World's first hydrogen tanker to ship test cargo to Japan from Australia

MELBOURNE, Jan 21, 2022 (Reuters) - A Japanese-Australian venture producing hydrogen from brown coal is set to start loading its maiden cargo on the world's first liquid hydrogen carrier on Friday, in a test delayed by nearly a year because of the COVID-19 pandemic.

The Suiso Frontier, built by Japan's Kawasaki Heavy Industries (KHI) (7012.T), arrived Australiathis week from Kobe, following a longer trip than the expected 16 days as theship dodged bad weather and rough seas, said a spokesperson for the Hydrogen Energy Supply Chain (HESC)venture. The ship is scheduled to head back to Japan in about a week.

Led by KHI, HESC is a A$500 million ($360 million) coal-to-hydrogen project backed by Japan and Australia as a way to switch to cleaner energy and cut carbon emissions.

Hydrogen, seen as a path to decarbonising industries that rely on coal, gas and oil, is key to Japan's goal to achieving net-zero emissions by 2050. Australia aims to become a major exporter of the fuel.

The Australian government on Friday committed a further A$7.5 million for HESC's A$184 million pre-commercialisation phase, and A$20 million for testing a capture and storage project for carbon dioxide released in the coal-to-hydrogen process to create a carbon neutral product.

Last year, HESC started extracting 70 kg of hydrogen a day from brown coal in the Latrobe Valley, about 135 km (84 miles) east of Melbourne, where brown coal mines have long fuelled some of Australia's most polluting power stations.

The hydrogen is produced by reacting coal with oxygen and steam under high heat and pressure. It is then trucked to a port site where it is cooled to minus 253 degrees Celsius (minus 423 Fahrenheit), liquefying it for export.

The partners are looking to produce up to 225,000 tonnes of hydrogen a year.

They will need to make a final investment decision by 2025, with Australia racing against countries in the Middle East and elsewhere to produce carbon neutral hydrogen, said Jeremy Stone, a director of J-Power, one of the HESC partners.

Partners in the project include Japan's Electric Power Development Co (9513.T), Iwatani Corp , Marubeni Corp , Sumitomo Corp (8053.T) and Australia's AGL Energy Ltd , whose mine is supplying the brown coal.

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Can Russia and Australia Become Climate Allies?

Resources Brotherhood: can Russia and Australia Become Climate Allies?

Climate policy in Australia has much in common with Russia, where the authorities are trying to promote solutions that somehow use the existing technological potential. However, is this similarity enough for two countries whose climate plans are not considered very ambitious to become allies in international climate negotiations?

The Australian government is openly saying that it is not ready for drastic steps to decarbonize and reduce the carbon footprint of its economy. The main reason for this is that the structure of Australian exports, with a huge share of raw materials in general and hard coal in particular, leaves the country little room for manoeuvre.

In this regard, Australia is similar to Russia, whose authorities also hope for a smooth energy transition with the role of fossil fuels preserved for as long as possible. This closeness of approach could make Australia an important partner for Russia in international climate negotiations, as climate issues have often created bizarre alliances between very different countries. But achieving this rapprochement will not be easy - despite the external similarity, Russia also has climate problems, and possible answers to them turn out to be more complex than Australia.

Australia refused to sign a Glasgow 2021 climate declaration with a commitment to reduce methane emissions by 30% by 2030, although the document was supported by the US and the EU. Australia, with its decision not to sign the Glasgow declaration, does not yet look marginal. Large gas producing countries, including Qatar and Russia, also did not join the declaration, apparently preferring first to see how the implementation of its provisions will go in practice.

For now, Australia is choosing not to make any onerous climate commitments, believing that, as a commodity supplier, it can struggle to cut emissions without hurting its own exports. Premier Morrison's recent words that Australia will reduce greenhouse gas emissions primarily through natural technological progress and energy efficiency are reminiscent of Russia's position, where President Putin also spoke extensively about energy efficiency as an important factor in reducing emissions.

Australia also hopes to take a place in the production of hydrogen, the use of which many countries are now betting in their decarbonization strategies. One such project is being implemented jointly with Japan and involves the production of hydrogen from brown coal with carbon dioxide capture.

All this also adds to the similarity with the policy of Russia, where the authorities are trying to promote solutions that allow somehow using the existing technological potential, including relying on hydrogen technologies. However, is this similarity enough for two countries whose climate plans are not considered very ambitious to become allies in international climate negotiations?

Despite the reputation of a ‘petrol station’, Russia still has a greater set of technological competencies than Australia. For example, the question of the role of nuclear energy in reducing emissions is obviously of much greater importance to the Russian authorities, who are interested in orders for the nuclear industry and the maintenance of nuclear technologies. Australia, although it is a major exporter of uranium, is not very dependent on this export and is rather sceptical about the construction of a nuclear power plant at home.

Similarly, Russia's hopes for the development of hydrogen technologies are connected not only with the possible provision of sites and raw materials for this, as in the case of Australia. The initiatives of Rosatom, which plans to produce carbon-free hydrogen using nuclear and green energy, as well as steam reforming of methane, show that Russia expects to enter the future hydrogen market with technological developments and relatively complex production chains.

So far, the climate agenda is left beyond the confrontation of powers (which is confirmed, for example, by the joint climate declaration signed in Glasgow by both the United States and China). This opens up a choice for Russia - to look for common ground and a field for joint work with the United States and other influential Western countries, or to try to build alliances with those who, for various reasons, can afford to ignore the climate agenda, for example with Australia.

This post is based on a selective translation of a paper by Stanislav Kuvaldin published on 17/12/2021.

Before the suspension of ARD activities in March 2022, ARD Committee was considering inclusion of this topic in the program of the St-Petersburg International Economic Forum (SPIEF) in June 2022. We are seeking your feedback on this suggestion. For more details or to provide feedback, please contact Alexey Goncharov.