We’re running like crazy, says the man leading Fortescue Future Industries’ bet on green hydrogen

Andy Vesey is just four months into his role spearheading Andrew Forrest’s global bet on green hydrogen. He admits the pace has been frenetic.

Fortescue Future Industries head of energy transition projects Andy Vesey. Picture: Joe DelNero

Andy Vesey is just four months into his role spearheading Andrew Forrest’s global bet on green hydrogen. And admits the pace has been frenetic.

“We’re putting flags in a lot of places and we’re running like crazy,” Vesey told The Weekend Australian from the US city of Denver in his first interview since joining Fortescue Future Industries in May. “We literally feel like we’re under the gun for time. Waiting until 2050 is too late. We’ve got to get going now and we can’t just sit back and wait for it to naturally evolve.”

Vesey, the former AGL Energy chief who fought Malcolm Turnbull over backing new coal plants, received a call about joining the Fortescue Metals Group’s green arm and signed on less than 48 hours later. Since then it’s been a frenzy of activity as the US executive looks to knit together a cohesive strategy despite plenty of critics doubting its ability to build a major new industry from scratch.

Vesey likens FFI’s nascent push into green hydrogen — a power source which taps renewables to split hydrogen from water — and development of electrolyser factories with the early stages of solar, wind and battery storage technologies before they became globally competitive forms of energy.

Green hydrogen remains up to three times more expensive than supplies from gas, but experts predict the cost of production from renewable sources could reach parity by the end of the decade.

Vesey said technology will deliver that goal far sooner.

“Every time we deploy electrolysers around the world, our costs are going to come down. That’s the beauty here. That’s why we’re building large, efficient, electrolyser manufacturing capability because the more we can manufacture the cheaper they become. If we’re doing one off bespoke assemblies, the prices will never come down,” said Vesey, FFI’s head of energy transition projects.

“The proof of this is what we saw in wind and solar where there was a rapid decline in the cost of solar panels and wind turbines occurred because more and more were deployed. Every time you manufacture more, those costs come down, and every time you deploy them you get smarter, so there’s a learning curve.”

Andrew Forrest has identified North America as a key market for FFI. Picture: AFP

To help fast-track its vision, FFI opened a technology hub in Colorado on Friday US time that aims to develop green hydrogen and decarbonise hard-to-abate industries that can be quickly commercialised. President Biden’s Inflation Reduction Act, which sets out a decade of federal subsidies, could also see FFI use future tech innovations to build a string of manufacturing centres through the US to take advantage of the policy carrot.

The hub will combine experts from Colorado universities and institutions, including the US Department of Energy’s National Renewable Energy Laboratory and help FFI deliver on green hydrogen dreams which have been questioned by energy giants including Shell.

FFI may expand into manufacturing its own green technologies including solar panels, cables and batteries, according to the FFI executive.

“We‘re currently analysing all the components of this ecosystem and trying to decide where we have to make an intervention because there’s currently a gap. We can’t get what we need when we need it,” Vesey says.

“We’re going to be looking at this on a global basis to find out how we’re going to get the technology and components that we need because we aren’t going to wait for others. If we can’t get it, we will produce it ourselves. And that’s how we’re going to build a whole new ecosystem.”

FFI has previously floated the idea of investing in as many as 22 US coal power stations and converting them to run on renewable energy, just one of 120 different development projects under consideration in 40 countries surpassing a potential $200bn in schemes.

Fortescue’s green arm has a 15m tonne a year target by 2030 for green hydrogen and has allocated 10 per cent of Fortescue’s total net profit after tax. It had a $US1.1bn ($1.6bn) war chest available at June 30.

Still, the amount of capital needed to deliver projects has stoked growing concerns among some of the company‘s major investors and analysts about the speed and scale of its global commitments.

FFI’s budget this year is about $US100m for capital spending, and $US600m to $700m on operating costs – up from $US148m and $US386m, respectively, last year.

Mr Forrest has identified North America as a key market for FFI, saying he wanted to turn the region “into a leading global green energy heartland and create thousands of green jobs now.”

The company is also growing at a furious pace with 1122 staff at the end of June – more than double the 500 it employed in October 2021. One high profile departure was its North American boss, Paul Browning. Vesey has stepped in to help fill the void.

“What motivates us is decarbonising hard to abate industries, one of which is Fortescue Metals Group,” Vesey says.

“But it’s going to have to get done. I always ask people, so do you think we‘re gonna get this done? And most people will say yes we’re cautiously optimistic. Well, we have got to be more than cautiously optimistic. We’re going to roll up our sleeves and get to work. And do the tough yards on this thing. That’s one of the reasons I joined this organisation because these people get it. And we’re gonna get it done as well as we can.”