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International conflicts including Russia’s invasion of Ukraine had driven up the price of all fossil fuels, and dragged green electricity with it, Forrest said.
“And there’s precisely nothing we can do about it, unless we invest upstream in generating very large quantities of green electricity ourselves, which is what the company announced,” he said.
“We’re consolidating by investing upstream so we can get the price of electricity down to a point where green hydrogen becomes more competitive.”
In recent years, Forrest has toured the globe seeking opportunities to produce the huge amount of affordable, emissions-free electricity needed to separate hydrogen from water in commercially meaningful quantities.
The potential markets are in replacing hydrogen from gas and coal in the manufacture of fertiliser and chemicals, and providing an emissions-free fuel in applications where batteries may be impractical, such as long-distance shipping.
However, Fortescue found the cost of that clean energy prohibitively high and now wants to focus on developing renewable energy projects to drive down the major cost in producing green hydrogen.
“If the electricity cost is high, then we can’t make hydrogen cheaply enough to compete with fossil fuels,” Forrest told Radio 6PR in Perth on Thursday.
Shared ambition: Energy Minister Chris Bowen (left) and Forrest at the Uungula wind farm site in January.
Climate Change and Energy Minister Chris Bowen defended the viability of green hydrogen projects, which are being developed by more than 50 companies in Australia at a cost of $225 billion.
“Green hydrogen will be one of the best ways Australia can decarbonise domestic heavy emitters and help develop robust low-carbon manufacturing,” he said.
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While Bowen said the federal government was committed to working with the project proponents, opposition energy spokesman Ted O’Brien said Fortescue’s move had “blown a gaping hole” in Labor’s renewables-focused energy plans.
“Labor thinks it’s picking winners, but we now know they are picking losers, and it’s Australian taxpayers who are picking up the bill,” O’Brien said.
The federal government’s $2 billion Hydrogen Headstart program is its highest-profile backing of the nascent industry. In December, six projects – none backed by Fortescue – were shortlisted for funding. Recipients will be announced late this year.
O’Brien said the Coalition had supported the hydrogen industry while in government, and it was optimistic the fuel would have a long-term role in the energy mix.