Japan’s Approach for Commercialization of Fuel Cell / Hydrogen Technology

1. Japan’s Approachfor Commercialization of Fuel Cell / Hydrogen Technology METI Ministry of Economy, Trade and Industry Jiro NAGAO ANRE, METI February, 2005

2. Highly Efficient 　　（Energy Conservation Effect） Hydrogen can be obtained from not only petroleum, but also natural gas, photovoltaic, wind, bio-mass and by-product energy Reducing Impact on Environment Diversification of Energy Supply Five Benefits of Introducing Fuel Cells Creation of New Industry and Job Enhancement for Industrial Competitiveness Distributed Energy Resources Significance of Introducing Fuel Cells Fuel Cell Vehicles: about 48% Stationary Fuel Cells: over 80%（including heat） Reducing CO2 Zero NOx，SOx and PM Fuel cells require a wide range of technology from various industries. ・Reducing energy loss in transmission ・Serve as backup energy in emergency Environmental technologies will affect industrial competitiveness

3. Expected Targets and Policies FCV Stationary PEFC • 2010 50,000 • 5M • 2030 15M • 2010 2.1GW • 10 GW • 2030 12.5 GW 2002 - 2005- 2010- R&D Stage Introduction Stage Diffusion Stage Infra Demonstration Project Step by step Construction Grow Naturally Codes Review of Regulations Further R&D R&D on FC and H2 R&D

4. METI Budget for Fuel Cells (1) 2001FY: 11.7 2002FY: 22.0 2003FY: 30.7 2004FY: 32.9 2005FY: 35.5 (requesting) (Billion JPY)

5. METI Budget for Fuel Cells (2) 2005FY(req.) • R&D on PEFC 5.5B - Strategic R&D alliance - New 2.0B • R&D on Hydrogen Safety 4.1B • Codes and Standards 3.6B • R&D on SOFC 3.3B • Large-scale demonstration for stationary application - New 2.5B • Strategic publicity - New 0.3B (JPY)

6. 2002ＦＹ 2003ＦＹ 2004ＦＹ Nagoya Osaka Stationary Fuel Cell Demonstration Framework（2003-2004FY） Sapporo New Energy Foundation ＜participants＞ 　・Ebara Corporation 　　・Nippon Oil Corporation 　　・Sekisui Chemical Co. Ltd 　　・Central Research Institute of Electric Power Industry 　　・The Japan Gas Association etc. ＜cooperative companies＞ 　・ Ebara Corporation 　　・ Sanyo Electric Company 　　・ Nippon Oil Corporation 　　・ Toshiba International Fuel Cells Corporation 　　・ Toyota Motor Corporation 　　・ Matsushita Electric Industrial Co. Ltd 12 places 31 places 33 places Tokyo Fukuoka Nagoya Osaka ○ Demonstration & test of Stationary Fuel Cell in various conditions ○ Evaluation of Stationary Fuel Cell effect on electric grid

7. Dramatic improvement both in power generation efficiency and heat recollecting efficiency can be observed between FY2002 and FY2003. Heat Collection ratio (HHV) FY02 FY03 Power Generation ratio (HHV) Half of all failures occur during 4 months.

8. More than 32% efficiency under real conditions WIN: Dec.-Feb. SPR: Mar.-May SUM: Jun.-Aug. AUT: Sep.-Nov. Courtesy of the Japan Gas Association (5 sites)

9. Good Performance of Heat Recollection Efficiency Courtesy of the Japan Gas Association

10. Major Improvement on Energy Conservation Ratio Courtesy of the Japan Gas Association

11. More than 30% CO2 reduction under real conditions Courtesy of the Japan Gas Association

12. JHFC Demonstration Project (1) • 47 FCVs (in Jan. 2005) from both domestic and overseas auto manufactures • 10 hydrogen stations with various H2 sources • Study on energy efficiency from well to wheel

13. JHFC Demonstration Project (2) LPG Reforming Mobile at METI Natural Gas Reforming Tokyo Liquid Hydrogen (by-product from steel mills) Water Electrolysis Naphtha Reforming Methanol Reforming Kanagawa By-product from soda factories Gasoline Reforming Kerosene Reforming FCV base station In Yokohama

14. Tokyo Station Monzen-Nakacho Ariake H2 Station Tokyo Bigsite Tokyo Teleport Current Topics (1)FC Bus Service in Tokyo Metropolitan area Period Aug. 2003 - Dec.2004 Vehicle FCHV-BUS2 (1 unit) Route 2 routes of 20 to 40 km 3 to 4 round-trips per day Ariake H2 Station Tokyo ２ｋｍ Service Route

15. Current Topics (2)Technology Showcase in EXPO 2005 FC Buses / H2 Station Japan’s Government Pavilion Fuel cell buses (PEFC) Electric power supply for the pavilion - PAFC 800kW - MCFC 720kW - SOFC 50kW Hydrogen station (natural gas reforming + by-product from steel mills) Government of Japan Pavilion

16. P.M. Koizumi’s Initiative • Test Drive by Prime Minister (December, 2001) • Basic Policy Speech by Prime Minister to the Diet (February, 2002) • Introduction of First Commercially Released FCVs by the Government (December, 2002)

17. Current Topics (3)PM’s new Residence will introduce the world’s first Fuel Cell Systems to the marketplace next year. Panasonic Ebara=Ballard

18. Current Topics (4)Japan concentrates on stationary application. Target system cost is c. 500,000 yen (=5,000USD)/1kW. Mass production drastically reduces the cost. Joint R&D and other measures help us to reach the target. To achieve the goal in three years, Japan: ①Starts large-scale demonstration program (c. 400units) in order to urge “kaizen” (improvement) and assure a learning curve to design a mass-production system. ②Started a joint R&D team consisting of “top runners” in order to research and resolve degradation factors. ③Started research to find ways to secure harmonized specifications or compatibilities of modules in order to achieve further cost reduction and self-inducting “evolution” of modules .

19. International Cooperation • International Partnership for the Hydrogen Economy (IPHE) (November, 2003) • Joint Ministerial Statement betweenMETI and DOE(January, 2004)

20. International R&D Cooperation • METI/NEDO started a new international joint R&D grant program up to 300,000 USD. • 11 joint research activities were adopted last month. • Diverse foreign partners from 8 counties: Université du Québec, National Research Council Canada (Canada), Chinese Academy of Science (China), Université Bordeaux 1 (France) , National University of Singapore (Singapore) , University of Fribourg (Switzerland) , Institute for Energy Technology (Norway) , Boreskov Institute of Catalysis - Russian Academy of Sciences (Russia) , Applied Nanotech, Inc., Battelle Memorial Institute, Naval Research Laboratory, SRI International （US）