Market Trends of Green Ammonia Industry
Growing Agricultural Production
- Ammonia is important in agriculture as it binds airborne nitrogen and makes nitrogen the most important crop nutrient available for nitrogen fertilizer production.
- The demand for green ammonia is increasing with the growing population and rising need for green fertilizers. Green ammonia is intended to produce carbon-neutral fertilizer products, decarbonizing the food value chain.
- Green ammonia is essential for sustainable food production. Several manufacturers are focusing on producing carbon-free fertilizers. For instance, Yara International is working toward making carbon-free fertilizer. Clean hydrogen is the major enabler for making CO2-free or green ammonia, which is the key ingredient in green fertilizers.
- According to estimates by the FAO (Food and Agriculture Organization) of the United Nations, the growing population is estimated to increase food production by as much as about 70% by 2050 to feed the global population of 9.1 billion people.
- The growing use of green fertilizers and the rise in fertilizer consumption globally are expected to drive the demand for green ammonia.
- According to the International Fertilizer Industry Association, the demand for agricultural fertilizer is expected to grow by about 2.04% in FY 2023-24 and reach a volume of 195.04 million metric tons.
- The European fertilizer industry made tremendous improvements in the energy efficiency of ammonia production. According to Eurostat, The value of output produced by the agricultural industry in the European Union was EUR 537.5 billion (~USD 566.42 billion) in 2022, which was an increase of 19.58% compared to 2021.
- China accounted for around 7% of the overall agricultural activities globally, thus feeding 22% of the world’s population. The country is the biggest producer of a wide array of crops, including rice, cotton, potatoes, and others. Thus, the demand for ammonia, which is used as a fertilizer, is rapidly increasing owing to the large-scale agricultural activities in the country.
- Moreover, China has the most significant agricultural output among all other countries. Only about 10% of the land in China is suitable for cultivation. The limited space for cultivation has led to severe food shortages in the past. Thus, China is planning to modernize and upgrade agriculture in the next ten years. The country’s agricultural development is expected to shift from increasing production to improving quality.
- China accounts for nearly 35% of the world's total fertilizer consumption, making it the most influential country in the fertilizer industry. However, the production and use of mineral fertilizers are expected to decline as the government aims to achieve net-zero carbon emissions by 2030 and carbon neutrality by 2060. These policies are expected to favor the demand for green ammonia in the years ahead.
- Together, the factors mentioned above are projected to boost the consumption of green ammonia in agriculture.
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North America Expected to Dominate the Market
- North America is the largest consumer of green ammonia, driven mainly by agriculture, power generation, and transportation.
- The rising population in the United States increased the need for food, which propelled the agriculture sector. It further increased the consumption of green ammonia within the region.
- Agriculture is one of the major sectors in the United States. The increasing global demand for food and grain products, such as corn, cereals, etc., is favoring the growth of the agriculture industry in the region.
- Owing to the increasing adoption of sustainable practices in countries across North America, the demand for green ammonia is expected to grow significantly over the forecast period.
- In February 2023, Canada’s EverWind Fuels Co.'s green ammonia project worth USD 6 billion in Nova Scotia, Canada, received environmental approval for its initial phase. EverWind said it will deliver green ammonia to German off-takers, E.ON and Uniper, by 2025.
- In March 2023, Maire Spa announced that a major North American fertilizer producer awarded its subsidiary Nextchem Holding licensing and basic engineering contracts for a green ammonia plant with a capacity of 450 tons per day. This plant will be built in the United States and start operating in 2026. The green ammonia produced in this plant will be used as a feedstock for nitrogen-based fertilizers, using the state-of-the-art technology, Stamens green ammonia.
- In September 2022, Ohmium International Inc. signed an agreement to provide 343 MW of green hydrogen electrolyzers to Tarafert, the developer of a large-scale urea fertilizer and green ammonia production facility in Mexico. When construction is completed, the plant is anticipated to produce around 200,000 tons of green ammonia per annum.
- In May 2022, Mitsui & Co. Ltd and CF Industries Holdings Inc. announced their intention to develop a greenfield project for ammonia production in their US facility. This new project is expected to begin production in 2027, and CF Industries is expecting to produce up to 2 million tons per year of blue and green ammonia at its existing facilities.
- The factors mentioned above are projected to boost the consumption of green ammonia in the region.
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