1. Ammonia: basic information

Ammonia is a toxic gas with a pungent smell. In our daily lives, we encounter it mainly in cleaning agents. But ammonia is primarily the basis for almost all synthetic fertilizers and numerous chemical products. It can be produced relatively easily using the Haber-Bosch process and has been one of the most important basic chemicals in the world for a century.

Quantities and emissions: Germany and EU

The production volumes are enormous. Worldwide, 185 million tons of ammonia are produced per year. That is almost 23 kilograms per capita per year.

In the EU, around 15 million tons of ammonia are produced annually, although the quantities fluctuate greatly due to volatile gas prices. On average, European ammonia/fertilizer plants are rather old and consume about 10 billion cubic meters of natural gas per year. Another 2.9 million tons were imported.[Q6 – see source list below]

In Germany, 2-3 million tons of ammonia are produced, depending on the capacity utilization of the plants. In 2020, it was 3.1 million tons, which caused approx. 6 million tons of CO2. The amount dropped to 2 million tons in 2022 due to the gas price crisis. [Q1] The major production sites in Germany are Wittenberg (SKW Stickstoffwerke Piesteritz), Ludwigshafen (BASF), Brunsbüttel (Yara) and Cologne (Ineos). [Q9]

Nitrogen and hydrogen

The chemical formula for ammonia is simple: NH3. The main component of the molecule is nitrogen (N), which makes up 82% of the molecule by mass. The rest (18%) is made up of three light hydrogen atoms (H3).

1. Nitrogen (N) is therefore the most important component of fertilizers. However, ammonia is rarely used directly outside the USA. It is much more commonly processed into urea and other products. Urea is also the active ingredient in AdBlue (exhaust gas treatment for diesel engines).

2. The three hydrogen atoms (H3) in ammonia make the gas interesting for the decarbonization of energy supply. The number of publications on this topic is already immense. Hundreds of pilot projects are starting in these years. Similar to hydrogen, ammonia seems to be becoming a jack of all trades for climate policy – if it is produced in a climate-friendly way. But there is still a long way to go.

2. Production process

Today’s production processes generate large amounts of CO2 and consume significant amounts of energy. About 2.0% of global final energy and 1.3% of CO2 emissions are attributable to ammonia production.

The IEA estimates that this is about 450 million tons of CO2, not including the climate impact of upstream natural gas or coal production (methane emissions).[Q3] About 90 per cent of the emissions arise from the provision of hydrogen. Not surprisingly, the ammonia industry consumes 60% of industrial hydrogen demand and, on par with oil refineries, is the largest H2 consumer. [Q5]

Approximately 72% of the global ammonia supply is produced using natural gas (CH4). In this process, natural gas is used both as a fuel and as a feedstock in steam reformers (steam crackers) at high temperatures to break it down into its components. This produces hydrogen and CO2. The nitrogen is taken from the air. Only in China is coal mainly used instead of natural gas (26%).

The production of ammonia consumes 170 billion cubic meters of natural gas worldwide. By way of comparison, this is twice Germany’s natural gas demand. An additional 75 million tons of coal are burned in China. The rest is accounted for by oil. Ironically, the EU still uses outdated oil-based production processes – an anachronism in the world market.[Q3]

Depending on the location and calculation method, 1.8-2.5 tons of CO2 are emitted per ton of ammonia when natural gas is used. In Europe, the average is 1.9 t CO2 per ton of ammonia, worldwide the average is 2.2 t CO2/tNH3. Per ton, this is twice as much as for steel.[Q8]

3. Prices and trade

Only a small proportion of ammonia is traded on the open market (c. 20 million tons). Around 90% is processed directly on site in integrated production plants to produce nitrogen fertilizers, primarily urea. There are hundreds of port terminals worldwide that can handle ammonia and numerous gas tankers that can transport ammonia. On land, transportation by rail is the most common method.

Prices are mainly determined by market conditions, location and the price of natural gas. In October 2024, they were around $430 per ton for ammonia (FOB) in countries with low gas prices, such as in the Persian Gulf region.[Q2]

4. The future: ammonia as a fuel and carrier

To date, ammonia has been produced using fossil processes that cause high emissions (gray ammonia). As mentioned above, the vast majority of emissions are produced during the provision of hydrogen. However, if green hydrogen (electrolysis plus green electricity) or blue hydrogen (traditional processes plus CCS) is available, ammonia production can be decarbonized: green ammonia and blue ammonia. This opens up new areas of application.

4.1 Ammonia as a carrier for hydrogen in maritime transport

For maritime transport, hydrogen has to be cooled to -253ºC with great effort and considerable energy losses. Compressed hydrogen gas is also too expensive to transport over long distances.

However, hydrogen can be bound to nitrogen in the exporting country with relatively low energy losses. The resulting ammonia (NH3) is then liquefied at only a moderate cooling temperature (-33ºC) and can be transported in conventional gas tankers. This is already being done with gray ammonia in the large global fertilizer market.

The importer can then either use the ammonia directly or extract the hydrogen in an ammonia cracker. However, this cracking process is expensive and has not yet been implemented on an industrial scale. The first large plants are expected to be built in the next few years, though.

New ammonia import terminals and crackers are already being planned for the German and Dutch coasts including Hamburg. The idea is that they will supplement and, in the long term, replace LNG imports, i.e. liquefied fossil natural gas.

4.2 Ammonia as a fuel additive in coal-fired power plants

The use of blue or green ammonia as fuel component for coal-fired power plants sounds rather absurd. Despite the high costs and the miserable energy and climate balance, however, growth prospects in this market are surprisingly good. The quantities used there could also initially overshadow other areas of application.

The policy background to this trend is the climate regulation for power suppliers in Japan and other Asian countries. The requirements there are still modest, meaning that a complete switch to other electricity suppliers does not appear attractive from the corporations’ point of view. The Japanese electricity giants, in particular, do not want to write off their coal-fired power plants for the time being.

Initial pilot projects indicate that the blending of small ammonia portions is technically possible without major adjustments. Power plant operators in Japan, Indonesia, India, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand are currently planning or implementing pilot projects.

4.3 Ammonia in road traffic, small ships, stationary fuel cells, etc.

As with hydrogen, numerous other applications for ammonia are being researched and implemented in pilot projects, including in Germany (e.g. in the Campfire project).

Ammonia fuel cells, ammonia engines for road vehicles, ammonia as an electricity storage medium and other applications are conceivable, but technical alternatives such as hydrogen and batteries are, at least from today’s perspective, far ahead in all these fields. Nevertheless, use in niche markets is conceivable.

5. Ammonia as marine fuel

A worldwide change in shipping fuels is an enormous task. Worldwide, there are about 100,000 larger seagoing vessels. In addition, there are 3-4 million fishing boats and tens of thousands of other types of ships such as ferries, offshore supply vessels or cruise ships. [Q14]

The picture appears more manageable when we look at the shares of fuel consumption. A quarter of the total is consumed by container ships, another quarter by tankers (oil, gas, chemicals) and another 20% by bulk carriers (grain, coal, etc.).

What role can ammonia play as a low-carbon fuel in maritime shipping? The potential market volume would be enormous, but the uncertainties are just as great. There are a number of candidates that want to replace fossil fuels. It is still unclear which one will prevail.

This means that shipowners are facing difficult decisions. Large seagoing vessels are normally in service for 25-35 years. A new ship ordered today will not set sail until 2027/28 and will still be in service in 2050.

But why should ammonia be used as a marine fuel at all? At first glance, the most important application for green ammonia (PV/wind power plus electrolysis) or blue ammonia (natural gas + CCS) seems obvious: the decarbonization of the large existing markets, i.e. nitrogen fertilizers and chemicals. 

But that is too short-sighted: ammonia is used where there is the greatest willingness to pay and few alternatives available, in other words, where the manufacturers of green/blue ammonia can achieve the highest prices.

This is particularly the case for container shipping companies and in the maritime shipping industry in general. More and more transport customers, especially of high-priced branded goods, are demanding low-emission ships in order to improve their own carbon footprint.

In addition, individual states or regions, especially in the EU, are imposing stricter requirements on ship emissions. Alternative bunker fuels for maritime shipping have received a strong boost, particularly from the EU’s new FuelEU Maritime Regulation.

5.1 CO2 emissions of maritime shipping

The shipping industry is under considerable pressure to minimize its climate emissions by 2050 at the latest. So far, fossil fuels have been used almost exclusively in ship engines. This is primarily heavy, sulfurous marine diesel; recently, however, LNG (liquefied fossil natural gas) has been on the advance.

Low-emission ammonia production could be a relatively inexpensive alternative to biofuels. Since ammonia burns without CO2 emissions, all current and future emission regulations in the shipping area are easily met – at least if the engine manufacturers get the climate-damaging NOx emissions under control during ammonia combustion.

At the moment, global shipping emits almost 900 million tons of CO2 per year. About 320 million tons of fossil fuels are burned in the process. The amount of emissions is even higher than that of aviation and corresponds to almost 3 per cent of the fossil CO2 emissions.

However, this is set to change, especially in the EU. The new FuelEU Maritime Regulation stipulates a decarbonization path that ends with an 80 per cent reduction by 2050. By 2034, 2 per cent of shipping fuels are to be low-emission e-fuels. Their use is made attractive by double counting in the EU’s Emissions Trading System (ETS-1). Starting this year (2024), the maritime shipping industry must gradually finance a growing share of its emissions in the ETS. Free allocations will end in 2027. From then on, shipowners will have to buy emission certificates for every ton of CO2.

The shipping industry is already responding. It is currently the first globally active industry to pursue a global approach to decarbonization. According to the IMO (International Maritime Organization, the responsible UN organization), emissions should be close to net zero by 2050. The speed and paths to a “net-zero framework” are currently being debated.

5.2 Ammonia – Technical hurdles

At the moment, there is no large seagoing vessel powered by ammonia. There are still a number of technical and logistical hurdles to overcome.

1. Engines: Methanol engines already exist. It will take longer for ammonia engines. The first production-ready models will probably come onto the market in 2026 or 2027, albeit at significantly higher prices than conventional engines. The VW subsidiary MAN is also in the running here.
2. Emissions: Since ammonia burns without CO2 emissions, all current and future emission regulations in the shipping area are easily met. However, this only applies if the engine manufacturers get a grip on the particularly climate-damaging NOx emissions and N2O emissions (“laughing gas”) when ammonia is burned. There are still unresolved problems and a need for research here.
3. Ship design: The switch to ammonia combustion also requires a number of adjustments to the ship. Above all, the fuel tanks must be about three times as large as before, since ammonia has a lower energy density than marine diesel and must also be stored in thick-walled cold tanks. The safety requirements also increase with the use of ammonia. All crews must be retrained to be able to handle the new fuel and to respond to the toxic gas in the event of leaks.
4. Ports: As soon as green or blue ammonia is used in larger quantities by the shipping industry, it must be available in sufficient quantities at ports around the world. Similar to marine diesel, a large tanker fleet must supply the seaports. The infrastructure already exists: there are already around 200 gas tankers that can transport ammonia as well as LPG. However, the number of these tankers, and in particular the size of the ammonia tankers, will have to increase in order to meet the expected demand. More than 120 seaports are already logistically capable of storing and dealing with larger quantities of ammonia. Approximately 5 million tons of ammonia can currently be stored in ports worldwide. [Q17] However, the safety requirements increase with the quantities, since ammonia is a toxic, combustible gas. The widespread use of ammonia in seaports will create completely new safety problems. The limited number of terminals and fertilizer factories will then become a dense network with countless tanks, pipes, ships and workers. If large quantities of ammonia are released, toxic clouds could suddenly endanger entire port areas.
   The first large-scale bunker options for ammonia will only be available in major ports such as Singapore or Rotterdam. Long non-stop trips would only be feasible if the ships use their dual-fuel engines with petroleum products. However, solutions are on the horizon: the Port of Antwerp and the Belgian shipping company CMB are planning to build ammonia and hydrogen tank farms on the coast of Namibia. Other port locations will follow suit.

5.3 But: The quantities!

Even after the technical problems have been solved, the challenges remain enormous. If, for example, 10% of ocean shipping were to switch to green ammonia, 70 million tons of ammonia and electrolysers with a capacity of 130 GW would be needed, according to a model calculation by the IEA.[Q14]

By way of comparison, Europe will not even reach 1 GW of electrolysis capacity for all industries by 2025. Even taking into account ammonia projects in other world regions, it quickly becomes clear that green ammonia will take at least a decade to play a significant role in maritime shipping.

6. Other options

CCS on board

From the shipowners’ point of view, the simplest approach would of course be to decarbonize the traditional fossil fuels. In fact, there are already over 30 ships in trial operation that capture CO2 on board, liquefy it and store it temporarily. The CO2 containers are then disposed of in port. The capture rates are said to be between 70 and 85%.

The process is not cheap, but the expense is compensated by the possibility of continuing to use the comparatively cheap and widely available fossil fuels.

However, there are a number of technical and organizational hurdles. The energy loss is also very high. At the moment, the prospects for widespread use of on-board CCS are rather bleak.

Other fuels

To date, only just under 6% of seagoing vessels can use other fuels. However, the proportion of ships with dual-fuel propulsion systems that can use petroleum products or alternatives is growing rapidly. Global order book shows that more than half of all new ships will have dual-fuel propulsion systems. It is likely that from 2030 almost all new sea-going ships will have dual-fuel engines.

1. So far, LNG is the most important alternative. LNG is available in many ports and is often even cheaper than marine diesel. For obvious reasons, LNG tankers that transport LNG worldwide are among the users, but so are a growing number of other ships. LNG produces comparatively low pollutant emissions, but has a dubious climate balance.[Q15] However, the gas industry does not want this to remain the case. LNG could also become more attractive with increasing additions of e-methane/bio-LNG. 
2. In addition, the various types of biofuels have good growth opportunities as a blending component in maritime shipping. Supplies are limited, though, and the road and air transport sectors are large competing markets.
3. Finally, one should not write off liquid hydrogen (LH2) just yet. Countries such as Japan and South Korea are continuing to pursue this technology path. Liquefying hydrogen does consume large amounts of energy, but this takes place in the exporting country, e.g. in the USA, on the Persian Gulf or in Australia. Energy prices there are generally lower than in the importing country, i.e. Japan or the EU. 
4. Methanol (CH3OH) was faster off the mark as a shipping fuel than ammonia, as order books show, but it will be difficult to produce large quantities of green methanol. In addition to hydrogen, it requires a climate-neutral source of CO2, such as suitable biomass. The CO2 is then released again during combustion on the ship. Only a few locations have conditions that provide large quantities of CO2 from biomass and are attractive for the production of green hydrogen.
   Ammonia does not have this problem. As the molecular formula NH3 already shows, there is no carbon here that could burn to CO or CO2. So it is sufficient to produce green/blue hydrogen. The nitrogen (N) can be obtained from the atmosphere. 

Even more promising: Efficiency and design improvements as well as speed limits

There are many ways of reducing emissions from ocean shipping immediately and without the use of new fuels. The ship hulls themselves offer many opportunities, ranging from design improvements to autonomous hull cleaning robots.

One often-overlooked option is to slow down shipping traffic, even though this naturally also has disadvantages as additional ships will be needed.

However, a 10% reduction in speed reduces emissions per tonne-kilometer by about 30 percent. That is many times more than green or blue ammonia are expected to save in the next 10-20 years. Climate policy initiatives in this direction are blocked primarily by the container shipping companies. Time is money – this applies to the expensive ships as well as to the customers’ goods. 

Over the past months, average speeds have actually increased. The attacks by Houthi forces on ships in the Gulf of Aden blocked access to the Suez Canal and made long detours around the southern tip of Africa necessary. To make up at least some of the time lost, ships increased their speed and thus also their fuel consumption.

Image: Dual-Fuel Container Carrier Ane Maersk © Courtesy A.P.Møller – Maersk

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