About cancellation of Hydrogen projects

Recently, the international energy press has been publishing announcements of major companies suspending or even canceling major projects and investments in the hydrogen sector. The main arguments, depending on the jurisdiction, range from legal uncertainty, drastic changes or lack of clarity in tax incentives, lack of long-term offtake contracts, insecurity in the supply of inputs such as electricity, and geopolitical instability, among others.

This is the case, for example, with Fortescue, an Australian mining giant, which is currently completing studies for the installation of a massive hydrogen electrolysis production project at the Pecém Industrial Port Complex for export purposes. Incidentally, this project has been repeatedly maintained by the company.

According to the online magazine Hydrogen Insight, Fortescue announced on July 24th the accounting write-down of 150 million US dollars corresponding to the cancellation of two projects that had already been approved in November 2023 by the Board of Directors, one being an 80MW project in Arizona, USA and another of 50MW in its home country.

During the quarterly earnings report, however, Agustín (Gus) Pichot, Chief Growth and Energy Officer, a former Argentine national rugby player, firmly stated that this was not a resignation. According to him, "green energy and hydrogen are key to our future, including our green metal strategy. The technology is improving rapidly. Costs will fall and the market will follow, but we must be realistic and disciplined. Therefore, we will review and reevaluate the future and timeline of our global projects to ensure economic viability and deliver value to our shareholders," the executive said.

In another context, some oil and gas giants, such as bp and Shell, have been revising their investment plans, reducing allocations to renewable energy and hydrogen projects, according to recent announcements. The stated reasons are a realignment of shareholder earnings expectations.

Despite the apparent frustration regarding the projects, the renewables and hydrogen sector does not appear to be slowing down, as can be seen, for example, in the increased global production of electrolyzers, solar panels, and wind turbines, as well as investments in new technologies related to decarbonization, such as CCS, natural hydrogen, and offshore wind, according to reports from organizations such as the IEA (International Energy Agency) and IRENA (International Renewable Energy Agency).

These topics will be analyzed in detail by experts and authorities during the 4th Brazilian Hydrogen Congress, hosted by ABH2 in Brasília. Watch out for the 11:30 a.m. lecture preceding the panel "Opportunities and Challenges for the Electricity Sector for Hydrogen" on Friday 24/7, the third and final day of the event.

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About the author:

Carlos Peixoto is co-founder and CEO of H2helium, maintainer of RADARH2