Investor News

ECT Chairman attends JOGMEC seminar on hydrogen from Latrobe Valley brown coal

Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to announce it had the honour of being invited to the Japan Petroleum, Natural Gas and Metals Mineral Resources Organisation (JOGMEC) as part of a Victorian government event in Tokyo on Friday 10 May 2019.

Key points:

  • ECT attends alongside Victorian government and Latrobe Shire representatives
  • Hydrogen industry focus
  • Coldry and COHgen technologies of greatest interest

Japan is investing heavily in hydrogen, viewing the element as central to its future energy security.

ECT presented a compelling overview of its technologies (attached), highlighting the fundamental importance of efficient, cost-effective drying as the ‘gateway’ enabler of higher-value, low or zero emission applications for Victoria’s vast, world-class lignite reserves.

The event, focused on coal-to-hydrogen, was hosted by Atsushi Ikeda, General Manager, JOGMEC Metals & Coal Business Support Division, who introduced the following presenters:

  • Ms Jane Burton, Acting Executive Director, Earth Resources Policy and Programs, Department of Jobs, Precincts and Regions, Victorian Government
  • Mr Ian Filby, Project Director, The CarbonNet Project, Department of Jobs, Precincts and Regions
  • Mr Roland Davies, Chair, Energy Resources Working Group, Gippsland Regional Partnership
  • Darren Howe, Deputy Mayor, Latrobe City Council

ECT’s Chairman, Mr Glenn Fozard was the only Australian project proponent in attendance as Mr Roland Davies outlined the Latrobe Valley’s advanced lignite upgrading and conversion project pipeline.

Specifically, ECT’s Coldry technology was profiled as a cost-effective, zero-CO2 drying process that could harness waste heat from, in the case of hydrogen, a gasification plant. Drying lignite prior to gasification is essential.

In addition, the Company provided an overview of its catalytic organic hydrogen generation process (COHgen), an emerging technology aimed at the lower cost, lower emission generation of hydrogen from lignite.

Mr Fozard, who himself went to school in Japan when he was 17, conveyed the technical and commercial fit of ECT’s suite of technologies with Japan’s coal-to-hydrogen objectives.

Mr Fozard commented, “As a private sector listed company, we were honoured to be invited to what is ostensibly a Victorian government event arranged to support the ongoing engagement with Japanese business via its key industry body, JOGMEC, with the view to advancing investment in low carbon, high value applications for Victoria’s lignite resource.

“Now that JOGMEC and Japanese corporations have met us and understand what our company can offer, we’ll be developing these relationships with a number of these Japanese companies to further discuss opportunities for our technologies.”

Mr Ian Filby, Project Director of CarbonNet outlined the critical role that Carbon Capture and Storage (CCS) will play in commercialising hydrogen produced from the Latrobe Valley’s brown coal.

Mr Fozard continued, “Whilst in its early stages of development, COHGen represents a massive potential cost saving to hydrogen producers given the nature of how we extract the hydrogen-rich syngas from the coal; keeping most of the carbon fixed by not turning that carbon gaseous.”

Hydrogen production cost, including CCS as cited by Mr Filby, is around $3.00kg. Without the requirement to capture CO2 the cost is estimated to be closer to $1.50kg. COHgen provides the hydrogen industry the opportunity to minimise CO2 emissions upfront, significantly mitigating the cost of CCS. The challenge for ECT will be to see how close it can get COHgen to zero-CO2 emissions.

The Role of Lignite in the Hydrogen Industry

The hydrogen industry is attracting bi-partisan support from the two major Australian political parties with programs in place at both State and Federal level to encourage development of what is touted as a potential AUD10 billion export market by 2030 for Australia in what may become an AUD2.5 trillion market globally by 2050.

Both ‘green’ and ‘brown’ hydrogen production routes are being explored, with Australia’s Chief Scientist, Alan Finkel coming out in support of ‘green’ hydrogen while acknowledging the need to rely on ‘brown’ hydrogen as a stepping stone due to its lower cost and shorter timeframe to commercial scale deployment.

‘Green’ hydrogen production relies on ‘spare’ wind or solar power to split water molecules via a process called electrolysis, to make it economic. However, ‘spare’ wind or solar electricity is ultimately paid for by domestic electricity consumers, essentially subsidising hydrogen production for export.

Electrolysis requires a lot of electricity, making it very expensive at large scale, hence the concept of ‘spare’ wind or solar electricity is essential to bringing that cost down because it’s energy that would otherwise go to waste if not used. Use of dedicated wind and solar energy to make hydrogen for a large export market is presently, and for the foreseeable future, uneconomic.

As an example, in 2016-17, South Australia experienced ‘spare’ wind output for 139 hours, spread across 30 days, or less than 2% of the time.

Unfortunately, AUD10 billion worth of hydrogen exports would require ~93TWh of electricity, equivalent to 35,000MW of new dedicated wind capacity. The figures for solar are much worse.

For context, current installed wind capacity in Australia is ~5,600MW with a further ~5,700MW under construction or financially committed as at the end of 2018, worth ~AUD8 billion.

As such ‘green’ hydrogen production cannot scale to reliably meet export production quotas while retaining the cost benefit of ‘spare’ wind and solar electricity economics.

‘Brown’ hydrogen is proposed to be produced from brown coal via a method similar to that of the currently dominant ‘steam reforming’ process which uses natural gas and water as its raw materials (accounting for >90% of the current hydrogen market). The idea being, brown coal is a cheaper raw material than natural gas, and cheaper than electrolysis. According to CarbonNET, presenting at the event, hydrogen production costs are expected to be as follows:

The flagship coal-to-hydrogen project in Australia is the Japanese-led Hydrogen Energy Supply Chain (HESC) consortium, with support from the Australian Federal and Victorian State governments, which has embarked on an AUD500 million project; a world-first pilot project to safely and efficiently produce and transport clean hydrogen from Victoria’s Latrobe Valley to Japan.

HESC aims to establish an integrated commercial-scale hydrogen supply chain that encompasses production, transportation and storage, with the goal of delivering liquefied hydrogen to Japan.

According to HESC’s website, the project will be developed in two phases:

  1. The pilot phase will demonstrate a fully integrated supply chain between Australia and Japan over one year by 2021.
  2. The decision to proceed to a commercial phase will be made in the 2020s with operations targeted in the 2030s, depending on the successful completion of the pilot phase, regulatory approvals, social licence to operate and hydrogen demand.

ECT broadly sees an opportunity to provide its Coldry and (after further development) COHgen technologies to the hydrogen production industry, delivering innovative lignite drying and hydrogen production methods, reducing cost and CO2 intensity.

For further information, contact:

Glenn Fozard – Chairman           [email protected]