Japan allocates up to $3.4 bln from green fund to accelerate R&D in hydrogen

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TOKYO, May 18 (Reuters) - The Japanese government said on Tuesday it will allocate up to 370 billion yen ($3.4 billion) from its green innovation fund for two projects to accelerate research and development (R&D) and promotion of hydrogen use over the next 10 years.

Japan unveiled an ambitious goal in December to boost the country's demand for hydrogen to 3 million tonnes a year by 2030, from about 2 million tonnes currently, and to 20 million tonnes by 2050.

New Energy and Industrial Technology Development Organization (NEDO), a state-owned R&D agency, on Tuesday started accepting applications for two hydrogen projects, the industry ministry said.

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One will be an up to 300 billion yen project to create a large-scale supply chain of hydrogen and promote demand for the clean fuel. The other 70 billion yen project will develop a large-scale, cost efficient hydrogen production system by water electrolysis using electricity derived from renewable energy sources, the ministry said.

The two projects will be funded from the government's 2 trillion yen green innovation fund created to help the country achieve its 2050 target of becoming carbon neutral.

They are the first of 18 potential projects announced by the ministry last month to support R&D, by tapping into the government's fund.

Hydrogen, long used as rocket fuel, is mostly extracted from natural gas or coal. It is mainly utilised in oil refining and to produce ammonia for fertilisers but future demand is expected to come from broader segments including transport, building and power generation. read more

Details of other R&D projects to tap the government fund, including lowering the cost of offshore wind farms and building a supply chain of fuel ammonia, will be decided by the autumn, an official at the industry ministry said.

($1 = 108.8600 yen)

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Reporting by Yuka Obayashi; Editing by Susan Fenton

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