Australia has the potential to become a global green hydrogen superpower, creating hundreds of thousands of jobs along the way.
But if that is going to happen, we need to make the right decisions now – as other countries have the same natural advantages we do and the market is finite. Every week, we hear about new green hydrogen projects, from India and South Korea to Brazil and Spain.
Indian billionaire Mukesh Ambani, for example, has just announced plans to invest $75 billion in renewables, electrolysers and green hydrogen. The world is realising a new industry is about to dawn. I want Australia to do what it does best – lead.
But if we want Australia to take advantage of this new industry, we need to stop pouring billions of dollars into fossil fuels, or at least give our emerging green industries the same advantage.
Fossil fuel subsidies cost Australians $10.3 billion in 2020-21, according to The Australia Institute. That means every minute, taxpayers effectively gave $19,686 to coal, oil and gas companies.
This is not a level playing field.
If the government truly wants a green economy, it needs to stop giving the fossil fuel industry handouts, or at the very least grant the renewable energy and green hydrogen industry the same advantage.
Levelling the playing field won’t double the price of energy or increase taxes because consumers will still use exactly the same amount of energy.
Don’t misunderstand me. Green hydrogen will be extremely competitive but I haven’t seen many industries succeed when they have to fight against their own Government, which is exactly what is happening when Government funds only one side of the playing field.
While green hydrogen might be more expensive than natural gas in 2022, its cost is continuing to decline as technologies emerge and scale, with global analytics and information company IHS Markit estimating production costs have fallen 40 per cent since 2015 – and will fall a further 40 per cent by 2025. By 2030, researchers at the Australian National University forecast green hydrogen will be cost competitive with fossil fuels, with a production cost of $2 per kilogram.
But 2030 is going to creep up on us quickly. We must use the next eight years to build and invest in green hydrogen and green energy, not more fossil fuel projects that will continue to drive global warming, pollute our planet and will only become more expensive, not cheaper like green projects.
“Any number of massively wealthy energy businesses worldwide stand to become even wealthier if they can finally devise a way to make green hydrogen economically feasible,” The Daily Telegraph pointed out. I assure you, it will be feasible. I wouldn’t be building a new green energy company if I thought it wouldn’t work or if I thought it couldn’t sustain itself by being profitable.
Goldman Sachs predicts green hydrogen has the potential to give rise to a $US11 trillion addressable market globally for the utilities industry alone and supply up to 25 per cent of the world’s energy needs by 2050.
FMG’s initial cost of iron ore production was more than $50 per tonne but within 10 years it was less than $15. Costs came down as projects began, lessons were learned and technology improved processes. The same will happen with green hydrogen. Australia can’t get left behind.
Dr Andrew Forrest AO is the founder and chairman of Fortescue and Fortescue Future Industries.
This opinion piece was first published in The Daily Telegraph on 3 February, 2022