By Nick Toscano
Australian billionaire Andrew “Twiggy” Forrest has terminated a major hydrogen project in the United States as Donald Trump slashes tax breaks for clean energy investments and guts programs aimed at tackling climate change.
The Forrest-led Fortescue Metals Group on Thursday said it would not proceed with a $US550 million ($830 million) plan to begin producing zero-emissions hydrogen at a new plant in Arizona, blaming the “shift in priorities away from green energy” under the Trump administration.
Fortescue founder Andrew Forrest and Prime Minister Anthony Albanese.Credit: Dominic Lorrimer
“The lack of certainty and step-back in green ambition has stopped the emerging green energy markets, making it hard for previously feasible projects to proceed,” Fortescue head of growth and energy Gus Pichot said.
“As a result, we cannot proceed with our investments as they stand, and will explore future opportunities for our site in Arizona.”
Trump’s domestic policy bill slashes tax breaks for renewable energy while aiming to make it cheaper and easier to produce fossil fuelsCredit: AP
Since returning to the White House, Trump has passed laws to end lucrative tax breaks for wind and solar farms, electric cars and other technologies that would help combat global warming, which he falsely calls a “hoax”, while enacting sweeping measures to make it cheaper and easier for companies to extract more fossil fuels.
The cancellation of the Arizona project comes as Forrest continues a years-long campaign to diversify Fortescue beyond its lucrative West Australian iron ore mines and into the production of green hydrogen, a promising future energy source that burns cleanly and could eventually help displace the use of coal, oil and gas in heavy industry.
While Fortescue insists it remains steadfast in its commitment to green hydrogen, it has been forced to hit the brakes on the speed of its ambitions over the past year, blaming the high cost and the vast amount of renewable energy required.
Most hydrogen produced across the world today is limited to “grey hydrogen”.
Fortescue also confirmed on Thursday it would not proceed with another of its hydrogen projects – a part-built $140 million plant in Gladstone, Queensland, which has been mothballed since May – after deciding not to stick with a specific type of hydrogen-production technology it planned to trial there.
Pichot stressed that Fortescue was “not giving up” and believed green hydrogen was key to its future.
“Being first isn’t always easy, but to succeed, we must remain nimble and frugal with the resources our shareholders have entrusted with us,” he said.
“Technology is improving at rapid speed – the cost will come down, and the market will come, but we must also be realistic and disciplined.”
Most hydrogen produced across the world today is limited to “grey hydrogen”, made from gas through a process that emits carbon dioxide into the atmosphere. Fortescue’s ambitions focus on “green hydrogen”, produced when renewable energy is used to separate water into hydrogen and oxygen, making the product emissions-free.
The Albanese government has promised billions of dollars to support nascent industry in the push to turn Australia into a leading supplier of green hydrogen.
However, significant barriers to the viability of green hydrogen remain, the biggest being that it still costs much more to make than hydrogen produced from fossil fuels.
Early-stage green hydrogen projects have been stalling in Australia and across the world as developers struggle to find enough customers due to the high production cost and challenges involved in transporting the fuel.
Fortescue told investors on Thursday it expects to take a pre-tax writedown of $US150 million on the two abandoned hydrogen projects in Arizona and Queensland.
Woodside Energy, the largest Australian oil and gas company, said this week it had decided to walk away from a liquid hydrogen project it had been planning in the US state of Oklahoma, citing high costs and a lack of customers.
While Woodside did not link its decision to Trump’s anti-green-energy agenda, the company said in January it needed to assess the implications of his administration’s plans to remove support for clean energy, including his halting of the disbursement of funds from the $567 billion Biden-era Inflation Reduction Act.
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