Premier sells Japan on NSW green hydrogen

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With the war in Ukraine driving up oil and gas prices, alternative sources of clean energy, particularly green hydrogen, underscore NSW Premier Dominic Perrottet's trade mission to Japan.

Mr Perrottet is hoping to put various scandals dogging his government behind him, and sell NSW as an attractive location for supply of hydrogen.

"We don't want people filling up with oil from Middle East, we want people filling up with hydrogen from NSW," the premier told reporters at an Iwatani hydrogen refuelling station in Tokyo.

With a blue Toyota hydrogen-powered vehicle parked behind him, the premier said NSW has the scale and infrastructure to supply Japan and other markets with 110,000 tonnes of green hydrogen annually by 2030.

"We have two deep seaports, we have an abundance of renewable energy and NSW has ... a great opportunity to lead the nation when it comes to capital investment (and) job creation."

He hoped his government would have a whopping $270 billion invested into the nascent and expensive industry as the world pushes for decarbonisation.

Green hydrogen refers to that produced from electrolysis - splitting hydrogen from oxygen in water - using renewable electricity with zero direct emissions.

Its applications include generation, transport and heating.

Hydrogen is widely seen as critical to decarbonising industries that rely on coal, gas and oil.

The premier said his government is hoping to reduce the cost of production to $2.80 per kilo by 2030.

On Monday, NSW treasurer Matt Kean said the state, along with Victoria, would spend up to $20 million on hydrogen refuelling stations along the Hume Highway, the east country's busiest freight route, in a bid to drive down carbon emissions.

Last year the NSW government released its Hydrogen Strategy, which includes $3 billion in incentives.

But experts on economic ties between both countries warn the switch to a hydrogen energy mix will not happen overnight.

"It's still a long way to go to make hydrogen a full-fledged energy source due to its production costs," Australian National University PhD candidate Yuma Osaki told AAP.

"Japan is a leader in fuel cell technology, especially fuel cell vehicles, but there are only 55 hydrogen refuelling stations across Tokyo ... and the number of conventional gas stations is 80 times larger.

"It is unrealistic to expect that hydrogen could serve as an alternative to the existing energy source, even though Japan sees reliance on hydrocarbon as inevitable in the short term."

Mr Perrottet said coal remains a major export to Japan and the transition to alternative sources of energy need not to be divorced from exporting the fossil fuel.

"Coal will be around for a substantial period of time ... it was made very clear to me ... that the Japanese market is still strong for coal," he told reporters after taking a test run filling up a hydrogen-run vehicle.

There are less than 7500 hydrogen vehicles in Japan with scale for more, and Mr Perrottet sees this as fertile ground to translate in NSW with his government pushing for the uptake of electric vehicles.

"If you don't move with the times to get the government ahead of the curve, then future generations will suffer," Mr Perrottet said.

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