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.
On February 8, the Royal Society released a policy briefing entitled “Options for producing low-carbon hydrogen at scale.” The briefing evaluates the technical and economic aspects of hydrogen production methods and concludes that it is indeed feasible to produce low-carbon hydrogen at scale. Part of that feasibility, the briefing says, could be based on the use of ammonia as an expedient for hydrogen transport and storage.
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).