Spanish utility Iberdrola plans to build a €1.1bn ($1.17bn) green hydrogen plant in Tasmania, Australia, that would deliver hundreds of thousands of tonnes of green methanol to the shipping industry for use as a marine fuel.

Hydrogen: hype, hope and the hard truths around its role in the energy transition
Will hydrogen be the skeleton key to unlock a carbon-neutral world? Subscribe to the weekly Hydrogen Insight newsletter and get the evidence-based market insight you need for this rapidly evolving global market

The firm intends to partner up with local green fuels company Abel Energy to construct the Bell Bay Powerfuels project in Tasmania, with backing from the Australian government.

The first phase can be expected to deliver 200,000 tonnes of methanol per year, Iberdrola said, before being dramatically scaled up to 300,000 tonnes in its second phase.

But the company gave no details as to when the project can expect to come on line, or when it plans to take a FID.

And it is not clear where the project intends to source carbon dioxide to make green hydrogen-derived methanol, which is made by combining green H2 with CO2 — although the company may be able to find a supplier in the Bell Bay industrial complex on which the project is located.

The Iberdrola project joins a host of other schemes scoping out the Tasmanian government’s proposed Bell Bay Hydrogen Hub, which aims to funnel federal regional development cash to companies working on hydrogen projects in the Bell Bay industrial complex in northern Tasmania.

Andrew Forrest’s Fortescue Future Industries is working on a 250MW green hydrogen project in Bell Bay, which the company says will produce 250,000 tonnes of green ammonia for local use and export – however no announcement has been made on FID.

And Woodside Energy is vying for a slice of the Australian government’s A$70m (US$47m) renewable energy fund with its proposed 1.7GW H2TAS green H2 and ammonia scheme in the area, while Origin Energy this year completed a feasibility study into its nearby 500MW green hydrogen ammonia project.

Norway’s Equinor recently decided to back a multi-GW offshore wind farm in the area in the hope that it will supply green hydrogen production in Bell Bay.

The regional government has an ambitious 200% renewable energy target by 2040, with plans to utilise excess capacity to make green hydrogen that can be used domestically and exported abroad.

The project could end up benefitting from Germany's H2Global subsidy programme, which this week launched its first tenders for hydrogen-derived methanol.

But Iberdrola had words of caution for those in the hydrogen industry who advocate for its use in many sectors — without mentioning the viability of H2-derived marine fuels.

“The use of hydrogen should focus on applications where there are no other alternatives,” the company said. “That is, for the replacement of grey hydrogen (produced from fossil fuels) with green hydrogen (produced by renewables) in sectors where it is currently used, such as fertilisers, methanol or refineries.”

Methanol appears to be an early leader of the race to decarbonise shipping, with Danish shipping behemoth Maersk putting in orders for methanol-powered ships and tapping Spanish green hydrogen producers for up to two million tonnes of methanol supply.

This trend was not lost on Danish renewables giant Orsted, which earlier this week gave the go-ahead for investment on a massive green hydrogen-to-methanol plant in Sweden, that will supply fuels to the shipping industry.

UPDATED: corrected methanol production goals in paragraph 3