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Today's Age

Loy Yang coal deal heats up


Adam Carey Cole Latimer

Clockwise from main: Loy Yang power station; Malcolm Turnbull, Josh Frydenberg and Kawasaki Heavy Industries executives feel the heat in the Latrobe Valley. Photos: AAP, Justin McManus
On one of Victoria’s hottest mid-April days on record, Australian and Japanese leaders gathered at the base of Loy Yang, the state’s biggest power plant, to launch a project to secure the long-term future of its vast brown coal reserves.
If this $496 million pilot project to convert the Latrobe Valley’s brown coal into liquid hydrogen pays off, there is hope that a new export industry will be created that will fuel the valley’s coaldependent economy for many decades to come.
Speaking at the launch of the project between Australia and Japan in the Latrobe Valley, Prime Minister Turnbull highlighted the government’s agnostic position on energy, one of the main tenets of the National Energy Guarantee, which has been used to increase the role of coal in Australia’s energy mix.
‘‘It’s amazing to think that brown coal from Victoria is going to be keeping the lights on in Japan,’’ Mr Turnbull said.
‘‘This partnership [between Australia and Japan] will ensure this ancient resource of brown coal will produce one of the critical fuels of the future.’’
Australia wants to be the first country in the world to export hydrogen, converted from its brown coal reserves, as an energy source.
Attendees at the launch were told hydrogen could one day provide a fifth of the world’s energy needs.
By 2030, between 10 million and 15 million cars and 500,000 trucks globally will be hydrogen-powered, according to a recent report by business consortium the Hydrogen Council.
But the viability of the coal-tohydrogen project depends on being able to inject the associated carbon dioxide into porous rock beneath the Bass Strait seabed, to avoid emitting vast amounts of greenhouse gases into the atmosphere.
The carbon capture and storage trial is ongoing. Just two months ago, a ship ventured out to sea off Ninety Mile Beach in the hope of finding a place to sequester millions of tonnes of carbon dioxide.
Even so, the Hydrogen Energy Supply Chain pilot project was locked in yesterday, when Mr Turnbull, Victorian Minister for Regional Development Jaala Pulford, Japanese Vice-Minister for the economy and trade Daisaku Hiraki, and others, signed a commitment to the project.
The Turnbull and Andrews governments have each committed $50 million and a Japanese consortium led by Kawasaki Heavy Industries will fund the bulk of the pilot.
Kawasaki believes there is enough brown coal in the Latrobe Valley that could be converted to hydrogen that it could power Japan for 240 years.
Masayoshi Kitamura, chairman of J-Power, a Japanese energy company, said Latrobe Valley brown coal is attractive because it is “relatively inexpensive and abundant”.
The pilot will begin with construction of a hydrogen production plant at the Loy Yang power station, just south of Traralgon.
Hydrogen gas, produced from brown coal, will be transported in pressurised tanks on semi-trailers to the Port of Hastings. It will be liquefied and shipped on a purpose-built hydrogen carrier to Japan. The pilot phase is planned to start in 2020, for about one year.
If the technology is judged commercially viable, it is expected that the export industry will take off in the 2030s and generate about 400 local jobs.
About 700 jobs were lost in the valley when Hazelwood closed one year ago.
AGL chief executive Andy Vesey said he was “reasonably confident” the carbon capture and storage trial would succeed and ensure the viability of Victoria’s hydrogen export industry for the long term.
“When we look at the fuel and the resource available in this valley, the abundance of it, the cost of it, it really is something we should be optimistic about,” Mr Vesey said.
He said the world had no choice but to stop emitting carbon dioxide into the atmosphere.
‘‘We don’t need hot days or cold days or cyclones – we know that the continued emission of a heattrapping gas into the atmosphere can’t continue indefinitely,’’ Mr Vesey said.
However, Environment Victoria signalled its scepticism about the project.
‘It’s amazing to think that brown coal from Victoria is going to be keeping the lights on in Japan’
Malcolm Turnbull