Can ‘green’ ammonia solve Incitec Pivot’s emissions problem?

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Incitec Pivot’s Jeanne Johns thanks COVID-19 for instilling a greater sense of urgency about emissions reduction as businesses and citizens alike realised that what sounded like a futuristic threat could become an immediate reality.

“I did pandemic training years ago, and I remember everyone thinking ‘this is the most ridiculous thing I have ever heard’,” says the chief executive of the ASX-listed fertiliser and explosives maker. “The pandemic got people feeling vulnerable.”

Incitec Pivot boss Jeanne Johns: “The pandemic got people feeling vulnerable.”Credit: Chris Hopkins

On carbon emissions, Johns has bought a similar sense of urgency to the $6.2 billion market cap company that’s a major producer of essential, yet emissions-intensive ammonia.

The DNA of both fertiliser and explosives, ammonia is made from natural gas and the process accounts for about two per cent of global greenhouse gas emissions. Customers – notably farmers – are also high emitters in their own right.

Johns says when she became CEO in late 2017, Incitec Pivot had an enviable record on sustainability in general – namely issues such as gender diversity and workplace safety – and still easily outscores its chemical sector peers on the closely watched Dow Jones Sustainability Index rankings.

But the company lacked action on carbon abatement and not much external pressure was being exerted.

“The world knew it was a bit of an issue, but it was hard to get people focused,” says Johns, a chemical engineer who had held several senior roles at BP as the oil giant de-emphasised fossil fuels under its Beyond Petroleum persona.

Signalling her intent, Johns created a new position of chief strategy and sustainability officer – a function that had previously been the purview of the legal department.

A direct report to Johns, the new role elevated the issue from a “tick-the-box” annual reporting requirement to a core influence in terms of the company’s investing and purchasing decisions.

The DNA of both fertiliser and explosives, ammonia is made from natural gas and the process accounts for about two per cent of global greenhouse gas emissions.Credit: AP

Over the past two years, Incitec Pivot has cast two targets in stone: net-zero emission status by 2050 “or as soon as practicable” and an interim 42 per cent reduction by 2030 (revised from 25 per cent off a 2020 baseline).

The 2030 target is underpinned by four projects entailing “varying degrees of difficulty”.

Arguably the most ambitious project is the mooted conversion of the company’s Gibson Island plant in Queensland to so-called “green” ammonia, in alliance with Andrew Forrest’s Forest Future Industries.

The company reluctantly closed the plant in January after it was unable to secure long-term gas supplies. The green lining of the eastern seaboard gas crisis is that a retrofitted plant could produce ammonia using hydrogen generated from renewable power.

The companies are in “deep feasibility” stage for the world-leading project, with a final investment decision expected by the end of 2023.

Further afield, Incited Pivot last month agreed to sell its Waggaman ammonia plant in Louisiana state in the US to CF Industry Holdings for $2.5 billion. The deal includes Incitec Pivot signing a 25-year ammonia offtake deal, to service its ongoing US explosives business.

A geological carbon sequestration venture planned for the site – one of the four key projects – raises hopes of Waggaman supplying green ammonia to Incitec Pivot, thus ameliorating the company’s scope-three (supplier) emissions.

Meanwhile, nitrous oxide abatement projects at the company’s Moranbah facility in Queensland and near the town of Louisiana, Missouri aim to slash nitrous oxide emissions.

A by-product of making ammonium nitrate for explosives, nitrous oxide is produced in smaller quantities but as a greenhouse gas is more than 250 times more potent than carbon dioxide.

Ahead of a potential demerger of its fertiliser business, the company is experimenting with enhanced-efficiency fertilisers that could reduce greenhouse gas emissions at the farm gate by 70 per cent, “depending on soil conditions and crops.”

Johns adds that to achieve net-zero by 2050, further breakthroughs in green ammonia, green hydrogen and sequestration technology need to be achieved.

Despite being inherently polluting to make, green ammonia has a key role in decarbonising heavy industrial processes, such as steel and shipping.

Johns says that as hydrogen is difficult and expensive to handle, ammonia – which consists of three nitrogen atoms and one hydrogen atom – is the obvious solution to ship hydrogen effectively.

Despite the unproven elements of green ammonia, Jones says investors have shaken off any pre-pandemic complacency and are demanding action in the here and now.

“Most issues have their time and place,” she says. “If it’s too far out it’s difficult for people to get into action; there always seems to be more pressing issues short term.”

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