Victorian hydrogen gets A$2.35B investment from Japan

The Hydrogen Energy Supply Chain (HESC) project will be established in Victoria thanks to a commitment of A$2.35 billion from the Japanese government through its Green Innovation Fund.

By demonstrating that clean liquid hydrogen can be extracted from a mixture of Latrobe Valley coal and biomass, liquified, delivered, and unloaded in the Port of Kobe in Japan, the HESC project, which was piloted in January of last year, achieved a world first.

The A$500 million pilot project received finance of A$100 million from the federal and state governments, with the remaining A$300 million coming from the Japanese government and other project partners.

Through Japan Suiso Energy (JSE), which is made up of Kawasaki Heavy Industries and Iwatani Corporation, the most recent round of funds will be dispersed. A newly created J-POWER and Sumitomo Corporation joint venture (JPSC JV) would provide a JSE-owned and -operated liquefaction and shipping facility at the commercial Port of Hastings with 30,000 t/y of pure hydrogen gas.

With this huge infusion of funds, JSE is able to design and construct industrial-scale facilities to liquefy and ship hydrogen from the Port of Hastings to the Port of Kawasaki in Japan, which will have a significant positive impact on Victoria and Hastings’ economies.

The JPSC JV will use carbon capture and storage facilities in the neighboring Bass Strait to harvest hydrogen from the coal in the Latrobe Valley. When fully commercialized, the project will contribute to the reduction of atmospheric carbon dioxide (CO2) and the creation of numerous sustainable energy jobs in Hastings and the Latrobe Valley.

In the beginning, the JPSC JV will generate between 30.000 and 40.000 t/y of clean gaseous hydrogen. A projected production capacity of 225 000 t/y would prevent the release of 1.8 million tonnes of CO2 annually or the emissions of around 350 000 gasoline-powered cars.

Hydrogen production is anticipated to start in the late 2020s, pending commercial agreements and compliance with all environmental permits and approvals.

Japan Suiso Energy CEO Dr. Eiichi Harada remarked, “After a decade of collaboration with the Japanese, Australian, and Victorian governments, our efforts to develop a world-first clean hydrogen energy supply chain have been rewarded.

“For our united efforts to decarbonize global energy output, this is unquestionably a watershed moment. All partners in the hydrogen supply chain now have the confidence to go on to the next phase of commercialization thanks to this commitment of A$2.35 billion.

This is a significant boost for the Victorian economy as it moves toward a future powered by sustainable energy, according to Harada. “This is a difficult project, and there is still some way to go in terms of permissions, design, building, and commissioning,” he said.

“The project will provide the Hastings and Latrobe Valley communities with new sustainable energy infrastructure and jobs. Something that we believe to be crucial as we assist the populace and the larger energy sector through this time of transformation.

J-POWER The introduction of commercial-scale hydrogen production to the Latrobe Valley, according to Latrobe Valley non-executive director Jeremy Stone, will act as a catalyst for growth in the greater Gippsland region as complementary industries like ammonia, fertilizer, and methanol are drawn to the opportunities it offers.

Gippsland has a singular chance to contribute to the reduction of global CO2 emissions through the dependable generation of substantial amounts of inexpensive, pure hydrogen. In addition to the region’s abundant natural resources, it also boasts unmatched access to a trained workforce, significant energy infrastructure, and a workable long-term storage option for CO2 gathered in the Bass Strait.

He continued, “It is estimated that hydrogen production will start by the late 2020s, subject to commercial agreements and achieving the needed environmental licenses and approvals.

The Mining and Energy Union in Victoria has welcomed the significant investment, with Victorian President Trevor Williams stating that the project would create hope and opportunity for working families in the area, where previous and impending closures of coal-fired power stations were causing profound anxiety.

He stated, “The pilot project has shown that carbon-neutral hydrogen can be produced inexpensively from Latrobe Valley coal and shipped to Japan.

“Through growing and commercializing this initiative, we promote the Latrobe Valley’s economic transition while simultaneously supporting the energy transition of the Japanese economy.

We anticipate that contracts to provide coal to the hydrogen plant will give Latrobe Valley coal mineworkers and energy workers who are being displaced by power station closures full-time, well-paying career pathways.

“Any responsible government must support any industry consistent with a low carbon future that delivers such good alternative jobs for power workers and coal miners,” added Williams.

The government divided over A$2.35B hydrogen deal

As Trade Minister Tim Pallas negotiated a deal with Japan to commit $2.35 billion to a project to employ carbon capture and storage to transform Australia’s dirtiest coal into clean hydrogen for export to Japan, tensions over climate policy inside the Victorian government reached a boiling point.

However, according to sources within the government, Lily D’Ambrosio, Victoria’s Minister for Climate, Energy, and Resources, and the State Electricity Commission would need to approve the project. These sources caution that D’Ambrosio has taken a much harder stance against any projects involving carbon or gas.

One insider in the government stated, “I wouldn’t say the project is a done deal at all.

While a source in the sector asserted that Ms. D’Ambrosio is “shutting down anything to do with coal or gas,” there is allegedly a “genuine ideological fight” going on between Mr. Pallas and her.

As the Latrobe Valley is affected by the closure of coal-fired power plants, Mr. Pallas, Victoria’s treasurer and one of the few remaining economic hardheads in the Andrews administration, is promoting the hydrogen project as a way to create thousands of jobs by converting brown coal there into low carbon hydrogen.

This week’s cabinet decision about the acceleration of offshore wind projects and a mechanism to help allow the kilometers of onshore cables necessary to connect the projects to the grid were likely to rekindle the tensions.

The proposed Japanese hydrogen project was lauded by the Mining and Energy Union on Tuesday as bringing “hope and opportunity for working families in the Latrobe Valley”.

Modeling indicates that throughout the operational phase, the project will provide more than 1000 employees annually, with almost half of those jobs being located in the Latrobe Valley.

The pilot project has shown that it is feasible to produce carbon-neutral hydrogen from Latrobe Valley coal and ship it to Japan, according to Trevor Williams, president of MEU Victorian.

“Any responsible government must support any industry consistent with a low carbon future that delivers such good alternative jobs for power workers and coal miners,” he said.

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