KUALA LUMPUR (May 28): A hydrogen project in Sarawak involving Malaysian and Japanese investors is being scaled down due to funding constraints, Nikkei Asia reported.
The developers failed to secure the crucial subsidies from the Japanese government, the news platform reported unidentified sources familiar with the matter as saying. Without the subsidies, the cost of transporting the output to Japan would soar and make the project financially unviable.
The Japanese partners have “suspended the original idea”, said Tan Sri Abdul Aziz Husain, chairman of Sarawak state-owned SEDC Energy that jointly developed the project with Japanese trading house Sumitomo Corp and oil company Eneos.
The project aimed to produce ‘green hydrogen’ through electrolysis of water powered entirely by renewable energy such as solar, wind or hydroelectric, resulting in near-zero greenhouse gas emissions.
When the project was announced in 2023, the developers planned to produce 90,000 metric tonnes of hydrogen a year by 2030, mainly for shipment to Japan, using cheap hydropower in the state of Sarawak.
Nikkei Asia‘s report did not detail the extent of the project’s scale-back.
Sumitomo Corp and Eneos declined to comment to Nikkei Asia.
While Sarawak’s affordable hydropower can keep the cost of hydrogen production low, estimated at less than RM20 ringgit per kilogramme, the expense of pressurising, cooling and shipping hydrogen to Japan multiplies the final price to RM50 per kilogramme, Nikkei Asia reported, citing Abdul Aziz.
Sarawak Premier Tan Sri Abang Johari Tun Openg confirmed in a separate interview with Nikkei Asia that the project is being restructured rather than abandoned.
“The project is still on, but it is scaled down, and it is more market-oriented,” he was quoted as saying, adding that “there is a possibility of hydrogen in the open market” with global green transition accelerating.
