US industrial gases major Air Products has shelved a £2b ($2.7b) green energy import project at the UK’s northeastern port of Immingham, citing a lack of government support. The project would have included capacity to crack imported green ammonia back to hydrogen for local consumption.

On one level, the move is not entirely surprising, given the strategy update given in May by recently installed CEO, Eduardo F. Menezes. “We will delay investing in downstream facilities in Europe until specific regulatory frameworks are clear for each country and we have firm customer commitments,” he told investors.

$2.7b – Project cost

However, the policy backdrop in the UK raises deeper questions about the export plans of large-scale green hydrogen producers, such as Saudi Arabia, which have settled on a strategy to export their product in the form of ammonia.

The Immingham terminal would probably have taken green ammonia from sources such as Saudi Arabia’s giant Neom project, a joint venture between Air Products, Saudi developer ACWA Power and the Neom region.  Air Products is Neom’s sole offtaker.

Homegrown hydrogen

The Immingham project was granted development consent in February by the UK government, which has ambitions to become a “clean energy superpower”. However, that was the limit of its support for the project. When it comes to hydrogen, homegrown energy is the priority, not imported ammonia.

“We will not be financially supporting any ammonia cracking projects at this time, as we are prioritising support for primary hydrogen production in the UK,” a government spokesperson told Hydrogen Economist. The government is providing £2b ($2.69b) to support 11 British green hydrogen projects, in addition to £500m to create the UK’s first regional hydrogen transport and storage network.

The UK’s hydrogen strategy allows for imports but with no clear targets. Its refusal to support ammonia cracking at this early-stage risks losing out to other buyers in the race to secure the most reliable sources of green hydrogen for the longer term. It could also deter wider investment in the UK’s hydrogen economy.

The EU has said explicitly that it wants to import half its future hydrogen demand, a strategy that implies support for green ammonia cracking.

Germany’s H2Global, a state-backed scheme to support imports from outside the EU, has already signed green ammonia deals, while cracking capacity is planned at ports in Germany and the Netherlands.

Economics of cracking

Using ammonia as a green hydrogen carrier makes sense in that there is already a functioning global seaborne ammonia market into which the green derivative can be sold, albeit at a hefty premium. However, the economics and energy efficiencies, as well as the carbon footprint, of converting to ammonia, shipping and then cracking to hydrogen look challenging. Unless of course the exporter can sign up offtakers to long term deals at prices which can earn a margin, even after the processing and shipping costs. And that requirement applies to every green and low carbon hydrogen project, regardless of the product’s route to market.

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Author: Stuart Penson