Japan awards US$6.8 billion in first international hydrogen CfD, signaling start of major procurement cycle

Japan's Ministry of Economy, Trade and Industry (METI) has awarded its first international low-carbon ammonia projects under the government's hydrogen Contract-for-Difference (CfD) scheme, marking a pivotal shift from small-scale domestic projects to large-scale international supply chains, according to Wood Mackenzie. 

The two projects, led by JERA and Mitsui & Co., will import approximately 772,000 tonnes of blue ammonia annually (equivalent to 120,000 tonnes of hydrogen) from Louisiana, United States, starting in 2030-2031. With approximately 65% of the $19.2 billion CfD funding pool remaining available after these awards, Wood Mackenzie anticipates that further international hydrogen awards will follow as Japan scales up its low-carbon hydrogen procurement. 

“This CfD round represents a breakthrough, not a conclusion,” said Shintaro Onishi, Principal Analyst, Hydrogen and Ammonia Research at Wood Mackenzie. “Japan is now backing large-scale international supply chains rather than just domestic demonstrations. By leveraging US production incentives like the 45Q tax credit alongside domestic CfD support, Japan has created a more cost-effective pathway to secure low-carbon ammonia supply.” 

Securing over half of Blue Point's capacity 

Both projects will source blue ammonia from the Blue Point facility in Louisiana with a 1.4 million tonne per annum (Mtpa) project jointly developed with CF Industries. JERA holds 35% equity and will offtake 0.5 Mtpa starting February 2030, primarily for co-firing at its Hekinan coal-fired power station in Aichi. Mitsui holds 25% and will supply 0.28 Mtpa beginning January 2031, primarily to Hokkaido Electric Power for ammonia co-firing, with the remainder serving UBE Mitsubishi Cement and Tosoh facilities. 

Together, the Japanese consortia have secured more than half of Blue Point's production capacity, significantly de-risking the project's commercial viability. 

The projects have been awarded 15-year CfD support to be executed through JOGMEC, with subsidy funding to be drawn from Japan's US$19.2 billion (JPY 3 trillion) hydrogen ‘price gap’ support programme. While specific subsidy values were not disclosed, Wood Mackenzie estimates that these two projects will account for approximately US$6.8 billion, which is roughly 35% of the total CfD funding available, over the 15-year subsidy period extending through 2045. 

Leveraging Japan's ammonia co-firing leadership 

The CfD awards build on Japan's world-leading technical capabilities in ammonia co-firing. JERA's Hekinan power station achieved the world's first demonstration of 20% ammonia combustion in a commercial coal unit, with full commercial operation targeted for 2029. The new CfD support extends this technology to Hokkaido Electric's Tomato-Atsuma plant, creating a foundation for ammonia-based decarbonisation beyond central Japan. 

“Japan has grounded its hydrogen programme in tangible demand,” added Onishi. “By linking imports to real use-cases such as power generation and industrial furnaces across utilities, cement, and chemicals industries. These projects create cross-sector synergies that strengthen the business case for large-scale ammonia deployment.” 

Integrated policy approach reduces value chain risk 

The CfD awards are part of Japan's increasingly holistic hydrogen policy framework. Both JERA's Hekinan units and Hokkaido Electric's Tomato-Atsuma plant previously secured awards under Japan's Long-Term Decarbonised Power Auction (FY2023), which provides mainly capital cost support. Combined with CfD fuel price differential support and infrastructure development incentives (Hub Development Support), the integrated approach de-risks the entire hydrogen value chain from production to end-use. 

More awards expected as funding capacity remains 

METI's announcement suggests the door remains open for additional CfD-backed projects. With approximately 65% of the US$19.2 billion funding envelope still available after these awards, and two small-scale domestic projects approved in September 2025 expected to have limited budget impact, Wood Mackenzie anticipates further international hydrogen awards may follow. 

“The takeaway for developers and investors is clear: Japan's hydrogen CfD programme is accelerating and reaching overseas at large volumes,” concluded Onishi. “Each supported project validates Japan's commitment and builds toward a future international hydrogen market. However, closing the gap to the 3 million tonne 2030 target will require a significant acceleration in award pace and project development.”