Fortescue Cancels Green Hydrogen Projects Amid Policy Shifts

In a significant setback for renewable energy initiatives, Fortescue Metals Group has announced the cancellation of two major green hydrogen projects, one located in Gladstone, Australia, and the other in Arizona, USA. This decision comes in the wake of a shift in energy policy under the Trump administration, which, according to Fortescue executives, has created an uncertain environment for the development of green energy projects.

Gus Pichot, Chief Executive of Growth and Energy at Fortescue, stated that the change in U.S. policy priorities has directly impacted their plans for a USD 550 million green hydrogen production facility in Arizona. “The lack of certainty and a step back in green ambition has made it hard for previously feasible projects to proceed,” Pichot remarked during a press conference on July 25, 2025. This cancellation reflects a broader trend of stalled hydrogen projects across Australia, raising concerns about the future viability of green hydrogen as a clean fuel alternative.

The Gladstone PEM50 project was anticipated to produce up to 8,000 tonnes of green hydrogen annually. Pichot explained that the decision was part of a strategic shift away from using electrolysers for hydrogen production. Electrolysers, which split water into hydrogen and oxygen using electricity, have been considered vital for generating zero-emission fuels. However, Fortescue is now focusing on advancing technologies that can provide low-cost hydrogen suitable for industrial applications in Australia.

The implications of these cancellations extend beyond Fortescue. Simon Nicholas, a global steel sector analyst at the Institute for Energy Economics and Financial Analysis, commented, “There has clearly been way too much hype surrounding green hydrogen. Politicians need to focus on more practical applications, such as its use in steel production or replacing hydrogen derived from gas for fertilisers.”

The Australian federal government has expressed disappointment over the cancellation of the Gladstone project, emphasizing the importance of green hydrogen in achieving a net-zero future. A spokesperson for Tim Ayres, the federal industry minister, affirmed that green hydrogen remains essential for manufacturing and the nation's broader industrial goals. “Australia has one of the best hydrogen development opportunities in the world,” the spokesperson noted, highlighting the government's commitment to supporting hydrogen initiatives despite setbacks.

Fortescue had previously secured AUD 44.9 million in government funding for a separate project, the Gladstone Electrolyser Facility, as part of Australia's modern manufacturing initiative. However, the cancellation of the PEM50 project may impact this grant, prompting discussions between Fortescue and government officials regarding the potential recoupment of funds.

As Fortescue looks at alternative uses for the affected sites, Pichot remains optimistic about the company's green metals project in the Pilbara region, indicating that while costs for green hydrogen may decrease over time, a disciplined approach is necessary.

The situation highlights the challenges facing the green hydrogen sector amid shifting political landscapes and the need for clearer policies to support sustainable energy initiatives. Industry experts advocate for targeted subsidies that align with realistic applications of green hydrogen, emphasizing the necessity for government and industry collaboration to ensure the viability of future projects.

In conclusion, the cancellations of Fortescue's green hydrogen projects underscore the critical need for stable policy frameworks to foster renewable energy development. As global energy landscapes evolve, the role of green hydrogen remains pivotal, yet its success will depend on strategic investments and a commitment to sustainable practices across various sectors.