Hydrogen: Sarawak's journey towards the green dream

At the national level, the Hydrogen Economy and Technology Roadmap charts Malaysia's ambition to become a hydrogen exporter by 2050.
KUCHING (May 18): Hydrogen is fast becoming a central pillar in Malaysia's push for a cleaner and more diversified energy future.
Seen globally as a versatile fuel with the potential to decarbonise hard-to-abate sectors, hydrogen's promise lies in its flexibility and zero-emission profile when produced from renewable sources.
So far, Malaysia possesses key advantages: untapped renewable energy sources, a supportive government, and a developing infrastructure base. Sarawak specifically is spearheading the charge forward with tangible initiatives like the hydrogen bus trials in Kuching, moving beyond pilot projects towards its goal of producing and exporting green hydrogen by 2030.
At the national level, the Hydrogen Economy and Technology Roadmap (HETR) charts Malaysia's ambition to become a hydrogen exporter by 2050. It highlights hydrogen's role in job creation, industrial transformation, and sustainable growth.
The evolving market and commercially unproven technologies at scale remain key considerations.
Still, this journey reflects what industry leaders describe through the Gartner Hype Cycle, a pattern also visible in Malaysia's early hydrogen enthusiasm.
Hydrogen is currently on the peak of a hype cycle
It has passed its 'peak of inflated expectations,' where media and investor enthusiasm may have over-promised short-term returns. It is now entering the 'trough of disillusionment' where real-world challenges like cost, infrastructure, and regulations become apparent.
Even so, momentum is building. As the technology matures, hydrogen is moving up the 'slope of enlightenment' toward mainstream adoption. Malaysia now has a critical window of opportunity.
With careful coordination between federal and state policies, targeted investment, and consistent regulation, hydrogen can deliver not just hype but long-term economic and environmental benefits for the country.
Malaysia targets two million tonnes of hydrogen output a year by 2030, rising to 16 million tonnes by 2050.
Leveraging its strong foundation in renewable hydropower and strategic early investments, Sarawak is also carving out its role in the Asia Pacific hydrogen market, scaling up green hydrogen with support from Japanese and Korean firms to tap into global demand for clean energy.
As we have a strong foothold in renewable hydropower and early investments in hydrogen production, the region is poised to lead the charge into Southeast Asia's hydrogen frontier. How hydrogen works
While the allure of hydrogen lies in its clean energy potential, it's crucial to understand that not all hydrogen is created equal.
Today, the most prevalent form is grey hydrogen, derived from fossil fuels, a process that unfortunately comes with a carbon footprint.
Depiction of grey, blue and green hydrogen production. – Photo by University of Calgary
Blue hydrogen offers a transitional step, capturing some of these emissions through carbon capture technologies and storing them underground.
However, the ultimate frontier lies in green hydrogen, produced by harnessing the power of renewable electricity to split water into its fundamental elements: hydrogen and oxygen. This process, called electrolysis, is a game-changer – producing energy without emitting a single speck of carbon.
The future of a truly sustainable energy system hinges on our ability to scale up this low-carbon green hydrogen production through electrolysis.
Think of electrolysis as an elegant process where electricity acts as the catalyst to gently separate the water molecule (H₂O), releasing pure hydrogen (H₂) and clean oxygen (O₂).
Several innovative electrolysis technologies are currently being explored, each with unique strengths and applications:
— Alkaline Water Electrolysis (AWE): The Reliable Workhorse. As the most mature and widely adopted method, AWE utilises a liquid alkaline solution as its electrolyte. Its long history in industrial applications speaks to its reliability and cost-effectiveness, making it a strong contender for large-scale hydrogen production, particularly when coupled with consistent renewable energy sources.
— Proton Exchange Membrane Electrolysis (PEM): The Agile Performer. Employing a solid polymer electrolyte, PEM electrolysis stands out for its rapid start-up times and ability to handle fluctuating power inputs. Its compact and efficient design makes it ideally suited for integration with intermittent renewable energy sources like solar and wind, unlocking flexibility in hydrogen production. While currently more expensive due to the use of rare materials like platinum, its responsiveness positions it as a key technology for dynamic energy demands.
A simplified diagram of Proton Exchange Membrane (PEM) electrolysis, where renewable electricity splits water (H₂O) into hydrogen (H₂) and oxygen (O₂)
— Solid Oxide Electrolysis (SOEC): The High-Efficiency Innovator. Operating at high temperatures with a solid ceramic electrolyte, SOEC boasts impressive efficiency and the potential to leverage industrial waste heat, further enhancing its sustainability credentials. Although currently in pilot and research phases due to its high operating temperature and lower commercial readiness, SOEC holds significant promise for maximising energy utilisation.
— Anion Exchange Membrane (AEM) Electrolysis: The Emerging Hybrid. This promising method blends the advantages of AWE and PEM, utilising a solid membrane while avoiding costly catalysts. This could potentially drive down the cost of green hydrogen production. While still in the early stages of development and requiring further large-scale testing, AEM represents an exciting avenue for affordable and efficient hydrogen generation.
The viability of green hydrogen as a mainstream energy carrier rests on the efficiency of these electrolysis processes, alongside the cost and performance – including capacity and lifespan – of the electrolysers themselves. Businesses looking to invest in the future of energy should pay close attention to advancements in these critical areas.
Malaysia is actively exploring this frontier, having tested various electrolyser types – PEM, alkaline, and solid oxide – across different stages of development, from pilot projects to commercial applications. This proactive approach signals the nation's commitment to understanding and potentially capitalising on the hydrogen economy.
'PEM is currently the most commercial-ready, but each technology has its own strengths,' notes Dr Mohd Nor Azman, Deputy Secretary General (Technology Development) of the Ministry of Science, Technology and Innovation, speaking at the recent H2EF 2025 in Kuching.
'The key is how fast we can scale up while keeping the cost per kilogramme of hydrogen competitive.'
This statement underscores the critical balance between technological readiness and economic viability that will determine the pace of hydrogen adoption.
The journey towards a hydrogen-powered future presents significant opportunities for innovation, investment, and the creation of a truly sustainable energy ecosystem.
Understanding the nuances of hydrogen production technologies is the first step towards unlocking its transformative potential for businesses and the planet. Eye on Sarawak's hydrogen plans
The federal government's roadmap puts hydrogen at the heart of decarbonising power, transport, and heavy industries. Under the roadmap's Emission Driven Scenario, the country could generate RM905 billion in hydrogen-related revenue by 2050.
Meanwhile, Sarawak's strategy focuses on scaling green hydrogen by tapping into its natural strengths, thanks to its vast hydropower resources which offer a reliable and sustainable source of renewable electricity.
With an installed capacity of 3,452 megawatt and a further 1,285 megawatt expected when the Baleh hydroelectric project is completed in 2027, Sarawak can produce consistent, carbon-free electricity to electrolyse hydrogen efficiently.
Leading Sarawak's push into the hydrogen economy is SEDC Energy, a subsidiary of the Sarawak Economic Development Corporation (SEDC), which is spearheading two flagship projects currently in the Front-End Engineering Design (FEED) phase expected to complete by end of this year.
The H2ornbill project, a collaboration with Japan's Eneos and Sumitomo Corporation, plans to produce 90,000 metric tonnes of clean hydrogen annually by 2030.
About 2,000 tonnes will be retained for local use in Sarawak, while the rest will be exported to Japan.
Japanese firm Eneos is also bringing in proprietary technology to enable hydrogen transport at room temperature – a game-changer for large-scale export logistics – while Sumitomo handles feasibility and financial planning.
SEDC Energy is also working with South Korea's Lotte Chemical and the Korea National Oil Corporation on the H2biscus project.
This initiative will deliver a green hydrogen plant with a capacity of 150,000 metric tonnes per year, alongside an ammonia facility capable of producing 850,000 metric tonnes annually.
If final investment decisions go through, commercial production could begin by 2028. A new hydrogen hub is also being planned in Kuching.
Abang Johari receives a memento from Deputy Minister of Energy and Environmental Sustainability, Datuk Dr Hazland Abang Hipni during the launch of the Sarawak Hydrogen Economy Roadmap recently.
Moreover, during the H2EF 2025, Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg launched the Sarawak Hydrogen Economy Roadmap that provides a strategic plan to guide policies and investments through 2035 and beyond.
He said the roadmap will steer the state through challenges and help secure its place as a regional leader in clean hydrogen.
Furthermore, Deputy Sarawak Secretary for Economic Planning and Development Dato Sri Dr Muhammad Abdullah Zaidel, said Sarawak's ambition goes beyond merely producing hydrogen. It aims to consume and develop its own downstream industries.
'We are not just hydrogen uptakers, we want to use it and go downstream. Sarawak's current gas exports power countries like Japan and Korea, but we still have longhouses without reliable electricity. Hydrogen gives us the chance to build a new, clean industrial base here at home,' he said.
He said that producing hydrogen from water instead of natural gas is the state's preferred route due to lower emissions and long-term affordability.
'Just like computers used to be massive and expensive but are now supercomputers in your hand, the same will happen with electrolysers. Eventually, they will be small and affordable enough to power vehicles directly,' he said. Facing the hydrogen cost barrier
Despite the promising hype, cost has been the biggest hurdle. Hydrogen now costs about twice as much as unsubsidised RON97 petrol and far more than subsidised RON95.
Producing and scaling hydrogen is expensive for several reasons. First, the electrolysis process used to produce green hydrogen requires large amounts of electricity.
Second, the electrolysers (the machines that spilt water into hydrogen and oxygen) are capital intensive. Their performance varies by technology, and many rely on rare or expensive materials like platinum or iridium in PEM systems.
Infrastructure is another cost driver. Hydrogen must be stored at high pressures or very low temperatures that requires specialised tanks and cooling systems.
Hydrogen supply chain (Source: MIDA)
Nationally, policymakers are looking at shifting energy subsidies to support hydrogen and other renewables while offering incentives such as Green Investment Tax Allowances and import duty exemptions to attract investors.
Malaysia's long-term plan is to phase out grey hydrogen, rely on blue hydrogen as a transitional fuel, and eventually make green hydrogen cost-competitive through improvements in technology and scale.
Hard to abate industries like steel, oil refining and ammonia production are expected to be early adopters. Sarawak's hopeful future hinges on policy, innovation and regional cooperation
As hydrogen gathers global momentum as a clean fuel alternative, Sarawak is carving out its place in the energy transition.
The state's ability to lead the region in hydrogen hinges not just on its natural resources, but also on robust policy, investment in technology, and cross-border partnerships.
On this front, Abang Johari has committed to finalising key regulatory frameworks by the end of this year.
He said these guidelines, to be developed by the Ministry of Energy and Environmental Sustainability, will help shape the hydrogen landscape in Sarawak that offers a clear path forward for industry players while safeguarding public and environmental interests.
For Sarawak, the legal backbone has already been strengthened with the enforcement of the Distribution of Gas (Amendment) Ordinance on March 1 this year.
The amendment includes provisions that govern hydrogen development, generation, distribution, and usage.
It also outlines penalties for non-compliance and enables the state government to set rates, levies, and charges specific to hydrogen-related activities.
Experts during the H2EF 2025 stressed that without strong and consistent policy frameworks, the hydrogen economy will struggle to take off no matter how rich a region's resources might be.
While Sarawak has a strong chance of becoming a regional leader in the hydrogen economy by 2050, but it must act swiftly to boost policy support, push technological innovation and build regional partnerships.
During the H2EF forum, several memorandums of understanding were exchanged between SEDC Energy and NGLTech (Sarawak) Sdn Bhd; Unimas and Bureau Veritas; and Sarawak Petchem and HighChem, respectively; to elevate Sarawak hydrogen industry. — Photo by Roystein Emmor
During forum, energy data and analytics solutions provider Wood Mackenzie principal consultant Flor de la Cruz pointed out that Asia-Pacific is set to dominate global hydrogen demand by 2050.
She said over 40 per cent of demand will come from this region by 2040 and eventually climbing to nearly 50 per cent by 2050 driven by high emissions and population density.
'Most of the emissions are here in Asia-Pacific, so most of the demand will come from this region.
'Over 40 per cent of demand by 2040, and close to 50 per cent by 2050, will come from Asia-Pacific. That's why regional partnerships are critical.'
In the near term, demand for hydrogen will be driven by traditional sectors such as refining, ammonia and methanol production. These industries can absorb the initial high cost of hydrogen and act as early adopters.
Sarawak, with its resources and infrastructure, is well-positioned to support both supply and demand in these sectors.
Refining is widespread globally and plays a key role in helping early-stage hydrogen projects take off. Sarawak offers a strong case study for companies looking at both sides of the hydrogen equation.
By 2050, she said the focus will shift to new energy sectors such as power generation and steel manufacturing. However, these industries are not yet ready to use low-carbon hydrogen at scale.
'The technology just isn't there yet. We will need a lot of innovation and strong policy support to help speed up hydrogen use in these sectors.'
Globally, major hydrogen projects are currently concentrated in the US, Europe and the Middle East.
But this will shift toward Asia-Pacific as the region ramps up production capacity and leverages its resources including abundant land, hydropower, solar and wind, something Sarawak has.
'To become a leader, Sarawak must capitalise on its domestic resources.
'But we can't ignore the elephant in the room: cost. Green hydrogen still costs between US$7 to US$12 per kilogramme. That needs to come down significantly.'
During the H2EF forum, several memorandums of understanding were exchanged between SEDC Energy and NGLTech (Sarawak) Sdn Bhd; Unimas and Bureau Veritas; and Sarawak Petchem and HighChem, respectively; to elevate Sarawak hydrogen industry. — Photo by Roystein Emmor
According to de la Cruz, early expectations of US$1 per kilogramme by 2030 are unlikely to be met. But she believes that costs will drop 20 to 40 per cent by 2035.
Key to this is scaling up manufacturing, especially of electrolyser.
'Electrolyser production has surged from under 1 gigawatt to around 50 gigawatts today. That's a huge leap.
'We can learn from solar. Back in 2010, solar cost around US$400 per megawatt hour. Thanks to policy support, manufacturing growth and R&D, those costs dropped by 80 per cent.'
Hydrogen needs a similar trajectory. De la Cruz pointed to policy examples such as Korea's hydrogen power bidding market, Japan's Contracts for Difference scheme, and Australia's Hydrogen Production Tax Incentive (HPTI) initiative as effective drivers of hydrogen development.
'These policies show that when governments step in, projects get off the ground. That's what Sarawak and Asia-Pacific need right now.'
During the H2EF forum, several memorandums of understanding were exchanged between SEDC Energy and NGLTech (Sarawak) Sdn Bhd; Unimas and Bureau Veritas; and Sarawak Petchem and HighChem, respectively; to elevate Sarawak hydrogen industry. — Photo by Roystein Emmor
Looking ahead, she said the hydrogen industry must build out complex infrastructure, including ammonia export and shipping systems, as well as cracking facilities.
'You'll have projects here in Sarawak, offtake in Japan and Korea, and facilities across the region. You need partnerships to build the full supply chain,' she said.
On the debate between blue and green hydrogen, de la Cruz said that blue hydrogen produced via fossil fuels with carbon capture will likely lead the market in the short term due to technological readiness.
'Hydrogen produced from methane reforming, with its CO2 captured and stored (CCS) is already at scale, unlike green hydrogen which still needs more R&D and larger projects.
'So yes, in the near term, we'll see more blue hydrogen. But long term, it's a green hydrogen story,' she said. Policy lessons from Europe and Spain
Policy support and international coordination are essential to catalyse the hydrogen economy. This was the point that panellists drove home at the H2EF 2025 during a deep dive into regulatory frameworks.
Industry experts highlighted Europe's advanced approach and the specific challenges and opportunities facing Sarawak.
Embassy of Spain in Malaysia economic and commercial counsellor Juan Guia Garcia said demand-side incentives have been the most effective driver in Spain.
Unlike solar and wind, which gained traction through existing electricity demand, hydrogen adoption requires industries to commit to a costlier fuel.
'If there's no demand incentive, it will be very difficult to develop the activity,' he said, pointing out that refineries and fertiliser production through ammonia as low-hanging fruit for hydrogen use.
Michael Harrison, a partner at law firm Baker Botts LLP, explained that the European Union has made greater progress than other regions due to its long-standing Emissions Trading Scheme (ETS) established since 2005.
The ETS puts a price on carbon and it makes grey hydrogen increasingly uneconomical, which in turn encourages producers to switch to green hydrogen.
This is further supported by consistent regulation across EU member states and strong financial backing, such as Germany's €4.5 billion allocation for demand-side technology upgrades.
'Europe has market size, coherence, and money. Moving to clean technology reduces your liability under the ETS – and that's not available everywhere,' he said.
Garcia (centre) and Harrison (right) at the H2EF 2025 during the international dialogue on policy and regulation.
For Sarawak, both Garcia and Harrison stressed the importance of policy certainty and global partnerships.
Harrison noted that green hydrogen must be part of a broader national and state strategy to meet Malaysia's climate goals.
'It's a means of reducing greenhouse gas emissions and creating high-paying jobs,' he said.
He also urged Sarawak to assess its domestic needs first before pursuing exports.
'The critical thing with any new industry is certainty. If Sarawak is serious about green hydrogen, it must be developed with both state and national interests in mind, and aligned with international climate commitments.'
He went on to say that green hydrogen is not an end in itself, but a tool for reducing emissions and promoting sustainable development.
To start, he suggested for Sarawak to prioritise on energy efficiency, even with its relatively cheap power supply.
'Electrification should also be a priority.If you can electrify something, do it. Especially here in Sarawak, where you have the capacity,' he added.
He stressed that hydrogen production must make sense for the local context.
'You need to assess how and where hydrogen will be used. You can't just shut down grey hydrogen facilities overnight. The transition needs to be planned.'
If the government intends to support green hydrogen production, Harrison said, it must ensure timely and consistent auctions.
'Don't keep changing the dates. And alongside supply, invest in domestic demand.'
While there has been much discussion about hydrogen exports, Harrison said Sarawak should also explore cross-border opportunities and build up difficult-to-decarbonise industries locally, such as high-heat applications in steel or iron production.
Garcia echoed this as Spain's hydrogen strategy hinges on a clear long-term commitment and a focus on exports.
'There's no domestic market large enough to scale green hydrogen production. That makes international collaboration and securing overseas demand absolutely critical.'
If Sarawak wants to be at the forefront of Asia-Pacific's hydrogen economy, it must act decisively. Strong policy, regulatory clarity, cost reduction strategies, and regional partnerships are no longer optional, they are essential.
Sarawak has the right ingredients: resources, infrastructure, and leadership. But it will need to maintain momentum, adapt to changing technologies, and collaborate across borders.
The race is on, and Sarawak must seize the moment.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

New Straits Times

2 hours ago

• New Straits Times

Tankers U-turn, zig-zag, pause around Strait of Hormuz

SINGAPORE: At least two supertankers made U-turns at the Strait of Hormuz following US military strikes on Iran, shiptracking data shows, as more than a week of violence in the region prompts vessels to speed, pause, or alter their journeys. Washington's decision to join Israel's attacks on Iran has stoked fears that Iran could retaliate by closing the strait between Iran and Oman through which around 20 per cent of global oil and gas demand flows. That has spurred forecasts of oil surging to US$100 a barrel. Disruption is already evident, with tankers avoiding spending more time than needed in the strait, industry sources said. Singapore-based Sentosa Shipbrokers said that over the past week, empty tankers entering the Gulf are down 32 per cent while loaded tanker departures are down 27 per cent from early May levels. The Coswisdom Lake, a very large crude carrier (VLCC), reached the strait on Sunday before making a U-turn and heading south, Kpler and LSEG data showed. On Monday it turned back again, resuming its journey towards the port of Zirku in the United Arab Emirates. The South Loyalty, also a VLCC, made a similar U-turn and remained outside the strait on Monday, LSEG data showed. It was scheduled to load crude from Iraq's Basra terminal, according to Kpler data and two shipping sources. The Coswisdom Lake was scheduled to load crude at Zirku for delivery to China. It was chartered by Unipec, a trading arm of China's state-run Sinopec, LSEG and Kpler data showed. Sinopec did not immediately respond to a request for comment. Shipowners will try to minimise time that vessels spend inside the Strait of Hormuz due to the conflict, KY Lin, spokesperson at Taiwan's Formosa Petrochemical Corp. "Vessels will only enter the region when it is nearer to their loading time," he said on Monday. Japanese shipping firms Nippon Yusen and Mitsui O.S.K. Lines said on Monday they continue to transit the strait but have instructed their vessels to minimise time spent in the Gulf. Several oil traders and analysts told Reuters that they had been warned to expect possible shipping delays as vessels wait for their turn outside the area. Iran's parliament on Sunday approved a measure to close the strait, Iran's Press TV reported, but any such move would require approval from the Supreme National Security Council. Iran has threatened to close the strait in the past but has never done so.

Barnama

4 hours ago

• Barnama

Japan Stresses Peaceful Maritime Presence As Mizuho Begins Deployment In Malaysia

PULAU INDAH, June 23 -- Japanese Ambassador to Malaysia, Shikata Noriyuki (center), and Acting Deputy Director-General of Operations for the Malaysian Maritime Enforcement Agency, Maritime Rear Admiral Mohd Zawawi Abdullah (eighth from left), pose for a photo with the Japan Coast Guard (JCG) vessel MIZUHO during its four-day strategic visit to Malaysia at the Klang Cruise Terminal today. --fotoBERNAMA (2025) ALL RIGHTS RESERVED PULAU INDAH, June 23 -- Japanese Ambassador to Malaysia, Shikata Noriyuki (center), and Acting Deputy Director-General of Operations for the Malaysian Maritime Enforcement Agency, Maritime Rear Admiral Mohd Zawawi Abdullah (second from left), during the strategic visit of the Japan Coast Guard (JCG) vessel MIZUHO to Malaysia for four days at the Klang Cruise Terminal today. --fotoBERNAMA (2025) ALL RIGHTS RESERVED PULAU INDAH, June 23 -- Japan Coast Guard Deputy Commander for Operations, Kanosue Hiroaki (center), delivers a speech during the strategic visit of the Japan Coast Guard (JCG) vessel MIZUHO to Malaysia for four days at the Klang Cruise Terminal today. --fotoBERNAMA By Muhammad Fawwaz Thaqif Nor Afandi and Wan Muhammad Aslah Wan Razali KLANG, June 23 (Bernama) -- The Japan Coast Guard (JCG) said its multi-nation maritime activities in the Indo-Pacific are aimed at strengthening regional cooperation and not provoking conflict. JCG Vice Commander for Operations, Vice Admiral Kanosue Hiroaki, said the goal is to foster cooperation and coordination with regional maritime partners in line with a rules-based international order. bootstrap slideshow He said the efforts are part of Japan's broader Free and Open Indo-Pacific (FOIP) strategy, which champions freedom of navigation and respect for international law. 'Our objective is not to seek conflict, but to reach a common understanding with respective countries on international law, and for their enforcement agencies to act accordingly,' he said at a press conference in conjunction with the port call of JCG patrol vessel Mizuho at Port Klang Cruise Terminal (PKCT), Monday. Kanosue said this in response to a question about Japan's increasing presence in the region through joint maritime exercises amid rising tension in the South China Sea. Last week, the JCG completed joint drills with the United States and the Philippines in the Kagoshima Bay, southwestern Japan. This followed a joint maritime exercise with the Philippines held in the town of Masinloc on the Philippines' main island of Luzon, on June 14. This is the Mizuho's first deployment to Malaysia. Beginning today, the vessel will take part in a five-day strategic mission involving joint exercise drills with the Malaysian Maritime Enforcement Agency (MMEA). The training includes arresting techniques, boarding exercises, and the use of long-range acoustic devices.

Malaysian Reserve

6 hours ago

• Malaysian Reserve

Tokyo voters punish Japan ruling party ahead of national election

TOKYO – Voters in Tokyo knocked Japan's ruling party from its position as the largest group in the city assembly, results showed Monday, a warning sign for Prime Minister Shigeru Ishiba's unpopular government before July elections. Japanese media said it was a record-low result in the key local ballot for the Liberal Democratic Party (LDP), which has led the country almost continuously since 1955. Public support for Ishiba, who took office in October, has been at rock-bottom for months, partly because of high inflation, with rice prices doubling over the past year. The LDP took 21 Tokyo assembly seats in Sunday's vote, including three won by candidates previously affiliated with the party but not officially endorsed following a political funding scandal. This breaks the party's previous record low of 23 seats from 2017, according to the Asahi Shimbun and other local media. Ishiba described the results as a 'very harsh judgement'. 'We will study what part of our campaign pledge failed to resonate with voters and ensure we learn from this,' he told reporters on Monday. Tomin First no Kai, founded by Tokyo governor Yuriko Koike, increased its seats in the 127-member assembly to 31, becoming the largest party. The funding scandal 'may have affected' the result, Shinji Inoue, head of the LDP's Tokyo chapter, said Sunday as exit polls were released. Policies to address inflation 'didn't reach voters' ears very well' with opposition parties also pledging to tackle the issue, Inoue said. Within weeks Ishiba will face elections for parliament's upper house, with reports saying the national ballot could be held on July 20. Voters angry with rising prices and political scandals deprived Ishiba's LDP and its junior coalition partner of a majority in the powerful lower house in October, marking the party's worst general election result in 15 years. Polls this month showed a slight uptick in support, however, thanks in part to policies to tackle high rice prices. Several factors lie behind recent shortages of rice at Japanese shops, including an intensely hot and dry summer two years ago that damaged harvests nationwide, and panic-buying after a 'mega-quake' warning last year. Some traders have been hoarding rice in a bid to boost their profits down the line, experts say. Not including volatile fresh food, goods and energy in Japan were 3.7 percent higher in May than a year earlier. To help households combat the cost of living, Ishiba has pledged cash handouts of 20,000 yen ($139) for every citizen ahead of the upper house election. Masahisa Endo, a politics professor at Waseda University, described the Tokyo assembly result as 'severe' for the ruling party. 'Tokyo is not a stronghold for the LDP, but it's possible that its support is weakening across the nation,' he said. Even if Ishiba fails to win an upper-house majority, it is hard to see who would want to take his place, while Japan's opposition parties are too divided to mount a credible challenge to the LDP's power, Endo told AFP. The opposition Democratic Party For the People (DPP) won seats for the first time in the Tokyo assembly vote, securing nine. The DPP's campaign pledge for the July election includes sales tax cuts to boost household incomes. Sunday's voter turnout rate was 47.6 percent, compared to the 42.4 percent four years ago, according to local media. A record 295 candidates ran — the highest since 1997, including 99 women candidates, also a record high. The number of women assembly members rose to 45 from 41, results showed. –AFP