Japan's government and top carmakers, including Toyota Motor, are joining forces to bet big that they can speed up the arrival of the fuel cell era: a still costly and complex technology that uses hydrogen as fuel and could virtually end the problem of automotive pollution.
Prime Minister Shinzo Abe's growth strategy, announced on Tuesday, included a call for subsidies and tax breaks for buyers of fuel cell vehicles, relaxed curbs on hydrogen fuel stations and other steps under a road map to promote hydrogen energy.
That will bolster plans by Toyota, the world's biggest carmaker, and Honda Motor, Japan's No.3, to start selling fuel cell vehicles in 2015.
Toyota is expected to unveil the price and design for its new fuel cell car on Wednesday.
With two of Japan's three biggest automakers going all in on fuel cells, the country's long-term future as an automotive powerhouse could now hinge largely on the success of what they hope will be a key technology of the next few decades.
The auto sector carries special significance in Japan, providing nearly one in 11 jobs and about one-fifth of its manufacturing output. It is also one of the few big industries where Japan remains at the pinnacle of global competition after losing much of its edge in electronics and elsewhere.
Japan's ruling party is pushing for ample subsidies and tax breaks for consumers to bring the cost of a fuel cell car down to about $20,000 by 2025. The government is also aiming to create 100 hydrogen fuel stations by end-March 2016 in urban areas where the vehicles will be launched initially.
"To stay globally competitive, Japan cannot afford to lag behind in this area," said Yuriko Koike, a former environment minister who heads a group of ruling party lawmakers advocating hydrogen energy.
A fuel cell vehicle, running on electricity from cells that combine hydrogen with oxygen, emits only water vapor and heat. Hydrogen fuel production from hydrocarbons emits some carbon dioxide, although Japan hopes to implement carbon-free production by 2040.
Hydrogen vehicles can run five times longer than battery-operated electric cars, and their tanks can be filled in just a few minutes compared with recharging times from 30 minutes up to several hours for electric cars.
The challenges for fuel cell cars nevertheless remain daunting and growth could be slow, especially given the expense of building up an infrastructure of hydrogen fuel stations and the likely reliance on subsidies until costs come down.