DNV has conducted a foresight study is conducted to assess the supply and demand of green and/or blue ammonia in the years 2030, 2040, and 2050.
According to DNV, before 2021, green ammonia production was minimal, mainly confined to Peru with about 20 kt of ammonia produced annually, while blue ammonia, produced without enhanced oil recovery using captured CO2, was virtually nonexistent. However, by Q2 2023, the global landscape had drastically transformed. The industry had announced 161 clean ammonia projects, capable of producing a total of 244 MTPA. This surge in projects, spanning from 2021 to 2023, suggests a trajectory towards further growth, with potential contributions to the 2030 supply of green and blue ammonia.
Ammonia production and endeavors
These projects are dispersed worldwide, with Australia leading in green ammonia projects and the USA dominating blue ammonia endeavors. Most of these projects are still in early developmental stages, marked by significant uncertainties regarding their implementation. Nonetheless, it’s projected that 79% of the announced production capacity will be available by 2030, with blue ammonia accounting for only 12–16% of the total capacity.
Factors influencing the distribution of green and blue ammonia projects include access to resources like natural gas and renewable electricity, alongside market demand. Regions with excess natural gas can export it as LNG, methanol, or ammonia, with ammonia offering a carbon-free alternative if CO2 can be centrally removed during production. Conversely, regions with abundant renewable energy sources and favorable regulatory environments can harness wind and solar power for green ammonia production, making it a scalable option requiring only renewable electricity, water, and air.
Market and production costs
Furthermore, the production costs of green and blue ammonia will play a pivotal role in determining their competitiveness in various markets such as maritime fuel, fertilizers, and power and hydrogen production. Factors like market regulations, GHG taxes, and stakeholder expectations will also influence market dynamics. Despite potential competition, there’s an optimistic outlook due to learning curves leading to cost reductions over time.
While the current ammonia market is primarily driven by fertilizer demand, clean ammonia seeks new applications such as shipping fuel, power generation, and hydrogen transportation. Producers intend to cater to multiple sectors, with only 26% of production capacity committed to a single end use, indicating a diverse array of potential offtakers driving up production.
Despite ambitious announcements, the likelihood of implementation suggests a more conservative estimate of ammonia output by 2030. Of the announced 244 MTPA, approximately one-sixth (43 MTPA) is projected to be available in a balanced scenario, with around 14 MTPA being blue ammonia. Green ammonia, primarily dedicated to shipping, may range from 4 to 7 MTPA, while 21 to 31 MTPA could potentially serve fertilizers, energy, and fuel markets. Renewable energy sources, predominantly wind and solar PV technology, are integral to green ammonia production.
The maritime sector is anticipated to be a significant consumer of clean ammonia, with demand projected to surge from 2.3 MTPA in 2030 to 245 MTPA in 2050. However, the total availability of green and blue ammonia is expected to far exceed maritime demand by 2030, offering potential for diversification of end uses.
Although green ammonia production growth is not currently constrained by electrolyzer production capacity, the accelerating demand growth post-2030 could rapidly alter the supply-demand balance, necessitating continued modeling and adaptation in the coming decades.
