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An Emerging Australia-Japan Hydrogen Supply Chain

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An Emerging Australia-Japan Hydrogen Supply Chain

The outbreak of the Russia-Ukraine War reconfirmed Japan’s energy insecurity, but also highlighted the potential of Australia-Japan energy cooperation.

An Emerging Australia-Japan Hydrogen Supply Chain
Credit: Wikimedia Commons

On May 24, a Quad leaders’ meeting between U.S. President Joe Biden, Australian Prime Minister Anthony Albanese, Indian Prime Minister Narendra Modi, and Japanese Prime Minister Kishida Fumio, was held in Tokyo. The four leaders discussed regional and global issues in the Indo-Pacific, including the influence of the Russia-Ukraine War on the region as well as the importance of common energy supply chains.

The meeting produced a joint statement that included a variety of fields for quadrilateral cooperation, such as international security, global health security, infrastructure, climate, and energy. The four countries agreed on the significance of “clean energy cooperation” in “clean hydrogen” while welcoming the contribution of the Sydney Energy Forum as well as the new Australian government’s commitment to climate change. Indeed, the newly elected Australian prime minister stated that Australia could become a “renewable energy superpower.”

Prior to the Quad meeting, Japan and Australia had already cooperated in the field of clean energy, especially the creation of a clean hydrogen supply chain in the Indo-Pacific region. On April 9, a consortium of Japanese companies, including Kawasaki Heavy Industries, J-Power, Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation, and Australia’s AGL Energy, held a ceremony to celebrate their success in a pilot project to transport hydrogen from Australia to Japan by the world’s first liquefied hydrogen tanker, “Suiso Frontier.” In the ceremony, Kishida mentioned that Japan has explored stable energy procurement in the wake of the Russia-Ukraine War and said that hydrogen is a key to Japan’s energy security and stable energy procurement toward carbon-neutral goals. 

The Japanese government announced a “Basic Hydrogen Strategy” in 2017 which aimed at establishing a “world-leading hydrogen-based society” in pursuit of carbon-neutrality goals. The strategy stressed that Japan would establish basic technologies with Australia for the development and demonstration of a “liquefied hydrogen supply chain” paving the way for commercialization. Regarding the world’s first attempt for maritime transportation of liquefied hydrogen, the document emphasized that Japan would develop and demonstrate a liquefied hydrogen carrier ship for the Australia-Japan liquefied hydrogen supply chain project. Based on this strategy, Suiso Frontier was developed in Japan, departed from the port of Kobe on December 24, 2021 and arrived in Port Hastings in Victoria, Australia on January 20 of this year. The vessel returned safely to Kobe on February 25.

Prior to the success of liquefied hydrogen transportation as a A$500 million pilot project backed by the Japanese and Australian governments, both Tokyo and Canberra have made several arrangements and statements regarding bilateral renewable energy cooperation. On June 13, 2021, Japan and Australia agreed to cooperate for facilitating carbon-neutral goals of the Paris Agreement by announcing the “Japan-Australia Partnership on Decarbonization through Technology” recalling and building on other initiatives and statements, such as the “Hydrogen Energy Supply Chain” (HESC), the “Japan-Australia Energy and Resources Dialogue” (JAERD), and the “Australia-Japan Joint Statement of Cooperation on Hydrogen and Fuel Cells.”

On January 7 of this year, “Australia-Japan Clean Hydrogen Trade Partnership” was released by the Scott Morrison government. Prime Minister Morrison stated that “It is critical that we work closely with our international partners such as Japan to deliver on Australia’s low emissions objectives… Clean hydrogen is central to both Australia’s and Japan’s plans to achieve net zero emissions while growing our economies and jobs.” The bilateral agreement is based on the first round of a A$150 million project, “Australian Clean Hydrogen Trade Program” (ACHTP), which aims to advance Australian-based hydrogen supply chain efforts. With regards to the joint partnership, Morrison continued, “When Osaka hosts the World Expo in 2025, Australia will be there to showcase the best of Australian ingenuity and innovation.”

The Australian government has invested more than A$1.3 billion in the development of a domestic hydrogen energy industry. Liquefied hydrogen is created from brown coal and biomass produced at a hydrogen production plant at AGL Energy’s Loy Yang site in the Latrobe Valley in Victoria. This is 99.99 percent pure hydrogen, but critics pointed out that “emissions from hydrogen derived from brown coal are twice that of natural gas.” A group of energy experts in Australia warned that carbon capture and storage (CCS) technology is “technically complex and expensive” and high carbon-capture rates are not assured, meaning that liquefied hydrogen produced through CCS cannot be “truly clean” hydrogen.

Moreover, Llewelyn Hughes, an associate professor at the Crawford School of Public Policy of the Australian National University, argued that Japan’s carbon-recycling strategy is a “risky bet” and pointed out that Japan’s energy strategy includes the construction of coal plants. Furthermore, Kondo-Francois Aguey-Zinsou, a hydrogen technology expert and a professor at the University of Sydney Nano Institute, pointed to the technical challenges associated with transporting liquefied hydrogen. Still, he also commented that “Obviously it is [currently] not economically viable, obviously there are a lot of technical challenges, but what HESC is doing is actually creating the market.” Thus, although there are some technical issues to be sorted out in the CCS and liquefied hydrogen transportation, clean hydrogen is still a promising and critical energy source for both Tokyo and Canberra.

As Patrick Gorr observed in The Economist, procurement of hydrogen from Australia is not the cheapest choice, but from the perspective of Tokyo, Australia is strategically reliable and Japan could “expect to cushion its balance of payments with Australia, likely exporting some of the fruits of its hydrogen revolution, public transport fleets.” Gorr also contended that Japan would become one of the first major consumers of “green hydrogen” produced by renewable energy with a view to achieving net zero emissions. Hydrogen itself is a colorless gas, but there are various colors in hydrogen classification depending on its generation methods: carbon-free renewables (green), fossil fuel combined with the carbon-neutral CCS process (blue), steam methane reforming method (gray), coal or lignite coal (black or brown), thermal splitting of methane (turquoise), nuclear power (pink, purple, or red), and natural generation (white).

Notably, Japanese companies have attempted to cooperate with Australian firms for the commercialization of “green hydrogen” energy as well. On January 12, Sojitz corporation, a Japanese trading company, announced that it would work together with CS Energy, an Australian power generator, and carry out a demonstration project to transport green hydrogen produced from solar power in Queensland of Australia to Palau for the purpose of backup power sources in small fuel cells. The Pacific Island country attempts to achieve 45 percent of renewable energy generation, and the project is financially backed by the Japanese Ministry of Environment. Likewise, Osaka Gas announced on April 12 that it would provide project management as well as technical and engineering support for a A$10.75 billion “green hydrogen project” on Australian soil.

The outbreak of the Russia-Ukraine War has reconfirmed Japan’s energy insecurity owing to its low energy self-sufficiency rate, but at the same time, it has proven the functionality and mutual-complementarity of the Australia-Japan “quasi-alliance” in the field of energy security cooperation, especially clean hydrogen energy as potentially and economically significant renewable energy. In the changing geopolitical and strategic environment, both Japan and Australia are expected to cooperate for the maintenance of the international peace and security as well as in the field of renewable energy development through the emerging hydrogen supply chain network in the Indo-Pacific region.

A short version of this article first appeared in The Interpreter.