Mining giants’ hydrogen row erupts anew

- Reading The Australian Financial Review

On October 28, A broader war of words is between Fortescue and more established energy suppliers over the future of gas. Fortescue supports renewables-based green hydrogen. However, Santos and Woodside Petroleum advocate gas-based blue hydrogen by using carbon capture and storage (CCS) or offsets. The federal government acknowledges the importance of both technologies in pursuing the Australian goal of net zero emissions by 2050.

CEO of Santos, Kevin Gallagher, said the focus should be on the carbon impact of the fuel, i.e. the zero-emissions hydrogen no matter whatever you use to make it. He also highlighted that the affordability is critical, noting the green hydrogen costs are at least three times more than hydrogen produced from gas with CCS, estimated by the International Energy Agency. Alan Finkel, the federal government’s adviser on low emissions technology, supports Mr Gallagher highlighting the importance of CCS. Dr Finkel recognized blue hydrogen being a pathway to develop the market for the fuel, especially in decarbonizing the heavy transport and industrial sectors. However, Dr Finkel also said with the costs issue, a “guarantee of origin” certification scheme would be critical to help customers know what they are getting. Then the market will work it out via pricing.

Felicity Underhill, the director of Fortescue Future Industries for Australia’s eastern states and the previous Origin Energy senior executive, casts doubts on blue hydrogen. She said keeping resources relevant while the world tries to decarbonize makes a lot of sense for oil and gas companies. However, given that green hydrogen is the ultimate goal and customers want, the investment in renewable green hydrogen now is a much better economic argument. She also said that all emissions from the supply chain in blue hydrogen are more than just using gas. Additionally, She highlighted the uncertainty of the continuous allowance in emission from a blue product under the International Partnership for Hydrogen and Fuel Cells in the Economy and other international certification regulations. Therefore, she questioned Woodside’s proposed hydrogen and ammonia project in Western Australia, which uses offsets to neutralize the carbon footprint of blue hydrogen based on tree-planting and reforestation.