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January 11, 2024Global green ammonia market snapshot
Green ammonia is anticipated to emerge as a prominent pathway for achieving net-zero objectives. Its versatility spans various sectors, encompassing well-established applications, and is poised to play a pivotal role in addressing targets within challenging to decarbonize industries. Anticipated growth includes heightened demand in emerging applications.
In 2023, 191 million tons of ammonia are expected to be produced in the form of grey and brown ammonia, using natural gas and coal feedstocks respectively. Blue ammonia production is also expected to begin, with capacity expected to come online in 2023 using carbon capture and storage technology to reduce carbon intensity. Blue ammonia capacity growth is expected to be quicker in the short term to provide additional demand for green ammonia if the cost of production allows.
Green ammonia is produced using renewable energy and electrolysis of water to produce green hydrogen followed by the production of green ammonia via the Haber Bosch Process. The first green ammonia plant is expected to come online in 2024 and be integrated into a green fertilizer plant in Bangladesh. Capacity is expected to increase slowly year on year, following the announcement of large-scale projects including NEOM in Saudi Arabia and Avina in the United States. Over 10 million tons of capacity has been announced in the last year alone.
Both grey and blue ammonia currently have a cost competitiveness advantage over green ammonia, which will limit its penetration into the established end uses including fertilizers, as countries will look more towards food security than the sustainability credentials early on. In regions such as Western Europe, the cost of renewable energy can make up to 50% of the cash cost. In the short term, new additions for capacity will generally be in regions with access to low-cost renewable energy, with projects also requiring pre-existing offtake agreements to allow the plant to be feasible, due to the currently limited market.
Policies including the Inflation Reduction Act (IRA) have made countries including the US more attractive for new plants, with the introduction of tax credits, reducing the cost of production and the cost to consumers. Within Europe, the Cabron Border Adjustment Mechanism (CBAM), Emissions Trading Scheme (ETS) and Renewable Energy Directive (RED III) all apply to the production of green ammonia and will provide financial benefits for the uptake of green alternatives. The International Maritime Organization (IMO) has also introduced net-zero mandates on marine fuels, with green ammonia expected to have a substantial share in the low carbon fuel market.
A primary end use for green ammonia is expected to be as a hydrogen carrier. It allows for more energy efficient transport and can be used to transport larger amounts of energy over long distances in less space. It can also utilize existing ammonia infrastructure, a problem which currently hinders hydrogen, and will allow for transport and trade over further distances. Green ammonia is also expected to penetrate the marine fuel market, as a low carbon alternative, and as a fuel source for energy generation, through co-firing in coal powered power plants in countries including Japan and Korea.
Green ammonia adoption is likely to be concentrated in regions including Western Europe and Asia Pacific, with the Middle East expected to become a key player in the export market. Demand for green ammonia is expected to reach 24 million tons by 2030.
Announced Annual Green Ammonia Capacity Additional (Thousand tons)
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Market Scenario Planning: Green Ammonia - 2023
This report report provides NexantECA’s scenario forecast for green ammonia demand out to 2045 by key region and application (marine fuel, power generation, hydrogen carrier, fertilizer derivatives and industrial end uses). Scenarios forecast demand based on low, base and high assumptions whereby underlying policy, cost learning curves and adoption of green ammonia in each application evolves in fundamentally different ways. As well as the scenarios, detail on the current situation of the market and key market drivers (carbon intensity, market pressure, cost competitiveness and policy) are provided.This report is part of our new Market Scenario Planning program which looks at emerging products, market events and end-use industries where scenario forecasting provides more value due to the higher uncertainty associated with the subject. Scenarios are defined as low, base and high and are informed by NexantECA’s expert knowledge of chemical, fuel and fertilizer markets.
Market Analytics: Ammonia - 2023
This report provides analysis and forecasts to 2045 of supply and demand of the global ammonia industry. This analysis identifies the issues shaping the industry as well as provide demand, supply and net trade data for 40 countries/regions. Ammonia demand is segmented by key end-use including ammonium nitrate fertilizers, ammonium phosphate fertilizers, direct application fertilizer, industrial, other nitrogen fertilizers, urea, marine fuels and power generation.
The report captures:
Consumption: Assesses historic and forecast consumption; forecasts are based on projections of end use and economic activity.
Supply: Includes a list of all producers, their production capacity, location, etc., and discussion of the status of new projects.
Supply, Demand and Trade: Provides historical analysis and forecasts to 2045 of consumption, production, imports/exports, inventory build-up/decline, capacity and capacity utilization.NexantECA has also utilized its long standing knowledge in the energy and fuels sector to forecast the consumption of ammonia in emerging end uses including marine fuels and power generation.
The Author...
Tristan McCallum, Analyst
About Us - NexantECA, the Energy and Chemicals Advisory company is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms. Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies and economics, NexantECA provides solutions that our clients have relied upon for over 50 years.
