By Fred Wang

November 20, 2020 - The HESC project aims to safely and efficiently produce and transport hydrogen from Victoria's Latrobe Valley to Japan, where hydrogen will be transported from a liquefaction and loading terminal at the Port of Hastings, Victoria to Kobe terminal in Japan.

The rationale of producing hydrogen from Latrobe Valley coal in Australia stems from three factors -- scale, urgency and sustainability, said Jeremy Stone, non-executive director at J-Power.

"Victoria's Latrobe Valley contains one of the world's largest deposits of coal and through gasification with CCS to produce clean hydrogen, has the potential to meet Japan's energy demand and provide new jobs for workers as the energy market transitions," Stone said.

The commercial phase of the HESC project will require a Carbon Capture and Storage (CCS) solution, said Stone.

The Latrobe Valley pilot gasification plant, Loy Yang, is scheduled to commence operations in November. Logistics delays have been minimized and commission works were underway despite the coronavirus pandemic.

The Hastings liquefaction storage and loading terminal's construction was completed in June 2020. It has started commissioning and operations will start later this year, Stone said.

The Kobe hydrogen unloading terminal in Japan completed construction in May this year amid ongoing commissioning work, and shipping operations will start in early 2021.

The liquefied hydrogen storage tank has been installed into the cargo ship, where Kawasaki Heavy Industries (KHI) conducted a successful world-first sea trial of the liquefied hydrogen carrier Oct. 14-15, according to KHI's website.

"Japan is facing real challenges regarding energy security and emissions reductions subsequent to the Fukushima nuclear accident in 2011 and Paris climate targets, where the country depends on overseas fossil fuels for about 94% of its primary energy supply and account for about 3.7% of the worldwide carbon dioxide emissions," said Yuko Fukuma, Senior Staff Officer from Kawasaki Heavy Industries. 

Alternative Production Pathways

A Germany-based hydrogen source told S&P Global Platts that he was rather conservative about the developments of the HESC project.

"Since the feedstock will be coal, the industry is not really keen as the production of green hydrogen is a better option and may actually be cheaper on scale than this coal project," he said.

Green hydrogen is produced via electrolysis, using renewable electricity to split water into oxygen and hydrogen.

He reckoned that the hydrogen trade route from Australia to Japan is highly possible in the near term, but it would be the transport of green hydrogen produced from electrolysis.

"Australia will become a hydrogen giant, but green hydrogen is prominent where Australia has affordable renewable energy and government support to develop the industry with foresight ahead," he said.

A Singapore-based source echoed that sentiment.

"Coal gasification will be expensive in the upstream, and shipping liquefied hydrogen may not make much economic sense as compared to MCH or ammonia shipping," he said.

He reckoned that should the production pathway of this project be through Steam Methane Reforming (SMR), it may be less environmentally harmful.

Despite developments of CCS, the source said that it is difficult to find an optimal downstream solution or product for the carbon dioxide that's being captured during the production process.

An Australia-based source said that coal gasification for hydrogen production is an off-the-shelf technology, which can be provided at scale when KHI has designed and built its large-scale liquefied hydrogen tanker.

The Germany-based source said that many projects in Australia are being developed with different progress for each.

There are 23 hydrogen specific demonstration projects and research facilities across Australia, mostly concentrated along the eastern coast of the country, said Patrick Hartley, leader of the Commonwealth Scientific and Industrial Research Organization's Hydrogen Industry Mission.

Meanwhile, natural gas continue to remain a significant feedstock for hydrogen production in Australia.

The Australian Gas Infrastructure Group aims to reduce carbon dioxide emission through blending of biogas and hydrogen in gas networks and eventually convert the networks to carbon dioxide free biogas and hydrogen, said Kristin Raman, Head of Strategy and Innovation from the Group.