Plans for a $15 billion green ammonia plant near Kalbarri, Australia, have been suspended as stakeholders grapple with a challenging ammonia market. The project, spearheaded by investment firm Copenhagen Infrastructure Partners (CIP), aimed to harness solar and wind energy from facilities located 600 km north of Perth to produce hydrogen and subsequently ammonia. Initially slated to reach a final investment decision last year, the project is now on hold, according to Brian Jensen, a partner at CIP.
In an interview conducted in Kasso, Denmark, Jensen stated that the anticipated decision has been “on pause” due to significant market difficulties. He noted that market conditions have deteriorated, limiting opportunities for shipping the green ammonia to target countries such as Japan, Korea, and Taiwan. “We are nowhere near an investment decision,” he remarked, describing the initiative as a “longer term play.”
The project’s viability was further undermined by the outcome of the International Maritime Organisation (IMO) discussions in October 2023. Efforts to mandate cleaner shipping fuels or implement a carbon levy starting in 2028 collapsed following intense negotiations, leading to a decision to delay for a year. Jensen explained that the absence of an agreement has made it difficult to secure customers for the green ammonia.
“We had hoped that the IMO would basically make this economically viable, that there was an incentive for people to buy it. Unfortunately, that’s now not going to happen,” Jensen stated. The IMO discussions had been ongoing for years, facing opposition from key players like Saudi Arabia. Reports suggest that the United States’ withdrawal from the talks contributed to a ripple effect, causing other countries, including Panama, Greece, and Cyprus, to reconsider their positions ahead of the next vote.
CIP holds licenses to develop 3 gigawatts of wind and solar energy at the Murchison site. However, Jensen emphasized that moving forward with the power generation aspect without a functioning ammonia plant would not be economically feasible, as the local population lacks the capacity to consume such a large amount of energy.
Despite these hurdles, Jensen expressed cautious optimism regarding the Western Australia (WA) Government’s plans to bolster the green steel industry. He indicated that an offtake agreement from the government could provide crucial support for the Murchison project, allowing it to proceed with power generation while the clean shipping fuel market matures.
The project has already received $814 million from the Federal Government’s Hydrogen Headstart fund. Jensen noted that this financial backing is appreciated and will be disbursed only once the project becomes operational, thus minimizing taxpayer risk.
When asked about a potential timeline for abandoning the Murchison project if market conditions do not improve, Jensen refrained from providing a definitive deadline. Currently, CIP is shifting its focus to other initiatives across Australia, which include the Star of the Sea offshore wind farm near Gippsland in Victoria, battery projects in South Australia, and various renewable energy developments in New South Wales and Queensland.
As the Murchison project faces uncertainty, stakeholders will closely monitor shifts in the ammonia market and the evolving landscape of international shipping regulations.
