THE Japanese coal-to-hydrogen HESC project, when in full commercial production from the early 2030s, will contribute more than $900 million to the economies of Gippsland and the Mornington Peninsula every year, according to an economic analysis of the project.

HESC (Hydrogen Energy Supply Chain) is expected to support 30,000 full-time equivalent jobs (FTE) in Gippsland and the Peninsula over the project’s 30-year life, consultants KPMG said in an analysis prepared for the Japanese HESC consortium.

A total of 1500 jobs will be generated in the construction phase and 980 jobs in the operational phase. In both phases, direct jobs are the main contributors to the total job effect.

The project has the key backing of a major trade union. The president of the Mining and Energy Union, Tony Maher, said the HESC project had the rare distinction among new energy projects of being able to generate hundreds of genuine, ongoing jobs while kickstarting a new industry.

“In a region facing major closures and job losses, Latrobe Valley communities can be at the centre of a new hydrogen economy as supply chains and infrastructure are developed,” he said.

“The successful pilot and $2.3 billion funding commitment from the Japanese government have given workers in the region hope for their future and they are determined to see this project come to life.”

The pilot project was successfully completed in February last year when liquefied hydrogen produced from Latrobe Valley brown coal was delivered to the Port of Kobe in Japan, demonstrating the viability of an end-to-end supply chain between both countries.

The project partners are now doing feasibility studies and preparing for the regulatory approval process.

The initial commercialisation demonstration project will include an annual production of 40,000 tonnes of hydrogen (H2) per annum, with 30,000tpa for Japan and 10,000tpa for Victorian consumption and emissions reduction.

Pending all required approvals, a commercial scale production from 2030 onwards, with an operating life of 30 years, is expected to produce 225,000 tonnes of H2 annually and avoid 1.8 million tonnes of greenhouse gas annually.

The brown coal is gasified into hydrogen and carbon dioxide at a plant next to Loy Yang A power station. The hydrogen is transported to the the Port of Hastings in Western Port, where it is liquefied and sent to Japan.

The CO2 will be sequestered under Bass Strait, with the options including the CarbonNet project and Exxon’s Gippsland joint venture carbon capture and storage hub.

KPMG’s analysis is based on an estimated total direct capital expenditure of $10 billion over 10 years during the construction phase. A further $24 billion in operating expenditure is expected over the life of the plant from the 2030s through to 2064.

The study found that Victoria’s Gross State Product (GSP) is estimated to be 0.15 per cent or $1.1 billion higher per year over the life of the commercial project.

About $919 million of this growth will occur in Gippsland and the Mornington Peninsula.

In Gippsland, capital spending in construction is expected to stimulate job growth, with 192 more FTE jobs. The operational phase will generate 304 full-time equivalent jobs. On the Mornington Peninsula, construction will generate 1231 full-time jobs and the operational phase 511 jobs.

Direct jobs will be in construction, basic chemical industries, pipeline development and transport services. Indirect jobs will be in retail and wholesale trades, professional and technical services, rental hire and real estate, primary industries, manufacturing and other services.

TAFE Gippsland Chief Executive, Laura Macpherson said the TAFE was at the forefront of emerging energy industries, providing training opportunities to those transitioning into the sector and those starting out in this exciting new industry.

The Deputy Vice Chancellor, Research and Innovation at Federation University, Chris Hutchison, said HESC was an amazing opportunity for Australia to be at the forefront of the transition to clean energy.

“The potential impact of this project is significant,” he said.

“A commercial scale hydrogen production and CO2 capture/storage facility would require the creation of hundreds of highly skilled jobs. It would also create a robust energy supply chain with Japan and maintain our region’s status as a valuable energy exporter.”