Japan intends to develop its supply chain of blue ammonia, possibly in the Middle East, Australia and North America, by the late 2020s in order to introduce it as a new fuel for power generation as it accelerates its efforts to achieve the 2050 carbon neutrality, a government official told S&P Global Platts on Jan. 8.
The move will come as Japan has recently formulated the Green Growth Strategy for 2050 Carbon Neutral with action plans including on ammonia, following the announced carbon neutrality target by Prime Minister Yoshihide Suga in October.
“We need to develop a new supply chain because there would not be enough ammonia supply once we start using it as fuel,” Ryo Minami, director-general of oil, gas and mineral resources at the Ministry of Economy, Trade and Industry, said in an interview.
Ammonia — three hydrogen atoms and one nitrogen and, thus, about 18% hydrogen by weight — releases no carbon emissions when combusted in a thermal power plant. It is a widely traded chemical globally.
“In principle, we are looking at producing ammonia from natural gas in the Middle East, Australia and North America as among strong candidates,” Minami said. “We also plan to process CO2 emitted from producing [ammonia] from natural gas as CCS (carbon capture and storage) there.”
Japan has yet to decide its ammonia source for its potential supply chain because it is examining supply costs, stability among other factors, he said.
Currently, Japan is prioritizing the development of supply chain for blue ammonia produced from natural gas, rather than green ammonia made from renewable electricity because of cost competitiveness, Minami said.
“The cost of blue [ammonia] is extremely low, which is only half to one third of green [ammonia] on a power generation cost basis even with CCS costs,” he said.
Under the Green Growth Strategy for 2050 Carbon Neutral, Japan aims to lower ammonia supply costs to high Yen 10s normal cubic meters-H2 by 2030 by developing stable supply chains.
“The current cost is about the mid-Yen 20s [normal cu m-H2], and we aim to trim it slightly by building ammonia production plants, although we expect to see an increase in ammonia once we start using as fuel because supply restriction is expected to be significant,” Minami said.
The current global ammonia production of about 200 million mt/year is used primarily for fertilizer and chemical, and there is no use of ammonia as fuel today, he said.
By the late 2020s, Japan expects to start using 500,000 mt/year of ammonia as a fuel, co-burning it 20% with coal and boost it to 3 million mt/year by 2030, Minami said.
A 1 GW coal-fired power plant would need about 500,000 mt/year of ammonia for 20% co-burning, meaning 3 million mt/year of ammonia consumption would require six 1 GW coal-fired units, he said.
“By 2040 we aim to introduce up to 10 million mt/year of ammonia for power generation, in addition to expected use in shipping and industrial sectors,” Minami said.
Japan now targets to introduce complete ammonia-fueled power plants in the 2040s and expect to use “several tens of millions mt/year” of ammonia by 2050, he said.
Japan’s latest outlook for introducing ammonia as a zero emissions fuel comes as the country has developed technologies to remove NOx when burning it.
METI unveiled Dec. 21 a proposal for the country’s 2050 energy mix as the country gears up to achieve carbon neutrality by 2050, with hydrogen and ammonia accounting for about 10% of the power generation mix in 30 years, from zero currently.
The proposal, which also includes METI’s proposed share of other energy sources in Japan’s 2050 energy mix, will be used as part of its policy discussions to review country’s Strategic Energy Plan after the strategic policy committee finalizing its few scenarios by the end of March 2021.
In February. METI’s fuel ammonia council, which looks at ways to introduce ammonia as fuel, also intends to release its interim report, which will include cost targets for new supply chains in the 2020s, Minami said. The report will be taken into consideration for the Strategic Energy Plan review, he said.