Japan has taken another bold step toward decarbonising heavy transport. The government is set to introduce a generous subsidy to cover hydrogen fuel costs for fuel cell trucks and buses, an initiative that could shift the landscape for clean mobility.
The new scheme will provide a subsidy of ¥700 (roughly £3.80 or €4.45) per kilogram of hydrogen, effectively covering up to 75% of the price gap between hydrogen and diesel fuels. For operators of large fuel cell trucks, this could translate to savings of around ¥21,000 (£114 or €130) per full refuel, a significant incentive to make the switch from fossil fuels to zero-emission alternatives.
A Model for the UK and EU?
So, what would a similar scheme look like if implemented in the UK or across Europe?
Let’s consider the UK context first. Currently, hydrogen in the UK can cost between £15 and £20 per kilogram and in some instances up to £60 per kilogram, depending on availability and region. Meanwhile, diesel prices, though volatile, are typically lower on a per-energy-unit basis. For fleet operators, this price disparity remains a key barrier to adopting hydrogen fuel cell technology.
If the UK were to adopt a Japanese-style subsidy, covering up to 75% of the difference in cost, operators could expect support in the range of £10–£15 per kilogram. For a truck refuelling with, say, 30kg of hydrogen, that would equate to a subsidy of approximately £200–£290 per fill-up. That’s broadly comparable to the Japanese support level and could be a game-changer for fleet economics.
What About the EU?
In mainland Europe, hydrogen pricing varies even more widely. In countries like Germany and the Netherlands, prices can range from €9 to €12 per kilogram. Applying the same 75% subsidy model could result in incentives of around €5–€7 per kilogram, again, easing the cost burden for hauliers and bus operators.
Some EU nations already offer support for hydrogen infrastructure and vehicle procurement, but very few directly subsidise fuel costs at the pump. A shift toward operational subsidies could accelerate adoption, particularly for long-haul logistics operators looking to decarbonise without sacrificing range or reliability.
While Japan offers direct per-kilogram subsidies for hydrogen fuel, the UK and EU primarily focus on supporting hydrogen production costs through mechanisms like CfDs and competitive auctions. These approaches aim to make low-carbon hydrogen more economically viable, indirectly benefiting end-users by reducing overall hydrogen prices.
UK Hydrogen Subsidies
-
Hydrogen Allocation Rounds:
The UK government supports low-carbon hydrogen production through the HPBM, which offers revenue support to bridge the cost gap between low-carbon hydrogen and high-carbon fuels. In the first Hydrogen Allocation Round (HAR1), 11 projects received contracts, with £90 million in capital grant support provided from the Net Zero Hydrogen Fund.
The UK has introduced “Hydrogen Allocation Rounds” that offer subsidies to hydrogen producers through a “contracts for difference” mechanism, guaranteeing a minimum price to investors. The Hydrogen Allocation Round 2 (HAR2) shortlist, which named 27 electrolytic hydrogen projects aiming for FID by the end of the year. -
Climate Change Levy (CCL) Exemption:
The government has committed to removing CCL costs on electricity used in electrolysis to produce hydrogen, supporting the growth of the low-carbon electrolytic hydrogen sector. GOV.UK
-
The Renewable Transport Fuel Obligation (RTFO):
In the UK supports the use of green hydrogen in transport. It does so by incentivising the supply of renewable fuels, including green hydrogen, through a certificate trading mechanism. Specifically, the RTFO mandates that fuel suppliers meet an annual obligation by using tradable certificates awarded for supplying sustainable, renewable fuel. These certificates can be around £0.60 per kg for green hydrogen.
EU Hydrogen Subsidies
-
European Hydrogen Bank Auctions:
The EU has launched auctions under the European Hydrogen Bank to support renewable hydrogen production. In the first auction, seven projects were awarded nearly €720 million in subsidies, with winning bids ranging from €0.37 to €0.48 per kilogram of renewable hydrogen produced. -
Second Auction Round:
The second round of the European Hydrogen Bank auction saw average bids below €0.70/kg, indicating a competitive market. The combined subsidy amount requested was €4.88 billion to support the cumulative production of 7.3 million tonnes of renewable hydrogen over a 10-year period. -
Member State Support:
Individual EU member states have supplemented EU funding with national budgets. For example, Germany added €350 million to support German projects that were not selected in the EU-wide auction.
Why It Matters
Fuel cell vehicles, particularly heavy-duty trucks and buses, remain one of the most promising applications of hydrogen technology. Unlike battery electric vehicles, which face challenges in range and charging time at scale, hydrogen vehicles can be refuelled quickly and offer long ranges, making them ideal for freight and intercity travel.
By targeting fuel costs directly, Japan’s new subsidy scheme helps close the economic gap between clean and conventional fuels. For the UK and EU, adopting similar measures could support domestic net-zero goals, create green jobs, and stimulate investment in hydrogen infrastructure.
With hydrogen set to play a key role in the global energy transition, policymakers across Europe will be watching Japan’s rollout closely.
The post Japan’s Hydrogen Truck Subsidy: What Could It Look Like in the UK and Europe? first appeared on Haush.