Argus launches prices for low-carbon ammonia

The new assessments reflect costs for producing liquid ammonia from renewables and emissions-abated fossil fuels

London 23 February 2023

Global energy and commodity price reporting agency Argus has launched a suite of new cost indicators for the production of ammonia, which looks set to play an important role in the energy transition. These new costs are for ammonia made with renewable fuels or with fossil fuels where carbon capture, utilisation and storage has been applied.

Argus now publishes 312 costs of production for decarbonised ammonia at key locations around the world. This supplements Argus’ existing ‘grey’ ammonia market coverage, which assesses market prices for ammonia made with fossil fuels where the carbon is not mitigated. These new indexes are published in the Argus Hydrogen and Future Fuels service and complement the more than 470 decarbonised hydrogen costs already available.

Ammonia production technology is a traditionally carbon-intensive process, with hydrogen (H₂) taken from fossil fuels and combined with nitrogen (N2) to produce ammonia (NH3) for use in fertilizer and chemical applications.

As low-carbon hydrogen production rises, it can be used to help reduce the emissions profile of the ammonia industry. But the 200mn t/yr industry is not just looking at decarbonising itself — there is potential for a much larger contribution to emissions reductions.

Ammonia is being considered as a “hydrogen vector” by numerous companies, as a way to move a diffuse gas — hydrogen — from the point of production to the site of demand. Simply put, it is easier to transport ammonia, which is a liquid, than hydrogen.

Decarbonised or low-carbon ammonia has also been identified for new uses in industries such as power generation for co-firing with coal and as a marine fuel.

With such widespread interest in low-carbon ammonia, the new indexes will assist industry participants by providing greater market transparency as they weigh investment decisions concerning differing production routes, in various global locations.

The costs are published in currency/tonne format, following standard practice in existing ammonia markets, for purity >99.5%, in liquid form at -33°C. This cost information is not only useful to producers, but also the demand side considering its use in coal-fired power generation and marine fuel applications.

More than 12 months of historical data are available, allowing users to see the effect on decarbonised ammonia costs of price movements in feedstocks such as coal, gas, power and renewables, as well as the changing cost of capital, over time.

Argus Media chairman and chief executive Adrian Binks said: “Providing transparency to the evolution of decarbonised ammonia costs is critical for our industrial customers, as they evaluate their options for a transition to net zero. Our new cost indexes offer a vital independent reference for companies structuring offtake agreements. At this stage of the market’s evolution, these are key for progressing projects to a final investment decision and bringing decarbonised production to market.”