It's Time - Huge Incentives, Rising Demand Drive Boom in Clean Ammonia Project Development

For some time now, clean ammonia proponents have been talking up its potential as a very-low-carbon alternative for power plants, ships and other hydrocarbon consumers. Still, rock-solid plans for U.S. projects to produce large volumes of ammonia from clean hydrogen remained few and far between. Until lately, that is, with the recent uptick in project announcements spurred on, in large part, by the supercharged tax credits for carbon capture and sequestration (CCS) in the Inflation Reduction Act (IRA) and the newly firmed-up efforts by power generators in Japan and South Korea to make clean ammonia an important part of their fuel mix going forward. In today’s RBN blog, we discuss the progress that clean ammonia has made since the IRA became law and the growing list of projects advancing to a final investment decision (FID), construction and production.

We’ll begin with a brief refresher course on what clean ammonia is, how it’s produced and what it can be used for. Then we’ll look at the primary drivers behind the development of clean ammonia production facilities (and ammonia export terminals), and after that (in Part 2) we’ll discuss in detail the bevy of U.S. projects now being planned.

What Is Clean Ammonia?

First off, there’s a little fuzziness around the definition — some say that to qualify as “clean,” the ammonia in question needs to be produced in a way that reduces the carbon dioxide (CO₂) released into the atmosphere by at least a certain percentage, typically 90% or more. That said, the widely held view is that clean ammonia includes both “blue” and “green” ammonia — Oh no, those darn colors again! — which are produced by reacting either blue or green hydrogen with nitrogen (supplied from an air separation unit) using the Haber-Bosch process (a catalyst, high temperatures, and high pressure). Blue hydrogen is produced by running natural gas through either a steam methane reformer (SMR) or auto thermal reformer (ATR) and capturing and sequestering most of the CO₂ generated by the process — typically about half of the CO₂ when an SMR is used and 90%-plus with an ATR. Green hydrogen, in turn, is produced by running water through a renewables-powered electrolyzer to produce hydrogen and oxygen — no CO₂ is produced, so there’s no need for CCS.