Japan to Spend $1.6 Billion to Extract Clean Hydrogen from Coal in Australia

The project, financed by the Green Innovation Fund, is being developed in Victoria


The Japanese Government’s Green Innovation Fund has committed A$2.35 billion (~$1.6 billion) to the Hydrogen Energy Supply Chain project in Victoria, which is considered Australia’s most advanced clean hydrogen project.

The funding will be administered by Japan Suiso Energy (JSE), which comprises Kawasaki Heavy Industries and Iwatani Corporation. The liquefaction and shipping facility at the industrial port of Hastings will be owned and operated by JSE. A newly formed joint venture, ‘JPSC’ between J-Power and Sumitomo Corporation, will provide 30,000 tons of clean hydrogen per year to the facility.

The significant infusion of funds will empower JSE to develop and construct large-scale commercial facilities for liquefying and transporting hydrogen from the Port of Hastings in Victoria to the Port of Kawasaki in Japan, bringing substantial economic advantages to the region, particularly Hastings.

The JPSC will extract hydrogen from coal in the Latrobe Valley while utilizing CO2 capture and storage technologies in the nearby Bass Strait. This project will aid in decreasing atmospheric CO2 emissions, with the aim of achieving net zero emissions by 2050. When operating at full capacity, the project will generate numerous sustainable energy employment opportunities in the Latrobe Valley and Hastings.

Eiichi Harada, CEO of JSE, said, “After a decade of working with the Japanese, Australian, and Victorian governments, our efforts to establish a world-first clean hydrogen energy supply chain have been rewarded. This is a watershed moment for our combined efforts to decarbonize global energy production. This commitment of A$2.35 billion (~$1.6 billion) gives all participants in the hydrogen supply chain the confidence to progress to the next stage of commercialization.”

“This is a complex project, and there is still some way to go regarding approvals, design, construction, and commissioning, but this is a major boost for the Victorian economy on its journey towards a clean energy future. The project will bring new clean energy infrastructure and jobs to the Hastings and Latrobe Valley communities,” Harada added.

The carbon emissions of the hydrogen manufactured will be authenticated through the Guarantee of Origin system, which is being developed by the Australian government to align with international hydrogen markets. This mechanism will aid in precisely evaluating and establishing the carbon intensity of the produced hydrogen.

In January 2022, the Hydrogen Energy Supply Chain pilot project showcased that pure liquid hydrogen can be obtained from a blend of Latrobe Valley coal and biomass, liquefied, transported, and discharged at the port of Kobe in Japan.

The Australian and Victorian governments jointly contributed $100 million towards the $500 million project, while the Japanese government and the project partners supplied the remaining funds.

Last October, Queensland announced its plans to spend A$62 billion (~$40.11 billion) over the next 15 years to build a robust renewable supply chain in the Australian state. To transform the energy system, Queensland will need 25 GW of renewable energy by 2035. This means connecting an additional 22 GW of wind and solar on top of the existing 3 GW operational in the Queensland system.

Earlier in 2021, the Australian Government research agency CSIRO and its partners had launched a $68 million Hydrogen Industry Mission. The research mission will help drive down the cost of hydrogen production to under $2/kg, making the fuel more affordable and helping Australia lead world exports in hydrogen by 2030.