Foresight report on future availability of green/blue ammonia in 2030, 2040 and 2050

Until 2021, green ammonia production was very small with about 20 kt ammonia produced per year in Peru and with no known production of blue ammonia (i.e. without enhanced oil recovery). Now, the global green and blue ammonia production industry has, however as per 2022 announced 112 clean ammonia projects with a total production of 182 MTPA. Since the majority of the projects appeared in 2021 and 2022, it is expected that similar numbers will be announced in the coming years, and some of these projects may also contribute further to the 2030 supply of green and blue ammonia.

The projects are distributed globally, however with a large share of green ammonia projects located in Australia and the majority of the blue ammonia projects in the USA. The majority of the projects are in very early stage of development with inherent large uncertainty for their implementation. Nevertheless, 80% of the production capacity is announced to be available in 2030. Only 11-13% of the announced production capacity is of the blue variety.

There are a number of factors that determines the share of green versus blue ammonia in a country. An important one is the access to resources (like natural gas and renewable electricity potential) and their consumption in the local market. Excess of natural gas can be exported as the liquids LNG, methanol or ammonia. Ammonia is the only one of the three that comes without carbon, i.e. for the others the CO2 has be removed by the consumer, whereas for ammonia the CO2 can be removed centrally by the producer of blue ammonia if permanent storage sites are available. For green ammonia, there are a number of regions globally with large potential for wind and/or solar power, where the local demand for renewable electricity is limited and with good framework conditions, such that this potential can be exploited to export of green ammonia. Green ammonia is in principle scalable, since it only requires the resources of renewable electricity, water (including sea water) and air.

Another major factor is the production costs of green and blue ammonia. There will be competition both for green and blue ammonia, and with the alternatives in the various markets (like maritime fuel, fertilizers, power production and hydrogen production). This will depend on the regulations in the markets and GHG taxes and likely increasingly on the stakeholder's expectations. Even though there will be a competition that depends on the purchasing power in these markets, there is also a positive interaction with learning curves that leads to reduced costs.

Unlike the current ammonia production, which is consumed mostly locally, the vast majority of future clean ammonia is targeted for international export. The distribution of size of the production facilities is dominated by the large plants above 0.1 MTPA, and 11 clean ammonia plants aim for production capacities larger than the largest ammonia facility today.

Today's ammonia market is dominated by the fertiliser market (80% of the demand), but clean ammonia aims at new applications such as shipping fuel, power plants and as a hydrogen carrier. A majority of the producers (140 MTPA) aims to cater to multiple market sectors, with only 42 MTPA committing to a single end use. Many possible off takers will contribute to drive up the production amount.

Likelihoods of implementation were evaluated in this report, and this leads to decreased final ammonia output in 2030. Instead of the announced 182 MTPA, 33 MTPA is estimated to be available in the most realistic scenario. From these, about 11 MTPA is projected to be blue. Green ammonia dedicated to shipping may be in the range of 3.6-6 MTPA. In addition, potentially, 17-23 MTPA will be available as a share between fertilisers, energy and fuel markets.

Most renewable energy sources are represented for the green ammonia production, but more than half relying on a combination of wind and solar PV technology.

The demand for ammonia as a maritime fuel is estimated for 2030 to 2.3 MTPA, but the demand will increase quickly to 62 MTPA in 2040 and 245 MTPA in 2050. In the maritime sector only green and blue ammonia will be used.

In total the amount of green and blue ammonia realistically available is estimated to be more than an order of magnitude higher than the anticipated demand for maritime sector in 2030. And if the announced ammonia production goes to where it is announced, then the availability for the maritime sector is sufficient; comparing the supply green ammonia dedicated to shipping in 2030 with the modelled demand for 2030. Maritime internal combustion engines might be available from about 2025 and hence a demand in the maritime sector becomes possible. The ammonia producers appear to be hedging, and the main approach is a mixture of off takers. The risks are clearly reduced when an investor has three to four distinct end uses, instead of only maritime fuel. However, this may also lead to competition from other off takers if they have a higher purchasing power. Green ammonia production growth does from our investigation not appear to be limited by electrolyser production capacity, as the estimated 52 GW by 2030 is likely achievable. However, the demand growth after 2030 is steep and accelerating and the supply & demand balance may change fast in the 2030s. In the longer term, supply and demand would be balanced, and the appropriate approach is to model the demand as carried out in the present report.

Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or CINEA. Neither the European Union nor the granting authority can be held responsible for them.