Hydrogen haulage is a nascent technology, with just a handful of hydrogen-powered trucks on Australia’s roads. While total cost of ownership (TCO) is better than for diesel vehicles, it currently lags behind the cost efficiency of BEVs. Trials continue along two tracks – H2 injection into modified internal combustion engines (ICE) and hydrogen fuel-cell electric platforms, with pilots expected between now and 2030. The injection route (H2-ICE) is considered to have more potential in Australia, as the hot temperatures found in Pilbara reduce the operating efficiency of fuel cells. Nevertheless, hydrogen fuel-cells still hold promise for longer routes. Policy reforms could accelerate the transition from diesel to low-carbon trucking. Australia’s Grattan Institute, for example, has suggested the government tighten its Safeguard Mechanism, which would raise the cost for diesel trucks and improve the TCO for BEVs in comparison.62 Meanwhile, the Australia Institute has proposed phasing out the government’s Fuel Tax Credit (FTC), which refunded over AU$3 billion to Australia’s mining sector in diesel excise in 2020-21.63 As a transition solution, HVO – a renewable diesel produced by hydrotreating waste vegetable oils and fats – is seen by some as an effective bridging fuel. It can be used as a drop-in replacement for regular diesel without modifying engines or infrastructure. Life-cycle emissions can be 60-95% lower than fossil diesel, depending on the type of feedstock used – although this is not sufficiently near-zero emissions to clear the bar for FMC inclusion.64 Furthermore, HVO supply is niche in Asia and government help is needed to reduce the significant green premium. Large-scale uptake is also constrained by feedstock availability, limiting the technology’s ability to fully decarbonize the industry. In 2023, BHP trialled HVO in its trucks and equipment in Yandi, Western Australia, as part of its goal to reduce operational emissions by at least 30% by 2030.65 In early 2025, Rio Tinto trialled use of 10 million litres of renewable diesel, across its network of ports, railways and mines in Western Australia. The renewable diesel, made from used cooking oil, is mixed in a 20% blend with fossil diesel. According to Rio Tinto Managing Director Rail, Port and Core Services Richard Cohen said: “Diesel makes up about 70% of the total carbon emissions from our Pilbara iron ore operations. While electrification is the ultimate longer-term solution for repowering the majority of our fleet, we’re also exploring biofuels as a complementary and nearer- term solution.”66 At sea, every bulk carrier, fully loaded with 200,000 tonnes of ore, will emit roughly 1,500 to 1,750 tonnes of CO2 (not including methane or N2O) on its 6,500 km loaded leg from Western Australia to China. Assuming a total of roughly 800 million tonnes of annual iron ore exports to China, Japan and South Korea, this would require approximately 4,000 voyages by bulk carrier. Based on this calculation, shipping’s carbon emissions for the loaded leg total ~6-7 Mt CO2/year, rising to ~10-12 Mt for the round trip.67 However, things are changing. In 2023, the International Maritime Organization (IMO) committed to a net-zero emissions target for international shipping “by or around 2050”. Various decarbonization technologies are already in use to replace the dirty bunker fuel that currently powers the world’s international shipping fleet. Industry momentum is gathering behind ammonia and methanol – which become near-zero emissions when produced using green hydrogen. Several methanol dual-fuel bulk carriers are already on order – these operate initially on bunker fuel but can switch without major retrofitting onto green methanol as soon as it is available. However, methanol dual- fuel bulk carriers are yet to carry iron ore on the Australia-China route, largely because of the lack of methanol bunkering at Pilbara’s ports in WA. Meanwhile, Australian mining companies are moving ahead on ammonia-fuelled bulk carriers (see Box 7), encouraged by Pilbara Ports’ strategic decision to create a Clean Fuel Bunkering Hub focused on using clean ammonia to power the bulk export vessels departing the Pilbara (see next section).3.3 Shipping – hydrogen-derived fuels hold promise to cut emissions Unlocking Asia-Pacific as a First Mover: Australia’s Green Iron Opportunity 23

Unlocking Asia-Pacific as a First Mover 2025