As the world pivots towards decarbonization and energy security, hydrogen is taking center stage as a clean energy carrier. What’s more, the logistics of transporting hydrogen efficiently and safely over long distances have become a critical concern. Enter ammonia, a versatile and cost-effective solution that’s revolutionizing the global hydrogen transportation landscape.
Ammonia, a compound made up of one nitrogen and three hydrogen atoms (NH3), is emerging as a game-changer in the quest for hydrogen transportation. This chemical offers several advantages over traditional hydrogen transport methods, primarily due to its higher energy density and lower flammability. These traits make ammonia a safer, more cost-effective, and practical medium for exporting hydrogen supplies in large volumes.
According to projections by Rystad Energy, the use of ammonia as a carrier is set to soar, with an estimated 62% of total hydrogen exports, approximately 13.5 million tonnes per annum (tpa), being transported in this form by 2035. This shift is gaining traction globally as the clean energy transition gathers momentum.
Surge in Clean Ammonia Transportation
Clean ammonia is poised to become the driving force behind a substantial surge in clean energy transportation and trade. Rystad Energy’s forecasts indicate that traded volumes of ammonia are expected to reach a staggering 76 million tonnes by 2035, marking a fourfold increase from 2020 levels. This significant growth is predominantly fueled by regions like Africa and North America.
By 2050, global ammonia exports are projected to skyrocket to 121 million tpa, with Africa contributing 40.7 million tpa and Australia adding 35.9 million tpa based on announced projects. These figures underscore the rising prominence of ammonia in the clean energy export landscape.
Currently, the global ammonia landscape comprises 220 infrastructure projects with a combined handling capacity exceeding 6 million tonnes. Australia, for instance, currently hosts only seven terminals with a storage capacity of around 173,000 tonnes. Without substantial expansion by 2040, these facilities would only accommodate two to three days of planned clean ammonia exports.
To match Australia’s anticipated monthly exports of ammonia, terminal capacity will need to increase tenfold, highlighting the immense infrastructure challenges on the horizon.
Global energy players are recognizing the potential of ammonia as a clean energy carrier. JERA, a major energy company, recently initiated a tender to secure an annual supply of up to 500,000 tonnes of ammonia, beginning in 2027. In Germany, leading energy companies like E.ON, Uniper, and RWE have entered into ammonia-related agreements with international firms, signifying a growing interest in this field.
Germany’s H2Global auction, supported by €900 million ($978 million) in government backing, is pioneering 10-year purchase agreements for green ammonia, setting an influential precedent for the industry.
Rystad Energy estimates that converting liquefied natural gas (LNG) export and import facilities to ammonia could incur costs ranging from 11% to 20% of the total LNG terminal capital expenditure. The feasibility of such conversions depends on factors like demand and location.
One significant challenge is the current limited capacity of the global liquefied petroleum gas (LPG) fleet to transport ammonia, with only 50 large and very large gas carriers having this capability. To meet the surging demand, Eastern Pacific Shipping has commissioned four very large ammonia carriers (VLACs), each with a capacity of 93,000 cubic meters.
However, approximately 200 VLACs will be required to transport the anticipated 121 million tonnes of ammonia. This endeavor necessitates an estimated $20 billion investment in newbuilds. Additionally, retrofitting existing LPG vessels for ammonia transport is gaining traction as a strategic transition for shipowners.
As decarbonization efforts reshape the industry, the declining demand for LPG tonne-mileage further underscores the importance of such transitions.
The rise of ammonia in the global hydrogen transportation arena signifies a monumental shift towards safer, more efficient, and sustainable logistics in the clean energy sector. With significant investments, innovations, and international initiatives, ammonia is poised to become the backbone of the clean energy export landscape, driving us closer to a greener, more sustainable future.