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Tea Fortescue Metals Group Limited (ASX: FMG) share price is rallying on Tuesday morning even after Shell PLC (LON: SHEL) cast doubts on the miner’s green hydrogen plans.
Shell’s head of hydrogen, Paul Bogers, believes that it will be more difficult than anticipated for Fortescue’s chairman Andrew Twiggy Forrest to deliver on his ambitious agenda, The Australian reported.
“We like the enthusiasm for the venture…. But I think the reality is it’s still some time away before we can build these really large-scale ammonia-based import-export plays,” said Bogers.
“We’re not convinced that that is the best way of shipping hydrogen over longer distances, because of how much energy you have to put in creating it.”
Fortescue’s green hydrogen plans under a capex cloud
Several of Fortescue’s major shareholders and analysts have already expressed concern about the costs involved in bringing Twiggy’s green hydrogen dream to life. The iron ore miner is committing 10% of its net profit to its green energy business, Fortescue Future Industries.
An analysis by The Australian found that Fortescue will need around $195 billion to make good on Twiggy’s promises.
Fortescue’s share price unaffected by doubters
But investors don’t seem perturbed. The Fortescue share price jumped 1% to $21.41 in early trade. At the time of writing, it is 0.73% in the green at $21,345.
In comparison, the BHP Group Ltd (ASX: BHP) share price is down 0.48% at $51.43 while the Rio Tinto Limited (ASX: RIO) share price is 0.38% higher to $117.95 at the time of writing.
Mind you, Shell isn’t pouring cold water on green hydrogen. It’s only concerned about the speed that Twiggy wants to execute.
Keeping the dream alive
The billionaire businessman is also not put off by Shell’s comments. If anything, he said that Bogers’ remarks show action was needed now.
“It’s good to see Shell is acknowledging it’s going to happen, it’s now just a discussion on timing,” Twiggy said.
“We strongly encourage these massive fossil fuel companies to use their huge infrastructure, very talented people and massive renewable resources from our environment, as that is the only way to save our environment.
“They can create the energy the world needs, leaving their fossil fuel in the ground, because time will run out, long before oil does.”
Fortescue’s green hydrogen ambition
Twiggy wants to use renewable power, such as solar, to split hydrogen from water. Hydrogen can then be transported as ammonia.
Shell sees a future for green hydrogen, but it also wants to use other technologies such as carbon capture and storage.
Interestingly, Bogers acknowledged the role that Twiggy is playing as a green hydrogen evangelist. It is influential voices like his that will help bring change and accelerate the great energy transition, he said.