A simple molecule has had a majorly positive impact on our world over the last 100 years. Ammonia, composed of three hydrogen atoms bonded to a single nitrogen atom, is widely used in producing fertilizers that allow us to produce enough food for everyone on the planet. This makes it the second most important molecule after water.
Green ammonia is produced using a carbon-neutral process. It is then synthesized using the Haber-Bosch process, powered entirely by renewable energy. The Haber process for green ammonia is a clean combustion process that combines nitrogen and hydrogen in a high-temperature and high-pressure chamber with iron as the catalyst. Ammonia production can be made completely carbon-free, by using water electrolysis and renewable electricity.
Green ammonia production currently costs around US$ 500 per metric ton, two to three times the cost of normal ammonia or synthetic ammonia, both of which are produced using natural gas. The majority of ammonia production today is powered by fossil fuels. It is also a precursor for many nitrogenous commodity chemicals and a potential energy carrier that is more easily stored and transported than electricity and hydrogen.
Ammonia is a well-established commodity, with around 180 million tons of global production and approximately 120 terminal ports worldwide. Companies that already produce and distribute ammonia around the world are familiar with ammonia technology and have an incentive to promote it because it is a sustainable technology that could open up new business opportunities.
Versatile Nature of Hydrogen
Hydrogen is a versatile energy source because it can be used as a fuel or an electricity source. Unlike batteries, hydrogen can be produced from excess renewable energy and stored in large quantities.
Hydrogen has many applications. Green hydrogen can be stored in existing gas pipelines and used to power appliances. It can transport renewable energy when converted into a carrier like ammonia, a zero-carbon fuel for shipping. This technology can also power electric vehicles and electronic devices.
The green ammonia market is expected to be led by the power generation segment. The high demand for energy across industries is driving the segment's growth. Green ammonia production can store renewable energy and reuse it for power generation. As a result, renewable energy production will be more efficient and long-lasting.
Potential Markets for Green Ammonia
Predominantly, green ammonia is used in the fertilizer industry, however, green ammonia has the potential to play a role in other major industries and sectors. Some of the practical applications of green ammonia include;
- Ammonia in power generation
- Ammonia as a marine fuel
- Ammonia in energy storage
- Ammonia in other industrial applications
Regional Analysis and Investments in Green ammonia
The global green ammonia market has enormous potential. Globally, ammonia is the second most widely produced commodity chemical, with a production volume of over 180 million tonnes in 2019. Nearly 15 million tons of new green ammonia capacity is announced for the period of 2022-2030. Increased green ammonia investments and large-scale global developments bode well for the market. The global green ammonia market is expected to be dominated by Europe. Fuel cell projects and government initiatives to deploy fuel cells in residential and commercial sectors should help grow the region's green ammonia market. With the increasing popularity of electric vehicles, the market for fuel cells and, thus green ammonia is expected to grow in this region.
- Germany is considering using green ammonia as a hydrogen carrier and clean-burning industrial fuel to achieve climate neutrality by 2050. The government plans to invest US$ 10.5 billion in green hydrogen and green ammonia. This fund would be used to reduce emissions and accelerate the fuel's rollout in steel, heavy transportation, and the nation's gas sector by 2030, according to the Australian Hydrogen Council. With this commitment, the Australian Hydrogen Council (AHC) hopes to see Australia among the top three exporters of hydrogen to Asia by 2030. The AHC includes Australia's largest financial institutions and business leaders.
- Chile, one of the Latin American countries with green hydrogen projects, announced a US$ 1 billion investment in projects in the country's north and extreme south. Promoter companies include Enel Green Power, Linde, Engie, Air Liquide, and CAP. Three large green hydrogen projects in Mexico are costing 1.4 billion dollars, two in Baja California and one in Guanajuato.
- China's involvement in the hydrogen industry has grown. In its recently released 14th Five-Year Plan (2021-2025), China intends to advance the hydrogen sector. Despite lacking a national hydrogen strategy or road map, 16 provinces and cities have launched hydrogen-focused five-year plans. Beijing's five-year plan, for example, promotes electric and intelligent vehicles while speeding up the planning and construction of hydrogen refuelling stations. Beijing aims to develop five to eight world-leading hydrogen companies and grow the city's hydrogen market to at least US$ 15.4 billion by 2023.
- In 2019, the Canadian petroleum industry received US$ 52 billion in investment. Despite the drop in oil prices and the erratic COVID-19 recovery, the government can work with the private sector on commercial hydrogen projects as part of the net-zero initiative. The chemical industry can use clean hydrogen as a fuel with government support.
- Countries like India and Morocco are also investing in renewable hydrogen and ammonia plants. Recently, India-based Avaada Group signed an initial pact to invest US$ 5 billion in a green ammonia project in Rajasthan state.
Despite massive investments and conducive policies, the green ammonia market faces a lot of challenges including the costs, environmental credentials, and the energy conversion rate of green ammonia. The Russia-Ukraine conflict also affects green ammonia production, as Russia is a major producer of both. The platinum group metals are essential to the catalysts used in electrolyzers and hydrogen fuel cells in the future and will be used in many hydrogen technologies as one of the alternatives for decarbonization in the post-fossil fuel era.
Ammonia has the potential to be a critical component of a net-zero energy mix, particularly in energy-intensive sectors such as power generation, transportation, and some industrial processes. The use of ammonia fuel will face several challenges, the most significant of which are the high cost and limited availability of low-carbon ammonia. The difficulties can be overcome through continued R&D, new regulations, supporting policies, and incentives. Meanwhile, blue ammonia can provide a quicker and less expensive start for gradually transitioning to green ammonia use.
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Co-founder and Director at RationalStat
Ujjwal is a thought leader and recognized expert in the market research and consulting field. He is the co-founder at RationalStat, a leading global market research & procurement intelligence firm with 10+ years of industry expertise.