Australia’s Victoria and federal governments have promised to pump $50 million each into a near $496 million project to gassify brown coal in Victoria and produce just three tonnes of hydrogen, in what is being dubbed a world-first pilot project.

Yes, that’s right: $500 million to build a pilot plant that will operate for just 12 months and produce a grand total “up to” three tonnes of hydrogen over the whole year. I had to read that 10 times and get on the phone twice to check.

World-first perhaps, because it is hard to imagine another country that would think of turning brown coal into hydrogen, and at such an outrageous cost – least of all one with such rich wind and solar resources, and which already has some cheaper renewables-fuelled hydrogen projects of its own.

But this is Australia.

And just three days after former prime minister Tony Abbott had cycled through the Latrobe Valley, pushing the case for a new government-funded brown coal generator, prime minister Malcolm Turnbull was there trying to outdo him.

“It is amazing to think that brown coal here in Victoria will be keeping the lights on in Japan,” Turnbull said during the project’s official launch on Thursday. Horrifying, actually.

“Our strategic support for this fuel of the future, hydrogen, opens up new possibilities for innovation and energy. It will see brown coal from here in the Latrobe Valley converted to hydrogen, liquefied, and then exported to Japan.”

You will note, of course, that Turnbull was nowhere to be seen when the wind and solar-fuelled hydrogen projects – which will create significantly more hydrogen at a fraction of the cost from wind and solar – were unveiled by the ACT and South Australian governments.

You can find more of what Turnbull had to say, including his predictions of an $8 billion brown coal export industry, in this press release.

The Victorian Labor government is right on board. “Hydrogen is a fuel of the future and we want to capitalise on that right here in the Latrobe Valley,” said Victoria’s Regional Development Minister Jaala Pulford.

Hydrogen is seen by many as a critical component of shifting the world to a low-carbon economy, mostly for its ability to replace fossil fuels (green LNG for instance), and provide long-term (seasonal) energy storage for grids increasingly dependent on wind and solar, particularly in Europe.

There is also the prospect of using hydrogen for a variety of industrial uses, as well as in fuel cells, competing with batteries for the new generation of cars, trucks, ships and other forms of bulk transport.

Most of the world, however, is looking at renewable fuels such as wind and solar when thinking of hydrogen, and so are some progressive Australian governments.

The ACT was first to go, including some hydrogen projects being built by Siemens and Hyundai as part of the winning tenders for wind farms that will help meet its 100 per cent renewable energy target for 2020.

The South Australian Labor government also announced a few hydrogen projects before it lost the recent state election.

The biggest of those, a 50MW wind and solar-fuelled electrolyser at the new Hydrogen Hub to be built by Neoen near Crystal Brook, would deliver 20 tonnes of hydrogen a day, at a fraction of the cost of the brown coal scheme.

The entire complex, including 150MW of solar, about 150MW of wind, the 50MW hydrogen plant along with up to 400MWh of battery storage, would cost around $600 million.

There is another wind-solar fuelled hydrogen electrolyser announced for Port Lincoln, that will produce 10 tonnes a day from a plant that will cost just $35 million.

Making hydrogen from brown coal, however, is a different matter altogether.

“Converting brown coal through high temperature processes does generate a lot of CO2, I don’t think anyone would deny that,” says Brian Davey of Coal Innovation Australia, according to an ABC report.

Davey and one of the key Japanese partners, Kawasaki Industries, said that developing a carbon capture and storage system for the emissions was critical to the commercialisation of the technology.

The Carbon Capture Institute reckons it is a done deal, claiming that CCS was a proven and low cost technology that could guarantee zero emissions. It pointed us to this article, posted on its website last December, claiming low costs for the brown coal hydrogen technology.

It is perhaps forgetting, for a moment, that this technology has not actually been developed yet, and that the CCS industry has form on over-promising and under-delivering. As was highlighted in last year’s Auditor General’s report, $450 million has already been wasted on CCS in recent years with nothing to show for it.

Others in the hydrogen community in Australia are gobsmacked. “They what!?” cried out one when informed of the announcement by RenewEconomy.

They noted that the project partners had been working on this for nearly 10 years, as the official press release also confirmed, and clearly wanted to access the bulk of the funding which had been promised for years by the Japanese government.

“When this project was instigated 10 years ago, the economics of renewable hydrogen did not stack up. With the cost of solar PV plummeting, together with that of improved Li-ion batteries, the situation is changing rapidly,” said one.

The brown coal hydrogen project is located at the Loy Yang brown coal mine complex, the site of the huge brown coal generator that AGL Energy has said it will keep in operation until 2048, although energy minister Josh Frydenberg wants plants such as Loy Yang A and B to run until 2070.

AGL boss Andy Vesey was excited. “As we transition to cleaner technologies this project may spark a reinvigoration of Latrobe Valley’s energy industry by generating a competitive edge in a new market,” he said in a statement. AGL is providing up to 160 tonnes of its coal for the project.

The media material says the project will involve the production of gas using gasification technologies adapted specifically for Victorian brown coal.

“The hydrogen gas will then be transported via truck to a liquefaction and loading terminal at the Port of Hastings. The hydrogen gas will be liquefied then shipped to Kobe in Japan by a ship carrier specifically developed for the task.”

It won’t need to be a big ship.

According to the project documents, the decision to proceed to 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.”

The whole thing has horrified environmental groups, who see it as yet another brown coal boondoggle, and yet another attempt to “gassify” the brown coal reserves. And they noted there had been no environmental or planning approvals.

“This boondoggle is just another example of companies pretending that the Latrobe Valley can’t produce anything other than coal,” said Nicholas Aberle, from Environment Victoria. “It distracts from the real task of planning a truly diverse economy.”

“Why is the government promoting a project which is at odds with its own policy?” asked Cam Walker, from the Friends of the Earth.

“Governments have squandered over $1.3 billion on carbon capture projects with no return on investment. This is money that could have been invested in healthcare, education, infrastructure, and climate action.”

Not to mention technologies, renewables, energy efficiency and retrofitting of houses, energy storage, high tech research and developing a business case for the geothermal resource that exists under the Latrobe Valley.