Paul Rodden • Season: 2023 • Episode: 251
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In episode 251, Ammonia is getting some much needed attention and investment as a hydrogen carrier. I'll discuss what this could mean to hydrogen economy on today's hydrogen podcast.
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Ammonia is getting some much needed attention and investment as a hydrogen carrier. I'll discuss what this could mean to hydrogen economy on today's hydrogen podcast.
Okay, I'm going to actually skip the intro today so we can listen to a quick word from the sponsor of today's podcast, From water electolyzers to flow batteries and fuel cells, Nafion™ Proton Exchange Membranes play a major role in advancing the Hydrogen Economy. Through their high conductivity, superior strength, and chemical durability, Nafion™ membranes provide the performance needed to make green hydrogen safer, more sustainable, and more affordable. Learn how Nafion™ ion exchange materials support the decarbonization of energy across the globe at www.nafion.com. Now back to the show.
In an article from Rystad energy, hydrogens rise fuels global ammonia infrastructure growth. As hydrogen gains prominence in the global pursuit of decarbonisation and energy security. Many major infrastructure projects are considering transportation in the form of ammonia, a safer more cost effective method for exporting hydrogen supplies in large volumes. Rystad energies projections indicate that 174 export terminals will primarily focus on converting hydrogen into ammonia by 2035, accounting for 62% of total exported volumes, or about 13 and a half million tons per year, and some sort of broader energy transition a substantial upsurge in clean ammonia transportation and trade is anticipated, with traded volumes of ammonia projected to reach 76 million tonnes by 2035. Four times the volume transported and traded in 2020.
This surge primarily originating from Africa and North America, will lead to a five fold increase in ammonia exports by 2050 to 121 million tonnes. nations such as Japan and Germany have already adapted their respective national hydrogen strategies in anticipation of a greater role for the fuel, highlighting the pivotal role that hydrogen will play and helping reach net zero emission targets. Despite the substantial scale of export projects and uncertainties surrounding future trade dynamics. Some project developers may decide to partially convert hydrogen to ammonia or explore alternative transportation methods. In the meantime, investors are increasingly raising their confidence in the ammonia market and making significant near term investments.
Green hydrogen produced using renewable energy is the cleanest but most expensive form. Blue hydrogen produced using natural gas is more cost efficient and widely seen as a transition fuel that can help reduce emissions until affordable and reliable alternatives are scaled up. LNG or liquefied natural gas is already widely used as transportation and power generation fuel and its facilities could be adapted to transport hydrogen as well. Hydrogen penetration is moving quickly and globally entering new geographies and outpacing market expectations.
With the ammonia trade booming, there is an urgent need to leverage existing assets to their fullest potential. Converting LNG terminals could be a good solution, not only optimizing current infrastructure, but also spurring a reevaluation of strategies that can cope with the scale of the expected market expansion. Rystad estimates show global clean ammonia exports are set to surge to 121 million tonnes per year by 2050, with Africa contributing 40 point 7 million tonnes per year and Australia 35 point 9 million tonnes per year based on announced projects. There are currently 220 ammonia infrastructure projects globally, with a combined handling capacity of more than 6 million tonnes.
Australia which is aspiring to be a top clean ammonia exporter presently has just seven terminals, with total storage capacity of approximately 137,000 tonnes with substantial expansion by 2040. This will be capable of accommodating just two to three days of plan to clean ammonia exports. To handle Australia's projected monthly exports of ammonia terminal capacity will need to increase tenfold. This is especially important considering Australian projects such as the Western green hydrogen hub, and the Australia renewable energy hub will be among the largest hydrogen projects worldwide and are considering ammonia as a transportation medium.
Although the hydrogen economy is still in its early stages of development, demand for ammonia is already on track to outpace available infrastructure. Both private and public sectors support the development of a global hydrogen economy, with major companies signing agreements with ammonia producers and governments auctioning off import contracts. For example, JERA, a prominent player in Japan's power generation sector recently initiated a tender to secure an annual supply of up to 500,000 tons of ammonia starting from 2027. This move is aimed at supporting cogeneration co firing applications within Japan and is involved active negotiations with ammonia producers such as CF industries and Yara. Meanwhile, in Germany, major energy companies E. ON, Uniper and RWE have entered ammonia-related memorandums of understanding with international firms, including EverWind (Canada), Greenko (India) and Hyphen (Namibia).
On the governmental front, auctions aimed at sourcing ammonia imports are gaining popularity. Germany’s H2Global auction, backed by €900 million ($978 million) in governmental support, will be the first of its kind globally and offer 10-year purchase agreements for green ammonia. Additionally, various government-backed initiatives are geared towards creating fresh demand for ammonia, including its use as an alternative fuel in the maritime sector (supported by the FuelEU Maritime initiative) and co-firing applications in Japan. Industry experts are already exploring the technical feasibility of these transitions, especially considering the projected rise in ammonia utilization for power generation and shipping. We estimate that switching LNG export and import facilities to ammonia would incur estimated costs ranging from 11% to 20% of the total LNG terminal capital expenditure, depending on factors such as demand and location.While still in its early stages, the ammonia shipping industry is expanding swiftly.
Currently, just 30% of the global liquefied petroleum gas (LPG) fleet can transport ammonia, with only 50 large and very large gas carriers having this capability. To meet rising demand, Eastern Pacific Shipping has commissioned four very large ammonia carriers (VLACs) from Jiangnan Shipbuilding Group. These VLACs will become the world’s largest carriers, each boasting 93,000 cubic meters of capacity. To transport the announced 121 million tonnes of ammonia, approximately 200 VLACs will be required, necessitating an investment of approximately $20 billion in newbuilds. Beyond newbuilds, interest is growing in retrofitting LPG vessels for ammonia carriage.
Given the availability of over 1,450 LPG carriers, converting these vessels into ammonia-ready carriers offers a robust transition strategy for shipowners, particularly as demand for LPG tonne-mileage is anticipated to decline amid decarbonization efforts. Okay, so an interesting topic and not one discussed as much as it should be. Recently, I've covered on the show issues surrounding demand, which is still a critical talking point, and use cases and demand centers. And while I've talked about transportation, it usually revolves around compression versus liquefaction and haven't touched on carriage mediums such as viable long term options for shipping and storage. Ammonia and methanol have been considered as the top contenders to transport hydrogen.
Both have their drawbacks. However, ammonia as we read here still needs infrastructure to help get moving, not an insurmountable task, but one that still presents a barrier of entry for hydrogen transportation. Methanol, on the other hand, can be used now and substitute as fuel for the containerships. It's also biodegradable in water and less toxic to handle, but it still releases co2 when burned, meaning a higher cost associated with the fuel as the need for carbon capture still remains. Ammonia then represents a better long term solution if decarbonisation is the main goal. Now burning ammonia does have the potential to generate NoX, which will need a catalytic converter to separate the nitrogen from the oxygen. But since nitrogen isn't a greenhouse gas, utilizing the fuel doesn't impact greenhouse gas mandates. But something else to consider is this. Ammonia currently has a global market, and one that's been impacted by the Russia Ukraine conflict.
And as intimated in this article, it is a market that's on the cusp of exploding due to extreme demand. But what could be an added bonus of ramping up ammonia production and infrastructure to deal with this drop in supply for fertilizer could continue to push the hydrogen economy forward. So that when the supply for ammonia is able to ramp it back up for the demand and the fertilizer market, the infrastructure that's created for that is still going to be critical for the global hydrogen transport industry.
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Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more, I'd appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.