Japanese-funded $500m project to extract hydrogen from Victorian coal is at risk, sources say

Hydrogen is intended to be extracted from brown coal currently used to power Victoria’s Loy Yang power station, but the project’s future is being questioned. Photograph: Julian Smith/AAP

A multibillion-dollar Japanese plan to extract hydrogen from Victoria’s brown coal is at risk of failing due to demands for extra subsidies and a lack of willingness from Japanese customers to sign up for long-term deals.

People familiar with the Hydrogen Energy Supply Chain (HESC) project said only a portion of the ¥220bn (A$2.48bn) funding would actually be spent on developing a liquefaction plant in the Latrobe valley and export facilities at the nearby Hastings port.