The recent withdrawal of Andrew 'Twiggy' Forrest from his ambitious green hydrogen investments is a harsh reality check for entrepreneurs and but sadly not politicians.
Forrest’s Fortescue Metals has shelved plans to produce 15 million tonnes of green hydrogen annually by 2030, shifting focus back to its core mining operations.
This shift exposes the folly of the federal and NSW governments' continued investment in green hydrogen, a technology that remains economically unfeasible and technologically unproven.
Energy Minister Chris Bowen remains optimistic, asserting that the green hydrogen transition is progressing "at pace" and predicting Australia’s emergence as a renewable energy superpower by the decade's end.
However, Bowen’s assurances starkly contrast with the reality faced by global energy companies and investors.
As Nick Cater from the Menzies Research Centre notes, “Developing green hydrogen has become much more expensive than we expected.”
Even global giants like Statkraft and Engie have rolled back their green hydrogen plans due to underestimated challenges and soaring costs.
Despite these setbacks, the Australian government continues to pour taxpayers' money into green hydrogen projects.
The NSW government, under a grant process initiated by former Treasurer Matt Kean, has allocated over $100 million to support hydrogen hubs.
Companies like BOC Limited, Hiringa Sundown Project Co., and Origin Future Fuels have received substantial grants, yet their projects are years away from producing any hydrogen.
Energy Minister Penny Sharpe remains committed, stating, “Our hydrogen plan is in the implementation phase and we will continue to deliver it.”
However, the feasibility of green hydrogen is increasingly questioned. Energy commentator Ben Beattie bluntly asserts, “Green hydrogen is not feasible at all.”
Independent MP Rod Roberts voices concerns about the continuous financial drain on taxpayers without any tangible results.
Even with “clawback” provisions to recover funds if projects fail, the risk remains high.
Forrest’s initial enthusiasm painted green hydrogen as the “miracle molecule” capable of decarbonizing challenging sectors like steel and cement.
Yet, as Cater highlights, this vision was “pure fantasy,” lacking committed finance and a solid business case. Forrest himself admitted last week, “We just have to work out now how to produce it cheaply enough,” a stark contrast to his earlier claims of imminent affordability.
The persistence of the federal and NSW governments in funding green hydrogen projects despite these setbacks demonstrates a disconnection from economic and technological realities.
The $200 billion investment Bowen mentions as being "in the pipeline" is reminiscent of the empty promises of past energy bubbles.
Governments should heed the lessons from Forrest’s pivot and redirect focus to proven, economically viable energy solutions.
Continuing to invest in green hydrogen, a technology described by Cater as having a fatal flaw where "another technology will do it better, safer and cheaper," is a misallocation of resources.
In conclusion, the reality check provided by Forrest’s withdrawal from green hydrogen should prompt a re-evaluation of current energy policies.
It is imperative that government funds be allocated towards sustainable and proven technologies rather than chasing the green hydrogen dream that remains, for now, an impractical and costly venture.