Green ammonia will become a vital low-carbon commodity in the coming years, but exactly how much will be needed – and for what purposes – remains contentious.

The promise of green hydrogen combined with the challenge of building pipelines has raised the possibility of shipped ammonia as a transport vector. A raft of ammonia import terminal projects are hoping for financing
But the actual demand for green hydrogen is unclear and shipping it as ammonia would involve significant energy losses
There are more reliable sources of green ammonia demand – such as fertiliser and shipping fuel – which alone will justify new terminal infrastructure
Just how much infrastructure will be needed and when remains to be seen. FIDs on ammonia terminal projects face real uncertainty around offtakers

The case for green ammonia is indisputable. The world uses around 187 million tonnes of fossil fuel-based ammonia each year – around 70% in fertiliser production – and this grey ammonia accounts for roughly 2% of global COâ‚‚ emissions. But green ammonia has potential beyond simply replacing its carbon intensive equivalent. Green ammonia could power ships, it could power peaker plants and it could be a way to transport green hydrogen. It is this latter use case that has pulled ammonia into Europeâ€™s increasingly acrimonious hydrogen debate.

Politicians and infrastructure owners want a continental hydrogen transport network that will help decarbonise a range of sectors including manufacturing, transport and industrial heating. But hydrogen is hard to handle and pipelines take a long time to build – hence the potential for ammonia as transport vector. This has prompted a wave of project proposals for import terminal facilities. These would include not just reception, storage and transport but also cracking facilities to turn ammonia into hydrogen. The most recent EU list of projects of common interest (PCI) includes a string of ammonia reception facilities stretching from Dunkirk in northern France to the German town of BrunsbÃ¼ttel. The Belgian and Dutch ports of Antwerp and Rotterdam each have multiple terminal projects on the PCI list.

Belgium-based Fluxys – a gas transmission system operator – is involved in plans for ammonia reception facilities at Antwerp, Zeebrugge and Dunkirk. Of its three ammonia projects, Fluxys told E-FWD that Antwerp – a joint feasibility study with Advario – is on a faster schedule than the other two.

As part of the feasibility study, the group is preparing to assess market demand for both raw ammonia and green hydrogen derived from ammonia. The Antwerp plans include a cracker for hydrogen, although this would be built at a slightly later stage. The firm is hoping to make a final investment decision (FID) on this project in 2024 or 2025.

Fluxys is also involved in the Belgian Hydrogen Backbone project, which would create a pipeline to supply industrial clusters in Belgium and Germany.

All about the offtakers

Fluxys describes demand for hydrogen as ammonia as a question of when, not if. The REPowerEU plan has an explicit target of producing 10 million tonnes of hydrogen and importing 10 million tonnes by 2030. A working document accompanying that plan suggested that 4 million tonnes of hydrogen could be imported as ammonia. Almost no-one thinks these specific targets are realistic, but the intent is clear.

Serious energy analysts are including hydrogen transport in their demand projections for ammonia. S&P Global estimates that European ammonia demand will rise from around 21 million tonnes in 2020 to almost 50 million tonnes by 2035. Of that 50 million tonnes, 16.8 million will be for hydrogen. Although Birgit Schultz, senior analyst for short-term fertiliser forecasts at S&P Global Commodity Insights, notes that given the time horizon this estimate could well be optimistic.

Studies suggest the maximum return on energy where ammonia is used as a transport vector for hydrogen is a little over 50%. Essentially, half of all the usable energy is wasted.

There are also analysts that argue demand for ammonia-to-hydrogen remains very much a question of ‘if’. Michael Liebreich, chairman and CEO of Liebreich Associates, says the ammonia import facilities are part of the â€œEuropean overreach on hydrogenâ€. He believes the potential demand for green hydrogen has been vastly overstated. There is no shortage of ambitious projects of the kind found on the PCI list, but Liebreich notes that a glance at the FID landscape tells a different story.

Late last year, BNEF reported that only 10% of the clean hydrogen capacity planned by 2030 had identified a buyer. Of those precious few projects that had, just 13% had a binding contract. The vast majority of offtake agreements were memorandums of understanding or simply unspecified. Investors need to have confidence in offtaker demand in order to finance a project, and right now confidence is lacking.

Almost half of the total planned hydrogen offtake capacity that BNEF tracks is to be supplied as ammonia. But ammonia projects suffer from the same lack of confidence. Earlier this year, a BNEF whitepaper on low-carbon ammonia highlighted that of the 185 ammonia projects the firm tracks, only 8% had reached financial close or were under construction.

Detractors point to such numbers as evidence for a fundamental lack of demand for green hydrogen – rendered uncompetitive in many use-cases by high costs and thermal efficiency. Adherents say it only shows the need to stimulate demand through supportive policies. The infrastructure operators behind proposed hydrogen and ammonia projects have a natural desire to push and highlight new use cases for their businesses.

â€œBut donâ€™t confuse rattling a stick on the side of a trough with animals eating happily,â€ says Libereich. â€œIf youâ€™re a commodity port you donâ€™t want to sit on your hands and let some smaller port get ahead of you. But that doesn’t mean that you want to pull the trigger and pour huge amounts of your investorsâ€™ money in. All of it comes down to: are there offtakers?â€

E-FWD recently covered the hydrogen offtaker debate in detail. When it comes to ammonia as a transport vector, the issues of cost and efficiency are even clearer. One tonne of ammonia produces just 0.18 tonnes of hydrogen. Of the energy in that hydrogen, some 15% is lost in the cracking process. Looking at energy losses across the entire hydrogen chain, studies suggest the maximum return on energy where ammonia is used as a transport vector for hydrogen is a little over 50%. Essentially, half of all the usable energy is wasted.

â€œWe badly need to produce truly green ammonia from green hydrogen for use as a fertiliser and as the basis of the entire nitrogen chemicals industry,â€ says Paul Martin, a chemical engineer and co-founder of the Hydrogen Science Coalition. â€œUsing ammonia as either a fuel or energy transport medium, however, is fraught with both inefficiency and cost.â€

Green growth

The one clear source of green ammonia demand is fertiliser. Regulation is pushing European industry toward decarbonisation and ammonia is no exception. S&P Global estimates that the 21 million tonnes of demand in 2020 will remain more or less stable out to 2035. So Europe is going to need some 20 million tonnes of low-carbon ammonia.

Over the last few years, high gas prices have made several European ammonia production facilities uncompetitive. EU fertiliser makers like Yara and OCI started importing grey ammonia through their existing export-import terminals.

The question is whether Europe will be any more competitive at producing green ammonia, or whether it will need to import. At this stage, that question is essentially unanswerable.

We badly need to produce truly green ammonia from green hydrogen for use as a fertiliser and as the basis of the entire nitrogen chemicals industry.
Paul Martin, co-founder of the Hydrogen Science Coalition

Fertiliser analysts say estimating a price for green ammonia amounts to holding a wet finger up to the air. Energy costs, technology costs, financing costs, transport costs – the uncertainties are vast. What is clear is that Morocco, the UAE, the US and Canada are all planning to be competitive exporters of green ammonia. If Europe ends up relying more heavily on imports, then it will need additional import facilities.

Martin Tengler, head of hydrogen research at BloombergNEF, says there is likely a case for ammonia import facilities â€œif for no other reason that we produce it now in the EU through natural gas, and we might not be able to produce [green ammonia] at home.â€

But he also points out that green ammonia alone is not a pathway to zero-emissions agriculture. Ammonia-based fertilisers result in nitrous oxide emissions – a potent greenhouse gas with a much higher global warming potential than CO2.

â€œEven if you make green ammonia – you still have 60% of the emissions occurring through NO2 in post application,â€ he says. â€œIf we are going to reduce emissions, we need to reduce ammonia use.â€

Ammonia at sea

The remaining 13 million tonnes of European ammonia demand that S&P Global expects in 2035 will come from bunker fuel. This is a more plausible new case for ammonia than green hydrogen transport, and S&P Global expects there to be around 200,000 tonnes of bunker fuel demand in 2025.

There is still robust debate over whether methanol, ammonia or biofuels will be the low-carbon shipping fuel of choice. But ammonia – despite its toxicity – has some clear advantages. It is both more energy dense and easier to handle than liquid hydrogen. Ammonia does not use agricultural land as biofuels do and – unlike methanol – its production is not reliant on CO2.

Announced in 2023, the Yara Eyde will be the world’s first container ship to use clean ammonia as fuel. Source: Yara

Well over 200 methanol engine vessels have been ordered, while ammonia orders are only just into double figures. But Aparjit Pandey, shipping decarbonisation lead at think-tank RMI, says this is because methanol engines have been around for longer. He expects ammonia-powered ship orders to ramp up in 2024. Green methanol could remain cost competitive in the short to medium term. But there is a finite supply of biogenic CO2, and Tengler also expects this limitation to lead to more demand for ammonia-powered ships.

Premature but not implausible

Finally, ammonia and hydrogen could also have a role to play in power generation. Japan is pursuing an aggressive – some say foolish – strategy that involves co-firing its large fleet of coal power plants with ammonia. This would reduce emissions without the difficulty of decommissioning the plants. But BNEF estimates that a 50% coal 50% ammonia co-firing would be far more expensive than renewables, while still leaving 50% of emissions unaddressed.

European countries could use green ammonia and hydrogen in a far more modest way – as fuel for peaker plants. Germany has proposed building a set of peaker plants that would run on hydrogen, although the high costs of construction and fuel have cast doubt on these plans. Still, Tengler says that Europe could find solid demand for green ammonia as a fuel in seasonal balancing – potentially produced and imported from the US or Canada.

Ultimately, there are clear parallels between the EU ammonia reception terminals and the hydrogen backbone plans. These are large-scale ambitious projects designed around fuels of the future, and their presence on the PCI list means there is the prospect of receiving public funding. There is a core set of demand cases that makes some version of these projects plausible. For ammonia, that includes fertiliser and shipping fuel with a large question mark over green hydrogen. But that also fits with the plans of firms like Fluxys who see hydrogen crackers as a later stage addition to their import facilities.

The most reasonable criticism of the import terminals may be that – given the absence of confirmed offtakers – they are premature. Yet given the projected appetite for green ammonia and the opportunity for state support it is no surprise project developers are moving forward.

â€œWe can see demand growing,â€ says Schultz at S&P Global. â€œSo these [projects] are going to come into use.

“But if this is going to be in the next two years or the next five years – who knows.â€

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