Scientists at CSIRO have been working with energy and shipping leaders on a $500 million hydrogen energy supply chain (HESC) project as the next phase for Victoria's coalfields.

"The HESC project puts Australia at the forefront of the global energy transition to lower emissions through clean hydrogen, which is a fuel of the future," Prime Minister Scott Morrison said on Friday.

Touted as the most advanced hydrogen project in Australia, it is also the first in the world to make, liquefy and transport liquid hydrogen by sea to an international market.

But Australia is separated by more than 1500km from the future hydrogen markets of North Asia, requiring new technology for shipping and fuel production.

A "ship of the future" was welcomed at Victoria's port of Hastings by industry leaders, and state and federal politicians before loading up for the return journey to Kobe.

"The arrival of the Suiso Frontier marks the dawn of Australia's hydrogen industry," chair of Kawasaki Heavy Industries Yoshinori Kanehana said.

The new liquefied hydrogen carrier's propulsion system is diesel-electric and the liquid hydrogen that will fill its high-tech tanks is made from Latrobe Valley coal and biomass feed stock.

"The HESC project has the potential to become a major source of clean energy which will help Australia and Japan both reach our goals of net zero emissions by 2050," Energy Minister Angus Taylor said.

The project is expected to create 30,000 full-time jobs across the Gippsland and Mornington Peninsula regions when it scales up.

Another project, CarbonNet, is key to making the new export "carbon neutral".

CarbonNet is designed to be a commercial-scale carbon capture and storage (CCS) network that traps emissions from industries in Victoria's Latrobe Valley and pipes them to offshore storage sites in Bass Strait.

The federal government announced on Friday an additional $20 million for the next stage of CarbonNet, contingent on more state and Japanese capital.

Victoria's Minister for Resources Jaala Pulford said she has signed a deal with Japan Oil, Gas and Metals National Corporation to provide funding and engineering expertise ahead of regulatory and environmental assessments later this year.

The CCS hub is intended to support emitters in hydrogen, fertiliser, bioenergy and natural gas industries.

The federal government has also set aside an additional $7.5 million for the HESC project, which has a long-term target of producing 225,000 tonnes of liquefied hydrogen each year.

The government estimates that will reduce carbon emissions by 1.8 million tonnes a year - or the equivalent of taking 350,000 petrol cars off the road.

During the pilot phase, the 99.999 per cent pure hydrogen has been produced, trucked to Hastings, cooled to minus 253C and liquified to less than 800 times its gaseous volume to create liquefied hydrogen.

Over the next two years, there will be more trips between Australia and Japan, and more research to reduce costs and carbon intensity.

Biomass feed stock for hydrogen production, blended with Latrobe Valley coal, will be fine-tuned.

Other proponents of hydrogen as a future hero fuel are developing non-fossil fuel production methods.

The HESC partners believe using coal resources is essential for scaling up hydrogen supply chains, especially in the short to medium term.

The project partners are Kawasaki, J-Power, Iwatani, Marubeni, AGL Energy and Sumitomo.

Shell, ENEOS Corporation and K-Line are also involved on the Japanese side of the project.

Australian Associated Press