A landmark project aiming to convert coal from Australia’s Latrobe Valley into hydrogen for export has encountered a significant obstacle following the withdrawal of a key international partner, Kawasaki Heavy Industries.

The project, backed by both the Victorian and Australian federal governments with $50 million each, sought to establish an international hydrogen supply chain. Using brown coal from the Latrobe Valley, the plan involved producing hydrogen, sequestering carbon emissions through unproven CO2 capture and storage (CCS) technology in the Bass Strait, and piping the hydrogen 150 kilometres to the Port of Hastings for shipment to Japan. The Japanese government had also pledged $2.35 billion to support the initiative.

However, Japanese media reported last week that Kawasaki Heavy Industries has decided to refocus efforts domestically, citing challenges in meeting a 2030 timeline for hydrogen procurement. The Japanese business publication Nikkei noted that the completion of the project within the original timeframe was critical to its competitiveness.