The wheels are falling off Labor’s coal-to-hydrogen pipe dream

By Ellen Sandell, Leader of the Victorian Greens and State Member for Melbourne 

This year, the Earth effectively hit the 1.5 degree threshold. It cannot afford a new coal or gas project – let alone one that would barely deliver any actual energy. 

That’s what Victorian Labor’s ridiculous coal-to-hydrogen plan – the so-called Hydrogen Energy Supply Chain (HESC) project – would have done. Burned brown coal in the Latrobe Valley, keeping Loy Yang alive well into the 2030s, just to create a small amount of hydrogen for export to Japan.

Even before Labor gave the pilot project $50 million back in 2018, it should have been obvious to anyone that the plan does not stack up, on any level.

Now, following consistent pressure from the community, environmental groups, and the Greens, a key Japanese partner and importer has at last seen the writing on the wall. 

This megacorporation, Kawasaki Heavy Industries, announced in mid-November it was pulling out of the HESC’s commercial trial, even downsizing plans for its liquid hydrogen carriers by about 75% to focus on domestic opportunities.

While there’s a whole consortium of companies behind the HESC’s many phases, Kawasaki was a key partner in purchasing and transporting this brown hydrogen.

In short, the wheels are well and truly falling off this furphy of a project.

The project never made sense, first and foremost on an environmental level. 

The HESC would burn enough coal to create up to 3.8 million tonnes of carbon emissions – the equivalent to putting another 735,000 cars on the road! 

Claims the HESC would capture some small portion of those emissions and bury them in disused, offshore gas wells are at best naive (check out Chevron’s Gorgon gas project in WA for a world-class example of a government falling for the carbon-capture con).

What’s more, the HESC would lose a whopping 70% of the energy required for the long, convoluted process of turning coal into hydrogen gas at AGL’s Loy Yang plant; transporting that gas to the Port of Hastings; freezing it into liquid hydrogen; and shipping that liquid hydrogen to Kobe, Japan.

The 2018-2022 pilot program created just 1 tonne of the 2.6 tonnes of hydrogen target. The consortium behind the HESC ended up having to buy another 1.6 tonnes from another project partner, Coregas, which was made from methane.

Sadly none of these red flags were enough for Labor to call quits on this project. In March 2023, the former Treasurer Tim Pallas even flew to Japan to rubber-stamp a $2.35 billion government grant for its commercial phase.

So along with some legends at Friends of the Earth (FOE), Save Westernport, Environment Victoria and more, the Greens got to work fighting a project that never should have made it this far.

This has included online webinars, rallies outside Parliament, questions and letters to ministers, motions demanding documents related to the project, and a first-of-its kind parliamentary debate into the project, triggered by FOE’s successful petition.

We even developed a Transition Away from Coal Bill 2023 to legislate an end date for both coal mining and burning in Victoria of 2030. On top of creating an orderly transition for existing coal plants, the bill would create a constitutional ban on new coal projects, meaning the HESC would have to source hydrogen from clean, green sources of energy.

While Labor rebuffed that opportunity (and Parliament is still waiting on those documents…), we note that the HESC did not receive any further taxpayer handouts during this campaign, despite several request to both the state and federal government. 

The Minister for Energy and Resources, Lily D’Ambrosio, even spoke out about the fact that $2.35 billion grant would only go towards the liquefaction and transport of the hydrogen – meaning responsibility for carbon emissions would fall entirely on Victoria.

Which brings us to Kawasaki’s announcement. Blaming “procurement delays”, the company announced to Japanese media last month that it would pull out of the commercialisation phase, downsize its planned hydrogen carrier by 75%, and focus on domestic opportunities. 

In the new year, I’ll be asking for an update from the Government on what exactly this means for the HESC’s status.

While proponents may still argue it is technically still on the books, we know delays driven by community and political pressure are often the key to defeating these dangerous, unpopular fossil fuel projects – see, for example, TGS’ now-scrapped plan for the world’s largest seismic blasting project in the Bass Strait.

Thank you to everyone involved in the community effort in this campaign. Labor may not be able to come out and say it, but this is a win and we should feel vindicated by this news.

The Victorian Greens and I won’t stop fighting until this ridiculous plan is done and dusted, and we ensure any hydrogen developed in the state comes from renewables.