This article is part of our special report Ammonia and the greening of EU industry.
Ammonia has until now been used chiefly in the fertiliser industry as a way to return nitrogen to the soil. But it also has potential in boosting renewables – both as a replacement for hydrogen in long haul shipping and as a way of storing and transporting hydrogen.
David Herrero Fuentes is industry director at Fertiberia, a Spanish company and leader in fertiliser and ammonia production. It recently joined with Iberdrola, a Spanish multinational electric utility, in an alliance on green ammonia.
Tove Andersen is the executive vice president at Yara, a fertiliser company that recently announced plans to produce 500,000 tonnes of green ammonia annually in Norway.
Both are board members of Fertilizers Europe, a trade association.
What is green ammonia? And why do you believe it can be significant for the energy transition?
Andersen: Today when you produce conventional ammonia you use natural gas in the production, to get the hydrogen that you need to create ammonia. Green ammonia is ammonia that is produced with renewable electricity, with water, and with air.
Ammonia is a basic chemical that has many different applications, but for us, the main application is fertiliser production. It is the first building block in bringing nitrogen into the fertiliser which is one of the key minerals that a plant needs to grow. It has many industrial applications as well.
Can you give a sense of the scale of the uses of ammonia currently?
How can ammonia be expanded and used in energy applications? Is it an alternative to hydrogen?
Herrero: I think it’s complementary. The main applications for ammonia in the energy sector will be for fuel and for storage, as an energy carrier. It will be an enabler of the hydrogen economy, it will complement hydrogen and will assist, together with other technologies like electric batteries, in storing energy, depending on the use and the application. Each of these technologies will find their way based on their properties and economics.
One of the applications where ammonia can be used directly as a fuel is in shipping. Can you expand on that?
Andersen: The advantage with ammonia is that, if you want to liquefy it, you only need to take it down to -33 degrees. While hydrogen you need to take it down to -253, so to liquefy hydrogen is much more expensive.
If you look at long haul vessels, the energy density is much higher in ammonia than in hydrogen, so the storage capacity you need on ships to use hydrogen for long hauls doesn’t seem to be an efficient solution.
Our belief is that, for long haul shipping, ammonia can be an energy carrier and fuel in itself, which can replace hydrogen. And for other applications, we see ammonia as a battery for hydrogen. It will actually be an enabler of the hydrogen economy.
Herrero: The shipping application of ammonia is quite direct. There are many developments in terms of engines for combustion of ammonia, even the cost of adapting existing vessels shouldn’t be too high. So the potential for shipping is quite high, but to reach this potential the production of ammonia needs to increase.
Andersen: Equinor has announced that they will have a vessel running on ammonia within a couple of years – their target is to have it in test operations in 2024. You see quite a lot of interest in this and this is the challenge for the shipping industry – if they’re really going to decarbonise and meet climate targets, they need to find different solutions for different distances and ammonia currently seems like the best solution for long haul.
In its hydrogen strategy, the European Commission said it would aim for 100% renewable hydrogen production in Europe. What do you believe is ammonia’s contribution to this? How can it accelerate the deployment of green hydrogen?
Herrero: Today, 55% of all the hydrogen produced in Europe goes into the production of ammonia. This is why ammonia is going to play a crucial role in the initial deployment of a green hydrogen economy: because of the current size of production.
And by gradually replacing grey hydrogen with green hydrogen or implementing some CO2 capture technology, ammonia can be a key enabler of this deployment of the hydrogen economy.
Andersen: I think we can really participate in some of this early development, to drive down the cost, and improve the technology. Secondly I do think ammonia can play a role in the storage of energy. You can use ammonia as a battery for hydrogen, so it can also play a role in the infrastructure for having a hydrogen network in Europe.
Yara is looking into “blue” and “green” ammonia. Which one is more promising at the moment?
Andersen: In Yara, we believe that the best option is always to eliminate the production of CO2, so we do prefer that you never produce the CO2. However, we don’t exclude that CO2 capturing can be a good solution for certain assets. We believe that the climate challenge is so big that we need to utilise all opportunities to reduce emissions, so we will not exclude one, but our focus is on renewables.
The main advantage of ammonia is that there’s already existing production, thanks to the fertiliser industry. There is storage infrastructure already in place, and there is an existing fleet of ships for transport. Do you expect that this infrastructure, over time will need to be scaled up?
Herrero: Existing infrastructure could be perfect for the initial development. And based on the adoption by the shipping industry, this infrastructure may need to be adapted because terminals were designed to be used only in one way – to load or unload. But initially, we could use the existing infrastructure.
Andersen: Yara is currently the largest trader of ammonia globally. We have a fleet of vessels with a capacity of around 200,000 tonnes of ammonia that we can ship. We have storage capacity of around 580,000 tonnes.
We have 18 marine terminals around the world. There is infrastructure there today and I think the good thing with ammonia is that there is confidence and knowledge on aspects like storage, handling etc. I think that’s a good foundation to build upon. But if this really takes off in the rest of the shipping industry, then of course the infrastructure will need to be expanded.
Herrero: For example, there are eight terminals for LNG in Spain, which are supplying all the needs of Spain and Portugal. Now, for ammonia, we have six terminal in Spain and Portugal, so the numbers are quite similar to the existing LNG infrastructure. It’s already quite a big infrastructure.
What are the challenges associated with ammonia? And what kind of regulation do you believe is necessary to overcome them?
Andersen: The key challenge is, of course, the cost of producing green ammonia versus conventional ammonia. We estimate that the total cost currently is two to four times as expensive.
That needs to be overcome by support, especially for early movers, and through EU innovation funding mechanisms.
It also needs to be overcome by the full value chain. We need to work together to distribute these costs so that they do not fall only on the producer. We have done some calculations and, if you look at the fertilisers, it costs them two to four times as much to produce this. For the consumer, the additional cost will be very limited as long as you can get those costs transferred to the final consumer.
Herrero: We need to look at the whole supply chain – from the energy providers and renewable power production until the end consumer – in order to reduce costs.
But the most important part is to intensively support early movers because investments in ammonia infrastructure are highly capital intensive. So early movers need support to fill this gap.
Have you applied for funding under the EU’s recovery plan?
Andersen: There are funding schemes available, both at the EU and national level. And we are pursuing applications to get support from those.
Herrero: We have already applied for funding, both at national and European levels. And, for sure we need to apply for those funds to have a business case as explained before.
Together with its hydrogen strategy, the Commission also launched a European Clean Hydrogen Alliance bringing together some industry leaders in order to scale up production. Is ammonia represented in this alliance?
Herrero: Within this alliance, there are several roundtables or working groups that have been established for different applications. And both Yara and Fertiberia are represented in the industrial application roundtable. And indeed Fertiberia is co-chairing this round table.
Do you believe policymakers have realised the potential of ammonia? And do you think that is well reflected in these industry alliances?
Herrero: Two years ago we were worried because there was no visibility at all for ammonia in the European institutions. Everything related to hydrogen was driven by other types of companies. In the last 6 to 12 months, there has been an increasing awareness around ammonia, but still I think there is a potential to increase it further. Because we believe that there is a huge potential in ammonia for enabling the energy transition.
There is growing interest in ammonia from the energy sector. What kind of change does that mean for the ammonia industry? Is it becoming more of an energy-related industry and less of a fertiliser-type industry? And what are the consequences of that: do you expect big oil majors to get into this business?
Andersen: Ammonia will increasingly be linked to energy, as a carrier for hydrogen, which creates different market dynamics than when it was only used as a fertiliser. We view this as a huge business opportunity because it will increase consumption and demand significantly at the same time as it enables a reduction of global climate emissions.
At Yara, we are always looking for sustainable businesses that can grow and I think this is one of those.
But yes I think we can expect to see many other players that will show interest in ammonia, especially big energy companies.
Herrero: We see ammonia as a building block. The fertiliser industry will continue to be a major user of ammonia for many years to come. At the same time, the upstream production of ammonia will see a lot of interest from the energy majors. And we will probably see alliances and opportunities. For sure the industry will need to adapt to this new scenario, but we see a nice outlook with very attractive opportunities.