Blue Ammonia Market Trends and Drivers

Trends in Blue Ammonia Market

Rising Demand for Low-Carbon Solutions Is Key Trend

Blue ammonia, produced with CCUS technologies, is emerging as a low-carbon alternative to traditional ammonia. As its cost falls, it could play a significant role in the economy as a carrier for this gas and, ultimately, a storage solution for energy. With the rise of hydrogen as a clean energy source, ammonia (especially blue ammonia) is being seen as an efficient medium for hydrogen storage, transportation, and distribution.

Governments globally are introducing policies and setting targets to reduce carbon emissions. One of the sectors being targeted is agriculture, where nitrogen-based fertilizers, for which NH3 is the key raw material, is critical. By using blue ammonia, this primary sector could massively reduce its carbon footprint, as it accounts for almost 10% of the global direct and indirect emissions.

In November 2024, DL E&C signed a USD 35-million contract with Genesis Fertilizers at the Embassy of Canada in Seoul to lead the front-end engineering design phase of a fertilizer plant in Belle Plaine, Saskatchewan. The plant will process 1,500 tons of blue ammonia daily and produce 1.05 million tons of fertilizers annually.

In the same vein, in July 2024, Johnson Mattthey and Thyssenkrupp Uhde announced the signing of an MoU to collaborate on delivering a fully integrated low-carbon blue ammonia solution.

Growing Industrial Demand Is Biggest Market Driver

As industries and governments set off on the path to decarbonization, reducing carbon emissions from industrial processes is a key priority. The industrial sector is one of the major emitters of carbon and extremely hard to decarbonize. Because ammonia is a key input for many chemicals, fertilizers, and various industrial processes, its production needs to evolve to low-carbon pathways.

Blue ammonia is being adopted as a carbon-neutral fuel for power generation, especially in sectors looking to phase out coal and other high-emission energy sources. Another Way it could help in decarbonization is via its usage in ammonia-fired power plants, to replace natural gas and coal. Even though only 20% of the global final energy consumption is in the form of electricity, its generation releases 40% of the emissions, as per the World Nuclear Association.

In December 2023, Centrica and Mitsubishi Power Europe unveiled plans to construct Europe’s first ammonia-based electricity generation plant in Ireland, with the goal of cutting emissions and showcasing low-carbon ammonia technology.

NH3, as a zero-emission marine fuel, is growing increasingly common as a result of the implementation of ambitious goals by the International Martine Organization (IMO) and other international shipping organizations to cut emissions related to shipping. According to the International Energy Agency (IEA), emissions from the shipping industry grew from 502 million tons in 2000 to 706 million tons in 2022.

In the direction of clean-fuel ships, Eastern Pacific Shipping (EPS) announced a collaboration with Hyundai Heavy Industries, MAN Energy Solutions, the China State Shipbuilding Corporation, ABS, and Lloyd’s Register in September 2023 to develop ammonia engines for the new fleet of EPS.

Similarly, in November 2023, Yara International ASA and North Sea Container Line announced a partnership to develop a clean ammonia ship, named Yara Eyde. The vessel will start sailing between Germany and Norway in 2026.

A new landmark was established in regard to ammonia-fueled ships in March 2024 with the first trial of offshore supply ship Fortescue Green Pioneer at the Port of Singapore. During the trial, a mix of ammonia and diesel was used to power the ship.

High Production Costs Are Key Challenge

CCUS, which is central to blue ammonia production, involves capturing the carbon emissions produced during ammonia synthesis, compressing them, and either storing them or transporting them via pipelines or tankers for further usage as a chemical feedstock. This technology is expensive, both in terms of implementation and operations.

Because CCUS enables regulatory compliance, many companies are integrating it into their ammonia plants. However, this increases the overall cost of the final product, thus scaring away small and mid-scale end users from purchasing it and forcing them to rely on the conventional grey variant instead.

Moreover, the high production cost makes it more difficult to attract investments in blue ammonia projects. Investors are often worried about the high upfront capital expenditure in CCS infrastructure and the uncertainty around long-term return due to the high operating costs.