TI, what are you doing to me? You tag me, insult me (standard practice, worth a couple of ticks), give no reasonable explanation, and then scare the pants off readers by suggesting that NRZ might have painted themselves into a corner. Again with no explanation.
But seeing that your have tagged me, I will give you my opinion.
NRZ will produce 1,000,000 tonnes of urea. 1,000,000 tonnes of urea contains the equivalent of 750,000 tonnes of CO2. (1,000,000 x 0.75) 750,000 tonnes of CO2 is 75% of total factory CO2. Residue for sequestration and the like is approx. 1/3. I.E. 250,000 tonnes of CO2.
Now read the "Climate related risks" in the report. It's very well done.
OK, they have nailed their colours to the mast, carbon neutrality by 2025. But they have not painted themselves into a corner, and definitely will not be belching out 250,000 tonnes of CO2 long term. They have a number of options, CCS, Australian Carbon Capture Units (ACCU), Carbon Credits and the like. Maybe a combination of some or all of them.
And while they have been given a little slack, if they exceed the limits they have accepted, there will be consequences, some quite serious, including fines.
With respect to ACCUs, they are currently running at about $30.00 per tonne CO2.
If the worst came to the worst, 250,000 tonnes of CO2 would cost about $7.5 million. Not a lot but it will affect the bottom line. $7.50 per tonne of urea. Definitely not long term, if at all,.
I would expect that there will be a combination of these costs during the teething stage, and would not be surprised if there were an ongoing occasional carbon credit required.
I will finish by saying that anything short of almost 100% CCS, will not go down well with genuine environmentalists.
That's how I see it, TI. DYOR, critically examine my assumptions, and if I have got it wrong, please correct me.
. J L.
NRZ Price at posting:
14.5¢ Sentiment: None Disclosure: Not Held
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