U.S. Low-Carbon Ammonia: Costs and Resource Requirements

Low-carbon ammonia produced with low-carbon electricity (green) or carbon capture (blue) has the potential to serve as a critical component of a future decarbonized energy system, whether it is used in the chemicals industry, for example, as feedstock for fertilizer; used as a hydrogen carrier; or used directly as a fuel. While low-carbon ammonia synthesis has been considered cost-prohibitive in the past, recent US Inflation Reduction Act (IRA) incentives for clean energy and hydrogen production have the potential to reduce production costs. This project develops a feasibility study to evaluate the levelized costs (with and without IRA incentives) and resource requirements of producing blue and green ammonia in the US in the 2030 timeframe. This study finds that low-carbon ammonia production costs with IRA credits may be comparable to historic grey ammonia prices in select regions in the US. IRA credits have the potential to reduce levelized costs, lowering green ammonia costs by up to two-thirds and blue ammonia costs by approximately 20%. Results suggest that green ammonia produced in regions with good-quality wind resources (for example, SPP or Texas) may have levelized costs (LCOA) under $300/tonne, while blue ammonia may be more competitive than green ammonia in several US regions at low gas prices. The study further considered the transport of ammonia from the US to Japan, which may increase costs by approximately $100/tonne of green ammonia. This study also analyzed the electric resource requirements for green ammonia production. Using data from modeled scenarios for green ammonia, this study found that 2–8 GW of electric resources per million tpy green ammonia (primarily for hydrogen production) may be required, depending on the resources utilized. Note that these values depend strongly on the quality of the electric resources, the levels of demand, and the available electric resource supply in a given region and, therefore, are presented here as first-order estimates only. More detailed analysis with site-level information will be required when considering specific projects. Further, this study estimates that 1.6 million tpy CO2 sequestration potential may be required per million tpy blue ammonia.