A billion-dollar proposal to turn Australian coal into ‘clean’ hydrogen and ship it to Japan could be in jeopardy as support for it among the host state’s politicians appears to be melting away.

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Earlier this week, four Japanese energy giants announced they had teamed up to develop the Latrobe Valley project in the state of Victoria, which would produce 300,000 tonnes of hydrogen gas from brown coal for liquefaction and export, with emissions captured and stored under the seabed.

The project will be furnished with ¥220bn ($1.6bn) from the Japanese government’s Green Innovation Fund.

But Victoria’s energy minister Lily D’Ambrosio — on whom the project depends for a slew of regulatory approvals — outright refused to endorse it this week, leading to speculation that she is at odds with the state’s finance minister Tim Pallas, who travelled to Japan last week to secure funding for the scheme.

And Daniel Andrews, premier of Victoria, also appeared to hedge on supporting the proposal, yesterday describing the technology in play for the scheme, including carbon capture and storage (CCS), as “unproven”.

This is despite the fact that the state government has previously funded a pilot version of the scheme in Latrobe Valley for the past six years.

“The technical feasibility and practicality of that at scale, all of those things are really important questions,” he told the Australian Financial Review. “We do have people like that working for us, and they are doing a due diligence on the whole thing. And that’s still some way off, so it’s a bit early to be requiring the government to call it one or the other.”

The number-one question for those in opposition to the scheme — which include’s Victoria’s Green Party — is how the emissions will be verified.

The Hydrogen Energy Supply Chain (HESC), the consortium of nine different companies supporting the scheme, said that the emissions intensity of the scheme would be verified via a new regulatory programme being developed by Australia’s federal government.

But CCS technology does not have a good track record in Australia. Chevron’s pioneering Gorgon gas project has failed to meet its carbon abatement targets, forcing the developers to pay millions of dollars for carbon offsets.

“There’s many questions that are still unanswered,” Andrews added. “You’ve got a hydrogen project that’s all about trying to turn coal into hydrogen. The emissions profile of that process is directly relevant.”

But executives for J-Power, one of the Japanese developers behind the Latrobe Valley scheme, called for a “patient”, fact-based approach to the project that assessed emissions intensity rather than “labels” such as brown or green hydrogen.

The role of CCS is the subject of significant debate in Australia, which has a large mining industry and a fleet of coal-fired power plants. Proponents say CCS is necessary for the country to meet its net-zero targets.