Japan channels $1.6bn public money into coal-based ‘clean’ hydrogen project in Australia
Japanese developers say the project will use carbon capture and storage technology with emissions intensity verified by the Australian government
Hydrogen: hype, hope and the hard truths around its role in the energy transition
Hydrogen production is expected to begin by the end of this decade.
The group are acting as part of the Hydrogen Energy Supply Chain (HESC), a consortium of around nine different companies, including oil giant Shell and seven Japanese corporations, to drive forward projects that develop a hydrogen supply chain between Australia and Japan.
The 220 billion yen ($1.6bn) investment will form the first part of the supply chain, HESC said, and comes just a few days after state and federal officials from Australia travelled to Japan to meet ministers from Japan’s Ministry of Energy, Trade and Industry (METI).
Eiichi Harada, chief executive of Japan Suiso Energy (JSE), the Kawasaki-Iwatani joint venture running the liquefaction element, noted that the scheme is complex, with “still some way to go in terms of approvals, design, construction and commissioning”, with first hydrogen production targeted by the end of the decade.
HESC claims the scheme can be classified as a “clean hydrogen” because it will use carbon capture and storage (CCS) technology to abate emissions from the scheme, with captured carbon stored offshore in the Bass Strait.
Oil giant ExxonMobil has been working on a design for a CCS project that aims to use a depleted oil and gas field in the Bass Strait. Exxon says that the project could come online by 2025, but only if it is proved to be technically and economically viable.
But HESC it does not specify which carbon capture project it intends to use, or note that Australia’s previous attempts at CCS have been chequered at best. Chevron’s Gorgon liquefied natural gas (LNG) plant was last year forced to buy millions of carbon offsets because it failed to meet its carbon abatement targets.
J-Power and Sumitomo will be responsible for producing hydrogen from a coal mine in Victoria state’s Latrobe Valley and shipping it for liquefaction, while Kawasaki and Iwatani, together as JSE, will own and operate the liquefaction plant in Port of Hastings.
The JSE joint venture will also deliver the investment from Japan's government.
The $1.6bn investment has been pulled from Japan’s two-trillion yen ($14bn) Green Innovation Fund, launched by Tokyo in 2020, with the aim of supporting Japan’s net zero ambitions.
It will allocate funding for ten years across nineteen different target areas — of which four are directly related to hydrogen production, with a further three are related to demand segments which hydrogen producers are hoping to tap into.
Jeremy Stone, non-executive director of J-Power’s coal-to-hydrogen unit, suggested that the hydrogen supply chain could provide a springboard for Australia’s other hydrogen-based industries: “We are moving from start up to scale up phase,” he noted. “Bringing commercial scale hydrogen production to the Latrobe Valley will act as a catalyst for growth in the broader Gippsland region, as complementary industries such as ammonia, fertiliser and methanol production are attracted to the opportunities it presents.”
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