TOKYO: A renewed commitment by Australia and Japan to pursue opportunities in coal, gas and hydrogen has fuelled hopes of increased trade and renewed momentum for Victoria’s brown coal-to-hydrogen ambitions. Following annual bilateral talks in Tokyo late last week, Prime Minister Malcolm Turnbull and Japan’s Shinzo Abe pledged to further work to develop regional coal and LNG markets and on hydrogen energy supply as Japan wrestles with its transition to cleaner energy amid divisions over the future of nuclear power. Their accord is expected to promote the use of Japanese technology for smaller LNG import terminals in the region that would open up new supply opportunities for Australia’s expanded band of gas exporters. In coal, the agreement paves the way for an extension of Japan’s push in Asia, including coal-dependent south-east Asia, to use its technology for cleaner, high-efficiency, low-emissions (HELE) coal power plants that could be fed by high-grade Australian product.
“The construction and operation of an expanding HELE fleet through Asia is helping to underpin coal export opportunities in north Asia and beyond – including south-east Asia, which is a growing market for our coal with trade valued at close to $2 billion in 2016-17,” Minerals Council of Australia executive director for coal Greg Evans said. In LNG, Japanese firms are involved in import terminals springing up in Pakistan, Bangladesh and Sir Lanka, which have increased expectations for demand for shipped gas in emerging markets. The installation of LNG import terminals in south-east Asian countries such as Vietnam, the Philippines and Thailand is also seen swelling demand. Japan is already Australia’s largest market for LNG and trade volumes are set to expand markedly once Inpex Corporation starts production at its $US37 billion Ichthys LNG project in Darwin. While Queensland’s LNG plants are constrained by threats of curbs on exports, Japan’s users of the fuel have focused their investments on conventional export plants in Western Australia and the Northern Territory. While Bernstein Research cites Japan as the only Asian country that will see LNG demand decline through to 2030, its forecast assumes the wide-scale restart of nuclear reactors for power generation, despite climbing anti-nuclear sentiment since the Fukushima accident. The outcome of the Japanese debate about nuclear power will have big implications for coal and gas exports from Australia, said Tony Wood, energy program director at the Grattan Institute. “The core of this is that Japan in particular is grappling with how it transitions its energy sector,” Mr Wood said. If Japan doesn’t substantially reopen its nuclear plants it will have a big problem from a cost and energy security perspective.” The accord paves the way for further collaboration in the hydrogen energy supply chain, which includes work by a Kawasaki Heavy Industries-led consortium to investigate the potential for using brown coal in Victoria’s Latrobe Valley to convert into liquid hydrogen for export to Japan for use in regional industry and power supply.