The Fortescue Metals Group Limited (ASX: FMG) share price slipped lower today. This, despite Fortescue Future Industries (FFI) receiving Queensland Government approval for its first global green energy manufacturing (GEM) centre in Gladstone today.
While the notable progression in the green hydrogen roadmap is positive for FFI, it seems it wasn't enough to counteract comments made by Woodside Petroleum Limited (ASX: WPL) climate vice-president Tom Ridsdill-Smith yesterday.
Fortescue share price takes a hit amid Woodside's LNG pitch
The excitement around green hydrogen has been palpable in recent weeks. A true sense of urgency has only heightened following the COP26 climate summit in Glasgow, which wrapped up last week.
However, comments from a Woodside VP might have deflated some of the hype for a quick green transition. Contrary to the green dream, one of Australia's largest oil and gas companies is betting on natural gas as the near-term replacement for coal.
Commenting on why LNG might be a better bet than hydrogen, for now, Woodside's Ridsdill-Smith said:
If we're going to replace the energy exports of the North West Shelf project today with green hydrogen it would require about 120 gigawatts of renewables. That's ultimately why LNG isn't going to go away overnight … it's going to take time.
The argument is founded on the immense level of capital and time required to scale green hydrogen to meet existing energy demand. In a previous article, I covered how Fortescue (through FFI) plans to plough an estimated US$500 billion into its own projects to reach its target of 15 million tonnes of hydrogen production annually.
A tall figure that hasn't done the Fortescue Metals share price any favours since being reported.
As such, the oil and gas giant considers LNG as a necessary transitory energy source. Eventually, the company even foresees LNG being used alongside renewables.
First green step for FFI
Despite Woodside's position, Fortescue was optimistic about today's plant development. Although, this wasn't reflected in the Fortescue Metals share price, FFI chair Dr Andrew Forrest marked the milestone, saying:
Gladstone is going to be at the centre of Queensland's green energy revolution with the first electrolysers scheduled to enter production in 2023.
This project will not only be a gamechanger for green manufacturing in regional Queensland, it will also provide a major boost for the local economy and indelibly put Queensland as an epicentre of the coming green industry revolution.
From here, the company will work towards starting construction on its first stage in February 2022. Upon completion, the facility will be the first in Australia capable of making multi-gigawatt electrolysers. These pieces of equipment are used in the production of hydrogen.
Finally, the Fortescue Metals share price is down 37% since the beginning of the year. The resource company currently holds a market capitalisation of $48 billion.