Piloting hydrogen as a future fuel

As countries tackle the challenge of meeting national and international emissions targets and look for secure, clean and sustainable sources of fuel, hydrogen is becoming recognised as a fuel for the future.

In 2014, global hydrogen production was in excess of 64 million tonnes with a valued of approximately AUD$132 billion1. The Hydrogen Council, a global organisation of leading energy, transport and industry companies with an interest in hydrogen, estimates that the international hydrogen market will be worth approximately US$2.5 trillion in 2050.2

The State Government of Victoria, the Australian Government and the Japanese Government, are all supporting a world-first project to produce hydrogen in the Latrobe Valley in south-east Victoria for export to Japan. The project is being developed by a consortium of companies led by Kawasaki Heavy Industries (KHI) and which includes electric power development company J-POWER, Marubeni, Iwatani , Shell and AGL.

The Hydrogen Energy Supply Chain Pilot Project

The Hydrogen Energy Supply Chain (HESC) Pilot Project (The Pilot) presents an opportunity for Australia to be at the forefront of the rapidly expanding and increasingly important hydrogen production industry. The Pilot will demonstrate a fully integrated supply chain for hydrogen, starting with the production of hydrogen in the Latrobe Valley in south-east Victoria and ending with the transport of that hydrogen, in liquefied form, to Kobe, Japan.

Hydrogen production in the Latrobe Valley

The Pilot will involve the construction of a hydrogen production plant in the Latrobe Valley. Using proven gasification technologies developed by J-POWER, the plant will produce hydrogen gas and will be located on AGL’s Loy Yang site.

Hydrogen transport to Port of Hastings and beyond to Japan

The hydrogen gas will be transported by road in a pressurised tank to the Port of Hastings. Here, the gas will be liquefied using well - developed technology which is already being used in other countries. The liquefied hydrogen will then be shipped by KHI in a specifically designed, world-first hydrogen carrier ship to an unloading base operated by Iwatani in Kobe, Japan where it will be used for a variety of applications including fuel cells and electric vehicles.

Carbon offsets

The Pilot will offset any carbon emissions produced.

A successful carbon capture and storage solution is a necessary condition for the HESC project to progress to full commercial scale.

The Victorian and Commonwealth Government’s CarbonNet Project is investigating the potential for establishing a commercial-scale carbon capture and storage network in Gippsland.

An extensive work program to confirm the suitability of a prioritised storage site in Bass Strait is underway.

Investment and benefits to Victorian and Australian economies

The project will see significant investment and benefits flow into the Victorian and wider Australian economies.The Pilot Project will see around half a billion dollars in investment across the full supply chain in Australia and Japan. Approximately half of this investment will be in Victoria where the Pilot Project is expected to create a number of jobs during its planning, construction and one year of operation.

Based on a number of factors – including the successful completion of the Pilot Project, regulatory approvals, social licence to operate and hydrogen demand, the decision to proceed to a commercial phase will be made in the 2020s with operations targeted in the 2030s. Comprehensive community engagement would be ongoing during this period and build on the engagement undertaken during the Pilot Project.

It is estimated that more than half of the multi-billion dollar investment required for a full commercial operation would be spent on infrastructure located in Australia, with thousands of jobs created during the commercial phase.

Keeping the community informed

The Victorian and Australian governments are committed to keeping the community fully informed about The Pilot as is progresses. Opportunities for the community to learn more about the project as it progresses will be provided in a range of ways, including fact sheets and web and electronic news updates.

Further information can be found at these websites:


An opportunity for Victoria and Australia

The HESC Pilot Project puts Australia in a strong position to be the first place in the world to create a thriving hydrogen export industry that will bring significant economic benefits in the form of jobs and investment to the Latrobe Valley, Victoria and Australia. The project also allows Victoria to play a leading role in developing a clean, new source of energy for domestic consumers and markets.

The Pilot builds on both Victoria’s and Australia’s long and well-established relationship with Japan and provides an opportunity for Australia to lead the way in the production of the fuel of the future.

1 Hazer Group, Prospectus, 2015
2  Hydrogen Council, Hydrogen Scaling Up, 2017