A key milestone has been reached in a project that will see Australian hydrogen being exported to Japan.

Production of the gas, from brown coal, has begun at a refinery in the Latrobe Valley in Victoria. From there it will be transported to Port of Hastings and then liquified and shipped to Japan in the world’s first, purpose-built liquified hydrogen carrier, the Suiso Frontier.

A critical part of the Hydrogen Energy Supply Chain (HESC) Pilot Project, it is also the world's largest hydrogen export demonstration project.

The pilot will assist in establishing local skills, capabilities and infrastructure that will provide a platform for the development of a broad hydrogen industry in Australia.

The pilot is required to offset all the minimal greenhouse gases produced. For it to progress to full commercial scale, it must achieve successful carbon capture and storage, enabling a significant reduction in CO2 emissions.

At full scale, the project has the potential to create thousands more local jobs, provide clean hydrogen that can help meet Victoria’s future energy needs, as well as kick-start the emergence of a new, global export industry. The fast-growing hydrogen industry is expected to be worth $2.5 trillion globally by 2050.

The HESC Pilot Project is being developed by a consortium of top energy and infrastructure companies from Australia and Japan – including Kawasaki Heavy Industries, J-Power, Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation, and AGL – with the support of the Victorian, Commonwealth and Japanese governments.