Japan-Australia flagship hydrogen project stumbles

Japan Times

01-04-2025

Japan wants to become a hydrogen fuel leader to meet its net-zero goals, but one blockbuster project is hanging in the balance over questions about its climate credentials.
The Hydrogen Energy Supply Chain (HESC) is billed as a billion-dollar attempt to ship liquid hydrogen from Australia to Japan. However, cold feet about the project in Australia means HESC will source hydrogen from Japan to meet a 2030 deadline for its demonstration phase.
Hydrogen sounds promising on paper: While fossil fuels emit planet-warming greenhouse gases, burning hydrogen creates only water vapor. But it has not yet lived up to its promise, with several much-hyped projects globally struggling to overcome high costs and engineering challenges.
Hydrogen's climate credentials also depend on how it is produced. "Green hydrogen" uses renewable energy, while "blue hydrogen" relies on fossil fuels such as coal and gas, with carbon-capture technology to reduce emissions. "Brown hydrogen" is produced by fossil fuels without any carbon capture.
The HESC project aims to produce blue hydrogen in the Australian state of Victoria, harnessing abundant local supplies of lignite coal.
With the world's first liquid hydrogen tanker and an imposing storage site near Kobe in Japan, HESC had been touted as a flagship experiment showcasing Japan's ambitions for the fuel. HESC says it aims to eventually produce enough hydrogen to "reduce about 1.8 million tons per annum of CO2 from being released into the atmosphere."
Japan's energy sector emitted 974 million metric tons of CO2 from fuel combustion in 2022, according to the International Energy Agency.
Japan's government pledged ¥220 billion (now $1.4 billion) to HESC's current "commercial demonstration" phase, which has a completion deadline of 2030.
But to meet this deadline, the project will now source hydrogen in Japan. That has been blamed on cold feet among Australian officials concerned about the project's environmental payoff.
A spokesman for Japan's Kawasaki Heavy Industries, one of the companies behind HESC, said the decision to shift production to Japan was taken "chiefly because of delay in procedures on the Australian side." The Victoria government did not respond to repeated requests for comment, though Australian officials have told local media that the move was a Japanese "commercial decision."
Australia's cooling interest in the project is due to "strong opposition" from environmental activists and energy experts opposed to carbon capture and storage, said Daisuke Akimoto of Tokyo University of Information Sciences.
"The main problem the project faces is the lack of approval of the blue hydrogen project by the Victorian government," Akimoto said.
Kawasaki Heavy said it has not yet decided what type of hydrogen it will procure in Japan and downplayed the project's challenges.
"We are very positive" about HESC and "there is no change" to the goal of building a new supply chain, the spokesman said, declining to be named.
However, sourcing the hydrogen locally leaves "a critical evidence gap at the middle of the project" — proving carbon capture and storage work — explained David Cebon, an engineering professor at the University of Cambridge. That is "difficult and challenging and not being done successfully anywhere," Cebon said.
Kawasaki Heavy has said it will continue "feasibility studies" for the HESC project, but Cebon believes it will "quietly die," partly because of the cost of shipping hydrogen to Japan. To be transported by sea as a liquid, hydrogen needs to be cooled to minus 253 degrees Celsius — an expensive, energy-intensive process.
"I think wiser heads in the government just realized how crazy it is," said Mark Ogge from the Australia Institute think tank.
Japanese energy company Kansai Electric has separately withdrawn from a different project to produce "green" hydrogen in Australia. A company spokesman declined to comment on reports that the decision was due to ballooning costs.
Resource-poor Japan is the world's fifth-largest single-country emitter of carbon dioxide.
It already produces some hydrogen domestically, mostly using natural gas and oil or nuclear power, although this is limited and expensive.
Some experts are sanguine about HESC's challenges. Noe van Hulst, a hydrogen advisor to the IEA, said it was important to take the long view. "Pilot projects are undertaken to test innovations in practice: learning-by-doing," he said.
"Yes, it is hard to develop a low-carbon hydrogen market and it will take decades," as with wind and solar energy, van Hulst said.
Solar in particular has seen costs plummet and uptake soar far beyond initial expectations and at greater speed.
And for now, "there isn't really an alternative (to) decarbonize these hard-to-electrify sectors like steel, cement, ships and planes," van Hulst added.