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An introduction to Green Ammonia

13/06/22

Note: This article has been written predominantly for the benefit of our non-ammonia clients, in response to an increase in general enquiry levels.

 

Green ammonia: Why all the interest?

Over the last 12-24 months, the market has been saturated with reports about green ammonia. Many of these have come with bold predictions for its future, including suggestions that the seaborne ammonia market could grow from approx. 16.5 million tons (mmt) per annum today to as much as 200 mmt per annum by 2050, with much of that growth predicted to be green ammonia. This has, understandably, raised questions from all corners of the energy and shipping worlds. But are these reports and expectations realistic or misleading? In this article, we seek to provide some context and clarify conceptions about ammonia today. We also look at what we consider to be realistic prospects in the near to medium term.

 

What is ammonia and how is it produced?

Anhydrous Ammonia, to give it its full name, has a variety of uses, including in the production of:

  • Fertilisers (particularly urea)
  • Explosives (ammonium nitrate)
  • Textiles
  • Plastics
  • Other chemicals.

The invention of the Haber-Bosch process in the early 1900s revolutionised the industry and enabled ammonia production on an industrial scale. Also known by the formula NH3 (3 atoms of Hydrogen and 1 atom of Nitrogen), most ammonia produced today uses:

  • Hydrogen - sourced from methane, coming from natural gas, although other fossil fuels like coal can be used
  • Nitrogen - sourced from air.

The two are converted into ammonia using a repeated, steam reforming process under high pressure/temperature conditions over catalysts, cooling between each pass. However, because the carbon atoms found in the methane are separated during production, the process also results in CO₂ waste. So while traditional ammonia production has been considered revolutionary and essential for world food production, it is also recognised as being responsible for significant CO₂ emissions, currently estimated to be around 1% of the global tally.

 

Is green ammonia as ‘green’ as the name suggests?

While green ammonia is a desirable outcome, the time and resources required to establish processes entirely reliant on renewable energy remains limited, as does the ability to transport ammonia without at least some undesirable emissions. In the interim, greener ammonia is perhaps a more appropriate term, reflecting the more realistic evolutionary process which is likely to occur.

 

Knowing your yellow from your pink ammonia: Colour references explained

The various ammonia production methods have each been assigned a colour, reflecting the environmental nature of the production process. The table below sets out the various types of ammonia.

Ammonia, green ammonia, pink ammonia, brown ammonia, black ammonia, grey ammonia, blue ammonia, yellow ammonia, turquoise ammonia, white ammonia

How big is today’s ammonia market?

Anhydrous Ammonia has been shipped on specialised gas tankers in liquid form since the 1970s. Today, approximately 192 mmt of ammonia is produced globally, of which only around 16.5 mmt is shipped by sea. When compared with the 113 mmt of seaborne trade of LPG, you begin to understand why shipowners often see ammonia as being of secondary importance: The ships which carry ammonia are essentially LPG carriers which have been certified to carry ammonia. Therefore, shipping availability and economics are heavily influenced by the LPG trade.

Most seaborne ammonia volumes are moved on LGC, MGC and Handysize units, plus a few smaller gas carriers (at least 180 smaller units are reported to be ammonia-rated). There are also a handful of VLGCs certified to carry ammonia, although only one has done so within the last two decades due to storage limitations and constraints on load/discharge options.

 

What has created so much excitement in the sector?

Three main developments have fuelled interest in the sector and prompted increased focus on the upscaling of ammonia seaborne transportation:

  1. Production methods
    The switch to green or blue ammonia production methods – with little or no CO₂ emissions during the process – have attracted attention
  2. A source of hydrogen
    The fact that hydrogen can be produced from Ammonia, is of great interest to the market given the cost and design constraints of moving hydrogen directly by sea
  3. Ammonia as a potential marine fuel
    Ammonia has no carbon atoms meaning it produces no CO₂ during combustion. Its potential to be used as a marine fuel holds the promise of opening the door to a huge market.

Where will demand come from?

There are two distinct aspects to the rising demand for green ammonia:

  • Replacement demand
    While green and blue production processes could, in theory, replace brown or grey processes, it will take significant time for new, greener production sites to phase in. Plants will require funding, time to construct, and the product itself will need to price itself into the market. However, it’s important to note that replacement of supply does not necessarily grow the market, as this is dependent on base demand.
  • Additional or new demand
    Demand for green ammonia has been further boosted thanks to its use as an alternative/supplemental industrial power (particularly for power generation). Japan, for example, has announced ambitious plans to import 3 million tons of green ammonia by 2025 and 30 million tons by 2030 for power generation. It is worth noting however that analysts currently predict the most significant surge in demand (not necessarily green ammonia) will be for marine propulsion.

 

Conclusion: Will the future of ammonia be green?

While it’s true that all decarbonisation efforts have drawbacks, the likely advent of green ammonia production and the possibility of ammonia as a marine fuel must be seen as positive developments. Both could provide a significant boost to the ammonia industry. Having said this, we’re at the beginning of this process. We anticipate it will take time and considerable investment to reach anything close to the volumes which some analysts are predicting.

Clarksons Gases: The green ammonia specialists

As the leading provider of shipping-related services to the ammonia industry for more than four decades, developments in green ammonia and CO₂ carriage have become focal points for the Clarksons Gases.

Whether you’re looking to develop your ammonia strategy or future-proof your shipping requirements, our chartering and asset team is perfectly positioned to assist. Working closely with the Clarksons Green Transition, Carbon and Research teams, we bring a unique blend of experience and knowledge, backed by strong analytical support.

Your partner through the green transition

Our team of experts are here to help guide, shape and execute your green transition strategy. Whether it is future fuels related, understanding your carbon footprint, getting closer to regulatory requirements, how offsets work or simply improving your day-to-day chartering activity, a conversation with our Green Transition team is a great place to start.

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