High power costs will make most of Europe and Japan unattractive as centers of green hydrogen production, according to the executive leading Fortescue Ltd.’s drive to become a global supplier of the clean fuel.
“What we’re looking for is abundant, cheap power that a country doesn’t need,” Mark Hutchinson, chief executive officer of Australia-based Fortescue’s energy division, said in an interview. “Europe is a place where you won’t have major projects because it’s too expensive. Same with Japan — it’s too expensive.”
Green hydrogen, created using renewable energy, is seen as a promising fuel to reduce emissions in heavy industries and to power airplanes and cargo ships. But lower costs are critical for it to become widely adopted.
Fortescue — founded by billionaire Andrew Forrest, who is its executive chairman — last year authorized a first round of projects to expand beyond its traditional business as an iron ore producer. It confirmed $750 million of investments in three clean energy developments in Australia and the US.
The company will likely make final investment decisions on green hydrogen initiatives in northeastern Brazil and Norway this year, Hutchinson said Monday. Brazil has advantages as its power grid is dominated by clean energy, while Norway has large volumes of excess renewable electricity.
Weak demand for green hydrogen remains a key issue for the sector’s development and only 10% of production capacity planned by 2030 has identified offtakers, BloombergNEF said in a November report.
“This is where governments have to step in” with incentives like the production tax credits offered under the US Inflation Reduction Act, which can “bridge that gap to get the market going now,” Hutchinson said.
(By Laura Hurst and David Stringer)
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