Yara Finds Partners for Biggest-Ever Green Ammonia Plant

Yara International ASA said it’s brought on two partners for a project that will enable its flagship chemical plant to produce ammonia and hydrogen in the greenest way possible.

Statkraft AS and Aker ASA agreed to join Yara in switching its facility in Porsgrunn, Norway to run on renewable energy and convert its production methods to eliminate the use of natural gas. The companies said doing so could potentially cut 800,000 tons of carbon dioxide a year -- the equivalent of emissions from 300,000 cars.

The project would be the first conversion of an existing large-scale factory that produces ammonia, which can be used to facilitate the use of hydrogen as a fuel. There’s immense interest in developing cheaper ways to produce clean hydrogen, which it burns without producing CO2, because of its potential as a climate-friendly replacement for fossil fuels currently used in industries such as shipping and aviation.

Producing ammonia requires manufacturers to obtain hydrogen as a chemical component. Porsgrunn currently does this by using natural gas in a carbon-intensive process. To produce so-called green ammonia, it would have to switch to renewable sources of energy and rely on electrolyzers, which run a current through water to separate the hydrogen and oxygen atoms.

If successful, Porsgrunn could spark a mass conversion of the chemical industry as well as other industries such as shipping fuel, said Statkraft Chief Executive Officer Christian Rynning-Tonnesen.

The project will likely require more than 1 billion euros ($1.2 billion), according to Bloomberg calculations based on current cost estimates for the technology and amount of hydrogen required. Electrolyzers are expected to get cheaper in the coming years as demand rises for clean hydrogen, which could help lower costs.

Green ammonia will probably cost more than ammonia made using standard methods. The three companies plan to seek support from the Norwegian government and the European Union to kickstart a market place that will drive demand, said Yara’s CEO Svein Holsether.

At this stage, the partners only have to shoulder the expense of preliminary development work such as surveying. Costs will escalate once the actual conversion is underway.

Yara’s contribution will be its site in Porsgrunn, which is valued at $450 million. Using the existing infrastructure and skill-sets will “significantly” lower costs, Holsether said. For example, some of the processes it currently uses to manufacture ammonia are also applicable to producing green ammonia, once electrolyzers are added.

With a capacity of 450 megawatts, Porsgrunn alone would dwarf all the combined installed hydrogen capacity added in the past decade totaling 350 megawatts, according to Holsether.

“If we are to do something that’s really meaningful by 2030, the decisions actually have to be taken now,” said Oyvind Eriksen, CEO of Aker, which has interests in fishing and ship-leasing. “You can’t expect a shipping industry to convert in the hope that the fuel will be produced.”

©2021 Bloomberg L.P.

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