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Cotton grown by Sundown Pastoral
Image credit: Sundown Pastoral

Exclusive: Hiringa Energy & Sundown Pastoral bag $23.6m from NSW govt for green hydrogen and ammonia project

August 2, 2023

Hiringa Energy and Sundown Pastoral Co have been awarded AUD$35.8 million ($23.6 million) from the New South Wales government to support a ‘green hydrogen’ and ammonia facility designed to slash carbon emissions from fuel and fertilizer at Sundown’s ‘Good Earthcotton farm near Moree.

The Good Earth Green Hydrogen and Ammonia (GEGHA) project combines renewable energy production, hydrogen production from water rather than fossil fuels, and ammonia production.

The plan is to install a 27-MW solar farm producing roughly 45,000-MWh of energy per year to power an electrolysis process whereby rainwater collected on the farm will be split into hydrogen and oxygen. The hydrogen will then be used for on-site ammonia production and to power hydrogen fuel cells (rather than diesel) that pump irrigation water throughout the farm.

The project is designed to demonstrate the commercial viability of low-carbon fertilizer production, and will be followed by medium-scale expansion across the state’s agricultural sector.

Solar power generates electricity to split water into oxygen and hydrogen via electrolysis

Hydrogen and nitrogen are required for ammonia-based fertilizers, which generate huge quantities of greenhouse gases both from their production and application. Significant efforts are therefore being devoted to reducing their environmental impact, with strategies ranging from re-tooling the DNA of bacteria in the soil so plants can more effectively convert nitrogen from the air into food, to replacing the energy-intensive Haber-Bosch ammonia production process.

Typically, nitrogen is sourced via air separation while hydrogen is produced from natural gas (methane) through a carbon intensive process called steam methane reforming. Nitrogen and hydrogen are then mixed together under high pressure and temperature in the presence of an iron-based catalyst to form ammonia via the Haber Bosch process.

“Our processes are the same in the back end,” Hiringa’s executive director, Australia, David Heard told AgFunderNews.

“But the source of our hydrogen [water separated into its constituent parts via electrolysis, powered by solar] is not carbon intensive. But what’s also quite different here is that typically those [ammonia production] plants are very large, and often located in a major industrial area on the coast and connected to the international markets through shipping.

“What we’re looking at here is a small- to medium-scale version of that located close to a renewable energy source that’s close to the farmers that are using the ammonia as fertilizer. While that means there are fewer economies of scale, there’s some significant advantages in terms of the avoided cost of moving around ammonia.”

‘This project will result in direct abatement of over 17,000t CO2 equivalent per year’

The GEGHA project will both improve the reliability of fertilizer supply to local farms while decarbonizing it by manufacturing close to the point of use, eliminating the carbon-intensive use of methane as a feedstock for hydrogen production, and using renewable energy to drive the process, claimed Heard.

He added: “We conceived of the project a couple of years ago, and started going through the initial feasibility stage, and we were fortunate to be one of two projects out of 21 to get money from the NSW government’s Hydrogen Hubs Initiative.

“This project will result in direct abatement of over 17,000t CO2 equivalent per year, in addition to substantial indirect abatement and safety benefits associated with reduced shipping and heavy vehicle emissions required to transport fertilizer and diesel.”

 ‘There’s a significant opportunity at about 60 tons a day to achieve more economies of scale’

Asked about the commercial viability of such projects, he said: “There’s no doubt that the grant monies are essential. This project has been sized around Sundown Pastoral’s fertilizer needs, and we’ll also sell some of the excess product to a couple of neighbors. But part of our pitch to the New South Wales Government is looking at the next stage upwards.”

The facility near Moree in Australia is planned for 10 tons a day of ammonia production, said Heard. “But there’s a significant opportunity at about 60 tons a day to achieve more economies of scale in terms of the capital and operating costs and at a level where we’re hopeful that we can structure a project that wouldn’t need upfront government capital funding.

“But this funding is necessary to prove the commercial model and show that there’s demand from farmers and from the customers of farmers like [Sundown Pastoral owner] David [Statham] for low carbon produce.”

A similar project in New Zealand, powered by wind rather than solar, is also under development and could be up and running by late next year, he said. “For the project with David in Australia, we’re looking to make a final investment decision in the first half of next year, and if we do take that decision, we should be producing low carbon replacements for David’s fertilizer by sometime in 2025.”

Project offers promise of more stable pricing and supplies of fuel and fertilizer  

According to David Statham at Sundown Pastoral, “The business case for me is to add value to the existing brand of our cotton. 85% of the carbon emissions from my cotton are from fuel and fertilizer, and [cutting emissions via lower carbon fuel and fertilizer means] we’re sequestering more carbon than we’re emitting. We’re piloting with brands overseas on an insetting model, where we can inset carbon credits through the supply chain.”

He added: “I sat in a budget meeting last year, and thanks to Russia/Ukraine, China, and Covid, my two biggest inputs [fuel and fertilizer] doubled in value, but my price stayed the same.”

By contrast, said Heard at Hiringa, “We’re able to offer a resilient secure supply at a stable price, so it isn’t just about the absolute level of price, it’s about the certainty and control.”

‘There’s an opportunity here to decarbonize fertilizer production in Australia’

Stepping back to look at the ‘green hydrogen’ space, Hiringa was “reasonably early,” he claimed, although “there are lots of other companies looking at this now. However, our particular focus on creating opportunities to serve farmers is unique. But we don’t want this to just be a single project on a single farm. There’s an opportunity here to decarbonize fertilizer production in Australia and decouple Australia from having to import that product through long volatile supply chains.”

He added: “The nitrogen-based fertilizer market in eastern Australia is about 2 million tons a year. The project size we’re looking at as being potentially commercially viable on its own without grant support would be around 20,000 tons a year. So that’s only 1% of the market, but projects of that size we think, are big enough to make sense if they service an agricultural valley with low distribution costs and we’re able to offer farmers reliable, stably priced supply.”

According to Hiringa, each ton of ammonia it produces abates the equivalent of 2.8tons of carbon dioxide from conventionally produced ammonia, while each liter of diesel it substitutes abates 2.7 kgCO2e.

Further reading:

Nium raises $3m seed round from AgFunder, DCVC to eliminate Haber-Bosch from ammonia production

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