Joint doorstop - Pilot hydrogen project underway

  • Transcript, E&OE
Topics: Hydrogen liquefication; Japan; Employment.
19 July 2019

Matt Canavan: This project builds on thebest of our past to create our future. Creating a better of relations betweenAustralia and Japan, we've done between our two countries in the past, which isto develop our resources to create jobs in Australia and create opportunitiesin Japan with the use those resources as well; to build on our past of all thebest minds. So, we've always been on the cutting edge of, particularly theresources sector, where we lead the world with a frontier of development inresources and energy in Australia. And here, for the first time in Victoria,going to build a liquefaction facility for hydrogen, is a fantastic example ofAustralian scientists kicking goals on the world stage. And of course it's alsofantastic to see the development of our resources to create jobs here inVictoria. The brown coal of the Latrobe Valley has helped develop Victoria,helped create a manufacturing powerhouse here in Victoria; it's the strongestmanufacturing state in our country. I want to see that continue, and grow, anddevelop. And it's only through the development of our own Indigenous economicresources that we're going to maintain the strong manufacturing jobs we havehere in Victoria. So it's great to see a new life being given to those browncoal resources to create jobs in Australia too. I'll let Simon say a few wordsand then we'll take questions.

Simon Birmingham: Well thanks, Matt. Throughthe export of coal, iron ore, LNG, Australia has been fueling industry in Japanfor decades and we see hydrogen is a potential for us to keep fueling Japaneseindustry for decades to come, and industry elsewhere around the globe. And whatthat means is the potential for billions of future in export dollars and manyjobs supported across Australia should this pilot project be a success. What wewant back here is the fact that we have, ingenuity, innovation, exploring newenergy potential, using old traditional fuels that can support communities thathave served Australia so well for years to come.

Japan isone of Australia's key export markets, one of our key investment partners. Andtoday, we see in this project that investment continuing to hopefully fuelbillions in future exports into the future. Hydrogen is a real potential energysource in the future. This project is being pursued because of the clean energypotential behind it. But the very exciting thing for Australia, and especiallyfor communities like the Latrobe Valley, is that it can preserve and continuethe jobs and opportunities in those traditional mining sectors while giving usa new energy resource for the future.

Now I'mhappy to take your questions.

Question: A hundred-million-dollarsfor something that's going to run 12 months; that's a lot of cash. Why is thatworth it?

Simon Birmingham: There are billions ofdollars of potential exports for the future, thousands of potential jobs intothe future if this pilot project can be proven to be technologically feasible,commercially feasible. And we've got to make sure that we invest in the futureof Australia continuing to be a key reliable, affordable energy supplier to theworld because that's what's underpinned our prosperity to date and it's whatcan deliver future prosperity in the future.

Question: Minister, when exactly doyou anticipate that you'd have a time where you'd be like: right, we can set upan industry, if this works.

Simon Birmingham: Well, there arecommercial realities to this and that's why it's so critical that this projectis being driven by a range of commercial partners, led by Kawasaki HeavyIndustries out of Japan. They will make commercial decisions. It's not the onlyaspect of hydrogen technology being explored in Australia. And we're delightedthat Dr Alan Finkel, Australia's Chief Scientist, is leading work developing anational hydrogen strategy for which we know there are numerous other proposalsthat look at how hydrogen can be developed in Australia and potentiallyexported from Australia. But each of them will have to pass a commercialreality test in terms of whether investors stump up the cash to invest, andthat of course is what is driven and fueled all of our export industries in theenergy and resources sector to date.

Question: Australians have got $100million of taxpayers' money here on the line. They could expect to know whenyou think this type of technology's going to approved, particularly the carboncapture technology. When is this going to happen?

Simon Birmingham: I'll add one point andthen Matt- and that is Australia invests billions of dollars, around 9 billionof federal dollars each and every year in research and development. We don'tknow from research and development what innovations will fly and which one'swont. But we invest in research and development because that's what keeps us asa modern economy at the cutting edge of the future. If we didn't invest inresearch and development, if we didn't invest in potential new technologies,well then we wouldn't be a part of new industry in the future. So this is aprudent investment about ensuring that Australia, who relies so heavily as anation on our energy and resources exports, and still be a world leader inenergy resources exports in the future. And it may take years in terms of thecommercial realities of all of these projects coming to fruition, but we oughtto make sure we invest in the real life potential. And this is a real lifepotential, because you don't just have Government putting their dollars on theline. You have many millions of private sector dollars going into this projectand being put on the line as well.

Question: That's all very well butI just - I'll point on this particular bit of technology – you've got insideinformation – when is it going to- when are seeing that it might be ready – isit 10 years away, is it three years away?

Matt Canavan: Well look, I want torepeat the point and echo, what Simon just said: the Commonwealth and StateGovernment investments is also unlocking hundreds of billions of dollars ofprivate investment in Australia. So Kawasaki Heavy Industries are partners onthis project; they're putting up almost $400 million of their own capital, tosupplement the hundred million dollars is being jointly funded by the State andFederal Governments. We can't provide definitive timelines on exactly when acommercial scale project might be able to start, because of course we're doinga pilot because of the uncertainty about how this will work.

It is aworld first so we have to wait for those results. We're hoping though theexpectation is that this project will deliver those results by around 2022-23and a decision leading up to that would be made on whether a commercialinvestment would be possible. So about five years from when we made theinvestment last year. There is a lot of moving parts here with a project ofthis size and uniqueness as you'd expect. It's not just the research we'redoing here in liquefication - the conversion, sorry, the liquefication andtransport of hydrogen to Japan. As has been remarked, we were also looking tofind a long term solution for carbon capture and storage in any commercialscale project.

So mydepartment, along with the state government, is investing in what's called aCarbon Net Project which is searching for a - such a suitable site in the BassStrait not far from here. It is an unrelated project but we'll have to haveboth of those sort of combined, if you like, over that five-year period tounlock that further investment.

Question: Just to be clear, you saida $50 million contribution from the Feds so that's matching what the state putin. 50/50 and 400 from the projectpartners.

Matt Canavan: That's right, 50/50. Ithink the total project we can get to is about 496 or so in total. So it's 50/50 to 100 and therest of the balance is divided by Kawasaki and their partners.

Question: Minister, on thecommercial viability. I spoke to Yara International who are working on theirown pilot program in the Pilbara on a hydrogen program. They say that theythink that hydrogen are unlikely to be viable in Australia without a carbonprice and without an international carbon pricing. Do you think that on theevidence before you that we can have an industry in Australia without a carbonprice?

Matt Canavan: Look, I think we can lower emissions through a rangeof ways which don't require a specific and explicit carbon price. We havesuccessfully reduced our emissions here in Australia using the directinvolvement of the Government through the Emissions Reduction Fund. We had atthe election promised to establish a new Climate Solutions Fund on a similarbasis.

And since the election I see theLabor Party also saying that they think that carbon pricing type solutionsmight not be the best strategy. It's taken only four elections for the LaborParty to get that through their head, but hopefully we can move forward now ina bipartisan way which supports efforts to lower emissions without sluggingAustralian taxpayers with carbon tax.

Question: The locals here, there argument is that Japan getsall the clean energy and the hydrogen, the liquefied hydrogen, and they get allthe pollution. Is that accurate, what they're saying?

Matt Canavan: Yeah look, I don't accept that given our strongrecord of, as Simon said, we have a strong record of exporting resources andenergy to Japan in a way that clearly has significant mutual benefits to bothcountries. That has been a long term relationship over 50, nearly 60 years nowwith Japan and this just builds on that same experience.

This project itself will providehundreds of jobs albeit short term ones in construction and the pilot project,and then long term there are potentially thousands of jobs in the hydrogenindustry in Australia for Australians – just as we have thousands of jobs inour iron ore industry, thousands of jobs in our natural gas industry, thousandsof jobs in our coal industry.

It'll then provide benefits toJapan but also benefits here. We can't trade with another country without providingbenefits to the other country. Of course they wouldn't buy our resources ifthere weren't benefits to them too. But by the definition trade provides mutualbenefits and that's what we're supporting here today.

Question: I think it has promised hundreds of jobs in LatrobeValley, how many actual jobs are there now? How many jobs is this providingLatrobe Valley right now?

Matt Canavan: Well my understanding is the work at Latrobe Valleyhasn't quite kicked off yet, that's what I was informed this morning, but we'reexpecting that some time this year. So I don't have a specific job number butmy understanding is over the life of this project there's around 400 jobs. But,as I said, we're not there. This project is not primarily providing those long termsjob, it's a pilot program so we're not seeking to over exaggerate that. Butobviously you need to make investments like this to prove up and de-risk, longterm, large investments which could provide thousands of jobs.

Question: On the issue of trade, Australian coal exports arestill getting held up in China – that's what the industry's saying. Have youmade any direct representations to your counterparts in China? And what are youhearing out of China in terms of what's going on there and how long it's likelyto continue?

Simon Birmingham: Well I havehad conversations with Chinese officials, as indeed has our Ambassador inChina. We continue to monitor this situation very closely, we continue to notethe assurances of the Chinese Government that the delays that are beingexperience are as a result of new environmental testing and standards thatChina has been applying and that those standards are being applied uniformly inrelation to particularly thermal coal imports into China.

Australia wants to make surethat our producers can export with confidence and certainty around thestandards that have to be met. Australian coal is amongst the most efficientand effective in the world and we back our industry, we note and that wecontinue to see and have seen record levels in terms of Australian coal exportsto China and we want to continue to make sure that we work cooperatively withthose Chinese authorities and to give, not only our industry the certainty toexport, but those Japanese industries, sorry those Chinese industries who relyupon Australian coal, the certainty that they're going to get it in the type oftimely matter they expect to receive it.

Thanks guys.

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