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Renewable energy

Green Hydrogen Hype Fades as Reality Bites: What Went Wrong?

Strategic Insights

— 2 min read

The ambitious plan to use green hydrogen to decarbonize big industries like steel has hit a major roadblock. The deal between Australian mining company Fortescue and German energy operator E.On, touted as a benchmark for large-scale green hydrogen production and transportation, has fallen through. Meanwhile, the EU's ambitious targets for hydrogen production and importation by 2030 are looking increasingly unrealistic, with only 17% of planned projects expected to come to fruition.

The collapse of the Fortescue-E.On deal and E.On's subsequent retreat from investment in green hydrogen infrastructure mark a significant setback for the industry. The EU's planned hydrogen production and import targets are also in jeopardy, as companies like BP and ArcelorMittal pull out of ambitious green hydrogen projects due to high costs and competition from cheaper alternatives.

Key Takeaways:

  • The deal between Fortescue and E.On, considered a benchmark for large-scale green hydrogen production and transportation, has been cancelled, despite initial enthusiasm from German minister Robert Habeck, who hailed it as a "future without fossil fuels".
  • E.On has retreated from investment in large-scale green hydrogen infrastructure, slashing import targets and prioritizing other midstream activities.
  • The EU's ambitious targets for hydrogen production and importation by 2030 are unlikely to be met, with only 17% of planned projects expected to come to fruition.
  • The collapse of the Fortescue-E.On deal and E.On's retreat from green hydrogen investment highlight the challenges of scaling green hydrogen production, including limited infrastructure, policy uncertainty, and regulatory hurdles.
  • Green hydrogen production is currently expensive due to high costs of electricity, and the industry relies heavily on dwindling government subsidies and support.
  • Companies like BP and ArcelorMittal are pulling out of ambitious green hydrogen projects due to high costs and competition from cheaper alternatives.

Statistics:

  • 95% of hydrogen is currently produced using fossil fuels.
  • The EU plans to produce 10 million tons and import another 10 million tons of renewable hydrogen per annum by 2030.
  • Only 17% of the EU's planned hydrogen projects are expected to come to fruition by 2030 (Source: Westwood Global Energy).
  • The Fortescue-E.On deal aimed to supply up to 5 million tons of low-emission green hydrogen to Europe annually.
  • BP has cancelled a $36 billion investment in a renewable energy and green hydrogen project in Western Australia.

Sources:

  • DW: Interview with Robert Habeck, German minister for economic affairs and climate action.
  • DW: Statement by Jun Sasamura, hydrogen manager at Westwood Global Energy.
  • DW: Statement by Alexander Ihl, E.On spokesperson.
  • DW: Interview with Dino Otranto, Fortescue Metals and Operations CEO.
  • DW: Interview with Alison Reeve, program director, energy and climate change at the Grattan Institute.
  • BP: Statement on cancellation of Western Australia renewable energy and green hydrogen project.

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