The Institute for Energy Economics and Financial Analysis (IEEFA) said that the Albanese government should prioritise local ammonia production to develop Australia’s green hydrogen industry.
This comes amid plans by the federal government to invest $15 billion into the promotion of the local green hydrogen sector.
According to the Department of Climate Energy, Energy, the Environment and Water (DCEEEW), Australia has the resources, technical skills, and track record with international partners to further develop the country’s hydrogen production, turning Australia into a top hydrogen producer and exporter in the global market.
“Our research shows that Australia’s ammonia industry is in pole position to capitalise on the new funding measures announced in the budget. And this in turn would provide the robust platform for a viable green hydrogen industry in this country,” said IEEFA Australia CEO Amandine Denis-Ryan.
Ms. Denis-Ryan believes ammonia production would be a pioneering move in green hydrogen production.
Additional research from The Royal Society also claimed that hydrogen and ammonia have the potential to be competitive net zero energy sources and to be the leading cost-effective low-carbon alternative, especially for heavy industries within the country.
“By helping to bridge the cost premium for green hydrogen, the new funding measures significantly bolster the economic argument for a rapid transition to green ammonia,” said IEEFA guest contributor Cameron Butler.
“Introducing progressive requirements for green explosives uptake by miners could also help kickstart Australia’s green hydrogen industry, while minimising the financial impact, especially if combined with further government support for early projects.”
Green ammonia is made from green hydrogen and is a potential alternative to grey ammonia, created from methane.
A majority of grey ammonia is used in agriculture as fertiliser but it can also be used in textiles, cleaning products, and more. Green ammonia can be used in largely the same areas and is also looked at as a potential fuel source.
London-based CRU Group previously cautioned that while ammonia is touted as the low-emissions fuel of the future, challenges such as costs, energy conversion rate, and environmental concerns are crucial to consider.
CRU Group Research Manager Paul Butterworth said that apart from the expensive cost of producing ammonia, its combustion may lead to increased nitric oxide and nitrous oxide emission levels. Thus, ammonia cannot be said to be environmentally-friendly as previously claimed.
But the IEEFA said decarbonising ammonia production can alleviate pressures in the local market, reduce emissions, and kick off the country’s emerging hydrogen industry.
It is also projected that by 2030, production costs for green ammonia could reach equal levels to conventional grey ammonia in regions where existing ammonia plants are located.
“Further funding support would strengthen the case for a large-scale green ammonia plant in Kwinana. This is a pivotal moment for Australia’s energy transition,” Ms. Denis-Ryan said.
“While we currently lack a green hydrogen supply chain, our ammonia industry offers a ready-made demand source that can help develop infrastructure, expertise, and innovation.”
