In-Depth Analysis & Strategic Recommendations: Participation in the Joint Crediting Mechanism (JCM) and Hydrogen-Related Support Programs

Excerpt from the presentation of Ms. Tomoe Kobayashi from Nippon Koei Corporation at the Hydrogen Linkage Workshop - Bringing hydrogen into the industrialization process in Vietnam and ASEAN

1. Context & Significance

The Joint Crediting Mechanism (JCM), funded by the Government of Japan, aims to accelerate the dissemination of CO₂ reduction technologies such as green hydrogen, renewable energy, and storage solutions.

• Direct financial support: covers 20–50% of initial investment costs.

• Improved project bankability: lower CAPEX shortens payback period and improves project attractiveness to financiers.

• Carbon credits: can be shared between Japan and Vietnam, adding potential revenue from future carbon markets.

With a total budget of approx. JPY 11 billion (around VND 2 trillion) for FY2025–2027, JCM is a major “catalyst” enabling businesses to adopt low-carbon technologies at reduced costs.

2. Requirements & Challenges

a. Project Selection Criteria

• Cost-effectiveness threshold: ≤ JPY 4,000/tCO₂eq (~VND 704,000/tCO₂eq).

• Decreasing subsidy rate: as the number of similar projects in Vietnam increases (≥8), the subsidy rate drops from 50% to 20% or may no longer apply.

• MRV (Measurement, Reporting, Verification): projects must demonstrate verifiable CO₂ reductions under Japanese standards.

b. Business Challenges

• Application capacity: requires technical and language capability (English/Japanese) to prepare documentation and MRV reports.

• Co-financing requirement: JCM covers only part of the cost; remaining funds must be mobilized.

• Market risks: power price volatility, carbon credit price fluctuations, and OPEX uncertainty.

3. Strategic Opportunities for Businesses

1. Take advantage of early-stage high subsidy (2025–2026):
   Since the number of hydrogen projects in Vietnam is still low (0–3 selected so far), businesses may receive the maximum 40–50% support.

2. Combine complementary technologies:
   Use JCM to fund entire integrated systems:

   • Solar + BESS to power electrolysis

   • Energy Management Systems (EMS) to maximize CO₂ reduction

3. Japan–Vietnam–ASEAN collaboration:

   • Work with Japanese contractors to meet technical and MRV standards more easily

   • Leverage Vietnam projects as pilots and replicate across ASEAN

4. Specific Recommendations

For Vietnamese Companies

• Early planning: Prepare proposals for FY2025–2026 to secure higher subsidy rates.

• Build internal MRV capability: Train staff to conduct emission reduction reporting, reducing reliance on external consultants.

• Smart financing: Combine JCM with concessional loans (ODA, climate funds, domestic green credit lines).

For ASEAN Companies

• Regional value chain integration: Connect cross-border hydrogen demand (e.g., Singapore–Vietnam shipping corridors).

• Use Vietnam as a sandbox: Pilot projects in Vietnam before replicating in Thailand, Indonesia, etc.

• Engage Japanese partners early: Japanese entities are mandatory representatives in many JCM projects — early engagement increases selection probability.

5. Action Plan Summary

• Step 1: Assess potential CO₂ reduction and calculate cost per tCO₂eq.

• Step 2: Contact consulting firms such as Nippon Koei or VAHC for project design support.

• Step 3: Form a consortium with Japanese partners and prepare submission before the next call.

• Step 4: Develop MRV, O&M, and reporting plans for the entire project lifecycle.