Page 130 - CW E-Magazine (25-3-2025)

Point of View

Table 1: Pathways for hydrogen & ammonia
Type of hydrogen Technology
Grey hydrogen By SMR of natural gas, i.e., the currently prevailing method, which has unavoidable process emissions that
cannot continue if net zero emission target is to be met.
Green hydrogen By electrolysis using exclusively renewable electricity (RE). This is the least GHG emitting process, but faces
challenges from high costs and insufficient access to RE.
Yellow hydrogen By electrolysis using the current available electricity mix of the grid. Attractiveness is directly linked to emission
intensity of the electricity grid.
Blue hydrogen By SMR of natural gas combined with Carbon Capture and Storage (CCS). This method is hampered by avail-
ability of adequate storage locations and potentially, cost.
Turquoise hydrogen: By methane pyrolysis. This method is currently least developed, but has the benefit of having no direct emissions,
though it leads to increased natural gas consumption.
needs to be produced and this is done most widely by Steam Methane Reforming (SMR), with natural gas as primary feedstock. Using gas not
only makes for ‘cleaner’ production vis-à-vis producing it from coal or liquid hydrocarbons but also comes with better economics. Gas-based
ammonia plants are cheaper to build than ones based on other hydrocarbons, though, depending on circumstances that determine the gas/oil/
coal pricing, they may be more expensive to operate.
Over the last decade Indian ammonia producers have shifted to using natural gas, and most have pipeline access to the feedstock. But as
domestic gas production is insufficient, it is supplemented by imports in the form of LNG, and the price consumers pay is a ‘pooled’ price.
This keeps Indian ammonia in the last quartile of the cost curve, similar to European producers, with production costs roughly 4x the cost for
gas-advantaged producers in Canada, Saudi Arabia, Russia, Algeria, Nigeria and USA.
Shades of ammonia
Nearly all ammonia produced today is ‘grey’ – denoting a hefty carbon footprint that stems from use of hydrocarbons as feedstock. But that
is changing. The first plants for ‘blue’ ammonia, which will continue to use hydrocarbons but sequester the carbon dioxide (CO ) produced will
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come onstream this year. These are likely to be followed by several producing ‘green’ ammonia in which the hydrogen comes from electrolysis of
water and the energy needs are met by renewables.
Clearly, ‘green’ ammonia offers the greatest CO mitigation prospect, but wholesale and swift migration to the technology seems unlikely. A
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staged approach, spanning one or more of the other technological options will likely be the preferred path. The actual progression of technological
choice will be determined by a number of factors, including governmental policies and support, as well as technological breakthroughs. For countries
and companies that have access to CO sequestration opportunities, blue hydrogen is the easiest progression in the path to decarbonisation. For
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producers located in places where this is not possible or unfeasible, a gradual change from grey to yellow and eventually to green may be considered.
Markets for the new ammonia
The markets these avatars of ammonia will serve will differ. Grey hydrogen is expected to continue to drive urea production, while low-carbon
ammonia (green, yellow, and blue) will find outlets such as power generation, as marine bunker fuel, as a carrier of hydrogen, some speciality
fertilisers and industrial chemicals. Use as bunker fuel will be driven by LNG-fuelled ships for which new build orders have risen from 25 in 2024
to 88 in 2025 and expected to rise to 128 and 142 in the next two years.

By 2050, S&P Global Commodity Insights estimates use for blue and green hydrogen could add up to a sizeable 171-mt, from nil today. But
there are several uncertainties that could derail growth prospects. For example, ammonia’s low energy density (akin to methanol) – only about
half of hydrocarbon fuels – makes it less efficient than traditional marine fuels. There are also concerns whether the anticipated supply of low- and
no-carbon ammonia will actually materialise, and the high cost of the low-carbon alternatives. There are also concerns over ammonia’s toxicity
and corrosive nature, which have been addressed in the industrial settings in which it is currently used but could pose challenges in a more
dispersed user scenario.

Ammonia markets are evolving from a production and consumption standpoints. But the pace of change and adoption of low-carbon versions
of this energy-intensive chemical will hinge around fiscal and policy support and here there is some reason to be sceptical. Recent moves both
in the US and the European Union away from the earlier strong commitments to ‘greening’ energy bear close watching and could set the tone of
developments!
Ravi Raghavan

130 Chemical Weekly March 25, 2025

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