Ammonia’s Potential Role in a Low-Carbon Economy

Ammonia’s Potential Role in a Low-Carbon Economy

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December 7, 2022
Ammonia’s Potential Role in a Low-Carbon Economy
Ammonia, composed of nitrogen and hydrogen (NH3), is
which in turn is produced via water electrolysis using
the second-most produced chemical in the world by mass,
renewable energy.”
according to a 2022 publication from the International
Renewable Energy Agency (IRENA). Most ammonia is
Ammonia is produced globally. China produces almost a
used to produce fertilizer. Ammonia production is energy
third of the world’s ammonia supply (Figure 2), using coal
intensive and emits greenhouse gases. In the same report,
as the primary hydrogen feedstock. The United States and
IRENA estimated that ammonia production represents 15-
most other producers use natural gas. In 2021, the United
20% of all carbon dioxide (CO2) emissions from the
States had 35 active ammonia production plants across 16
chemical sector. Some ammonia applications also release
states, with 60% of production capacity located in
nitrogen oxides, a potent greenhouse gas that can trap more
Louisiana, Oklahoma, and Texas.
heat than CO2. Experts view decarbonizing ammonia
production, referred to as low-carbon ammonia, as
Figure 2. World Ammonia Production, 2021
expensive, but this cost could fall should costs of hydrogen
Mt
produced from renewable energy or fossil fuels paired with
carbon capture lower. Ammonia is seen as a potential
hydrogen carrier and as a fuel for ocean-going vessels.
These potential end-uses could employ existing
infrastructure supporting a well-established global ammonia
trade.
Today’s Ammonia Economy
Ammonia is produced through a high-pressure, high-heat
catalytic reaction of nitrogen and hydrogen. The nitrogen is
generally obtained from air and the hydrogen from a fossil
fuel feedstock. Around 183 million metric tonnes (Mt) of
ammonia is produced annually worldwide.
Figure 1. Ammonia Feedstocks

Source: U.S. Geological Survey, Mineral Commodity Summaries,
“NITROGEN (FIXED)—AMMONIA,” January 2022,
https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-nitrogen.pdf.
Global Trade
A well-established global ammonia trading system features
pipelines, tankers, and infrastructure at around 200 ports.

According to IRENA, 18-20 Mt of ammonia is shipped
Source: IRENA, “Innovation Outlook: Renewable Ammonia,” May
around the world annually. Ammonia can also be
2022, https://www.irena.org/publications/2022/May/Innovation-
transported via truck, train, and pipeline. The United States
Outlook-Renewable-Ammonia.
is an active participant in this market, exporting almost 19%
Notes: Naphtha and heavy fuel oil are petroleum products.
of its domestically produced ammonia, and importing about
14% of its total consumption, according to the U.S.
Feedstocks
Geological Survey (USGS) in 2022. The USGS reports that
Due to the comparatively low costs of natural gas and coal,
top import sources for the United States for 2017-2020
almost all ammonia today is produced from fossil fuels.
were Trinidad and Tobago (63%), Canada (34%), and
Over 70% of ammonia is generated from natural gas, and
Venezuela (2%).
over 20% is generated from coal (Figure 1). IRENA
estimates that less than 0.02 Mt of global ammonia
Uses and Demand: Fertilizer and Other Chemicals
produced in 2021 was “renewable ammonia,” which
According to the International Energy Agency’s (IEA) in
IRENA defines as “produced from renewable hydrogen,
2021, 70% of all ammonia produced globally is used to
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link to page 2 Ammonia’s Potential Role in a Low-Carbon Economy
make nitrogen-based fertilizer. 88% of ammonia consumed
 Low-carbon maritime fuel: Ammonia has been
in the United States is for the same purpose, according to
considered for use as a possible future maritime fuel
USGS in 2022. The chemical is also used to produce
either through ammonia-based fuel cells or through
various explosives, plastics, synthetic fibers, resins, and
direct use as fuel. Testing and prototyping of such
other chemicals used in refrigeration, waste treatment,
approaches in maritime vessels is ongoing. Utilizing
pharmaceuticals, and air treatment.
available ammonia terminals could expand ammonia’s
use as a fuel to reduce the shipping sector’s emissions,
Ammonia production is expected to increase based on a
but ships would need to be built or retrofit to consume
range of projected future demands. USGS estimates
ammonia as a fuel.
demand for ammonia to increase 1% annually, driven by
demand increases in Latin America and south Asia. The
Federal Action
IEA estimates ammonia production capacity will need to
Federal involvement supporting low-carbon ammonia
increase by nearly 40% by 2050 to account for expected
production is primarily through research, development,
global population and economic growth.
demonstration, and deployment (RDD&D) activities, as
detailed in Table 1.
Ammonia’s Potential Future Uses
Ammonia production relies heavily on fossil fuel
Table 1. Selected Federal Support for Low-Carbon
feedstocks to supply hydrogen and heat due to low costs
Ammonia
and wide availability. Efforts to decarbonize ammonia
production have identified alternative approaches to
Statutory
feedstock and energy. Existing ammonia plants can be
Program Name
Authority
Details
retrofit to have lower carbon dioxide emissions through use
Department of
42 U.S.C.
Funds a variety of
of hydrogen generated from renewable energy or existing
Energy’s Advanced
§16538
RDD&D projects
fossil fuel resources paired with carbon capture and
Research Projects
involving ammonia
sequestration (CCS). The first renewable hydrogen supply
Agency—Energy
was retrofit to an existing ammonia plant in Spain in 2021.
Additional low-carbon ammonia capacity is currently under
Tax Credit for
26 U.S.C. §45Q
Provides
construction. In May 2022, IRENA estimated that the
Carbon Oxide
deployment
combined capacity of announced ammonia projects
Sequestration
incentives for
produced from renewable hydrogen, if constructed, would
utilizing CCS
total 15 Mt in 2030, equivalent to approximately 8% of
Environmental
42 U.S.C. §7403 Provides incentives
production.
Protection Agency’s
for greenhouse gas
ENERGY STAR
reduction in
Zero- and low-carbon ammonia is not currently considered
Efficiency Fertilizer
fertilizer production
commercially viable due to high production costs. IRENA
Plant Certification
estimated in 2022 that the cost to produce ammonia from
renewable hydrogen at $720-1,400 per metric tonne,
Source: Program name and details, besides Section 45Q tax credit,
compared to $110-340 for production from natural gas and
adapted from International Energy Agency, Ammonia Technology
coal.
Roadmap: Towards more sustainable nitrogen fertiliser production, Paris,
October 2021, p. 137, https://www.iea.org/reports/ammonia-
Potential Applications for Low-Carbon Ammonia
technology-roadmap.
Ammonia has a wide variety of potential uses beyond its
current role in food and chemical production. Applications
Notes: For more on the Clean Air Act, please see CRS Report
in earlier stages of development may include stationary
RL30853, Clean Air Act: A Summary of the Act and Its Major
power generation, industrial heat, or vehicle fuel. Other
Requirements, by Richard K. Lattanzio.
proposals include:
To make low-carbon ammonia more commercially viable,
 Hydrogen carrier: Hydrogen, if developed and
Congress could explore policies that make low-carbon
employed as a fuel at scale, could contribute to reducing
ammonia more cost competitive, such as a carbon price or
CO2 emissions in a wide variety of industries and
tax. Increasing funding for RDD&D could incentivize
processes. Ammonia can be decomposed via a catalyst
further development of early stage technologies that may
to produce hydrogen and atmospheric nitrogen
eventually help increase the scale of low-carbon ammonia
(“ammonia cracking”). Some assert that the transport
production. Congress might support approaches to provide
and delivery infrastructure of ammonia could be
low-carbon ammonia project financing that could also help
combined with ammonia cracking to facilitate use of
scale low-carbon ammonia and incentivize innovation from
hydrogen as a fuel source. For more information on
the private sector.
development of hydrogen as a fuel in the United States,
please see CRS Report R47289, Hydrogen Hubs and
Lexie Ryan, Analyst in Energy Policy
Demonstrating the Hydrogen Energy Value Chain, by
Martin C. Offutt.
IF12273

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Ammonia’s Potential Role in a Low-Carbon Economy

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