Asia’s energy transition is set to witness a significant shift, with ammonia emerging as a key player in the region’s decarbonization efforts. The consultancy Rystad Energy reports that Asia will require approximately 8.8 million tonnes per annum (mtpa) of ammonia by 2030 to meet its energy transition targets, with China, Indonesia, Japan, and South Korea leading the charge in ammonia co-firing initiatives.
Ammonia co-firing, which involves blending low-carbon ammonia with coal or natural gas for power generation, is gaining traction in these countries. However, the path is not without challenges. Policy gaps and weak market demand are currently hindering investment in the necessary infrastructure to scale up ammonia usage. Minh Khoi Le, Head of Hydrogen Research at Rystad Energy, emphasizes the critical role of foreign partnerships and long-term offtake agreements in driving progress. Without firm commitments and accelerated infrastructure development, the anticipated ninefold growth in ammonia demand for power generation by 2030 could face setbacks.
The cost implications of ammonia co-firing are substantial. Rystad estimates that with hydrogen priced at $5 per kg, the levelised cost of electricity for a 10% ammonia blend would be 50% higher than coal-fired power. This cost differential underscores the need for supportive policies and market mechanisms to incentivize the adoption of ammonia co-firing.
China, in particular, is taking bold steps to integrate ammonia into its energy mix. The country’s National Development and Reform Commission has included ammonia in its 2024-2027 Action Plan, mandating that from 2027, new or upgraded coal plants must achieve a 50% reduction in emissions compared to 2023 levels. This includes a 10% co-firing requirement for biomass and green ammonia, alongside carbon capture technologies. China’s Inner Mongolia region, with its abundant renewable resources, is poised to become a hub for low-carbon hydrogen and ammonia production. Envision Energy’s recent commissioning of the world’s largest green ammonia plant in Chifeng, with a capacity of 0.32 mtpa and plans to expand to 1.5 mtpa by 2028, highlights China’s potential to supply the region with low-carbon ammonia.
South Korea is also making strides in its clean hydrogen power push, with the Ministry of Trade, Industry and Energy (MOTIE) launching a second auction covering 3 terawatt-hours (TWh) of electricity under a 15-year contract. To encourage greater participation, MOTIE is introducing exchange rate-linked settlements and a hydrogen borrowing system. Japan, meanwhile, has secured foreign contracts for low-carbon ammonia supplies, including blue ammonia from the US and green ammonia from China and India. The Japanese government plans to announce the winners of its contract for difference programme early next year, further supporting its ammonia-for-power strategy.
The implications for the energy market are profound. The shift towards ammonia co-firing could reshape the regional energy landscape, influencing investment patterns, trade flows, and policy frameworks. As countries strive to meet their decarbonization targets, the demand for low-carbon ammonia is expected to rise, creating new opportunities and challenges for stakeholders across the value chain. The success of this transition will depend on the ability of governments, industries, and investors to collaborate effectively and overcome the hurdles that lie ahead.