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Australia, Japan begin operations of complete, integrated supply chain for hydrogen plant

23 March 2021

The Hydrogen Energy Supply Chain (HESC) pilot, an initiative of the Australian and Japanese governments, began operations in the Australian state of Victoria on 12 March, a milestone for the project.

The HESC pilot, launched in 2018, is part of Australia's national hydrogen strategy and involves developing a complete hydrogen supply chain, from producing hydrogen gas from brown coal in Victoria's Latrobe Valley via a coal gasification and gas-refining process, transportation to the Port of Hastings for liquefaction, and exporting the liquefied hydrogen to Kobe, Japan.

"I believe the HESC pilot is a world-first complete, integrated supply chain. Australia has been producing hydrogen at its refineries from natural gas for a long time. This would be the first collaboration of this type," said Logan Reese, research and analysis associate director at IHS Markit in Brisbane.

The project proves it is possible to take Latrobe Valley coal and safely produce and transport hydrogen, said the consortium behind the project in a joint statement 12 March.

"It is yielding data and insights that feed into the pathway to commercialization," it added.

The consortium includes AGL, Iwatani Corporation, J-POWER, Kawasaki Heavy Industries, Marubeni Corporation, and Sumitomo Corporation, with the support of the Victorian state, Australian and Japanese governments.

First shipment

The next major development in the HESC pilot will be the first shipment of liquefied hydrogen between Japan and Australia aboard the world's first purpose-built liquefied hydrogen carrier, the Suiso Frontier.

"The pilot project will contribute to growing Australia's hydrogen industry. A successful pilot will be an important step toward establishing a commercial hydrogen production and export industry," said the Department of Industry, Science, Energy and Resources of Australia.

The decision to begin commercial production of liquefied hydrogen will be made later this decade, with operations targeted to begin in the 2030s, according to the Department of Industry, Science, Energy and Resources.

CarbonNet project

The CarbonNet project, an initiative of the Victorian and Commonwealth governments, is being developed in tandem with the HESC project, and is critical for the commercialization of the hydrogen pilot, the consortium said in the statement.

"If both projects are commercialized, [carbon dioxide (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 1.5 kilometers beneath Bass Strait, similar to the way oil and gas has been trapped naturally for millions of years," it added.

A commercial-scale HESC project could produce 225,000 metric ton (mt) of clean hydrogen annually with carbon capture and storage, the consortium said.

"We estimate our project could reduce CO2 emissions by 1.8 million mt per year, equivalent to the emissions of some 350,000 petrol cars," said Jeremy Stone, non-executive director of J-POWER Latrobe Valley.

Helping Australia move toward lower emissions

Hirofumi Kawazoe, general manager, Hydrogen Engineering Australia, said the HESC pilot put Victoria and Australia at the forefront of the global energy transition to lower emissions through the use of clean hydrogen.

The Victoria government, on 26 February, released its Renewable Hydrogen Industry Development Plan, which sets out how the state will invest in the renewable hydrogen industry and the role it could play in reshaping Victoria's economy in the aftermath of the COVID-19 pandemic.

Concerns

But there are concerns about the HESC pilot project as well, one of which is carbon capture.

"I know long-term plans would include offshore carbon storage; it just wasn't clear if carbon was being captured from the beginning. This is a very important point, given this project is coal-based hydrogen," Reese said.

Other concerns are the quality of coal being used, particularly because the Latrobe Valley is known for its low-grade coal, and that the coal-fired generation is located in areas which have some of Australia's highest carbon emitters, according to Reese.

National Hydrogen Strategy

Australia released its national hydrogen strategy in 2019, which set out the country's goals and areas of development for building a hydrogen industry. About AUD146 million (US$113 million) has been committed to hydrogen projects.

Through these projects, Australia hopes to learn more about how hydrogen can form part of its energy mix through driving down prices and emissions as well as providing expertise to build a competitive export industry.

"We plan to accelerate the commercialization of hydrogen, reduce technical uncertainties and build up our domestic supply chains and production capabilities. The strategy looks to initially concentrate hydrogen use in niche hubs that will foster domestic demand. A strong domestic hydrogen sector will underpin Australia's exporting capabilities, allowing us to become a leading global hydrogen player," said Angus Taylor, minister for energy and emissions reduction, and Matthew Canavan, minister for resources and northern Australia, in a handbook on the strategy published in 2019.

Original reporting by Soo Cheng Bernadette Lee.

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