Japan's Kawasaki set to trial Australian hydrogen exports in 2020

Japan's Kawasaki Heavy Industries on Friday began building facilities in Australia to liquefy and ship hydrogen, aiming to start exporting the fuel in a trial in the second half of 2020.

The A$500 million ($355 million) pilot project in Victoria state is one of several Japan is betting on in a push by Prime Minister Shinzo Abe to put hydrogen into vehicles, homes and power stations, with the Tokyo Olympics as a showcase in 2020.

"The hydrogen economy is already materializing in Japan, and it is wonderful to now be breaking ground here in Australia," Kawasaki board chairman Shigeru Murayama said in a statement.

The demonstration project, backed by the Japanese and Australian governments and the state of Victoria, will produce hydrogen from brown coal from Australia's largest coal mine, Loy Yang, owned by AGL Energy.

The process involves coal reacting with oxygen under high pressure at high temperatures to form syngas, a mixture of mostly carbon monoxide and hydrogen. The carbon monoxide is then converted to carbon dioxide with steam, and the hydrogen is separated out.

The hydrogen gas will then be sent by trailer to be liquefied at the plant that KHI is building and shipped in a specialized ship to Japan.

The project has sparked protests from the local community, which is opposed to the coal industry in the Latrobe Valley and concerned about the impact of shipping on wetlands at the Port of Hastings.