Japan’s ambitious Hydrogen Energy Supply Chain (HESC) project, a $500m, decade-long plan to extract hydrogen from brown coal in Victoria, Australia, is at risk of failure due to demands for extra subsidies and a lack of long-term commitments from Japanese customers.
Critics say the project is unsustainable, as it relies on fossil fuels, and the costs of capturing and storing the resulting carbon emissions will likely make it uncompetitive. Last year’s first shipment of liquefied hydrogen to Japan was hailed as a technological breakthrough, with proponents claiming that using fossil fuels to create hydrogen and sequestering the emissions could pave the way for a switch to renewable sources.
However, Victoria’s climate action and energy minister, Lily D’Ambrosio, said that 100% of the risk of capturing and containing the project’s carbon emissions “sits with Victorians”.
Only a portion of the ¥220bn ($2.48bn) funding will be spent on developing a liquefaction plant in the Latrobe Valley and export facilities at the nearby Hastings port, according to insiders, who also raised concerns about the lack of clarity regarding responsibility for capturing and containing the carbon emissions.
The project is not expected to reach commercial scale before 2030, and Japanese partners are offering contracts to take hydrogen produced in the Latrobe Valley for fewer than five years. The Australian Hydrogen Council said the HESC project would not require renewable energy resources needed elsewhere in the state but would need a sequestration solution. Andrew “Twiggy” Forrest, who is investing billions of dollars in green hydrogen, said the Japanese investment in Latrobe was “better than nothing” but that he would not do it.