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The European Union (EU) has awarded Fortescue’s Holmaneset green ammonia project in Norway a €203.77 million ($325.4 million) grant as part of its innovation fund.

The EU innovation fund is one of the world’s largest funding programs for innovative low-carbon technologies, financed by revenues from the auctioning of allowances via the EU’s emissions trading system.

The proposed green ammonia plant aims to capitalise on surplus renewable energy from the Norwegian transmission grid and ship the resulting green ammonia to domestic and European markets.

“The Holmaneset project is a great opportunity for Fortescue, Norway and Europe to develop a significant green energy value chain, and its selection for funding by the EU is a recognition of its significance to global decarbonisation efforts,” Fortescue Energy chief executive officer Mark Hutchinson said.

“Fortescue is leading the way to a future beyond fossil fuels, and we commend the EU for its leadership in joining with us to help kickstart a green ammonia industry in Norway and Europe.”

Fortescue is hoping to commence constructing Holmaneset in 2025, with operations to begin in 2027, pending final approvals from the board.

“The Holmaneset project is integral to creating a new green economy for Norway and Europe at scale,” Fortescue Norway country manager Thor Magnus Rovik said.

“The green hydrogen and green ammonia produced near Svelgen has the potential to replace fossil fuels in industries that find it difficult to cut emissions, like long-haul transport, shipping and heavy industry.

“This project will be important for Norway to achieve its ambitious targets to cut emissions and build sustainable industrial development, and those targets are crucial for overall emissions reductions across Europe.”

The EU innovation fund grant will be paid on the completion of specified project milestones, with the first instalment to be paid on financial close.