Pictet North America Advisors SA

Kobe City and renewable hydrogen

When it comes to renewable hydrogen, Kobe City is forging ahead

The city’s mayor describes how his hometown recovered from a devastating earthquake and how it is looking to build a greener, more equitable and more resilient future.

Kobe has long been one of Japan’s “gateways to the world”. There has been a port situated here, on the northern shore of Osaka Bay in central Japan, for a very long time and like Esbjerg in Denmark, its fortunes have been linked to the sea for centuries. Historically, Kobe traded with China and Korea and then, after the 1868 political revolution that ended the so-called Tokugawa shogunate, Japan emerged from more than 200 years of isolation and Kobe reopened its port. Today it is one of the country’s top inter- national trading ports.

However, one of the city’s darkest days still casts a long shadow. On 17 January 1995, the city was struck by the Great Hanshin-Awaji Earthquake, a 7.3 magnitude quake that killed over 6,400 people and destroyed more than 100,000 homes. The destruction was on an unprecedented scale, with some estimates putting the cost of damage at USD100 billion. “The city’s economy, infrastructure and port suffered extensive damage,” says Kizo Hisamoto, who has been mayor of the city since 2013 and is currently in his third four-year term.

“Later, Kobe’s finances deteriorated rapidly after the city borrowed for post-disaster restoration and reconstruction projects.” Such was the scale of both the rebuilding effort and the subsequent financial difficulties that both were still in the mayor’s in-tray when he came into office nearly 20 years on from the quake. “I have focused all of my efforts on Kobe City’s reconstruction and future development,” he says, “while maintaining the city’s financial health.” 

Despite this tragedy, which is still well within living memory, today, Kobe is looking to the future with optimism. For starters, the reconstruction effort has been largely successful and has involved increased disaster preparedness, such as the installation of new large-capacity water pipes to serve as emergency water-supply stations should another disaster hit. The city also now has remote-controlled seawall gates to protect against storm surges and tsunami.

But it goes beyond this too. In 2020, Mayor Hisamoto launched a five-year plan called Kobe 2025 Vision, which sets out the direction of Kobe’s urban vision and urban development, and presents seven “goals”, which are all in accordance with the UN’s Sustainable Development Goals. These goals range from “Creating diverse culture, arts and attractions” to “Creating sustainable city spaces and infrastructure”. In essence, they are built around making the city more liveable, more equitable, more green and sustainable, and more robust economically. Since 2021, the administration has even issued so-called “Kobe City SDG municipal bonds”, whose proceeds go directly towards supporting these social and environmental strategies.

It’s clear that Mayor Hisamoto feels that economic growth and sustainability go hand-in-hand. “I believe that by encouraging residents to adopt more eco-friendly practices and by aiming for sustainable policies,” he says, “we will attract new investment and accelerate the city’s economic revitalisation.” As an example, the mayor points to an initiative that is recovering phosphorus from sewage sludge at treatment plants and turning it into a powdered fertiliser ingredient. This is then in turn made into a fertiliser which is used on farms that grow rice served in school lunches. “It’s a local-production-for-local-consumption model connecting urban residents and farming villagers,” he says. It’s a modest but incredibly illustrative example.

In terms of scale, at the other end of the spectrum is the investment the city has put into transforming hydrogen into a vital energy source. In 2014, the year after he came into office, Mayor Hisamoto began an initiative to create what he calls “a supply chain for hydrogen energy”. Later, he announced the Hydrogen Smart City Kobe Initiative, calling for Kobe to take the lead in making use of hydrogen and supplying it to the rest of Japan. Kawasaki Heavy Industries, a Kobe-based corporation, has been an important player here. The company became, in 2018, the first in the world to demonstrate a hydrogen-fuelled gas turbine that generated heat and power for public facilities near an urban centre. Last year, it led a successful pilot project using the world’s first liquefied hydrogen tanker to transport hydrogen produced in Australia to Japan. Few cities on the planet are as far ahead of the curve when it comes to exploring the potential of hydrogen as a source of renewable energy.

However, it must be noted that the energy picture in Japan is not entirely clean and green. The country has had a number of significant energy crunches in recent years, which reached their worst point in the summer of 2022. During such times, the country has had to rely on ageing coal-fired power stations, such as Takasago Thermal Power Plant, a plant built in 1968 that supplies the entire Kansai region (which includes Kobe). Part of the problem is an underinvestment in cleaner energy. According to BloombergNEF, Japan ranked only sixth on spending on the energy transition in 2021, despite being the world’s third-largest economy. The nation invested just USD26 billion, compared to USD266 billion in China and USD114 billion in the US. Clearly, there is a broader challenge across the rest of the country.

Nonetheless, Mayor Hisamoto is undeterred in his conviction that sustainability is capable of bringing with it significant eco- nomic growth. For instance, the city has plans to make the Port of Kobe, which is connected with over 500 ports in more than 130 countries worldwide, carbon-neutral to help Japan hit its nationwide target of reaching net zero by 2050. For Mayor Hisamoto, this initiative will have a positive impact on the port’s business, because it “should boost the brand of our shipping hub”.

The most apt example of this is arguably Kobe’s Airport, which right now only offers connections to regional destinations within Japan. However, from around 2030, the airport will open to international flights, which will surely be an economic fillip. The airport is located on an artificial island, which has a sloping seawall that was designed with the marine ecosystem and the surrounding seaweed beds in mind. This, Mayor Hisamoto says, is an example of the “blurring of the boundary between nature and human development that is known as satoumi in Japan”. The word comes from the Japanese words “sato” (an area where people live) and “umi” (the sea), and is a poignant word to describe a place that has been formed by prolonged interaction between humans and the environment. As we know from those historical records, Kobe has been shaped by its connection to the sea for many centuries.

For Mayor Hisamoto, everything points back to the resilience and resourcefulness of the people he serves. “Kobe City’s residents are known for taking on challenges and generating new ideas,” he says. “That quality makes it easy for the city to forge ahead with cutting-edge initiatives.” Whether it’s hydrogen energy or its soon-to-be carbon-neutral port, there’s little doubt Kobe is indeed forging ahead.