reactor designs such as the traveling wave reactor, the molten salt reactor and small modular reactors promise to be much safer and cheaper than conventional nuclear power. And to have broader ranges of applications. Some could even “burn” nuclear waste as a fuel. Therefore eliminating the need for very long-term storage of radioactive material, which is a major argument against nuclear energy. Standardized modular construction would allow nuclear reactors to be factory-produced in much shorter times.

On this basis, a massive expansion of nuclear power worldwide might be accomplished within the space of 10-15 years. The rapid build-up of nuclear power in France, in response to the 1973 “oil shock,” provides a certain historical precedent.

New agenda

There is no doubt that nuclear energy is back on the world agenda. Even for many of those who have been bitterly opposed to it in the past. And nuclear energy – in the form used today – still has serious problems. But new reactor concepts are on the table. That addresses those issues and could completely redefine the role of nuclear energy in the world economy.

I shall describe some of these reactor concepts in a bit of detail. But first I should try to establish clarity on a crucial point.

I believe we are facing a branching point in global energy policy. What should be the priority? Assuming it should be a goal to drastically reduce world emissions of CO2 in the medium and long term – which I don’t want to argue about here – is it wise to invest so much in renewable energy sources, as many nations are doing today? Or should we allot only a limited role to the renewables? And go for a massive expansion of nuclear energy instead?

Hydrogen could be the future of energy, but…

Hydrogen could be the future of energy – but there’s one big road block

Cairney, Hutchinson, Preuss & Chen

CEO of Fortescue Metals Andrew Forrest recently said that green hydrogen offers “a colossal opportunity.” It is a solution that could change the world’s fate in the face of climate change.

Experts believe hydrogen could be a boon for renewables and a death knell for the burning of fossil fuels. “Green” hydrogen requiring only electricity and water for its manufacture.

As per the 2019 Australian National Hydrogen Strategy, Australia is at full-speed preparing to use hydrogen as a clean, flexible, sustainable, and storable energy source to achieve the decarbonisation promised in the 2015 Paris Agreement.

Australia also has the potential to become a superpower in the global supply of hydrogen fuel. Simply due to our world-leading renewable energy capacity and our existing strong networks of infrastructure for gas transport and storage.

There are clear environmental and economic incentives for Australia to establish a hydrogen economy. However it’s not as simple as changing out one source of energy for hydrogen.

For a large roll-out of hydrogen power and for Australia to lead in this space, there’s one huge hurdle that must be addressed. That hurdle is known as “hydrogen embrittlement.”

What is hydrogen embrittlement?

When engineering alloys such as steels or nickel-based alloys are exposed to hydrogen-containing environments, their mechanical performance can deteriorate to the point that catastrophic failure occurs. Scientists and engineers have known about hydrogen embrittlement for more than a century. But the problem remains unsolved.

The National Hydrogen Strategy proposes a kickstart project that allows up to 10 percent hydrogen into existing gas distribution networks. A goal of transporting 100 percent hydrogen in the long term. However, seeing as most of Australia’s existing gas distribution infrastructure is made from steel, embrittlement of these pipelines remains an issue.

A COAG Energy Council-commissioned report highlights that, while most existing structures should be capable of carrying 10 per cent hydrogen under normal circumstances, the situation is different at higher pressures and temperatures, or for welded structures, all of which are present in our existing gas network. It states that further consultation is required determine the tolerable hydrogen percentage for each type of process.

The risks are great: hydrogen is highly explosive and an accident could lead to major damage or loss of life. And potentially setting back our progress with participation in this new industry.

The challenge

The hydrogen embrittlement challenge is a highly complex materials and engineering problem. There are many aspects that still need to be understood before tangible solutions can be proposed.

For example, what are the conditions for hydrogen entry into different metals? Can this be controlled? Is it possible to completely stop hydrogen entry in metals using coatings or other surface treatments? What if these coatings get a scratch? If the hydrogen does get in, under what conditions will it cause failure of the metal? How much hydrogen is too much? How quickly will it accumulate? Can we design new engineering alloys that can better resist hydrogen embrittlement for the global hydrogen economy? If so, will the new alloys be economically feasible?

These questions can only be answered through collaboration between researchers and engineers who have a deep understanding of hydrogen embrittlement.

A solution

The development of materials for a hydrogen economy is a challenge that requires a coherent and coordinated national effort. It’s not a problem that will be fixed with one or two projects.

Hydrogen embrittlement is not just limited to steel. Other alloys are also affected. These materials will be required for hydrogen generation, transport, storage and conversion.

Addressing this issue requires long-term investment in the emerging generations of researchers and engineers. They will serve the hydrogen energy sector for the next 50 years.

Similar national initiatives are already in development in countries such as Japan, Germany, China, and the United States as they gear up for a future hydrogen energy world. Australia will have to follow suit quickly to capitalise on this emerging market.

There are many skill sets that are required to solve the hydrogen embrittlement problem. However, at its core will be metallurgy and metallurgical engineering.

Australia has a long and distinguished history in metallurgy as a result of our natural resources. Metallurgy remains a major research strength at several Australian universities.

This is a strength that will need to be leveraged to solve the hydrogen embrittlement problem. Otherwise, the hydrogen economy will be a long time waiting.

Australian researchers are working on it

Australian researchers are already active and making important new contributions to the hydrogen embrittlement problem.

In order to understand exactly how hydrogen interacts with metals at the atomic level – which is the critical information for designing a metal that can better withstand embrittlement – Australian researchers developed a unique-in-the-world microscope that can directly observe hydrogen atoms in metallic samples.

The new microscopy technique has revealed the first direct evidence that hydrogen clusters at crystal defects, leading to embrittlement. It is a major piece of the hydrogen embrittlement puzzle that needs to be solved to develop a solution to counter it.

Australia already has the ingredients for success – we have the skills, smarts, raw materials infrastructure to support a national hydrogen economy and export market. Our universities, industries and government must work together and lead the world in finding the answer to hydrogen embrittlement.

While the path to a hydrogen future isn’t an easy one, if we can solve hydrogen embrittlement we be much closer to achieving a decarbonised energy portfolio, and creating a new, clean export market in Australia.


Authors: Professor Julie Cairney, University of Sydney, Professor Christopher Hutchinson, Monash University, Professor Michael Preuss, Monash University, Dr Eason Chen, University of Sydney

The EU wants to impose carbon tariffs on Australian exports

What Australian politicians call carbon tariffs, the European Union labels a carbon border adjustment mechanism.

While one sounds bad (the WTO has rules that restrict tariffs) the other sounds understandable. If the EU is imposing a carbon tax on its own products, surely it is reasonable to impose it on products from overseas.

The argument is that if a German steel manufacturer has to pay a tax of, say, $77 a tonne for the carbon it emits while making the steel, an Australian manufacturer should be charged the same when its product enters the country, unless it has already paid the same tax here.

To do otherwise would give the Australian product an unfair price advantage — it would create “carbon leakage” of the kind Australian businesses used to warn about in the leadup to Australia’s carbon price.

The European Union approved the idea in principle on March 10.

The details are less than clear. In part because it is possible that carbon tariffs are not permitted under the rules of the WTO.

WTO rules might help Australia…

The rules say taxes or “charges of any kind” can only be imposed on imported products the same way as they are domestically.

That appears to mean that they can be imposed on importers but not on producers. However it isn’t quite what the European Union has in mind.

Ideally the WTO would be able to provide guidance. However, (in part because of the actions of the US Trump administration) it isn’t really in a position to do.

…if only they were enforceable

The WTO has a new director general in Ngozi Okonjo-Iweala. He took office this month. However it will remain unable to make rulings for as long as its appellate body is unable to hear disputes.

Under Trump, the US kept vetoing appointments to the appellate body until the expiration of terms of its existing members meant it no longer had a quorum.

Disputes can still be initiated by countries such as Australia, forcing consultations. But without final determinations.

EU says it wants to ensure that its adjustment mechanism complies with the WTO’s rules. However, it hasn’t ruled out the possibility of relying on provisions that allow exceptions.

Both sides could make a case

Exceptions are allowed for the protection of human, animal or plant life or health or the protection of an exhaustible natural resource.

The catch is these exceptions are not allowed to discriminate between countries and must not be disguised restrictions on trade.

It is arguable that an adjustment mechanism designed to protect the competitiveness of European industries will breach these provisions.

Japan Inc driving towards a hydrogen future

By SCOTT FOSTER

Toyota, Honda and Nissan are just a few of the Japanese companies placing big bets on hydrogen fuel

When Warren Buffett’s investment company Berkshire Hathaway announced last August that it had acquired more than 5% of the five largest Japanese general trading companies. Mitsubishi Corporation; Itochu; Mitsui & Co; Marubeni; and Sumitomo Corporation. Most failed to notice that Buffet was buying into coal-fired power projects.

Within three months, a group of institutional investors led by Nordea Asset Management of Finland sent a letter to Mitsubishi Corp requesting that it abandon its Vung Ang-2 coal-fired power plant project in Vietnam. Friends of the Earth, Greta Thunberg and Japanese environmentalists piled on, but to no avail.

In February, however, Mitsubishi Corp announced its withdrawal from the Vihn Tan 3 coal-fired power plant project, also in Vietnam, and said that Vung Ang-2 would be its last such project.

Both Itochu and Mitsui & Co have also announced plans to exit thermal coal. Marubeni and Sumitomo Corp plan to do so except in cases when no other source of power is available. Or where the most advanced emission-reduction technologies are used.

So what will they do instead?

These are large companies with annual turnover ranging from $48 billion (Sumitomo) to $146 billion (Mitsubishi). Operating in a wide range of businesses. From resources & energy to infrastructure, industry, IT and finance – they have no shortage of projects.

And they are all involved in hydrogen energy. For example:

Mitsubishi Corp, its Japanese engineering affiliate Chiyoda and five local companies are working on the development of a sustainable hydrogen economy in Singapore. They are using Chiyoda’s hydrogen storage and transportation technology.

Itochu plans to build one of the world’s largest liquid hydrogen plants in Japan with Air Liquide to supply fuel cell vehicles. Air Liquide already operates hydrogen fueling stations in Japan.

Mitsui & Co has entered into an agreement with Hiringa Energy to pursue commercial hydrogen energy projects in New Zealand. It has also invested $25 million in FirstElement Fuel. It is the largest developer and operator of hydrogen stations in California. 

Marubeni is working with Siemens and Masdar to develop hydrogen and other alternative energy technologies in Abu Dhabi.

Sumitomo Corp and Japanese engineering company JGC are planning to build a facility in Australia. That will produce hydrogen using solar-powered electrolysis.

These and many other Japanese companies are also getting involved in hydrogen energy through consortia and industry associations.

Hydrogen Energy Supply Chain (HESC) pilot project in Victoria, Australia, announced that the world’s first coal-to-hydrogen production process had begun operations.

The HESC project is being implemented by a consortium. From Japan, Kawasaki Heavy Industries, J-POWER, gas distributor Iwatani, Marubeni and Sumitomo Corp. Also supported by the Victorian, Australian and Japanese governments.

Last October, the Japan Hydrogen Association was established by Mitsui & Co, Iwatani, Kawasaki Heavy Industries, Japanese oil and energy company ENEOS, Kobe Steel, Sumitomo Mitsui Financial Group, Kansai Electric Power and Toshiba.

Forming international alliances

It aims to form international alliances and develop global hydrogen supply chains. In December, those companies were joined by Toyota and shipping company K Line.

In addition, K Line, Iwatani, Kansai Electric Power, Namura Shipbuilding, the Development Bank of Japan and the Tokyo University of Marine Science and Technology have formed a group to promote hydrogen fuel cell-powered ships.

Marubeni is also leading the Kobe/Kansai Hydrogen Utilization Council, which aims to develop a regional hydrogen supply chain in west-central Japan. The council includes many of the companies listed above, plus power plant equipment maker Mitsubishi Power, general contractor Obayashi and Shell Japan.

The Japanese are keen on industry associations, which often overlap. It sounds bureaucratic but ensures a degree of coordination that would be hard to achieve otherwise. As well as logistical and financial support for worldwide operations.

Iwatani recently announced plans to produce hydrogen with Stanwell Corporation in Queensland, Australia, and to build seven new hydrogen fueling stations in California with Toyota.

With interest high in Toyota’s latest developments in hydrogen fuel cell electric vehicles (FCEVs) it’s worth pointing out that Honda and Nissan also make hydrogen FCEVs.

Toyota began financing the construction of hydrogen fueling stations for passenger cars and other vehicles in California in 2014. Honda quickly followed suit. Toyota, Honda and Nissan have been supporting the development of hydrogen station infrastructure in Japan since 2015.

ENEOS now plans to install hydrogen pumps at its gas stations, a first for Japan and one that points toward a nationwide build-out. ENEOS operates some 13,000 service stations from Hokkaido to Okinawa.

Growing number of fueling stations

Available data show that there are now some 135 hydrogen fueling stations in Japan, 150-plus in Europe (more than half of them in Germany), about 80 in North America (more than half of them in California), and more than 70 in China.

The list of hydrogen power applications continues to grow:

  • Buses powered by Toyota hydrogen fuel cells are being introduced in Japan and Portugal;
  • East Japan Railway Company, Hitachi and Toyota are working on train engines powered by hydrogen fuel cells and storage batteries; and
  • Construction equipment maker Komatsu plans to develop hydrogen-powered mining trucks.

There are questions about hydrogen energy, most of them having to do with its relatively high cost, how it can be transported efficiently and safely, and the potentially negative environmental consequences of hydrogen production. All of these problems are currently the subject of research and feasibility studies.

Hydrogen fuel is currently several times more expensive than gasoline. However the price should come down as the volume produced and sold goes up. It will happen as Japan moves from 135 hydrogen stations now to several thousand in the ENEOS network alone. Transport is made economical by liquefaction and compression.

Safety concerns

As with gasoline, safety is a matter of pipe, tank and fueling system engineering. An industry representative explained that his company’s hydrogen fuel tank could withstand an attack by .50 caliber machine gun.)

Hidden environmental costs are a concern with most if not all alternatives to fossil fuels. In the case of hydrogen, the issues getting the most attention are the source of energy for electrolysis and potential carbon emissions from the coal-to-hydrogen production process.

The former is easily monitored. The latter will either be dealt with efficiently or the technology will fail economically as well as politically.

KMPG’s Global Automotive Executive Survey of 2017 found that 78% of 1,000 senior auto executives asked thought that hydrogen FCEVs would eventually outperform battery-powered EVs. Elon Musk is not one of them. Toyota, Honda and Nissan are pursuing both battery and hydrogen fuel cell vehicles.

Some industry observers believe that the cost of new technology and infrastructure will prove to be too high, but both government support and the long but incomplete list of companies mentioned in this article suggest otherwise.

In any case, Warren Buffett’s investments have done well so far. As of March 12, the share prices of Japan’s five biggest trading companies were up 45% to 99% from their 52-week lows.


Scott Foster is an analyst with Lightstream Research, Tokyo.