Gray, Blue, or Inexperienced: The Actual Ammonia Math

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Equinor’s resolution to halt its blue hydrogen undertaking in Groningen shouldn’t be a narrative about engineering failure or lack of public assist. It’s a story concerning the absence of shoppers. The H2M undertaking secured assist from the EU Innovation Fund and was positioned as a cornerstone of commercial decarbonization within the Netherlands. It had an outlined technical pathway, a reputable companion, and entry to CO2 storage infrastructure within the North Sea via Northern Lights. What it didn’t have was industrial offtake. With out consumers prepared to signal long run contracts for blue hydrogen, the undertaking couldn’t attain remaining funding resolution. Markets, not rhetoric, determined the end result.

The proposed Groningen facility was designed to supply roughly 210 to 220 thousand tons of hydrogen per 12 months beginning within the early 2030s. To place that in context, the Netherlands right this moment consumes on the order of 0.8 to 1.2 million tons of hydrogen yearly, largely for refining and ammonia manufacturing. A 220 thousand ton facility would subsequently have represented roughly 18% to 27% of present Dutch hydrogen demand. Throughout the European Union, whole hydrogen demand is roughly 8 to 10 million tons per 12 months, which means the Groningen undertaking would have equipped round 2% to three% of EU demand. Globally, the place annual hydrogen use is close to 95 to 100 million tons, it will have amounted to roughly 0.2%. In different phrases, the plant would have been important on the nationwide degree, noticeable on the European degree, and marginal in world phrases, underscoring each its scale and its limits.

In context of precise finish demand for hydrogen it will have loomed a lot bigger. My projection of precise future hydrogen demand is more and more clearly nearer to proper than any others, as hydrogen continues to show costly to make, costly to make use of, outcompeted by alternate options together with Fortescue’s new electrochemical inexperienced iron course of that they’re placing into pilot, and pointless sooner or later vitality world besides as a hydrogenator of biofuels. That’s actually the angle that we embedded into pragmatic Netherlands 2050 vitality and industrial situations when Dutch transmission system operator Tennet engaged me to help them in workshops with different consultants in mid 2025.

The bodily structure of the undertaking was complicated and deserves to be spelled out clearly. Pure fuel would have been produced offshore Norway and transported by pipeline to the Netherlands. In Groningen, that fuel would have been reformed into hydrogen via autothermal reforming or steam methane reforming. The CO2 generated in that course of would have been captured, compressed, conditioned to fulfill transport specs, and saved briefly on web site. It might then have been shipped again to Norway and injected into offshore geological formations below the Northern Lights undertaking. The system was a loop during which fossil carbon traveled from Norway to the Netherlands after which again to Norway. Even earlier than debating the local weather arithmetic, the availability chain required a number of transport legs, a number of compression phases, and a number of business interfaces.

Northern Lights itself is a CO2 transport and storage enterprise mannequin. It was developed by Equinor, Shell, and TotalEnergies to supply third social gathering CO2 disposal companies. It requires emitters prepared to pay for seize, conditioning, transport, and injection. In earlier evaluation, I famous that Northern Lights is dependent upon a pipeline of commercial prospects committing to multi decade storage contracts. Blue hydrogen tasks have been anticipated to be anchor prospects. When one of many extra outstanding proposed blue hydrogen tasks disappears, that reduces the close to time period demand base for the storage system. CCS infrastructure can work technically. The query is whether or not emitters are prepared to pay for it when partial decarbonization will not be enough below tightening coverage regimes.

That mentioned, blue hydrogen isn’t one thing I think about a excessive benefit goal for CCS. We’ve alternate options and as grew to become obvious final 12 months with a brand new research, the actual sequestration potential is a tenth of numbers that have been assumed to be right. Which means it’s a way more restricted useful resource and needs to be preserved for the very best worth sequestration, that of biogenic carbon dioxide from worth creating industrial processes that devour biologically sourced feedstocks. Biomethane feeding ammonia crops to interchange pure fuel is extra seemingly, however extra seemingly but is importing inexperienced hydrogen.

Placing that apart, the professional industrial use case at stake right here shouldn’t be hydrogen for residence heating or passenger autos. It’s ammonia as a feedstock for fertilizers, explosives, and different chemical substances. World ammonia manufacturing is roughly 180 million tons per 12 months. Most of that ammonia is made utilizing pure fuel and emits round 2.4 tons of CO2 per ton of ammonia from course of emissions alone, in keeping with the Worldwide Power Company. When upstream methane leakage is included on a GWP20 foundation, whole local weather influence rises to roughly 2.7 to three.2 tons of CO2e per ton of ammonia, relying on leakage charges between 0.5% and 1.5%. That could be a massive, concentrated industrial emission supply with actual benefit as a decarbonization goal.

If blue hydrogen have been used to supply ammonia in Rotterdam, what would the emissions appear to be? Blue hydrogen from pure fuel with carbon seize sometimes falls within the vary of 1 to 4 kgCO2e per kg of hydrogen on a GWP100 foundation, relying on seize charges and methane leakage. Every ton of ammonia requires 176 kg of hydrogen. At 1 kgCO2e per kg hydrogen, that interprets into 0.18 tons of CO2e per ton of ammonia from the hydrogen provide. At 4 kgCO2e per kg hydrogen, it turns into 0.70 tons. Including remaining course of emissions and residual vitality use, an affordable vary for blue ammonia is 0.6 to 1.8 tons of CO2e per ton on a GWP20 foundation and considerably decrease on a GWP100 foundation. In comparison with 2.7 to three.2 tons for gray ammonia, the prevented emissions are roughly 0.9 to 2.5 tons per ton of ammonia. That’s significant however partial decarbonization.

Another pathway is manufacturing inexperienced ammonia in a excessive photo voltaic and wind jurisdiction comparable to Morocco and transport it to Rotterdam. In that mannequin, massive scale electrolysis produces hydrogen on web site on the ammonia plant. There is no such thing as a methane feedstock and no CO2 seize chain. Electrolyzer capital prices outdoors China stay round $2,000 per kW put in. Electrical energy consumption is roughly 50 to 55 kWh per kg of hydrogen. If energy prices $30 per MWh and electrolyzers run at 65% capability issue, levelized hydrogen prices land within the $3.5 to $5 per kg vary. Changing that hydrogen into ammonia requires the identical 176 kg per ton. Transport from Morocco to Rotterdam provides on the order of $20 to $40 per ton. The delivered inexperienced ammonia value is plausibly $800 to $1,000 per ton in present market situations. Operational emissions are low. Hydrogen leakage at 0.2% to 1% with a GWP20 multiplier of round 33 results in 0.01 to 0.06 tons of CO2e per ton of ammonia. Transport provides maybe 0.02 to 0.04 tons. The full is 0.03 to 0.11 tons of CO2e per ton. That’s close to zero relative to gray ammonia.

Price of abatement clarifies the tradeoff. If Rotterdam gray ammonia prices $600 per ton and blue ammonia prices $650, the premium is $50. If blue avoids 1.5 tons of CO2e per ton on common, the abatement value is about $33 per ton of CO2e. If inexperienced ammonia prices $900 and avoids 2.8 tons, the abatement value is round $107 per ton of CO2e. Blue appears cheaper per ton of CO2 prevented, however it doesn’t attain close to zero emissions. Inexperienced is costlier right this moment, however it approaches full decarbonization.

The European carbon pricing framework shifts competitiveness additional. The EU ETS makes use of GWP100 accounting for methane and different gases. Underneath GWP100, methane’s multiplier is about 28 fairly than over 80 below GWP20. Hydrogen’s oblique GWP100 is round 8 to 12. Carbon costs are round €73 per ton right this moment, however EU budgetary steering reveals shadow carbon costs of €200 now, €250 within the mid 2030s, and €300 within the 2040 timeframe for alignment with local weather budgets. At 10 to 12 kgCO2e per kg hydrogen, gray hydrogen faces a carbon adder of €0.73 to €0.88 per kg at €73, and €2 to €3.6 per kg at €200 to €300. Gray ammonia turns into structurally uncompetitive in a €200 to €300 world, however sees the primary blue hydrogen aggressive loss within the €130 carbon value vary, and loses to imported inexperienced ammonia from Morocco within the €150 carbon value vary.

Blue hydrogen is much less uncovered however not immune. At 1 kgCO2e per kg hydrogen, a €300 carbon value provides €0.30 per kg. At 4 kg, it provides €1.20 per kg. For ammonia, that’s €53 to €211 per ton. If base blue hydrogen prices €3.8 per kg, then at €300 carbon it turns into €4.1 to €5 per kg.

Imported inexperienced hydrogen at €4.5 per kg with minimal carbon publicity stays round €795 per ton of ammonia for the hydrogen portion throughout all carbon value situations. Underneath critical carbon pricing, the competition turns into blue versus imported inexperienced, not gray versus blue.

It is very important word that ETS accounting utilizing GWP100 is a fiscal framework, not a local weather physics framework. Methane and hydrogen have stronger brief time period warming results than GWP100 displays. On a 20 12 months foundation, methane’s multiplier is roughly thrice greater. If coverage have been aligned with brief horizon local weather impacts, blue hydrogen would face the next efficient carbon value. Nonetheless, traders and industrial consumers reply to the precise ETS guidelines. Utilizing GWP100, blue hydrogen seems extra aggressive than below a GWP20 lens, however it nonetheless carries residual carbon publicity that grows as carbon costs rise.

Why did the Groningen undertaking fail to safe prospects? Industrial consumers seemingly assessed long run carbon publicity, capital lock in, and regulatory danger. In a world the place carbon costs are anticipated to succeed in €200 to €300, partial decarbonization that leaves 0.6 to 1.8 tons of CO2e per ton of ammonia will not be enough. Patrons signing 20 12 months offtake contracts should think about whether or not blue ammonia might grow to be deprived relative to close zero alternate options earlier than the asset is absolutely depreciated.

In latest evaluation, I argued that Germany’s hydrogen spine was constructed on assumptions about ubiquitous hydrogen for vitality use that by no means materialized, and that this misreads how industrial worth chains really function. Germany’s pipeline infrastructure is massive relative to its actual industrial low-carbon hydrogen demand and in lots of instances lacks suppliers and offtake agreements, making it a stranded asset in ready.

Against this, importing inexperienced industrial intermediates comparable to low-carbon ammonia, inexperienced iron, or methanol from areas with ample low-cost renewable energy preserves industrial competitiveness with out exposing the broader financial system to risky vitality pricing or costly under-utilized infrastructure. Importing these feedstocks permits Germany and different European producers to decarbonize upstream inputs whereas conserving high-value downstream transformation and manufacturing actions home, supporting jobs and worth creation with out remaking all the vitality system round hydrogen as an vitality service fairly than as a specialised industrial enter. This method treats inexperienced intermediates as tradable inputs that may be buffered, contracted, and managed commercially, fairly than as system-wide vitality value setters, preserving competitiveness in world markets.

The strategic goal for European trade is approaching zero emissions. Blue hydrogen can cut back emissions relative to gray. It doesn’t take away fossil carbon from the worth chain. Inexperienced ammonia produced with renewable electrical energy removes methane feedstock fully and reduces emissions by over 95% relative to gray. The Groningen undertaking was not a zero carbon answer. It was a partial one. In that context, its cancellation shouldn’t be essentially a setback. It could mirror the market signaling that incremental reductions are not sufficient in a tightening carbon funds world.