Owners of Fortescue Metals Group Limited (ASX:FMG) shares may want to know about a threat to Fortescue Future Industries’ (FFI) hydrogen plans.
What is Fortescue Future Industries planning to do?
Fortescue Future Industries says it’s taking a global leadership position in the renewable energy and green products industry and has a vision to make green hydrogen the most globally traded seaborne commodity in the world.
It has announced various projects and partnerships in recent months.
For example, it has announced the construction of a global green energy manufacturing centre in Gladstone, Queensland. The first stage development is an electrolyser factory with an initial capacity of two gigawatts.
A partnership that FFI has announced is a letter of intent with Plug Power for a 50-50 joint venture for the two gigawatt electrolyser factory, with the ability to expand into fuel systems and other hydrogen-related refuelling and storage infrastructure in the future.
Fortescue Future Industries has also signed an agreement with JCB and Ryze Hydrogen to become the UK’s largest supplier of green hydrogen. JCB and Ryze will buy 10% of FFI’s global green hydrogen production. FFI’s green hydrogen production is anticipated to grow to 15 million tonnes of green hydrogen per year by 2030, accelerating to 50 million tonnes per year in the next decade thereafter.
Under the above partnership, FFI will lead the green hydrogen production and logistics to the UK market, and JCB and Ryze will manage green hydrogen distribution and development of customer demand in the UK.
Over time, this green segment could have a greater influence on the Fortescue share price.
But not everyone likes the plans that Fortescue Future Industries is doing.
Threat to Fortescue Future Industries’ hydrogen plans
According to reporting by the Australian Financial Review, the former leader of the Greens, Bob Brown, has said that green hydrogen must not be “based on mega dam projects, bird-killing wind farms or without a “social licence” that returns foreign earnings to communities.”
Energy Minister Angus Taylor reportedly released modelling that showed green hydrogen could replace LNG as the top energy export, with $50 billion of revenue by 2050.
The AFR speculated that the Greens could use any balance of political power to block hydrogen projects that sustain fossil-fuel industries, like ‘blue hydrogen’.
The Bob Brown Foundation took out a full-page advert in the AFR this week to challenge some of Dr Forrest’s claims and Fortescue Future Industries’ potential projects including hydroelectric dams in countries like the Democratic Republic of the Congo and Papua New Guinea.
What’s the problem?
Why doesn’t Dr Brown like these projects? The Bob Brown Foundation said the aim is to foster debate about the environmental and social impacts of Fortescue Future Industries’ global hydrogen production. Bob Brown said:
He is promoting huge hydro-electric schemes on some of the world’s last remaining great rivers and there would be massive social and environmental consequences. As reported in the AFR, he has contracted with the president of the DRC for a scheme on the Congo River twice the size of China’s Twin Gorges Dam. It is reported to threaten the displacement of 25,000 people, involves massive transmission lines, and has been dropped by previous interested parties including the World Bank.
In Papua New Guinea, Forrest’s hydrogen vision brings dams on a number of major rivers into focus. There can have been no time to consult the local populations nor to assess the impact on some of the most spectacular tropical gorges on Earth. His global vision deserves global scrutiny. We want him to get social licences. That is what we seek.
We support a hydrogen economy based on renewable energy where the production of that energy does not contribute to climate change, damage the environment or cause social dislocation. That is going to take a lot more considered judgement than is evident in Dr Forrest’s global mission.
Time will tell what impact, if any, this has on Fortescue Future Industries, the Fortescue share price and FFI’s green hydrogen plans.