Fortescue Energy CEO: Green hydrogen costs are key to reducing demand

Fortescue Energy CEO Mark Hutchinson said in Davos that buyers will not pay "green premiums" if the price is competitive.

By splitting water into oxygen and hydrogen, using renewable electricity, green hydrogen can be created. The hydrogen can be used to generate electricity or as an ingredient in agricultural fertilisers.

Hutchinson, speaking at the Global Markets Forum, said that electrolyzers which split hydrogen were expensive and that government subsidies intended to lower these costs have not been forthcoming as expected.

The CEO of the World Economic Forum said that the green hydrogen and ammonia sector is not what they expected. He made the statement on Thursday, at the World Economic Forum annual meeting held in the Swiss resort.

He said, "The demand isn't as high as it should be. But we hope that over the next couple of years demand will rise (as prices fall)."

He added: "If you are waiting to be paid more because you're green, forget about it. At the end of day, economics must work."

Fortescue Energy (the green energy arm of Australian Iron Ore Miner Fortescue) said in July it would not be able to reach its target of 15 million metric tonnes of green hydrogen production by 2030.

Donald Trump's return as president of the United States has exacerbated the backlash against environmentally-driven business decisions. The U.S. President declared an energy emergency shortly after assuming office and rolled back green policies.

Hutchinson stated that a push for renewable energy may be pushed to the back burner during Trump's tenure, but the industry is responsible for making it a topic of economic discussion and not "just about saving the planet".

The company has increased its focus on "green" iron over the last year, despite concerns about demand.

The green iron is made by reducing the iron ore with hydrogen gas. This is then transformed into steel in a electric arc smelter.

Steel production, which is a critical material for infrastructure, and the transition to net-zero energy, contributes approximately 8% of global CO2 emissions.

Hutchinson stated that final investment approvals are still pending on green hydrogen projects originally scheduled for 2023 in Norway and Brazil. Fortescue Energy is waiting to attract more investors.

(source: Reuters)