Origin Energy is abandoning its ambitious plans to develop hydrogen in the country’s industrial heartland in another blow to the Albanese government’s dreams for the energy source to help drive the transition to net zero.
The group said on Thursday that the decision to exit the proposed Hunter Valley Hydrogen Hub project reflected uncertainty around the “pace and timing of development of the hydrogen market” and the risks associated with developing capital-intensive projects of this nature.
It comes after billionaire Andrew Forrest earlier this year cancelled his own green hydrogen targets in a major business backdown that resulted in the loss of 700 jobs at his flagship company Fortescue.
Origin chief executive Frank Calabria says the company had worked hard to evaluate the investment case for hydrogen and continued to believe hydrogen could play a role in the future energy mix.
“However, it has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome,” said Mr Calabria. “The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project.”
The Hunter Valley Hydrogen Hub project was touted as being able to “deliver a safe, reliable, and commercial-scale hydrogen supply chain” in the Newcastle industrial and port precinct. Located on Kooragang Island, phase one of the project aimed to decarbonise part of Orica’s nearby ammonia manufacturing plant natural gas feedstock with hydrogen.
The Orica plant on Kooragang Island in Newcastle.
The Orica plant on Kooragang Island in Newcastle.
Some hydrogen produced would also have been made available as a fuel for buses and trucks, displacing the use of diesel. The decision is the latest blow to Labor’s emissions transition plans, with the government providing $8bn in investment and support for hydrogen production as part of a push for Australia to become a key player in global efforts to achieve net zero.
The Hunter Valley project received $70m in funding from the Federal Government as part of its regional hydrogen hubs program. This program is investing more than $500 million in up to seven hydrogen hubs across the country. Hydrogen hubs are locations where producers, users and exporters of hydrogen work side-by-side to share infrastructure and expertise.
Mr Calabria said the decision to exit also reflected the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s investment strategy focused on renewables and storage.
“This can best support the decarbonisation of energy supply and underpin energy security over the near-term,” he said.
“Origin has been closely following the global development of hydrogen technology and markets over the past four years, and we have evaluated a range of options across several jurisdictions. We acknowledge there will be some disappointment at this decision and are grateful for the opportunity to evaluate the feasibility of this project in conjunction with Orica.”
Orica CEO Sanjeev Gandhi said while disappointed, Orica respects Origin’s decision and is grateful for the progress the two companies made in advancing Australia’s hydrogen initiatives.
“We remain committed to exploring new opportunities in this promising sector,” he said.
“We’ve been operating our Kooragang Island site for over 50 years and are committed to ensuring both our manufacturing facility and the Hunter Valley region remain competitive in a low carbon economy, while also strengthening Australia’s domestic manufacturing capability. Mr Gandhi also acknowledged the support of both the Federal and the NSW governments for the Hunter Valley Hydrogen Hub project.
“Orica looks forward to continuing the collaboration with ministers and responsible agencies on the transition of Orica’s Kooragang Island manufacturing facility and the Hunter Valley region,” he said.
“We remain open to discussions with interested parties who share our vision for a sustainable energy future and Australia’s hydrogen economy”.
In July, Dr Forrest launched a sweeping restructure at Fortescue in July in the face of the company’s failure to deliver on its green-energy promises. Up to 700 jobs would go in the massive cutbacks after the iron ore mogul pulled back from the company’s goal of producing 15 million tonnes of green hydrogen a year by 2030.
The billionaire had earlier boasted that the company’s green-energy ambitions would one day make it bigger than Saudi energy giant Aramco.
SoggyNegotiation7412 on
lots of video’s on youtube from experts in the industry that explain why hydrogen, although green is the least efficient way of doing this. You would be better off using a liquid oxygen storage system as you have zero logistics.
BTW the Chinese are building liquid oxygen storage systems for nighttime/bad weather power.
Gorogororoth on
Temporarily exiting hydrogen to focus more on other renewables & storage tech, they’re still moving away from fossil fuels and still not putting any time into nuclear.
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Origin Energy is abandoning its ambitious plans to develop hydrogen in the country’s industrial heartland in another blow to the Albanese government’s dreams for the energy source to help drive the transition to net zero.
The group said on Thursday that the decision to exit the proposed Hunter Valley Hydrogen Hub project reflected uncertainty around the “pace and timing of development of the hydrogen market” and the risks associated with developing capital-intensive projects of this nature.
It comes after billionaire Andrew Forrest earlier this year cancelled his own green hydrogen targets in a major business backdown that resulted in the loss of 700 jobs at his flagship company Fortescue.
Origin chief executive Frank Calabria says the company had worked hard to evaluate the investment case for hydrogen and continued to believe hydrogen could play a role in the future energy mix.
“However, it has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome,” said Mr Calabria. “The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project.”
The Hunter Valley Hydrogen Hub project was touted as being able to “deliver a safe, reliable, and commercial-scale hydrogen supply chain” in the Newcastle industrial and port precinct. Located on Kooragang Island, phase one of the project aimed to decarbonise part of Orica’s nearby ammonia manufacturing plant natural gas feedstock with hydrogen.
The Orica plant on Kooragang Island in Newcastle.
The Orica plant on Kooragang Island in Newcastle.
Some hydrogen produced would also have been made available as a fuel for buses and trucks, displacing the use of diesel. The decision is the latest blow to Labor’s emissions transition plans, with the government providing $8bn in investment and support for hydrogen production as part of a push for Australia to become a key player in global efforts to achieve net zero.
The Hunter Valley project received $70m in funding from the Federal Government as part of its regional hydrogen hubs program. This program is investing more than $500 million in up to seven hydrogen hubs across the country. Hydrogen hubs are locations where producers, users and exporters of hydrogen work side-by-side to share infrastructure and expertise.
Mr Calabria said the decision to exit also reflected the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s investment strategy focused on renewables and storage.
“This can best support the decarbonisation of energy supply and underpin energy security over the near-term,” he said.
“Origin has been closely following the global development of hydrogen technology and markets over the past four years, and we have evaluated a range of options across several jurisdictions. We acknowledge there will be some disappointment at this decision and are grateful for the opportunity to evaluate the feasibility of this project in conjunction with Orica.”
Orica CEO Sanjeev Gandhi said while disappointed, Orica respects Origin’s decision and is grateful for the progress the two companies made in advancing Australia’s hydrogen initiatives.
“We remain committed to exploring new opportunities in this promising sector,” he said.
“We’ve been operating our Kooragang Island site for over 50 years and are committed to ensuring both our manufacturing facility and the Hunter Valley region remain competitive in a low carbon economy, while also strengthening Australia’s domestic manufacturing capability. Mr Gandhi also acknowledged the support of both the Federal and the NSW governments for the Hunter Valley Hydrogen Hub project.
“Orica looks forward to continuing the collaboration with ministers and responsible agencies on the transition of Orica’s Kooragang Island manufacturing facility and the Hunter Valley region,” he said.
“We remain open to discussions with interested parties who share our vision for a sustainable energy future and Australia’s hydrogen economy”.
In July, Dr Forrest launched a sweeping restructure at Fortescue in July in the face of the company’s failure to deliver on its green-energy promises. Up to 700 jobs would go in the massive cutbacks after the iron ore mogul pulled back from the company’s goal of producing 15 million tonnes of green hydrogen a year by 2030.
The billionaire had earlier boasted that the company’s green-energy ambitions would one day make it bigger than Saudi energy giant Aramco.
lots of video’s on youtube from experts in the industry that explain why hydrogen, although green is the least efficient way of doing this. You would be better off using a liquid oxygen storage system as you have zero logistics.
BTW the Chinese are building liquid oxygen storage systems for nighttime/bad weather power.
Temporarily exiting hydrogen to focus more on other renewables & storage tech, they’re still moving away from fossil fuels and still not putting any time into nuclear.