Green ammonia development gains momentum

  • Market: Fertilizers
  • 26/11/20

Green ammonia's potential as an energy source and an energy carrier is becoming an increasingly hot topic. In recent months, visions of a growing role for ammonia in a future carbon-free economy have started to transition towards a viable reality.

A number of new green ammonia projects have been announced in the second half of this year, the largest — an ambitious $5bn joint venture in northwest Saudi Arabia — announced in July, will see a 1.2mn t/yr green ammonia plant being built in the new cross-border city of Neom. The project is a joint venture between US firm Air Products, Saudi-based ACWA Power and Neom, and the plant will run on 4GW of renewable solar and wind energy. A full list of new green ammonia projects is available in the latest issue of Argus' Ammonia Analytics.

From an end-product and utilisation perspective, one of the most interesting points about the Neom plant is that Air Products, as the sole offtaker, plans to deliver the ammonia globally and then crack the ammonia back to hydrogen at point of use. One of the key roles ammonia is expected to play over the coming decades is as a carrier of hydrogen. With the role of hydrogen as a fuel for large vehicle transportation gaining momentum, it is perhaps unsurprising that Air Products plans to use the ammonia in the transportation sector. Although for this project, Air Products plans to extract the hydrogen to power its transportation fleet, the development of ammonia-powered engines may mean that in future, green ammonia may also be used directly to fuel road vehicles.

Green ammonia is also expected to play a significant role as a direct energy source in existing internal combustion engines and natural gas burners and could offer significant savings to consumers who would otherwise have to replace expensive capital equipment to transition to hydrogen as their fuel. Companies such as US-based Starfire Energy are developing cracker products to meet the needs of direct ammonia users with heating applications such as steel or glass industries, and for sectors where fuel must have pressure, such as internal combustion engines and natural gas turbines used by utility companies. Those looking to develop ammonia use in engines argue that cracking takes energy so using ammonia directly is cheaper than wholly converting back to hydrogen.

In the maritime industry, feasibility studies on setting up ammonia bunkering ports at existing terminals that already handle ammonia are getting underway. The development of ammonia-based fuel cell technology and engines for ships is advancing steadily, and ammonia use as marine fuel is expected to rise in the near-term as shippers look to reduce their carbon emissions to meet IMO targets set out for 2030 and 2050.

Marine fuel prices to correlate in the near term

Although it is still unclear how the role of ammonia will develop as we move towards a more carbon-neutral economy, or whether its predominant use will be as a direct energy source or as a carrier for hydrogen, it is clear is that marine fuel ammonia and green ammonia will be priced in a different way to gas-based ammonia.

On the marine fuel side, some in the shipping industry believe that at least in the short term, marine fuel ammonia will need to have a correlation to current marine fuel prices, such as LSFO, to give shipowners some security that if they invest in engines that are designed to run on ammonia, the price of the fuel will in some way be capped so it does not exceed the price of existing fuel options. This is particularly important when considering the high costs of investment into newbuild vessels or retro-fit engines.

Clear legislation and incentives still needed

While there are clearly signs that ammonia use as marine fuel is looking increasingly likely, with the ammonia shipping fleet itself being a logical starting point, there still needs to be clear greenhouse gas (GHG) regulation to push plans for marine fuel and green ammonia energy into large-scale fruition.

A recent poll conducted at the Ammonia Energy Conference in mid-November found that 35pc of those polled believed the greatest barrier towards getting green ammonia to the marine fuel scale was the lack of a carbon tax, while 32pc thought the high cost of green hydrogen production was the main barrier. In order to encourage the development of further green ammonia capacity, more clear punitive legislation and taxes on carbon emissions will need to be implemented by regulatory bodies and governments. In addition, more funding and grants/incentives to contribute towards capital expenditure costs associated with building new plants or retrofitting existing facilities would give a further boost. Some in the industry believe that renewable energy costs being subsidised for a short period to encourage investment into green ammonia plants could push progress a long way, at least until renewable energy supply reaches scale, and prices subsequently start to fall. "The challenge now is to collaborate in the full value chain to minimise the additional costs for the end consumer choosing carbon-neutral products," Yara vice-president for ammonia energy and shipping fuel Rob Stevens said.


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