A high-profile plan to produce clean hydrogen from Australia's brown coal for export to Japan is on the verge of collapse, with Kawasaki Heavy Industries — one of Japan’s largest industrial conglomerates — pulling out of the Hydrogen Energy Supply Chain (HESC) project.
The ambitious project aimed to transform brown coal from Victoria's Latrobe Valley into liquefied hydrogen, transported to Japan via a specially developed supply chain. The process relied on untested carbon capture and storage (CCS) technology to offset emissions by sequestering CO₂ in Bass Strait.
Initially supported by $2.35 billion from the Japanese government and $50 million from Victoria's government, the project promised an economic boost for the Latrobe Valley’s coal industry.
However, delays and escalating costs have plagued its implementation. Kawasaki has now opted to pursue domestic hydrogen sources, scaling back its hydrogen carrier infrastructure for a "more realistic" approach.
Victorian Energy Minister Lily D’Ambrosio had previously expressed doubts about the feasibility of adequately capturing carbon from the coal and safely sequester it.
Environmental groups, including Friends of the Earth, labelled the project impractical and economically unviable.
“Using brown coal in a climate crisis to produce hydrogen is absolute nonsense,” said Freja Leonard, the group’s gas campaigner.
A 2022 confidential government report noted local support for the HESC but highlighted opposition from some stakeholders and ongoing financial and logistical hurdles.
Despite successfully generating hydrogen under trial conditions in January 2022, the project faced overruns and delays.
Victorian Greens leader Ellen Sandell called for the project to be scrapped, describing it as an environmental and economic failure.
With Kawasaki Heavy Industries’ decision to pull out of the project, future of the HESC remains uncertain.