Latrobe Valley Express, 24 April 2024

Latrobe City Council has reaffirmed its strong support for the Japanese hydrogen HESC project, stressing the vital role it can play in the Latrobe Valley’s economic future, after a visit to the proponent’s industry hub in Japan.

“The visit was successful in reinforcing the support from Latrobe City to be a hub for hydrogen manufacturing and the HESC project. This project will have a significant economic impact on the region if established,” the council said in a report on the visit made last October.

“This project is one of few for Latrobe City that will deliver much needed jobs for the region through construction and ongoing manufacturing as well as building hydrogen supply chain opportunities.”

The delegation consisted of the then Mayor, Cr Kellie O’Callaghan, and Latrobe City Chief Executive, Steven Piasente. The cost of the delegation was $11,261.41 and was paid for by the current financial year’s Advocacy budget.

Key concerns among the various Japanese companies visited was the strong need for support from the state and federal governments for HESC and other blue hydrogen projects, and a social licence from the Gippsland community.

The report recommended that council develop an advocacy plan to support the HESC project and hydrogen manufacturing in Latrobe, as well as advocating to both governments and developing a community engagement plan.

The joint-venture Hydrogen Energy Supply Chain (HESC) project, under development in Gippsland for 10 years, has a $2.35 billion grant from Japan’s Green Innovation Fund (GIF). HESC successfully completed the world’s first liquid hydrogen pilot project, located next to Loy Yang A power station in early 2022 and is moving towards commercialisation in the late 2020s.

Japan Suiso Energy (JSE) will co-invest with the GIF funds to build a hydrogen liquefaction and loading terminal at the Port of Hastings. The J-Power and Sumitomo Corporation joint venture will invest in a brown coal gasification plant at Loy Yang A that will supply clean hydrogen gas to the liquefaction plant. Together these facilities will employ up to 1000 people when operating at full capacity.

Carbon dioxide from the gasification process will be sequestered by carbon capture and storage under Bass Strait either by CarbonNet or in the aquifers available from ExxonMobil.

The council delegation visited J-Power’s best practice Integrated Gasification Combined Cycle with carbon capture and hydrogen fuel cell in Japan.

“The proposed Latrobe City project would be modelled on this existing project,” the council report said, providing an excellent opportunity to see firsthand “what this could mean for the region once delivered”.

Key meetings during the visit included:

• JSE and Kawasaki Heavy Industries. JSE will liquefy hydrogen to minus 253 degrees Celsius and transport it from Hastings to a receiving terminal in Kawasaki City. The loading and unloading terminals will be equipped with a 50,000 cubic metre liquefied hydrogen tank and loading arm. JSE plans to deliver the full commercial phase of the project by 2030.
• Japan Oil, Gas and Metals Corporation, which is responsible for a stable supply of oil and natural gas, and development of energy resources and achieving carbon neutrality for Japan. JOGMEC’s experienced representatives had a sound understanding of the Latrobe hydrogen project’s local challenges.
• The Ministry of Economy, Trade and Industry, where talks centred on how the project could help Japan achieve carbon neutrality. The Ministry was concerned about Gippsland community support and a lack of clearly articulated support for the project by the state and federal governments. “They also have concern about the support from the state and private sector to provide access to the coal reserves in the future.”
• J-Power and Sumitomo, one of the more strategically important meetings of the visit. They wanted to better understand how they can build trust with the community. Social licence is critical for both. “It will be critically important for Council to continue to build a strong relationship with J-Power and Sumitomo.”
• Mitsubishi Heavy Industries, which has no direct involvement with HECS, but has a hydrogen park in Takasago (Latrobe’s Sister City) that shows the value-add opportunities that could go to Latrobe City. The park, powered by hydrogen, also produces hydrogen from gas, and is developing a liquid natural gas to hydrogen facility.
• Iwatani Advanced Hydrogen Technology Centre, the primary supplier and distributor of hydrogen in Japan. It also undertakes research and provides a hydrogen fuelling station.

The first phase of the Latrobe Valley HESC project will produce 40,000 tonnes per year of clean gaseous hydrogen, of which 30,000 tonnes per year will be liquefied and exported by ship to Japan. The remaining 10,000 tonnes per year will be for the Australian domestic market, with freight cited as a potential use.

Subject to planning and environmental approvals, the project is expected to be in construction around the time of the planned shutdown of the Yallourn power station in 2028, providing career options for the existing workforce. It will also deliver significant foreign investment and export revenue for Victoria.  

Future potential production in the early 2030s, all going well, is estimated at about 225,000 tonnes per annum, which would create thousands of jobs a year.

To ensure carbon reduction targets are met, the project will use the federal government’s hydrogen Guarantee of Origin scheme to provide transparency to customers on carbon intensity.