Japan’s Culture Of Consensus Means It’s Slithering Into Hydrogen’s 10x Energy Cost Economy

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Why did Japan invade Manchuria and form a vassal state prior to World War II? Why did Japan go on to invade many Chinese prefectures and establish vassal states? Why did Japan then wage war on China and enter into a prolonged asymmetrical war against a vastly bigger country with a vastly greater populace? Why did Japan keep waging that war despite a clear national policy of withdrawal? Why did Japan sideline or even jail people who asked why? And why did Japan bomb Pearl Harbor?

It seems odd, but it’s reasonable to contrast this to Japan’s adoration and continued efforts to make hydrogen a carrier of energy at all levels of society. We can reasonably ask thankfully less momentous and world-framing questions about Japan and Toyota’s focus on hydrogen for transportation, imported hydrogen and derivatives for electrical generation, and hydrogen for home heating and cooking. Yes, it’s an economically destructive and thermodynamically nonsensical focus, but it’s not like it is going to be bombing other countries over this or end up bombed themselves. But it’s also not as if it is accidentally going to be saved by a foreign power forcing its culture into a more useful path and finding it a useful Asian ally.

Japan is faced with another choice that through external eyes is just as clear as the incredibly bad decisions it made in the run-up to World War II, where it kept doubling down on a terrible decision by an out of control military officer with more terrible and self-destructive decisions because of its culture. The country’s refusal to make the right decisions about hydrogen over the past and coming years have a high likelihood of destroying its economy, and Japan doesn’t seem to be able to help itself.

I have a long-distance relationship with Japan. I’ve studied the language, and as with five of the seven non-English languages I’ve attempted, failed to become even basically conversational. I love studying languages, but it’s not like I’m great at it. What I find fascinating about languages is the insights into culture that they provide. Japanese is like Brazilian Portuguese in that both attempt to avoid any semantic content with usually as many syllables as possible, but in very different ways. Japanese flowers with semantically-null courtesies, while Brazilian Portuguese extends every alternative under the sun to avoid giving offense by excluding one in case it’s the listener’s preference. By contrast, business English and Mandarin attempt to convey maximum semantic content in as few syllables as possible.

I lived in Singapore for a couple of years, and during those years was on the phone with Japanese teams and a translator multiple times a week as we worked big, and often head-scratching, technology transformation deals. There were several that I recommended my firm walk away from because they were nonsensical, including deals worth a billion US dollars. And yet, we walked away from none of them.

I was selected for a transformation role in Tokyo with my firm, helping the local team adopt global leading project practices for a couple of years, but it fell through. Japan is as alien a society as Saudi Arabia is, but in a much more benevolent and fascinating way, so while we rejected a KSA opportunity, we embraced the Japanese opportunity. The conditions for success that were momentarily there disappeared. I still regret not being able to stay in the tiny two-burner stove studio apartment we found in the heart of Tokyo, eight kilometers walk from the Imperial Palace, with my spouse. It would have been extraordinary.

And now, a decade later, I spend part of my time scratching my head and trying to understand Japan and Toyota’s failure of thermodynamics and economics around hydrogen. I’d attributed it to my understanding of the culture, such as it was. I’ve suggested that some aged man or men had to die or otherwise diminish so that his or their face would not suffer a reversal of their policies. But now I suspect I’m wrong.

I’ve been listening to a Great Courses series on Japan, Understanding Japan: A Cultural History by Mark J. Ravina. He introduced me to a phrase and concept that resonated, that Japan never made a strategically coherent decision to invade China or bomb Pearl Harbor, it just slithered into war because its culture prevented anyone from taking personal responsibility for mistakes and so it kept compounding them.

The originator of this phrase, slithered into war, is David Lloyd George, former Prime Minister of the United Kingdom. He used it about European countries in World War I. But Masao Maruyama, a pre-eminent Japanese post-WWII political historian and political scientist, applied it to the process that led to Japan being a global pariah, at war with both the USA and USSR, and being bombed with nuclear weapons. Let’s be clear. I’m a white person who hasn’t been to Japan, referencing a white historian who lived in Japan and married a Japanese woman, quoting a Japanese thinker. I’m undoubtedly missing many things.

And yet it’s resonant. I’m looking at Japan just as I look at Europe’s energy crisis, Australia’s Bizarro World Net Zero plan, Canada’s disconnect between carbon price and cost, and many other things I find fascinatingly disconnected around the globe.

Maruyama’s thesis, per Ravina, was that there was a circle of consensus that precluded responsibility among the Japanese leaders, including the emperor and all the governmental officials. The emperor ruled, the advisors advised, but no strong person decided. No one was willing to stand up to say no, so collectively they all said “Yes” multiple times. This is an aspect of consensus building culture in Japan. Unless someone manages to rise to a position of high authority while retaining the strength of character to make hard decisions, no hard decisions get made, and even then, it’s very hard for that person to get enough high-quality information to make informed decisions.

The creation of the Japanese vassal state in Manchuria? No one took the responsibility to say it was wrong and stupid, so it was diffused between the group. The following vassal states in China? All refused to point out their errors. Lots of aggressive military actions ahead of industrial five-year-plan successes? No one saying no.

And hence to Pearl Harbor. Amazing battle success and war failure. Tactically brilliant and strategically stupid. Japan didn’t have any capacity to build war materiel and the USA had massive capacity. And so at the Battle of Midway six months later, Japan lost massively, the start of the collapse of the dominoes that resulted in its abject capitulation a few years later. It was and is a pattern.

Even now, 76 years after the constitution of Japan came into effect, no one is really clear about whether the remarkable Article 9, the one that says Japan will never go to war again, was introduced by General MacArthur or Hitoshi Ashida, who chaired the constitutional committee. Japanese historians like Ravina just don’t know, but claims for both are present and have strong support. Ravina asserts that it’s quite possible that Ashida wrote it, but lied and said it was from MacArthur, who as unassailably the strongest figure of authority around couldn’t be argued with, just so that it would get in.

Japan, and especially one of its biggest corporations, Toyota, has been pushing hydrogen for years. A couple of years ago, I pointed out that the corporation had started exploring hydrogen for vehicles in 1992, 31 years ago, and it was a reasonable thing to explore at the time. Toyota was also exploring electric vehicles at the time, and delivered the first EV cars in 1993, the Townace EV, followed by an EV version of its Crown Majesta later that year, and an EV version of the RAV4 in 1995.

But at some point, industrial and energy and transportation policy became entangled, and instead of abandoning hydrogen when it became clear that electric vehicles were vastly superior, Toyota kept pushing the Mirai, to the extent of giving away $15,000 of free hydrogen with every car, including refurbished ones. It can’t sell them, it loses money on every one, yet it persists.

Toyota also co-developed the remarkably inane home hydrogen canister, a bulky 5 kilogram (11 pound) pod that contains sufficient hydrogen to produce 3.3 kWh of useful energy, per reports, which I take to mean electricity, being the generous sort. For context, that’s about a tenth of a gallon of gas worth of energy, or about 11% of the average US home’s daily electricity consumption. The company is promoting it as something that would be used in its hydrogen-powered Woven City at the base of Mount Fuji. Toyota asserts that they will be able to plug it into electric vehicles as well, although it’s far too bulky for an e-bike or other small vehicle power carrier at 40 cm (16 in) long and 18 cm (7 in) in diameter. It wants to build millions of the canisters, establish a national scale industry that delivers them everywhere every day all at once, which as is as insane as Michelle Yeoh with hotdogs for fingers.

If it were only one wealthy corporation with a sideline in wasting a fraction of its money on inane things while the rest of the corporation got on with actually useful efforts, that would be fine. It would just be an interesting, Toyota-has-a-whimsical-side amusement. But it is serious. Toyota keeps not making and delivering electric cars.

And if it were only Toyota, that would be fine. It would be in good company with other legacy OEMs which are deeply fumbling the electric vehicle transition like BMW and Stellantis (which I still insist is named that way because the marketing bros couldn’t resolve their disagreement between Stellar and Atlantis before it was time for martinis and so just mushed them together as a terrible compromise).

But late last year, the first test shipment of what Japan’s government considers to be a crucial hydrogen supply chain sailed from Australia to Kobe, carrying about 50 tons of liquid hydrogen. I published my assessment of how mind-bogglingly expensive it would be if delivered by ship a couple of years ago, noting at the time that it would be at least five times as expensive per unit of energy as liquid natural gas (LNG). As always in these types of assessments, I gave every benefit of the doubt to the technology, and as a result, it’s much more likely to be 10-15 times as expensive.

LNG is already one of the most expensive forms of fuel energy around, only used because it’s cleaner than coal and there are places with lots of cheap natural gas like Australia and the USA, and places which don’t have much of it but need energy, like Europe and Japan. How much more expensive?  S&P Global assessed LNG vs thermal coal price variances delivered in Asia a few years ago, long prior to the 2022 energy crisis and COVID-19, and found that LNG ranged between two and three times as expensive per unit of energy delivered. That’s why Europe prefers pipelines, of course, but given that Russia has turned out to be an incredibly bad strategic partner, to the point of exploding its own Nord Stream 1 & 2 pipelines during the middle of its illegal invasion of Ukraine, Europe can no longer get enough of the stuff through cheaper distribution models, hence its global tour begging suppliers for theirs.

When you multiply the most expensive form of energy by 10 times, while the world is pivoting to much cheaper wind and solar energy incredibly rapidly, you have a recipe for economic disaster. This isn’t hard math. China, which is only a few hundred kilometers from Japan through the East China Sea, built as much offshore wind energy in 2022 as the rest of world combined in the previous five years, and its deployment of renewables is exponentially growing. Europe’s energy crisis has led to radically increased heat pump and other efficiency deployments, accelerated HVDC projects in all directions and increased renewables deployments. 90% of all new generation projects deployed in the USA are renewables.

Does Japan have alternatives? Of course it does. While Japan is a world leader in domestic heat pump use, with a 90% market penetration and world-leading firm Daikin building gigafactories in Texas, it’s still a fossil fuel-heavy economy and its industry can electrify vastly further. It likely won’t see the 50% reduction in primary energy the USA could achieve for the same economic output, but it could easily see 40% efficiency gains.

Japan has 144 GW of onshore wind energy resource capacity and 608 GW of offshore wind resource capacity. The country only built about 5 GW of onshore wind and 0.2 GW of offshore wind (which is 6x the USA, so there’s that). Offshore wind is taking off around the world, Japan has lots of shallow seas around it to build seafloor-mounted turbines in, and floating offshore wind is finally a thing. As noted, other countries in the region have built massive amounts of both onshore and offshore wind. It has plans for more, but people keep scratching their heads about why it’s so slowly developing in the country.

There’s a lot of room for solar in the country, including carpeting the 150 square kilometers of the Fukushima exclusion zone with solar panels. At 40 MW capacity per square kilometer (a median average derived from looking at the world’s largest solar farms), that’s about 6 GW of capacity right there. It’s not like Japan doesn’t know how to build solar farms. I was involved with a proposal for a 40 MW solar farm next to a community in 2013 when I was working in Singapore. Japan already has about 79 GW installed, approaching 10% of the country’s electricity demand, so it is at least getting this partially right. Of course, solar resource capacity is estimated to be between 350 GW and 2,746 GW, so it’s not like it has maximized this resource.

Don’t forget Japan’s massive geothermal potential. There’s a reason it has massive numbers of hot springs and that they are a beloved cultural tradition. If it would use it, it could deploy 25 nuclear reactors worth of electrical generation.

And, of course, there’s the nuclear reactors themselves. Japan had 33 in operation before Fukushima and shut them all down. Remarkably, 50% of the deficit of electricity was made up for by voluntary efficiency measures by the populace, mostly leaving the thermostat high in the summer and low in the winter and dressing appropriately for the weather. (Formal business attire disappeared in the summers, and I’m not sure if it ever came back. If anyone knows, please let me know.) I had expected that two-thirds of the reactors would stay offline permanently due to a combination of being old and sharing safety defects. So far, Japan has brought 10 reactors back online, and has requests for approval for another 16, so it is likely to exceed my expectations. It even has two under construction, although they have been under construction since before Fukushima.

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Then there are HVDC transmission interconnects. Japan is only 200 km from South Korea and 700 km from mainland China. The Korea Strait is only 90 meters deep. The East China Sea between Japan and the mainland is shallow too, less than 200 meters, with the Okinawa Trough running outside of Japan and being easy to avoid. These distances and depths are trivial for modern HVDC undersea deployment. For that matter, linking to the Philippines at 1,600 km is still far from the longest under construction undersea HVDC that would be built, with construction of the Sunlink from Morocco to the UK spanning twice that distance. As I’ve noted, HVDC is the new pipeline, and interconnects enabling energy to flow as needed are a massive enabler of decarbonization.

It’s not like Japan doesn’t know how to build HVDC, even undersea HVDC, as that’s what it uses to link its islands. At one point, the Kii Channel link was one of the longest subsea links in the world. Japan has five operating HVDC connections today, although a couple are back-to-back, enabling grid segments to share electricity without synchronizing their frequency.

And then there’s pumped hydro. The map above shows just the sites per the Australia National University global pumped hydro atlas, and shows a resource capacity of 150 GWH. There are 33 of them. That’s a potential for about 5 TWh of power storage capacity. I suspect that’s more than Japan requires. In fact, it’s likely that developing 10% of those sites is vastly more than Japan requires. Oh, and there are so many potential sites with 2 to 50 GWh per the GIS study that Japan is literally invisible underneath them.

So what’s stopping Japan from building vast amounts of geothermal, more onshore solar, onshore wind, offshore wind, lots of pumped hydro and HVDC interconnections to the Asian Supergrid and the ASEAN Grid instead of steaming forward with plans to convert its industry and grid to run off of incredibly expensive imported hydrogen?

Why is it slithering into energy poverty with its hydrogen plans instead?

There are different actual reasons for different portions of the puzzle. Japan’s treatment of its farmers and farmland is deeply perplexing and likely impossible to unravel without someone at the very top forcing transformation, so solar and onshore wind are very hard to build. Japan refuses to build geothermal because it refuses to put its hot springs at any risk. Japan has been trying to build offshore wind for a long time, but its business culture appears to be creating typhoon-scale headwinds.

HVDC interconnects with South Korea face the minor problem that Japan occupied Korea for decades, massacred South Koreans, and kept teenaged Korea women as sex slaves in WWII. HVDC interconnects with China run into the problem that the USA made Japan very wealthy as part of a specific strategy of Pacific dominance and countering China, and now that’s become completely toxic with China’s economic ascendance and the USA’s irrational desire to pretend that it’s still 1980. And, of course, Japan committed massive war crimes in China in the run-up to and during WWII, including the six weeks of the Nanjing Massacre where about 200,000 Chinese citizens died and 20,000 were raped. Despite this, Japan has massive trade with both South Korea and China, so it’s not like the countries don’t have strong economic ties and a 77-year history of peaceful co-existence.

None of this is impossible to resolve if there were indeed sufficient willpower. It’s not like Japanese people are stupid, ignorant or lazy. Quite the contrary. But a lot of it comes down to its culture preventing the people from telling each other the truth about deeply stupid ideas. And so, just as it slithered into war in the late 1930s and early 1940s, it is slithering into hydrogen and energy poverty. As a result, Australia won’t be exporting lots of hydrogen and derivatives to it. Japan will either figure it out or suffer the consequences of being completely unable to compete internationally and see its economy collapse to the point that it can’t afford to import energy any more.