Gov needs to do more to promote green explosives, new study finds 

A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) has found that a government incentive program would accelerate the adoption of green explosives by miners. 

Miners consume about half of Australia’s ammonia through explosives and a shift to green explosives could be done with a minimal increase in operating costs. 

The IEEFA report found that by switching ammonia production facilities from fossil gas to green hydrogen Australia could lead the world in the production of green ammonia and lay the foundation for a new green hydrogen industry. 

IEEFA Australia chief executive Amandine Denis-Ryan says “ammonia production stands out as a logical early adopter of green hydrogen”.  

“Changing these processes is a relatively quick, simple step that could expedite the emergence of a green hydrogen industry in Australia,” she said. 

“Unlike other sectors, ammonia’s production process already involves hydrogen as an intermediary product, and Australia’s existing ammonia plants are perfectly placed geographically in regions with abundant renewable resources.” 

The Pilbara, Kwinana, the Hunter and Gladstone regions have been identified as potential hydrogen hubs under Australia’s National Hydrogen Strategy and offer the potential of large-scale demand clusters.  

The IEEFA stated switching all of Australia’s current ammonia production away from gas would create demand for around 350,000t of green hydrogen. 

Co-author of the report Cameron Butler says “traditionally the ammonia supply chain has been highly energy-intensive”.  

“Ammonia production accounts for roughly 5% of Australia’s total gas use, making it the second-highest user of gas across Australia’s manufacturing sectors,” he said. 

“Decarbonising ammonia facilities presents the opportunity of a triple win: alleviating domestic gas market pressure; reducing emissions; and, catalysing Australia’s emerging green hydrogen industry.” 

However, the report finds that progress is currently slow.  

Widespread adoption is being hindered by relatively high production costs for green hydrogen, a lack of demand at premium prices, and insufficient policy drivers. 

With more than half of Australia’s ammonia used to produce explosives, miners wield significant influence and could play a pivotal role in accelerating the transition to green hydrogen.  

According to IEEFA’s analysis, shifting to green explosives would be affordable for miners.  

Switching to 20% green ammonia by 2025 would increase their operating costs by less than 0.1% while a complete switch to 100% green ammonia by 2030 would increase costs by a maximum of 0.4%, the study found. 

“By setting green explosives adoption targets, miners could guarantee offtake and provide the certainty required to shift investment from suppliers,” Mr Butler said. 

“However, miners currently lack incentives to do so.  

“Government will be crucial in driving and complementing action by miners by addressing data transparency challenges and reducing investment risk.” 

And it’s likely incentivisation would also encourage ammonia producers to alter their processes.   

CSBP, a major global supplier of explosive-grade ammonium nitrate, and manufacturer of ammonia and other industrial chemicals, is planning to expand its ammonia plant in Kwinana, WA.  

The IEEFA says the planned expansion presents a powerful opportunity to demonstrate the large-scale integration of renewables and green hydrogen in the domestic ammonia supply chain.  

Under current proposals, the expanded plant would be fuelled by gas, according to the IEEFA. 

However, if the expansion was based on green hydrogen instead, it could create demand for about 53,000t of green hydrogen. 

“The expansion of CSBP’s ammonia plant provides a timely and pivotal moment for miners to catalyse change and drive the adoption of green ammonia in Australian mining and the emergence of a green hydrogen industry,” Ms Denis-Ryan said.  

“The convergence of miner influence, market-driven incentives and government support forms a compelling case for accelerating the transition to green ammonia.  

“By embracing this opportunity, government and industry could kickstart the emergence of a green hydrogen industry for Australia.” 

Combined emissions from facilities producing ammonia and its derivatives such as ammonium nitrate are around 4mt of carbon dioxide equivalent (MtCO2e), or just under 1% of Australia’s annual emissions. 

While just above half of Australia’s ammonia production is used to produce explosives, the remainder is used for exports or to produce fertilisers.  

The IEEFA says government support will be crucial to drive and complement action by miners, by addressing data transparency challenges and reducing investment risk.  

Adapting existing schemes such as Renewable Energy Certificates could drive investment in explosives inputs, according to the report.  

The IEEFA also said the creation of a similar market-based mechanism offers the opportunity of recognition for miners’ action, in addition to financial incentives and competitive advantages for ammonia producers.  

“Other emerging initiatives such as a hydrogen Guarantee of Origin (GO) scheme could also provide a consistent, accurate approach to tracking emissions from production of hydrogen and derivative products such as ammonia,” according to the report.  

“Investment support can cover shortfalls in miners’ commitments, while regulatory measures can mandate full decarbonisation of explosives production.  

“Other measures such as legislating Scope 3 emissions reductions or placing limits on the use of offsets would also accelerate action across the ammonia supply chain.”