Labor's 'dead horse' green hydrogen gamble slammed by energy expert Jude Blik as the govt urges Fortescue to repay funds
Industry and Innovation Minister Tim Ayres has urged the energy and mining giant to reimburse the government for the millions of dollars it gave Fortescue for the defunct Gladstone plant.
The Queensland operation received about $60m in federal and state government support and was canned about 12 months after it opened.
The recent shift is a blow to Labor's net-zero plans, which include a Hydrogen Production Tax Incentive as part of its Future Made in Australia Act.
More than $6.5 billion will go toward the scheme, which provides $2 per kilogram of renewable hydrogen produced between 2027-28 and 2039-40.
Centre for Independent Studies energy analyst Jude Blik said the latest failure was 'no surprise given green hydrogen was never feasible'.
'Green hydrogen is the panacea that Australia's Net Zero hopes and dreams have been pinned on,' Mr Bilk told SkyNews.com.au.
'Yet it has never been economic – even for the most basic use cases in chemical manufacturing, let alone for hare-brained green energy export schemes.
'Labor's attempt to appear fiscally prudent in recovering funds is odd given they are still throwing good money after bad with billions still committed to green hydrogen projects.
'Green hydrogen is a dead horse - yet the government continues to bet our future on it.'
He said that Fortescue, in principle, should return the taxpayer funds as the funds 'should be used to deliver public benefit'.
However, Mr Blik acknowledged that it was not clear whether Fortescue should repay the funds without knowing the terms of the grant.
A Fortescue spokeswoman said the company has been 'upfront with the government and will return funds where required under the grant agreement".
Creating green hydrogen has proved extremely difficult for local industry despite massive government subsidies.
Mr Blik said analysis from the CIS showed a 'realistic price' of green hydrogen was $10/kg – well above the $2/kg price for hydrogen from natural gas.
'This means that for any project to be successful it will either need to find a buyer at $10/kg, or achieve subsidies of $8/kg – both of which are completely unrealistic,' he said.
'The notion that there is a 'technology curve' that we need to be ahead of is naively optimistic, which would be forgivable if we weren't betting our nation's future on it.'
The failure of the Gladstone project, alongside another US plant in Arizona, will blow a US$150m ($227m) hole in Fortescue's financial results.
On the US project's failure, Fortescue chief executive of growth and energy Gus Pichot told analysts the shift away from green energy under US President Donald Trump hurt the project's viability.
'A shift in policy priorities away from green energy has changed the situation in the US,' Mr Pichot said.
'The lack of certainty and a step back in green ambition has stopped the emerging green energy markets, making it hard for previously feasible projects to proceed.
'As a result, we cannot proceed with our investments as they stand, and will explore future opportunities for our site in Arizona.'
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