The US is uniquely positioned to become a principal exporter of clean ammonia within the next decade despite price-related challenges that remain in play, delegates said Wednesday at the Argus Clean Ammonia North America Conference in Houston, Texas.
The nascent green ammonia industry faces a series of challenges before production on any commercial scale becomes a reality, but blue ammonia production — which captures and stores the carbon produced during traditional ammonia production — is closer to maturity.
"Blue is certainly scalable today… Green is going to be a little more challenging," said director of clean energy solutions for CF Industries, Jonathan Flynn.
Notably, 11 of the 20 currently planned blue ammonia projects globally have been announced in the US — totaling 16.3mn metric tonnes (t)/yr out of nearly 26mn t/yr potential capacities worldwide.
Supply-side advantages
The US is one of the most advantageous countries for clean ammonia production, said Flynn. Significant expertise already exists in the country, with the US currently responsible for 10pc of global ammonia production. Domestic ammonia plants are also among the most cost efficient, he said, as much as 25pc more efficient than the global average. There is also access to renewable energy sources and abundant natural gas reserves.
The US Gulf coast in particular has a large capacity for carbon capture and storage (CCS) to support such clean ammonia projects. The region's combination of large natural gas reserves, brownfield ammonia plants, export infrastructure and widespread renewable energy development gives it a competitive edge.
The business-friendly political environment in Louisiana and Texas, coupled with green initiatives at the federal level, suggest relative policy stability that panelists at the conference said is likely to remain constant regardless of which party holds the majority at the state or federal levels.
And the US is at the forefront of the global policy environment — the Inflation Reduction Act (IRA) signed in August prompted a flurry of investment in clean projects in the second half of 2022. The IRA introduced an up to $3/kg subsidy for green hydrogen production, and tax credits for CCS. For blue ammonia, IRA tax credits could translate into subsidies of $100-150/t, while green ammonia production could see up to $300/t in subsidies.
Several speakers noted a lack of clarity surrounding proposed credits but pointed toward further detail expected from the Internal Revenue Service in August. This could help support financing decisions for some proposed projects as companies across the low-carbon value chain are eager to minimize risks. But some industry observers say longer-term incentives, beyond 10 years, would give speculative investors more assurance.
Challenges to industry development
But uncertain pricing structures and premiums for low-carbon products present significant challenges to the development of the industry.
Despite demand pockets anticipated in the EU, South Korea and Japan, consumers in these regions will have difficulty absorbing the higher price of green ammonia. The EU has stated intentions to import 10mn t/yr hydrogen, or an equivalent of 56mn-67mn t/yr of shipped ammonia, said executive adviser of infrastructure for Jera Americas, Brad Williams. And South Korea's ministry of trade, industry and energy has forecast clean ammonia demand to rise to 21mn t/yr.
But Argus estimates current delivered levelized costs of green ammonia produced in North America delivered to northwest Europe at $1,230/t cfr, while the Argus traditional ammonia northwest European import price was assessed at $350-360/t cfr duty paid as of 1 June. With lower associated production costs, blue ammonia could help ease the transition until green production costs are reduced, said Williams. Governments will also have an important role to play in easing this transition, he said.
The industry will also need to see a significant scaling up of available infrastructure to meet this merchant demand. Jera is actively working with shipping companies to create the next generation of ammonia carrier vessels, which could double container capacity and see dramatic reductions in freight costs in the mid-to-long term. But there would need to be a simultaneous build up of ports and terminals which are able to receive such vessels.
"Inevitably we need to see a huge scale of up in infrastructure," senior director of green hydrogen for Avangrid, Adolfo Rivera said.
