The race to develop clean energy is accelerating and Clean Ammonia has taken a leading position in the shipping world. Plans to produce green and blue ammonia started in 2021 and increased in the following years. Potential investments could grow to over 100 billion dollars, but this new industry faces headwinds in four key areas.    

Production: Potential volume for all known projects totals 134M tons with most of the off-take slated for power outlets. Fourteen projects have a scheduled Financial Investment Decision and represent 51M tons. New projects were concentrated in the U.S. in response to IRA subsidies while long term projects in Australia have been delayed due to higher capital costs. Clean ammonia shipments began in 2024 and will ramp up to 2.3M t/y in 2026. An additional 2.4M t/y is projected from the U.S. in 2027 – 2028. Project approvals and timelines depend on price subsidies and infrastructure but it’s evident ammonia will play a major role in the power/fuel industry.

Infrastructure: The transition from production to end user requires several complex phases and multiple companies. New terminals, tank farms, and piping systems are needed for most projects while Hydrogen based projects require refineries to crack the ammonia into hydrogen. European projects are still in the design phase as governments scramble to outline safety requirements and licensing procedures. In Japan, power producers revitalized old LNG systems and have started pilot projects in three power plants.

Commercial Strength: Some commercial agreements were completed in 2023 but pricing was a major obstacle, particularly with limited government subsidies and variable, potentially volatile production costs. The IRA subsidies in the U.S. and accelerated infrastructure projects in Japan have pushed suppliers and receivers to work on pricing schedules. Indicative prices are under discussion but both sides are far from final numbers.

Shipping Viability: Shipping demand for ammonia will increase 10% in 2025 – 2026 and continue as more projects come on-line. Long haul cargoes from the U.S., Middle East, and Australia to Europe and the Far East are expected to ramp up steadily and tighten the mid-sized gas carrier market initially and the VLGC market as cargo sizes are increased.