By Mark John
LONDON, Oct 26 (Reuters) - Australian mining billionaireAndrew Forrest called ahead of next week's COP26 climate talksfor governments to ensure massive existing subsidies for fossilfuels did not undermine the drive for clean alternatives such asgreen hydrogen.
Forrest, whose Fortescue Metals Group aims tobecome carbon-neutral by 2030, has been travelling the world topromote green hydrogen, a zero-carbon fuel made by electrolysisusing renewable power to split water into hydrogen and oxygen.While it is currently more expensive than rival fuels,backers say costs will fall as the technology is scaled up andfine-tuned. The International Renewable Energy Agency hasforecast rapid growth in coming years."I'm asking regulators all over the world to give greenhydrogen a decent shot," Forrest said in an interview beforeclimate talks in Glasgow seen as key to pinning down nationalemission-cutting pledges made in the 2015 Paris Agreement."What I'd like to see is an even playing field. If you aregoing to subsidise the old energy then you have to play fairwith the new energy," he told Reuters.The International Monetary Fund estimates that the worldspends $6 trillion annually on fossil fuel subsidies and wants them scrapped. The figure includes about 70% from"under-charging" for associated environmental costs, whileconsumers often pay less than the real cost of supplying theenergy and producers enjoy state support to raise theirprofitability.Forrest did not specify how he thought state subsidy policyshould evolve but said a new and potentially more beneficialtechnology should not be expected to pay for the cost oftransitioning away from an old one.
"We didn't ask the original computer to subsidise the oldtypewriters, to transition the old typewriters out - the poordears," he said.
Around 95% of hydrogen currently used for energy is producedfrom fossil fuels in a process that results in hundreds ofmillions of tonnes of carbon emissions per year - so-called"grey hydrogen".Forrest is aiming for zero-carbon green hydrogen to supply aquarter of the world's energy by 2050, while Norwegian renewableenergy generator Statkraft puts that figure at 10%.Countries from Japan to Saudi Arabia are investing in thetechnology and the European Union has signalled spending worth$430 billion on green hydrogen by 2030.
A U.N. Climate Change energy brief in May said hydrogen as afuel source was easy to store and contained almost three timesas much energy as fossil fuels.
It said a major drawback of green hydrogen was the cost ofthe electrolysis process for making it. But it noted thatefforts to halve its current price to below $2 a kilogram couldmake it viable for sectors from shipping to steel.
In a 2019 report on hydrogen, the International EnergyAgency noted current challenges for it as a fuel source includedthe cost and difficulty of transporting it over long distances,meaning most hydrogen today is produced near to its end-use.
"Transport and storage costs will play a significant role inthe competitiveness of hydrogen," it said, adding that in thelong-term, pipelines would be the most cost-effective optionrather than the trucks typically used for distribution now.
(Editing by Giles Elgood)
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