Innovation Outlook: Renewable Ammonia

By International Renewable Energy Agency IRENA

This IRENA-AEA joint report provides a detailed overview of renewable ammonia in contrast to conventional and fossil-based ammonia with carbon mitigation.

• Language: English
• Publisher: IRENA
• Release date: May 1, 2022
• ISBN: 9789292605025

Book preview

IMAGES

Image 1 Electrolysis-based hydrogen production for renewable ammonia production in Cusco, Peru

Image 2 Morris wind-to-ammonia demonstrator

Image 3 FREA wind-to-ammonia demonstrator

Image 4 Green ammonia demonstration system, Rutherford Appleton Laboratory, Oxfordshire, UK

Image 5 Ammonia-fuelled bus in Belgium during the Second World War

Image 6 Mitsubishi Power’s H-25 Series gas turbines

Image 7 The Viking Energy, which will be retrofitted with an ammonia-fuelled solid oxide fuel cell

Image 8 Jacco Mooijer (right) of Proton Ventures gives Canadian Prime Minister Justin Trudeau (second from left) and Dutch Prime Minister Mark Rutte (middle) Monia, the mascot of Proton Ventures, an ammonia solutions provider

TABLES

Table 1 Overview of existing and planned facilities for fossil-based ammonia with a lower carbon footprint (existing capacity of 2.6 Mt/yr; planned capacity of 17.4 Mt/yr)

Table 2 Overview of existing and planned facilities and technology providers for renewable ammonia production (existing capacity of 0.02 Mt/yr; planned capacity of 15 Mt/yr (2030) and 71 Mt/yr (total)

Table 3 Typical gross energy consumption for ammonia synthesis from various feedstocks, based on modern technology

Table 4 Round-trip efficiency of ammonia production and utilisation for the maritime sector

Table 5 Overview of planned facilities for large-scale ammonia decomposition

Table 6 List of selected consortia for ammonia demonstrations in the maritime sector

Table 7 Comparison of physical and chemical fuel properties for international shipping

Table 8 Comparison of ammonia and methanol as a maritime fuel

Table 9 Greenhouse gas intensity of ammonia production process from various resources

Table 10 Production costs and production capacity of green ammonia reported in the literature

Table 11 Capital cost for renewable ammonia plants, including or excluding renewable energy generation cost

Table 12 Technology status for ammonia production technologies, ammonia transport and storage, and ammonia utilisation technologies

Table 13 Projected use of ammonia in various sectors

Table 14 Cost estimate for renewable ammonia production

BOXES AND CASES STUDIES

Box 1 Facilitating the transition to renewable ammonia: Recommendations for industry and governments

Box 2 Risks associated with ammonia used as a fuel for ships

Case study 1 Facilitating the transition to renewable ammonia: Recommendations for industry and governments

Case study 2 Ammonia at fuel value in Japan

Case study 3 Decarbonised ammonia demand and production forecast

ABBREVIATIONS

ATR Autothermal reforming

CAPEX Capital expenditure

CCS Carbon capture and storage

CCU Carbon capture and utilisation

CfD Contract for difference

CH3OH Methanol

CH4 Methane

CO Carbon monoxide

CO2 Carbon dioxide

CO(NH2)2 Urea

DAC Direct air capture

eSMR Electrified steam methane reforming

EU European Union

H2 Hydrogen

IMO International Maritime Organization

IRENA International Renewable Energy Agency

LHV Lower heating value

LNG Liquefied natural gas

LOHC Liquid organic hydrogen carrier

LPG Liquefied petroleum gas

N2 Nitrogen

N2O Nitrous oxide

NH3 Ammonia

NOX Nitrogen oxides

OPEX Operational expenditure

PEM Polymer electrolyte membrane

R&D Research and development

SCR Selective catalytic reduction

SMR Steam methane reforming

SOX Sulphur oxides

USD United States dollar

UNITS OF MEASURE

°C Degree celsius

Btu British thermal unit

GJ Gigajoule

Gt Gigatonne

GW Gigawatt

kg Kilogram

km Kilometre

kt Kilotonne

kW Kilowatt

kWh Kilowatt hour

LLitre

MJ Megajoule

Mt Million tonnes

MW Megawatt

MWh Megawatt hour

m3 Cubic metre

ppm Parts per million

tTonne

t/d Tonnes per day

t/yr Tonnes per year

KEY FINDINGS

Ammonia is an essential global commodity. Around 85% of all ammonia is used to produce synthetic nitrogen fertiliser. A wide range of other applications exist such as refrigeration, mining, pharmaceuticals, water treatment, plastics and fibres, abatement of nitrogen oxides (NOx), etc.

Ammonia production accounts for around 45% of global hydrogen consumption, or around 33 million tonnes (Mt) of hydrogen in 2020. Only the refining industry uses more hydrogen today. Replacing conventional ammonia with renewable ammonia produced from renewable hydrogen presents an early opportunity for action in decarbonising the chemical sector.

New applications being explored include renewable ammonia as a zero-carbon fuel in the maritime sector and for stationary power generation. Ammonia is also proposed as a hydrogen carrier for long-range transport.

Projections from the International Renewable Energy Agency (IRENA) estimate that by 2050, in a scenario aligned with the Paris Agreement goal of keeping global temperature rise within 1.5 degrees Celsius (°C), this transition would lead to a 688 Mt ammonia market, nearly four times larger than today’s market. This ammonia would be decarbonised, with 566 Mt of new renewable ammonia production (from renewable hydrogen and renewable power), complemented with fossil-based ammonia production in combination with carbon capture and storage (CCS).

Today’s high prices for natural gas create an exceptional opportunity for renewable ammonia. With the right policies, renewable ammonia manufacturing could be widely cost competitive from 2030 onwards. These cost reductions would be achieved through renewable hydrogen cost reductions, gigawatt (GW)-scale deployment, driving down costs of renewable electricity, creating high-volume demand for electrolysers, de-risking novel combinations of mature technologies and stimulating innovation through market creation.

Certification schemes, contracts for difference (CfD) and other mechanisms will therefore be important to support the development of renewable ammonia markets.

The first of many proposed multi-gigawatt renewable ammonia production plants are already under construction. The first renewable hydrogen supply was retrofitted onto an existing ammonia plant in 2021. Renewable ammonia is expected to dominate all new ammonia production capacity after 2025. Around 2025, the first movers are expected to have demonstrated innovative renewable ammonia deployment technologies. Gas turbines, furnaces and internal combustion engines can be retrofitted to use renewable ammonia as a fuel.

Industry is showing clear signals in moving renewable ammonia technologies forward. The first dedicated ammonia-fuelled vessels will be operating at sea, with two-stroke and four-stroke engines commercially available for new-builds and retrofits. The first 1 GW power plant will be co-combusting ammonia with coal, and ammonia gas turbines and fuel cells will be available. The first gigawatt-scale renewable ammonia production plants at remote locations will ship their output to distant consumer markets.

Ammonia

•Ammonia is a key product in the fertiliser and chemical industries. It is used mainly for producing fertilisers, such as urea and ammonium nitrate. Around 183 Mt of ammonia is produced annually, nearly all of which is generated from fossil fuels: natural gas (72%), coal (22%), naphtha and heavy fuel oil.

•Ammonia life-cycle emissions amount to 0.5 gigatonnes (Gt) of carbon dioxide (CO 2 ) annually (around 15-20% of total chemical sector emissions and 1% of global greenhouse gas emissions).

•Ammonia fertiliser demand has been rising steadily in recent decades, driven by growing food demand.

•In the IRENA 1.5°C scenario, the main market growth is expected from the maritime sector, representing new demand of 197 Mt by 2050, and from international trade of ammonia as a hydrogen carrier, representing new demand of 127 Mt by 2050.

•Significant amounts of CO 2 from fossil-based ammonia production are stored in the on-site production of urea fertiliser (1.3 tonnes per tonne of ammonia feedstock). This CO 2 is released as the fertiliser is applied in the field. Urea fertiliser is deployed in developing countries in particular. Carbon accounting rules and pricing for this CO 2 can have a significant impact on the future decarbonisation strategies for nitrogen fertiliser manufacturing.

Renewable ammonia

•Renewable ammonia is produced from renewable hydrogen, which in turn is produced via water electrolysis using renewable electricity. This hydrogen is converted into ammonia using nitrogen that is separated from air.

•Renewable ammonia has been produced on a commercial scale since 1921. However, less than 0.02 Mt of renewable ammonia was produced in 2021.

•Industrial production is shifting towards renewable ammonia. The annual manufacturing capacity of announced renewable ammonia plants is 15 Mt by 2030 (around 8% of the current ammonia market across 54 projects, notably in Australia, Mauritania and Oman). A pipeline of 71 Mt exists out to 2040, but investment decisions are still pending for most projects.

•Around 80 Mt of existing ammonia production capacity constitutes an early opportunity for decarbonisation.

•IRENA analysis suggests that in a 1.5°C scenario, renewable ammonia production capacity will need to reach 566 Mt by 2050. The 71 Mt of announced projects therefore represents slightly over 10% of the zero-carbon ammonia manufacturing capacity that would need to be operational by 2050.

•Renewable ammonia is expected to dominate all new capacity after 2025. In the long term, renewable ammonia is likely to become the main commodity for transporting renewable energy between continents.

Cost competitiveness of renewable ammonia

•The cost of renewable ammonia is currently an estimated USD 720 per tonne at locations with the best solar and wind resources, and this is expected to decrease to USD 480 per tonne by 2030 and USD 310 per tonne by 2050. These cost estimates are confirmed by other literature. A carbon price of around USD 150 per tonne of CO 2 is required for renewable ammonia to be competitive with existing fossil-based ammonia production.

•Renewable ammonia is expected to achieve cost parity with fossil-based ammonia with CCS beyond 2030.

•An electricity price below USD 20 per megawatt-hour is required for renewable ammonia to be competitive with fossil-based ammonia. In the right regional markets – for example, explosives manufacturing in Chile – local renewable ammonia production may already be competitive with imported fossil-based ammonia.

•The cost of producing fossil-based ammonia is typically in the range of USD 110-340 per tonne, depending on the fossil fuel price. Fossil-based ammonia production can be decarbonised with CCS technology. CCS adds costs that vary by technology and by capture efficiency, typically yielding an ammonia production cost of USD 170-465 per tonne and a mitigation cost of USD 60-90 per tonne of CO 2 .

•The costs associated with carbon emissions, CCS, premium price off-take agreements, as well as CfD schemes will shift this dynamic. A carbon price of USD 60-90 per tonne of CO 2 is required for CCS to be competitive with existing fossil-based ammonia production.

•The new autothermal reforming (ATR) technology is better suited for CCS than today’s steam methane reforming (SMR) technology. Around 2.6 Mt/yr of facility capacity exists today, producing low-carbon-fossil-based ammonia and the planned facility capacity accounts for 17.4 Mt/yr.

•The cost of renewable ammonia depends to a large extent on the cost of renewable hydrogen, which represents 90% of the production cost of renewable ammonia.

•The future cost of renewable hydrogen depends mainly on the combination of further reductions in the cost of renewable power generation and electrolysers, and gains in efficiency and durability.

•The number of operational hours per year plays a key role in reducing the cost of renewable ammonia production. Locations with complementary variable wind and solar energy profiles can yield electrolyser capacity factors of up to 70%.

•The cash cost of operating a large-scale renewable ammonia plant that includes renewable energy generating assets is well below USD 100 per tonne.

•Partial revamping of fossil-based ammonia plants to introduce renewable hydrogen reduces the cost, compared to stand-alone new-builds.

Benefits and challenges for renewable ammonia

•Ammonia is a versatile fuel for stationary power and heat and for maritime transport that can be used in internal combustion engines, gas turbines, industrial furnaces, generator sets and fuel cells. It can be stored as a liquid at 8 bar or above and at ambient temperature, or at atmospheric pressure at -33°C.

•Around 18-20 Mt of ammonia is shipped internationally per year. Substantial investments will be required to expand the shipping infrastructure and allow ammonia refuelling.

•Renewable ammonia can displace fossil fuels at scale in hard-to-abate areas of the power and transport sectors. However, the use of ammonia as a fuel could increase emissions of nitrogen oxides (NO X and nitrous oxide, N 2 O), which must be avoided.

•Most of the proposed renewable ammonia plants use variable solar photovoltaics (PV) and wind. A number of electrolysis technologies exist. Technological and operational innovations, in combination with careful site selection and project design, can facilitate the integration of high shares of solar and wind.

•The current global electrolyser production capacity of a reported 2.1 GW per year (in 2020) needs to scale up more than 20-fold to meet the renewable ammonia manufacturing objectives for 2050.

•Demonstrations, technology commercialisation and regulatory development will be required for the ammonia fuel market to take off.

Creating enabling frameworks: 10 recommendations

1Put a sufficiently high price on CO 2 emissions.

2Translate political will into policies.

3Focus on deployment of existing renewable ammonia technologies.

4Support the development of entire supply chains.

5Devise trade strategies that mitigate supply risks.

6Invest in electrolyser manufacturing.

7De-risk early investment projects.

8Retrofit technology towards renewable ammonia production.

9Support the demand-side phase-out of fossil fuels.

10 Re-assess the role of ammonia in hydrogen strategies.

SUMMARY FOR POLICY MAKERS

Ammonia is one of the seven basic chemicals – alongside ethylene, propylene, methanol and BTX aromatics (benzene, toluene