Hydrogen Energy – a BP-Rio joint venture launched last week – said the Kwinana development would be a clean coal project fully integrated with carbon capture and storage to reduce its emissions of greenhouse gases. The two resources giants said are now beginning feasibility studies.

This would be the first project for Hydrogen Energy, which was formed to develop decarbonised fossil fuel projects around the world.

Plans are also underway for the proposed development of two other clean coal hydrogen power projects at Peterhead, Scotland, and at Carson, California.

Decarbonised energy converts fossil fuels such as coal, petroleum, coke or natural gas to hydrogen and carbon dioxide.

The hydrogen can be used to fuel a gas turbine to generate electricity, and the CO2 is captured and buried in geological structures for permanent storage.

The planned WA project would be an industrial-scale coal-fired power and carbon capture and storage project, the partners said.

It would generate 500MW, enough electricity to meet 15% of southwest WA demand, while each year capturing and permanently storing about 4 million tonnes of CO2, which otherwise would have been emitted to the atmosphere, the partners said.

The project would use coal from the Collie region and the project’s gasification facility and power station would be located in Kwinana, 45km south of Perth, alongside BP’s refinery and Rio Tinto’s HIsmelt facility.

“Kwinana is an ideal location for a project of this type,” BP and Rio said.

“The availability of a suitable site immediately adjacent to BP’s refinery, Rio Tinto’s HIsmelt plant and other industrial operations which may benefit from its output provides synergies and potential additional revenue streams that greatly assist the commercial viability of the project.”

The hydrogen would be used to fuel the power station and around 90% of the CO2 would be captured and stored permanently in a saline formation deep beneath the Perth Basin seabed.

“This project could play an important role in influencing our future power mix, strengthening Australia’s energy security while also minimising our impact on the environment,” Hydrogen Energy chief executive Peter Gillies said.

“Clean coal technology such as this will be essential to reducing greenhouse gas emissions, both in Australia and globally.”

But this new technology would not be cheap, BP and Rio warned.

“The costs of this low carbon, hydrogen-fuelled power generation are higher than those of traditional power generation,” they said.

“For the project to be economic and able to compete effectively in the electricity market, it would require appropriate policy support and a regulatory environment, which recognises and encourages the low-carbon benefits it can deliver.”

A final investment decision is planned for 2011, and the plant would take three years to build.