Japan's Sojitz to provide green hydrogen made in Australia to Palau

TOKYO (Reuters) - Japanese trading house Sojitz Corp said on Wednesday it would conduct a demonstration project to produce green hydrogen in Australia and transport the fuel to Palau for use in small fuel cells as backup power sources and hydrogen fuel vessels.

Sojitz, along with Australian power generator CS Energy Ltd and Japan's Nippon Engineering Consultants Co Ltd, plans to produce hydrogen from solar power in Queensland, Australia, and transport the fuel to the Pacific Island country, with financial backing from Japan's environment ministry.

Sojitz will manage the project and support the installation of equipment, while CS Energy will supply green hydrogen and Nippon Engineering will study hydrogen applications, demand and the economic feasibility of marine transport for green hydrogen.

The projects will start soon and run through March 2024, a Sojitz spokesperson said, adding other details such as a type of hydrogen carrier and maritime route will be decided later.

The hydrogen production site was selected as the ideal location for producing renewable energy due to its vast land area and high level of solar radiation, making it possible to export green hydrogen at a low cost, Sojitz said.

Palau is highly dependent on fossil fuels for energy, but it has committed to achieving a target of 45% renewable energy generation by 2025 in an effort to cut carbon dioxide emissions.

The project is aimed at converting gasoline-fuelled vessels to hydrogen-fuelled vessels and implementing stationary fuel cells as backup power sources to replace diesel fuel.

"We want to apply the outcome to other Pacific Island countries in the future," the spokesperson said.

Hydrogen, long used as rocket fuel, is mostly extracted from natural gas or coal. It is mainly utilised in oil refining and to produce ammonia for fertilisers, but future demand is expected to come from broader segments including transport, building and power generation.

(Reporting by Yuka Obayashi; Editing by Mark Potter)

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