Much to the chagrin of “dirty” hydrogen proponents, Australian industrialist Andrew ”Twiggy” Forrest is outspending every other company and country in the world to make green hydrogen a reality.
For the world’s growing list of billionaires, climate is the new black. From Jeff Bezos’ $10 billion Earth Fund, to Bill Gates’ $1billion Breakthrough Energy Venture, and a book (How to Avoid a Climate Disaster) to Elon Musk’s sexy electric cars, the world’s richest men are all in on climate solutions.
One of the boldest and most audacious climate projects is being led by someone you’ve probably never heard of. He is Australian industrialist Andrew Forrest, commonly known by the odd nickname of “Twiggy.” He also happens to be the richest man in Australia, worth an estimated $14 billion made through mining and exporting iron ore, mostly to China. At a recent Fortescue Metals Group (FMG) investor briefing, the company he founded and now chairs, announced windfall profits of A$14 billion (U.S.$ 10 billion), with Forrest making an estimated A$4 billion from dividends, or A$11 million a day.
Profits aside, Forrest is now focused on a new business goal that is breathtaking: He wants to cut the carbon footprint of his sprawling mining empire’s direct emissions by 100% — in a heavily polluting industry — by 2030. Yes, less than eight years from now. By comparison, his competitor BHP has set a target of cutting 30% of its emissions, excluding its steel-making customers, in the same time.
What is really revolutionary is how Forrest wants to do it. He is using his vast wealth to prove that green hydrogen — the elusive carbon-free fuel — is ready for prime time. He’s committed to producing more than 15 million tons of renewable hydrogen annually by 2030.
“Twiggy Forrest is outspending every other company and currently almost every country in the world on green hydrogen,” said energy analyst Tim Buckley of the Institute for Energy Economics and Financial Analysis (IEEFA).
He’s committed to producing more than 15 million tons of renewable hydrogen annually by 2030.
That commitment not only challenges conventional climate wisdom — that green hydrogen is more a dream than reality — but also takes on the fossil fuel industry which is betting its future on convincing the world that hydrogen fuel can only be produced at scale by burning natural gas and by capturing carbon before it goes into the atmosphere.
Driving this surge of interest in hydrogen fuel are global commitments to be “net zero” in carbon emissions by 2050. Political momentum on decarbonization is building fast. The EU carbon price is up 100% year-on-year to €60/tonne September and the U.S. has pledged a 50-52% emissions reduction target by 2030. Just this week, China’s President Xi pledged that as part of its drive to reach peak emissions by 2030 and zero emissions before 2060, the country will cease building new coal power plants abroad.
Green hydrogen visionary
The debate now is how to make it. Much of that debate has been dominated by fossil fuel companies and technology “realists” like Bill Gates who believe that the only “practical solution” is to burn natural gas and use carbon capture technology. The key to these blue and brown hydrogen strategies is to also make competitive green hydrogen seem like some futuristic, pie in the sky idea.
And that is why Forrest poses such a threat: He is acting, not talking, on the belief that green hydrogen can be produced at scale. “We have one shot at a completely green, zero-carbon energy and that is green hydrogen. That future is right upon us,” he recently told the Atlantic Council. “Our aim is to produce 15 million tons of renewable green hydrogen every year by 2030, increasing to 50 million tons per annum thereafter.”
Bigger than any industry mankind has ever created
This is extraordinary by any standards. In a January speech to coal-loving Australia, Forrest predicted that the green hydrogen energy market will be worth as much as $12 trillion by 2050. “That’s bigger than any industry we have,” he says.
“With green hydrogen, energy can become democratic, ubiquitous and 100% green.“
Not only is Forrest’s strategy flying in the face of hydrogen fuel conventional wisdom, it offers new hope to fossil-fuel-dependent developing nations that are rich in renewable energy, but do not have the capital to develop. “They [developing nations] don’t want to be hog-tied to oil and gas companies any longer,” Forrest says. “With green hydrogen, energy can become democratic, ubiquitous and 100% green.“
Challenging words from a mining company magnate.
See our related story: The blue hydrogen blues.
Forrest has used the pandemic to jump-start his green vision. While some billionaires were planning to launch themselves into space or conducting business via Zoom, Forrest instead, gathered a caravan of 190 experts and staff and set out on the modern version of the 19th-century quest to discover the sources of the Nile. He traveled to 47 countries over eight months including Kyrgyzstan, Afghanistan, Southeast Asian and African nations, to scout the best locations for low-cost, large-scale renewable energy. He persevered through political unrest, pandemic lockdowns and a bout of Covid, which he contracted in central Asia.
See our related story: Australia’s richest industrialist says fossil fuels are dead
On the way, he signed renewable and green energy project agreements in Indonesia, Papua New Guinea, the Democratic Republic of Congo, Ethiopia, Kenya and Uzbekistan. More projects with India, Brazil and New Zealand are in the works. “I learned that the path the leaders [of these countries] want to take, developing countries in particular, is to see this happen,” he said. “Everywhere we went we were looking at geothermal prospectivity, hydro prospectivity, solar, wind. We were putting together hundreds and hundreds of gigawatts of power,” he said shortly after the trip. “This year alone, we have secured exclusive access to renewable resources in six different countries, totalling over 300 GW of power,” he says.
“It forces people to pay attention.”
How does he do it?
At the center of this feverish activity is his green think tank, Fortescue Future Industry (FFI). “We’re the people not waiting,” boasts the FFI website. Forrest has hired 400 executives — yes, 400 — to deliver green energy, and he’s putting 10% of FMG’s profits into the new business. That’s a spend of $600 million on research, development and deployment at speed and scale. After FMG’s August profit announcement, an additional A$1.03 billion (U.S.$723 million) was committed to his green hydrogen endeavor for 2021/21 alone.
When asked why so much so fast, Forrest said, “It forces people to pay attention.”
The attention of engineers at his headquarters in Western Australia is focused on kick-starting key elements to make green hydrogen work. The Forrest green team has hit some key development targets including the successful combustion of ammonia in locomotive fuel; designing and constructing a combustion-testing device for large ship engines; and designing and constructing a hydrogen-powered drill rig. Most recently the team demonstrated that it has developed a prototype green hydrogen haul truck with a 240-ton payload to a successful trial –– in just 130 days. Green cement is also on their to-do list.
Making the impossible happen
Forrest and his team have also done something many thought was impossible — produce high purity green iron at low temperatures in a continuous flow process. “This alone could be a potential global technology game-changer on par with the HYBRIT and Boston Metals technology breakthroughs being tested in Sweden and the U.S.,” says IEEFA’s Buckley.
All of this is extraordinary by any standards. But there is business logic to what some see as investment madness.
Not only could delivering green hydrogen help meet the 1.5 C temperature target of the Paris Climate Accord, it is also a huge business opportunity.
Not only could delivering green hydrogen help meet the 1.5 C temperature target of the Paris Climate Accord, it is also a huge business opportunity. Nations need radical solutions to meet their net zero commitments. In Asia alone, where the vast majority of Forrest’s — and Australia’s fossil fuel — exports go, new net zero commitments made by China, Japan and Korea mean that the world’s biggest manufacturers need to dramatically cut emissions, fast.
All three countries have set ambitious net zero targets: China by 2060, Japan and Korea by 2050. None really know how to deliver that, and manufacturing and transport are some of their biggest challenges. It also poses a huge risk for Australia’s resource-dependent economy. The Reserve Bank of Australia released a paper in September examining the stark implications should the country’s key trade partners deliver on their net zero pledges — Australian LNG exports would halve by 2050, and coal exports will drop more than 80%.
Enter Forrest’s green hydrogen solution as an export replacement for Australia. If he can offer zero carbon iron, steel and even transport, and do it fast enough, he could capture one of the world’s biggest new markets.
Bold and ambitious it is. Which, of course, raises questions.
Forrest’s company FMG is still involved in several new gas projects that conflict with the company’s climate change commitments. And, according to one shareholder activist group, the company has not set a target for its Scope 3 emissions from steel production, easily the largest part of the company’s carbon footprint. An announcement on FMG’s Scope 3 targets is expected later this month.
Also, the company’s diesel-burning haul trucks produce an estimated 25% of the company’s emissions. Forrest is hoping to solve that by fast-tracking green hydrogen or electric trucks (which technology wins this race is yet to be determined).
Can he afford a moonshot?
The biggest question is, can Forrest afford it? FMG’s success depends on revenue from the volatile iron ore market. This month, the price of iron ore took a dramatic plunge and now sits at 55% below a record high of $237.57 per tonne in May. The looming bankruptcy of China’s Evergrande Group, with its $300 billion of liabilities, has also fundamentally challenged the country’s property boom, which has driven steel demand, and hence iron ore.
Like a knife fight in a telephone booth
Australia’s fossil fuel giants — and its many supporters in Australia’s government, including the country’s prime minister — are not taking the challenge to their dirty hydrogen plans lying down. The fight, and the blue hydrogen PR push, have already begun.
What will ultimately drive down the cost of green hydrogen is scale of adoption and global cooperation.
Forrest says the battle for the future of energy is like a “knife fight in a telephone box.”
First movers on projects this ambitious can also become the crash test dummies for the second wave of more risk-averse innovators. What might make Forrest’s gamble less risky will be the global community establishing a realistic price on carbon emissions. (The upcoming U.N. climate talks, COP26, are just two months off.) This would remove the biggest obstacle to green hydrogen — short-term cost differentials to its high emissions alternatives.
What will ultimately drive down the cost of green hydrogen is scale of adoption and global cooperation. Asia, Europe, the U.S. and India are all committed to developing large-scale green hydrogen technologies as part of their emissions reductions plans. Hydrogen electrolyzer factories are being built today in Norway, France and England, each with a tenfold lift in annual manufacturing capacity, driving massive economies of scale. Wind and solar costs continue to drop, despite price spikes in some key commodities such as lithium, steel, copper and polysilicon in 2021. And developing nations offer vast, untapped sources of renewable energy.
Collaboration will be needed to overcome the biggest technological challenges. The world now has a model: The remarkable speed of developing and distributing a COVID vaccine in less than two years. As climate change is an even bigger global threat, climate activists say, now’s the time to seek similar cooperation as well as increasing public/private project collaboration.
First though, is to quickly change the narrative that Green Hydrogen is a fuel of the future, and not ready for the here and now. Forrest has a plan for that. He will be busy next month working COP26’s Glasgow’s back rooms and meeting with world leaders, delegates, investors and other VIPs to explain his audacious investments in green hydrogen. We’ll soon see if the rest of the world is ready to climb on board.