- Ammonia made by fossil fuels accounts for approximately 5% of world’s gas consumption.
- Industry reliance on ammonia necessitates shift to ‘green ammonia’ – produced using renewable hydrogen.
- Cross-sector alliances aim to make this ‘green hydrogen‘ a viable alternative to reduce emissions and generate large-scale investment.
Ammonia may not be the antidote to fossil fuels, but it will make a huge contribution to reducing our dependence on them. This article aims to answer some important questions: what is green ammonia; what is the role of hydrogen; what does it mean for food production; and how can it turn shipping green.
With investments, public funding and frameworks, we can cut emissions from energy-intensive sectors, decarbonize food, enable the green hydrogen economy and create a multi-billion-dollar market for green energy.
The world is already completely dependent on ammonia. In fact, half of the world’s food production depends on it as it is a key component of mineral fertilizer. Today, ammonia accounts for about 5% of the world’s gas consumption. If we can make ammonia from renewable energy (green ammonia) profitable, we will help decarbonize food and take a big step towards a hydrogen economy.
But we won’t just decarbonize food with green fertilizer; we will also be able to decarbonize fuel for shipping.
What is green ammonia?
The equation for ammonia looks something like this:
Power (gas or other source) + water (electrolysis) = hydrogen + nitrogen = ammonia
If we swap the gas currently used as a power source to make hydrogen with renewable energy—hydro-electric, solar power or wind turbines—we have the equation for green ammonia.
Fun fact: in Norway, hydro power was the primary source of energy used in ammonia production for decades, up until 1991. This all stopped when the low cost of gas outcompeted other sources of energy. So, we’re actually talking about going back to the future; or rather looking back before moving forward.
Projects powered by renewables
Several big ammonia producers have announced projects to make hydrogen from water using renewable energy. Yara, one of the world’s largest fertilizer and ammonia producers is one of them, with pilots in Australia, Norway, and the Netherlands. Yara also recently announced plans to electrify its ammonia plant in Norway, thereby potentially removing 800,000 tonnes of CO2 per year, provided the required public co-funding and regulatory framework are in place.
CF Industries in the US, Fertiberia and Iberdrola in Spain and the Asian Renewable Energy Hub and Fortescue Metals Group in Australia, amongst others, have started green ammonia pilot programs around the world.
Hydrogen viable at scale
The problem with green ammonia today, is that green energy sources are still far more expensive than gas, and a lot of electricity is needed to make ammonia.
So, the price of renewable energy must decrease. This is possible, if we look at how the existing ammonia market would be opened up to a whole new set of users and thus, buyers. Ammonia has nine times the energy density of Li-ion batteries, and three times that of compressed hydrogen, making it very attractive as a potential carbon-free energy carrier.
With pressure mounting on several industries to reduce emissions, it is not surprising that companies are racing to make green hydrogen (and thus green ammonia) more cost competitive.
The Green Hydrogen Catapult initiative was recently launched, with global companies across different sectors aiming to achieve a 50-fold increase in the production of green hydrogen by 2026. This could cut the current cost of green hydrogen in half, getting it below US$2 per kg, a potential tipping point where green hydrogen could become the energy source of choice.
If the target is reached, it could mean huge emission cuts from energy-intense industries like steel and fertilizer production, from power generation, and perhaps most promisingly, long-range shipping. The private sector is taking a leading role in overcoming the barriers of technology, safety, fuel supply and commercial viability to enable decarbonized shipping.
Decarbonizing food
But as prices for green hydrogen and green ammonia continues to be much higher than conventional ammonia, one of two things must happen to produce green fertilizer: either there is a market for more expensive, decarbonized food, or the price of green hydrogen as feedstock in ammonia production comes down.
The future is green
Although the private sector is rushing to produce green hydrogen and green ammonia at scale (to drive down costs) BloombergNEF estimates that the industry will need US$150 billion in subsidies by 2030, and far more overall investment. However, if the hydrogen economy is fully developed, it could become a US$12 trillion market, according to some estimates.
Realizing this, countries and regions are taking the lead in supporting green hydrogen production. Germany has allocated the largest share of its clean energy stimulus funds to green hydrogen, Korea and Japan have both rolled out roadmaps to guide hydrogen-related investments and policy in coming years, and the Middle East (which has the world’s cheapest wind and solar power) is angling to be a major player in green hydrogen.
Green hydrogen and green ammonia are no longer fringe concepts. But it is still an infant industry and history has taught us that such industries need special care and attention, before growing and blooming.
Author: Svein Tore Holsether
Svein is President and Chief Executive Officer, Yara International
This article was originally published by the World Econimic Forum and is republished under the Creative Commons licence. The views expressed in this article are those of the author alone and not the World Economic Forum or Green Building Africa.
