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Market Potential by Sector

Ammonia is increasingly recognized as an important, sustainable fuel for global use in the future. Applications of ammonia in heavy transport, power generation, and distributed energy storage are being actively developed. Produced at scale, ammonia could replace a substantial fraction of current-day liquid fuel consumption.

The production of green ammonia has the capability to impact the transition towards zero-carbon through the decarbonisation of its current major use in fertiliser production and also thanks to potential alternative uses such as:

  • As a medium to store and transport chemical energy, with the energy being released either by directly reacting with air or by the full or partial decomposition of ammonia to release hydrogen.

  • As a transport fuel, by direct combustion in an engine or through chemical reaction with oxygen in the air in a fuel cell to produce electricity to power a motor.

  • To store thermal energy through the absorption of water and through phase changes between material states (for example liquid to gas).


Current Market status


Ammonia is the second-most-widely produced commodity chemical globally, with a production volume of over 180 million tonnes in 2019, and with approximately 20 million tons per year traded as merchant ammonia (mostly in the form of seaborne trade), and mostly utilized in agriculture as a fertilizer, a sector that is under increasing scrutiny due to its environmental impact.

Ammonia can be synthesized from nitrogen and hydrogen via various methods, with the Haber-Bosch process currently the only method used on a commercial scale. The resulting ammonia can be easily transported, stored and the hydrogen can be extracted again at the destination via a thermal decomposition and separation process.

Ammonia production is a highly energy intensive process consuming around 1.8% of global energy output each year (steam methane reforming accounts for over 80% of the energy required) and producing as a result about 500 million tonnes of carbon dioxide (about 1.8% of global carbon dioxide emissions)


Where the Market is heading? Projections to 2050


Ammonia utilization will experience a journey, going from being essentially a fertilizer to becoming a widely used fuel for multiple industries.


Fertilizer


Fertilizer consumption will increase from 180 to 305 million tons per year between 2020 and 2050 (McKinsey data).


Transport


Transport consumed 119 EJ, or 27% of global final energy demand in 2018. Oil fuelled over 90% of the road, aviation and maritime subsectors, with biofuels and natural gas at some 3% each, while the only significant current use of electricity was in the rail subsector. By 2050, transport energy use will drop slightly to 112 EJ, despite a considerable expansion in transport services. Transport is thus one of the great engines of the energy transition, where electrons gain primacy over molecules of fossil fuel.


Shipping


DNV GL projects a 2050 fuel consumption of circa 11 EJ/Year, which is the same value that is currently reported globally. However, the same report indicates that low carbon fuels should represent circa 7 EJ/Year by 2050.

Aviation


DNV GL reports an annual fuel consumption for the aviation industry of 15 EJ/Year which could slightly increase to 16 EJ/Year by 2050.

DNV GL’s best estimate includes that the fuel mix will contain 6.5 EJ (41%) biofuels by 2050 – 3.5 times more than the road sector – and electricity will account for 3%, with pockets of short-haul flights electrified.


Replacing diesel for Power Generation


The report from the International Finance corporation of the World Bank Group indicates 40 to 70 billion liters are consumed by back-up generations. The total market is estimated to be 50Bn USD annually. Diesel as a fuel for power generation is mainly used on those area with limited access to reliable electricity grids. Hence the consumption of diesel for these purposes in concentrated in Africa, Southern Asia and LATAM. There are no projections of the future consumptions, but with no incentives to large investments to build national grids because of the arrival of cheap renewable power, the total demand from backup generators should not vary significantly.

Steel

Replacing the entire steel industry will consume at least half of the current ammonia industry production of 80MT a year

Assumptions

  • NH3 Price: 300 USD / Tonne

  • 12 MWh of electricity are needed to produce 1 Tonne of NH3

  • 1 Tonne NH3 produces 8 MWh of energy

  • The previous two assumptions represent a NH3 efficiency cycle of 67%

  • Fuels Price: 30 USD/MWh

  • Blended portfolio of Renewable Energy has an availability of 23%

  • NCV for genset diesel is 10 kWh/litre


Sources

  • The Royal Society: Ammonia: zero-carbon fertiliser, fuel, and energy store policy briefing

  • Argus: Ammonia White paper June 2020

  • Monash University : A roadmap to the Ammonia Economy

  • DNV GL - DNV_GL: Energy_Transition_Outlook_2020_Executive_Summary

  • McKinsey

  • AmmonFuell : An industrial view of ammonia as a marine fuel

  • International Finance Corporation – World Bank Group: The dirty footprint of the broken grid