There have been some very valid concerns raised about the production process, but if the Hydrogen Energy Supply Chain (HESC) Pilot Project has proved anything, it is that transporting hydrogen over long distances is feasible.

The HESC project was first imagined about eight years ago by Japanese giant Kawasaki Heavy Industries and a consortium of industry partners from Japan and Australia including J-Power, Iwatani Corporation, Marubeni, Royal Dutch Shell, and Sumitomo Corporation.

According to J-Power non-executive director Jeremy Stone, the project was set up to prove a reliable, cost-effective supply chain of hydrogen as an alternative fuel to drive Japan’s economy as it transitions away from fossil fuels.

“Japan was going to go down the nuclear path to make sure it could reach net zero by 2050 targets but in 2011 Fukushima happened and they didn’t want to put all their efforts into nuclear,” he said.

“It was decided that hydrogen would be a very good, clean and alternative fuel to drive Japans economy – they were the first country to set up a hydrogen strategy in 2017, but they needed to prove they could actually do it.

“So, our project was set up to achieve that and our vision is to commercially produce carbon-neutral hydrogen through extraction from the La Trobe valley coal and biomass with carbon capture and storage,” he said.


Backed by the Federal and Victorian governments with cash injections of $50 million each, as well as funding from the Japanese government, the $500m pilot project uses lignite from AGL Energy’s newly constructed Loy Yang coal mine in the Latrobe Valley – alongside biomass, to create hydrogen with gasification technology.

Stone says the project has emitted around 580 cars worth of carbon, or 2,900 tonnes which have been offset through the purchase of Australian Carbon Credit Units (ACCUs).

Earlier this month, the Suiso Frontier graced Australian shores at Victoria’s Port of Hastings with a capacity of 250 cubic metres, equating to 75 metric tons of liquid hydrogen.

Stone said to date, “a small amount” – around one tonne of hydrogen had been extracted from a mix of coal and biomass and cooled  to -253 degrees Celsius at the Hasting’s hydrogen liquefaction plant before it was transported to a purpose-built tank aboard the ship.

Now, the vessel has left Australian shores and is making its way to Kobe, Japan where the team will unload the liquified hydrogen into another purpose-built storage tank onshore.


Positive step VS black hydrogen reality

While it marked a significant moment for the HESC project, it also marked a significant moment for the world’s hydrogen industry, with the first fully integrated hydrogen energy supply chain realised.

But director of energy finance studies at the Institute for Energy Economics & Financial Analysis, Tim Buckley, says the move is a desperate, last attempt at trying to create value for a product that needs to stay in the ground.

“It is black hydrogen that is effectively produced by coal gasification – you might as well burn the coal itself,” he said.

“It is important we learn by doing, and the idea of the ship is good but hydrogen has to be transported at -250 degrees which is extremely energy intensive, even more than LNG at -160.

“There is nothing clean about it, that’s why Angus Taylor loves it.”


Carbon capture and storage claims under fire

Nevertheless, Stone said if the project becomes commercial it will be paired with carbon capture and storage (CCS) technology developed by CarbonNet in Victoria.

“Rather than entering the atmosphere, CO2 emissions will be stored in rocks 1.5km beneath the Bass Strait,” he said.

“Over the last 10 years CarbonNet have been undertaking their own pilot testing as well – so these are two separate projects, but they are symbiotic and will be ready at the same time.”

And this is where the line gets conveniently blurred, Buckley says.

“CarbonNet have not sequestered a single unit of carbon dioxide in the 10 years that Victorian taxpayers have been funding it,” he said.

“This is a perfect example of the use of black hydrogen as a delaying tactic by dressing it up, trying to paint it blue, and pretending it’s clean and calling it clean hydrogen rather than blue because blue is hydrogen produced with gas from carbon capture and storage.

“There is not a single carbon capture and storage project working in the world without massive subsidies.”



Or is CCS a critical step in the energy transition?

Chevron’s Gorgon LNG facility on Barrow Island, about 50km off Western Australia’s Pilbara coast, is one example of a failed CCS project, critics say.

While Chevron was meant to bury an average of 80 per cent of its (rather substantial) emissions over a five-year period from 2016, the system only started emissions storage in 2019 – and even after it came online, more issues ensued.

From Stone’s point of view, however, it’s a technology that has been around for 45 years and there are currently around 135 carbon capture and storage projects in various stages of development.

“When people mention Gorgon – the reality is, it hasn’t leaked any CO2,” he said.

“It has stored 5 million tonnes of CO2 which equals to the emissions of about 1 million cars.

“Yes, it hasn’t reached its annual storage target yet but it hasn’t leaked anything, and Chevron will eventually get their storage rate up.”

It is preposterous to think that, because Gorgon’s hasn’t achieved what it meant to, everyone needs to stop CCS, Stone explained.

“My view is that, if you are saying Gorgon proves it doesn’t work – to me it is like if you are building a tunnel project under the river and you encounter a problem, does that mean the world stops building tunnels?” he said.

“Everyone knows we need to do it, it is mind blowing,” he said.

“We can’t stop, we have such a major problem and in terms of CarbonNet it is incredibly close to where the hydrogen production is so it is cheap.

“There is huge storage capability in these depleted oil and gas reservoirs, we have already sucked out the oil and gas from these natural formations underwater and its basically reverse engineering where we will be pumping in  liquid CO2 – completely different to what Gorgon does.”

The Morrison government has announced a further $7.5 million to support its pre-commercialisation phase and $20 million for the CCS project.