Andrew Forrest says federal fossil fuel subsidies working against moves to send the world green

It makes no sense that we would keep fossil fuel subsidies roaring along, says mining billionaire Andrew Forrest.

Fossil fuel subsidies make no sense in a warming world, says Andrew Forrest.

Mining billionaire Andrew Forrest has lashed the federal government over fossil fuel subsidies, saying the use of taxpayer funds to help bankroll companies that are “busily cooking the planet” is an anathema to halting global warming.

Speaking from Glasgow, where he is attending the COP26 climate summit, Dr Forrest told the Impact X Sydney Summit on creating a pathway to net zero on Tuesday that maintaining subsidies for fossil fuels – including the diesel fuel rebate, of which mining companies are the primary beneficiary – was an “anathema” to attempts to keep global warming to manageable levels.

Dr Forrest was responding to a question about whether government intervention was needed to help kick along the global transition to renewable energy, and particularly the development of hydrogen production, to which Fortescue has made a multibillion-dollar commitment. But his comments come against the backdrop of negotiations over the future of fossil fuels at COP26, with Australia – along with India, Russia and China – having been accused of trying to frustrate the acceleration of moves away from the use of coal, gas and oil.

“I think green hydrogen is gonna roll regardless. However, it would be extraordinary in economic history – and an anathema to the whole reason why you have leaders in anything – to try to push back on something which is going to save humanity,” he said.

“And by that I mean government policy pushing back on green hydrogen, green ammonia and green electricity through using taxpayers to fund fossil fuels.”

Dr Forrest said it made “absolutely no sense that we would keep fossil fuel subsidies roaring along” in light of evidence about the pace of global warming, ­saying governments should instead level the playing field by ­removing them to help back the development of green industries.

“We do it heavily in Australia. We have massive fuel rebates. For fuels we don’t even produce in Australia. We’re sponsoring the lifestyles and the standard of living for people we’ll never meet in countries we’ll never go to,” Dr Forrest said.

“The people trying to send the world green are not actually working against our competition, which is a fossil fuel sector busily cooking the planet. We’re also working against our very own taxpayer-funded government.”

Dr Forrest has set Fortescue the ambitious target of creating a new global fuel industry in hydrogen, targeting production of 15 million tonnes of the fuel a year by 2030.

But he said green fuels would not be able to get a foothold in the market while they faced fuel rebates and other fossil fuel subsidies backed by governments.

“Until we grow up and realise that we need a level playing field – that we can’t wish something to existence by smashing it in reality, which is what a fossil fuel subsidy does when you’re asking green fuels to take over – we are not being leaders, we’ve just been talking heads,” he said.

“There’s going to come a time when people who are forcing massive cost to humanity by their behaviour are priced for that behaviour.”

Dr Forrest’s comments came as Fortescue Future Industries released the bones of its plans for yet another mega-hydrogen project, this time in Argentina.

FFI signed a framework agreement with the Argentina government and the provincial government of Rio Negro in ­August for the potential development of a hydrogen project in the country.

Speaking on the sidelines of the COP26 climate summit in Glasgow, FFI Latin America chief executive Agustin Pichot said Fortescue’s investment in the project could eventually reach $US8.4bn ($11.3bn).

While FFI was still running feasibility studies on the project, officials at the press conference said the company planned a $US1.2bn pilot stage aiming to produce 35,000 tonnes of green hydrogen to be built in 2022-24, before a $US7.2bn second stage that would target the production of about 215,000 tonnes a year of green hydrogen.

The figures are a rare insight into the likely scale and cost of FFI’s global hydrogen ambitions.

The 250,000 tonnes a year of hydrogen from the Argentinian project is only a sixtieth of the 15 million tonnes a year Fortescue says it wants to be producing by 2030.

But even though Fortescue has repeatedly said debt for each project will be secured against those assets, without recourse to its own balance sheet, the scale of the costs involved will raise eyebrows among market analysts already concerned about the scale of its ambitions – and the lack of detail in its disclosures to the market to date.