Global ammonia trade expected to increase
ten-fold as demand for low-carbon ammonia used for shipping fuel
and power generation transforms market
NEW
YORK, July 11, 2023 /PRNewswire/ -- The global
market for ammonia is poised to triple in the coming decades with
nearly all of the growth coming from low-carbon ammonia, a new
analysis by S&P Global Commodity Insights says. Driven by
improved economics resulting from decarbonization policies,
low-carbon ammonia is expected to grow from its current nascent
state to 420 million tons—two thirds of the total market—by
2050.
"Decarbonization policies, including incentives in the U.S.
Inflation Reduction Act and the EU's Carbon Border Adjustment
Mechanism, are transforming the economic fundamentals of low-carbon
ammonia," said Sean Mulholland,
Director, Agribusiness Consulting, S&P Global Commodity
Insights. "The transition from concept to reality is already
happening."
The new strategic report, Low-carbon Ammonia: Facilitating
the Transition to a Sustainable Future says that the
potential use of low-carbon ammonia as a marine bunker fuel,
industry feedstock and as a carrier for hydrogen used in power
generation represents a profound shift for the industry—from one
geared primarily towards fertilizer production to one driven by
energy markets.
S&P Global Commodity Insights expects global trade of
ammonia to increase nearly ten times over by 2050 (160 million
metric tons) as a result. While most ammonia is currently consumed
on-site to produce other products that are then traded, low-carbon
ammonia will more often be traded as a commodity in its own right.
The Americas, the Middle East and
Australia are expected to emerge
as major exporters with Europe and
East Asia emerging as major demand
centers, the analysis says.
"The rapid growth in ammonia driven by low-carbon supplies will
change the current market beyond recognition," said Ryan Monis, Director, Chemical Consulting,
S&P Global Commodity Insights. "The diversification of supply
routes and demand applications will introduce carbon capture,
renewables, power utility and shipping market participants to an
industry currently dominated by fertilizer producers."
The current pipeline of low-carbon ammonia projects for power
generation—with owners consisting of public utilities, oil and gas
majors, investment funds and others—illustrates the shift towards a
broader group of market participants, the analysis says. Joint
ventures between renewable energy producers, hydrogen
producers and ammonia producers can also be expected to emerge.
While decarbonization policies have provided an irreversible
momentum for low-carbon ammonia, several factors will be key in
determining the ultimate composition of the market, the analysis
says.
S&P Global Commodity Insights expects 'blue' ammonia
(hydrocarbon-based production coupled with carbon capture and
storage) to be more economically attractive than conventional
production in some key markets before 2030 due to a combination of
carbon emissions penalties and production subsidies. However,
'green' ammonia (produced from renewable electricity) will require
further policy support beyond the incentives already announced to
make it cost competitive in most markets.
Other points of high potential impact on the development of the
market include the development of certification and classification
systems to harmonize international trade; greater clarity from some
major markets regarding acceptable emissions thresholds for
hydrogen and ammonia in their decarbonization plans; and the pace
of innovation and efficiency improvements for ammonia's use in
power generation, the analysis says.
"Despite some policy and technological uncertainties remaining,
it is now clear that the fundamental economics of low-carbon
ammonia have been transformed," said Monis. "We expect the number
of projects reaching Final Investment Decisions to accelerate
significantly in the coming years, not only in production capacity
but also in the associated infrastructure required to take the
low-carbon ammonia market from concept to reality."
In addition to the new strategic report, S&P Global
Commodity Insights has also introduced a new Monthly Low-carbon
Ammonia Report service. Produced by Fertecon, the fertilizer
analysis team at S&P Global Commodity Insights and the leading
provider of data and insights for ammonia for more than 40 years,
the new monthly report offers a regular and recurring market
analysis that provides business intelligence and short-term
forecasts for the low-carbon ammonia market as an individual
sector. For more information about the new Monthly Low-carbon
Ammonia Report, visit:
https://www.spglobal.com/commodityinsights/en/ci/Info/0423/lowcarbonammonia.html
Additional Ammonia Resources from S&P Global Commodity
Insights:
Ammonia - Chemical Economics Handbook
Ammonia Fertilizer Market and Price Analysis
Interactive: Ammonia Price Chart
Media Contacts:
Jeff Marn +1-202-463-8213,
Jeff.marn@spglobal.com
Global/EMEA: Paul Sandell + 44 (0)7816 180039,
paul.sandell@spglobal.com
Americas: Kathleen Tanzy + 1
917-331-4607, kathleen.tanzy@spglobal.com
Asia: Melissa Tan
+ 65-6597-6241, melissa.tan@spglobal.com
About S&P Global Commodity Insights
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Global.
S&P Global Commodity Insights is a division of S&P
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SOURCE S&P Global Commodity Insights