Australia ponders green hydrogen future as tycoon scales back ambitions

SYDNEY – In recent years, colourful Australian mining tycoon Andrew Forrest – one of the country’s richest men – has made a surprising U-turn to become one of the world’s most high-profile advocates of replacing fossil fuels with green hydrogen.

Dubbed the “green prophet”, Dr Forrest, who runs one of the world’s largest iron ore mining companies, Fortescue, has travelled the world assuring that green hydrogen is key to the planet’s clean energy future.

He even famously attacked billionaire Elon Musk, the head of electric car maker Tesla and a skeptic of green hydrogen, calling Mr. Musk a “muppet” and a fool.

Dr Forrest’s actions have been supported by Australian Prime Minister Anthony Albanese, whose government will invest more than A$4 billion (S$3.47 billion) in green hydrogen as part of the country’s transition to net zero carbon emissions by 2050.

The Federal Government said there are more than 100 green hydrogen projects underway across the country, with an estimated value of A$225 billion.

However, the feasibility of green hydrogen and its future in the domestic and global energy mix have recently been thrown into question after Dr Forrest announced on 17 July that he was withdrawing his green hydrogen plans.

It revealed it intends to cut 700 jobs and abandon plans to produce 15 million tonnes of green hydrogen by 2030.

He said he is not “walking away” from green hydrogen but believes high energy prices since the Russian invasion of Ukraine have driven up production costs and his immediate goal is to increase renewable energy production.

According to a transcript of a July 25 call between Fortescue executives, investors and analysts seen by The Straits Times, Fortescue Energy Chief Executive Mark Hutchinson said the company needed to be “realistic about the pace of the current global energy transformation”.

The change of plans by one of the world’s most high-profile advocates of green hydrogen has generated worrying headlines and raised concerns about whether Dr Forrest – and the country – were being overly optimistic about the fuel’s prospects.

Green hydrogen is created by splitting water into its components using renewable energy to produce hydrogen, which can then be used as a clean fuel.

Dr Forrest’s statement appeared to dash some of the initial hopes for green hydrogen – that it could, for example, become a mainstream energy source for households or be used to power cars and potentially pose a threat to the growth of electric vehicles.

However, most experts believe that green hydrogen still has a role in the global energy future and could be used as an energy source for heavy industry or enable the clean processing of resources such as iron ore into green iron and green steel.