Japan's ENEOS, France's Neoen eye CO2-free hydrogen supply chain in South Australia

Japan's ENEOS said Aug. 2 it has agreed with France's Neoen to consider developing a CO2-free hydrogen supply chain in Australia's South Australia state, under which the companies aim to transport hydrogen in the form of methylcyclohexane (MCH) to Japan.

Under a memorandum of understanding between ENEOS and Neoen Australia, the two companies will run a pre-feasibility study by the end of 2021 to examine potential for stable supply of affordable hydrogen produced from renewable energy in South Australia, a company spokeswoman said.

The study will look at manufacturing green hydrogen from renewable energy-derived power through water electrolysis in Australia; conversion of manufactured hydrogen into MCH for hydrogen storage and transport; and maritime transport of MCH to Japan by tankers.

It will also look at receipt, storage and dehydrogenation of MCH at ENEOS refineries and supply of hydrogen for industrial use at nearby thermal power plants and steel refineries; and retuning toluene separated in the dehydrogenation process to Australia for repeat use as a raw material in MCH production.

ENEOS, which strives to develop CO2-free hydrogen supply chains in Japan and abroad, is pursuing the potential project with Neoen as "among the most hopeful matter" in Australia, the spokeswoman said.

Australian prospects

ENEOS, which is also considering developing CO2-free hydrogen supply chains in the Middle East and Asia, sees great potential in cost-competitive hydrogen production in Australia due to its favorable climate conditions, including wind and sunlight, and expansive land.

In South Australia, Neoen is currently developing two pioneering projects -- the Goyder Renewables Zone and Crystal Brook Energy Park, which combine wind, solar and battery storage to provide a firm renewable energy power supply, overcoming the limitations of wind- or solar-only projects.

South Australia is known as one of the most developed regions in terms of battery storage infrastructure, where the state government is promoting development of next-generation energy industries, including hydrogen and ammonia, and planning expansion of facilities at its leading port, which is expected to be used as the base for hydrogen export to Japan.

Neoen, one of the world's leading independent renewable energy producers, also has more than 2 GW of renewable energy generation in operation or under construction in Australia.

In June ENEOS said it will start up a 204 MW solar power plant in the Australian state of Queensland -- in the second half of fiscal year 2022-2023 (April-March) -- with an eye to establishing its CO2-free hydrogen supply chain in Australia.

Strategic move

The latest move by ENEOS comes at a time when Japan sees hydrogen as among key measures to decarbonize its power, transport and industrial sectors as part of its move toward 2050 carbon neutrality.

By 2030, Japan aims to launch commercial hydrogen supply chains and bring down the supply cost of hydrogen to Yen 30/normal cubic meters from the current Yen 100/normal cu m, under a draft Strategic Energy Plan released by the Ministry of Economy, Trade and Industry July 21.

The country also aims to use maximum 3 million mt/year of hydrogen by 2030, up from about 2 million mt/year currently, according to the draft of the Strategic Energy Plan, the country's principle energy policy.

Under the draft, Japan aims to introduce 1% of hydrogen/ammonia in its power generation fuel mix by 2030, when it also aims to introduce 30% co-burning of hydrogen at gas-fired power plants or mono-burning of hydrogen for power generation as well as introducing 20% co-burning of ammonia at coal-fired power plants.