DAVOS, Switzerland, Jan 24 (Reuters) - Replacing fossil

fuels with green hydrogen depends on creating demand by making

it price competitive, as buyers are unwilling to pay "green

premiums", Fortescue Energy CEO Mark Hutchinson told Reuters in

Davos.

Green hydrogen is created by splitting water into hydrogen

and oxygen using renewable electricity. It can then be used as a

power source itself or to make carbon-free ammonia, a major

ingredient in agricultural fertilizers.

Electrolyzers that split hydrogen are costly, and government

subsidies to reduce these costs for companies have not come

through as they were expected to, Hutchinson told the Reuters

Global Markets Forum.

"(The) green hydrogen, ammonia (sector) is not where we

thought it would be," the CEO said on the sidelines of the World

Economic Forum's annual meeting in the Swiss resort on Thursday

"The demand hasn't emerged in the way it should, (but) over

the next few years we're hoping demand will (rise) as prices

come down," he said.

"If you're waiting for someone to pay you extra because it's

green, forget it ... at the end of the day, the economics have

to work," he added.

Fortescue Energy, the green energy arm of Australian iron

ore miner Fortescue's, said in July that it was

unlikely to meet its target of producing 15 million metric tons

of green hydrogen by 2030.

A backlash against environmental-driven business decisions

has been compounded by Donald Trump's return to the White House,

with the U.S. president declaring an energy emergency and

rolling back green policies shortly after taking office.

Hutchinson said a push for green energy could take a back

seat during Trump's term, but it is up to the industry to make

it an economic discussion, not just "about saving the planet".

However, the company's focus on "green iron" has risen

significantly over the past year, despite the demand worries.

Green iron is produced by reducing iron ore using hydrogen

gas, which is then converted into steel in an electric arc

furnace.

The production of steel, a key material for infrastructure

and the net-zero energy transition, currently contributes around

8% of global carbon emissions.

Hutchinson said final investment approvals were still

pending for green hydrogen projects in Norway and Brazil,

originally due in 2023, with Fortescue Energy waiting to bring

in more investors.

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