‘Do it immediately’. Why Fortescue boss Twiggy Forrest says the federal budget’s green hydrogen plans can’t wait

boy dressed as an eco warrior and holding a globe.

boy dressed as an eco warrior and holding a globe.

Fortescue Metals Group Ltd (ASX: FMG) looks well-placed to make hay from the $2 billion green hydrogen program tucked into the 2023 federal budget.

Commenting on the renewables cash splash on Tuesday, Energy Minister Chris Bowen said, “Renewable hydrogen is a critical enabler for future manufacturing of green metals and other products the world needs as the transformation to net-zero by 2050 gathers pace.”

FMG founder Andrew ‘Twiggy’ Forrest has positioned Fortescue as a frontrunner in green hydrogen production via the company’s green energy branch, Fortescue Future Industries (FFI).

And he’s eager to get the ball rolling.

What is green hydrogen?

Hydrogen is the most abundant element in the universe. On Earth, you’ll find some of it in gas form, while mammoth amounts are locked up in water. Or good old H2O.

Hydrogen can be separated from that oxygen by running electricity through the water. For it to be green hydrogen that electricity needs to come from renewable sources. That’s distinct from blue hydrogen, which is created using gas.

As part of its 2030 net zero carbon plans, Fortescue aims to use green hydrogen across its mining and shipping fleets including drill rigs. The S&P/ASX 200 Index (ASX: XJO) miner also aims to produce commercially viable green iron using this hydrogen energy.

Why is Fortescue urging immediate action?

Fortescue boss Twiggy Forrest is eyeing international competition among nations to be the first to successfully, and affordably produce commercial levels of green hydrogen.

“It’s a race to win this race. I recommend that they keep it simple, and they do it immediately,” he said (courtesy of The Australian Financial Review).

Forrest continued:

Remember, I’m an industrialist. I’ve done this before. I see the potential in our country of an industry at least the size of Aramco, a multi-trillion-dollar company that underpins the entire economy of Saudi Arabia and that high standard of living which 34 million people have in their country.

We have the potential of creating an industry at least that size, and having economic growth for decades, full employment for decades. That is the power of this opportunity. The $2 billion gets that ball rolling.

Bowen also indicated that the government is aiming for quick action.

“We are not mucking around. We’ve outlined the contours and there’ll be a round of consultation with the players about the detailed design,” he said.

The green hydrogen program is intended to be established this year and will most likely reward big companies, like Fortescue.

“We envisage that this is for big projects … which means you don’t need many. You need a few big ones,” Bowen said (quoted by the AFR).

Fortescue Future Industries already has five green hydrogen projects underway in various nations.

That includes the Gibson Island project, located in Queensland, which is the closest to production.

As reported by The Australian, FFI director Guy Debelle FFI is aiming to progress Gibson Island “as soon as possible”. Fortescue expects to make a final investment decision (FID) later this year.

Asked about the $2 billion in green hydrogen funding contained in the 2023 budget, Debelle said, “Is something like this highly relevant for the economics of Gibson Island? Yeah, absolutely.”

The post ‘Do it immediately’. Why Fortescue boss Twiggy Forrest says the federal budget’s green hydrogen plans can’t wait appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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