Andrew Forrest travels the globe trying to persuade leaders of industry and politics — and rank-and-file workers — that despite his polluting past he’s the man to champion green hydrogen as the clean fuel of the future.
More than a couple of the dozen or so coal-plant workers gathered at West Virginia’s Pleasants Power Station in April to hear Andrew Forrest push his green hydrogen agenda rolled their eyes as he spoke. “I believe this coal-fired power station has a huge future,” the Australian mining billionaire told them. The employees could be forgiven for their skepticism. Just weeks before, they learned their plant, surrounded by other closures throughout coal country, would be the latest to shut down.
Forrest’s message was heartfelt, contrarian and a bit pie in the sky. In West Virginia, the second-largest coal-producing region in the U.S., Forrest told the workers that 22 of the state’s 26 coal-powered plants could be converted to green hydrogen plants. Tell your family and friends, he said. Manufacturing zero-emission hydrogen would need boilermakers, carpenters and welders in this very spot. And not only them, but their children and grandchildren, who would help power America with a new energy source that when unleashed releases nothing but water vapor.
NOT ALL HYDROGEN IS THE SAME
Used heavily in oil refining, the chemical industry and food processing, nearly all hydrogen is made from natural gas and steam reformation, which splits hydrogen and carbon. This is known as “gray” hydrogen owing to its carbon dioxide emissions. If the carbon dioxide is captured, it is upgraded to “blue” hydrogen, a more environmentally-friendly profile. Green hydrogen, however, is made using an electrolyzer — which splits the hydrogen atoms from water — powered by renewable energy sources like wind or solar power.
Forrest, the richest man in Australia, faces incredulity in the U.S. not only because the honcho of the metals industry, which is responsible for a chunk of the planet’s carbon emissions, seems like an odd missionary for green energy, but also because the infrastructure to achieve his vision doesn’t exist yet. Forrest has yet to produce a molecule of hydrogen and a recent flurry of announcements are far from firm contracts. Two of his more high-profile fellow billionaires have spoken doubtfully about hydrogen and nobody has tried to produce it at the scale Forrest envisions.
Even so, Goldman Sachs estimates green hydrogen will become a $12 trillion industry by 2050. In spite of the naysaying, Forrest has become the world’s biggest booster, and most-traveled proponent, of green hydrogen, and says he’s on track to start producing it in commercial quantities by 2024.
“Here’s a CEO of a company from Australia coming on a private jet into West Virginia,” says Jay Powell, the Pleasants County Commission president, who joined Forrest on his visit to the plant. “When you’re talking about utilizing something we have here, that he wants, that certainly gives me and others within our community goosebumps.”
Seated in a palatial lounge at his beachside mansion in Perth, 11,000 miles from the coal plant, Forrest, who built the world’s fourth-largest iron ore company, Fortescue Metals Group, tells Forbes that places like West Virginia are ripe for his green hydrogen revolution. “It’s a myth to think [workers] are loyal to coal,” he says. “People are loyal to employment.”
To promote his hydrogen venture, Fortescue Future Industries, or FFI, Forrest has in the past year met with President Joe Biden, European Commission President Ursula von der Leyen and U.K. Prime Minister Boris Johnson, among other world leaders. His world tour has led to over a dozen non-binding commitments, including an agreement with Airbus to study how to make planes powered by hydrogen and a plan to send 5 million tons of green hydrogen to Germany by 2030 — around 30% of what the country needs to replace its reliance on Russian energy. FFI is also in talks to build a green hydrogen plant in Kenya.
FFI is entitled to 10% of Fortescue’s annual profit, almost $1 billion last year, and since launching in 2020, FFI has built proof-of-concept hydrogen-powered hauler trucks and drill rigs in record time and is expected to roll out similarly powered locomotives and ships by next year. Some of Fortescue’s mines are now powered primarily by solar energy and FFI is spending $83 million to build a facility to make its own electrolyzers, the machine that extracts hydrogen from water.
Such vast ambitions, and the challenge of building an industry from the ground up, has led some to ask whether Forrest is biting off more than he can chew. “That’s what we love about him,” says Mike Cannon-Brookes, a fellow Australian billionaire and co-CEO of software giant Atlassian, who has partnered with Forrest on a venture to send solar power to Asia. “He’s six parts moxie, seven parts bullshit, and some part of it’s going to come true — and we’ll figure it all out in 20 years time.”
There’s also a widely held view that hydrogen is inefficient as a power source. Green hydrogen has a round-trip efficiency between 18% and 46%, according to an MIT study, which found by comparison flow batteries used in cars have an efficiency rate between 60% and 80%. Another billionaire, Elon Musk, the world’s richest man, reiterated his longstanding position last month, saying that because of the amount of energy needed to produce it, hydrogen is “the most dumb thing I could possibly imagine for energy storage.”
Then there’s the argument that hydrogen production is founded on unsound economics. Given the affordability of other resources like gas, hydrogen won’t become truly marketable until government subsidies and investment arrive, says David Leitch, a Sydney-based energy analyst at ITK Services. The Australian government, for example, has so far shown little interest in seriously subsidizing green hydrogen.
Forrest shrugs that off and points to coal. Coal in the U.S. is also grossly inefficient — about 33% after converting back to power. It’s also among the most heavily subsidized industries in the world. The International Monetary Fund found the fossil-fuel industry received $5.9 trillion in subsidies worldwide in 2020. As for Musk’s love of batteries, Forrest says the Tesla billionaire is depending on something with a finite life, with finite quantities. “We have an infinite life and an infinite commodity in hydrogen,” Forrest says.
To cement his pitch, Forrest is seeking buy-in from the U.S, and by the time he left Pleasants Power Station, the workers weren’t the only skeptics Forrest appeared to have won over. He met that day with Sen. Joe Manchin (D-W.Va.), whose staunch defense of the coal industry is the sharpest thorn in Biden’s plans to move the U.S. to a green future. Forrest’s “investments in hydrogen and other clean energy technologies have the potential to be transformative in Australia, the U.S. and around the world,” Manchin’s spokesperson Sam Runyon said in a statement.
The day after visiting West Virginia, Forrest met with Biden for 45 minutes, and Forrest says the president was satisfied “that this was a future for North America.” The White House did not respond to a request for comment.
Forrest has loomed large in Australia for decades. Known by his nickname “Twiggy,” a play on his family name and the fact he was a skinny kid, he has used his vast mining fortune, which Forbes estimates at $18 billion, to become the country’s most active philanthropist, and has crafted a public image as a knockabout Aussie bloke, often seen in press photos wearing high-visibility vests and talking to miners. With a demeanor that can morph from grin to jaw clench in an instant, Forrest tells Forbes that FFI is his way to leave the Earth better than he found it. “I’m not a person who just says, ‘OK, I’ve achieved everything, I’m now going to sail off playing tennis on the back deck of a yacht,’” he says. “I just want to live a useful life.”
A few miles from Forrest’s beachside compound, Perth’s tallest skyscrapers bear the names of the world’s mining giants: Rio Tinto, BHP and Woodside. It was here that Forrest got his start as a mining tycoon. A descendant of the first governor of Western Australia, the Forrest name is all over the region, on street signs, neighborhoods and national parks. Growing up, Forrest spent a lot of time on his family’s pastoral station, Minderoo — about three times the size of New York City — where he mustered cattle on horseback. After graduating from the University of Western Australia with a degree in economics and politics he worked as a stock broker before buying into and becoming the CEO of Anaconda Nickel in 1993 — a venture that would nearly ruin him.
He was ousted from Anaconda a decade later, amid bad bets, mounting debt and project delays, but reemerged in 2002 at the helm of Fortescue Metals Group, which he started by buying a small mining exploration company. His new vision was based on a hunch: For years, he believed there was potential to drill holes in the Pilbara region of Western Australia, an area he knew well from his time growing up on Minderoo. There were deposits of iron ore there. It was just that Rio Tinto and BHP had overlooked them.
Forrest’s tendency to ignore guidance would later prove fortuitous. Fortescue rode a wave of Chinese demand for iron ore, which drove the price of the commodity from $30 to $200 a ton in 2008, when the company began shipping. When Forrest stepped down as CEO and became chairman in 2011, Fortescue had generated $5.5 billion in revenue and $1 billion in profit. Now Australia’s eighth-largest company, Fortescue is valued at $42 billion, and generated $9 billion net income last year.
Becoming a mining magnate and building one of the world’s largest iron-ore producers — and one of Australia’s largest carbon polluters — meant that saving the planet from climate change wasn’t always top of mind for Forrest. But after stepping back as CEO, Forrest and his wife Nicola spent more time on their philanthropic arm, the Minderoo Foundation, to tackle big issues. Global warming was chief among them.
In 2016, Forrest embarked on a four-year doctorate in marine ecology at the University of Western Australia, a time when he was instructing his team to look into technology that could transport hydrogen and ammonia, and whether scaling solar power was possible. He realized “just how vicious the grip the fossil-fuel sector has on the future of everyone on this planet,” Forrest says. By 2020, the stage was set for Forrest to launch FFI.
Forrest has contended with a noisy chorus of cynicism at home. The “greenwash of the century,” one columnist wrote after FFI launched. The writer added that, aside from mining tycoon Gina Rinehart, “no Australian has ever caused more damage to the environment than Andrew Forrest, and with the same exception, no Australian has ever made more money doing so.”
Forrest is unapologetic about his rise. When asked what he makes of the notion that he has amassed his fortune using fossil fuel, his expression turns to steel. “I’d say, who the fuck hasn’t?” he says. “It’s because I have done something, because I’ve traded major industry, major manufacturing and major energy consumption, that I get listened to when I say to the energy manufacturing industry: We’re going green.”
Fortescue Future Industries has two mandates: to develop hydrogen-powered infrastructure and vehicles to decarbonize Fortescue’s operations by 2030 and, separately, to produce and sell 15 million tons of green hydrogen and green ammonia a year.
At a sprawling warehouse on the outskirts of Perth, Jim Herring, who oversees FFI’s research and development as head of green industry, is looking onto a vast lot where a white hauler truck is circling. Using hydrogen produced by a third party, the truck can run for 20 minutes before it needs to be refueled, but is a proof-of-concept that Herring’s team built last year in less than 100 days. His team is building prototype hydrogen-powered engines for locomotives and ships that he plans to reveal in the next 12 months. Last week, FFI said it purchased 120 hauler trucks — about half the size of Fortescue’s current fleet — to retrofit with FFI’s hydrogen-powered engines.
“When I saw all those engines running pollution free, I thought, ‘We finally have the smell of the future: no smell. The sound of the future: no sound,’” Forrest says. “‘And a sign of the future: Just as, if not more, efficient than oil and gas or coal.’”
Unlike blue or gray hydrogen — which both emit carbon — making green hydrogen produces no carbon, but it requires gargantuan resources. When paired with renewable energy like wind or solar power, a machine called an electrolyzer is used to split water into hydrogen. Then, either in gaseous form, in liquid form — stored at sub-250 degrees — or along with ammonia, the hydrogen is then transported in tanks loaded on ships, trains or trucks. When the electron-rich fuel is used in a fuel cell to make electricity, water vapor is the only emission.
The hydrogen-powered hauler trucks are the first small steps of what Forrest hopes will be an industry he effectively builds from scratch, powering everything from ships to planes. To underscore Forrest’s belief, FFI has hired almost 1,000 people in the past year and installed energy industry leaders, including Mark Hutchins, the former president and CEO of General Electric Europe, to join FFI as CEO.
While Forrest has been busy drumming up support across the world, at FFI headquarters, its global ambitions are made clear. Glass-walled rooms are marked by the country team operating in them: Jordan, Democratic Republic of the Congo, Argentina. But it’s in the U.S. that FFI sees the greatest opportunity. “We can make it in America, and we can sell it in America,” says Julie Shuttleworth, FFI’s outgoing CEO. “The U.S. is everything.”
To prosecute his clean energy dreams, Forrest will have to overcome technical challenges facing hydrogen. Companies like Toyota and Hyundai are investing billions into developing consumer vehicles powered by hydrogen, and Japan has become a leading advocate, deploying hydrogen-powered buses at the Tokyo Olympics and fueling the Olympic flame with the gas.
There’s enthusiasm for green hydrogen in the European Union, which is pushing energy producers to make 10 million tons of green hydrogen annually by 2030. The same is true of the U.S., where in February Biden announced $9.5 billion in subsidies for the hydrogen sector, aiming to bring down the price of the resource from around $5 per kilogram to $1 over the next decade and make it competitive with gas. In the U.S., green hydrogen also has avoided becoming a political lightning rod, says Andy Marsh, the CEO of New York-based green hydrogen company Plug Power, who has partnered with Forrest to build his electrolyzers.
There’s even been buy-in from the fossil-fuel industry. Last week, oil giant BP announced it was taking a 40% stake in the Asian Renewable Energy Hub, a $30 billion venture to cover 2,500 square miles of Western Australia with wind turbines and solar farms to produce 26 gigawatts of power — around a third of Australia’s entire grid — for electrolyzers that will make green hydrogen.
But other observers are taking a wait-and-see approach. Cannon-Brookes, a co-investor with Forrest in a $30 billion project named Sun Cable, which is building the largest solar farm in the world to send power to Asia via undersea cable, isn’t completely sold: The infrastructure to power Forrest’s vision with renewable energy does not yet exist. “Theoretically on paper it could,” he says. “It might just take another five to 10 years to run through all the scales to introduce it.”
If Forrest is concerned by the skepticism around his big bet, he hasn’t shown it, and his hurricane-style world tour has continued. In May, Forrest joined a coalition of industry players at the Green Hydrogen Global Assembly in Barcelona to set a goal to produce 100 million tons of green hydrogen globally by 2030, up from 100,000 tons today.
When a global standard was released, Forrest’s swagger was on full display, and in front of hundreds of people, he and Teresa Ribera, the deputy prime minister and ecological transition minister of Spain, danced to the Hamilton song “The Room Where It Happens.”
“We had a lot to celebrate,” Forrest told Forbes last week in New York. “So we danced.”
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Source: https://www.forbes.com/sites/davidjeans/2022/06/21/andrew-forrest-green-hydrogen-australian-billionaire/