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Champagne of the energy transition

Originally published in Handelsblatt by Klaus Stratmann

Media Release 01 June 2021
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Australian entrepreneur and Chairman of Fortescue Metals Group, Dr. Andrew Forrest AO wants to enter the production of green hydrogen on a large industrial scale soon, and German companies could be among the first customers as early as 2023. Speaking to Handelsblatt news, Dr. Forrest said, “Our goal is to be able to supply at least 15 million tonnes of green hydrogen annually in 2030. We have been working on this project for years and will probably start production in 2023, and will increase it continuously in the following years.”

To put this into perspective: Forrest’s project would exceed the goals of Germany’s hydrogen strategy by a factor of 30. The hydrogen strategy sets the goal of building capacities that would enable the annual production of 0.5 million tonnes of green hydrogen in Germany by 2030. To this end, an electrolysis capacity of up to 5 gigawatts (GW) is to be installed.

Forrest thinks in other dimensions. His credibility is consistent scaling and process optimisation. “We will industrialise green hydrogen. That applies to the entire process chain,” said Forrest. This is “the decisive factor for a massive cost reduction”.

Observers from politics, business and science are taking the Australian businessman’s plan very seriously. “Mr Forrest has a cool strategic view of what the world will need in the future: gigantic quantities of hydrogen,” Holger Lösch, Deputy Director General, Executive Board of the Federation of German Industries (BDI), told Handelsblatt. “He wants to become a big player on the world market as quickly as possible.” Forrest wants to achieve his goal through massive scaling. “If he proves that there is huge potential for cost reduction, it will help everyone,” Lösch said.

Lösch knows Forrest from the German-Australian cooperation project “Hysupply”. The project, which is funded by the Federal Ministry of Education and Research and coordinated on the German side by the BDI and the Academy of Science and Engineering (acatech), is intended to explore the potential of a German-Australian hydrogen partnership.

There is also approval from the scientific community. “We need projects of this dimension. There is no question that tens of millions of tonnes of green hydrogen are needed in Germany to decarbonise industry,” Robert Schlögl, Director at the Fritz Haber Institute of the Max Planck Society in Berlin, told Handelsblatt. Schögl said; “We will not get far with the in-house production of 0.5 million tonnes targeted in the National Hydrogen Strategy for 2030. We have to take a completely different approach,” he said.

Forrest’s concept is therefore “absolutely the right approach”. The internationally renowned chemist is a member of the National Hydrogen Council. This expert body was established by the German government last year. Forrest presented his project to German government representatives, who have not yet officially commented on his plans. However, the German government has repeatedly stressed that Germany will source a large part of its future green hydrogen needs from abroad. Hydrogen partnerships with countries like Australia are therefore expressly supported by the German government.

Forrest has already explained his plans to several companies in Germany. They could be among the first customers. In Forrest’s current project presentation, which Handelsblatt has seen, the names of several Dax companies as well as other large companies can be found under the heading “Potential German Customers”.

Companies from sectors such as steel or chemicals are desperately looking for ways to procure climate-neutral hydrogen. For steel manufacturers or chemical companies, climate-neutral hydrogen is the only way to decarbonise CO2 intensive processes, and to become a decisive step closer to the climate neutrality goal.

Among the different variants of climate-neutral hydrogen, the German government favours green hydrogen produced by electrolysis using electricity from renewable sources. Other variants, such as blue hydrogen are controversial. Blue hydrogen is produced on the basis of natural gas by means of steam reforming, and the CO2 released in the process is stored underground. Forrest relies exclusively on green hydrogen for his large-scale project.

Some companies are already facing fundamental investment decisions today or within the next two or three years. Investments in conventional processes – such as the classic blast furnace route with the use of coking coal – are no longer an option because of the drastically increasing climate protection requirements. But for new climatefriendly processes they need climate-neutral hydrogen – but this is not yet available in significant quantities.

According to Schlögl’s conviction, the time factor in particular speaks in favour of Forrest’s ambitious project. “We need green hydrogen now – and not in five or 10 years. Forrest promises to be able to supply green hydrogen in relevant quantities as early as 2023. “That makes his project particularly interesting,” Schlögl said.

Schlögl combines this remark with a fundamental criticism of the German approach: “Things are moving far too slowly in Germany. Germany is in danger of missing out on things. A look at our Dutch neighbour is proof of this. The port of Rotterdam wants to become a hydrogen hub. Wilhelmshaven and Brunsbüttel could also take on this role, but unfortunately far too little is happening.” Rotterdam as a logistics hub also plays a role in Forrest’s considerations.

Forrest is virtually unknown in Europe. In his home country, however, he enjoys a high reputation and is in close contact with the Australian government. Forrest made his fortune with Fortescue. The company mines iron ore and is, according to its own information, the world’s number 4 in the industry. The multi-billionaire, who repeatedly occupies one of the top 5 places in various rankings of the richest Australians, has contributed a large part of his fortune to a charitable foundation.

According to Forrest’s conviction, the processes for producing green hydrogen can still be made much more efficient. This applies to electrolysers, for example. “The production of electrolysers has to get out of the garage scale.”

His company will award major contracts for electrolysers on the condition that manufacturers switch to robotic, automated production at industrial scale, Forrest said. German companies such as Siemens Energy, Thyssen-Krupp, MAN and Linde are among the world’s leading manufacturers of electrolysers.

Forrest can contribute the most important production factor for hydrogen electrolysis at low cost, electricity from renewable sources. His company, Fortescue, owns tens of thousands of square kilometres of land in Australia suitable for the installation of photovoltaic panels and wind turbines.

Forrest’s goal is to install wind turbines and photovoltaic systems with a capacity of about 150 gigawatts (GW) by 2030. To put this into perspective, Germany currently has 55 GW of wind turbines and 54 GW of photovoltaic systems installed.

In Forrest’s view, the cost of transporting hydrogen from Australia to Europe is not an obstacle. Scientist Schlögl agrees with him: “The transport from Australia to Germany is not the problem. What causes the costs is the conversion of hydrogen into a transportable state.” The mere transport from A to B, on the other hand, does not make a significant difference. “In this respect, it makes no significant difference whether you transport hydrogen from Australia to Rotterdam or from Australia to Japan,” said Schlögl.

Forrest’s goal is to make green hydrogen a globally traded product. So far, green hydrogen is only available in homeopathic doses at high prices, which is why it is repeatedly referred to as the “champagne of the energy transition”. Forrest now wants to turn champagne into table water as quickly as possible. Eventually, green hydrogen will completely replace oil, coal and natural gas.

Please see below an editorial featuring Dr Andrew Forrest AO, written by Klaus Stratmann of Handelsblatt Newspaper, one of Germany’s most credible energy writers.

This story was originally published in Handelsblatt in Germany, the country that is leading the fight against the global warming challenge in Europe – the continent leading the world.