Ammonia Market Trends

Growth Drivers

• Expansion of green ammonia and renewable energy integration: The increasing concern about decarbonization is pushing the need for green ammonia to be produced from renewable hydrogen. Currently, as governments and industries seek new ways of reducing emissions, ammonia is becoming more popular as a fuel and a fertilizer component. In June 2024, the Norwegian chemical firm Yara International started a renewable hydrogen plant in Herøya for green ammonia to support carbon-free farming. This shift aligns with net-zero emissions targets, thereby helping ammonia for the future of energy and industry solutions.

• Increasing adoption of ammonia in the production of fertilizers: Fertilizers are the largest consumer of ammonia, especially nitrogen-based fertilizers, which are used in the agricultural industry to feed the world population. The world population is on the rise, and the depletion of the soil requires enhanced crop production, which, in turn, ensures the continuous demand for ammonia-based fertilizers. In May 2023, SABIC was able to deliver 5,000 metric tons of low-carbon ammonia to Indian Farmers Fertilizer Cooperative Limited IFFCO as a sign of low-carbon fertilizer usage. With countries working hard to provide food security, demand for ammonia-based fertilizers is set to rise further.

• Increasing use of ammonia in hydrogen transportation: Ammonia is gradually being accepted as a carrier for hydrogen due to its use in storage and transportation for fuel cells and power generation. Ammonia has a higher energy density and is easier to transport over long distances as compared to hydrogen, which makes it a feasible option for hydrogen economies. In March 2024, the Ammogen consortium began the largest ammonia-to-hydrogen conversion project at Tyseley Energy Park in the United Kingdom, putting the vector of clean energy into effect. Ammonia will be a critical enabler for efficient fuel delivery as hydrogen demand grows.   

Challenges

• Environmental concerns and carbon emissions from conventional production: Currently, ammonia production is closely associated with fossil energy sources, particularly natural gas, and is among the leaders in CO₂ emissions. The ammonia industry generates emissions of approximately 1.9% of the global CO₂ emissions, and the industry’s climate change concerns and potential regulation are becoming more apparent. The governments are increasing the emission standards, which have forced manufacturers to look for low carbon emitting materials. The shift towards green ammonia is still expensive and requires a lot of investment to meet green objectives.

• Supply chain and infrastructure challenges for green ammonia: The use of green ammonia has some challenges, such as high costs of production and the fact that it requires a new infrastructure for transportation and storage. Currently, the ammonia supply chain is oriented towards conventional processes, and it is quite difficult to start using renewable-based processes. Governments of nations that are investing in green ammonia need to provide policy support and financing to advance the technology. However, the use of green ammonia may still be constrained if there is no infrastructure and investment for it.