From Manhattan Contrarians
Francis Menton
Come here for the latest news on how the so-called “energy transition” is stalling. No amount of government handouts can make this extremely uneconomic fantasy come true. My last article on this topic, on July 20, reported on the collapse of a large “green hydrogen” project in Australia, with an alleged investment loss of approximately US$2 billion (Australian) (equivalent to approximately US$1.3 billion).
It seems this is just the tip of the iceberg. Today's [August 19th~editor] The Wall Street Journal did a massive roundup of the financials of a half-dozen or so so-called “clean fuels” projects. The titles in the print and online editions tell you what you need to know. The print version (page B3) reads “Clean fuel startups start to fail.” On the Internet, it’s “clean fuel startups that were supposed to be the next big thing. Now they’re crashing. As the headlines show, almost all of these “clean fuel” businesses are failing. Who would have thought?
The magazine's “clean fuels” label covers two different categories, one is biofuels and the other is so-called “green hydrogen” (a substance produced by electrolyzing water using wind or solar power). The biofuels category seems to include such genius ideas as making fuel for planes or ships from waste cooking grease. Whatever you think of the idea, these are still carbon-based fuels, and it's not at all clear to me why they are considered “cleaner” than other carbon-based fuels like oil or natural gas.
Hydrogen, on the other hand, has the potential to power planes, trains, boats, and automobiles without producing horrific “carbon emissions.” Just hook up some solar panels or wind turbines to a large electrolyser and watch these things bubble out of the water for almost free! The egregiously misnamed Inflation Reduction Act provides billions of dollars in subsidies for such projects. Of course, by this time, success should be happening one after another.
It turns out that no matter how many government subsidies there are, no one can make this “green” hydrogen as cheaply as drilling for rock to produce natural gas.
Plug Power is one of the big green hydrogen startups. The Wall Street Journal quoted CEO Andy Marsh as saying:
“The early excitement did not live up to the hype,” said chief executive Andy Marsh. plug powera startup recently opened one of the country’s first plants to produce green hydrogen, Potential alternatives to fossil fuels In steelmaking, chemical and other industries. Plug Power shares plummet more than 90% Since the bill was passed US climate law Two years ago.
Well, at least they're not bankrupt yet. You do wonder how Mr. Marsh qualified to be the CEO of such a company and raise hundreds of millions of dollars in investor funding without crunching the numbers to realize that green hydrogen will never be economical. Could it be that his business plan all along was to pay himself a large salary out of investors' money and then walk away when the inevitable bankruptcy came?
Here are a few paragraphs from the Wall Street Journal summarizing the overall state of the industry:
Many clean fuel projects have become money pitin part because they require large amounts of electricity. High interest rates, supply chain disruptions and expensive grid upgrades Pushed up electricity prices. . . . “The only way to solve this problem is to reduce the cost of green electricity,” said Andrew Forrest. The most vocal advocate hydrogen.
Wait a moment. Andrew Forrest – Where have we heard this name? Oh, he's an Australian tycoon named “Twiggy”. He is the head of Fortescue and the subject of my July 20th post over the failure of his massive Australian green hydrogen scheme. The Wall Street Journal continued to introduce some details of “Twiggy”’s ongoing green hydrogen project:
Forrest, billionaire founder of Australian iron ore giant fortescuesaid his company's 2030 hydrogen production target now looks unrealistic. Fortescue plans to produce its own clean energy to make hydrogen in Australia and is considering doing so in arizona.
But somehow the Wall Street Journal failed to mention the failure of Forrest's big Australia project. Did they interview him a month ago, before that?
Therefore, it is likely that no one will be able to produce these “clean fuels” economically. result:
Without clean fuels, emissions from many companies are expected to continue to climb, Threatens U.S. and global climate goals. Industries such as aviation and shipping are relying on new fuels as wind, solar and batteries fail to meet their needs Huge energy demand.
When can we declare this whole charade over?
Update August 20: Commenter Pablo Honey said it might be interesting to look at the financials of one of the “clean fuel” companies. The following is Plug Power's second quarter financial report for 2024 released on August 8. “Earnings” – Net loss of $262.3 million.
Margins: “Georgia factory capacity increases and strategic price increasesThe entire hydrogen product portfolio Significantly improved hydrogen profits. So they are raising prices to levels that are multiples of the price of natural gas with the same energy content. It would be good for them if they could get someone to pay for it, but it essentially means their market is limited to buyers who need hydrogen for its non-energy properties (i.e. fertilizer), or those who want to because of religious beliefs And give up profits to buyers.
Materials distributed by the government: “Plug Power becomes one of the first companies to leverage PTC [Production Tax Credit] Optimize financial performance and increase shareholder value for its liquid hydrogen plant in Georgia. . . . Plug Power is making progress with a U.S. Department of Energy loan designed to support the expansion of its green hydrogen program and infrastructure to up to six sites.
Relevant
