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The Federal and Victorian governments pledged $100 million in funding for the $496 million, four-year-long pilot project.

The remainder of the funding will be provided by a business consortium led by the Japanese government, comprising Kawasaki Heavy Industries, J-Power, Iwatani Corporation and Marubeni.

Brown coal from AGL's Loy Yang mine will be transformed into hydrogen.

Brown coal from AGL’s Loy Yang mine will be transformed into hydrogen.

Photo: Carla Gottgens

Kawasaki believes the there is enough brown coal in the Latrobe Valley that can be converted to hydrogen that it could power Japan for 240 years.

“Investing in this feasibility pilot is a down payment on our future economic prosperity and security,” Federal Minister for Jobs and Innovation Michaelia Cash said.

“We now embark on four critical, ground-breaking years.”

It is understood that GHD, the same firm investigating the feasibility of the government’s proposed West-to-East gas pipeline, will be the lead engineering firm on the project.

The process works by using brown coal, or lignite, which has a higher water content compared to black coal.

The lignite is pressurised and gasified in a furnace to create hydrogen. Kawasaki said the remaining carbon dioxide created during the process will be buried underground using carbon capture and storage (CCS) technology.

The gasified hydrogen is then supercooled to turn it into a liquid, which can then be transported.

The gas produced will be shipped through the Port of Hastings, located adjacent to AGL’s proposed $250 million floating LNG terminal at Crib Point.

The Victorian government has investigated CCS in the Latrobe Valley through its CarbonNet Project, which would pipe captured CO2 emissions through a pipeline into deep, underground offshore storage sites in the Gippsland Basin.

The CSIRO recently made the development of a national hydrogen production industry a key goal for Australia, aiming to make it a world leader.

In South Australia, fellow Japanese firm Mitsubishi is carrying out a similar hydrogen development project, using renewable energy as the fuel source, as part of the former South Australian government’s hydrogen roadmap.

The group has plans for a hydrogen production and distribution facility in Tonsley, repurposing the former Mitsubishi car manufacturing plant, to create hydrogen gas from solar energy.

However, unlike the Victorian plan, hydrogen produced in South Australia will remain onshore to be used as energy for cars and to generate electricity.

A recent study developed by the Hydrogen Council – a consortium comprising nearly 30 industrial, energy and automotive companies – found that by 2030, between 10 million and 15 million cars and 500,000 trucks globally will be hydrogen-powered.

It forecast annual hydrogen demand to reach close to 80,000 petajoules by 2050, accounting for 18 per cent of total global final energy demand under the Paris Agreement plan.

One petajoule of energy can power 19,000 Australia homes for an entire year.

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Covering energy and policy at Fairfax Media.

Adam Carey

State Political Correspondent for The Age

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