Australia’s Hydrogen Energy Supply Chain (HESC) project, which plans to ship coal-derived blue hydrogen to Japan, has entered its commercial demonstration phase after securing ¥220bn ($1.6bn) in funding from the Japanese government.

Japan Suiso Energy (JSE), a joint venture (JV) between Japanese multinational Kawasaki Heavy Industries and industrial gases company Iwatani Corporation, will design and build facilities to liquefy hydrogen at the Australian industrial port of Hastings and ship it to the Japanese port of Kawasaki. The HESC project completed a trial shipment of liquid hydrogen between Hastings and Kobe in early 2022.

30,000-40,000t/yr – JPSC hydrogen production from Latrobe Valley coal

JSE has signed an agreement JPSC, a JV of Japanese power generator J-Power and conglomerate Sumitomo, for the supply of 30,000t/yr of low-carbon hydrogen from the late 2020s. JPSC plans to initially produce 30,000–40,000t/yr, with the potential to scale up production to 225,000t/yr.

JPSC will produce hydrogen extracted from Latrobe Valley coal. The JV plans to capture CO₂ emissions for either direct utilisation or storage in depleted oil and gas reservoirs in the nearby Bass Strait.

“There is significant 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,” says Jeremy Stone, non-executive director of J-Power Latrobe Valley.

“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,” he adds.

The HESC project’s partners will verify the carbon intensity of its hydrogen using a guarantee-of-origin (GOO) scheme being developed by the Australian government. The government is trialling different pathways of hydrogen production—coal gasification with CCUS, steam methane reformation with CCUS, and water electrolysis—to inform its GOO scheme, with the second phase of tests due to conclude in June this year.

“This is a complex project and there is still some way to go in terms of approvals, design, construction and commissioning but this is a major boost for the Victorian economy on its journey towards a clean energy future,” says JSE’s CEO, Eiichi Harada.

Japan was an early mover in hydrogen, with a particular focus on replacing its fossil fuel imports. Demand is expected to reach 3mn t/yr by 2030 and 20mn t/yr by 2050. But the country has been criticised for its colour-blind approach to hydrogen, with claims it has promoted the use of emissions-intensive, fossil-derived grey hydrogen in sectors where direct electrification and renewables could present more economic options.

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Author: Polly Martin