After a successful taste test, Japan is hungry for more Australian-made hydrogen. The Japanese government’s clean energy fund will tip $2.35 billion into a new Victorian coal-to-hydrogen project in the Latrobe valley.

In 2022, Japan received the world’s first hydrogen shipment of liquid hydrogen (LH2). Headed by Japan’s chosen consortium – featuring J-Power and Sumitomo – the project will use coal to generate hydrogen and rely on carbon capture and storage (CCS) innovations to control emissions. 

The group aims to use the depleted oil and gas basins in Bass Straight to house the carbon it “can capture”, relying on the project’s close proximity to the oceanic area. 

The Victorian Government’s CarbonNet project and ExxonMobil’s Gippsland Basin joint venture are potential options for CCS, with one to be chosen over the next 12 months. However, Victoria’s peak conservation body, Environment Victoria, has raised concerns.

The group stated that the coal needed for the project would likely come from Loy Yang, the state’s largest coal mine, which could also require an expansion. Something that they are hoping to avoid. 

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What’s The True Cost of CCS?

Environment Victoria, among other groups, has taken the opportunity to provide strong statements around its CCS concerns.

“CCS is an unviable technology, and we know that it has never worked globally,” Environment Victoria policy and advocacy manager Bronya Lipski said.

The group has specifically highlighted the CCS Failings of WA’s Gorgon gas project. 

Gorgon aimed to capture 80% of its carbon emissions over a five-year period; however, by 2021 had only managed to store around 30%.

The Japanese consortium hopes to initially produce between 30,000 and 40,000 tonnes of gaseous hydrogen each year.

But there could be an environmental price to pay.

“That has massive complications regarding [mine] rehabilitation, not to mention all the use of water on already stressed river systems,” Environment Victoria said.

Adding, “that if the project proceeded as planned, communities in the Latrobe Valley and Hastings would pay the price environmentally, while the benefits were enjoyed in Japan.”

Coal to Hydrogen: The Process

While the two commodities might seem like oil and water in the modern energy landscape, coal and hydrogen share a link.

Namely, coal (or the moisture within it) can be leveraged to give up its hydrogen content. 

This “gasification of coal” produces grey hydrogen, which can become the blue hydrogen (cleaner) variant when paired with CCS methods. 

Today’s hydrogen is supplied almost entirely from fossil fuels: 70% from natural gas and around 27% from coal.

It’s forecast that by 2050, the world could demand upwards of 650 MtH2/y of hydrogen, or around five times the current production levels.

Transportation is expected to consume the lion’s share of future hydrogen stocks at around 185 MtH2/y by 2050, or almost 30% of the total.

Hydrogen’s primary transport use will be fuel cell electric vehicles (FCEVs), which can significantly reduce air pollution, especially in cities.


Through a chosen consortium, the Japanese government will invest $2.35 billion in a Victorian coal-to-hydrogen project in the Latrobe Valley.

After a successful first shipment of liquid hydrogen (LH2) in 2022 via the purpose-built Susio-Frontier vessel, Japan is now keen for more.

Relying on Carbon Capture and Storage (CCS) methods, however, the project has come under scrutiny from environmental groups. 

With its close proximity to Bass Straight, the partners J-Power and Sumitomo aim to use the region’s abandoned oil and gas wells to store carbon emissions.

However, Victoria’s peak environmental body says the CCS approach “has never worked globally” and “is an unviable technology”.

At this stage, the project is set to go ahead. 

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