New applications for low-carbon ammonia as a fuel in the power generation and maritime sectors could overtake usage in the fertiliser sector by 2040, according to speakers on a recent Reuters Events webinar.

Roughly 80% of ammonia demand comes from the fertiliser sector. However, recent testing of co-firing of ammonia in coal power plants and 100% ammonia-firing in gas turbines suggest power generation could become the largest ammonia consumer, followed by the maritime sector, said Akshay Bhardwaj, head of commercial business development, global ammonia, at fertilisers and chemicals producer OCI Global.

“We are clear that fertilisers might not be the biggest end-use by 2040. [Demand] has to come from the energy side because they are the biggest guzzlers,” he said. He pointed to testing in Japan of ammonia co-firing in coal power plants as well as advancements in the use of ammonia in gas turbines, with the latter potentially a “huge” market.

”We are clear that fertilisers might not be the biggest end-use by 2040” Bhardwaj, OCI

In the maritime sector, recent testing by a leading engine manufacturer has yielded “very positive” results, suggesting commercial availability of ammonia-fuelled new engines by 2026 0r 2027, he added. “The most important question was that what happens to the nitrous oxide, and the results that [the engine manufacturer] got are phenomenal,” he said.

Alicia Eastman, co-founder and board member of green hydrogen and ammonia project developer Intercontinental Energy, said maritime would be a “much bigger” market for ammonia than fertilisers by 2040.

“Even when you talk to fertiliser companies, they do not see a steeply growing market necessarily, even though we all know the population will likely grow. They see a level market because people will be using different types of farming,” she said.

Green premium

In the near-term, the high cost of green ammonia relative to conventional ammonia remains an issue for offtakers. Green ammonia is priced at $700–800/t “in good locations”, which is roughly twice the price of conventional ammonia, said Dolf Gielen, senior energy economist and hydrogen lead at the World Bank.

However, price sensitivity varies by consuming sector. “If you look at the fertiliser markets, the farmers are quite sensitive to prices,” he said. “For the shipping industry, an argument you often hear is that if you look at a pair of sneakers or whatever is being imported, the (fuel) price impact on the imported product is a few pennies.”

Green ammonia does provide offtakers the opportunity to decouple from volatile natural gas prices, which is potentially attractive, said Eastman. “I am actually finding that a lot of the offtake is very interested in this green product because you are decoupling from that volatility embedded in grey or in blue (ammonia),” she said.

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Author: Stuart Penson