The Fortescue Metals Group Ltd (ASX: FMG) share price is up 1.1% in early afternoon trade on Tuesday.
Shares in the S&P/ASX 200 Index (ASX: XJO) miner are currently changing hands for $21.78 apiece.
And in the wake of the Group of Seven (G7) meeting in Hiroshima, Japan on Saturday, the longer-term outlook for the Fortescue share price may well have gotten a boost.
What happened at the G7 that could impact the Fortescue share price?
United States President Joe Biden managed a truncated appearance at the G7, before hurrying home to negotiate a new federal debt ceiling.
But in his shortened attendance, Biden managed to make some extraordinary statements in regard to Aussie companies involved in transitioning the world to clean energy.
The US, as you're likely aware, is working to decrease China's dominance in this field.
As part of that effort, Biden and Prime Minister Anthony Albanese announced a new Climate, Critical Minerals and Clean Energy Transformation Compact. This runs parallel with the newly minted US$369bn (AU$555 billion) Inflation Reduction Act, much of which is targeted at sustainable energy transformation.
Speaking at the summit, Biden said (quoted by The Australian Financial Review):
We are going to establish climate and energy as the third pillar of the Australia-US alliance. This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials.
Biden also plans to have Australia added as a "domestic source" under the US Defense Production Act. This could be a boon for the Fortescue share price, as it would enable new US investments in some of the miner's projects, with a particular focus on green hydrogen.
And Germany added some fuel to the green hydrogen fire, as the member nations discussed energy security in the wake of Russia's invasion of Ukraine.
"We also need some new gas power stations, but they should be built in a way that they can run on green hydrogen later on as well. So it is an investment in the clean future as well," a German government official said at the summit (quoted by Reuters).
Hydrogen can be separated from oxygen by running electricity through water. For it to be green hydrogen the electricity needs to come from renewable sources.
Now what?
While a lot of big ideas were floated, many of the details remain to be worked out between the US and Australian governments.
But resources minister Madeleine King was unequivocally enthusiastic about the new pact.
"Importantly, it will ensure Australian resources companies can access US capital and benefit from the US Inflation Reduction Act," share said (quoted by the AFR).
As for any potential tailwinds for the Fortescue share price, Jason Willoughby, CEO of Fortescue founder Andrew Forrest's private company Squadron Energy, noted that Biden hadn't specifically mentioned directly subsidising Aussie green hydrogen.
Willoughby said:
We'll wait to see the detail. But I think the important message here is intent. And if we hadn't had that message, the risk was that folks would start adjusting their attention to start to move to the US.
By announcing this and showing intent, that means that companies like ours and others can just keep going with their plans in Australia.
Fortescue's green arm, Fortescue Future Industries (FFI) has five green hydrogen projects currently underway in various nations. Among those, the Gibson Island project in Queensland is the closest to production.
An FFI spokesman (quoted by The Australian) praised the new pact, saying it recognises the "critical importance of green hydrogen".
And in what could offer a boost to the Fortescue share price down the road, he said the pact will help FFI demonstrate its green energy projects "around the world".
This all comes just weeks after the Australian government announced $2 billion to fund green hydrogen projects as part of the 2023 federal budget.
Forrest, as you'd expect, applauded that funding.
"It's a race to win this race," he said of the global competition to be a leader in green hydrogen production.
Forrest added at the time:
I see the potential in our country of an industry at least the size of Aramco, a multi-trillion-dollar company that underpins the entire economy of Saudi Arabia and that high standard of living which 34 million people have in their country.
As for any long-term tailwinds for the Fortescue share price from the new pact, as Willoughby said, "We'll wait to see the detail."
