1. Markets and Policy in Japan: A Status Report Bob Rose Breakthrough Technologies Institute 2014 Ohio Fuel Cell Symposium 2014 Ohio Fuel Cell Symposium June 11,2014

2. Background: Fukushima 3/11 Fukushima disaster reshaped Japanese attitudes toward energy

3. Consequences 54 nuclear reactors, 30% of generation, all shut 54 nuclear reactors, 30% of generation, all shut Power consumption 7% below 2008 levels Power consumption 7% below 2008 levels Increase in fossil fuel combustion > first trade deficit in decades Increase in fossil fuel combustion > first trade deficit in decades – 83% of oil from middle east Home electricity prices up ~20% Home electricity prices up ~20% CO 2 emissions up 112 MMT CO 2 emissions up 112 MMT Destabilized electricity grid Destabilized electricity grid Consumer attitudes shifted toward security Consumer attitudes shifted toward security

4. 4 th Strategic Energy Plan of Japan Total rewrite of 2011 plan, which relied heavily on nuclear power Approved but still controversial

5. Major Goals Minimize reliance on nuclear power Minimize reliance on nuclear power Increase import of US shale gas/coal (short term) Increase import of US shale gas/coal (short term) Shift to alternative vehicle fuels Shift to alternative vehicle fuels Demand management/conservation Demand management/conservation Develop a new energy model Develop a new energy model – Distributed energy to reduce grid dependence – Resiliency – Open access and consumer choice Remain committed to CO 2 reduction Remain committed to CO 2 reduction

6. Quotable... public distrust of energy-related administrative organizations and business operators have grown due to many troubles...... public distrust of energy-related administrative organizations and business operators have grown due to many troubles... Japan cannot keep developing without establishing an energy supply-demand structure that realizes a stable energy supply system which imposes a light burden on society. Japan cannot keep developing without establishing an energy supply-demand structure that realizes a stable energy supply system which imposes a light burden on society. We aim to create... a multilayered and diversified flexible energy supply-demand structure. We aim to create... a multilayered and diversified flexible energy supply-demand structure. Hydrogen is expected to play the central role, as well as electricity and heat. Hydrogen is expected to play the central role, as well as electricity and heat.

7. What About Nuclear Restart? Nuclear Power still in the mix but much reduced Nuclear Power still in the mix but much reduced 15-18 reactors may restart, e - deficit still 20% 15-18 reactors may restart, e - deficit still 20%

8. What About Nuclear Restart? “Atomic power is important to society but it is a means to produce electricity and it is subordinate to the fundamental cornerstone of personal rights…” “Atomic power is important to society but it is a means to produce electricity and it is subordinate to the fundamental cornerstone of personal rights…” – 3 judge panel in Japan May 21

9. What About Nuclear Restart? “We need to turn around by 180 degrees the current energy-guzzling society dependent on nuclear power. I foolishly once believed the myth that nuclear energy is clean and safe. That myth has completely broken down.“ “We need to turn around by 180 degrees the current energy-guzzling society dependent on nuclear power. I foolishly once believed the myth that nuclear energy is clean and safe. That myth has completely broken down.“ -former prime minister Junichiro Koizumi -01/14

10. Hydrogen Has “The Central Role” Energy carrier Energy carrier Residential fuel Residential fuel Vehicle fuel Vehicle fuel Interconnect with renewables/storage Interconnect with renewables/storage

11. “Active Support” for FCV Commercialization Promote cost reduction Promote cost reduction Modify codes and standards Modify codes and standards Link passenger vehicles to forklifts and buses Link passenger vehicles to forklifts and buses Support infrastructure deployment Support infrastructure deployment Showcase in 2020 Olympics Showcase in 2020 Olympics Support H2 combustion research Support H2 combustion research

12. A Huge Market

13. Technology Mix

14. Applications

15. ENE-FARM 2014: 65,000 2014: 65,000 2020: 1.4 M 2020: 1.4 M 2030: 5.3 M (10% of households) 2030: 5.3 M (10% of households) Declining subsidy (450,000 to end in 2016) Declining subsidy (450,000 to end in 2016) Economic benefit: Economic benefit: - Companies pursuing markets in Europe

16. Recent Advances 80,000 hour durability 80,000 hour durability 10 year lifetime 10 year lifetime Substantial cost reduction Substantial cost reduction Units for apartment buildings Units for apartment buildings

17. Research and Development Battery hybrids Battery hybrids Integration with solar and batteries in home energy system capable of operating off grid Integration with solar and batteries in home energy system capable of operating off grid Distributed generation – harvesting excess generation capacity Distributed generation – harvesting excess generation capacity Small commercial systems Small commercial systems

18. Vehicles 50%-70% “new generation vehicles” in new car fleet by 2030 50%-70% “new generation vehicles” in new car fleet by 2030 – Natural gas, battery and FCEV Toyota and Honda Toyota and Honda committed to 2015 Toyota much more active H2 price is important H2 price is important

19. Motivation: Efficiency Toyota Corp. 2014

20. Responding to Market Interest

21. 2012: 17 research stations 2013: 19 more, $46M 2014: 6 so far, $72M 2015: 100 stations, 50% subsidy 2025: 2500, 5M FCEV Hydrogen Infrastructure

22. Final Thoughts At its best policy is revolutionary AND responsive to the public At its best policy is revolutionary AND responsive to the public Policy still in flux but hydrogen seems solid Policy still in flux but hydrogen seems solid Big players involved: JX, Toshiba, Panasonic, Toyota Big players involved: JX, Toshiba, Panasonic, Toyota Commitments made generally are commitments kept Commitments made generally are commitments kept Enlightened support bears fruit at home and in export markets Enlightened support bears fruit at home and in export markets