Jera Co. Inc., Japan’s largest power company, said Thursday it plans to launch a pilot project backed by the government that could help displace 30% of the liquefied natural gas (LNG) used to generate electricity, with hydrogen planned at a select power plant. 

The government grant would help fund the switch to hydrogen for a portion of the fuel used at an unspecified large-scale LNG thermal power plant. Jera is aiming to cut carbon dioxide emissions across its business. It plans to gradually increase the use of hydrogen and ammonia at its facilities. LNG is used to generate 71% of the company’s power. 

Hydrogen would be introduced later this year. Jera said it would evaluate the operational and environmental performance of the fuel from this October to March 2025. The results could help inform Jera’s aim of building hydrogen supply and related facilities, along with combustors that could co-fire hydrogen and natural gas, at the power plant and displace 30% of the LNG used with hydrogen by fiscal year (FY) 2025. 

The company received the grant from the New Energy and Industrial Technology Development Organization (NEDO), which provided the $18 billion Green Innovation Fund. The program is aimed at helping the country meet its goal of carbon-neutrality by 2050. 

Jera’s initiative would be Japan’s first to use a large amount of hydrogen as a fuel in large-scale commercial LNG thermal power plant operations. 

Kansai Electric Power Co. also announced a NEDO grant award on Thursday. The project would help demonstrate hydrogen generation using natural gas turbines over a six-year period through FY 2026. 

For decades, Japan has been the world’s largest LNG importer. A draft energy plan released in July would see the nation reduce the share of fossil fuels in its energy mix from 76% in 2019 to 41% in 2030. About half of the new target is expected to be supplied by natural gas. While the viability of the plan has faced scrutiny, it could significantly impact the global LNG trade. 

Asia has been a top destination for U.S. LNG cargoes this year, accounting for 41.2% of all exports through June, according to NGI data. Japan and China took in 57 cargoes each over that period, second only to South Korea, which imported 66.5 cargoes. 

Japan’s new plan sets a target of 20-22% for nuclear’s share in the power mix, which is unchanged from previous goals. It also makes room for hydrogen and ammonia amounting to only 1% of the nation’s energy mix, suggesting that the prospective next-generation fuels could play a larger role after 2030. 

Two types of hydrogen are being targeted to aid in the energy transition. Blue hydrogen is extracted from fossil fuels, with emissions removed using carbon capture technology. Green hydrogen is made by using renewable energy to split water through electrolysis that ultimately produces an emissions-free product. 

Infrastructure to import and export hydrogen is still in the very early stages of development across the world. Kawasaki Heavy Industries Ltd. launched the world’s first liquefied hydrogen vessel in 2019, and it completed the world’s first liquefied hydrogen receiving terminal in Japan for research purposes in 2020.