Fortescue’s goal of producing 15Mtpa green hydrogen by 2030 is off the table
Company still committed to achieving real net zero emissions by that time
It could also be continuing to develop renewable energy generation
In his fortnightly Power Up column, Stockhead senior energy journalist Bevis Yeo runs the ruler over an area of Australia’s electricity market worth keeping a close eye on.
Unless you have been living under a rock or got shipped off to China with its iron ore, you would be aware of Fortescue (ASX:FMG) slashing 700 jobs across its operations and the energy division admitting that its goal of producing 15Mt per annum of green hydrogen by 2030 is unachievable.
While some of its goals were achieved, including the opening of an electrolyser factory in Queensland, the slower than expected emergence of green hydrogen demand and high power prices appear to have pushed that (always) ambitious goal back.
The news is unlikely to be welcome by green hydrogen proponents, who have hoped that the gas, produced by the use of electrolysers powered by renewable energy to split water into hydrogen and oxygen, will be able to displace the use of fossil fuels to reduce emissions.
Likewise, displacing hydrogen currently produced from natural gas using a process known as steam methane reformation in industrial processes, such as for producing ammonia and ammonia-based fertilisers or producing green steel, is also looking just a little less likely in the near-term.
That said, Andrew Forrest still has very ambitious goals in relation to decarbonisation and has flagged that the hydrogen production goals have been delayed rather than abandoned.
Fortescue is also maintaining its goal of achieving net zero for its own operations by 2030 and is continuing with two green hydrogen and electrolyser projects in Phoenix in the US State of Arizona and Gladstone in Queensland.
READ: Fortescue’s green hole with 700 jobs on the cutting board
A win for renewable electricity?
However, while much has been made about Forrest’s comments, one – almost throw away – line is intriguing.
He noted that Fortescue would focus on developing green hydrogen in other parts of the world “once it gets its act together” in terms of developing renewables.
The implications are simple.
Even if green hydrogen is off the table for now, Fortescue will continue to develop renewable energy.
Until the day where this level of renewable energy generation reaches some critical point where it is both abundant and affordable enough to be shifted towards producing green hydrogen, any such capacity will need an outlet.
After all, it wouldn’t make sense to build up renewable energy generation capacity and just let it lie fallow.
Rather, any developed capacity will undoubtedly be pressed into use once available, which is a win for renewable power.
The post Power Up: Green hydrogen’s loss is domestic renewable power’s gain appeared first on Stockhead.
