The Middle East conflict has further dimmed the prospects for blue supply, amplifying the arguments for going green, writes Stefan Krumpelmann
For years, blue seemed set to become the colour of choice for northeast Asia's hydrogen and ammonia importers, at least in the near term. But green supply from China and India is increasingly looking a more attractive proposition.
Access to cheap gas and ample CO2 storage options put carbon capture and storage (CCS)-based hydrogen and ammonia plants in the Middle East, North America and Australia in pole position for deliveries to northeast Asia. Unlike the EU, governments in Japan and South Korea refrained from a strict policy focus on renewable supply, instead looking at carbon intensity only.
But progress on most CCS-based hydrogen and ammonia plans has been slow, with numerous initiatives called off entirely. War in the Middle East has lifted gas prices around the world, raising questions over the future cost of making blue hydrogen or ammonia. Projects have also been hit by a lack of infrastructure developments and, especially in the US, by policy changes. In the Middle East itself, the conflict has rendered future project developments even more uncertain and has vividly illustrated the dangers of supply disruption for potential buyers.
Meanwhile, renewable hydrogen and ammonia producers in China and India have trimmed costs down to levels that have taken many industry participants by surprise. As the cost gap between blue and green has shrunk, northeast Asian companies have stepped up efforts to secure renewable supply, while backtracking from involvement in CCS-based plans overseas, industry participants say.
When South Korea conducted the first round of its clean hydrogen power generation bidding market in 2024, all five bids were based on CCS-based ammonia, according to industry participants. This included the only winning proposal, by state-owned utility Korea Southern Power (Kospo), which was based on supply from the San-6 plant in Saudi Arabia.
But San-6 is facing delays and Kospo could end up using renewable ammonia from India instead for co-firing under the scheme. Samsung C&T, Kospo's supply partner, recently signed a binding $3bn renewable ammonia offtake deal with India's Reliance for 15 years starting in the2029-30 financial year.
Japanese trading house Marubeni signed a renewable ammonia offtake deal with China's Envision in May 2025 and South Korea's Lotte Fine Chemicals received a first delivery from Envision's plant in Inner Mongolia in February.
Last month, Japan's Itochu finalised commercial terms for 300,000 t/yr of renewable ammonia from Indian developer L&T for bunkering in Singapore and elsewhere. And Japan's IHI is working with Indian developer Acme on a plant in Odisha state that could provide 400,000 t/yr of renewable ammonia for export to Japan.
Even with a focus shift, CCS-based ammonia will still have a role to play in northeast Asia going forward. Jera and Mitsui are planning to bring in roughly 770,000 t/yr between them from the Blue Point plant in Louisiana, supported by Tokyo's contracts-for-difference scheme. Other deals could still be on the cards, as northeast Asian companies have collaborated with potential blue ammonia exporters for years. And questions remain as to whether many of the renewable hydrogen and ammonia plans in China and, especially, India will materialise.
Despite being more expensive than imports, domestic renewable hydrogen production is also getting more attention in South Korea and Japan, as the countries seek to limit import dependencies in times of geopolitical upheaval.
