Hydrogen project in Latrobe Valley proceeds to commercial stage

Philip Hopkins

JAPAN’s Hydrogen Energy Supply Chain (HESC) project, which uses Latrobe Valley brown coal to produce clean hydrogen, will proceed to its commercial stage through $2.35 billion funding from the Japanese government, positioning the Valley as a major source of renewable energy.

The move to dramatically upgrade development of the project follows the successful proving of the technology last year at a pilot plant located next to Loy Yang A power station.

HESC, which is regarded as Australia’s most advanced clean hydrogen project, is a joint venture between J-POWER, a major Japanese energy company, and Sumitomo Corporation. Jeremy Stone, J-POWER, Latrobe Valley non-executive director, said the company was excited to be one step closer to making commercial-scale hydrogen production in Victoria a reality.

“This is a major milestone and recognition of Gippsland’s unique ability to help reduce global CO2 emissions through the reliable production of large quantities of cost competitive and clean hydrogen,” he said.

“Gippsland, beyond the abundance of natural resources, has unrivalled access to a skilled workforce and major energy infrastructure. The project will bring new clean energy infrastructure and jobs to the Latrobe Valley and Hastings communities.”

HESC uses coal from the Loy Yang mine, where it is gassified in a nearby plant, with the carbon dioxide extracted in the process to be sequestered under Bass Strait. The aim is to liquefy the hydrogen and transport it via a pipeline to the Port of Hastings, where it will be shipped to Japan.

Mr Stone said the CO2 would be sequestered either by CarbonNet or in the aquifers available from ExxonMobil. The final cost of the hydrogen would include the cost of the energy required to pump the CO2 to Bass Strait and the cost of sequestration, he said.

Mr Stone said the IPCC (Inter-Governmental Panel on Climate Change) and the International Energy Agency both backed carbon storage as a way to achieve zero emissions by 2050. “According to the Global Carbon Capture and Storage Institute, over the past 45 years, 32 projects have been built and there are some 204 CCS projects under various stages of development around the world,” he said.

The joint venture will initially produce about 40,000 tonnes per annum of gaseous clean hydrogen – 30,000 tonnes for the Japanese market and 10,000 tonnes for the Australian market. In Japan, the hydrogen will be transported to Kawasaki City, close to Tokyo, where it will be used by the many industry departments, power generation and chemical producers.

The commercial plant is expected to be in production by the late 2020s at about the same time as Yallourn W power station is scheduled to close.

Future potential production in the early 2030s, all going well, is estimated at about 225,000 tonnes per annum, which Mr Stone said would create thousands of jobs a year.

The company said the project at this scale would stop about 1.8 million tonnes of CO2 being released into the atmosphere.

Mr Stone said such a large project would require a plethora of planning, design, environmental, construction and commissioning approvals over the next few years.

“We are aware of the social licence and environmental issues at play,” he told the Gippsland Times.

“However, we are not coming in cold. We have been here for five years and have long engaged with the government. We have a lot of work to do and also to liaise with people in the region.”

The HESC joint venture was chosen as the preferred hydrogen provider to Japan Suiso Energy (JSE), which comprises Kawasaki Heavy Industries and Iwatani Corporation. The $2.35 billion funding comes from the Japanese government’s Green Innovation Fund. The Ministry of Economy, Trade and Industry (METI) launched the $US16billion Green Innovation Fund Project set up to provide 10 years of continuous support to business-led decarbonisation initiatives, ranging from R&D and demonstration to social implementation, with specific goals shared between the public and private sectors.

Japan Suiso Energy chief executive, Dr Eiichi Harada, said after a decade of work with the Japanese, Australian and Victorian governments, “our efforts to to establish a world-first clean hydrogen energy supply chain have been rewarded”. “This is truly a watershed moment for our combined efforts to decarbonise global energy production,” he said.

“This commitment of $2.25b gives all participants in the hydrogen supply chain the confidence to progress to the next stage of commercialisation.”

The carbon intensity of the hydrogen produced will be verified under the Guarantee of Origin scheme, which is being developed by the federal government in-line with global hydrogen markets. HESC says this will facilitate the accurate assessment and determination of the carbon intensity (kgCO2/kgH2) of hydrogen produced.

Mr Stone said there was great domestic interest in a reliable source of locally produced, cost competitive clean hydrogen. “Now we have countries establishing the definition of ‘clean hydrogen’, based on carbon intensity, we are seeing an opening of trade, based on credible and transparent CO2 reduction numbers, at various price points,” he said.

“We are expecting further offtake agreements for hydrogen that can be used by a wide range of businesses and industrial processes, including the production of ammonia, fertiliser and methanol.”

In January last year, HESC’s pilot plant showed that clean liquid hydrogen could be extracted from a mix of Latrobe Valley coal and biomass, liquefied, shipped and unloaded in the port of Kobe in Japan. HESC said this was a world first achievement. The Australian and Victorian governments contributed $100 million in funding to this $500 million project. The rest was invested by the Japanese government and project partners.