The divisive HESC hydrogen project

Production: Latrobe Valley coal gasification and refining facility. Photo: Supplied



VICTORIA’S Energy Minister, Lily D’Ambrosio, has challenged the Japanese companies behind the $2.3 billion Gippsland HESC hydrogen project to prove that carbon capture and storage (CCS) works, the Australian Financial Review has reported.

The Japanese consortium plans to gassify Latrobe Valley brown coal at a plant next to Loy Yang A power station, producing hydrogen and carbon dioxide. The hydrogen would then be transported to Hastings where it is liquefied and shipped to Japan, while the aim is to sequester the CO2 in empty reservoirs in Bass Strait. The (Hydrogen Energy Supply Chain) HESC group has successfully operated a pilot plant and is now proceeding to the commercial stage.

Addressing the AFR’s Energy and Climate Summit last week, Ms D’Ambrosio said the state government would not decide on the HESC project until a formal feasibility study was filed next year, and she would closely watch the Japanese proponent’s work on carbon capture.

“What’s really critical here, there’s a really important threshold test, and that is: can they capture the carbon from the coal?” she told the summit.

“That is a question that is yet to be answered. But the government certainly hasn’t made a decision on this.”

Ms D’Ambrosio stressed that much of the HESC investment, in which Japan’s green innovation fund had invested $2.3 billion, would be spent in Japan, not Victoria.

“That is not in the Latrobe Valley, that’s about an import terminal back in Japan,” she said, despite the fact some of the money would be spent at Hastings in Western Port, the AFR reported.

Ms D’Ambrosio has refused to publicly support the HESC project, but Victoria’s Treasurer, Tim Pallas, has been a vocal advocate for the venture, fuelling perceptions that the project has split the state Labor government, the AFR said.

The federal Resources Minister, Madeleine King, told the summit that Australia should not spurn Japan’s investment in the project.

“I think it is very hard to turn your back on that, it’s significant for Japan,” she said.

“In addition to the capital investment, I think we can’t ignore the literally human effort and intellectual property drive that has gone into this.”

The AFR reported that the Australian Hydrogen Council chief, Fiona Simon, said, “Why would Victoria not take the opportunity to learn, and to do, and to build the efficiencies, build the capabilities?”

The federal Minister for Climate Change and Energy, Chris Bowen and Ms King recently met with Japan’s Trade Minister, Nishimura Yasutoshi, and HESC’s Japanese partners, Kawasaki Heavy Industries and J-Power. Kawasaki’s chairman Yashinori Kanehana, said he was very focussed on winning social licence from Victorian communities, the AFR reported.

“We cannot afford to be creating ideological divides at a time when the industry would be better served by more disciplined public discourse on the merits of cost effectively reducing the emissions intensity of global energy networks,” he said at a separate event in Melbourne.

J-Power’s non-executive director, Jeremy Stone, told the recent Gippsland New Energy Conference in Sale that in the first phase, the HESC project would produce 40,000 tonnes of hydrogen a year, of which 30,000 tonnes would be exported to Japan and the remaining 10,000 tonnes used in the domestic Australian market, reducing local CO2 emissions.

Subject to planning and environmental approvals, the project is expected to be in construction about when the planned shutdown of Yallourn power station occurs.

“It will also deliver significant foreign investment and export revenue for Victoria at a time when the state budget needs it most,” he said.

The CO2CRC (Co-operative Research Centre), operating in Melbourne since 2003, is a world leader in carbon capture and utilisation research. The chief executive, Dr Matthias Raab, says the Latrobe Valley’s massive amount of feedstock – its brown coal – will enables a commercial-stage hydrogen production plant at very low cost and very low emissions per kilogram of hydrogen.

Dr Raab said CCS is proven.

“It has been done for decades and decades. The challenge sits in the policy space,” he told the energy conference.

Mr Stone said the IPCC (Intergovernmental Panel on Climate Change) and the International Energy Agency regard CCS as a critical part to achieving the world’s global net zero targets.