Forrest says hydrogen subsidy makes green iron commercially viable in Australia

One of the biggest – and most deep pocketed – campaigners for government support for renewable hydrogen has hailed the federal budget’s $6.7 billion in tax incentives for the technology as a “historic moment,” but it is not the production and export of the green fuel that excites him most.

“This incentive will fast-track the development of a green iron industry in Australia,” iron ore billionaire and Fortescue Metals chief executive Andrew Forrest said in a statement on Tuesday.

“[It will bring] massive employment opportunities back to our country, value adding right here in Australia and slashing steel production’s debilitating global emissions.

“Fortescue believes that commercial production of green iron in Australia is now possible and must be pursued.”

And Twiggy is not alone in his enthusiasm.

“Green iron… is the $100 billion a year export value uplift opportunity for Australia,” Tim Buckley, the executive director Climate energy Finance told Renew Economy on Wednesday.

“That’s the number one opportunity for Australia in the zero emissions industry of the future world,” he adds.

“For the next decade there is no green hydrogen ship.”

Buckley concedes that in the context of $100 billion a year of exported embodied decarbonisation, what the federal government has set aside in this year’s federal budget is “a drop in the ocean compared to the investments required,” but he says the main aim is to de-risk the market enough to mobilise private capital.

“Certainly, $6.7 billion of hydrogen production tax credits means it will be commercially viable a lot sooner than [developers] were previously thinking,” he says.

The federal government’s Hydrogen Production Tax Incentive (HTPI) will pay developers $A2 (US$1.32) per kilo of green hydrogen produced over a ten-year period, starting from 2027.

This might seem like small change in comparison with the sort of money the US government is splashing about through its IRA. Just this week the US Department of Energy awarded Nasdaq-listed electrolyser outfit Plug Power a $US1.66 billion conditional loan to finance the development and construction of up to six green hydrogen production facilities.

But for Fortescue, the Australian production subsidy will be a welcome boost to its efforts to green up its core business, particularly as its competitors move to do the same – like Korea steel maker Posco, which is partnering with Engie on a green steel project in Western Australia’s Pilbara region.

Fortescue is trialing its in-house green iron technology at its major Chichester operations, also in the Pilbara in Western Australia – one of the largest iron ore producers in the world.

Forrest says Fortescue looks forward to working with government to “imminently scale up” the technology installed at the Christmas Creek Green Iron Plant, which it took a final investment decision on last November.

“This is a historic moment that, if introduced quickly, will spur the establishment of new green industries… creating tens of thousands of new jobs for Australians directly, hundreds of thousands of new jobs indirectly right across Australia, whilst cutting our emissions,” said Forrest.

“Through the $2 per kilo tax credit for green hydrogen production, the government has seized this opportunity for the Australian people.”