Ammonia is the New Oil
If you are reading the renewable energy trade press and/or tracking the progress of the global transition to clean energy, you cannot help but notice the word ‘ammonia’ popping up quite frequently of late. Most of us know ammonia as a chemical we use to clean things around the house (the floor, the sink, the bathroom, etc), and many others know that ammonia is the prime ingredient for fertilizer used to feed the world’s crops, which feed all of us. Roughly 80% of the world’s ammonia is used in fertilizer production. The world produces 200M tonnes of ammonia annually; that’s a lot by any standard!
And how does the world make all this ammonia? The vast majority of ammonia is produced by a chemical process called “Haber Bosch” invented by German chemists Fritz Haber and Karl Bosch in the early part of the 20th century: https://en.wikipedia.org/wiki/Haber_process
So why is this decades-old commodity suddenly popping up in discussions, articles, conferences, and trade press, relating to renewable energy and decarbonization? Because of the all-important “H” you see in the molecular formula for ammonia: NH3. The ‘H’ is hydrogen, and that’s what the world will use to replace methane, petroleum, coal, and other fossil fuels. When hydrogen burns, or is combined with oxygen in a fuel cell, the outputs are energy and water (H2O), not CO2. By weight, hydrogen packs a big energy punch, and delivers 33.33 kWh per kg, with no carbon emissions, versus gasoline, which delivers 70% less, or 13.1 kWh per kg, and lots of CO2.
Green ammonia (GNH3) is made from green hydrogen (GH2) plus nitrogen extracted from the atmosphere. How is GH2 produced? Through water electrolysis which splits water into oxygen and hydrogen (see: https://en.wikipedia.org/wiki/Electrolysis_of_water).
The problem is storage and transport. Hydrogen being the lightest element in the universe is very difficult and expensive to store and transport. Green hydrogen (GH2) will be produced in places with greatly abundant, low-cost, renewable energy (e.g. SW USA, Chile, Africa and the Middle East, Australia, India, China, and others). Economies with abundant solar and wind resources are destined to become renewable energy exporters and those with heavy industries but less solar/wind resources will end up being net importers. But how will renewable energy be stored and transported around the globe? To date, after substantial studies and R&D investments, the answer seems to be GNH3. Green ammonia will be produced in places with abundant renewable energy, loaded onto tankers (land and sea) and transported to locations with high demand for energy while short on renewable energy sources. Given the size of the long-established global ammonia trade, one would expect a fair amount of infrastructure is already in place, and that is certainly the case — production, storage, transport (pipelines, tanker trucks and tanker ships, etc), cracking, and more.
The resulting race to produce GNH3 naturally implies an associated race to produce GH2, a necessary input to any GH3 production process. But will there be enough green hydrogen to meet the global demand for GNH3? There are many pundits and analysts predicting the development of terawatts of hydrogen electrolyzer projects globally to meet the projected demand for GH2.
Aurora Energy Research’s latest global electrolyzer database shows 1.2 TW of electrolyzer capacity already in development, and the regional diversity of the pipeline is increasing: South America leads additions since April 2023 at 25 GW, followed by Oceania at 20 GW, while Europe’s share of projects that have advanced beyond the early planning stage 1 has dropped to 46%. Global electrolyzer manufacturing capacity is set to hit 59 GW/year in 2025, rising by over 20% since April 2023; production outside of Europe remains on track to surpass European output.
1.2 TW is an enormous production footprint for hydrogen electrolysis. A continuous water electrolysis process utilizing 1.2 TW of energy would produce 518K tonnes a day, assuming 60% conversion efficiency and 24 x 7 operations (a more realistic output averaged over a year would be 400K+ tonnes per day). In comparison, roughly 70M tonnes of hydrogen are produced globally and annually using steam methane reforming and other carbon-emitting processes. Natural gas, coal and oil are used to produce 96% of H2 (so-called “grey hydrogen”) today, while water electrolysis is used to produce 4% H2 (“green hydrogen”). Now that substantial incentives (e.g. US IRA) are available from governments, and pressures to decarbonize are mounting within global supply chains, experts are expecting increasing demand for and production of GH2 and GNH3.
How (what applications) will ammonia be used as a fuel to produce energy?
- Cracking into H2 and N2 and then running the H2 into a fuel cell (available now)
- Burning directly in a coal plant (“ammonia fired coal”, available now)
- Burning in an ICE in place of diesel in trucks and ships (under development)
- Burning in a gas turbine (very early stages of R&D, will require years of development)
Shown below is a simple, hypothetical, high-level diagram of the overall process for making green ammonia. This starts with green hydrogen made via water electrolysis from renewable energy inputs (and H2O of course) which then becomes input to the H-B process resulting in Green Ammonia (GNH3) for export. Upon arrival at the point of consumption, the GNH3 can be cracked yielding green hydrogen (GH2) and used in fuel cells to produce electricity and water, or burned in turbines, engines, coal plants, and other industrial processes.
Expected trade routes for green ammonia in the Asia-Pacific region. Green shaded areas are producers/exporters.
Where can we look for innovation in the green ammonia value chain? At Motus, we are seeking innovation in the following areas: green ammonia production, transport, storage, splitting/ cracking and conversion to energy (e.g. fuel cells). Some early-stage innovators that we’ve run across include:
- Talus Renewables ( https://www.talusag.com/ )
- Ammobia ( https://www.ammobia.co/ )
- Amogy ( https://amogy.co/ )
- Neology ( https://neology.ch/ )
There are many other early-stage innovators along with plenty of core R&D underway at academic, government and private research institutions. As well, traditional players in the ammonia business such as Yara: https://www.yara.com/ (fertilizer) and KBR: https://www.kbr.com/ (EPC) are turning their focus to green ammonia energy projects. Activity in this venerable age-old industry is poised for massive growth as ammonia becomes the default energy carrier for a clean energy future. Hence the title of this report Ammonia is the New Oil.
We look forward to sharing ideas and news relating to innovations and applications in the green ammonia business. Please feel free to reach out to us at info@motusventures.com.
Recent Green Ammonia News:
Japan’s JERA on zero emissions promise of ammonia and hydrogen
India set to add 5.8 million tonne of green ammonia manufacturing capacity
DAI to collaborate with Siemens Energy on green ammonia project in Egypt
Yara International in plan to build world’s first ammonia-fueled containership
Uniper and First Ammonia agree to collaborate on green ammonia project in Texas
Japanese firms looking into hydrogen and ammonia supply chain in Osaka
Green hydrogen policy targets 2 million tonnes per year by 2030
Malaysia’s Petronas to invest $1.6bn in Indian green ammonia
Yara and Navigator invest in Norwegian ammonia bunkering project
Green Ammonia Market to Reach $17.9 Billion by 2030
South Africa Plant to Export 900,000 Tons of Green Ammonia Annually
