Chris Bowen lost in a Forrest of green energy hubris
Energy Minister Chris Bowen was remarkably sanguine last week about the implosion of Andrew Forrest’s plan to produce 15 million tonnes of green hydrogen annually by 2030.
At lunchtime on Wednesday, Bowen told the National Press Club the green hydrogen transition was progressing “at pace”, putting Australia on track to become a renewable energy superpower by the end of the decade. Less than three hours later, Forrest’s Fortescue Metals told investors it was kicking its target down the road from 2030 to a destination one stop short of Never Never Land. In the meantime, Fortescue will concentrate on what it does best: digging stuff out of the ground instead of building castles in the air.
“Reports of the death of green hydrogen have been greatly exaggerated,” said Bowen. Fortescue may have “de-prioritised” green hydrogen, but $200bn of investment was “in the pipeline”. That’s renewable energy speak for “the cheque is in the mail”.
A Boston Consulting survey, published last September, found that 824 green hydrogen projects with a theoretical capacity of 21 million tonnes a year were in the pipeline in North America and Europe. But only 2 per cent of the announced capacity reached the planning stage, and just 0.2 per cent were completed.
Global energy companies are rethinking the wisdom of pumping billions of dollars of capital into an unproven technology with uncertain timing and no guaranteed rate of return. Statkraft, the Norwegian hydro-electricity giant, rolled back its plans last month. “We have definitely underestimated the challenges,” a company spokesman said. “Developing green hydrogen has become much more expensive than we expected.”
Earlier this year, French energy giant Engie dropped plans to build a green hydrogen plant in Portugal. Only this month, the European Court of Auditors criticised the European Union’s 2030 green hydrogen production target of 10 million tonnes as “overambitious”, saying it was unlikely to be met and, therefore, shouldn’t be included in carbon reduction calculations.
It’s been less than three years since Forrest boasted about spending $1bn to build the world’s largest green hydrogen electrolyser manufacturing plant in Gladstone, Queensland.
Forrest explained his plans to convert the Gibson Island ammonia factory in Brisbane to run on green hydrogen. He also committed to building the world’s first green hydrogen import and export facility at Port Kembla, linked to a power station fired by “the miracle molecule …. clean as the day is long … crystal clean, green hydrogen made right here at home”.
Much nonsense has been spoken at the National Press Club over the years, but seldom have journalists been taken on a flight of fancy quite as crazy as the one piloted by Forrest back in October 2021. “To make green hydrogen, you simply split water,” he said. “Any old water … It can be wastewater, desalinated water, sea water into hydrogen and oxygen using renewable electricity only.
Andrew Forrest signing a workers shirt as he meets Fortescue employees.
“It’s like a miracle molecule, the Swiss Army knife of energy and green products, versatile and able to decarbonise even the most challenging sectors, like, say, iron ore, cement, steel, iron fertilisers, aeroplanes, trucks, trains, cars.”
We now know all this was pure fantasy. The multibillion-dollar projects he promised were technologically unproven and economically unfeasible. There was barely a dollar of committed finance behind them and only the flimsiest of business cases.
We shouldn’t be surprised. Hydrogen has been breaking hearts since 1766, when Henry Cavendish described the production of “inflammable air” by reacting zinc metal with hydrochloric acid. Try as they might, technologists have never overcome hydrogen’s fatal flaw: whatever hydrogen is asked to do, another technology will do it better, safer and cheaper.
Forrest’s 2021 expectations about the cost of green hydrogen were somewhat wide of the mark. The cost had halved, he claimed, because “unlike fossil fuels, green hydrogen was becoming cheaper and would never run out”.
Last week he told Nine Radio in Perth: “We just have to work out now how to produce it cheaply enough.” The collapse of the green hydrogen bubble is a double blow for Bowen.
Green hydrogen manufacturing and the proposed Sun Cable solar development were supposed to provide the portable energy that would turn Australia into a renewable energy export power by the end of the decade. Neither project is going to happen, certainly not by 2030. The collapse of the business case for green hydrogen puts the lie to Bowen’s claim that renewable energy is cheap.
Hours before the Fortescue announcement, he was repeating his trite line at the National Press Club. Yet even Bowen’s cheer squad now doubts the claim, if it is not ready to abandon all of the hopes for a renewable future. Green hydrogen still had a great future, an opinion article in Renew Economy claimed. It’s just there was “limited access to the large amounts of low-cost renewable energy”. Quite.
Many of us have been making that point for some time. The lesson for Bowen from the green hydrogen debacle is that he should stop clogging his diary with carpet-bagging time-wasters and stick with the technology that actually exists. Bowen will never get back the hours he’s spent listening to the green hydrogen salesmen peddling miracle cures for the planet, just as taxpayers are unlikely to see a return on the billions of dollars of poorly scoped subsidies pushed their way.
Yet Bowen is part of a government that believes it understands capital allocation better than the markets. Its Treasurer has fallen for the neo-Marxist fantasy of values-based capitalism and the delusion that innovation should be driven by the state.
It has a Finance Minister who lacks the wisdom to ask tough questions and a Prime Minister content to leave the details to others. Labor will respond to Fortescue’s misadventures by throwing more money into its Hydrogen Headstart program and associated corporate welfare schemes designed to bridge the gap between the cost of manufacturing green hydrogen and the amount customers are willing to pay.
Australia will be caught up in the global sugar war, competing with governments in Europe and North America to pile more sugar on the table. However, it will not have the advantage of cheap energy enjoyed by countries blessed with abundant hydro-electricity or in which nuclear power is legal.
Politicians and entrepreneurs may be equally prone to the cognitive biases that allow bad ideas to hang around long after they should’ve been dismissed. The redeeming grace of entrepreneurs is the profit motive, which tells them when to stop throwing good money after bad.
Its my wife's car, I don't get to drive it much, but I do like driving it.
She loves it, not so much because its an EV, it just suits her driving style (fast!).
The downside is the poor range for country driving.
About 75% of our driving is at 100 or 110, and while its incredibly efficient in the city driving, thats not where we are at.
In about a year or so we will look at what comes next.
It will likely be another EV, as we have great capacity to charge from home, plus I wanted some insurance in case Oz suddenly has no access to diesel or petrol.
Will also consider a hybrid, but I would want one where the primary source is battery with the ICE merely as a backup, rather than the other way around.
I still have my Ranger ute, which will hopefully run forever.
Mick
famous last wordsCarry the essentials only, no need for the toolbox
famous last words
maybe not the 300 kilo professional mechanics tool kit , but even bicycles need tools sometimes
Wasnt the Hindenburg flying a 100y ago,?I heard that Hydrogen powered Airplanes are scheduled for take off 2028-2029
If I wasn't so Old I like to see that
I put a long range tank in the ranger. At gives me 140 litres , can safely get 1200 km out of a tank.Yes I think a dual cab ev with a range extender would be a hit here. We like the EV, but would like the flexibility of a range extended.
They are just starting to come out, but I think in a few years time, things will be completely different IMO
Yes I did the same back in 1994 with a Landrover Discovery 300tdi, it had a 90 litre tank and put in two 50 litre aux tanks, but I was doing a lot of desert trips back then.I put a long range tank in the ranger. At gives me 140 litres , can safely get 1200 km out of a tank.
Its more for towing the van, where it brings the range up to about the same range when no van but with the original tank.
Pretty easy install, took me about half a day.
Mick
You can still do it now for an ev :Yes I did the same back in 1994 with a Landrover Discovery 300tdi, it had a 90 litre tank and put in two 50 litre aux tanks, but I was doing a lot of desert trips back then.
I just think having a range extender will suit a lot of people.
It will be an interesting topic, if we want to explore it IMO.
https://www.history.com/this-day-in-history/the-hindenburg-disasterWasnt the Hindenburg flying a 100y ago,?
Interesting.EVs are changing the vehicle world. New materials, manufacturing process and design ideas are showing us that EVs are more technologically advanced than their ICEV cousin.
EVs are changing the whole car industry.
Gigacasting is the future, started by Tesla, and now it is catching on with other automotive manufacturers buying the tools to incorporate it in their new models.
Automakers are rushing to produce cheaper EVs and profitably. While the costs and challenges of improving batteries often hog the spotlight, automakers are also investing billions into new manufacturing methods that can change the way cars are made. One such method is gigacasting or megacasting - using high pressure molds to form molten aluminum into large parts. Electric car maker Tesla is credited with pioneering the method, but several rivals are making investments. CNBC spoke with experts including Volvo Cars' Chief Product and Strategy Officer, Erik Severinson, about the Swedish car maker’s plans in this area.
For the rest of the EU, which still have subsides for EV buyers, sales were up 9%.Germany’s decision to abruptly end its hugely successful electric vehicle (EV) subsidy program at the end of 2023 has hit the wider European market hard, with the number of battery EVs (BEVs) across the European Union increasing by only 1.3 per cent through the first half of 2024.
Budget issues forced Germany to prematurely ended its EV purchase subsidies in December, a year earlier than expected.
According to new figures from Transport & Environment (T&E), Europe’s leading advocates for clean transport and energy, the absence of EV purchase subsidies saw German BEV sales drop by 16.4 per cent in the first half, causing the EU to register marginal growth of just 1.3 per cent over the first six months of 2024.
Take away those subsidies, and it all drops away.“Germany is the sick man of Europe when it comes to electric cars,” said Lucien Mathieu, cars director at T&E.
“Meanwhile, markets which have strong, predictable incentives for EV adoption are reaping the rewards. Germany’s CDU lawmakers in Brussels should stop trying to weaken the EU’s 2035 target and instead actually promote electric vehicles.”
T&E called on German lawmakers to follow the example put forward by Belgium’s company car policy which has set attractive depreciation rates for EVs and phases out depreciation for internal combustion engine (ICE) vehicles – a move which saw BEV sales in Belgium increase by 48 per cent in the first half of 2024.
Further demonstrating the importance of a stable and supportive regulatory environment were increases in BEV sales in France and Italy.
In France, a social leasing scheme which helps to provide cheap EVs to low-income households helped see BEV sales increase by 14.9 per cent in the first half of 2024. Meanwhile, in Italy, new EV incentives launched in June saw a peak in EV sales in the same month, helping to push BEV sales up by 7 per cent across the first six months of the year.
Due again to Germany’s missteps, the share of BEV sales across the European Union in the first half of 2024 dropped slightly, from 12.9 per cent in the first half of 2023 to 12.5 per cent in the first half of 2024.
Excluding Germany, however, the share of BEVs increased from 12 per cent to 12.5 per cent.
Germany is getting itself in more $hit than Ned Kelly IMO.
And with winter around the corner, could be an interesting time, unless of course the whole populace goes on winter leave to the sunny climes of the MediterraneanGermany is getting itself in more $hit than Ned Kelly IMO.
Closing all their nuclear plants, with no subsitute power source, isn't the smartest move when you are a highly industrialised country IMO.
And do not forget getting their cheap russian gas blown up and replacing it with expensive US lpg boatsGermany is getting itself in more $hit than Ned Kelly IMO.
Closing all their nuclear plants, with no subsitute power source, isn't the smartest move when you are a highly industrialised country IMO.
Old schoolAnd with winter around the corner, could be an interesting time, unless of course the whole populace goes on winter leave to the sunny climes of the Mediterranean
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