CEFC finance tackles nitrous oxide emissions in landmark manufacturing investment
8 November 2021
A pioneering CEFC investment in the manufacturing sector will reduce emissions of a potent greenhouse gas by deploying proven technology in an Australian industry first.
The $25 million CEFC commitment, on behalf of the Australian Government, will enable manufacturer Orica to upgrade processing plants used in the production of ammonium nitrate with technology designed to abate nitrous oxide emissions.
It is the first major direct investment by the CEFC in the manufacturing sector and represents one of the largest single abatement projects financed by the CEFC. It will eliminate more than 567,000 tonnes per annum of CO2-e through the abatement of nitrous oxide, a greenhouse gas that is 265 times more potent than carbon dioxide.1
Tertiary nitrous oxide abatement technology will be installed in three nitric acid plants at Orica’s Kooragang Island facility in New South Wales from 2022 – the first time the technology has been used in Australia. The technology is highlighted in the Australian Government Technology Investment Roadmap discussion paper.
CEFC CEO Ian Learmonth said: “The global warming potential of nitrous oxide emissions are much more potent than carbon dioxide emissions. An investment which curtails these emissions to this extent can have a significant impact on our national emissions.
“Working with a leading manufacturer such as Orica enables the CEFC to help spearhead emissions reduction measures across a sector that has proven difficult to abate.
“This investment will also provide valuable insights into how sustainability can complement profitability. The project is commercially underpinned by carbon credit contracts with the Australian Government, further catalysing investment in sustainability outcomes.”
Orica Managing Director and Chief Executive Officer, Sanjeev Gandhi said: “The CEFC has been instrumental in facilitating the Kooragang Island Decarbonisation Project funding. Having effective emissions reduction technology available is important, but it’s the support and financing from our partners, including the CEFC, that’s critical in allowing us to effectively and efficiently implement this technology across our operations.
“This project marks an important step towards our medium-term target and long-term net zero ambition, and we welcome the CEFC’s support to facilitate the project.”
Orica is a leading Australian manufacturer and the world’s largest provider of commercial explosives and blasting systems to the mining and infrastructure sectors. It supports the Paris Climate Agreement goals and has committed to reducing scope 1 and scope 2 emissions by at least 40 per cent by 2030 (from 2019 levels). In addition, it has announced its ambition to achieve net zero emissions by 2050, which covers scope 1 and 2 greenhouse gas emissions and its most material scope 3 GHG emission sources.2 The Kooragang Island Decarbonisation Project is an important initiative in Orica realising its 2030 emissions reduction target.
In April, Orica was awarded a contract by the Clean Energy Regulator (CER) to purchase up to about 3.4 million Australian Carbon Credit Units (ACCUs) for a fixed price over seven years.
Orica is also a founding partner of the Australian Industry Energy Transition Initiative, which brings together industry and finance companies working towards emissions reduction in hard-to-abate supply chains. Orica is confident that the sustainability measures at the Kooragang Island facility will serve as a demonstration case for the opportunities to reduce nitrous oxide emissions in the manufacturing industry.
The manufacturing sector is responsible for 11 per cent of Australia’s carbon emissions3. Globally, industry accounts for 23 per cent of greenhouse gas emissions4, with emissions from the sector rising nearly 70 per cent between 1990 and 20145
Andrew Gardner, CEFC Executive Director Wind Energy and Manufacturing said: “While innovation and cost reduction have helped drive the decarbonisation of sectors like property, transport and energy, the pathway to lower emissions in manufacturing has proved more challenging. Hurdles including a lack of technological solutions, financial incentives and customer willingness to pay a premium for green products have slowed meaningful progress.
“As new advances come to market, manufacturers who are alert to the need to reduce their carbon footprint can take advantage of such technological developments. Orica’s foresight in adopting this innovative equipment and processes to help meet their sustainability goals will lead the way to a much cleaner manufacturing sector.”
Orica (ASX: ORI) is the world’s largest provider of commercial explosives and innovative blasting systems to the mining, quarrying, oil and gas and construction markets, a leading supplier of sodium cyanide for gold extraction, and a specialist provider of ground support services in mining and tunnelling. For more information about Orica, please visit: www.orica.com
1 Australian Government - National Greenhouse Account Factors 2021
2 Material means the scope 1 and scope 2 GHG emissions embodied in purchased ammonia and ammonium nitrate included in Orica’s scope 3 reporting category of purchased goods and services. These comprise around two-thirds of Orica’s scope 3 emissions footprint.
3 Decarbonisation of industrial sectors: the next frontier, McKinsey & Co
4 IEA Global energy-related carbon emissions by sector, March 2021
5 Decarbonisation of industrial sectors: the next frontier, McKinsey & Co
Media release, 2021