Andrew Forrest, the Perth philanthropist and billionaire, believes the world will need to rapidly move from fossil fuels to hydrogen.
The below is an extract from an ABC broadcast of the Boyer Lecture delivered by Mr Forrest, shows non ABC TV at 2.30pm on Saturday and in WA at 1.30pm.
Its titled “Oil vs Water: Confessions of a Carbon Emitter”
The iron ore company I founded 18 years ago, Fortescue, generates just over two million tonnes of greenhouse gas every year.
Two million tonnes — that’s more than the entire emissions of Bhutan.
It’s also just 0.004 per cent of the greenhouse gases that enter the atmosphere every year — around 50 billion tonnes.
The answer isn’t to stop mining iron ore, which is critical to the production of steel and to humanity.
If the world’s renewable energy resources were a power station, the plant would be millions of gigawatts in size. To put that into perspective, Australia produces all of its electricity from just 70 gigawatts.
There’s enough pollution-free, renewable energy out there to power humanity for the entire Anthropocene. That’s the age of humans, just as the Mesozoic was the age of dinosaurs.
But the markers of our era won’t be Tyrannosaurus teeth or asteroid craters. They’ll be giant landfills of single-swig, plastic water bottles, effectively fossils the moment they’re made.
We have no idea how long the Anthropocene will last. But if we don’t stop warming our planet, it will be geological history’s shortest era.
Hydrogen offers us a colossal opportunity
The solution is hydrogen.
Hydrogen is the most common element in existence. In fact, the universe is 75 per cent hydrogen by mass — so we’ll never run out of it.
It’s also the simplest. To make it, all you need to do is run electricity through water.
That’s green hydrogen, the purest source of energy in the world — and one that could replace up to three quarters of our emissions, if we improve the technology and had the scale.
But right now, we don’t use it for energy. It’s “just” an ingredient used in industrial processes. And we make it from fossil fuels, quaintly calling it “grey” hydrogen, to hide the fact that it’s a pollutant.
“Green” hydrogen — the good stuff — is virtually ignored by the economic world.
We’re missing a colossal opportunity. The tricky part is transporting it, but we are cracking that.
The green hydrogen market could generate revenues, at the very least, of $US12 trillion by 2050 — bigger than any industry we have now.
And Australia, with characteristic luck, is sitting on everything it needs to be the world leader, but only if it acts fast.
The journey to replace fossil fuels with green energy has been moving at glacial speed for decades but is now violently on the move.
In the last year, China, Japan and South Korea have together pledged to put almost 8 million hydrogen fuel cell cars on the road.
Boris Johnson, who once wrote that wind power “wouldn’t pull the skin off a rice pudding”, has invested 12 billion pounds in green energy, and, more importantly, banned the sale of all fossil fuel engines by 2030.
Even Australia, which declined to commit to a zero emissions target, is investing $300 million in hydrogen.
Europe has allocated a trillion Euros to reach zero emissions by 2050 — while the US has pledged $US2 trillion.
And almost every major business in the world has committed to net zero emissions by 2050, including Australian companies marching ahead of government.
Catching up before it’s too late
These are laudable and genuine ambitions. But if we wait until 2050 to act, our planet will be toast.
We’re already way behind schedule.
The science says that to keep things halfway normal, we need to limit warming to 1.5 degrees. The science also says that to do this, we need to slash our emissions every year between now and 2030.
Because as of today, we’re heading for a 3 degree rise.
That’s how science works. You can predict it.
There’s only one solution, and it’ll require businesses to work closely with governments.
Green energies need to be available at an industrial, global scale — and at a price that competes with fossil fuels.
When fossil fuel energy becomes more expensive than renewable energy, that’s when we’ll reach the tipping point. That’s when the world will begin the journey in earnest to become zero-carbon.
Not only because it’s the “right” thing to do, but because it makes great sense.
And the shift will be lightning fast. Forget 2050 — zero emissions will begin to happen overnight.
That’s how capitalism works. You can predict that too.
Sensing a change in the global mood
One of my favourite songs is Tom Petty’s Runnin’ Down a Dream.
In the song, he’s chasing a dream that won’t happen unless he pursues it, wherever it leads. It’s a song that makes you feel like anything is possible.
We played it every time our plane took off on our recent five-month journey around the world.
We were searching for the best places on Earth for renewable energy.
I sensed a change in the global mood — this shift in belief — that the impossible could be possible. We could create sufficient green energy to challenge the oil sector.
America’s and Asia’s captains of industry met us with a tirade of enthusiasm for hydrogen, as did Europe.
In Bhutan, the Prime Minister opened the border for the first time in months — just to allow my team to enter. Any staff who met us had to then quarantine for three weeks.
If you’ve ever done quarantine, you’ll know what a sacrifice that was.
In Afghanistan, the Vice President showed huge conviction that his country could play a major role in the world’s march to green energy.
After surviving a bomb and a seven-minute gun battle, with bandages on his hands and burns to his face, he negotiated the final clauses of our sovereign agreement — just so the President, also one of the most selfless leaders I have ever met, could sign before we flew out.
On our way back, we took an unusual flight path out of Central Asia, from Kyrgyzstan to Seoul.
We saw thousands of wind towers and the foundations for what looked like tens of thousands more, on the Mongolian-Chinese border.
This is a massive move into green energy, and China is making it, without fanfare.
In short, my time on the road made me realise that our ambitions — while risky — were far from radical.
The question isn’t whether or not green hydrogen will become the next global energy form. It’s which company has the resilience to take the risk and truly test green hydrogen at global, industrial scale.
Steel is fundamental — and it can be green
The board and I decided that Fortescue would be that first mover.
Since then, we have locked in almost 300 gigawatts of power, almost four times what Australia can produce.
We have targeted hydro-electricity, generated by rivers, and geothermal, which taps into the heat from the Earth’s core, because these renewables work around the clock — unlike solar or wind, which we are also relying on.
Our final aim is 1,000 gigawatts of zero-emissions energy.
Most of the world’s iron ore formed roughly 3 billion years ago, when organisms first evolved the ability to make oxygen.
The oxygen reacted with iron, sinking to the bottom of the ocean and creating the rich deposits in the Pilbara we have today.
Ironically, this ancient event is what’s allowing us to modernise. Steel is fundamental to everything you see around you, from your home, to your car, the roads you drive on.
But right now, Australia makes barely any of that steel. We just dig up the iron ore, process it and export it.
In some ways, that’s a blessing: blast furnaces, where most steel is made, generate 8 per cent of global emissions, because coal is used in the process.
Now imagine if we could find a way to make “green” steel — zero-carbon steel — in Australia.
This isn’t a pipe dream, either. Enterprising businesses around the world, like Thyssenkrupp in Germany and Japan’s Nippon Steel, have already figured out the technology.
There are two ways.
In one, you replace coal in the furnace with our old friend, green hydrogen. You get steel — but instead of emitting vast clouds of CO2, you produce nothing more than pure water vapour.
To strengthen the steel, you simply add the carbon separately. It bonds into the metal rather than dispersing into the atmosphere. Beautiful.
The other way to make green steel, the more radical approach, is to scrap the blast furnace altogether and just zap the iron ore with renewable electricity.
We produce over 40 per cent of the world’s iron ore. Our potential green energy and hydrogen resources are immeasurable. And the timing is right.
If Australia were to capture just 10 per cent of the world’s steel market, we could generate well over 40,000 jobs — more than what’s required to replace every job in the coal industry.
Not any old jobs, but similar jobs — using similar skills. Construction workers, mechanics, electricians, engineers — all of the sectors that’ll be hit when coal is phased out.
And we would also produce a product that is so much more valuable than either coal or iron ore — green steel.
The immediate and multiplier impact on the Australian economy, if we get this right, could be nothing short of nation-building. We stand to lose tens of thousands of jobs if we don’t do this, but we stand to create hundreds of thousands of jobs if we do.
A future that doesn’t demand self-sacrifice
Let’s not underestimate the challenge.
The fossil fuel sector will react to falling green hydrogen prices by slashing the cost of oil and gas until it’s almost zero.
And Big Oil’s last stand will be to use fossil fuels to create “blue” hydrogen — storing the emissions in the ground and peddling it as clean energy.
But it’s not clean energy. So-called blue hydrogen just displaces the pollution from one part of the world to another.
It’s not just the oil companies we need to be wary of. Self-interest will be everywhere.
Elon Musk recently called hydrogen fuel cell cars — despite the 8 million that will be on the roads shortly — “mind-bogglingly stupid”.
He has every reason to fear them. His description is perhaps better suited to someone who peddles a battery technology as green when it runs on fossil fuel.
There are two possible futures ahead of us.
Fly less, drive less, slash your standard of living — but you’re still killing the planet.
Or the alternative one, that doesn’t demand such sacrifice. One where quality of life increases, and we reduce carbon emissions at the same time.
One where we decouple our economy — for the first time — from damage to our planet, damage that threatens our, and the Anthropocene’s, very existence.
I choose hydrogen. What do you choose?