Green Pioneer or Green Fantasist?
In last week's episode of Cleaning Up, my co-host Bryony Worthington sat down with Andrew "Twiggy" Forrest, Founder and Chair of Fortescue - self-made iron ore billionaire and hydrogen evangelist
A couple of weeks ago, during his visit to the Innovation Zero conference in London, Bryony got hold of Andrew Forrest and recorded another barnstorming episode of Cleaning Up. Her conversation last week with legendary economist, bond guru and academic Mohamed El-Erian has been watched over 36k times on YouTube alone.
Bryony kicked off by asking “Twiggy” Forrest how he had defied the big mining companies to break into the iron ore industry - and how that eventually led to his climate epiphany and oceanography PhD.
Forrest’s Minderoo Foundation was a significant backer of David Attenborough’s beautifully filmed Ocean - which I saw last weekend and can thoroughly recommend.
Then Bryony pushed Forrest hard on his hydrogen dream and his championing of ammonia for shipping. He has famously converted a ship to run on ammonia, but was blocked from sailing it under ammonia power into the Dubai Marina during COP28, over what he assumed to be spurious safety concerns.
They ended up sparring over whether ammonia or nuclear powered shipping were safer, and it’s a perfectly fascinating and fun conversation.
However, I won’t lie: I would have loved the opportunity to challenge Forrest on the economics ammonia shipping.
If green hydrogen costs $5/kg, using it to power ships would be equivalent to spending an extra $1,700/tonne on VLSFO (shipping fuel) - tripling its price. That would require a $540/TCO2 carbon price to make sense, about seven times the current EU-ETS and proposed CBAM price and far higher than anything envisaged in the recently agreed International Marine Organisation deal.
Even if you can make hydrogen for $3/kg (which right now no one in the world can), that would still be equivalent to double the shipping fuel cost and require a $200/TCO2 carbon price.
So Forrest can be as tiggerish about hydrogen as he wants, and he can bluster and claim to be a technologist with a track record of delivery, but he can’t defy the laws of physics and economics.
There’s a fascinating segment of his conversation, where Forrest claims he has a secret new electrolyser that is 95% efficient, that will be revealed next year. Now, I’m an advisor to Australian startup Hysata, which has indeed achieved that level of efficiency, but it doesn’t belong to Fortescue.
Even if Forrest gets his hands on 95% efficient electrolysers, that won’t be enough to salvage his hydrogen dream. It would drive down his production costs by around 20%, but green hydrogen currently has a 400% production cost problem. And - as I have explained here and elsewhere - it faces further cost headwinds in conversion, transport, storage, distribution and useage.
That’s why there’s a #HydrogenSoufflé. That’s why this week we learned that even Saudi super-project NEOM has failed to sell over half of its output, and earlier this year the CEO of the only company to have signed an off-take from NEON lost his job.
Since recording the episode, Forrest’s head of hydrogen has left Fortescue and the company is said to be mulling mothballing its 2GW electrolyser factory (presumably until the magic 95% efficient technology materialises).
So Forrest might be more Green Fantasist than Green Pioneer. Maybe next time he’s in London - or if I make it to Australia later this year as tentatively planned - I’ll get to talk to him and we’ll find out.
Watch this space!
My alma mater, Cambridge University, is in the process of electing a new Chancellor. And not one but two of the leading candidates have been guests on Cleaning Up. Both of them are great people and extraordinary leaders - it’s a shame they can’t both take it on as a job-share!
Watch Bryony’s episode with Mohamed El-Erian from last week
Watch my episode with Lord John Browne from July 2021
Oh, before you go, have you watched the Cleaning Up episode on Project Bo yet? A bunch of us built a solar/battery system for a neonatal unit in Sierra Leone, and it’s helping the medical team there save hundreds more lives per year. And if you feel inspired, you can donate to support Project Bo here – no amount is too small!
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I really enjoyed this conversation that was lively and broad ranging as billed. Having followed the podcast for years now, I’ve come to share the reservations on the potential role of hydrogen in the energy transition. But I found this was a really good episode for challenging your preconceptions and I’m aware that it’s all too easy to become too tribal and to fail to recognise the advances being made in those technologies you might have written off. Exciting to hear about the advances in electrolyser technology and ultimately it’s hard to discount the views of someone who’s willing to “put their money where their mouth is”.
Another really thought provoking episode which for me has become the hallmark of the series.
Pioneer or fantasist? Perhaps both, if you look beyond hydrogen to Forrest's significant achievements with electrification. Consider his acquisition of WAE. Its world-leading battery control systems. Its ultra-fast charging for battery/electric mine equipment. Look, too, to Fortescue's deals with Liebherr and XCMG ... and to the big wind and solar from Forrest's Squadron Energy.
Hydrogen's a bit puzzling. It's not as if Forrest is incapable of pivoting. Not too far back hydrogen was considered the only possible pathway to carbon-free mining ... but at a significant premium to fossil fuels. Fortescue's pivot to electrification - battery/electric with behind-the-meter renewables - will deliver decarbonisation with big operational savings.
Of course, if a market for green iron emerges Forrest will need a vast amount of green hydrogen, made and used in situ (unless direct electrochemical reduction becomes a thing ... but Forrest's invested in that as well). As for the 95% efficient electrolyser ... ok, let's see. But he's also invested in a start-up that's pursuing photocatalytic water splitting, so as to decouple the cost of green hydrogen from green electrons.
The fantasist appears to be spreading his bets.