In a world-first, operations from the Hydrogen Energy Supply Chain (HESC) facility in Victoria have begun, with hydrogen being produced from Latrobe Valley coal which will be exported to Japan.

The facility – which forms a critical part of the HESC Pilot Project – is converting brown coal into hydrogen gas, which will be transported to the Port of Hastings and then liquified and shipped to Japan in the world’s first, purpose-built liquified hydrogen carrier, the Suiso Frontier.

This world leading project is an important step in developing Australia’s hydrogen industry, which is estimated to generate more than 8,000 jobs, many in regional Australia, and over $11 billion a year in GDP by 2050.

The HESC operations are part of a significant joint collaboration between industry and the Australian, Victorian and Japanese Governments.  

Federal Minister for Energy and Emissions Reduction, Angus Taylor, joined key partners in the Latrobe Valley to mark the commencement of operations, including with the Ambassador of Japan, His Excellency Mr Shingo Yamagami.

Mr Taylor said the start of operations for the HESC project was a milestone for Australia’s hydrogen industry.

“Our major international trading partners like Japan are very excited about Australia’s hydrogen prospects,” Mr Taylor said.

“This project is a great example of how regional Australia can play a key role in developing Australia’s hydrogen future on the world stage, with investment and job opportunities to flow through to communities. 

“This is even more important as we strengthen our economy post-COVID 19.

“This HESC project milestone demonstrates the value of Australia’s technology-led approach to reducing emissions and the leading role hydrogen could play in our future. Real projects like this show our approach is working.”

Federal Minister for Resources, Water and Northern Australia, Keith Pitt, said the HESC pilot project could help secure a long term future for Latrobe Valley coal reserves.

“The HESC pilot aims to use brown coal with carbon capture and storage technology to produce clean hydrogen, which can then be used to power much of Japan’s energy needs along with Australia and the rest of the world,” Mr Pitt said.

“Australia has been working with our international partners to build a global hydrogen industry. Our strong and historic relationship with Japan helped build our iron ore and LNG industries and now we are cooperating with Japan on the HESC Project.

“We are also actively working with a number of countries on hydrogen, including Germany, Taiwan, Singapore and Korea.

“A commercial-scale HESC project could produce up to 225,000 tonnes of clean hydrogen per year with carbon capture and storage. It’s a great example of Australian resources supporting new low emissions energy production.” 

The HESC Pilot Project is being developed by a consortium of top energy and infrastructure companies from Australia and Japan – including Kawasaki Heavy Industries, J-Power, Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation and AGL – with the support of the Victorian, Commonwealth and Japanese governments.

Victorian Minister for Economic Development, Tim Pallas, said, “The HESC Pilot Project will create jobs for the Valley and right across Victoria while boosting our economy.

“This is an important milestone for this world first project, which will help us transition towards a low carbon energy future while potentially creating thousands more jobs for Victorians if it reaches commercialisation.”

Executive Managing Officer of J-POWER, Dr Hiroshi Sasatsu, said, “The commencement of operations of the HESC Pilot Project is an Australian and world first, it marks a cornerstone moment for science and innovation.”

Executive Managing Officer of Kawasaki Heavy Industries, Dr Eiichi Harada, said, “The Victorian, Australian and Japanese Governments share a vision that clean hydrogen is the future of fuel. HESC is that vision in action.”

International project supports local jobs

Hirofumi Kawazoe, from Hydrogen Engineering Australia (Kawasaki’s subsidiary company based in Melbourne), said the progress of the HESC Pilot places Victoria and Australia at the forefront of the global energy transition to lower emissions via the fuel of the future, clean hydrogen.

“The next major HESC Pilot development will be the first shipment of hydrogen between Australia and Japan, aboard the world’s first purpose-built liquefied hydrogen carrier, the Suiso Frontier,” Mr Kawazoe said. 

“The eyes of the world will be on Victoria, when shipments of liquefied hydrogen commence in 2021.

The HESC Pilot is proving it is possible to take Latrobe Valley coal and safely produce and transport hydrogen. It is yielding data and insights that feed into the pathway to commercialisation.

Jeremy Stone from J-POWER Latrobe Valley said the HESC Pilot has created approximately 400 jobs across the Victorian supply chain.

“A commercial-scale HESC can leverage and build local skills, potentially creating thousands of jobs,” Mr Stone said. 

“This will include long-term employment in a new clean energy industry for the people of Gippsland.

“Latrobe Valley has a proud history powering Australia and today we celebrate the next generation of energy technology in the region.”

Hydrogen for emissions reduction

The Victorian and Federal Governments’ CarbonNet Project is developing in parallel with HESC and is essential for the hydrogen pilot’s commercialisation. 

If both projects are commercialised, CO2 captured during hydrogen production would be transported and stored by CarbonNet using carbon capture and storage (CCS) technology. 

Rather than entering the atmosphere, CO2 emissions will be safely stored in rocks 1.5km beneath Bass Strait, similar to the way oil and gas has been trapped naturally for millions of years.

A commercial-scale HESC project could produce 225,000 tonnes of clean hydrogen annually with carbon capture and storage.

“We estimate our project could reduce CO2 emissions by 1.8 million tonnes per year, equivalent to the emissions of some 350,000 petrol cars,” Mr Stone said.

The Victorian Government said the project has the potential to provide clean hydrogen with domestic use-cases, as well as kick-start the emergence of a new, global export industry with huge local economic benefits.

The HESC Project will also help develop the infrastructure and highly skilled workers that are crucial ingredients for the emergence of an Australian hydrogen industry.

“Without the support of the local communities, the Victorian, Australian and Japanese Governments, this project would not be possible,” Mr Kawazoe said.

The Federal and Victorian Governments have both made $50 million commitments to the $500 million HESC project.

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