By Aaron Foyer
VP, Orennia
Since humans began organized agriculture, we have always looked for ways to get more out of the land. Many civilizations discovered that applying manure, rotating crops and growing legumes all help plants grow, getting more food out of the same acreage. It took until the 19th century for chemists to figure out that it was the nitrogen, potassium and phosphorous from these practices that were the benefit.
Around this time, the US became aware of enormous deposits of bird excrement on the Chincha Islands off the coast of Peru. Known locally as “guano” and rich in nitrogen, potassium and phosphorus, the value of these deposits was instantly recognized. Most notable was a 200-foot tall, 2-million-ton guano pile referred to completely seriously as the “Great Heap.” (10-year-olds everywhere giggling.)
The discovery led to a guano frenzy in the 1850s, known as the Great Guano Rush. In 1856, at a time when ~80% of Americans worked in agriculture, Congress passed the Guano Islands Act, America’s earliest imperialistic land grab outside the continent. The law actively encouraged citizens to claim foreign lands in the name of securing guano for farmers.
Enter science: Fast forward 50 years to the early 1900s when two German chemists named Fritz Haber and Carl Bosch worked to synthesize ammonia by combining hydrogen and nitrogen using an iron catalyst. In 1910, the two industrialized the method that came to be known as the Haber-Bosch process and went on to make ammonia one of the most important chemicals ever made. It’s believed ammonia-based fertilizers are now responsible for feeding no less than half of the world’s population, a result of ammonia salts overtaking organic fertilizers like guano.
Ammonia has once again emerged in discussion, this time with potential to be a versatile tool in the energy transition toolbox. There are views that it could be used as an energy carrier, as a fuel for power generation and as a maritime fuel. For a chemical that’s been industrialized for more than 100 years and is almost entirely used today for agriculture, could ammonia help address emissions in many sectors?
Background
To start, ammonia is not a complicated molecule. It consists of one nitrogen atom and three hydrogen atoms. Its chemical formula is NH3 and is still made using Haber-Bosch, a carbon-intensive process. The nitrogen for the process is pulled straight from the air, so the emissions mostly stem from generating the hydrogen and from the industrial heat needed to make the Haber-Bosch magic happen.
For its use today, 80% of ammonia is consumed as some form of fertilizer. In North America, most of the operating plants are strategically positioned near cropland. There are ~3,100 miles of ammonia pipeline in the US, most of them transporting the chemical from factories on the Gulf Coast to farms in the Midwest.
Classifying: Like hydrogen, ammonia is assigned colors based on how it’s made and based on the type of hydrogen used. If gray hydrogen is used to make the ammonia, it’s gray ammonia. Electrolysis-based green hydrogen makes green ammonia. And when coal or gas is used to make the hydrogen, but the emissions are largely captured, it’s blue.
North American Cropland and Ammonia Infrastructure
Announced low-carbon ammonia plants are being planned across North America. While some projects aim to actively decarbonize existing ammonia facilities, many are situated along the coasts with grand plans to decarbonize local sectors or export to countries looking for clean fuels.
Blue ahead of green on cost
Like most low-carbon solutions, the clean alternative is currently more expensive than the incumbent. S&P Global tracks gray, blue and green ammonia costs at various hubs around the world and shows blue ammonia trading 8% to 10% higher than conventional gray ammonia, and it’s tough to see how that improves significantly in the future. Ammonia is a well-established ~$70 billion global market with more than 100 years of chemists and engineers driving down its production cost. So, take a century of industrialization and add carbon capture costs and that’s about as low as blue ammonia can go.
Unsubsidized Levelized Cost of Blue and Green Ammonia
Power play: While more expensive today, green ammonia has the greater potential to come down in cost. With its future tied to green hydrogen’s, electrolyzer-based ammonia could start to be competitive if electricity and electrolyzer prices come down and efficiencies go up. Today, according to our models, the electricity needed for the electrolyzer alone is more than all the combined production costs for blue ammonia.
Many clean energy use cases
With blue ammonia being just modestly more expensive than conventional ammonia, it opens the conversation for using the low-carbon chemical.
As an energy carrier: Hydrogen has potential to help decarbonize many industries, but one of the great challenges is how to move it. The hydrogen molecule is the smallest on Earth. As a gas, it can sneak its way out of pipe joints and tank seals. Turning it into a liquid and keeping it there is not a cheap or easy solution either, as it takes temperatures approaching absolute zero to liquify. Haber-Bosch is much easier.
Ammonia turns to liquid below –28°F at atmospheric pressures, even warmer with a little added pressure, making it ideal for transporting by ship. Many of the future low-carbon hydrogen projects along the US Gulf Coast and Canadian East Coast plan to convert hydrogen into ammonia for transport across the ocean. There are other hydrogen energy carriers being considered, including methylcyclohexane (MCH) and methanol.
Minimum Costs for Shipping Hydrogen Over Long Distances
For power generation: Ammonia is a real contender for making low-carbon electricity.
In its favor, the ambient gas can be used directly in retrofitted gas turbines, avoiding the need to crack it back into hydrogen. Taking advantage of existing infrastructure accelerates its adoption and reduces upfront costs. While ammonia burns at a lower flame temperature than natural gas and can produce nitrogen oxides when doing so, these issues can be overcome. Several countries in Southeast Asia are already co-firing ammonia alongside coal to generate power, and both Mitsubishi and GE Vernova are developing 100% ammonia-fired gas turbines to be in use by the end of the decade.
Working against ammonia as a fuel for electricity is cost. The market price of blue ammonia today is ~$400 per metric ton, translating to more than $20 per million British thermal units (MMBtu). In places like the US Gulf Coast, that’s 10 times the current price of natural gas, even before lower ammonia turbine efficiencies are accounted for. But the price difference is much smaller in places like Japan and Germany where natural gas is imported at closer to $10 per MMBtu. It’s not surprising then that both countries, each with bold climate ambitions, are building clean hydrogen import terminals that will accept ammonia.
As a maritime fuel: There are many challenges with decarbonizing the shipping industry, which accounts for ~2% of global energy-related emissions. Neither hydrogen nor batteries carry enough energy for how much space they would occupy on a ship for long-distance shippers to be interested. Following some initial tests on a wide range of low-carbon technologies and fuels, ammonia and methanol have emerged, like Captain Jack and Davy Jones, as the two competitors vying for dominance of the high seas.
Low-carbon Technology Projects for Large Vessels
The Global Maritime Forum publishes a regular report on technologies being piloted by maritime companies to decarbonize the industry. In early July, the not-for-profit released the report’s fifth edition, which highlighted ammonia’s emergence as a top low-carbon fuel being tested by shippers, though methanol projects are now considered mature and so many are excluded.
Both fuels have benefits and drawbacks
While not a true hydrocarbon, the methanol molecule still contains one carbon atom so emits some carbon emissions when burned, though 10% to 20% less than traditional marine fuels. It’s also easier to handle and has existing infrastructure to leverage. With existing dual-fuel engines that support methanol use, ships can run on it today.
By comparison, ammonia is high risk, high reward. If made using zero-carbon hydrogen, it is essentially a zero-carbon fuel and cheaper than methanol to produce. The lack of bunkering infrastructure can be addressed, but an underappreciated barrier to adoption is its toxicity. Ammonia is so toxic, it makes Kanye West look like Buddy Holly. A major ammonia spill at sea would create ammonium hydroxide in volumes that would sterilize cubic miles of ocean. Last year, a tanker truck carrying anhydrous ammonia was punctured, and the exposure killed five people and hospitalized another seven.
Many shippers have opted for hydrogen-based methanol, as ammonia’s toxicity makes it risky and more expensive to transport, though low-carbon maritime technology is a rapidly changing landscape seascape.
Bottom line
Low-carbon ammonia has the potential to help reduce global emissions. First and foremost, the ammonia industry can decarbonize itself. The Haber-Bosch process accounts for 1.5% of anthropogenic global emissions, so the industry self-decarbonizing is already an improvement. And if the safety issues with transporting large volumes can be sorted out, ammonia may become an internationalized decarbonization fuel used to address a “great heap” of emissions.
Sparked thoughts
- Blue over green? Eventually carbon credits will end, and we’re just left with whatever fuels cost. It seems unlikely that the cost to produce blue ammonia will come down much further, but it will require some meaningful technological leaps for green to be competitive in the long term.
- Transport risk underappreciation? One major ammonia spill at sea could make Exxon Valdez look like nothing. There is no shortage of efforts to move ammonia across large bodies of water, so the benefits of shipping are clearly recognized, but it feels like one accident away from an international ammonia shipping ban.
- Use over risk? Despite all the safety risks, the clear advantage of ammonia over other carriers like methanol and MCH is being able to use it as-is rather than reconverting it back to hydrogen. Ammonia may still end up as the ultimate energy carrier across the high seas.
Aaron Foyer is Vice President, Research and Analytics at Orennia. Prior to Orennia, he leveraged his technical background in management consulting and finance roles. He has experience across the energy landscape including clean hydrogen, renewables, biofuels, oil and gas, petrochemicals and carbon capture.
