The United States Congress passed a measure on February 9 that could galvanize the production of low-carbon ammonia in the U.S. The measure, included within the Bipartisan Budget Act of 2018, amends Section 45Q of the Internal Revenue Code, titled “Credit for Carbon Dioxide Sequestration”. That section, originally adopted in 2008, created a framework of tax credits for carbon capture and sequestration. 45Q’s impact in the intervening years has been minimal, an outcome attributed by experts to the relatively low prices assigned to CO2 sequestration and the fact that tax credits would be allowed only for the first 75 million tonnes of sequestered CO2. The new legislation increases the tax credit per tonne of CO2 placed in secure geological storage from $20 to $50, and for CO2 used for enhanced oil recovery from $10 to $35. It eliminates the credits cap altogether. With these changes, it now seems possible that low-carbon ammonia could find itself on an equal economic footing with “fossil” ammonia – and this could have consequences well beyond American agricultural markets.
Toyota Motor Corporation announced on April 25 the launch of an effort called the Chita City and Toyota City Renewable Energy-Use Low-Carbon Hydrogen Project. According to the company’s press release, the project is intended as a step toward “the realization of a hydrogen-based society spanning the entire region through mutual coordination and all-inclusive efforts.”
For ammonia energy advocates, the announcement had two elements of particular significance. First is the clear indication that Toyota Motor Corporation is embracing ammonia as a hydrogen carrier – although not as a motor fuel. Second is the project’s stated intention to establish a “system in which Aichi Prefecture certifies low-carbon hydrogen objectively and fairly.”
Last week, the International Maritime Organization (IMO) formally adopted its Initial GHG Strategy. This means that the shipping industry has committed to "reduce the total annual GHG emissions by at least 50% by 2050," and completely "phase them out, as soon as possible in this century."
This also means that a global industry is searching for a very large quantity of carbon-free liquid fuel, with a production and distribution infrastructure that can be scaled up within decades. The most viable option is ammonia. How much would be required? Roughly one million tons of ammonia per day.
The International Renewable Energy Agency (IRENA), in partnership with the International Energy Agency (IEA) and Renewable Energy Policy Network for the 21st Century (REN21), released a report this month entitled "Renewable Energy Policies in a Time of Transition." The 112-page document is a comprehensive survey of technologies, policies, and programs that have current or prospective roles in the global transition to a sustainable energy economy.
For the ammonia energy community, one of its conclusions stands out in vivid relief:
"Developing P2X is crucial because it plays a key role in decarbonising long haul road transport, aviation and shipping sectors that are difficult to decarbonize ... The overall recommendation for developing P2X is to focus on the development of ammonia for the shipping sector as well as long haul road transport, where few or no competing low carbon technologies exist and P2X is expected to be economically viable."
Twelve months ago, I wrote here that "the shipping industry is beginning to evaluate ammonia as a potential 'bunker fuel,' a carbon-free alternative to the heavy fuel oil (HFO) used in maritime transport." Around that time, I described the obstacle to adoption of ammonia fuel as an information gap, rather than a technology gap, because no new technology was required: the industry simply did not know about ammonia. This information gap had allowed the industry to believe that "CO2 reduction objectives will only be achievable with alternative marine fuels which do not yet exist." I'm glad to announce that this information gap is closing, and fast.
According to a report published last week by the International Transport Forum, the OECD's "think tank for transport policy," the use of "currently known technologies could make it possible to almost completely decarbonise maritime shipping by 2035." This conclusion requires the adoption of ammonia as a zero-carbon fuel.
A recent Ammonia Energy post mentioned that in December 2017 “the Japanese government . . . approved an updated hydrogen strategy which appears to give ammonia the inside track in the race against liquid hydrogen (LH2) and liquid organic hydride (LOH) energy carrier systems.” While this news is positive, the hydrogen strategy remains the essential context for economic implementation of ammonia energy technologies in Japan; ammonia’s prospects are only as bright as those of hydrogen. This is why Ammonia Energy asks from time to time, how is hydrogen faring in Japan?
This week, the government of South Australia announced a "globally-significant demonstrator project," to be built by the hydrogen infrastructure company Hydrogen Utility (H2U). The renewable hydrogen power plant will cost AUD$117.5 million ($95 million USD), and will be built by ThyssenKrupp Industrial Solutions with construction beginning in 2019.
The plant will comprise a 15 MW electrolyzer system, to produce the hydrogen, and two technologies for converting the hydrogen back into electricity: a 10MW gas turbine and 5MW fuel cell. The plant will also include a small but significant ammonia plant, making it "among the first ever commercial facilities to produce distributed ammonia from intermittent renewable resources."
Japan and Saudi Arabia are together exploring the possibility of extracting hydrogen from Saudi crude oil so that it can be transported to Japan in the form of ammonia.
According to a synopsis of the planned effort, “one option for Japan’s material contribution to reducing greenhouse gas emissions [would be] a supply chain for carbon-free hydrogen and ammonia produced through CCS from Saudi Arabian fossil fuels.” The synopsis emerged from a September 2017 workshop sponsored by Saudi Aramco and the Institute of Energy Economics, Japan (IEEJ).
The U.S. Department of Energy H2@Scale program’s November 2017 workshop in California included mention of ammonia as a constituent of a future hydrogen economy. It also highlighted the relevance ammonia energy could have in California.
California stands out globally as a large economy that is strongly committed to development of a hydrogen economy. The state’s strategy for hydrogen-powered transportation involves reducing the production cost of renewable hydrogen and the capital and operating costs of hydrogen fueling stations. It does not explicitly address the cost of intermediate hydrogen logistics.
The question of cost is of utmost importance because California has so far put $120 million of public funds into hydrogen fueling stations and intends to invest an additional $20 million per year through 2022. The state’s aspiration is to move to a point where hydrogen that is used as a motor fuel is free of public subsidy. So it clearly behooves the state to investigate how ammonia could be used as a cost-reducing energy carrier.
Toyota is active in California’s hydrogen movement and has announced plans to build a renewable hydrogen plant that will use cow manure as a feedstock. A project with a different conception, one that draws upon the solar and wind resources of the Mojave Desert to produce renewable hydrogen and logistically advantaged ammonia, would align better with the state’s sustainability objectives.
One of Ammonia Energy’s “top ten” stories of 2017 described Australia’s early steps toward export of renewable hydrogen in the form of green ammonia. The story said that “Agencies such as the Australian Renewable Energy Agency (ARENA) made it clear during the year that the country intends to build on [its historical] position” as a supplier of fossil energy to countries such as Japan.
ARENA took a tangible step in this direction on December 20, 2017 with the release of a Request for Proposal for a AUD$20 million (USD$16 million) renewable hydrogen R&D funding program. Included in the scope, per ARENA’s 2017 Investment Plan, could be “demonstration of renewable production methods for transportable energy storage options (such as hydrogen or ammonia).”