Thanks Peter Milne for this story.
Certainly sounds, disappointingly, like Yara crab walking stage-left on decarbonisation in Australia after taking a leadership role with Project Yuri.
Couple of points that seem to have been omitted from the analysis:
1/ Yara Pilbara is covered by Australia's Safeguard mechanism. It's 1.5mpta CO2 emissions baseline needs to reduce in line with that law and Australia's Paris committments. It must comply with that law. If it can not or choses not to reduce emissions, it must buy offsetting credits from the market or from the Government at $75/t per ACCU.
2/ Yara has an internal corporate target of 30% reduction in Scope 1 and 2 emissions by 2030.
From what I understand (and am supportive of) is that CCS in USA gulf states (if it works one day) will be used to achieve the USA's Paris committments and reduction of its own Scope 1 and 2 CO2 emissions.
Green hydrogen (and ammonia) is just like renewable energy 20 years ago - we know it works, the world needs it in its decarbonisation journey and it's currently twice the price of the fossil fuel equivalent. But we also know that economies of scale created by "demand-pull" policies such as Safeguard mechanism and Hydrogen Headstart (hydrogen's equivalent of MRET) will cause solar-like reduction in cost of electrolysers over the next decade to the point (once circa 65GW electrolysers are installed globally) where green hydrogen passes blue and then grey hydrogen and ammonia cost.
As we were in renewable energy 25 years ago, Yara is sitting at the pointy end of abatement in their industry. However, unlike them, we never tried pea and thimble obfuscation tricks (e.g. "CCS as saviour" or "doesn't meet our cost of capital" or "customers won't pay us a premium") to avoid what was right for the science of climate change, required by law or required corporately.
And like the renewable energy transition, the cost differential, although large at the beginning, pales in significance relative to the underlying commodity price volatility (i.e. Ukraine war). This is because each year only a couple of percent of the green product (at [double] the fossil price) is being blended with the fossil product. The net result to customers is unnoticeable in the noise. As larger percentages of green are blended with fossil ammonia over the coming decade, the price of green is falling as its share is increasing as a result of the aforementioned learning curve benefits. Then parity is reached and much to AEP's chargrin, green will displace fossil on cost alone. Gas, like coal, is then displaced on an economic basis alone.
If Yara wants moral support, from this renewable energy lived-experience, to keep moving forward (rather than sideways) they are more likely to find it in Clean Energy Council forums rather than the AEP.
