Japan’s government will offer ¥220 billion ($1.6 billion) from a green innovation fund to accelerate efforts in Australia to produce hydrogen for export from coal and biomass.

Partners including J-Power Latrobe Valley, a unit of Japan-based Electric Power Development, and Sumitomo have carried out trials including the delivery last year of the first ever liquid hydrogen shipment from southeast Australia to Kobe.

The Japan Suiso Energy joint venture aims to begin production in the late 2020s, supplying an initial 30,000 to 40,000 tons a year of clean hydrogen in a process that will use carbon capture technology, the companies said in a Tuesday statement. There’s potential to raise output to as much as 225,000 tons, according to the partners.

"This is a complex project and there is still some way to go in terms of approvals, design, construction and commissioning,” Japan Suiso Energy CEO Eiichi Harada said in the statement. The development has won a commitment of funds from Japan’s ¥2 trillion green innovation fund, Harada said.

Imports of clean hydrogen are seen as an option to help countries like Japan, with little space for wind and solar equipment, to decarbonize their energy systems. However, liquefying hydrogen remains expensive and the fuel is currently cumbersome to transport, challenging its viability.

The vessel carrying the initial Australian test cargo suffered a gas flame incident on its deck while it was berthed at a port in Victoria state, authorities said in a report published last month.