AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- The Hydrogen Energy Supply Chain (HESC) project, a high-profile hydrogen initiative, faces major setbacks.
- Kawasaki Heavy Industries (TYO:7012) has withdrawn, citing cost concerns and domestic focus.
- Delays and escalating costs, along with environmental critiques, cloud the project’s future.
The ambitious Hydrogen Energy Supply Chain (HESC) project, aimed at producing clean hydrogen from brown coal in Australia’s Latrobe Valley, is facing significant challenges. Kawasaki Heavy Industries (TYO:7012), a leading Japanese industrial conglomerate, has announced its decision to withdraw from the project. This move casts doubt on the future of the multi-billion-dollar initiative.
The HESC project was designed to convert Victoria's brown coal into liquefied hydrogen for export to Japan. The project relied on carbon capture and storage (CCS) technology to offset emissions, proposing to sequester carbon dioxide in Bass Strait. However, the technology remains untested on a large scale.
The initiative had initially garnered significant financial backing, including $2.35 billion from the Japanese government and $50 million from the Victorian government. Despite this, delays and escalating costs hindered the project’s progress. Kawasaki has now shifted focus to domestic hydrogen sources, reducing its hydrogen carrier infrastructure to align with what it described as "more realistic" goals.
Environmental groups have long criticized the project, highlighting its reliance on fossil fuels during a climate crisis. Friends of the Earth, a prominent advocacy group, described the venture as impractical and economically unviable. According to Freja Leonard, the group’s gas campaigner, producing hydrogen from brown coal exacerbates climate concerns.
In 2022, the project successfully generated hydrogen under trial conditions, showcasing its technical feasibility. However, a confidential government report highlighted financial and logistical challenges, along with divided local support. Victorian Energy Minister Lily D’Ambrosio also voiced doubts about the project’s ability to safely and effectively capture and sequester carbon emissions.
The withdrawal of Kawasaki Heavy Industries from the project leaves its future uncertain. Victorian Greens leader Ellen Sandell has called for the initiative to be discontinued, citing environmental and economic concerns.
As the HESC project faces mounting criticism and logistical hurdles, its promise of transforming the Latrobe Valley’s coal industry into a global hydrogen export hub seems increasingly out of reach. With Kawasaki’s exit and mounting costs, the vision of clean hydrogen powered by brown coal may struggle to become a reality.
