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Hydrogen Energy Supply Chain Project for Latrobe Valley awarded AU$2.35 billion from Japanese Green Innovation government fund

The HESC Project is now entering the commercial demonstration phase with the commitment of JPY220 billion (AUD$2.35 billion) in funding from the Japanese government's Green Innovation Fund.

By news@gippsland - 7th March 2023 - Back to News

In February 2022, the Hydrogen Energy Supply Chain (HESC) Project successfully completed its pilot phase with the arrival of the world's first liquefied hydrogen carrier in Kobe, Japan with a load of liquefied hydrogen extracted from Latrobe Valley coal.

Jeremy Stone, Non-Executive Director of J-Power Latrobe Valley

Jeremy Stone, Non-Executive Director of J-Power Latrobe Valley

Commercial demonstration phase

The HESC Project is now entering the commercial demonstration phase with the commitment of JPY220 billion (AUD$2.35 billion) in funding from the Japanese government's Green Innovation Fund, as Australia and Japan pursue their own net-zero emission goals.


J-Power and Sumitomo have formed the J-Power Sumitomo Corporation Joint Venture (JPSC JV) for producing hydrogen via coal gasification using carbon capture and storage.


KHI and Iwatani Corporation have formed Japan Suiso Energy (JSE) to oversee the liquefaction, loading, transportation and unloading of hydrogen to Japan.

Preferred hydrogen provider

J-Power/Sumitomo Corporation Joint Venture selected as preferred hydrogen provider by Japan's Green Innovation Fund. An Australian joint venture between Japanese organisations J-Power and Sumitomo Corporation (JPSC JV) has been selected as the preferred hydrogen provider to Japan Suiso Energy (JSE). The clean hydrogen gas will be produced in Gippsland, Victoria and H3:JSE will liquify the hydrogen for export to Japan.

The JV will produce the clean hydrogen, extracted from Latrobe Valley coal with CO2 capture, utilisation and storage (CCUS). J-POWER successfully produced 99.999 percent 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.

Major milestone and a recognition

Jeremy Stone, Non-Executive Director of J-Power Latrobe Valley said; "Building on the success of HESC and J-Power's 166MW Osaki CoolGen project, we are excited to be one step closer to making commercial scale hydrogen production in Victoria a reality."

"This is a major milestone and a recognition of Gippsland's unique ability to help reduce global CO2 emissions through the reliable production of large quantities of cost competitive and clean hydrogen," he said.

The Latrobe Valley hydrogen production facility will benefit from the local skilled workforce, existing energy infrastructure and resources. The project will take advantage of one of several long-term CO2 storage solutions, including using the depleted oil and gas reservoirs in Bass Strait for the CO2 emissions that cannot be utilised.

Achieve emission reduction

Japan Suiso Energy CEO, Dr. Eiichi Harada said, "We are delighted to have selected the JPSC JV as the preferred supplier of clean hydrogen for the Japanese energy market as we continue our transition to a more sustainable clean energy future. We have received a commitment of JPY220 billion (AUD$2.35 billion) from the Japanese government's Green Innovation Fund to further progress this opportunity."

"We look forward to working with the JV and the Victorian, Australian and Japanese governments to achieve the significant economic and emission reduction benefits that a commercial scale clean hydrogen project will deliver." Dr Harada said.

The JPSC JV will initially produce between 30,000 to 40,000 tonnes per annum of gaseous clean hydrogen. 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). Subject to commercial agreements and meeting the required environmental permits and approvals, it is expected hydrogen production will commence in the late 2020's.

Economic opportunity

Jeremy Stone said, "There is significant domestic interest in a reliable source of locally produced, cost competitive clean hydrogen. Now we have countries establishing the definition of "clean hydrogen", based on carbon intensity."

"We are seeing an opening of trade, based on credible and transparent CO2 reduction numbers, at various price points. We are expecting further offtake agreements for hydrogen that can be used by a wide range of businesses and industrial processes, including the production of ammonia, fertiliser and methanol," he said.

Australian media backgrounder

Australia's most advanced clean hydrogen project, the Hydrogen Energy Supply Chain (HESC) project in Victoria, has entered the commercial demonstration phase with the commitment of JPY220 billion approximately AUD$2.35 billion, in funding from the Japanese government's Green Innovation Fund.

The funds will be delivered via Japan Suiso Energy (JSE) comprising Kawasaki Heavy Industries and Iwatani Corporation. A newly formed J-POWER and Sumitomo Corporation Joint Venture (JPSC JV) will supply 30,000 tonnes of clean hydrogen gas per year, to a JSE owned and operated liquefaction and shipping facility at the industrial Port of Hastings.

Sustainable energy jobs

This major injection of capital enables JSE to design and build commercial scale facilities to liquefy and ship the hydrogen from Port of Hastings to the Port of Kawasaki in Japan, bringing significant economic benefits to Victoria and Hastings in particular.

The JPSC JV will extract the hydrogen from Latrobe Valley coal with CO2 capture and storage facilities in the nearby Bass Strait. The project will help reduce atmospheric CO2 on the path to net zero by 2050 and at full commercial scale, creating many sustainable energy jobs, in the Latrobe Valley and Hastings.

Progress in commercialisation

Japan Suiso Energy CEO, Dr. Eiichi Harada said, "After a decade of working together with the Japanese, Australian and Victorian governments, our efforts to establish a world-first clean hydrogen energy supply chain have been rewarded. This is truly a watershed moment for our combined efforts to decarbonise global energy production. This commitment of AUD$2.35 billion gives all participants in the hydrogen supply chain the confidence to progress to the next stage of commercialisation."

"This is a complex project and there is still some way to go in terms of approvals, design, construction and commissioning but this is a major boost for the Victorian economy on its journey towards a clean energy future", said Dr. Harada. "The project will bring new clean energy infrastructure and jobs to the Hastings and Latrobe Valley communities. Something, we think is very important as we support the people through this period of change, as well as the broader energy sector." Dr Harada said.

Reduced global emissions

Jeremy Stone, J-POWER Latrobe Valley Non-Executive Director said; "We are moving from startup to scale up phase, which is an exciting time for J-POWER and our joint venture partner, Sumitomo Corporation. Bringing commercial scale hydrogen production to the Latrobe Valley will act as a catalyst for growth in the broader Gippsland region, as complementary industries such as Ammonia, Fertiliser and Methanol are attracted to the opportunities it presents."

"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. Subject to commercial agreements and meeting the required environmental permits and approvals it is expected hydrogen production will commence by late 2020s." Mr Stone said.

Carbon intensity

The carbon intensity of the hydrogen produced will be verified using the Guarantee of Origin scheme which is being developed by the Australian government in-line with global hydrogen markets. This will facilitate the accurate assessment and determination of the carbon intensity (kgCO2/kgH2) of hydrogen produced. This provides certainty to customers that production and transport of clean hydrogen meets their carbon dioxide emission reduction requirements.

The Intergovernmental 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 and avoiding catastrophic climate change.


A summary of additional information has been included to give a background.


In January 2022, the Hydrogen Energy Supply Chain (HESC) pilot Project achieved a world first by demonstrating that clean liquid hydrogen can be extracted from a mix of Latrobe Valley coal and biomass, liquified, shipped and unloaded in the port of Kobe in Japan.

The governments of Australia and Victoria contributed a combined $100 million in funding to the $500 million project. The rest was invested by the Japanese government and Project Partners. For more information, visit the Hydrogen Energy Supply Chain (HESC) website.

Japan Suiso Energy

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.

J-POWER / Sumitomo Corporation Joint Venture (JPSC JV)

A joint venture between J-Power and Sumitomo Corporation, two large Japanese organisations will provide the hydrogen gas. J-Power (Electric Power Development Co., Ltd) is one of Japan's largest power utility companies with some 25GW of global energy generation. They are 50% renewable in Japan. J-Power invests in a range of clean energy projects around the world, including pumped hydro, wind, biomass, solar and clean hydrogen.

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. Aiming to create a next-generation business that will contribute to carbon-neutral society, Sumitomo Corporation is engaged in the business development in the field such as hydrogen, ammonia, forest, biomass, solar power, storage battery, subsurface energy, carbon credit, and CCUS.

Green Innovation Fund

Based on the 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 decarbonization initiatives, ranging from R&D and demonstration to social implementation, with specific goals shared between the public and private sectors.

Pictures from Cox-inall Dentsu Creative website.


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