In recent months, a number of high-profile green hydrogen projects, both here in Australia and overseas, have been either postponed or shelved entirely. The reasons vary, but the core challenges are consistent: escalating costs, immature supply chains, technological hurdles, and the harsh economic realities of scaling up an industry from scratch.
Projects on Pause
One of the most notable recent announcements came from Fortescue, one of Australia’s most vocal advocates for a green hydrogen future. In February 2024, Fortescue Future Industries (FFI) confirmed it was putting its $1 billion Gibson Island green hydrogen and ammonia project in Queensland “on hold.” The company cited concerns about the project’s economic viability under current market conditions. Fortescue’s founder, Andrew Forrest, who has long promoted green hydrogen as central to the future of clean energy, acknowledged that making these projects work financially in the near term is proving much more difficult than anticipated.
This announcement follows a broader trend. BP’s $4 billion Australian Renewable Energy Hub in Western Australia, once touted as a world-leading green hydrogen and ammonia export facility, has also faced delays, with BP Global Chief Murray Auchincloss recently telling investors that the Company moved ‘too far and too fast’ down the Clean energy transition path. BP has scaled back initial plans as feasibility studies reveal logistical and economic challenges that are hard to overcome without sustained government support or significant shifts in market demand.
Internationally, similar headwinds are blowing. In Europe, Shell has paused its involvement in the NortH2 green hydrogen project in the Netherlands, citing “uncertain economic prospects.” In the US, Plug Power announced in late 2023 that it would delay several of its planned green hydrogen plants due to financing constraints and rising costs for renewable electricity, a critical input for producing green hydrogen.
Trials and Tribulations in Heavy Transport
“Here in Australia, the excitement around hydrogen-powered heavy vehicles is also being tempered by some hard-learned lessons from recent trials”, said ACAPMA CEO Mark McKenzie.
Several Australian operators have participated in demonstration projects using hydrogen fuel cell electric trucks and buses. However, many of these trials have exposed significant reliability issues. Operators have reported frequent breakdowns, maintenance difficulties, and challenges sourcing spare parts.
“The complexity of these vehicles and the lack of local technical support have made maintaining operational fleets extremely difficult”, said Mark McKenzie.
One clear example is the experience of Hyzon Motors Australia, currently the country’s only active supplier of hydrogen-powered trucks. While Hyzon has made commendable progress introducing hydrogen trucks into Australian fleets, it has faced challenges ensuring vehicle uptime and meeting the high warranty and maintenance costs associated with early-stage technology. The company’s 2023 restructuring, which included withdrawing from some international markets, has been partly driven by these factors.
“The high costs of maintaining hydrogen trucks—combined with limited refuelling infrastructure and the high price of green hydrogen itself—have made the business case for fuel cell vehicles increasingly hard to justify in the near term”, said Mark McKenzie.
As a result, many fleet operators are reconsidering their strategies, with battery-electric and renewable biodiesel options gaining traction as more immediate and viable alternatives.
A Shift in Focus: Synthetic Fuels and Green Hydrogen
While the short to medium-term prospects for hydrogen fuel cell electric drive-trains in trucks and buses appear pessimistic, it would be a mistake to write off green hydrogen altogether.
“There remains a significant opportunity to pivot towards using green hydrogen in synthetic fuel production, specifically synthetic diesel, to dramatyically reduce GHG emissions from the Nation’s trucks and buses – both old and new”, said Mark McKenzie.
Synthetic diesel, or e-diesel, is produced by combining green hydrogen with captured carbon dioxide through processes like Fischer-Tropsch synthesis. This fuel is chemically similar to traditional diesel and can be used in existing internal combustion engines without modification, offering an attractive pathway for decarbonising the heavy transport sector without the need for costly new vehicle technologies and infrastructure.
Several global projects are exploring this potential.
Porsche and Siemens Energy, for example, have developed the Haru Oni pilot project in Chile, producing synthetic e-fuels using wind power and green hydrogen. While currently on a small scale, the project points to a future where green hydrogen plays a role in producing drop-in fuels that leverage existing vehicle fleets and refuelling networks.
For Australia, the prospect of domestically producing synthetic diesel could present a strategic opportunity. Not only could it help the nation reduce its reliance on imported refined fuels, but it could also provide a new pathway for utilising its vast renewable energy resources in a commercially viable way.
The economics of synthetic diesel, also known as e-diesel, currently present significant challenges when compared to conventional diesel, particularly within the Australian transport sector. The production costs of synthetic diesel are substantially higher than those of traditional fossil fuels, creating a notable disparity that impacts its current commercial viability.
“The unit cost of e-fuels remains substantially higher than conventional diesel suggesting there is a need for greater government and industry investment in pilots of this fuel to better understand the long term production economics – variable fuel taxes may also have a role to play in the early adoption of clean diesel blends”, said Mark McKenzie
Conclusion
Green hydrogen’s journey was never going to be simple, and recent developments have made it clear that the road to scaling hydrogen-fuelled heavy transport is longer and rougher than early advocates anticipated. However, by shifting the focus toward the production of synthetic fuels, there’s an opportunity to leverage green hydrogen in ways that align better with existing transport realities.
“ The near-term outlook for hydrogen-powered trucks and buses may be dim, but the story of green hydrogen is far from over”, said Mark McKenzie.
“It’s just taking a different route – one that may ultimately deliver the emission reductions we need, through fuels we already understand how to use”, concluded Mark McKenzie.
ACAPMA
