Brown coal from the Latrobe Valley in Victoria will be converted to liquid hydrogen and exported to Japan under a world-first trial backed by $50 million in federal funding, the prime minister has announced.
The project will be run from AGL’s Loy Yang power station and will take two years to get off the ground before the first shipments of hydrogen leave the port of Hastings.
“Brown coal in the Latrobe Valley can keep the lights on in Tokyo,” AGL chief Andy Vesey told reporters at the launch.
The announcement comes after months of sparring within the Coalition over energy policy, with a group of conservatives championed by former prime minister Tony Abbott pushing for direct investment in coal-fired power.
Earlier in the week, Mr Abbott himself rode through the Latrobe Valley on a charity bike ride.
Citing the government’s 30th straight opinion poll loss under Malcolm Turnbull’s leadership, the former PM called for investment in coal-fired power and a cut to immigration.
Prime Minister Malcolm Turnbull insists he is committed to a “technology-agnostic” approach that does not favour renewables or fossil fuels.
He said the “cutting-edge” hydrogen scheme in the Latrobe Valley would deliver the “energy of the future”, and promised the one-year export trial would create 400 local jobs.
The announcement saw Mr Turnbull and the AGL chief, Mr Vesey, united in a rare show of solidarity.
The pair have traded public barbs over the energy giant’s plan to shut down the Liddell power plant in NSW, with the government pushing the company to sell the plant to a Chinese firm to keep it running longer and reduce the risk of blackouts in coming years.
The Loy Yang generator, on the other hand, is slated to run through to 2048.
AGL's Loy Yang coal-fired power station. Source: AAP
Mr Vesey said AGL wanted to “transition with care” to a “carbon-constrained” future.
The project is co-funded by the Australian and Japanese governments.
Mr Turnbull said the Japanese prime minister Shinzo Abe was “very excited” about the trial.
Japanese companies Kawasaki Heavy Industries, J-Power and the Iwatani Corporation are also invested.
Coal Innovation Australia said there would be CO2 emissions generated by heating the coal and converting it to a liquid, but suggested there were good options for storage in Victoria.
“Victoria is blessed with absolutely world class storage capability in Bass Strait, so we have a huge natural resource in terms of the brown coal which is low cost, and we've got a huge reservoir for storage of CO2,” Brian Davey told ABC News.
Carbon capture and storage is still a relatively new technology.
Earlier this year, the Victorian Government tested dried-up oil wells in the Gippsland Basin to see if they could be suitable for storing captured carbon.
Labor's Joel Fitzgibbon said the opposition would "welcome" the plan if it is feasible.
"We have a natural resource there in brown coal which will be worth nothing sometime in the future," Mr Fitzgibbon told Sky News.
"If we can exploit it now and take value from it and do something very good with it like hydrogen, that would be a good thing obviously. But all subject to the detail."
