Fortescue Energy CEO goes green

By Divya Chowdhury and Lisa Pauline Matakar

DAVOS, Switzerland, Jan 24 (Reuters) – Replacing fossil fuels with green hydrogen depends on creating demand by making its price competitive, Fortescue Energy Chief Executive Mark Hutchinson told Reuters in Davos. , because buyers are unwilling to pay a “green premium.”

Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable electricity. It can then itself be used as a power source or to create carbon-free ammonia (the main ingredient in agricultural fertilizers).

Hutchinson told the Reuters Global Markets Forum that electrolysers to break down hydrogen are expensive and government subsidies to reduce costs for companies have not materialized as expected.

“The green hydrogen, ammonia (industry) is not living up to our expectations,” the CEO said on the sidelines of the World Economic Forum’s annual meeting in the Swiss resort on Thursday.

“Demand hasn’t come out the way it should yet, but over the next few years we’re hoping that as prices come down, demand will go up,” he said.

“If you’re waiting for someone to pay you a premium because it’s green, forget it…Ultimately, the economics have to work,” he added.

Fortescue Energy, the green energy arm of Australian iron ore miner Fortescue’s, said in July that it was unlikely to meet its target of producing 15 million tonnes of green hydrogen by 2030.

Donald Trump’s return to the White House has intensified a backlash against environmentally driven business decisions, with the US president declaring an energy emergency and rolling back green policies shortly after taking office.

Hutchinson said the push for green energy may take a backseat under Trump, but the industry should approach it as an economic discussion and not just about “saving the planet.”

However, despite demand concerns, the company’s focus on “green steel” has grown significantly over the past year.

Green iron is produced by reducing iron ore using hydrogen, which is then converted into steel in an electric arc furnace.

Steel is a key material for infrastructure and the net-zero energy transition, and its production currently accounts for around 8% of global carbon emissions.

Hutchinson said final investment approvals for green hydrogen projects in Norway and Brazil were still pending, due to expire in 2023, and Fortescue Energy was waiting to bring in more investors.

(Join GMF, a chat room hosted on LSEG Messenger, for a live interview: (Reporting by Divya Chowdhury in Davos and Lisa Mattackal in Bengaluru; Editing by Richard Chang and Alexander Smith)