The $147 billion green hydrogen bubble that BP helped burst

AUSTRALIAS long-held ambitions to tap its abundant renewable resources and vast uninhabited landmass to become a global green hydrogen leader are fast unraveling.

- BLOOMBERG

Despite strong government backing and significant private sector interest, at least seven big hydrogen production projects have been delayed, scaled back, or canceled in the last year.

Chief among them was BP Plc’s decision last week to exit a $36 billion (R468bn) facility in the Pilbara region of Western Australia, which had targeted starting production this decade.

Around the world, project withdrawals have accelerated as developers struggle to secure customers willing to pay a premium for the fuel.

Costs remain persistently high, unlike the sharp price drops seen in solar and wind that have boosted their competitiveness.

That's raised concerns about the feasibility of using renewable energy to produce hydrogen that can be stored, transported and consumed like a fossil fuel to help nations meet net zero goals. It also looks set to make Asia's goal of cutting hard-to-tackle emissions tougher to achieve.

“This isn’t just an Australian issue - there has been a slowdown in development globally, in large part because the cost hasn’t come down as fast as previously forecast,” said Simon Nicholas, an analyst at The Institute for Energy Economics and Financial Analysis, a think tank that seeks to accelerate the energy transition.

“I hope that the bursting of the hydrogen hype bubble is an opportunity for a reset”

There are more green hydrogen projects under development in Australia than in any other country, with a A$225 billion (R2.6 trillion) pipeline worth of proposed projects, according to the government.