The Market for Low-Carbon-Intensity Ammonia

Abstract

As carbon capture and storage (CCS) technologies mature, the concept of a low-carbon or net-zero-carbon economy becomes more and more feasible. While many chemical and energy products do not contain carbon in their compounds, the upstream production process does. An added CCS module allows the removal of carbon emissions from the production process, which expands the value chain. This paper focuses on one of such commodities—low-carbon-intensity ammonia (LCIA). Even though ammonia is carbon-free in its final product, it is commonly made from natural gas, and the production process could generate significant carbon emissions. The idea of LCIA is to reduce the carbon footprint of the ammonia production process (e.g., blue ammonia) or eliminate carbon from the production process (e.g., green ammonia via electrolysis) so that the entire supply chain is decarbonized. The goal of this paper is two-fold. We first explore the US domestic market and the international market for LCIA. We then discuss relevant federal and local policies that could help grow markets for LCIA. The agricultural sector will be the center of the discussion, which consumes an estimated 70–90% of the global ammonia supply as fertilizers. The paper also examines other potential uses of LCIA, such as alternative fuels for decarbonizing agricultural machinery and transportation sectors. Finally, we argue that developing a comprehensive LCIA value chain, supported by dedicated policy measures and broad stakeholder engagement, is critical for materializing the potential of LCIA in contributing to a climate-resilient and sustainable economy.