How Japan’s hydrogen price-gap support settles each year
JOGMEC pays a grant calculated from the price gap between a project’s plan-specific base price and its reference price. The application guide specifies a 15-year support period and requires the plan to provide for continued supply for at least 10 years from the day after that period ends.1,4
The annual amount follows the eligible price gap and actual supplied volume. A separate ceiling uses average prices and planned volume. Negative annual amounts and other repayment rules have their own conditions.1,3
How the annual price gap is calculated
For each use and unit supply period, the eligible amount is the base price minus the reference price, multiplied by the quantity actually supplied. The annual settlement sums those amounts across uses and periods. A positive result determines the year’s support, subject to a separate ceiling.1
This is the guide’s example base-price formula, not a universal tariff. The guide says a recognised plan may set a different formula when JOGMEC accepts it. Its inputs and adjustments are therefore plan-specific.1
Reference prices depend on the use
The distinction is the commercial history of hydrogen or related products in the application, not the age of the facility. A new use is an application where hydrogen or related products have not generally been used commercially. An existing use is an application where hydrogen or related products already have a self-sustaining commercial market, including when a new plant starts using them in that application.1,3
| Use | Reference-price basis in the guide |
|---|---|
| New use | Japan-landed price of the displaced existing fuel or raw material, with the specified fuel-tax, carbon-price and other applicable components. |
| Existing use | Based on past transactions and sales prices. If the user currently buys hydrogen from another company for the same application, use the price under its existing hydrogen purchase contract, including its price formula. If it does not currently buy hydrogen from another company for that application, such as at a new plant or for in-house production, use an existing-hydrogen market price indicator. Add any specified transaction-specific decarbonization value. |
For the carbon-price element used for a new use, METI/ANRE’s FAQ version dated 17 December 2025, Q3-54, identifies the figure as the floor price under the GX emissions-trading system, legally called the adjustment reference transaction price. This is the interpretation in that dated FAQ.2
The 1.5 factor is a ceiling
The guide gives a separate annual grant ceiling:1
[S] and [R(t)] are average prices calculated from the latest 12 months of information available in June of the preceding fiscal year. [V(t)] is the operator’s planned supply volume for each use during the relevant subsidy year, as set in the recognised plan. The 1.5 factor applies to this ceiling formula.
This 1.5 calculation limits eligible support. It is not a multiplier applied to the settlement calculated from actual annual deliveries.
Negative totals and other repayment rules
If annual eligible costs are negative, the amount is treated as revenue. JOGMEC’s operator rules, Article 29(1), require the operator to remit, out of grants already paid, an amount equal to the absolute value of that negative total.3
Article 29(2) addresses a different case. If the operator earns income incidental to the subsidised project but outside the grant’s purpose, JOGMEC may require part of the grant to be remitted. The income is the trigger; the amount named by the clause is part of the grant, and the clause makes the action discretionary.3
Separately, continuing revenue from other markets arising from the subsidised project may support an exceptional downward review of the base price under the recognised plan when there are reasonable grounds to expect the base price to fall. That is a price review, not an automatic grant repayment under Article 29(2).1,3
Sources
The evidence dates above apply only to the claims and source checks described there.