Japan's largest power producer by capacity Jera will decide whether to invest in US fuel ammonia production after details of Japanese government funding of the fuel become clearer.
Jera is currently working with Norway-based fertilizer producer Yara and US ammonia producer CF Industries to separately develop blue ammonia production on the US Gulf coast, aiming to produce more than 1mn t/yr at each project. Jera will decide whether to join the upstream projects after examining details of the government support, due to be released next year, Jera president Hisahide Okuda said on 29 November.
It is difficult to make an investment decision given recent inflation and Jera will first see how much the government finance will cover the expected rise in costs, Okuda added. He stressed that subsidies should be used to ensure the social implementation of fuel ammonia, not only focus on technology development.
The Japanese government is planning to issue around ¥20 trillion ($136bn) of green transformation (GX) economic transition bonds over 10 years from the April 2023-March 2024 fiscal year, of which around ¥6-8 trillion is likely to be allocated to support the non-fossil fuel sector, including ammonia, hydrogen and renewables. The GX bonds will supplement the country's public-private investments in achieving carbon neutrality by 2050, which is estimated to require more than ¥150 trillion over the next decade.
Jera awarded its tender in January to Yara and CF Industries to buy up to 500,000 t/yr of green or blue ammonia that will be co-fired at the 1GW Hekinan No.4 coal-fired power unit, subject to collaboration on developing production sites. Green ammonia is produced from renewable sources without any emissions, with blue ammonia produced from hydrocarbons where the carbon dioxide emitted during production is captured and stored.
The start of trials of co-firing 20pc of ammonia with coal at Hekinan is planned to start from around March 2024, Okida said. The company has secured from Japanese trading house Mitsui around 30,000-40,000t of an unspecified type of ammonia for the test generation.
Development of technology that will allow more than 50pc co-firing of ammonia is also under way, with demonstration expected to begin around 2028. Commercial operations with a more than 50pc mixture is predicted to start in the first half of the 2030s.
Import plans
Jera is looking to import around 2mn t/yr of fuel ammonia by 2030, which is nearly 70pc of Japan's current 2030 ammonia demand target of 3mn t/yr, in efforts to reduce the use of coal. It is still unknown where and which types of ammonia Jera plans to buy to realise its target, except for the supplies through its latest tender. More ammonia will be produced from blue than green under the current situation, so Jera will mainly start with the blue variety, Okuda said.
The vast majority of blue ammonia projects are still proposed and have not reached a final investment decision. Only a handful of projects totalling around 7mn t capacity could be on line by 2027 but several have yet to receive financing. Many are struggling to demonstrate clear demand for lower carbon ammonia in the short term, with the lack of clear direction from the Japanese government a determining factor. North American fertiliser producer Nutrien has put its blue ammonia project in Geismar, Louisiana on hold because of a lack of clarity on the timeline for demand and support mechanisms.
Jera has not ruled out the possibility to expand the use of hydrogen to ensure zero emissions thermal power output. It is interested in any hydrogen projects in the US and Middle East where hydrogen is relatively easily available, Okuda said. It completed in June remodelling a gas turbine of its 50pc-owned 972MW Linden power plant in the US state of New Jersey for co-firing hydrogen.
