Low-carbon ammonia in Nebraska and the Netherlands

Last week, two new low-carbon ammonia production projects were announced, both of them large-scale and largely CO₂-free.

Monolith Materials announced a 275,000 ton per year “clean ammonia” plant in Nebraska, in the heart of the US cornbelt. The plant will begin construction in 2021, expanding the existing demonstration plant, using Monolith’s methane pyrolysis process powered by 100% renewable electricity.

Ørsted and Yara announced their plan to produce 75,000 tons per year of “green ammonia” at Yara’s existing Sluiskil plant in the Netherlands. They intend to install a 100 MW electrolyzer, using Ørsted’s offshore wind energy, with a final investment decision expected in 2021-2022, and production beginning in 2024-2025.

Also last week, I wrote about Saudi Aramco’s announcement that it had shipped one batch of “blue ammonia” from which some of the the CO₂ emissions were utilized in enhanced oil recovery (CCS-EOR) and methanol production (CCU). These production pathways may allow ammonia to be marketed as low-carbon, from a certain carbon accounting perspective, but they cannot contribute to any significant reduction in atmospheric emissions.

The contrasts in emission intensity between CCS-EOR or CCU and pyrolysis or electrolysis are striking. And the argument that “blue ammonia” must be used to kick-start ammonia’s entry into low-carbon markets, due to perceived advantages in cost and availability, is beginning to look increasingly questionable.

Monolith: ammonia from methane pyrolysis

Monolith is currently commissioning its first plant, Olive Creek 1, a commercial-scale demonstration with an annual production capacity of 14,000 metric tons of carbon black (the process produces no CO₂, only solid carbon). Monolith’s pyrolysis process produces a carbon-to-hydrogen ratio of around 3:1, meaning that the demonstration unit also has an annual capacity of almost 5,000 tons of hydrogen.

This latest announcement, Olive Creek 2, is an order-of-magnitude bigger, producing 180,000 tons per year of carbon black. This means roughly 60,000 tons of hydrogen, which Monolith intends to upgrade into 275,000 tons per year of ammonia.

Like the current OC1 facility, OC2 will be located in Hallam, Nebraska near many of the nation’s largest agricultural companies and run on 100% renewable electricity. Monolith expects construction on the new facility to begin in 2021.

Monolith Materials announcement, Monolith Materials Plans to Build Country’s First Large Scale Carbon-Free Ammonia Plant, October 6, 2020

Following the announcement, an in-depth profile on Monolith appeared in Forbes, with details of the company’s origins and financial backers:

Their goal was finding a business idea that was both environmentally transformative and financially sustainable … 

The carbon is used to manufacture carbon black in a manner that’s sustainable. The existing process, [Rob Hanson, cofounder and CEO of Monolith Materials] says, produces a lot of carbon dioxide. Better still, it’s cost-competitive, he claims, stating that making money from selling off the resulting hydrogen is a financial bonus.

“If all the process did was make carbon black and vented hydrogen, we would still be competitive,” he says.

“As a growth investor, Warburg Pincus was attracted to Monolith because of its disruptive economic model and commitment to  produce essential chemicals in an environmentally friendly manner,” John Rowan, a managing director at Warburg Pincus told Forbes in an email. “Monolith is a great example of companies who continue to lead the energy transition.”

For his part, Hanson is gratified to see that original idea he and his cofounders put on that blank piece of paper start to come to fruition. “Ammonia is a great milestone on our journey, where it’s an existing hydrogen-produced chemical and we can do it cleaner.”

Forbes, This Startup’s Building A Factory To Sustainably Turn Natural Gas Into Fertilizer, October 7, 2020

Yara and Ørsted: ammonia from wind

I last wrote about Yara’s Sluiskil plant in January 2019, when I reported on its new hydrogen pipeline connection, importing 4,000 tons per year of byproduct hydrogen feedstock from the nearby Dow ethane cracker. From a decarbonization perspective, byproduct hydrogen has a carbon footprint roughly 25% smaller than normal. While that project delivered minor, incremental decarbonization to the Sluiskil plant, it connected the plant to hydrogen pipelines that make it easier to add electrolyzers now.

As I wrote at the time, “the engineering and infrastructure that are in place now will reduce the cost of deeper decarbonization later. Ultimately, they could allow for the full integration of hydrogen produced from electrolyzers, eliminating the ammonia plant’s natural gas consumption.”

Moving a step further down the pathway to complete decarbonization, Yara now plans to use this infrastructure to tie in renewable hydrogen from a 100 MW electrolyzer.

Yara and Ørsted share the vision of creating a sustainable future through being first movers and have joined forces to develop a 100 MW wind powered electrolyser plant for renewable hydrogen production, aiming to replace fossil-based hydrogen with renewable hydrogen for ammonia production in Yara’s Sluiskil plant, located in the Dutch province of Zeeland. The renewable hydrogen would generate around 75,000 tons of green ammonia per year — approx. 10% of the capacity of one of the ammonia plants in Sluiskil — based on dedicated renewable energy supply from Ørsted’s offshore wind farms.

Yara announcement, Ørsted and Yara seek to develop groundbreaking green ammonia project in the Netherlands, October 5, 2020

Yara’s Sluiskil site has three ammonia plants, with a combined annual capacity of 1.5 million tons per year. With one 100 MW electrolyzer, Yara can decarbonize roughly 5% of the site’s capacity. 2 GW of electrolyzers, or twenty more, would be needed to decarbonize the entire site — and this is precisely the kind of scale Ørsted intends to deliver for its renewable hydrogen ambitions.

“Ørsted is committed to investing in renewable hydrogen production at scale, and with the right support in place this joint flagship project between Yara and Ørsted will not only lead to a significant reduction of CO2 emissions, but also help mature the technology for the wider decarbonisation of European industry”, says Martin Neubert, Executive Vice President and CEO of Ørsted Offshore ...

With its abundant offshore wind resources and large hydrogen consumption centres in coastal areas, the Netherlands are well-positioned to lead the way in the green transformation of heavy industry powered by offshore wind, while securing the competitiveness of key industrial sectors and creating economic activity and jobs. This project can be a milestone on the hydrogen roadmap of the Smart Delta Resources cluster in Zeeland, and an important step in the scaling of renewable hydrogen in the Netherlands towards 3-4 GW by 2030.

Ørsted announcement, Ørsted and Yara seek to develop groundbreaking green ammonia project in the Netherlands, October 5, 2020

The pathway to Low-Carbon Ammonia

Many people declare that “blue ammonia” is an essential bridge to “green ammonia” because it is low-cost and available in relevant volumes. Therefore, the argument continues, new markets for low-carbon ammonia must be kick-started with “blue ammonia.”

This logic is becoming increasingly challenged.

First, one way to minimize the cost of “blue ammonia” is to minimize the emission reduction. For example, capturing less than 100% of the CO₂ emissions, or using the captured CO₂ in products with less carbon sink potential than permanent sequestration. (This was the case with last week’s announcement from Saudi Aramco, and the reason I wrote that “there is an urgent need to establish definitions across the industry, or risk losing credibility”). If emissions are increased, doesn’t this focus on lowest-cost defeat the purpose of using ammonia for energy?

Second, if “blue ammonia” is viewed as a necessary bridge, we risk establishing a cost basis for low-carbon ammonia that could render lower-carbon ammonia uncompetitive or leads to policies that provide inadequate support. If “blue ammonia” must be used first because it is lowest-cost, how does this support the transition to “green ammonia” — how is this a bridge? We can only achieve volume manufacturing of electrolyzers by building more and more of them, pushing down their unit costs and, with increasingly lower renewable energy costs, driving a virtuous cycle — as the unit cost decreases, we build more and bigger. But we will never reduce electrolyzer costs by investing in carbon capture.

Third, if we build new “blue ammonia” plants to meet early demand and then see that other production pathways, like electrolysis or pyrolysis, are available and cost-competitive, we may have locked ourselves into decades of unnecessary emissions, or stranded our assets.

It is increasingly likely that ammonia produced from renewable power will be available at low-cost and large-scale this decade. NEOM’s 1.2 million tons per year should be coming onstream in 2025, with Asian Renewable Energy Hub’s potential 9.9 million tons per year ramping up early in the 2030s. Both projects combine wind and solar resources to increase capacity factor and reduce product costs. Both projects were announced this year.

Yara and Ørsted are taking a more incremental approach than these mega-projects, but Yara’s announcements have already increased by a factor of 20 in just the last 14 months: from a 5MW electrolyzer in Porsgrunn, Norway, to be operational by 2022, to a 100MW electrolyzer in Sluiskill, Netherlands, to be operational by 2024. As we push inevitably towards gigawatt-scale electrolyzers, I look forward to reporting what Yara announces in 2021.

Monolith’s pyrolysis process is still unproven for ammonia, for now, but Monolith is not alone: BASF, TNO, and others are developing different methane-splitting systems. Pyrolysis illustrates the uselessness of the binary “green” / “blue” color code used to describe low-carbon hydrogen or ammonia, and it challenges the assumption that fossil-based ammonia production needs to emit CO₂ at all.