Australia, known for its ambitious renewable energy goals, is on the brink of a groundbreaking transformation in the world of hydrogen. Recent analysis by Rystad Energy reveals that the nation’s hydrogen infrastructure developers are considering a monumental shift—transporting hydrogen in the form of ammonia.
Ammonia, once primarily recognized as a fertilizer precursor, is emerging as a safer and more cost-effective method for exporting hydrogen, especially in large volumes. Unlike gaseous hydrogen, ammonia boasts a higher energy density and can be stored under less energy-intensive conditions.
A pivotal research paper by the Kleinman Center for Energy Policy at the University of Pennsylvania corroborates this shift. It establishes that for long-term storage and transport of hydrogen, especially in a country as geographically isolated as Australia, ammonia stands out as the pragmatic choice.
However, for Australia to even contemplate the logistics of storing and transporting hydrogen effectively, the critical factor is terminal capacity. Presently, the country has just seven terminals with a combined storage capacity of approximately 173,000 tonnes, sufficient for merely two to three days of planned clean ammonia exports.
Fast forward to 2050, and Australian ammonia exports are projected to skyrocket to 35.9 million tonnes annually, considering the projects that have already been announced. With colossal undertakings like the Western Green Hydrogen Hub and the Australia Renewable Energy Hub—both eyeing ammonia as their transportation medium—rapid expansion of terminal capacity is imperative.
Rystad Energy suggests that existing liquefied natural gas (LNG) facilities could be repurposed for hydrogen transportation, bridging the gap between the anticipated hydrogen and ammonia demand and encouraging fossil gas producers to participate in decarbonization.
Converting LNG export and import facilities to ammonia would entail costs ranging from 11% to 20% of total LNG terminal capital expenditure, depending on factors like demand and location.
While ammonia shipping is currently in its infancy, the sector is poised for swift expansion. Currently, only 30% of the global liquefied petroleum gas (LPG) fleet can transport ammonia, with just 50 large and very large gas carriers capable of doing so.
However, strides are already being made to bolster ammonia shipping capabilities. Singaporean shipping giant Eastern Pacific Shipping has commissioned four very large ammonia carriers, each with a capacity of 93,000 cubic meters, set to become the world’s largest carriers.
Yet, to transport the colossal 121 million tonnes of ammonia that have been announced, approximately 200 very large ammonia carriers will be required, necessitating an investment of approximately $US20 billion in newbuilds.
Interestingly, the retrofitting of existing liquefied petroleum gas carriers for ammonia transport is gaining momentum. Considering the 1,450 of these carriers currently in service, retrofitting could provide a much-needed incentive for shipowners, especially as demand for liquid petroleum gas is expected to decline in the wake of larger decarbonization efforts.
As Australia sets its sights on becoming a renewable hydrogen powerhouse, the pivot towards ammonia could hold the key to unlocking a sustainable energy future on a grand scale.
