FAQs

The commercial phase will be located in the Latrobe Valley and the Port of Hastings.

A future potential production of 225,000 tonnes per annum, would reduce about 1.8 million tonnes per annum of CO2 from being released into the atmosphere (equivalent to the emissions of about 350,000 petrol cars).

A commercial-scale project will require a pipeline from the Latrobe Valley to the Port of Hastings.

No. Leveraging Victoria’s Carbon Capture and Storage (CCS) infrastructure will be paramount for the commercial phase. Project partners, including governments, have stated that a CCS solution is critical to the HESC Project, to ensure the supply of low-emissions hydrogen.

Based on Japan’s Green Development Strategy, the Ministry of Economy, Trade and Industry (METI) launched the Green Innovation Fund Project, a JPY 2 trillion (around USD 16 billion) fund set up with the New Energy and Industrial Technology Development Organization (NEDO) to provide 10 years of continuous support to business-led decarbonisation initiatives, ranging from R&D and demonstration to social implementation, with specific goals shared between the public and private sectors. From this amount, JSE received a commitment of JPY210 billion (AUD$2.1 billion), to assist in the establishment of a liquid hydrogen supply chain.

The JPSC JV will initially produce around 40,000 tonnes per annum of gaseous clean hydrogen. Around 30,000 tonnes per annum will be transferred via pipeline between the Latrobe Valley and the industrial Port of Hastings where it will be liquefied by JSE and loaded onto a specialised marine carrier for transport to Port of Kawasaki, Japan.
Around 10,000 tonnes per annum of clean hydrogen gas will be made available to the Victorian market. Access to clean hydrogen can replace existing unabated hydrogen used in Victoria, accelerating Australia’s own carbon emission reduction efforts. The clean hydrogen could be used to produce several high value products including low emission fertiliser, methanol and aviation fuel.
This will create opportunities for new industries and employment opportunities in the Latrobe Valley and help to reduce Victoria’s reliance on overseas supply chains for these products.

Subject to commercial agreements and meeting the required environmental permits and approvals, it is expected hydrogen production will commence in the late 2020’s.

Initially the hydrogen will be used to power homes, industry and transportation.

By 2030 hydrogen demand reaches around 180 Mt (International Energy Agency), with nearly half of that demand coming from new applications, particularly in heavy industry, power generation and the production of hydrogen-based fuels. Supplying hydrogen for refining oil, ammonia production, methanol production and steel production is a major business around the world.

Gippsland presents a unique opportunity to help reduce global CO2 emissions through the reliable production of large quantities of cost-effective clean hydrogen. Beyond the abundance of natural resources, the area has unrivalled access to a skilled workforce, major energy infrastructure and viable long-term storage for captured CO2 in the Bass Strait. 
Gippsland presents a unique opportunity to help reduce global CO2 emissions through the reliable production of large quantities of cost-effective clean hydrogen. Beyond the abundance of natural resources, the area has unrivalled access to a skilled workforce, major energy infrastructure and viable long-term storage for captured CO2 in the Bass Strait.

The project also provides opportunities for other hydrogen projects to share the pipeline, liquefaction and port infrastructure, reducing the capital costs for other clean hydrogen projects. 

In March 2023, after a review of several potential projects in Australia and around the world, Japan Suiso Energy (JSE) confirmed it had chosen to allocate the Japanese Government’s Green Innovation Fund (GIF) grant of ¥210 billion Japanese Yen (approximately AU$2.1 billion) to the commercial demonstration phase of Victoria’s HESC Project. The grant was originally allocated to Japan Suiso Energy, Iwatani Corporation and ENEOS in August 2021.

The commercial demonstration project will be delivered by two consortia.

In Gippsland’s Latrobe Valley, J-POWER and Sumitomo Corporation will form a joint-venture to produce clean hydrogen via extraction from Latrobe Valley coal with carbon capture, utilisation and storage (CCUS). 

J-POWER successfully produced 99.999% pure hydrogen gas, extracted from Latrobe Valley coal, as part of the Hydrogen Energy Supply Chain (HESC) Pilot Project, which achieved a world first liquid hydrogen supply chain with the delivery of the hydrogen at the Port of Kobe in Japan in February 2022.

Sumitomo Corporation is one of the largest trading houses in Japan with a wide variety of business activities including sales of products and services, import and export, trilateral trade, and domestic and international business investment.
 
Japan Suiso Energy (JSE), was established by Kawasaki Heavy Industries in 2021 as a company that will take research, planning, operation, and investment in the global supply chain of liquefied hydrogen. In 2023, Iwatani Corporation joined JSE, to create a world first global energy supply chain using liquefied hydrogen and contribute to the realisation of a sustainable decarbonised society.
JSE intends to purchase clean hydrogen from the J-POWER/Sumitomo Corporation project and will be responsible for liquefaction at the Port of Hastings and trans-oceanic shipment from Victoria to Japan. ​

Over more than ten years, the project partners have been investing heavily to develop a sustainable, affordable and reliable hydrogen supply chain.

The HESC Project is being developed in two phases, beginning with a pilot, which demonstrated that hydrogen can be produced extracted from Latrobe Valley coal, liquified and transported to Japan.

The pilot phase commenced in 2018 and successfully delivered the world’s first liquefied hydrogen supply chain involving gaseous hydrogen production in the Latrobe Valley and the export of liquefied hydrogen to Japan in February 2022. This brought the Pilot Project to a successful conclusion.

The decision to proceed to a commercial phase will be made in the 2020s with operations targeted in the 2030s, subject to regulatory approvals, social licence to operate and hydrogen demand.

The Pilot Project was led by a consortium of experienced industry partners from Japan and Australia: Kawasaki Heavy Industries, Ltd (KHI), Electric Power Development Co., Ltd. (J-POWER), Iwatani Corporation (Iwatani), Marubeni Corporation (Marubeni), AGL Energy (AGL) and Sumitomo Corporation (Sumitomo), and was supported by the Victorian, Australian and Japanese Governments. Royal Dutch Shell (Shell) was also involved in the Japanese portion of the project.

The HESC Pilot Project created approximately 400 jobs across the Victorian supply chain.

We encourage interested parties to keep an eye on project progress via our website and register to receive our e-newsletter.

The primary aim of the HESC pilot phase was to demonstrate that hydrogen could be produced extracted from Latrobe Valley coal and transported to Japan. About one tonne of hydrogen was produced during the pilot phase. This was be used for demonstration purposes only.

Hydrogen is a clean gas that produces only water as an emission when used as fuel for cars, heavy transport, power generation and industry.

Hydrogen is versatile and can be used in a broad range of applications. Hydrogen can power fuel cell electric cars, trucks, buses and trains. Hydrogen can be exported, either as an energy carrier or for use as a chemical feedstock – hydrogen‘s most common use today is as a chemical ingredient to produce fertiliser or refine petroleum.

Combined across these use cases, hydrogen could account for almost one-fifth of total final energy consumed by 2050. This would reduce annual CO2 emissions by roughly 6 giga tonnes compared to today’s technologies.

Hydrogen is non-toxic and has been widely used in industry and as a fuel for over 50 years. Technologies and handling practices already exist to ensure it can be safely produced, stored, transported and used.

Pure hydrogen gas is not toxic and cannot ignite or explode spontaneously. An ignition source and oxidiser (like oxygen) must be present. When handled responsibly and safely, hydrogen is no more or less dangerous than other flammable fuels like natural gas and gasoline. Technologies and handling practices already exist to ensure that hydrogen can be safely produced, stored, transported and used.

Measures will be put in place along all stages of the supply chain to prevent, detect and mitigate the risk of hydrogen risks. These will be in accordance with government standards for portable gases and fuels.

Additional measures will be used to safely store liquid hydrogen, which must be kept at extremely low temperatures, including the development of purpose-built ships for overseas transport.
The liquid hydrogen storage containers are very solid, safe and, similarly to other specialised containers, are manufactured to comply with strict industry standards. They are double-walled and vacuum-sealed. They are also designed to release the hydrogen as a harmless gas in the unlikely event that the outer or the inner wall is breached.

The HESC Project Partners have a wealth of experience in the safe handling of hydrogen gained since the 1970s. They have developed the world’s best practice health and safety procedures that will be followed carefully in all Australian operations. In Japan, they already operate many hydrogen facilities and refuelling stations.

The governments of Australia and Victoria each contributed $50 million in funding to the $500 million HESC Pilot project with the remainder invested by the Japanese Government and the project partners. The Victorian and Australian Governments have each invested $50 million for the delivery of the pilot as a practical investigation of a viable new industry for the Latrobe Valley and Australia.

The Latrobe Valley pilot facility is in care and maintenance currently, while the liquefaction facility at the Port of Hastings has been handed over to Coregas.

Carbon offsets were purchased to mitigate emissions from the pilot. In the commercial phase, carbon dioxide will be captured and utilised, with any remaining CO2 to be stored deep underground in a process known as carbon capture and storage (CCS).

The Inter-Governmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) support carbon capture and storage as a way of achieving carbon neutrality by 2050.

What will happen with CO2 during the commercial phase?
There are two carbon storage options in Gippsland under consideration, CarbonNet and ExxonMobil affiliate operated Gippsland Basin Joint Venture South East Australian Carbon Capture Storage Hub.  There is also a pathway of CO2 being utilised as a feedstock for other chemicals or industrial processes, driving a circular economy,

The CarbonNet Project, which is jointly funded by the Australian and Victorian Governments, is investigating the potential for establishing a commercial-scale CCS network from the Latrobe Valley to offshore storage sites in the Gippsland Basin.
For more information on CCS, we recommend visiting:  https://www.globalccsinstitute.com/resources/ccs-101-the-basics/

One purpose of the HESC Pilot is to conduct an analysis of the economic feasibility of producing hydrogen gas from coal in the Latrobe Valley, liquefying it and exporting it to Japan.

According to 2019 data from the IEA, hydrogen made from fossil fuel with CCS costs significantly less than hydrogen from renewables – USD $1.20 –2.60/kg, compared to USD $3.20-7.70.

HESC Project Partners are confident they can deliver cost-competitive hydrogen.

Hydrogen is non-toxic and has been widely used in industry and as a fuel for over 50 years. Technologies and handling practices already exist to ensure it can be safely produced, stored, transported and used.

Pure hydrogen gas is not toxic and cannot ignite or explode spontaneously. An ignition source and oxidiser (like oxygen) must be present. When handled responsibly and safely, hydrogen is no more or less dangerous than other flammable fuels like natural gas and gasoline. Technologies and handling practices already exist to ensure that hydrogen can be safely produced, stored, transported and used.

Measures will be put in place along all stages of the supply chain to prevent, detect and mitigate the risk of hydrogen risks. These will be in accordance with government standards for portable gases and fuels.

Additional measures will be used to safely store liquid hydrogen, which must be kept at extremely low temperatures, including the development of purpose-built ships for overseas transport.
The liquid hydrogen storage containers are very solid, safe and, similarly to other specialised containers, are manufactured to comply with strict industry standards. They are double-walled and vacuum-sealed. They are also designed to release the hydrogen as a harmless gas in the unlikely event that the outer or the inner wall is breached.

The HESC Project Partners have a wealth of experience in the safe handling of hydrogen gained since the 1970s. They have developed the world’s best practice health and safety procedures that will be followed carefully in all Australian operations. In Japan, they already operate many hydrogen facilities and refuelling stations.

The hydrogen liquefaction plant and loading terminal will be located at the industrial Port of Hastings.

The facility will liquefy hydrogen gas by cooling it to − 253°C and reducing it to 1/800th its volume. Specially made refrigeration equipment will be used. The technology has been in use for more than 25 years in many countries.

The liquefied hydrogen will be stored at the facility in a multi-layer vacuum insulated cryogenic container. A similar container is already operational in Japan.

Liquefying hydrogen (LH2) reduces its volume by 1/800^th, which allows for commercial volumes to be transported over long-distances.
 
Liquefied hydrogen can be used as an industrial ingredient to produce fertiliser, methanol, and aviation fuel. Once it arrives in Japan, it can be used immediately as an energy source to power homes, industry, and transportation.
 
Using ammonia as a carrier requires additional processing on arrival, called ‘cracking’, before the hydrogen can be used. ‘Cracking’ splits the ammonia into hydrogen and nitrogen and is extremely energy intensive as it requires temperatures of 850 Celsius or more.

Liquefied hydrogen needs to be stored at extremely low temperatures. The boil-off rate is the daily evaporation rate of a compressed liquid due to increases in temperature. This is an important factor for the HESC Project, which will transport liquefied hydrogen by boat from the Port of Hastings, Victoria to Japan.
 
The pilot project’s marine carrier, the Suiso Frontier, achieved an extremely low boil-off rate of 0.3% per day, and the onshore LH2 storage tank in Kobe, Japan has a boil-off rate of 0.06% per day.
 
This is a significant improvement on traditional storage technology. The innovative next generation storage tanks developed by Kawasaki Heavy Industries, can store and transport LH2 at -253 Celsius.
  
Technology from both the carrier and the onshore storage tank will be improved upon and used to increase the efficiency of storage and transportation during the commercial phase of the project.
 
A commercial-scale hydrogen carrier could even use boil-off hydrogen as fuel to drive the engines.