Ammonia Technology
Roadmap
Towards more sustainable nitrogen
fertiliser production

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Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Abstract

Abstract
Ammonia is the starting point for all mineral nitrogen fertilisers, forming a bridge
between the nitrogen in the air and the food we eat. Around 70% of ammonia isused to make fertilisers, with the remainder used for a wide range of industrial
applications, such as plastics, explosives and synthetic fibres. Ammonia may also
serve as a low-carbon energy vector in the future, but that application is notconsidered within the core analytical scope of this technology roadmap. Ammonia
production accounts for around 2% of total final energy consumption and 1.3% of
CO2 emissions from the energy system. An increasingly numerous and affluent
global population will lead to growth in ammonia production, during a period inwhich governments around the world have declared that emissions from theenergy system must head towards net zero.
This technology roadmap uses scenario analysis to explore three possible futures
for ammonia production. In the Stated Policies Scenario the industry follows
current trends, making incremental improvements but falling well short of asustainable trajectory. In the Sustainable Development Scenario the sector adopts
the technologies and policies required to put it on a pathway aligned with the goalsof the Paris Agreement. The Net Zero Emissions by 2050 Scenario describes a
trajectory for the ammonia industry that is compatible with reaching net zero
emissions globally for the energy system by 2050. The roadmap concludes with achapter outlining the necessary roles and actions of key stakeholders, namely
governments, producers, and financial and research institutions, and establishes

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IEA. All rights reserved.

milestones and decision points.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Acknowledgements

Acknowledgements
This report was prepared by the Energy Technology Policy Division within the
Directorate on Sustainability, Technology and Outlooks of the International Energy
Agency. The study was designed and directed by Timur Gül (Head of the Energy
Technology Policy Division). The analysis and production was co-ordinated by
Araceli Fernández Pales (Head of the Technology Innovation Unit) and Peter Levi.
The main authors were Sara Budinis, Alexandre Gouy, Peter Levi, Hana Mandová
and Tiffany Vass.
Several colleagues across the agency contributed analytical input, including Julien
Armijo, Jose Miguel Bermudez Menendez, Tomás de Oliveira Bredariol, Uwe
Remme and Jacopo Tattini. Valuable comments and feedback were provided by
IEA senior management and other colleagues within the IEA, in particular, Tanguy
de Bienassis, Ilkka Hannula, Paul Hugues and Keisuke Sadamori. Thanks also go
to Jon Custer, Astrid Dumond, Tanya Dyhin, Merve Erdem, Grace Gordon, Jad
Mouawad, Jethro Mullen, Rob Stone, Julie Puech, Therese Walsh and Wonjik
Yang of the IEA Communications and Digital Office for their help in producing thereport. Caroline Abettan, Reka Koczka, Diana Louis and Per-Anders Widell
provided essential support.
Justin French-Brooks carried responsibility for editing.
The work could not have been undertaken without the financial support provided
by the European Bank for Reconstruction and Development via the Shareholder
Special Fund.
The International Fertilizer Association and the European Bank for Reconstruction
and Development provided valuable feedback and support throughout the project,in particular by facilitating communication with fertiliser companies and otherexperts, including at multiple in-person and online workshops. They also provided
analytical feedback during the modelling phase and submitted detailed comments
during the peer review process.
Many experts from outside the IEA reviewed the report and provided comments
and suggestions of great value. They include:
Abdou
Abdulrahim Alabbasi
Adair

Abu Qir
Gulf Petrochemical Industries Company
Nutrien

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IEA. All rights reserved.

Walid
YasserBlake

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Ali
Ali
AndresenAusfelder
Brentrup

JonathanBrooksTrevor
Tom
Shawn
Lucia

Brown
Bruulsema
CarnineCastillo Nieto

CiniroCosta Junior

Laura
Jacky
Jose
Rebecca
Alexander
Achim
HarrieErmannoNicoloCrossde Letter
De Sousa
Dell
Derricott
Dobermann
Duisters
Filippi
Giachino

Guillaume

GruèreSantiago

GuerreroPat
YvonneOliverPatrick
JulianPeter
Sjoerd
Glyn
Rita
David
KK
Alzbeta
Trine
Dimitri
Timothy
Lavan
Gianpiero
Sachchida
Klaus
Jan-JappCedricAsim

Han
Harz-Pitre
Hatfield
Heffer
HiltonHirschJenneskens
Johnson
Jupe
KanterKaul
Klein
Kopperud
Koufos
Lewis
Mahadeva
Nacci
Nand
NolkerNusselder
Philibert
QureshiArab Fertilizer Association
United Nations Environment ProgrammeInternational Fertilizer Association
DECHEMA
Yara International
Organisation for Economic Co-operation andDevelopment
Ammonia Energy Association
Plant Nutrition Canada
CF Industries
International Fertilizer Association
Institute for Forestry and Agricultural Management andCertification
International Fertilizer Association
Yara
International Fertilizer Association
ClimateWorks Foundation
CRU
International Fertilizer Association
OCI
Casale Group
European Bank for Reconstruction and Development
Organisation for Economic Co-operation andDevelopment (OECD)
Organisation for Economic Co-operation andDevelopment (OECD)
Haldor Topsoe
International Fertilizer Association
Argus MediaInternational Fertilizer Association
Aleff Group
European Bank for Reconstruction and Development
OCI
European Bank for Reconstruction and Development
International Fertilizer Association
New York University
DCM ShriramInternational Fertilizer Association
Yara
European Bank for Reconstruction and Development
AngloAmerican
CRU
European Bank for Reconstruction and Development
The Fertiliser Association of India
Thyssenkrupp
OCI
Former IEA
Engro

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IEA. All rights reserved.

MohamedSaleemVolkerFlorianFrank

Acknowledgements

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Praveen
Lorenzo
Khurram
Ahmed
MarinaUpendraMichielSammy
Wilfried

Reddy
Rosa
Saleem
ShaabanSimonova
Singh
Stork
Van Den Broeck
Winiwarter

Xin

Zhang

Acknowledgements

BD Energy Systems
University of California, Berkeley
Fauji Fertilizer Company Limited
Helwan Fertilizers Company
IHS Markit
International Fertilizer Development Center
Guidehouse
Yara
International Institute for Applied Systems Analysis
University of Maryland Center for Environmental
Science

The individuals and organisations that contributed to this study are not responsible
for any opinions or judgements it contains. The views expressed in the study are
not necessarily views of the IEA’s member countries or of any particular funder or

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IEA. All rights reserved.

collaborator. All errors and omissions are solely the responsibility of the IEA.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Table of contents

Table of contents
Executive summary .................................................................................................................. 8
Chapter 1. Ammonia production today ................................................................................ 14
Ammonia and society............................................................................................................ 15
Nitrogen fertilisers: An indispensable input to our modern agricultural systems ..................... 17
Demand, supply and trade ....................................................................................................... 23

Ammonia production fundamentals ...................................................................................... 26
Current and emerging production pathways ............................................................................ 28
Economic considerations ......................................................................................................... 39

Ammonia and the environment ............................................................................................. 43
An energy- and emissions-intensive sector ............................................................................. 45
Non-CO2 environmental impacts .............................................................................................. 47
What will happen tomorrow to today’s CO2 emissions from ammonia production? ................ 56

Chapter 2. The future of ammonia production .................................................................... 61
Three contrasting futures for the ammonia industry ............................................................. 62
The outlook for demand and production ............................................................................... 65
The outlook for nitrogen demand, nutrient use efficiency and material efficiency ................... 66
The outlook for production ....................................................................................................... 78

Technology pathways towards net zero emissions .............................................................. 82
Energy consumption and CO2 emissions................................................................................. 82
A portfolio of mitigation options ................................................................................................ 87
Innovative technology pathways .............................................................................................. 89
Considerations for the main innovative technologies .............................................................. 97

Readiness, competitiveness and investment ..................................................................... 107
An array of technology options at differing levels of maturity ................................................ 109
Exploring key uncertainties .................................................................................................... 117
Investment .............................................................................................................................. 123

Chapter 3. Enabling more sustainable ammonia production.......................................... 129
The current policy, innovation and financing landscape..................................................... 130
Ongoing efforts by governments ............................................................................................ 130
Encouraging progress in the private sector ........................................................................... 137
Initiatives involving financial institutions and investors .......................................................... 139

Recommendations for accelerating progress ..................................................................... 141
Framework fundamentals ....................................................................................................... 143
Targeted actions for specific technologies and strategies ..................................................... 146
Necessary enabling conditions .............................................................................................. 153

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Key milestones and decision points.................................................................................... 158

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Table of contents

Annexes ................................................................................................................................. 161
Abbreviations ...................................................................................................................... 161
Units of measure ................................................................................................................. 162

List of figures
Fertiliser use and crop yield for wheat production ................................................... 20
Nitrogen fertiliser demand and application rate by crop........................................... 22
Apparent consumption and production of ammonia in 2019.................................... 24
Mass flows in the ammonia supply chain from fossil fuel feedstocks to nitrogen
fertilisers and industrial products .............................................................................. 27
Current and announced projects for near-zero-emission ammonia production ....... 35
Simplified levelised cost of ammonia production for commercial and near-zeroemission production routes in 2020 ......................................................................... 40
Energy consumption for and emissions from ammonia production in context, 2020.................................................................................................................................. 46
Ranges of emission factors by fertiliser product for current process technology andapplication practices ................................................................................................. 52
Projected emissions from existing ammonia plants under different lifetime
assumptions ............................................................................................................. 57
Geographic distribution and average age of ammonia production facilities in 2020 58
Direct CO2 emissions from the chemical sector and ammonia production by
scenario and region .................................................................................................. 63
Nitrogen demand by market segment and per capita .............................................. 67
Nitrogen demand by final product by scenario ......................................................... 70
Contribution of use and material efficiency to ammonia demand by scenario......... 74
Ammonia and urea production by region for Stated Policies Scenario andSustainable Development Scenario ......................................................................... 79
Direct CO2 emissions and energy consumption for ammonia production by scenario.................................................................................................................................. 84
Ammonia direct CO2 emission reductions in the Sustainable Development Scenario
by mitigation strategy ............................................................................................... 89
Global ammonia production by technology and scenario ........................................ 91
Ammonia production by process route and scenario in major ammonia-producing
regions ...................................................................................................................... 92
Levelised cost of electrolytic ammonia production with VRE at nine key sites for arange of storage cost assumptions ........................................................................ 101
Simplified levelised cost of ammonia production via electrolysis for optimal mixes ofwind and solar PV in China in 2050 in the Sustainable Development Scenario .... 103
Captured CO2 for storage and utilisation in the Sustainable Development Scenario................................................................................................................................ 106
CO2 emission reductions in the Sustainable Development Scenario by technology
maturity category .................................................................................................... 117
Levelised cost of ammonia production pathways at varying gas, electricity and CO2
prices ...................................................................................................................... 119
Ammonia production energy requirements and CO2 emission reductions in 2050 indifferent technology contexts ................................................................................. 122
Capital investment in process equipment for ammonia production by scenario .... 124

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A framework for accelerating the sustainable transition of the ammonia industry . 142

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Table of contents

List of tables
Key nitrogen fertilisers and their characteristics ...................................................... 19
Energy needs to produce one tonne of ammonia for each route using BAT ........... 33
Parameters for low-cost VRE sites in 2020 and 2030 in the Sustainable
Development Scenario ........................................................................................... 100
Status of main near-zero-emission technologies in ammonia production ............. 111
Key current government policies and programmes that could enable progress
towards sustainable ammonia production and use ................................................ 137
Global ammonia industry technology milestone requirements for meeting the
Sustainable Development Scenario and Net Zero Emissions by 2050 Scenario .. 160

Box 1.1
Box 1.2
Box 1.3
Box 1.4
Box 1.5

Scope of this technology roadmap ........................................................................... 15
Box 1.2 An overview of carbon capture, utilisation and storage .............................. 31
Electrolysis-based ammonia production: Grid connection versus dedicated variable
renewable energy capacity....................................................................................... 36
What might a typical near-zero-emission ammonia plant look like in practice?....... 41
Methane emissions from fossil fuel operations ........................................................ 53

Box 2.1
Box 2.2
Box 2.3
Box 2.4
Box 2.5
Box 2.6

Scenario definitions and the broader energy system context .................................. 64
The potential use of ammonia as an energy carrier ................................................. 71
IEA demand projections for nitrogen fertilisers in context ........................................ 77
Box 2.4 Technology modelling methodology ........................................................... 80
Box 2.5 How are indirect CO2 emissions tackled? ................................................... 86
The TRL scale ........................................................................................................ 107

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List of boxes

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

Executive summary
Ammonia makes an indispensable contribution to global agricultural
systems through its use for fertilisers. Ammonia is the starting point for all
mineral nitrogen fertilisers, forming a bridge between the nitrogen in the air andthe food we eat. About 70% of ammonia is used for fertilisers, while the remainder
is used for various industrial applications, such as plastics, explosives andsynthetic fibres. While the use of ammonia as a fuel shows promise in the context
of clean energy transitions, this application currently remains nascent. The focusof this roadmap is therefore on existing agricultural and industrial uses ofammonia.
In the future, the world will need more ammonia but with fewer emissions.
An increasingly numerous and affluent global population will lead to growth inammonia demand, during a period in which governments around the world havedeclared that emissions from the energy system must head towards net zero. This
technology roadmap explores three possible futures for ammonia production. In
the Stated Policies Scenario the industry follows current trends, making
incremental improvements but falling well short of a sustainable trajectory. In the
Sustainable Development Scenario the sector adopts the technologies andpolicies required to put it on a pathway aligned with the goals of the Paris
Agreement. The Net Zero Emissions by 2050 Scenario describes a trajectory forthe ammonia industry that is compatible with the energy system reaching net zero
emissions globally by 2050.

An energy- and emissions-intensive global industry
Ammonia production currently relies heavily on fossil fuels. Global ammonia
production today accounts for around 2% (8.6 EJ) of total final energy
consumption. Around 40% of this energy input is consumed as feedstock – theraw material inputs that supply a proportion of the hydrogen in the final ammonia
product – with the rest consumed as process energy, mainly for generating heat.
Just over 70% of ammonia production is via natural gas-based steam reforming,
while most of the remainder is via coal gasification, leading to 170 bcm of natural
gas demand (20% of industrial natural gas demand) and 75 Mtce of coal demand(5% of industrial coal demand). Oil and electricity combined account for just 4% of

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the sector’s energy inputs.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

Ammonia production is emissions intensive. Direct emissions from ammonia
production currently amount to 450 Mt CO2 – a footprint equivalent to the totalenergy system emissions of South Africa. Indirect CO2 emissions are around
170 Mt CO2 per year and stem from two main sources – electricity generation andthe chemical reaction that takes place when urea-based fertilisers are applied tosoils. Ammonia is one of the most emissions-intensive commodities produced byheavy industry, despite coal accounting for a much smaller share of its energy
inputs than in other sectors. At around 2.4 t CO2 per tonne of production, it isnearly twice as emissions intensive as crude steel production and four times thatof cement, on a direct CO2 emissions basis.
Ammonia is produced and traded around the world. China is the largest
producer of ammonia, accounting for 30% of production (and 45% of CO2
emissions), with the United States, the European Union, India, Russia and the
Middle East accounting for a further 8-10% each. Ammonia is traded around theworld, with global exports equating to about 10% of total production. Urea, its mostcommon derivative, is traded even more widely, at just under 30% of its
production. The availability of feedstock and process energy is a key determinantof where and how ammonia is produced. Low-cost natural gas in the
United States, Middle East and Russia explain the prominent roles of theseregions and their natural gas-based plant fleets. China’s abundant coal reserves
explain its heavy reliance on the fuel, which accounts for around 85% of its
production.

Absent a change in course, ammonia production would
continue to take an environmental toll
The industry’s current trajectory is unsustainable. In the Stated Policies
Scenario, ammonia production increases by nearly 40% by 2050, driven by
economic and population growth. CO2 emissions grow by 3% by 2030, before
entering a decline that is mainly spurred by increases in energy efficiency and a
decline in the proportion of coal use. In 2050, emissions are 10% lower than today.
Cumulative direct emissions from ammonia production under current trends
amount to around 28 Gt between now and 2100, equivalent to 6% of the remaining
emissions budget associated with limiting global warming to 1.5 °C.
Existing assets give the industry’s emissions momentum. Ammonia
production facilities have long lifetimes of up to 50 years. The current average ageof installed capacity is around 25 years since first installation, but this figure is
subject to significant regional variation. Plants in Europe are around 40 years old

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on average, compared with 12 years in China, which is home to around 30% ofAmmonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

global capacity. Depending how long these plants operate, the existing global
stock could produce up to 15.5 Gt CO2 over their remaining lifetime, which is theequivalent of 35 years’ worth of ammonia production emissions in 2020.
Non-CO2 environmental impacts should not be neglected. In addition to CO2emissions, the production of nitrogen fertilisers also results in nitrous oxide
emissions. Nitrous oxide and CO2 are also generated in the use phase during andafter fertiliser application. While exact quantities are hard to measure accurately,
it is estimated that use-phase emissions are upwards of 70% of the total life-cycle
greenhouse gas emissions of nitrogen fertilisers. The over-application of mineral
fertilisers can damage ecosystems, but the higher crop yields enabled by fertilisers
can also reduce the conversion of natural ecosystems to agricultural production.
Methane emissions generated during the extraction and transport of fossil fuelspose a further challenge – as they do for the energy system more broadly – butorder-of-magnitude reductions can be achieved with commercially available
technologies, a significant proportion of them at zero net cost.

Towards more sustainable ammonia production
Encouraging progress on near-zero-emission technologies is already being
made. Near-zero-emission production methods are emerging, including
electrolysis, methane pyrolysis and fossil-based routes with carbon capture andstorage (CCS). These emerging routes are typically 10-100% more expensive per
tonne of ammonia produced than conventional routes, depending on energy
prices and other regionally varying factors. Existing and announced projects
totalling nearly 8 Mt of near-zero-emission ammonia production capacity arescheduled to come online by 2030, equivalent to 3% of total capacity in 2020.
Two pathways outline a range of desirable futures for the ammonia industry.
In the Sustainable Development Scenario, direct CO2 emissions fall by over 70%
by 2050 relative to today. The Net Zero Emissions by 2050 Scenario describes a
trajectory where emissions fall by 95% by 2050. The difference between thecomponents of these scenarios is one of degree, not of direction.
Using ammonia more efficiently – reducing demand growth withoutcompromising the end-use services it provides – eases the burden on
technology deployment. Slower growth in total production is the outcome ofstrategies such as increasing the efficiency of nitrogen fertiliser application and

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increased recycling and re-use of plastics and other durable ammonia-derived

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

goods. By 2050, ammonia production in the Sustainable Development Scenario
and Net Zero Emissions by 2050 Scenario is 10% lower than in the Stated Policies
Scenario.
Using technology to improve the performance of existing equipment isimportant, but alone is not sufficient to deliver the emission savings
required. The global average energy intensity of ammonia production today isaround 41 GJ/t on a net basis, compared with best available technology (BAT)
energy performance levels of 28 GJ/t for natural gas-based production and 36 GJ/t
for coal-based production. The universal adoption of BAT, in combination with
operational improvements and a structural shift in the processes used to produce
ammonia, together yield a reduction of around 25% in the average energy intensityof production by 2050 in the Sustainable Development Scenario and the Net Zero
Emissions by 2050 Scenario.

Near-zero-emission ammonia production requires new
infrastructure, innovation and investment
The heavy lifting with respect to emission reductions is done by deploying
near-zero-emission technologies. Their deployment contributes the largest
share of emission reductions in both the Sustainable Development Scenario and
Net Zero Emissions by 2050 Scenario. In the Sustainable Development Scenario,
the share of near-zero-emission technologies reaches nearly 70% of total
production 1 by 2050, up from less than 1% today. Natural gas-based production
equipped with CCS accounts for around 20% of production, while for electrolysis
the share of total production is more than 25%. In the Net Zero Emissions by 2050
Scenario, near-zero-emission technologies achieve nearly 95% of total production
by 2050. Natural gas-based production with CCS accounts for around 20% of
production, and electrolysis for more than 40%.
Most near-zero-emission technologies are not yet available at commercial
scale in the marketplace. CO2 separation is an inherent part of commercial
ammonia production, but permanent storage of the CO2 is not yet widely adopted.
Electrolysis-based ammonia production has already been conducted at scaleusing high-load-factor electricity, but challenges remain in the use of hydrogenproduced from variable renewable energy (such as solar PV and wind) directly incaptive installation arrangements. Nearly 60% of the cumulative emission

Calculated excluding the portion equipped with carbon capture for providing CO2 for urea production.

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1

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

reductions in the Sustainable Development Scenario stem from technologies thatare currently in the demonstration phase.
New infrastructure must be deployed at a rapid clip. The Sustainable
Development Scenario requires more than 110 GW of electrolyser capacity and
90 Mt of CO2 transport and storage infrastructure by 2050. This means installingon average ten 30 MW electrolysers (the largest facility in operation today) per
month and 1 large capture project (annual capture, transport and storage capacityof 1 Mt CO2) every four months between now and 2050. In the Net Zero Emissions
by 2050 Scenario, the additional emission reductions require an even more rapid
deployment of these technologies.
Overall investment needs for a sustainable pathway are roughly equivalent
to those associated with current trends. The Sustainable Development
Scenario requires USD 14 billion in annual capital investment for ammonia
production to 2050. Of this, 80% is in near-zero-emission production routes. The
Net Zero Emissions by 2050 Scenario requires only slightly higher annual
investment – USD 15 billion to 2050. In the Sustainable Development Scenario, it
is only after 2040 that the investment per tonne of ammonia produced increases
above that of the Stated Policies Scenario. Prior to 2040, the avoidance ofcontinued capital-intensive investment in coal-based production in China yields
significant savings, and the lower quantity of ammonia produced yields further
savings in overall investment needs.

Enabling more sustainable ammonia production
The industry is primed for change. Governments, producers and otherstakeholders have already begun taking action to reduce emissions from theammonia industry. Some governments have adopted carbon pricing regimes andare funding innovation, while producers have set emission reduction targets andare undertaking RD&D projects. Despite these efforts, emissions continue to rise,and greater ambition is needed.
Governments’ role is central. Governments will need to establish a policy
environment supportive of ambitious emission cuts by creating transition plans
underpinned by mandatory emission reduction policies, together with mechanisms
to mobilise investment. Targeted policy is also required to address existing
emissions-intensive assets, create markets for near-zero-emission products,
accelerate RD&D and incentivise end-use efficiency for ammonia-based products.

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Governments should ensure that enabling conditions are in place, including a level

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Executive summary

playing field in the global market for low-emission products, infrastructure forhydrogen and CCS, and robust data on emissions performance.
Other stakeholders also have a crucial part to play. Ammonia producers willneed to establish transition plans, accelerate RD&D, and engage in initiatives todevelop supporting infrastructure. Farmers and agronomists should prioritise best
management practices for more efficient fertiliser use. Financial institutions andinvestors should use sustainable investment schemes to guide finance towards
emission

reduction

opportunities.

Researchers

andnon-governmentalorganisations can help develop labelling schemes, continue research on earlystage technologies and galvanise support for key technologies.
Time is of the essence. The current decade – from now to 2030 – will be criticalto lay the foundation for long-term success, with around 10% of cumulativeemission reductions to 2050 taking place by then in both the Sustainable
Development Scenario and Net Zero Emissions by 2050 Scenario. Vital near-term
actions include establishing strong supportive policy mechanisms, taking early
action on energy and use efficiency, developing supporting infrastructure, and

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accelerating RD&D.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 1. Ammonia production today

Chapter 1. Ammonia production
todayHighlights• Ammonia makes an indispensable contribution to global agricultural systems
through its use for mineral nitrogen fertilisers. About 70% of ammonia is used
for fertilisers, while the remainder is used for various industrial applications,such as plastics, explosives and synthetic fibres. Ammonia may also serve asa low-carbon energy vector in the future, but that application is not consideredwithin the core analytical scope of this roadmap.
• Ammonia production today is highly energy and emissions intensive. In 2020
global ammonia production accounted for around 2% (8.6 EJ) of total final
energy consumption and 1.3% (450 Mt) of CO2 emissions from the energy
system. How to reduce these CO2 emissions is the focus of this roadmap.
• The People’s Republic of China (hereafter “China”) is the largest producer ofammonia today, accounting for 30% of production, with Russian Federation(hereafter “Russia”), the Middle East, the United States, the European Unionand India accounting for a further 8-10% each. Ammonia is traded around theworld, with global exports equating to about 10% of total production. Urea, its
most common derivative, is traded even more widely, at just under 30%.
• Ammonia production currently relies on fossil fuels. Just over 70% of ammonia
production is via natural gas-based steam reforming, while most of theremainder is via coal gasification. Near-zero emissions production methods are
emerging, including electrolysis, methane pyrolysis and fossil-based routes withcarbon capture and storage. The routes are typically 10-100% more expensive
per tonne of ammonia produced than conventional routes, depending on energy
prices and other regional factors.
• Ammonia production facilities have a long lifetime of typically 20-50 years.
Depending how long they operate, existing plants could produce 3.9 to
13.5 Gt CO2 over their remaining lifetime, which is the equivalent of 9 to 30
years’ worth of ammonia production emissions in 2020. Strategies to address
existing assets will be an important part of the industry’s energy transition.

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• In addition to CO2 emissions from production, nitrogen fertilisers also result in
nitrous oxide and CO2 emissions when applied to soils. While their overapplication can damage ecosystems, the higher yields enabled by fertilisers can
reduce the conversion of natural ecosystems to agricultural production.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 1. Ammonia production today

Ammonia and society
The main interaction between ammonia and society is via the world’s agricultural
systems. Ammonia is the starting point for all mineral nitrogen fertilisers, forminga bridge between the nitrogen in the air and the food we eat. While ammonia is
applied directly to pastures in a minority of cases (less than 3% of total usage
globally, mainly in North America), it is much more commonly converted to urea
and other nitrogen fertiliser products before use. While nitrogen fertilisers are
critical inputs to the production of food, feed and fibre, it is ammonia that sits
directly at the interface between global agriculture and energy systems. Henceammonia is the focus of this IEA technology roadmap (see Box 1.1 for a fulldescription of the scope of this publication).
Ammonia is not only used to produce nitrogen fertilisers. Approximately 30% of
global demand is for a range of industrial applications. Ammonia is the main input
to nitric acid production, which is in turn used to make different grades ofammonium nitrate. Aside from its use as a fertiliser, ammonium nitrate is also used
as an industrial explosive for mining, quarrying and tunnelling, and as an input toother chemical products. Urea is a direct derivative of ammonia. Besides its mainuse as a fertiliser, around a fifth of urea production is also used for a series ofindustrial applications. It is used as an intermediate in the manufacture of durable
resins (e.g. urea formaldehyde) and as a chemical agent to reduce nitrogen oxide(NOx) emissions from power plants and diesel engines.
Ammonia is also used as an input to acrylonitrile production, which is anintermediate for a range of durable chemical products, including plastic(e.g. polyacrylonitrile and isocyanates for polyurethanes), rubber (e.g. nitrile
butadiene) and fibres (e.g. hexamethylenediamine for nylon 66 and caprolactam
for nylon 6). While ammonia may in the future be used as a low-carbon energy
vector, the focus of this publication is on the production of ammonia to satisfy
present and future demand for existing agricultural and industrial applications(see Box 1.1).

Box 1.1

Scope of this technology roadmap

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This technology roadmap focuses primarily on the energy consumption and CO2
emissions associated with the production of ammonia. Other nitrogen fertilisers
and industrial products are considered to the extent that they help explain present
and future demand for ammonia, and where they have a direct impact on theAmmonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 1. Ammonia production today

technology portfolio that is used to produce it, such is the case with urea. Global
ammonia production for both fertiliser and industrial applications was 185 Mt in
2020. This roadmap covers the total demand for all existing applications, but does
not include within its core scope the potential future use of ammonia as an energy
carrier at commercial scale. This topic is addressed in brief in Box 2.2, and in
further detail in two separate IEA publications: the Global Hydrogen Review 2021
and The Role of Low-Carbon Fuels in Clean Energy Transitions of the Power
Sector.
Scope of this technology roadmap

IEA, 2021.

Energy consumption
The industrial activities associated with producing ammonia fall under the United
Nations (UN) International Standard Industrial Classification (ISIC) Rev. 4 Class
2012. These activities are in turn encompassed within the wider chemical andpetrochemical sector boundary, which corresponds to UN ISIC Rev. 4 divisions 20
and 21. The latter boundary is the most granular level at which the IEA compiles
energy statistics that cover ammonia production, alongside other chemicals suchas methanol and high-value chemicals. This roadmap therefore relies heavily on
bottom-up modelling of energy consumption, including the use of fuels both forfeedstock (essentially raw material inputs that provide much of the hydrogenrequired) and process energy (electricity and fuel used to provide heat andpressure to drive various process units).
Emissions

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The core analytical focus of this roadmap is on CO2 generated from the productionof ammonia. Direct CO2 emissions (often referred to as Scope 1 emissions) fromammonia production include both energy-related CO2 emissions from the
combustion of fossil fuels, and process CO2 emissions that result from theAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

difference in the carbon content between the feedstock used (typically natural gas
or coal) and the ammonia produced.
Two categories of indirect CO2 emissions (often referred to as Scope 2 and 3
emissions) are also addressed within the core analytical scope. The first is CO2
emissions that are generated during the production of electricity that is useddirectly to produce ammonia. The second is the CO2 emissions that are released
downstream during the application of carbon-containing nitrogen fertilisers,
predominantly urea. The rationale for including this latter category within the core
analytical scope stems from the fact that all of the CO2 used to make urea and its
derivatives is sourced indirectly from the fuels that are used as feedstocks to
produce ammonia. Nitrous oxide (N2O) emissions, both from the production phase(e.g. during nitric acid production) and the use phase, are addressed tangentiallyin Chapter 1, but are excluded from the core analytical scope. Emissions
associated with the transport and distribution of fertilisers are also outside thescope of this technology roadmap.

Nitrogen fertilisers: An indispensable input to ourmodern agricultural systems
Fertilisers are a source of nutrients used by plants to grow, constituting an integral
input to the world’s agricultural systems. Plants obtain carbon, hydrogen andoxygen directly from water and the atmosphere. Nutrients are also sourced fromthe environment, with fertilisers being used to supplement those that naturally
occur in a given locality. While the diverse range of plant species cultivated forhuman use require a wide range of nutrients, 1 three key macronutrients are
essential to virtually all plant life: nitrogen (N), phosphorus (P) and potassium (K).
No macronutrient is more or less important in the context of agriculture, but in thecontext of the energy system, nitrogen fertilisers are of preeminent concern. Within
the agricultural sector, nitrogen is consumed in the largest volume of the threenutrient categories (in 2018, 104 Mt, compared with 46 Mt of phosphorus and
37 Mt of potassium on a nutrient basis) 2, and it is also the most energy-intensive
to produce. While the raw ingredients to produce phosphorus and potassium
fertilisers are sourced from deposits of naturally occurring minerals in the earth’s

In addition to the three key macronutrients: sulphur, magnesium, calcium, iron, manganese, zinc, copper, boron,
molybdenum, chlorine, nickel. Additional elements may be beneficial to a certain plant species, e.g. sodium, silicon andcobalt.
2
The fertiliser industry uses nitrogen content, potassium oxide (K2O) content and phosphorous pentoxide (P2O5) content tocompare fertilisers on a nutrient basis. For example, ammonia (NH3) is 82% nitrogen by weight.

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Chapter 1. Ammonia production today

crust, the nitrogen in mineral nitrogen fertilisers is sourced from air. Nitrogen is themost abundant element in the atmosphere, accounting for 78% in the form ofdinitrogen (N2). But most plants are unable to absorb it directly due to its strong
triple bond, and require reactive nitrogen compounds (ammonium and nitrate) tobe present in the soil.
There are five key mechanisms by which nitrogen in the air can be converted intoa usable form for plants, known as reactive or fixed nitrogen:First is natural biological nitrogen fixation. On land, nitrogen diffuses naturally into
the soil from the air, and bacteria can convert it to plant-available organic forms.
Nitrogen-fixing bacteria exist freely in the soil in many cases. Natural biologicalfixation on land accounts for an estimated 14% of annual global nitrogen fixation,
while similar processes in the ocean account for about 34%.

Second is agricultural biological nitrogen fixation. Some plants have symbiotic
relationships with nitrogen-fixing bacteria, enabling more direct nitrogen uptake –for example, legume roots have nodules in which nitrogen-fixing bacteria canoperate. Agricultural production of such crops accounts for about 15% of annual
nitrogen fixation.



Third, lightning can convert nitrogen in the air to nitrous oxide, which then reacts
with oxygen to form nitrogen dioxide, which in turn reacts with water in clouds toform nitrates (NO3), which are transported to the soil by rain. This pathway
accounts for only a small amount – around 1% – of total nitrogen fixation.



Fourth, combustion processes (such as in internal combustion engines or inindustrial facilities) lead to nitrogen fixation through a pathway similar to lightning,
and fixed nitrogen can be made available to plants through atmosphericdeposition. This pathway accounts for an estimated 7% of nitrogen fixation.

Fifth, production of mineral nitrogen fertilisers accounts for the remaining
approximately 29% of nitrogen fixation. Mineral fertilisers are the most significant
means by which humans increase the availability of nitrogen to plants in themodern global agricultural system.

In addition to nitrogen fixation from the air, reactive nitrogen can be made available
to plants through recycling. Animals and plants can return nitrogen to the soil
through nitrogen contained in excrement and decomposing organic matter. In
agricultural systems, organic fertilisers composed of animal manure and otherexcreted wastes make a considerable contribution to providing nitrogen to plants.
The amount of nitrogen applied to soils from manure is equal to about one quarter
the amount of nitrogen delivered by mineral fertilisers.
Mineral nitrogen fertilisers comprise a group of products (Table 1.1) that deliver

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nitrogen in plant-available form to soils and aquacultures. Since the chemical

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Chapter 1. Ammonia production today

composition of each nitrogen fertiliser is different, they are not directly comparable
on a “per tonne of product” basis. Instead, nitrogen fertilisers – as with potassium
and phosphorus products – are typically measured in terms of their nutrient
content. When making comparisons between nitrogen fertiliser products orreferring to quantities of demand, it is typically the N content, or “tonnes N”, that isrelevant for application in agriculture. When discussing the production of a specificsubstance, such as ammonia (82% nitrogen), it is typically the overall tonnage ofthe product that is more often referred to.
Key nitrogen fertilisers and their characteristics
Nitrogen fertiliser productN

Precursors% byweightGlobal annual
production
Mtproduct

Mtnutrient

Ammonia82%

Hydrogen, nitrogen

183

150

Urea

46%

Ammonia, CO2

177

81

Ammonium nitrate

34%

Nitric acid, ammonia

49

17

Calcium ammonium nitrate27%

Calcium carbonate, ammonium
nitrate, water

14

4

Urea ammonium nitrate30%

Ammonium nitrate, urea, water

25

8

Diammonium phosphate

18%

Ammonia, phosphoric acid92

Monoammonium phosphate

11%

Ammonia, phosphoric acid7

<1

Ammonium sulphate

21%

Ammonia, sulphuric acid122Notes: Global production values are the latest available values for each fertiliser in 2019. N content given is a typicalpercentage by weight, but actual N content can vary by a few percentage points depending on the fertiliser purity. All fertiliserslisted other than ammonia are derivatives of ammonia, and some fertilisers are further derivatives (for example, calcium
ammonium nitrate and urea ammonium nitrate are derivatives of ammonium nitrate); as such, the global annual production
values are not additive.
Sources: Data sourced from the IFA, the FAO and the European Commission, rounded to the nearest 1 Mt.

There is no universal approach to farmers’ selection of mineral fertiliser product.
Multiple factors influence the decision in a given context, including weather
conditions, soil types and existing nutrient levels, crop types, existing and targetedyields, availability in regional markets, cost, subsidies, environmental regulations,handle ability and safety considerations. There is some variation between different
nitrogen fertiliser product prices on a per tonne N basis, with products requiring

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more transformation steps usually being more expensive. Furthermore, fertiliser

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Chapter 1. Ammonia production today

prices can differ considerably in a given local context depending on supply,
demand and trade dynamics, including whether the product is produced locally or
would need to be imported. Some fertilisers deliver two or more nutrients at once
(e.g. ammonium phosphate provides nitrogen and phosphorus), whereas othersdeliver a single nutrient in different forms (e.g. nitrate vs ammonium). Eachnitrogen fertiliser product has its own nitrogen content, volatilisation rate, impact
on soil acidity and product form (e.g. liquid, granular, crystalline, prilled).
The primary purpose of fertilisers is to achieve and maintain high crop yields andreplenish soils with the nutrients that are depleted when plants grow. Since theearly 20th century, mineral fertilisers have formed an integral part of our foodsystem. Researchers estimate that around half of the global population issustained by mineral fertilisers. Wheat, an illustrative case, is one of the largestvolume cereal crops and consumes more nitrogen fertiliser than any other single
crop globally. Comparing the yield of wheat fields and the amount of nitrogen
fertiliser used per unit area of agricultural land specifically for this crop in different
countries shows that yields tend to rise with increased levels of application(Figure 1.1).

Yield (tonne wheat/ha)

Fertiliser use and crop yield for wheat production
10
8
6
4
2
0

0

50

100

150

200

250

300

N fertiliser per ha (kg N/ha)
IEA, 2021.
Note: Each data point represents the average fertiliser use and yield of wheat fields in a specific country for the years 2006,
2007, 2010 and 2014.
Sources: Data sourced from the IFA and the FAO.

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Nitrogen fertiliser application to arable land raises yields of crops such as wheat, butsustainable nutrient management is key to realising high yields per unit of fertiliser applied.

Ammonia Technology Roadmap
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Chapter 1. Ammonia production today

Naturally, there is a limit to the extent that increased application of nitrogen will
increase crop yields. The goal of fertiliser application is to narrow the gap
between actual and attainable crop yields. As the crop approaches the attainable
yield, there is a diminishing return measured as the proportion of added nutrientsthat are taken up by the plants, such that adding more of a given nutrient canbecome wasteful and lead to environmental damage. It is therefore essential to
first establish the attainable yield for a given crop, location and season. From a
fertiliser perspective, this is defined as the maximum yield that is achievable
when the macronutrient (nitrogen, potassium and phosphorus) needs of the crop
are met. Nitrogen cannot compensate for the absence of other nutrients or otherrequirements such as water and sunlight. This principle is embodied within thelaw of the minimum, whereby the plant yield is proportional to the amount of thelimiting nutrient.
Soil fertility, climate and weather conditions vary widely across the world, and soa wide range of yields are attainable for a given crop, resulting in a wide rangeof fertiliser requirements. Crop uptake of nitrogen fertiliser varies in the range of
30-60% for most major crops depending on these local factors, the extent towhich fertilisers are under- or oversupplied and other management practices.
Nitrogen uptake can be 50-60% for wheat grown in temperate climates andaround 30% for lowland rice grown in coarse-textured soils, althoughmanagement practices can lead to considerable variability within crop types.
Crops can have dramatically different rates of nitrogen uptake – at the high end,
soybeans are estimated to have an average uptake rate of 80%, while fruits andvegetables fall at the lower end with efficiencies of about 15%. The range ofapplication rates for nitrogen fertilisers seen across different countries for major
crops are illustrative of the combined impact of site-specific factors and nutrient
management practices on the amount of fertiliser required.
All crops consume nitrogen, but just three cereals – wheat, rice and maize –
account for over 50% of the total global demand for nitrogen fertiliser, largely
because they are three of the four largest-volume crops grown globally 3. Rice andmaize are among those with the widest range of fertiliser application rates
observed across countries, with the world average at 96 kg N per hectare (country
averages ranging between 14 kg and 266 kg) and 98 kg N per hectare (country
averages between 44 kg and 287 kg), respectively. Some crops, such as
soybeans, peanuts and clover, are able to fix nitrogen directly from theWhile sugar cane is the crop grown in the largest volumes globally, it has high yields per area of cropland. As such, it
requires less total nitrogen fertiliser, despite requiring somewhat more fertiliser per hectare compared to wheat, maize andrice.

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Chapter 1. Ammonia production today

atmosphere, leading to lower (or zero, in some instances) fertiliser application
requirements. These crops can even form a supply of nitrogen to the soil in specificcircumstances, excreting nitrogen compounds via their roots, and are often
planted specifically for this purpose.

Nitrogen fertiliser demand

kg N/ha

Soy

Palm

0
Roots and tubers

0
Sugar

100

Fibre

5

Other cereals

200

Other oil seeds

10

Fruits300

Vegetables

15

Rice

400

Maize

20

Wheat

Mt N

Nitrogen fertiliser demand and application rate by crop

Nitrogen fertiliser application per ha (right axis)

IEA, 2021.
Note: Ranges for fertiliser application rate reflect the variation at the country level.
Sources: Data for 2014, sourced from the IFA and the FAO.

Three cereals account for more than 50% of all the nitrogen fertiliser demand for
agriculture, with wheat alone accounting for around 20%.

Beyond site- and crop-specific factors that are key to determining the appropriatequantity of fertiliser to apply, it is critical to adopt best fertiliser management
practices in order to optimise nutrient use efficiency. 4 These practices areembodied in the “4Rs” of nutrient stewardship: applying the right fertiliser source,
at the right rate, at the right time, in the right place. In each of these areas, a variety
of technologies can help achieve greater understanding of what the agricultural
system needs, and optimise the rate, time and place of fertiliser application andnutrient provision. Such technologies include slow-release fertiliser coatings thatcan maintain nutrient availability for a significantly longer period of time, global
positioning and geographic information systems to target precisely where to apply,

There are varying definitions of nutrient use efficiency, including partial factor productivity, agronomic efficiency, recovery
efficiency, removal efficiency and physiological efficiency. In this report we adopt the partial factor productivity definition, ofcrop yield per unit of nitrogen fertiliser applied.

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Chapter 1. Ammonia production today

and monitors and sensors that can facilitate the adjustment of application rates inreal time. Policy is also critical. While fertiliser subsidies and trade policies areoften applied with the good intentions of reducing food prices or improving thebalance of trade, if poorly applied they have the potential to increase wastefulfertiliser

application

practicesandconsequently

exacerbate

negativeenvironmental impacts. Reforming such policies can be a critical enabler of
improved nutrient management.

Demand, supply and trade
Between 1990 and 2019, 5 global ammonia demand increased broadly in line withthe rise in the population. On a regional basis, true demand for the services
provided by ammonia would be best measured through the components of foodconsumption and industrial products that have ammonia or ammonia-derived
products as an input. Given that it is difficult to trace the consumption of thesenumerous products, apparent consumption – production, plus imports, lessexports – is often used as an alternative indicator of broad trends in regional
demand levels. Since apparent consumption constitutes demand by direct usersof ammonia, such as fertiliser producers, farmers and downstream chemicalindustries, the indicator is influenced by growth in the relevant industries in the
countries rather than directly correlated with population and economic
development trends.
China is currently the largest ammonia producer, accounting for 29% of global
production in 2019, followed by Russia (10%), the United States (9%), the Middle
East (9%), the European Union (8%) and India (8%). Over the past three decades,
the structure of the supply side has not changed drastically in market share terms– the main producers in the global economy have remained the same, even as
their order has shifted. In 1990 China was the largest producer (19%), followed bytoday’s members of the European Union (17%), the United States (13%), today’s
Russia (10%), and India (7%), while the Middle East was only at 3%. The regionswith the largest increase in apparent consumption of ammonia over the past two
decades are the Middle East, Africa and Russia, with demand increases ofapproximately 140%, 110% and 80% respectively. In the meantime, demandroughly stagnated in the European Union, the United States and South America.

2019 data are used in this section to reflect the global supply and demand situation before the start of the Covid-19
pandemic.

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Chapter 1. Ammonia production today

Mt

Apparent consumption and production of ammonia in 201960

45
Production
30
Apparent
consumption

15

Rest ofthe World

Latin
AmericaIndonesia

AfricaIndia

European
Union

UnitedStatesMiddleEast

RussiaChina

0

IEA, 2021.
Notes: The apparent consumption of a region is equal to its production plus imports minus exports.
Source: Data from IFA.

China is the largest ammonia producer at 53.5 Mt in 2019 (29% of global production), andthe largest consumer at 54.3 Mt.

Ammonia is traded around the world. In 2019 global trade was almost 20 Mt, or
about 10% of production. Principal exporting countries and regions are Russia,
Trinidad and Tobago and the Middle East, representing respectively 24%, 23%
and 15% of global ammonia exports in 2019. Principal importing regions andcountries are the European Union, India and the United States, at 24%, 14% and
13% of global imports respectively. Urea, the single largest derivative product ofammonia, saw an even greater share of its total production volume traded in global
markets, at around 28% in 2019.
The main reason for the large volumes of trade in ammonia and its derivatives isthe difference in cost of production in different regions of the world. Countries with
abundant natural gas reserves and access to nearby centres of demand can
produce ammonia at relatively low cost and may specialise in ammonia production
as a product for export. For example, Trinidad and Tobago converts around 20% 6of the natural gas it produces locally into ammonia, rather than exporting the gas
itself, increasing the value addition generated in the country. The country’s largeammonia industry relative to the size of its economy was also driven by a historical
drive to build up a lower-cost offshore source to meet demand in the United States– today, the United States remains its largest trading partner, importing 1.5 Mt of
Number is calculated by applying the average energy intensity of ammonia production via the gas route to Trinidad andTobago’s production volume and comparing it to the country’s annual natural gas production. This number assumes that allammonia in the country is made using natural gas.

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Chapter 1. Ammonia production today

ammonia per year from Trinidad and Tobago alone in 2019. The country exports
another 3 Mt to more than 25 other countries. Other countries have also adopted
an export-focused model, often as a way to make use of the natural gas that is
produced in tandem with oil extraction, particularly in the Middle East and North
Africa. Saudi Arabia’s production has more than doubled since 2005 (compared
to a global increase in production of 26%), and Algeria’s production quadrupledover the same period. These countries now export around 30% and 40% of theirproduction, respectively.
An important network of ports, pipelines and storage facilities dedicated toammonia supports this trade. The United States alone has over 10 000 ammonia
storage sites, many of which are connected to a pipeline network stretching morethan 3 000 km and connecting the Gulf of Mexico to the Midwest. The longest
ammonia pipeline in the world is the Tolyatti-Odessa pipeline, running from Russia
to Ukraine, at a length of 2 471 km.
Before the 2008 financial crisis, the global volume of ammonia trade was growing
at an average rate of 5% per year. In 2009 it decreased by 7%, despite overall
production remaining stable between 2007 and 2009 at 150 Mt per year. Since2010 the total volume of ammonia trade has fluctuated between 18 Mt and 20 Mt.
Global ammonia production remained relatively robust during the Covid-19
pandemic, with 2020 production (185 Mt) estimated to be similar to that of 2019(182 Mt). Overall food demand was not affected to the same degree as otheraspects of the economy (such as international travel), despite more of it being
consumed at home rather than in restaurants and other public spaces affected bylockdowns and other control measures.
Fertiliser prices stayed broadly stable since the 2008 financial crisis, although they
have been rising since January 2021, reaching their highest levels since 2012 inJuly of this year. Capacity additions to respond to the continuing rise in demand
are well underway, with around 9 Mt of output under development. Ammonia, urea
and their derivatives can be transported and stored fairly cheaply and easily
relative to some other large-volume industrial chemicals. Appropriate handling isimperative to ensure safety. Although these substances are not explosive in andof themselves, they can be brought to explosion when exposed to hightemperatures or with the help of additional materials such as oxidisers, fuels anddetonators.
The handling requirements vary depending on the particular product. Ammonium
nitrate is classified as an oxidiser (Class 5.1) under the United Nations

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Recommendations on the Transport of Dangerous Goods Model Regulations, andAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

as such requires handling and storage according to special regulations. Urea is
not classified as a hazardous substance, although still requires attention tohandling since it could be dangerous if exposed to high temperatures or mixed
with other chemicals. The handling requirements for urea are, however, lessdemanding overall compared to ammonium nitrate, which can be a major factor
motivating the selection of urea as a fertiliser in several regions.
Each year millions of tonnes of nitrogen fertilisers and other nitrogen-based
products are safely transported, stored and used without incident. Over the years,
however, a number of accidents have demonstrated the perils of handling thesesubstances inappropriately. Some of the largest incidents include the Texas City
disaster of 1947 and the Beirut explosion of 2020, both involving ammonium
nitrate. Accidents in the past have been among the catalysts for the stringent
safety regulations and guidelines that governments and industry have put in placein many countries and regions. Examples of such measures include: in theEuropean Union the Registration, Evaluation, Authorisation and Restriction ofChemicals (REACH) regulation; in the United Kingdom the voluntary Fertiliser
Industry Assurance Scheme (FIAS); and in Canada the Ammonium Nitrate Codeof Practice (AN Code). At the international level, the International Fertilizer
Association’s Protect and Sustain programme helps to set standard global
reference points for product stewardship, including for safe fertiliser handling.

Ammonia production fundamentals
Ammonia production involves two main steps: first, isolating hydrogen, andsecond, the Haber-Bosch process in which the hydrogen is reacted with nitrogenfrom the air to produce ammonia. Currently close to 100% of ammonia production
obtains the required hydrogen from fossil fuel feedstocks (together with the steam
used to transform them in certain process arrangements). Process energy,
comprising fossil fuels and electricity, is needed in addition to the feedstock inputs
to generate the heat and pressure required for the production process, and to
separate nitrogen from the air. In 2020 ammonia production accounted for 8.6 EJof energy consumption, equivalent to 2% of total final energy consumption
globally. Of this energy, 40% was consumed as feedstock and the remainder asprocess energy. Natural gas accounts for 70% of the ammonia industry’s total

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energy consumption, coal 26%, oil 1% and electricity the remaining 3%.

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Chapter 1. Ammonia production today

Mass flows in the ammonia supply chain from fossil fuel feedstocks tonitrogen fertilisers and industrial products

IEA, 2021.
Notes: The thickness of the lines in the Sankey diagram are proportional to the magnitude of the mass flows. All numericvalues are in million tonnes per year of production using production data for 2019. Only the fossil fuel quantities consumed
as feedstock are shown; the diagram does not represent process energy inputs. MAP = monoammonium phosphate; DAP =diammonium phosphate; CAN = calcium ammonium nitrate; UAN = urea ammonium nitrate; AS = ammonium sulphate.
Sources: Production volumes sourced from the IFA. Process characterisations and yields from Levi and Cullen (2018).

Ammonia is the precursor to all mineral nitrogen fertilisers, which together account for justunder 70% of total ammonia demand, including the downstream usage of its derivatives.

For the bulk of its eventual use, ammonia production is only the first step innitrogen fertiliser production. Just over 2% of total ammonia demand is for direct
application to pastures. The majority of ammonia is combined with other inputs to
produce other nitrogen-based fertilisers and industrial products in subsequenttransformation steps. Urea is chief among these. The production of urea accounts
for around 55% of ammonia demand, which is in turn used directly as a fertiliser(around 75%) and to produce urea ammonium nitrate (5%), the remainder being
for a range of industrial applications. The other major use of ammonia is for nitricacid and ammonium nitrate production. Around 80% of nitric acid is used to
produce ammonium nitrate, two-thirds of which is used for fertiliser applications,
including via further transformation into monoammonium and diammonium
phosphate, ammonium sulphate, calcium ammonium nitrate and, in conjunction
with urea, to produce urea ammonium nitrate. Tracing all of these uses ofammonia downstream to their end uses reveals that just under 70% of ammonia
is used for nitrogen fertiliser applications, with the remainder being used for

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industrial applications.

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Chapter 1. Ammonia production today

Aside from these primary products of the ammonia value chain, the varioustransformation steps also involve the significant use and generation of secondary
reactants and products respectively. Around 540 Mt of secondary reactants,
comprising steam, oxygen, phosphoric and sulphuric acids and calcium
carbonate, are used across the ammonia supply chain, dwarfing the estimated136 Mt of fossil fuels that are used as the key raw material inputs to ammonia
production. Around 355 Mt of secondary products are also produced, comprising
mainly steam and process CO2 emissions – this does not include the CO2 that is
generated during the combustion of fossil fuels used to provide process energy
inputs. One important interaction between the primary and secondary mass flows
in the ammonia supply chain is the use of CO2 generated during ammonia
production for urea synthesis. Of the roughly 250 Mt CO2 generated directly fromthe use of fossil fuel feedstocks (direct process CO2 emissions), around 130 Mt
CO2 are used directly to produce urea. However, this CO2 is only temporarily
sequestered in the urea and urea ammonium nitrate products – it is rereleased
downstream in the agricultural sector when urea decomposes during the usephase.

Current and emerging production pathways
A brief history of ammonia production
The Birkeland-Eyde process was one of the first methods used to produce
ammonia at industrial scale, developed in 1903. No longer in use, the processused an electric arc to convert nitrogen, oxygen and water into nitric acid. Thismethod was energy intensive, requiring around 400 GJ of energy per tonne ofammonia. Ten years later the Haber-Bosch process was first deployed at scale,emerging as the dominant method of production. The method greatly improved
energy efficiency, requiring around 100 GJ per tonne of ammonia at the time it
was first employed. During World War I, the Haber-Bosch process was
significantly developed as a means to produce munitions. By the 1930s it had
become the main method to produce ammonia, and it remains so today.
The key aspect of the process that has evolved since the early 20th century is themethod of producing the hydrogen required to feed the Haber-Bosch process. In
the first few decades of industrial fertiliser production, electrolysis usinghydropower was commonly used to produce hydrogen for ammonia synthesis via
the Haber-Bosch process. A considerable proportion of fertilisers sold in Europe
until the 1960s were produced at two hydropower electrolysis plants in Norway.
Coal gasification was another early source of hydrogen. By the middle of the 20th

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century, continued improvements had reduced the minimum energy requirement

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Chapter 1. Ammonia production today

for ammonia production to about 60 GJ per tonne of ammonia. In the 1960s and1970s wider availability of natural gas at competitive prices led to increasing use
of natural gas-based steam reforming for hydrogen production, due to its lower
overall production costs. Most of the electrolysis-based plants shut down overtime. Following the closure of a plant in Egypt in 2019, only one known hydropowerelectrolysis-based ammonia plant remains in the world: a small facility in Peru
using a 25 MW electrolyser.
In 2020, of the 185 Mt of ammonia produced, 72% relied on natural gas-based
steam reforming, 26% on coal gasification, about 1% on oil products, and afraction of a percentage point on electrolysis. We estimate 7 that producing one
tonne of ammonia in 2020 on average used 46 GJ of energy on a gross basis and41 GJ on a net basis, accounting for the generation of excess steam in modern
process arrangements. This compares to best available technology (BAT) energy
intensity for production via natural gas of 32 GJ/t and 28 GJ/t on a gross and net
basis respectively, and theoretical minimum energy requirements of 20.9 GJ/t(gross) and 18.6 GJ/t (net) via pure methane. A major contributing factor to
reduced energy needs since the middle of the 20th century has been the shift
away from coal gasification and towards more efficient natural gas-based
production. Other contributors include the introduction of large centrifugal
compressors, better process control and maintenance scheduling, a higher
degree of process integration to make better use of waste heat, and catalyst
improvements. Efficiency gains have slowed considerably since 1990, as
production has come increasingly close to the theoretical minimum energy
intensity.
The Haber-Bosch ammonia synthesis process operates in the same manner
regardless of the hydrogen source. The overall reaction that takes place in theammonia synthesis step is exothermic, and a high temperature (typically
400-650°C) and pressure (typically 100-400 bar) are needed to activate thereaction in the presence of a catalyst, enabling the reaction to occur at a speed
that is economical for industrial production. Most of the energy needed for theprocess is generated by the reaction itself, although a small amount of electricity
is required to power motors, heat exchangers and other equipment to control thepressure and temperature. Under normal operating conditions, only a proportionof hydrogen is converted into ammonia after one cycle through the reactor. A
condenser separates ammonia from the remaining hydrogen, the latter being
Average global and regional energy intensities in this section are estimated using reported national average energy
consumption data where available, supplemented by best available technology and energy efficiency metrics derived fromthe IEA’s World Energy Balances dataset. The results of an IFA benchmarking analysis using real plant data from 2018
were used to inform and calibrate the results.

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7

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Chapter 1. Ammonia production today

cycled back through the reactor until virtually all (> 98%) the hydrogen and mostof the nitrogen (around 95%) is converted to ammonia.

Natural gas reforming
Producing hydrogen through natural gas-based steam reforming involves anumber of steps. The first step is natural gas desulphurisation, which cleanssulphur impurities from the natural gas feedstock. The second step is steam
reforming, which has two main options: 1) regular steam methane reforming(SMR); or 2) auto-thermal reforming (ATR), which combines SMR with partial
oxidation (POX). SMR requires process heat (endothermic process) and involves
reacting methane and steam to produce a syngas consisting of carbon monoxide(CO) and molecular hydrogen (H2). ATR reacts hydrocarbons (typically methane)with steam and pure oxygen to produce a syngas consisting of CO, H2 and CO2.
In ATR, SMR and POX occur simultaneously in a reactor. POX involves internal
combustion of part of the methane using oxygen. It is an exothermic reaction thatprovides the heat required for the SMR reaction, and therefore only minimal
external energy inputs are required in ATR for preheating the inputs. 8
The third step in natural gas reforming is a water gas shift reaction, which reacts
water vapour with the CO in the syngas to produce CO2 and more H2. The fourth
step is CO2 removal in order to separate the hydrogen from the syngas. Aminebased scrubbing is used for CO2 removal in many ammonia plants. In this process,the syngas containing CO2 and H2 is passed through an amine solution, which
absorbs the CO2 and then releases it when heated. Other CO2 removal options
are used in some plants, such as hot potassium carbonate scrubbing. The highpurity CO2 stream generated during ammonia production is sometimes utilised forother industrial processes, such as urea production (typically in the same or an
adjacent facility) or elsewhere in industry (such as the food and beverage sector).
CO2 from ammonia production is also captured for permanent storage, mostly
during the process of enhanced oil recovery (see Box 1.2). The final step ofhydrogen production is a methanation process to remove any residual CO and
CO2. Using a catalyst, COx reacts with hydrogen to produce methane. This step isnecessary as CO and CO2 can degrade the catalysts used in the Haber-Boschsynthesis step.
The SMR arrangement (as opposed to the ATR) is the most common process for
producing ammonia from natural gas. If BAT is used, SMR-based production

An additional difference between SMR and ATR is that ATR requires an air separation unit to isolate oxygen and nitrogen,whereas SMR can use air directly.

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Chapter 1. Ammonia production today

consumes 32 GJ of natural gas per tonne of ammonia produced, on a gross basis.
The vast majority of energy inputs are natural gas used for the hydrogenproduction step. A small amount of electricity – about 0.3 GJ – is also needed to
power the CO2 removal stage of hydrogen production and the ammonia synthesis
processes. About 5 GJ of excess steam is produced that could be exported foruses outside the ammonia production process, which results in a net energy
intensity of 28 GJ per tonne of ammonia. About 1.8 tonnes of CO2 are generated
per tonne of ammonia produced via SMR using BAT.
In the SMR route, typically more than 60% of the natural gas inputs are used as
feedstock. The feedstock proportion of the natural gas results in a concentrated
CO2 stream, as CO2 removal from the syngas is a fundamental part of thecommercial production process as it exists today. This CO2 only needs to becompressed before it can be utilised or prepared for permanent geologicalstorage. Utilisation is commonplace today – in 2020, about 130 Mt of CO2 wasutilised for urea production, most of it supplied from ammonia production. This isequivalent to about a quarter of the CO2 generated from ammonia production. The
additional natural gas used for process energy inputs results in a dilute flue gas
CO2 stream that would require the use of additional CO2 capture equipment wereit to be utilised or stored.
If capture were applied to both concentrated and dilute CO2 streams and the CO2
were permanently stored, SMR production would become near-zero emissions,depending on the CO2 capture rate realised. With current technology costs foramine-based capture, the optimum CO2 capture rate is in the range of 85-90%.
With further economic incentives, capture rates of up to around 99% could become
viable in future. Applying carbon capture, utilisation and storage increases energy
requirements, for separating and compressing the CO2. Capture on both theconcentrated and dilute streams would require approximately a further 0.7 GJ ofelectricity per tonne of ammonia produced.

Box 1.2

An overview of carbon capture, utilisation and storage

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Carbon capture, utilisation and storage (CCUS) refers to a suite of technologies
that can play an important and diverse role in meeting global energy and climate
goals. CCUS involves the capture of CO2 from large-scale point sources, including
power generation plants and industrial facilities that use either fossil fuels orbiomass for fuel. CO2 can also be captured directly from the atmosphere, so-called
direct air capture (DAC). If not utilised (CCU) on-site or in an adjacent facility,

Ammonia Technology Roadmap
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Chapter 1. Ammonia production today

captured CO2 can be compressed and transported by pipeline, ship, rail or truck
and then injected into deep geological formations (including depleted oil and gas
reservoirs or saline formations) which trap the CO2 for permanent storage, avoiding
its release to the atmosphere. This is carbon capture and storage (CCS).
Current large-scale CO2 capture capacity for injection and storage in geologicalformations is on the order of 40 Mt CO2/yr. Around two-thirds of this capacity is innatural gas processing facilities and the remaining third comprises roughly equalshares of power generation, synthetic fuel, ammonia and hydrogen applications,with smaller quantities being captured from bioethanol and steel production. Of the
40 Mt figure quoted above, around 20% of the captured gas is directed to dedicatedgeological storage sites, with the remainder used for enhanced oil recovery (EOR).
Virtually all of the CO2 injected for EOR is ultimately retained in the reservoir overthe life of the project, but monitoring and verification is needed to confirm
permanent storage. An increasing share of planned projects intend to store CO2 indedicated storage sites as opposed to via EOR.
Interest in CCUS has been expanding globally in recent years, with a renewed
momentum driven by strengthened climate commitments from governments andindustry, including ambitious net zero targets. The improved investment
environment has seen more than 40 new commercial projects announced aroundthe world in the first eight months of 2021. Pilot and demonstration-scale carbon
capture installations are currently operating or planned in several key sectors
where CCUS plays an important role in achieving clean energy transitions: thecement sector; steel furnaces besides those producing direct reduced iron;chemical facilities; and carbon removal facilities (DAC and bioenergy with CCS[BECCS]).
CCUS includes a portfolio of technologies and applications at various stages ofdevelopment. There are many carbon capture technologies, several of which aremature, such as chemical absorption of CO2 during hydrogen production inammonia plants. There are also many CCU applications proposed, including
cement and synthetic fuels, but urea synthesis with CO2 from ammonia plants isthe only one that operates at very large scale today (around 130 Mt CO2/yr). The
environmental benefits of CCU depend on the eventual fate of the product in which
the CO2 is utilised – CCU for urea only results in temporary sequestration.
Permanent geological storage is conceptually more straightforward. Globally,
theoretical CO2 storage resources are vast, but some reservoirs will not be suitableor accessible. Detailed site characterisation and assessments are still needed to
identify the feasibility and scope of permanent CO2 storage in many regions.

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SMR is the arrangement of choice for new-build natural gas-fuelled plants today.
This is because ATR plants tend to be slightly less energy efficient overall, on a

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Chapter 1. Ammonia production today

net basis. ATR does not produce excess steam for possible export (e.g. to power
an adjacent urea plant), and requires significantly more electricity than an SMR
arrangement, mainly to supply the air separation unit that sources nitrogen fromthe air. At 1.6 t CO2 per tonne of ammonia, the direct CO2 emissions intensity of
ATR is 13% lower than that of SMR, but this does not reflect any emissions credit
for the additional steam that is produced in the SMR route, which can avoid theneed for fuel inputs to utilities that would otherwise be required to generate it.
Another major difference relative to the SMR arrangement is that over 90% of thenatural gas inputs to an ATR are for feedstock. This means that a higher proportionof the CO2 produced is concentrated (a lower proportion is dilute flue gas CO2)and so is more amenable to the application of CCUS. Because capturing CO2 fromthe concentrated feedstock-derived stream of an ammonia production facility isless energy- and capital-intensive, ATR arrangements may become the preferredtechnology for new-build natural gas facilities where the aim is to achieve nearzero emissions ammonia production. Capturing the concentrated emissions alone
would reduce ammonia production emissions via the ATR route by 90%. If higher
reductions were targeted, it could be an option to increase the capacity of the ATR
unit to produce additional hydrogen that could be used to provide the process heat,rather than using fossil fuels and generating dilute CO2 in flue gas.
Energy needs to produce one tonne of ammonia for each route using BATFeedstock

FuelElectricity

Steam

Gross

Net

Direct CO2
intensity(t CO2/t)

Natural gas SMR

21.0

11.1

0.3

-4.8

32.4

27.6

1.8

Natural gas ATR

25.8

2.1

1.0

0.0

28.9

28.9

1.6

Coal gasification

18.6

15.1

3.7

-1.3

37.4

36.1

3.2

SMR with CCS

21.0

11.1

1.0

-3.1

33.1

30.0

0.1

ATR with CCS

25.8

2.1

1.5

0.0

29.4

29.4

0.1

Coal with CCS

18.6

15.1

4.9

2.6

38.6

41.2

0.2

Electrolysis

0.0

0.0

36.0

-1.6

36.0

34.4

0.0

Biomass
gasification

18.6

16.5

1.4

0.0

36.5

36.5

0.0

Methane pyrolysis

40.5

0.0

8.4

-1.6

48.9

47.3

0.0

Production route

Energy intensity (GJ/t)

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Notes: SMR = steam methane reforming; ATR = auto-thermal reforming; CCS = carbon capture and storage. All energy
intensities presented for the production of 1 tonne of ammonia. The arrangements considered here include capture of bothconcentrated and dilute CO2 streams. Negative values represent net steam generation, which is available for use by otherprocess units or for export. Methane pyrolysis produces solid carbon as a by-product, the energy content of which is notreflected in the values shown. Methane pyrolysis is at an early stage of technology development and the estimates provided
are for a future commercial-scale installation. CO2 is generated from the use of bioenergy, but does not contribute towards
direct CO2 emissions from the energy system, following IEA emissions accounting conventions.
Source: Data gathered and reviewed in collaboration with the IFA and its members.

Ammonia Technology Roadmap
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Chapter 1. Ammonia production today

Coal gasification
Nearly all ammonia production from coal is in China. About 85% of the country’s
ammonia production is via coal gasification. Much smaller amounts of ammonia
are produced via coal gasification in the United States, South Africa andIndonesia. Producing hydrogen via this method requires a number of steps. First,
an air separation unit is used to isolate oxygen from the air. Second is thegasification step, in which coal is heated in the presence of oxygen and water,
creating a syngas composed of hydrogen, CO, CO2, methane and otherhydrocarbons. Heating can be internal or external depending on the configuration.
Next, a syngas clean-up step removes impurities, to avoid poisoning the catalysts
used and to meet air pollutant emission requirements. The remaining steps include
a water gas shift reaction that converts CO to CO2 and hydrogen, CO2 removal
and sulphur removal. Biomass gasification for ammonia production, were it to be
pursued in the future, would follow a similar series of steps.
Ammonia production via coal gasification is considerably more emissionsintensive than natural gas-based production. Considering BAT energy
performance for facilities using a standard-grade thermal coal input, the route uses
37 GJ per tonne of ammonia produced, on a gross basis, 36 GJ/t on a net basis.
This includes 34 GJ of coal, more than half of which is used as feedstock.
Electricity needs are higher than for natural gas-based processes, at about 4 GJ
per tonne of ammonia. About 1 GJ of excess steam is produced. The emissions
intensity using BAT is 3.2 t CO2 per tonne of ammonia produced by coalgasification, which is nearly double that of BAT SMR-based production. As withnatural gas-based routes, CCS can be applied to coal gasification, enabling close
to near-zero-emission production if applied to both the concentrated and dilute
CO2 streams generated from the feedstock and process energy inputs,
respectively.

Near-zero-emission production routes currently being pursued
In the future, in addition to more widespread application of CCS in existingproduction routes, other methods of hydrogen production for ammonia synthesis
are likely to become more common in order to meet energy and climate goals. In
recent years electrolysis-based ammonia production has been regaining interestfor this reason. After decades of decline, multiple projects are scheduled to comeonline in the coming years, bringing total electrolytic ammonia production forconventional uses to more than 3 Mt of capacity by 2030, considering announced

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projects as of June 2021. A key difference compared to past production is that aAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

considerable proportion of planned capacity will use variable renewable electricity
as opposed to dispatchable large-scale hydropower.

Mt

Current and announced projects for near-zero-emission ammonia
production
4

Electrolysis and pyrolysis

CCS

3

2

1

0

2015
2020
2025
2030 2015
Methane pyrolysis (announced) Electrolysis (announced)
Electrolysis (existing)2020
CCS (existing)

2025
2030
CCS (announced)
IEA, 2021.

Notes: CCS = carbon capture and storage. Near-zero-emission ammonia production capacity from CCS projects is estimatedbased on the quantity of emissions that would be avoided from an ammonia plant with BAT energy performance, whether
process-related or energy-related emissions are captured. Emissions utilised for producing urea are not included. Electrolysis
projects producing ammonia explicitly for use as an energy carrier are not included. Announced projects include those underconstruction, with a final investment decision or with a feasibility study completed; those currently at the concept stage are
not included.

Despite a decline in near-zero-emission production in recent years, announced projects
totalling nearly 8 Mt of ammonia production are in the pipeline for 2030.

Electrolysis involves the splitting of water molecules using an electric current toproduce hydrogen, with oxygen as a by-product. Several different types ofelectrolysers exist, including designs that are commercially available and others
that are still under development. Alkaline electrolysers have been used in thechemical industry since the middle of the 20th century. They use an alkaline
solution where ions in the water can conduct the current, allowing electrolysis tohappen. The catalysts used are generally less expensive and more durable
compared to alternative designs. Polymer electrolyte membrane (PEM)electrolysers are a much more recent design, offering the potential to respondeven more rapidly than alkaline electrolysers to required changes in capacity
factor. In early 2021 Air Liquide inaugurated the largest PEM electrolyser in theworld to date, with 20 MW capacity and the ability to generate 8.2 tonnes ofhydrogen per day. Solid oxide electrolyser cells (SOEC) are also under

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development, but have yet to be deployed at scale. A core advantage of SOEC

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Chapter 1. Ammonia production today

designs is the potential for considerably higher conversion efficiencies comparedto other designs, and the ability to operate in reverse (as a fuel cell) when required.
Electrolysis-based ammonia production requires a standalone air separation unit
to separate nitrogen from the air, as is the case for ATR natural gas-based
arrangements. In SMR arrangements, oxygen from the air is consumed in thereaction with methane, leaving behind pure nitrogen that can be used for ammonia
synthesis. A standalone Haber-Bosch synthesis unit is also required, but like theair separation unit, this process can also be powered by electricity. Electrolysis
thereby opens a pathway to fully electrified ammonia production, requiring 36 GJ
of electricity per tonne of ammonia produced for the process as a whole, with anefficiency of 64% on a lower heating value basis for the electrolyser. Most of theelectricity (95%) is used for hydrogen production, with the remaining 5% used to
power the air separation and Haber-Bosch synthesis units. This route producesammonia with zero direct CO2 emissions. Substantial indirect CO2 emissions will
be incurred upstream in the power sector using this route if the electricity feeding
the installation is not low carbon. For a grid-connected electrolysis plant to havelower indirect emissions than the direct emissions from a natural gas-based SMR
plant using BAT, the CO2 intensity of the grid electricity must be 180 g CO2/kWhor less; the current global average is 475 g CO2/kWh (see Box 1.3).

Box 1.3

Electrolysis-based ammonia production: Grid connection versus
dedicated variable renewable energy capacity

Electricity is the energy source behind electrolytic ammonia production. The way
the electricity is produced and delivered has implications for plant operation, costs
and indirect CO2 emissions. Electricity can be produced from virtually any otherenergy source, including dispatchable low-carbon energy sources such as hydro,
geothermal and nuclear power, and variable renewable energy (VRE) sources
such as solar PV and wind. Electricity can of course be generated using fossil
fuels, as the majority is today globally, but if fossil fuels are to be used for ammonia
production, it is more efficient to use them directly (e.g. via an SMR) than to firstuse them to produce electricity for use in the electrolysis route. There are two main
ways that electricity can be obtained: either via a connection to the electricity gridor from dedicated electricity generation capacity, which involves captive, on-site
power generation specifically for the ammonia plant. Any electricity source can bepaired with either approach.

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Projects under development to produce electrolytic ammonia include those usinga grid connection and others using dedicated capacity. For example, Yara’s projectAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

in Norway and CF Industries’ project in the United States will be grid-connected,
while Yara’s projects in the Netherlands and Australia and Enaex’s project in Chile
will be powered by dedicated solar or wind power (see Chapter 2 “An array oftechnology options at differing levels of maturity” for more project examples).
A key difference between ammonia production using grid-connected anddedicated VRE capacity is the way the plant is operated. Ammonia production
using the Haber-Bosch process requires a relatively stable supply of hydrogen.
Electricity grids are designed to provide a constant and reliable flow of electricity
by drawing on multiple generation units and multiple sources of flexibility. Thisreliable provision of electricity enables an electrolyser to operate at high capacity
factors (typically > 90%) and produce hydrogen at a steady and consistent rate forammonia synthesis. Dedicated dispatchable capacity would have attributes
relatively similar to grid-connected capacity, given that it would enable
electrolysers to operate at a high capacity factor.
In contrast, dedicated VRE capacity would not provide a stable flow of electricity
day to day or hour to hour. Capacity factors for VRE vary widely depending on thesite. While higher capacity factors can be achieved in some locations, typical solar
and wind installations may operate at capacity factors in the range of 15-50%. As
a result, VRE generation and electrolyser capacity typically need to be oversized
to compensate for the intermittency of a dedicated VRE capacity arrangement.
Hydrogen or electricity storage can be used to ensure that a stable supply ofhydrogen can be provided to the Haber-Bosch process unit. An alternative orcomplementary option to storage could be to increase the flexibility of the HaberBosch process, thus facilitating some degree of ramping or periods of ceased
production. Firm-up electricity can also be provided via a connection to the grid toprovide a minority of the electricity input at times when it is more cost-effective to
do so.
Electricity costs are a critical factor in determining the cost of ammonia produced
from electrolysis-based installations. For grid-connected installations, the cost of
grid electricity can vary widely by region – national average electricity prices forindustrial users varied widely, with a range of USD 22-240 per MWh and a global
average of about USD 100 per MWh. The electricity cost for dedicated VRE
installations will also vary widely depending on the renewable resources (e.g. solar
irradiance, wind speed) at a given site. Some of the lowest-cost solar and windsites today have levelised costs of around USD 30/MWh, assuming an 8%
discount rate, and with further cost declines this could reach as low as
USD 20/MWh within a decade. Many sites will have considerably higher costs, but
given that no large dedicated VRE installations for ammonia production currently
exist, regions with lower costs are likely to be the most attractive targets.

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With regard to electrolyser costs, grid-connected capacity with electrolysers
operating at high capacity factors would require less electrolyser capacity toAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

provide the same amount of hydrogen, in comparison to dedicated VRE
installations operating at lower capacity factors. Hydrogen storage would only berequired for dedicated VRE installations. At sites in close proximity to naturally
occurring geological storage (e.g. salt caverns), the costs of storage may be very
low. However, geological storage is unlikely to be available in many instances, andthe alternative would be expensive high-pressure steel tanks (up to 40 times morecostly than geological storage). Demand-side flexibility can also incur additionalcosts, due to lower utilisation and increased maintenance costs for the HaberBosch synthesis unit.
The CO2 intensity of the electricity generation, and in turn the indirect emissions ofammonia production, can vary significantly between grid-connected and dedicatedVRE installations. For grid-connected installations, the CO2 intensity of the gridvaries by region and over time. In a sustainable future for the energy system,
electricity generation would need to decarbonise rapidly, likely approaching nearzero emissions in most locations within a few decades. Furthermore, the locations
with the lowest electricity prices that would favour electrolytic ammonia production
currently tend to have large proportions of low-cost large-scale hydropower in theelectricity mix, which is already a zero-emission form of electricity generation. With
regard to dedicated VRE capacity, no CO2 emissions will be produced given that
renewable energy is used directly, although the use of firm-up electricity, whererequired, has the same implications as those mentioned for the grid-connected
installations.

Methane pyrolysis is another potential route to produce near-zero-emissionammonia. As no commercial-scale installations currently exist, and the technology
is still under development, techno-economic parameters for the process remain
highly uncertain. The process involves using very high-temperature heat provided
by electrical plasma to split methane into its constituent hydrogen and carbon
atoms, without burning it. Producing one tonne of ammonia via methane pyrolysis
requires around 40 GJ of natural gas feedstock along with around 8 GJ ofelectricity. Instead of CO2, the carbon output is in the form of solid carbon, which
can be sold for use in certain carbon black applications, if of the appropriate grade.
However, if the product in which the carbon is used is then combusted, during use
or at the end of its lifetime, the indirect emissions of the methane pyrolysis routeare similar to natural gas-based production. Each tonne of hydrogen produced
results in around 3 tonnes of solid carbon, such that one tonne of solid carbon is
produced for about every 1.9 tonnes of ammonia. The first commercial facility

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producing ammonia from methane pyrolysis-derived hydrogen is expected toAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

come online by 2025. Announced projects equating to around 0.3 Mt of ammonia
production capacity are scheduled to come online by 2030.
Natural gas-based production with CCS is also likely to become increasingly
common in the future in order to meet CO2 emission reduction targets. CCS
projects are typically measured by the quantity of CO2 that they capture. For agiven capture project, the near-zero-emission ammonia production capacity canbe estimated as being equal to the capacity of an unabated plant emitting thatquantity of CO2, assuming energy performance levels based on BAT. Using thatapproach, we estimate that just over 1 Mt of ammonia is currently produced eachyear with near-zero emissions via the application of CCS in projects located in the
United States, Canada and China. All of the CO2 currently captured in theseprojects is used for EOR. Announced CCS projects, if realised, would increasenear-zero-emission ammonia production capacity via CCS to around 4 Mt by2030.

Economic considerations
The cost of producing ammonia is highly dependent on the cost of the main inputs,
particularly the cost of energy used for both process energy and feedstock. Using
the simplified levelised cost metric as a proxy for the cost of producing one tonneof ammonia, these raw material and energy inputs typically account for 20-40% of
the total for commercial routes in operation today. The annualised cost of capital
expenditure (CAPEX) and the fixed operational expenditure 9 account for theremainder. The techno-economics of three important near-zero-emission routes
are explored in more detail at the individual plant level in Box 1.4.
The prices of the main energy inputs for feedstock and process energy (naturalgas, coal and electricity) are key determinants of the overall levelised cost of
production. The higher CAPEX of the coal gasification route is offset by theabundance and low-cost of coal relative to natural gas in certain regions,especially China. Avoiding the need to increase relatively expensive natural gas
imports, which could potentially hamper efforts to improve energy security, isanother factor at play when it comes to the prevalence of the coal-based route in
China.

The fixed OPEX boundary used in this analysis includes maintenance, replacement parts and the associated engineering,procurement and construction. Variable OPEX, such as the labour required for operating the plant, is not included. Energy
costs are accounted for separately.

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Chapter 1. Ammonia production today

Simplified levelised cost of ammonia production for commercial andnear-zero-emission production routes in 2020
USD/t

1 500
Ammonia
marketprice range

1 000

500

0

SMR

Coal
gasification

SMR
with CCS

Commercial production
CAPEX

Fixed OPEX

Fuel

ATR
with CCS

Coal
with CCS

GridDedicatedBiomassconnected
VRE
gasificationelectrolysis electrolysis
Near-zero-emissions production

Feedstock

CO₂ capture and storage

Methanepyrolysis

Combined sensitivity

IEA, 2021.
Notes: SMR = steam methane reforming; ATR = auto-thermal reforming; CCS = carbon capture and storage; VRE = variable
renewable energy. The simplified levelised cost is calculated using a discount rate of 8% and a design life of 25 years for all
equipment, with the exception of the electrolyser stack (11 years) and system (28 years). CAPEX includes core equipment
costs, corresponding to the plant battery limit (including CO2 capture equipment in the case of CCS-equipped routes,
electrolysers in the case of electrolysis-based routes, and hydrogen storage in the case of the dedicated VRE electrolysis
route), and includes engineering, procurement and construction costs, equating to 70% of core equipment costs. A 95%
capacity factor is used for all equipment apart from the dedicated VRE electrolysis route, where a 50% capacity factor isused. The combined sensitivity includes the impact on the total levelised cost of varying the regional coefficient for CAPEX
and fixed OPEX (a factor of 73-127% of the CAPEX cost estimated for the United States), energy cost variation for naturalgas (USD 3-8.2/GJ), coal (USD 1.3-2.9/GJ), electricity (USD 4.5-30.2/GJ) and bioenergy (USD 2.2-4.4/GJ). The dedicatedVRE electrolysis route uses a narrower electricity cost range (USD 2.8-11.1/GJ). Where relevant, the central values for thecolumn series are calculated based on an output weighted average of the fuel prices faced across regions today. For theelectrolysis routes, electrolyser cost = USD 1477/kWe, electrolyser efficiency = 64% and feedstock refers to the electricity
used for electrolysis. For CCS-equipped routes, the CO2 capture rate is 90%, the CO2 transport and storage costs vary byregion from USD 5/t CO2 to USD 100/t CO2. CCS is applied to both concentrated and dilute emissions streams for SMR with
CCS route, and just the concentrated emissions stream for the ATR with CCS route. No CO2 emissions price is imposed. A
range of revenues for the solid carbon by-product is assumed (USD 0-500/t) for the methane pyrolysis route. CCS in thisinstance refers to long-term storage. The dotted grey area represents the range of average monthly ammonia prices for 20102020, using US Gulf, Middle East and Western Europe spot prices.
Source: Ammonia price data from Bloomberg Terminal.

Energy costs typically account for 20-40% of the levelised cost of ammonia production forthe dominant routes used today. Near-zero-emission production routes are typically 10115% more costly than the incumbent routes.

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Among the key emerging routes to produce ammonia with near-zero emissions,two categories can be established based on the relative contributions to levelised
cost: CCS-equipped routes and electrolysis-based routes. At the lower end of thecost range, CCS-equipped routes are similar in cost to their unabated counterparts
because they are in regions with the lowest CAPEX and energy costs. The slightly
higher cost for the CCS-equipped route (10-25% for the natural gas-based routes
and 15% for coal gasification) is attributable to slightly higher energy consumption,
CO2 transport and storage costs, and the increased cost of CAPEX and operating

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Chapter 1. Ammonia production today

expenditure (OPEX) for the capture equipment. The cost of the electrolysis
pathways is in large part dependent on the cost of the electricity used, over 90%
of which is consumed by the electrolyser. For the case using dedicated VRE
capacity, the proportion of cost attributable to CAPEX is much higher than for the
grid-based case (95% capacity factor), due to the much lower capacity factor (50%considered here, although this will vary significantly from site to site).
For the methane pyrolysis and biomass gasification routes, the levelised cost issignificantly more uncertain due to the lack of a commercial-scale plant in
operation today. Cost premiums for the biomass-based route appear to be verylarge, owing to the very high energy intensity (37 GJ/t including feedstock) and therelatively high cost of bioenergy assumed for a representative sustainable supply(USD 3.3/GJ). The cost of the methane pyrolysis route is highly dependent on therevenue obtained for the carbon black, which is co-produced alongside thehydrogen (and in turn ammonia). At a revenue assumption of around USD 360/t
for carbon black, it appears the route could produce ammonia at costs competitive
with conventional routes. However, there is a limit to the amount of carbon blackthat can be absorbed by existing markets for the product (tyres, other rubber
products, fillers, pigments), and the grade of carbon black produced significantly
affects the revenue that can be obtained. If no revenue, or even a cost, wasassociated with producing the carbon black, the competitiveness of this route
would be severely affected.

Box 1.4

What might a typical near-zero-emission ammonia plant look likein practice?

The world’s fleet of ammonia plants numbers around 550, constituting about
250 Mt per year of ammonia production capacity in total. While no two of theseplants are exactly the same, a typical natural gas-based ammonia plant built today– the most common choice outside China – uses one of a handful of licensor
designs employing SMR technology. Typically, ammonia plants range in size
between around 200 kt and 1 200 kt per year (600-3 300 tonnes per day). A
reference-scale plant of 875 kt per year (2 400 tonnes per day) is used here.

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Characterising the size of a typical near-zero-emission ammonia plant is more
speculative, as no such installation exists today at the scale that would be needed
in a more sustainable future for the ammonia industry. Two CCUS-equipped plantarrangements can be considered: a typical SMR configuration with full CO2 capture
retrofit to both the concentrated and dilute streams; and a new-build ATR plantwith capture of its concentrated stream. These plant configurations would likely
operate at a similar scale to commercial plants today. For electrolysis-based

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plants, announced projects range from 10 kt to 510 kt per year, and commercial
electrolysis-based plants have operated at the 150 kt per year scale in the past.
The CAPEX for a typical SMR plant, including engineering, procurement andconstruction (EPC) costs, is around USD 1 675 million for the core equipment for
the 875 kt per year reference-scale plant. Fixed annual OPEX, excluding energy
costs, would be around 2.5% of the total initial capital outlay per year, so around
USD 50 million per year. For the CCUS retrofit configuration, CAPEX of around
USD 335 million would be required (excluding the cost of the existing plant), andannual fixed OPEX for the plant as a whole would rise by around 20%. The ATR
configuration is estimated to be just under 10% less expensive than the retrofit
configuration when including the cost of the original SMR plant, so would be thelikely choice for new-build plants. The fixed annual OPEX for the capturecomponent of the process would also be around 10% lower than the SMR
configuration.
The electrolysis-based plant would be the most expensive of the three near-zeroemission options explored here (CAPEX of USD 2 065 million for the referencescale plant, including EPC costs), considering today’s electrolyser costs of around
USD 1 477/kW e. However, electrolyser costs are expected to fall significantly inthe coming years, as manufacturing volumes rise to meet increasing capacity
additions. The efficiency of the units is also expected to climb, which will make animportant contribution to lowering the energy costs. With today’s electricity prices
in most regions (see Box 1.3), energy costs would make the plant significantly
more expensive to operate than the CCUS-equipped configurations, despite
similar levels of fixed OPEX.
Assuming BAT energy performance levels, a typical new-build SMR plant
consumes around 7 810 GWh of natural gas per year for the reference-scale plant.
Electricity inputs are much smaller, at around 75 GWh per year. Around
1 170 GWh of high-temperature steam is produced as a by-product, which is
generally put to use on site for preheating and other thermal needs. For CCUSequipped configurations, natural gas consumption would be broadly similar, butwith 3-5 times higher electricity needs owing to the operation of the compressors
and separation processes that make up the capture equipment. For the CCUSequipped SMR retrofit configuration, a proportion of the steam generated by thecore process equipment is used to fulfil the heat requirements of the dilute stream
capture unit. The electrolysis-based plant does not consume any natural gas, but
20-120 times more electricity, or 8 750 GWh per year for the reference-scale plant.

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An SMR plant of the reference-scale size would generate around 1 580 kt CO2 peryear, if operated around the clock. The CCUS configurations would yield areduction in direct CO2 emissions of 90-95%, while the electrolysis-based plant
would have zero direct CO2 emissions. Indirect CO2 emissions from electricity
generation depend entirely on the technologies and fuels used in the power sector,
and should tend rapidly towards zero in the context of a sustainable future for theammonia industry. However, taking the global average CO2 intensity of power
generation today, the indirect CO2 emissions generated equate to around 35 kt ofAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

CO2 for the SMR-based plant, around 110-175 kt for the CCUS-equipped
configurations, and 4 150 kt for the electrolysis-based plant – the latter being
significantly more than double the direct emissions from an unabated SMR plantof the same reference scale.
Indicative techno-economic parameters for near-zero-emission ammonia
plant configurations
Parameter

Unit

SMR

SMR with
CCS
retrofit

ATR with
CCS newbuild

Electrolysis plant

220-1 205
(600-3 300)

220-1 205
(600-3 300)

220-1 205
(600-3 300)

10-510(30-1 400)

Typical plantsize

kt/year(t/day)Reference
capacity

kt/year(t/day)CAPEX incl.
EPC costs

USD million

1 675

335

1 850

2 065

Fixed OPEX

USD million
/year

50

10

55

65

Natural gas
consumption

GWh/year

7 810

7 810

6 790

0

Net steam
generation

GWh/year

1 170

760

0

390

Electricity
consumption

GWh/year

75

235

365

8 750

Direct CO2
generated

kt CO2/year

1 580

105

170

0

Indirect CO2
generated

kt CO2/year

0-35

1-110

2-175

50-4 150

875 (2 400)

Notes: SMR = steam methane reforming; ATR = auto-thermal reforming; CCS = carbon capture and storage; EPC =engineering, procurement and construction. Figures are rounded and constitute indicative quantities; realised costs andperformance will vary by geography and licensor. Typical plant sizes are stated on a 365-day operational basis andcorrespond to contemporary new-build plants for the natural gas-based routes and to those of announced projects forelectrolysis plants. The reference capacity is used to calculate the quantities in all subsequent rows of the table, topresent equivalent quantities for each plant. Energy intensities based on BAT energy performance levels, assuming atypical arrangement with respect to net steam generation. Natural gas consumption includes feedstock. The indirect
CO2 range uses values for the CO2 intensity of electricity of 6-474 g CO2/kWh, with the lower end of the range
corresponding to the lowest national average grid CO2 intensity seen in 2020, and the upper end of the range to theglobal average. Electrolyser parameters, corresponding to a grid-connected arrangement in 2020, as follows: CAPEX
including EPC costs = USD 1 477/kWe, efficiency = 64% on a lower heating value basis.

Ammonia and the environment
While nitrogen fertilisers are essential to modern society, their production and use
have considerable impacts on the environment. The energy used for fertiliser
production leads to considerable CO2 and other greenhouse gas emissions, andfertiliser use leads to further emissions in the agriculture sector, alongside other

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impacts on ecosystems and air quality.

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Chapter 1. Ammonia production today

Future emissions from nitrogen fertiliser production will depend on:The level of demand that must be satisfied, which is influenced by many factors
including nutrient management strategies.



The fate of existing production capacity.



The technology adopted for new capacity additions.



The type of fertiliser that dominates the market.

Future emissions from fertiliser use also depend on a myriad of factors, including:The types and amounts of crops that need to be produced.

Soil, crop and nutrient management practices.



Local climate and soil conditions.



The choice of which fertiliser to produce for new capacity, such as whether toproduce urea or other fertilisers.



The availability of various nitrogen fertiliser products in regional markets.

The relationship between sustainability and ammonia-based products is complex.
The path the sector takes during the current decade can contribute to achieving
several of the United Nations Sustainable Development Goals (SDGs) by 2030,



SDG 2 – End hunger, achieve food security and improved nutrition, andpromote sustainable agriculture: nitrogen fertilisers facilitate food production,
and as such their production and use can contribute to ending hunger.



SDG 3 – Ensure healthy lives and promote well-being for all at all ages: since
production and consumption of ammonia-based products is one of many
contributors to air pollution, reducing pollutants can contribute to improved humanhealth.



SDG 7 – Ensure access to affordable, reliable, sustainable and modern
energy for all: since ammonia production uses a substantial amount of energy,
shifting to technologies with improved energy efficiency and more renewableenergy can contribute to more sustainable energy use.



SDG 9 – Build resilient infrastructure, promote inclusive and sustainableindustrialisation and foster innovation: given that ammonia production is a partof the industrial sector, development and deployment of more sustainable
technologies will contribute to the broader goal of sustainable industrialisation.



SDG 12 – Ensure sustainable consumption and production patterns:
improving the efficiency of use of nitrogen fertilisers and other ammonia-based
products will contribute to improved resource efficiency and more sustainableconsumption. Additionally, the target to reduce food waste can help contribute to
reducing growth in demand for fertilisers.

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including the following:Ammonia Technology Roadmap
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Chapter 1. Ammonia production today

SDG 13 – Take urgent action to combat climate change and its impacts: sincea substantial amount of greenhouse gases is emitted as a result of producing andconsuming nitrogen fertilisers and other ammonia-based products, switching tonear-zero-emission technologies and improving use efficiency will contribute totackling climate change.



SDG 14 – Conserve and sustainably use the oceans, seas and marine
resources for sustainable development: nitrogen fertiliser use contributes tonutrient pollution of waterways and oceans, and therefore more efficient use can
improve the health of marine ecosystems.



SDG 15 – Protect, restore and promote sustainable use of terrestrial
ecosystems, sustainably manage forests, combat desertification, and halt
and reverse land degradation and halt biodiversity loss: since fertiliser use
improves yields, more widespread use can reduce the land needed to produce thesame amount of crops, and thus help reduce the need to convert natural
ecosystems to agricultural production. Meanwhile, improving fertiliser use
efficiency can help reduce ecosystem impacts that arise from air pollution.



SDG 17 – Strengthen the means of implementation and revitalise the global
partnership for sustainable development: through finance and technology
transfer related to sustainable ammonia production, the global community canhelp improve sustainability and well-being in emerging-market and developing
economies.

There are interlinkages and interactions between the various SDGs, calling for abalanced approach to reap the benefits of using fertilisers and other ammoniabased products, while also minimising their environmental impacts. This section
discusses these environmental impacts and begins to look towards a moresustainable future for the sector. A more in-depth look at the future can be foundin Chapter 2, including an outline of what the IEA’s Sustainable Development
Scenario would entail for ammonia production. This scenario focuses in particularon achieving the three SDGs most closely related to energy: to achieve universal
access to energy (SDG 7), to reduce the severe health impacts of air pollution(part of SDG 3) and to tackle climate change (SDG 13).

An energy- and emissions-intensive sector
In 2020 global ammonia production accounted for around 8.6 EJ of final energy
consumption – over 95% of which was fossil fuels – and around 450 Mt of CO2
emissions. This is around 20% of the energy consumption of the wider chemical
sector and around 35% of its CO2 emissions. Measured against the energy sector
as a whole, ammonia production accounts for around 2% of final energy

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consumption and 1.3% of energy sector emissions (including energy-related andAmmonia Technology Roadmap
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industrial process emissions). If the ammonia industry were a country, it would be
the 16th largest emitter in the world, between South Africa and Australia. 10
Energy consumption for and emissions from ammonia production incontext, 2020
3.0

60

2.0

30

1.0

Other chemicals
10%

8.9 Gt CO2
Steel
29%

Cement
28%

90

0

Steel

Cementt CO2/tOther industry
28%

Ammonia
5%

Energy and emission intensities
GJ/t

Industrial CO2 emissions

0.0

Ammonia Methanol

HVCs

Energy intensity

Emissions intensity (right axis)

IEA, 2021.
Notes: HVCs = high value chemicals, including ethylene, propylene, benzene, toluene and mixed xylenes. Energy intensities
shown on a gross basis to facilitate comparison between products and sectors, i.e. excluding the quantities of steam andother energy carriers that are produced as by-products. Industrial energy consumption includes energy used in blast furnaces
and coke ovens and chemical feedstock. Industrial CO2 emissions include process emissions.

Energy demand and direct CO2 emissions from ammonia production are estimated to haverisen by 30% since 2000, while production volumes have increased by 40%.

Three heavy industry sectors – steel, cement and chemicals – account for 70% of
industrial CO2 emissions globally. Emissions from steel production (2.6 Gt CO2 in2020) stem primarily from the use of carbon-based reduction agents (coke andcoal) and the generation of high-temperature heat during the ironmaking process.
Around two-thirds of the emissions generated by the cement sector (2.5 Gt CO2)
stem from the chemical reaction that is employed to make clinker from limestone
in a kiln. The remaining third is generated from the burning of fossil fuels (mainlycoal) to produce the heat required to sustain this reaction. The chemical sector
comprises thousands of complex value chains, most of which start with the
production of seven primary chemicals – high-value chemicals (which in turncomprise ethylene, propylene, benzene, toluene and mixed xylenes), methanol
and ammonia – which altogether account for around two-thirds of the energy
consumption in the sector. Ammonia is by far the largest contributor to emissions

This comparison only takes into account the energy-related emissions of countries in 2019.

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within the chemical sector, at 450 Mt CO2 in 2020, with methanol contributing afurther 220 Mt CO2 and high-value chemicals a further 250 Mt CO2.
While the steel and cement sectors dwarf the emissions from ammonia production
in absolute terms, they are significantly less energy and emissions intensive on atonne-for-tonne basis. Steel and cement are produced in far higher volumes
globally, at 1 877 Mt and 4 281 Mt in 2020 respectively, compared with 185 Mt ofammonia. When considering direct CO2 emissions from the production of thesecommodities, steel and cement generate 1.4 t CO2/t and 0.6 t CO2/t respectively,
compared with 2.4 t CO2/t for ammonia. This difference is owing to the significant
energy intensity differential between the materials, which for steel and cement arearound 19 GJ/t and 3 GJ/t respectively, compared with around 46 GJ/t forammonia on a gross basis (41 GJ/t on a net basis). Within the chemical sector,
the energy intensity of methanol is broadly similar to that of ammonia, whereas forhigh-value chemicals the energy intensity is nearly double, at around 80 GJ/t on
average. This is because high-value chemicals consume large quantities of fuel(mainly oil products like ethane and naphtha) as feedstock, which are not
combusted during production – this explains their comparatively low emissions
intensity of 1 t CO2/t, less than half that of ammonia.

Non-CO2 environmental impacts
While this roadmap focuses primarily on the CO2 emissions from ammonia
production, the production and use of nitrogen fertilisers also have wider
environmental implications. Negative impacts include:Further contributions to climate change by nitrous oxide (N2O) emissions from
nitric acid production and both N2O and CO2 emitted from soils following fertiliser
application.



Air pollution associated with ammonia (NH3) and nitrogen oxides (NOx) emitted
from soils, as well as pollutants emitted from production facilities.



Soil and water quality degradation and biodiversity loss from excess nitrogen inaquatic and terrestrial ecosystems.

Conversely, fertiliser use enables higher crop yields, thus reducing the need toconvert natural ecosystems to agricultural production. This can result in positive
impacts on ecosystems and biodiversity, including reduced deforestation and landdegradation.
A balance needs to be reached between the benefits and impacts of using nitrogen
fertilisers and other ammonia-based products. Researchers have suggested that

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the degree of human modifications to the nitrogen cycle, including a large

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Chapter 1. Ammonia production today

contribution from fertiliser production and use, already exceeds the boundary of asustainable, safe operating space for humanity. This boundary largely pertains to
impacts on aquatic ecosystems from excess nitrogen, as well as the greenhousegases that result from nitrogen use. Reducing these environmental impacts will
evidently be important in the shift to more sustainable ammonia-based value
chains.
A comprehensive assessment of these non-CO2 environmental impacts is outside
the scope of this analysis. However, an overview is provided here as a broader
picture of the sustainability implications of ammonia-based products. Additionally,
these other environmental impacts are highly relevant to one of the strategies
discussed in this roadmap – improving nutrient use efficiency. Both ammonia
production CO2 emissions and other environmental impacts are reduced when
fertilisers are used more efficiently, regardless of the motive behind efficiency
improvements. The link between CO2 and non-CO2 impacts is thus of interest
when considering more sustainable ammonia production.

Non-CO2 greenhouse gas emissions from fertiliser production
and useBesides CO2 and methane (see Box 1.5), nitrous oxide (N2O) is emitted as a resultof both the production and use of nitrogen fertilisers. N2O is a potent greenhousegas, with a global warming potential 298 times higher than CO2 over a 100-year
period. 11 It is also now the top contributor to ozone depletion, following large-scale
phase-outs of chlorofluorocarbons (CFCs). The nitrogen cycle is highly complex,
with a multitude of natural and anthropogenic sources and sinks, and as suchcalculating N2O emissions is prone to uncertainty. It has been estimated that on
average between 2007 and 2016 around 17 Mt of nitrogen from N2O were emitted
to the atmosphere each year, around 7.3 Mt (43%) of which was due toanthropogenic activities and 3.8 Mt (52% of the anthropogenic total) specificallyfrom the agricultural sector. Naturally occurring nitrous oxide sinks reduced theannual increase of nitrogen in the atmosphere to 4.3 Mt. In 2018 N2O accounted
for about 5% (2.8 Gt CO2-eq) of total global anthropogenic greenhouse gas
emissions (excluding land use change emissions). Human induced N2O emissions
have increased by 30% since 1980, with nitrogen additions to cropland being thelargest contributor to growth.

Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5) has
assessed the global warming potential of different greenhouse gases with and without climate–carbon feedbacks. The
global warming potential of nitrous oxide is 298 with feedbacks and 265 without. IPCC states that, “Though uncertainties in
the carbon cycle are substantial, it is likely that including the climate–carbon feedback for non-CO2 gases as well as forCO2 provides a better estimate of the metric value than including it only for CO2.”

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With regard to fertiliser production, nitric acid (HNO3) is the main contributor to
fertiliser-related N2O emissions. Nitric acid is an important precursor for the
production of certain fertilisers, namely ammonium nitrate, calcium ammonium
nitrate and urea ammonium nitrate. About 75-80% of nitric acid is used in fertiliser
production. Nitric acid is produced by the reaction of ammonia and oxygen. During
the process, N2O is also produced at a rate usually between 6 kg and 9 kg of N2O
per tonne of HNO3. With the adoption of abatement technologies, emission rates
have been observed at least as low as 0.12 kg of N2O per tonne of HNO3. While
recent robust global data are not available on the quantity of N2O emissions from
nitric acid production, extrapolations using available data would put an estimate ataround 120 Mt CO2-eq in 2020 12 for nitric acid and adipic acid combined (adipic
acid is a chemical used in nylon and PVC production; it is derived from nitric acidand its production process also emits N2O). This is about one-third of the nitrous
oxide emissions from the industrial and waste management sectors, andequivalent to about 30% of global CO2 emissions from ammonia production.
Multiple abatement technologies already exist to limit nitrous oxide emissions fromindustrial facilities. Primary abatement methodologies prevent N2O from formingin the first place, such as by using different materials for the ammonia oxidation
catalyst. Secondary N2O abatement technologies involve placing the catalyst
inside the ammonia oxidation reactor to control N2O immediately after it is formed.
Abatement efficiency can be as high as 98%, although it varies by plant and isusually somewhat lower than this. Tertiary N2O abatement technologies consist ofa separate reactor dedicated to reducing nitrous oxide further downstream, but
before being vented. Abatement efficiency can be between 95% and 98%. Costsof these technologies are relatively low at EUR 0.90-3.20 (USD 1.10-3.80)
per t CO2-eq.
In some parts of the world, N2O abatement catalysts have been installed on most
nitric acid plants. This includes in Europe, largely due to policies such as theEU emissions trading system, as well as in China and a number of otherdeveloping economies through the Clean Development Mechanism under the
Kyoto Protocol. Largely as a consequence of these technologies, nitrous oxide
emissions from nitric acid and adipic acid production fell by 55% from 1990 to2010. Further deployment of such N2O abatement technologies, particularly inregions where they are not yet widespread, will be an important and relatively
easy-to-implement step in reducing the overall greenhouse gas footprint of

In 2010 N2O emissions from nitrous oxide and adipic acid production combined were 104 Mt CO2-eq according to the
IPCC. This is the latest available value for nitric acid and adipic acid production. 2020 N2O emissions from these activities
were estimated by comparing the level of nitric acid demand for ammonium nitrate production between now and then, as
well as the level of N2O emissions from industrial processes and product use published by the FAO. The estimate assumes
no particular improvement in abatement in this period, which is a conservative assumption and may mean that emissions
are somewhat overestimated.

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nitrogen fertilisers. Limiting N2O emissions from nitric acid production will become
even more important if fertilisers that require it as an input are increasingly chosenover urea in order to reduce urea’s use-phase CO2 emissions (discussed below).
N2O emissions from fertiliser use are considerably larger than those from fertiliser
production. While quantifying N2O emissions from agriculture involves
considerable uncertainty, and a range of estimates exist, approximately 50-60%
of anthropogenic N2O emissions are estimated to come directly from agriculture.
This includes emissions from direct application of mineral and manure fertilisers,
cultivation of organic soils, crop residues left on fields, manure left on pastures,
manure management and aquaculture. The FAO estimates that in 2019 theapplication of mineral fertilisers led to emissions of about 2.3 Mt of N2O (or 0.7 Mtof nitrogen from N2O), of which 1.7 Mt N2O were direct and 0.6 Mt indirectemissions. This is equivalent to 670 Mt CO2, or 50% more than the 440 Mt CO2
emitted from ammonia production in that year.
N2O emissions from the application of fertilisers to soil occur through a number ofprocesses. N2O is emitted directly from agricultural soils as a by-product of two
processes by which soil microbes convert ammonia back to nitrogen gas:
1) nitrification, which converts ammonium (NH4+) to nitrate (NO3−); and2) denitrification, which converts nitrate (NO3−) to nitrogen gas (N2). Two indirect
pathways also lead to N2O emissions from fertiliser application: 1) nitrogenleaching and run-off from soils leads to later N2O emissions from ground andsurface waters; and 2) NH3 and NOx is volatised into the air from soils, then later
redeposited onto other soils and waterways, from which N2O is emitted.
A complex array of factors affect how much N2O is emitted from soils as a resultof fertiliser application. There is a natural flux of N2O into the atmosphere as partof the nitrogen cycle. Both mineral and organic fertilisers add to the total amountof nitrogen in the soil, as does leaving crop residues on fields. The rate of N2Oemissions is higher when the total amount of nitrogen available exceeds that taken
up by plants. Other factors influencing N2O emissions include soil characteristics(moisture, temperature, pH, salinity, carbon availability), soil microbial
populations, and irrigation and tillage practices. As of 2019 the IPCC’s default
factors for direct N2O emissions from mineral fertilisers (the percentage of nitrogen
applied in mineral fertiliser inputs that is later directly emitted as N2O) are 1.6% in
wet climates, 0.5% in dry climates and 0.3-0.5% for flooded rice fields. However,actual emissions may vary considerably by site depending on the factors
mentioned above.

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The quantity of greenhouse gas emissions from fertiliser application also varies
by the type of fertiliser. Based on the range of typical practices employed acrossthe world today, greenhouse gas emissions from the use phase of the nitrogenAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

fertiliser life-cycle account for roughly 25-70% of total direct and indirect emissions
from nitrogen fertiliser production and use. 13 As fertiliser production emissions
decrease in the future, fertiliser use emissions – and thus the choice of fertiliser –will become increasingly important for reducing the overall greenhouse gas impact
of fertilisers. N2O emissions from soil per unit of nitrogen fertiliser are highly
dependent on application practices, soil type and conditions, humidity and other
weather conditions, and the use of additional compounds such as nitrification
inhibitors. Different fertiliser types can also react distinctly depending on theconditions. For arable soils and particularly when conditions are dry, nitrate-based
fertilisers result in similar or lower N2O emissions compared to urea and fertiliserscontaining only ammonium. Meanwhile, for grasslands, peat soils and clay soils,
when there are wet conditions, urea and ammonium-based fertiliser may lead tolower N2O emissions relative to nitrate-based fertilisers.
Fertilisers also differ in their direct CO2 emissions. Urea (and its derivative, urea
ammonium nitrate) is a carbon-containing fertiliser (CO(NH2)2) synthesised fromammonia and CO2. The CO2 used to manufacture it is released when it is applied
to soil. When the CO2 is sourced from fossil fuels, as it is today, this adds to thetotal CO2 emissions from fertiliser use. If in future the CO2 were sourced through
DAC or biogenic sources, this CO2 release would be carbon neutral and not add
to the total. In 2020 the use of urea fertiliser led to around 130 Mt CO2 use-phaseemissions, or equivalent to about a quarter of the CO2 emissions from theproduction of ammonia. Due to the contribution of these CO2 emissions during
application (which cannot practically be captured), urea greenhouse gas
emissions from the use phase are about 40% higher than that of the next mostcommon fertiliser, ammonium nitrate.
Various measures can be taken to reduce N2O emissions from fertiliser
application. Nutrient use efficiency measures, such as the 4Rs (right source, rightrate, right time and right place), help minimise nitrogen losses to the environment,
including direct and indirect N2O emissions, and in the case of urea reduce CO2
emissions by lowering the amount of fertiliser applied. Particular techniques thatcan significantly reduce fertiliser N2O emissions include variable-rate fertiliser
application, precision farming and soil microbe inhibitors. Other management
strategies not directly related to fertiliser application can also help reduce N2O
emissions, such as crop residue management, improved irrigation and drainage
techniques to reduce excess water in soils and, depending on the conditions of
the particular site, limiting tillage to enable more oxygen flow (N2O production ishighest in wet, low-oxygen conditions). It should be noted, however, that while

See notes to the figure below for a description of the boundaries and calculations in this estimate of direct and indirectemissions.

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N2O emissions from mineral fertilisers can be reduced, no method is currently
available to eliminate these emissions without also eliminating fertiliser use. In a
net zero world, any remaining emissions from fertiliser use would need to be offset
by carbon removal, whether in the energy sector, in soils or elsewhere.

t CO₂ equivalent/tonne N

Ranges of emission factors by fertiliser product for current process
technology and application practices
20
16
12
8
4
0

NH₃ UreaAN

CAN UAN DAP MAP

AS

NH₃ Urea

CAN UAN DAP MAP

AS

High

Low
Soil CO₂
Precusor-related CO₂

AN

Soil N₂O indirect
Production CO₂ indirect

Soil N₂O direct
Production CO₂ direct

Precusor-related N₂O
IEA, 2021.

Notes: NH3 = ammonia; AN = ammonium nitrate; CAN = calcium ammonium nitrate; UAN = urea ammonium nitrate; DAP =diammonium phosphate; MAP = monoammonium phosphate; AS = ammonium sulphate; N2O = nitrous oxide. The realemission factors for nitrogen fertilisers in a given instance are highly uncertain; ranges are shown here using standard
emission factors and are illustrative. For the direct CO2 emission intensity of ammonia production, low and high values are
based on a range of energy intensities and feedstocks: natural gas-based steam methane reforming with gross natural gas
consumption of 28 GJ/t NH3 (low), and coal gasification with gross coal consumption of 45 GJ/t NH3 (high). Indirect CO2
emissions from ammonia production include emissions from electricity generation with emission intensities of 6 g CO2/kWh(low) and 933 g CO2/kWh (high). Precursor-related N2O emissions include those generated during nitric acid production,using a range of emission factors (0.12-9 kg N2O/t nitric acid) from Brentrup et al. 2016 and Ecofys. Precursor-related CO2
emissions refer to the production-phase emissions generated from upstream products (e.g. the emissions from the productionof ammonia used to produce urea). Emissions from phosphoric acid, sulphuric acid and calcium carbonate production andliming are not included, but are estimated to be negligible on a per tonne N basis. Soil N2O direct and indirect emissions(stemming from nitrification and denitrification reactions) are calculated using emission factors from the IPCC and the EEA
respectively. For direct emissions, the default IPCC factor of 0.01 kg N2O-N/kg N (high) is used along with a reduced valueof 0.006 kg N2O-N/kg N (low), which assumes the use of nitrification inhibitors. This emission factor can vary widely dependingon the conditions and application methods, so this value is only an average. Soil CO2 emissions (stemming from ureahydrolysis) (0.73 t CO2/t urea and 0.26 t-CO2/t UAN) are calculated using emission factors from the IPCC. This CO2 is often
sourced from ammonia production, but is accounted for during the fertiliser use stage (application to soils) rather than
production is often sourced from ammonia production, but is accounted for during the fertiliser use stage (application to soils)
rather than production .

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Upwards of 70% of the life-cycle greenhouse gas emissions from fertilisers take place after
the fertiliser is applied to the soil. Around 90% of the emissions from the production phase
are attributable to ammonia production.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Box 1.5

Chapter 1. Ammonia production today

Methane emissions from fossil fuel operations

Oil, natural gas and coal supply account for nearly one-third of anthropogenic
methane emissions and over 90% of methane sources from the energy sector.
Tackling methane emissions from fossil fuel operations represents one of the bestnear-term opportunities for limiting the worse effects of climate change because of
its short-lived nature in the atmosphere and the large scope for cost-effective
abatement.
In 2020 fossil fuel operations released over 115 Mt of methane to the atmosphere,
equivalent to almost 3.5 Gt of CO2-eq, 14 around 10% of global energy-related CO2
emissions. Coal, oil and natural gas account for similar shares of methane
emissions, but this varies greatly by region. Almost 90% of methane emissions in
China are from coal supply, whereas leaks along the natural gas supply accountfor close to half of related emissions in the United States.
It is complex to allocate methane emissions to a specific end-use like ammonia
production accurately, as fossil fuels are widely traded around the world undervarious contractual arrangements. Using global average emission factors formethane emissions from fossil fuels results in an estimate of 2.3 Mt (70 Mt CO2-eq)
attributable to the fuel inputs to ammonia production. This is equivalent to
0.4 t CO2-eq per tonne of ammonia, or 15% of the CO2 directly emitted during
production on average.
Methane emissions from fossil fuel operations in key ammonia-producing
regions, 2020

IEA, 2021.

Methane global warming potential is considered at 30 over 100 years based on the latest values from the IPCC.

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Chapter 1. Ammonia production today

Nearly 75% of oil and gas methane emissions can be abated with existing
technologies. These can often be deployed at a relatively low cost. Considering
natural gas prices so far in 2021, we estimate that almost 50% of oil and gas
methane emissions can be avoided with measures that would have no net costbecause the value of the captured methane is sufficient to cover the costs of theabatement measure. The technical solutions available to avoid emissions of coalmine methane are more limited, especially after the start of operations, and often
entail higher costs due to the dispersed nature of coal mine methane. However,actions to minimise leaks in coal mines can drive a reduction of almost 45% in themethane intensity of coal supply.
This topic is covered in more detail in other IEA analyses, including Curtailing
Methane Emissions from Fossil Fuel Operations

Impacts on water, soil, air and ecosystems
Inefficient use of fertilisers – including both mineral and organic fertilisers – hasconsiderable impacts on water quality and aquatic ecosystems. Run-off fromagricultural fields carries excess nutrients to lakes and oceans, leading toeutrophication of freshwater and marine ecosystems. In the process ofeutrophication, a high influx of nutrients into a body of water leads to a large
increase in growth of plant organisms such as phytoplankton, more commonly
known as algae. When the phytoplankton die, bacterial decomposition of the deadphytoplankton depletes oxygen levels in the water. This creates a low-oxygen(hypoxic) environment that is inhospitable to fish and other animal life.
Researchers have found that more than 500 sites in coastal waters have reported
hypoxic conditions since 1950. An example of the impact is the Gulf of Mexico
hypoxic zone, which has become an annual summer occurrence. The Mississippi
River drains a 3.2 million km2 catchment area from Canada down through thecentral United States – the third-largest in the world – into the gulf. Nitrogen andphosphorus fertilisers, animal manure, human waste and industrial waste allcontribute to the nutrient enrichment. The size of the hypoxic zone can varyconsiderably from year to year. Over the past 36 years of measurement, theaverage size has been 14 000 km2, approximately the area of Northern Ireland.
Other examples around the world abound, from the world’s largest hypoxic zone
in the Baltic Sea to algal blooms in one-third of China’s lakes. In addition to their

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impacts on oxygen availability, algal blooms can have direct toxic effects. The

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Chapter 1. Ammonia production today

toxins created can affect smaller fish and shellfish that consume the algae, andthey can also be passed up the food chain to other fish, birds, marine mammals,
and reptiles.
Nitrogen pollution can also have impacts on soils and terrestrial ecosystems.
Long-term excessive fertilisation can cause soil acidification and salinisation,
reducing crop productivity and potentially resulting in loss of arable land. Nitrogen
pollution also contributes to acid rain and direct ammonia deposition, which candamage forests and grassland ecosystems, in addition to negatively affecting
aquatic ecosystems. Ammonia – both when applied directly on agricultural fields,
and when volatised and redeposited further away – can have localised effects
directly toxic to soil organisms.
Nitrogen fertiliser use also contributes to air pollution. The air pollutants involved
include: nitrogen oxides (NOx), which are directly emitted from agricultural fields;
particulate matter, which can be formed from NH3 emitted from agriculture; andground-level ozone, which can be formed from NOx emitted from agriculture.
These air pollutants contribute to a variety of human health problems, including
cardiovascular and respiratory disease.
Various efforts are underway to improve nutrient use efficiency and thus reduce
the environmental impacts of nitrogen fertiliser use, including efforts led by theindustry itself. Nonetheless, according to the United Nations, much stronger efforts
are needed to reduce nutrient pollution. See Chapter 3 for examples of existing
initiatives and recommendations for accelerating progress.
The environmental benefits that arise from using fertiliser should also be
acknowledged. Fertilisers enable higher crop yields relative to organic agriculture,and thus can produce the same amount of food and fibre from a smaller land area.
As a result, less land needs to be brought into agricultural production when using
mineral fertilisers. Preserving more natural ecosystems, such as forests andgrasslands, has the benefit of preserving biodiversity and maintaining naturalcarbon sinks. Reduced land use requirements can also prevent agriculture fromencroaching on less suitable land, thus reducing degradation of soils anddesertification.
This is not to say that organic agriculture should not be pursued due to its higher
land use requirements. Indeed, researchers point out that there are other ways toreduce land use requirements. Measures could be taken to reduce food wastage,
and diets could be shifted towards lower reliance on animal products, thus
reducing livestock feed requirements. As such, total crop production requirements

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could be lowered while sustaining the same human population. All things

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Chapter 1. Ammonia production today

considered, moving towards a more sustainable agricultural system will require
effort on many fronts and finding a balance between the benefits and impacts ofdifferent agricultural production methods. In all likelihood, agricultural production
with mineral fertilisers and with organic methods will both play a role in asustainable future, and maximising efficiency across agricultural value chains will
help minimise the various aforementioned environmental impacts.

What will happen tomorrow to today’s CO2 emissions
from ammonia production?
The ammonia industry’s infrastructure is like a container ship – it has inertia andis slow to change direction. While producers are constantly responding to pricefluctuations and changes to their order books, short of major disruption to theeconomy, the behaviour of the system tends to maintain fairly stable trends.
Understanding the main pieces of equipment that comprise the emissionsintensive components of the industry’s infrastructure is critical to assessing theunderlying momentum in the system. Existing infrastructure certainly presents
challenges for reducing emissions, but there are also technology opportunities tobe seized.
The amount and type of energy that the industry uses at any given time are theconsequence of past investments in ammonia production facilities. It is notpossible to predict accurately the future energy consumption and subsequentemissions of these installations, as there is scope for adjusting both the quantities
and types of energy carriers that they will use and the length of the period they will
actually remain in operation. In the end, decisions about whether to cease,continue or extend the operation of a given facility will be based predominantly on
its operational cost relative to existing or emerging alternatives, and/or the ability
to obtain a sufficient return in a given economic and regulatory context. However,examining potential trajectories of various emission streams, under a stated set ofassumptions, is a useful starting point to examine the challenge posed by existing
assets and our room to manoeuvre in the coming decades.

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The current age profile and typical lifespan of the world’s ammonia plants canprovide a guide as to the rate at which the existing stock of equipment in theammonia industry will be decommissioned. Without any further investment in new
capacity, emissions from ammonia production would decline, but not as fast as
one might think. If operated under the conditions typically observed in recent years(similar energy intensities, capacity factors and fuel mixes), existing ammonia
capacity could lead to between 4.4 Gt and 15.5 Gt of CO2 emissions, consideringa typical plant lifetime range of 20-50 years. This is equivalent to 10-35 years’Ammonia Technology Roadmap
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Chapter 1. Ammonia production today

worth of emissions from ammonia production in 2020, and excludes any emissions
from the new capacity needed to replace existing facilities and meet rising demandin the future.

Mt CO₂

Projected emissions from existing ammonia plants under different
lifetime assumptions
500
400
300

+ 3.6 Gt CO2+ 3.7 Gt CO2

200
100

+ 3.7 Gt CO2~ 4.4 Gt CO2

0
2020

2030

2040

20-year lifetime assumption
40-year lifetime assumption

2050

2060

2070

30-year lifetime assumption
50-year lifetime assumption
IEA, 2021.

Emissions from existing ammonia production facilities could amount to 4.4-15.5 Gt CO2,
equivalent to 10-35 years’ worth of emissions based on ammonia production in 2020.

A key factor in estimating the future emissions from existing ammonia facilities istheir current age. A plant built in one year is highly unlikely to be decommissioned
the next, but equally no facility is designed to operate indefinitely, so the starting
point is of critical importance in estimating the period over which these assets
might continue to operate. Using data provided by the International Fertilizer
Association, 15 the global average age of ammonia plants in 2020 is estimated to
be around 24 years. Figure 1.10 shows the average age and output of global
facilities by country. The oldest plants in the world still operating today were
installed just under a century ago, although these are clearly outliers when viewing
the national average age data available with this study.
China accounts for 30% of ammonia production capacity globally, and theseassets are both young (around 12 years old on average) and emissions-intensive

Plant-level data held by the International Fertilizer Association are confidential. National averages were calculated andprovided for use in this study.

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15

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Chapter 1. Ammonia production today(85% are coal gasification units). The age of individual plants within the country
will vary considerably, but China’s growth in output over the past 20 years (morethan 60%) shows the relatively short timeframe over which most of these
installations have been added. Industrial facilities in China also tend to be replaced
more frequently than in other regions of the world, often owing to mandates
targeting the replacement of inefficient capacity. Typical asset lifetimes in the
power and heavy industry sectors tend to be in the range of 25-35 years,
compared with 30-50 years globally. The average age of the world’s ammonia
plants excluding China was around 29 years in 2020.
On the right-hand side of the large share of Chinese capacity is significant
variation in average age across the other regions. At one end are the recently
installed plants in Africa (less than 18 years on average) and capacity in Europe
at the other (around 40 years on average). Plants in the Middle East tend to be at
the lower end of the age profile, at 19 years old on average, and plants in theAmericas towards the upper end (35 years).

Years

Geographic distribution and average age of ammonia production
facilities in 2020
60
Germany
50
India

40
30
China

20

RussiaUnitedStatesSaudi Arabia

10
0

0

40

80

North America

Central and South America

120
Europe160
AfricaMiddle East

200

240
Mt capacity

Eurasia

Asia Pacific
IEA, 2021.

Source: National average age data provided by the IFA.

Around 30% of the existing stock of ammonia production capacity is based in China, withan average age of 12 years, compared with a global average age of around 24 years.

The average age since installation only tells part of the story, however. Like
Theseus’ ship, the extent to which many of the older plants have been refurbishedand upgraded may render them unrecognisable relative to their original installation

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arrangement. Many of their parts will have been refurbished and replaced as they

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Chapter 1. Ammonia production today

wear, and in order to maintain competitiveness and meet evolving regulatory
standards, owners are likely to have upgraded them over time to improve energy
performance and reduce pollution. A detailed maintenance and upgrade record
for every plant in the world was not available for this study, explaining the rangeof prospective lifetimes (20-50 years) we have used in estimating the potential
emissions from the existing stock of plants.
To the extent that much of the existing capital stock will still be in operation
decades into the future, the associated CO2 emissions are often considered to be“locked in”. However, these emissions are by no means destined to take place,and there are several strategies and technologies that can be deployed to varying
extents to help “unlock” emissions from existing infrastructure:

Early retirement or interim underutilisation of assets, either because of achange in market conditions that makes them uneconomic, or because of laws
and regulations that force early closure or partial operation.

Refurbishment and retrofitting, such as enhanced process integration to boost
energy efficiency, or the application of emission reduction technologies such as
replacing a portion of the natural gas inputs with electrolytic hydrogen or applying
CCS.



Fuel switching and incremental blending, sometimes combined with a degreeof retrofitting, to allow assets to use less carbon-intensive fuels or recovered fuels.

In the regions where industrial capacity is generally older, earlier retirement thanmight otherwise be desirable without efforts to reduce emissions will be lesspainful economically, as the plants would already have provided a substantial
return on their original investment. In the countries with younger assets, greater
emphasis is likely to be placed on retrofitting with more energy-efficient and lesscarbon-intensive technologies, where it is economic to do so.
Beyond applying the mitigation strategies above, existing production facilities canbe used to bridge the gap to deployment of innovative near-zero-emission
technology. This is especially important for the sustainable transition of the assets
used to produce ammonia, where readily available alternatives for dramatic
reductions in emission intensity are not yet widely accessible to the market.
Strategically timed investments to partially renew existing infrastructure – or adecision to forgo investment – can form an important strategy to avoid investment
in new capacity occurring just at the wrong time.
The estimates of emissions from existing assets associated with the 20-50-year

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lifetime range explored above can be used to illustrate the potential impact ofAmmonia Technology Roadmap
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Chapter 1. Ammonia production today

misalignment between the phase-out of existing facilities and the availability ofnear-zero-emission technologies to replace them. The 30-year difference in the
lifetime range could be considered equivalent to a full cycle of new or renewed
investments in emissions-intensive production capacity, leading to around
10 Gt CO2, or more than 20 years’ worth of emissions from ammonia production

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in 2020.

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

Chapter 2. The future of ammonia
production
Highlights• In the Sustainable Development Scenario – a pathway fully aligned with the“well below 2°C” goal of the Paris Agreement – direct CO2 emissions fromammonia production fall by over 70% by 2050 relative to today. The Net Zero
Emissions by 2050 Scenario describes a trajectory for the ammonia industry
that is compatible with reaching net zero emissions globally for the energy
system by 2050, where emissions fall by 95% by 2050. In contrast, the Stated
Policies Scenario, projecting forward current trends, sees emissions decline by
only 10%.
• In the Stated Policies Scenario, ammonia production increases by 37% by 2050,
driven primarily by economic and population growth. Strategies to improve enduse efficiency (e.g. nitrogen fertiliser application) lead to slower growth in total
production (23%) in the Sustainable Development Scenario, thereby accountingfor 20% of the emissions reductions achieved.
• Energy efficiency contributes about 25% of emission reductions in the
Sustainable Development Scenario, including adoption of BAT, operational
improvements and switching from coal to less energy-intensive natural gasbased production. 10% of emission reductions in this scenario stem fromsubstitution of coal with less emissions-intensive fuels.
• The deployment of near-zero-emission technologies contributes the largest
share of emission reductions in the Sustainable Development Scenario,
including electrolytic hydrogen (30%) and CCS (15%) technologies. Thisrequires more than 110 GW of electrolyser capacity and 90 Mt of CO2 storageby 2050. In the Net Zero Emissions by 2050 Scenario, the additional emission
reductions are driven by even more rapid deployment of these technologies.

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• Near-zero-emission technologies are not yet available at commercial scale inthe marketplace. CO2 separation is an inherent part of ammonia production
today, but permanent storage of the CO2 is not yet widely adopted. Electrolysisbased ammonia production has already been conducted at scale using highload factor electricity, but challenges remain to use hydrogen produced from
VRE. The Sustainable Development Scenario requires USD 14 billion in annual
capital investment for ammonia production to 2050. Of this, 80% is in near-zeroemission production routes. The Net Zero Emissions by 2050 Scenario requires
only slightly higher annual investment – USD 15 billion to 2050.

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

Three contrasting futures for the ammonia
industry
The future development of the ammonia industry will depend on, among otherfactors, advances in production technology, energy and climate policies,
population growth and economic progress. Scenario analysis is a useful tool tohelp understand how ammonia production may evolve in the future and allows us
to gain insights into the implications for the energy system and our climate goals.
Understanding the current trajectory of the sector and the implications ofalternative pathways can help inform decision makers in the technology, policy
and consumer realms.
This chapter presents three scenarios for the future of ammonia production in the
period 2020-2050 (see Box 2.1). The Stated Policies Scenario reflects thesector’s current trajectory, influenced by existing and announced policies. The
Sustainable Development Scenario presents a pathway with regional detail thatputs the energy system as a whole on a trajectory compatible with the goals of theParis Agreement. The Net Zero Emissions by 2050 Scenario, modelled
regionally but presented globally, lays out a pathway to net zero emissions fromthe energy system by the middle of the century. None of these scenarios aims topredict the future, but together they can help us explore a range of possible futuresthat are compatible with stipulated outcomes.
Ammonia production currently accounts for around 450 Mt of CO2 emissions per
year globally, equivalent to the territorial CO2 emissions from fossil fuelcombustion of South Africa. Ammonia accounts for almost a third of emissions
produced within the chemical and petrochemical sector, more than any single
other industrial chemical. The Stated Policies Scenario shows that under current
and announced policies and technology trends, emissions from ammonia
production would peak in the next 10 years at around 460 Mt CO2 and gradually
decline to around 400 Mt CO2 by 2050 (Figure 2.1). In the Sustainable
Development Scenario emissions from ammonia production fall by at least 70%
by 2050 relative to 2020. These levels are to be achieved while global ammonia
production for existing agricultural and industrial applications increases at an
average annual rate of 0.7% per year, from 185 Mt today to 230 Mt in 2050, a
somewhat slower rate than the 1.5% annual growth over the previous three
decades.
The regional pace of emissions intensity reductions in the Sustainable

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Development Scenario is broadly similar between regions, except for those inAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

countries that have pledged to reach net zero emissions (e.g. the European Unionand several other countries in Europe, and the United States and Canada in North
America), or carbon neutrality (in the case of China) by a specific date. In the Net
Zero Emissions by 2050 Scenario the global pace of emission reductions is evenmore ambitious, declining by 95% by 2050.
The reduction in emissions from ammonia production is broadly similar to theemissions trajectory of other industrial sectors. For example, in the Sustainable
Development Scenario total chemical sector emissions decline by 65% by 2050.
Similarly, in the same period emissions in the cement and steel sectors drop by
70% and 60% respectively. However, emission reductions across heavy industry
take place at a slower pace than in other areas of the energy system, such as inelectricity generation, where emissions are reduced by 95% within the same
timeframe in the Sustainable Development Scenario, and reach net zero by 2040
in the Net Zero Emissions by 2050 Scenario.

2.0

Chemical and petrochemical direct emissions

Mt CO2Gt CO₂

Direct CO2 emissions from the chemical sector and ammonia production
by scenario and region

1.5

500

Direct emissions from ammonia production

400
300

1.0
200
0.5
0.0

100

2020

2025

2030

2035

STEPS - chemicals total
SDS - chemicals total
NZE - chemicals total

2040

2045

2050

0

STEPS - ammonia
SDS - ammonia
NZE - ammonia

2020

2025

2030

Asia Pacific
EuropeMiddle East

2035

2040

North America
Eurasia

2045

2050

CSA
Africa

IEA, 2021.
Note: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050
Scenario; CSA = Central and South America.

In the Sustainable Development Scenario emissions from ammonia production are reducedby 75% by 2050, accounting for around 30% of direct emissions from the chemical sector
through to 2050.

Deep emission reductions in the industrial sector, including ammonia production,
face a different set of challenges to the power sector and other sectors of the

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energy system. Key challenges for heavy industry include the need to provide

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Chapter 2. The future of ammonia production

high-temperature heat, the use of fossil fuels as chemical feedstocks, theprevalence of process emissions (particularly in cement and ammonia production)and the need for chemical reduction agents (in iron and steel production). At
present there is limited availability of technologies in the market to address thesechallenges and achieve deep reductions in emissions. Long-lived assets are afurther challenge, slowing the potential pace of technology change that is possible
without early retirements. The high degree of competition faced by many industrial
products makes it difficult for early adopters to invest in near-zero-emission
technologies while maintaining viability. The hydrogen production step in ammonia
manufacture, in particular, is one of the single most emissions-intensive processes
in the chemical industry. Reducing its emissions will be necessary to achieve deep
emission reductions across industry as a whole, and to contribute to the broader
energy system transition outlined in the Sustainable Development Scenario and
Net Zero Emissions by 2050 Scenario.

Box 2.1

Scenario definitions and the broader energy system context

This Ammonia Technology Roadmap is part of the Energy Technology
Perspectives (ETP) series, which since 2006 has been providing insights into
technology, energy and environmental issues and their interdependencies. In 2020
the IEA revamped the ETP series with its launch of ETP 2020, the key focus ofwhich was technology opportunities for reaching net zero emissions from theenergy sector, and the related energy technology development and innovationneeds.
To explore a range of possible futures for ammonia production over the next three
decades, this technology roadmap follows three scenarios, two of which are
explored at the energy system level in ETP 2020:
The Stated Policies Scenario projects forward current trends in the energy
sector, taking into account existing and announced policies, including thenationally determined contributions established under the Paris Agreement. This
scenario is not the key focus of this technology roadmap, but rather is used toprovide a baseline for analysis.

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The Sustainable Development Scenario comprises a pathway for the energy
system that is compatible with achieving the goals of the Paris Agreement and is
the analytical focus of this technology roadmap. This scenario reaches “net zero”
CO2 emissions for the global energy system as a whole by 2070. Alongside theseclimate-related goals, the scenario addresses other key elements of theUnited Nations Sustainable Development Agenda embodied in its SustainableAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

Development Goals (SDGs), including obtaining universal access to modern
energy and a dramatic reduction in energy-related air pollution.
The rising number of net zero emissions targets announced by different countries
was reflected within ETP 2020 using the Faster Innovation Case, which evaluatedopportunities for reaching net zero emissions across the whole energy system by
2050 through technology innovation. In May of 2021 the IEA published Net Zeroby 2050: A Roadmap for the Global Energy Sector, which provides in-depth
analysis of the necessary milestones for the energy system as a whole to achieve
the goal stipulated in its title. This technology roadmap builds on the global resultspresented in that publication using the Net Zero Emissions by 2050 Scenario.
None of the scenarios above should be treated as predictions or forecasts, butrather as possible pathways for the energy system, given a series of pre-stipulated
goals and assumptions. The aim is that they collectively provide insights into thepotential impacts and trade-offs that can occur, assisting decision makers ingovernment and other stakeholders. For the latest information on the broader
energy system context of the scenarios presented in this technology roadmap,
please see the chemical sector and overall energy system analysis presented in
Chapter 4 of ETP 2020 and Chapter 3 of Net Zero by 2050: A Roadmap for the
Global Energy Sector.

The outlook for demand and production
Demand for ammonia is driven in large part by demand for mineral nitrogen
fertilisers (around 70% of current ammonia production), with the remainder ofdemand stemming from a range of industrial applications (see Chapter 1). With
respect to examining the potential future demand for fertilisers in particular, it is
the nitrogen (N) nutrient content that is of most interest, irrespective of the specificfertiliser product that is used. Industrial N demand can also be quantified in thesame units. In this technology roadmap we only deal with demand for mineral N,
which is initially produced in the form of ammonia – demand for nitrogen as partof the broader naturally occurring nitrogen cycle or in future uses for energy
applications are not included within our core scope (see Box 1.1).
In 2020 annual global N demand reached 152 Mt. In the Stated Policies Scenario
demand for nitrogen grows by almost 40% by 2050 relative to today, reaching
208 Mt, driven largely by economic and population growth. A stronger push on
nutrient use and material efficiency strategies leads to slower growth in the
Sustainable Development Scenario and Net Zero Emissions by 2050 Scenario,

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such that nitrogen demand is about 10% lower in 2050 relative to the StatedAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

Policies Scenario, but still 25% higher than today. In both scenarios Asia Pacificcontinues to dominate global ammonia production, even as its production sharedeclines from 47% today to 42% in 2050. Strong growth is seen in the Middle East,
Africa, and Central and South America, each of which roughly doubles its
production levels by 2050.

The outlook for nitrogen demand, nutrient use efficiency
and material efficiency
Nitrogen demand drivers
Total demand for nitrogen-based products as well as nitrogen demand per capita
have been steadily increasing, driven by increasing demand for fertilisers and forother uses. Since 2010 global demand for nitrogen has grown on average by 1.7%
per year, reaching 152 Mt in 2020. Fertiliser demand has grown at an annual
average rate of 0.9% since 2010. The remaining non-fertiliser portion of demand
grew at a considerably faster rate of 4% per year. Apart from fertilisers, nitrogenproducts are used in a wide range of industrial applications, including: explosives,
plastics, textiles, pharmaceuticals and dyes; for removing impurities from stainlesssteel in construction and manufacturing processes; as a refrigerant; as a cleaning
agent; and in agents for reducing nitrous oxide emissions (see Chapter 1).
In the Stated Policies Scenario demand for nitrogen for conventional uses grows
by almost 40% by 2050 relative to today, reaching 208 Mt. Total demand grows at
a rate of 1.0% per year, a somewhat slower rate than in the 2010-2020 period.
The slower growth can be attributed to the non-fertiliser demand segment, whose
growth rate falls to 1.3% per year. China’s rapid industrial expansion following theturn of the millennium is not repeated in our projection horizon, as its economy
shifts towards higher-value manufacturing and a larger share of consumption-led
growth – this is the main cause of slower growth in the non-fertiliser demand
segment. Meanwhile, demand for fertiliser production grows at a similar ratecompared to the past decade (around 0.9% per year), driven by increasing food,feed and fibre demand in developing economies. The split between the different
nitrogen-based products used in agriculture for fertilisation remains broadly similar
to today – urea remains the most common nitrogen-based product, accounting for

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60% of the nitrogen applied to soils via fertilisers.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

25025

250

25

200

20020

20

150

15015

15

100

10010

10

50

505

5

0

2010

2015

00
2020

2025

2030

2035

2040

2045

2050

0

kg N/capita

Mt N

Nitrogen demand by market segment and per capita
Fertiliser
Non-fertiliser
STEPS
Demand per capita(SDS and NZE)
Demand per capita(STEPS)

IEA, 2021.
Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050
Scenario. Non-fertiliser includes industrial nitrogen use, losses during manufacturing processes and stored ammonia orammonia products. Ammonia used as an energy carrier is not included.

By 2050 the demand for nitrogen per capita increases by 10% in the Stated Policies
Scenario. In the Sustainable Development Scenario and Net Zero Emissions by 2050
Scenario, the demand per capita is similar to today, despite total nitrogen use increasing by
25%.

In the Stated Policies Scenario the global population increases by 25% between
2020 and 2050, and global GDP by 150%, compared with growth in nitrogen
fertiliser demand of 40%. Growing populations require higher agricultural
production to sustain them. Economic development changes the nature of bothfood production and food consumption. On the production side, economic
development proceeds in tandem with an increasing shift away from smaller-scale
subsistence farming towards larger-scale industrial farming, the latter of whichtends to be more intensive and rely more heavily on fertilisers and other chemical
inputs. On the consumption side, increasing wealth tends to drive higher
consumption of meat and dairy products, together with the feed that animals
require. The human consumption of animal products requires more crop
production per calorie compared to obtaining a calorie directly from plants, due tothe conversion ratio of livestock feed to animal product. As such, animal products
are more fertiliser-intensive overall. Due to these factors, as economies grow, theirper-capita fertiliser demand tends to increase. As economies reach maturity,
however, per-capita demand tends to saturate, and fertiliser demand growth slows
even with continued economic growth.

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Measures to improve nutrient use efficiency also have a moderating impact on
demand growth (see the following sub-section). Such measures tend to be applied
most assertively in advanced economies with stringent environmental regulations.
Meanwhile, increasing use of bioenergy may contribute to higher fertiliser

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

demand. This could result either from the use of crops grown specifically forbiofuels or the use of agricultural residues that would otherwise have been left on
the fields and contributed nutrients to the soil.
At the global level, nitrogen demand per capita has grown modestly over the past
decade to reach just under 20 kg per capita in 2020. At the country level,
per-capita demand varies considerably, tending to be higher in advanced
economies than in emerging and developing economies. The level and nature of
agricultural activity in the country also has an influence. Countries that are major
exporters of agricultural products will tend to have higher fertiliser consumption
per capita, while importers have lower consumption. Other factors can contributeto regional variability in fertiliser application rates, including fertiliser prices,availability of manure and other alternatives, the types of crops grown, soil andclimate conditions, application practices and environmental policies.
At the global level, nitrogen demand for fertilisers – the key driver of total nitrogen
demand – was 14 kg per capita in 2018. To provide a sense of demand in someof the largest agricultural-producing countries, per-capita demand was 35 kg in
the United States, 22 kg in Brazil, 20 kg in China and 13 kg in India. Countries withthe highest consumption per capita are generally those that have large volumesof net agricultural exports relative to domestic production. These include
New Zealand, Ireland and Canada, all with per-capita demand of 75 kg or more.
Meanwhile, many countries in Africa have per-capita demand of 5 kg of less.
In the Stated Policies Scenario per-capita nitrogen demand from all sources grows
slightly to reach about 21 kg in 2050. Underlying the relatively flat demand per
capita at the global level are more complex regional dynamics. In general, matureeconomies see declining demand per capita. They have reached a saturation
point in the economic growth-related factors that drive up consumption. At thesame time they are increasingly pursuing nutrient use efficiency measures out ofboth economic and environmental motivations. Conversely, many emerging anddeveloping economies continue to see growth in demand per capita, as theytransition to larger-scale agricultural operations, increase meat consumption andare able to afford more fertiliser inputs. The net effect is relatively flat demand per
capita globally. With a growing population, however, this does lead to growth intotal nitrogen demand.

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In the Sustainable Development Scenario the more assertive pursuit of measures
to improve nitrogen use efficiency leads to slower total nitrogen demand growth of
0.7% per year and a total nitrogen demand increase of 25% by 2050. Global
nitrogen demand per capita stays broadly constant relative to today, at around
20 kg per capita. Other activity shifts in this scenario will also affect demand fornitrogen-based products. With regard to explosives used for mining, someAmmonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

activities will decrease, including mining for coal and for certain minerals andmetals (e.g. iron ore, limestone used for cement) due to the pursuit of material
efficiency strategies. Meanwhile, mining for a variety of critical minerals(e.g. lithium, copper, rare earth elements) will increase for clean technologies suchas batteries and renewable energy. The build-out of more rail systems will require
more explosives (for underground metros, tunnelling in mountainous areas, etc.),
while decreased demolition due to building reuse and lifetime extension will reduce
explosives demand. Requirements for agents to reduce nitrous oxide emissions
in power plants and diesel engines will decrease with the shift away from fossil
fuels. Not every aspect of this demand profile for ammonia in industrial
applications could be assessed individually in the context of this technology
roadmap. In the context of the Sustainable Development Scenario and Net Zero
Emissions by 2050 Scenario, we have assumed that the increases and decreases
mentioned above offset each other, and identify this area as deserving further
study. Nitrogen demand in the Net Zero Emissions by 2050 Scenario is very
similar to the Sustainable Development Scenario. Fertiliser-related nitrogen use
efficiency measures are already fully exploited in the Sustainable Development
Scenario.
In the Sustainable Development Scenario the use of urea-based fertilisers
declines by 28% by 2050 compared to today, replaced by ammonium nitrate andcalcium ammonium nitrate. Urea is dominant today due to its high nitrogen content(46%) and greater convenience for storage, transport and application relative tothe other derived fertiliser products. However, in the context of a sustainable future
for energy and agricultural systems, urea has the disadvantage that its production
requires CO2 that is later released during hydrolysis after its application to the soil.
Urea therefore moves CO2 from where it can be managed (i.e. captured or
avoided) in the production phase of nitrogen fertilisers to the use phase, where,
when it is released, it is very difficult to fully mitigate.

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This CO2 from urea use – around 130 Mt CO2 in 2020 – adds to the total CO2
emissions of the agricultural sector if derived from fossil fuels, as it is currently.
For context, this is equivalent to about 30% of the total emissions generated fromammonia production, a substantial quantity when considering global objectives toreach net zero emissions. While the CO2 could be sourced from climate-neutral
non-fossil sources – via direct air capture or capturing CO2 from biogenic sources– doing so would make urea less cost-competitive compared to other fertilisers inmany instances. Thus, the Sustainable Development Scenario sees greater
uptake of ammonium nitrate and calcium ammonium nitrate, which do not release
CO2 during their use. While urea use declines considerably, it continues to be usedin some contexts, particularly for applications where nitrated-based fertilisers
would lead to higher nitrous oxide emissions (e.g. in wet conditions on heavy soils)

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

and in developing economies where infrastructure for safe handling and transportof nitrate-based fertilisers may not be yet fully developed. Certain industrial
applications for urea, such as durable resins (e.g. urea formaldehyde) also see
continued growth in the Sustainable Development Scenario and Net Zero
Emissions by 2050 Scenario, whereas others see significant declines (e.g. urea
used to reduce nitrogen oxide [NOx] emissions from diesel engines).
Aside from conventional applications, the Sustainable Development Scenario and
Net Zero Emissions by 2050 Scenario see growth in ammonia demand for use as
an energy carrier, primarily as a maritime fuel and in the power sector. In addition
to the 230 Mt of ammonia demand from conventional uses in 2050, 125 Mt ofammonia is used as an energy carrier – this brings total ammonia demand to355 Mt, about twice the 185 Mt produced in 2020. The use of ammonia as anenergy carrier is outside the scope of this roadmap (these quantities are notincluded within the core scenario results presented in this chapter), but the main
considerations and results from a broader energy system analysis are
summarised in Box 2.2. The topic is addressed in more detail in other IEA
publications, including the Global Hydrogen Review 2021 and The Role of LowCarbon Fuels in Clean Energy Transitions of the Power Sector.

Mt N

Nitrogen demand by final product by scenario
250

250

200

200

150

150

100

100

50

50

0

0

2010

2015

2020

2025 2030 2035 2040 2045 2050 2025 2030 2035 2040 2045 2050
STEPS

Ammonia (direct)

Urea

AN

CAN

SDS and NZE
UAN

Other fertilisers

Ammonia (non-fertiliser)
IEA, 2021.

Notes: AN = ammonium nitrate; CAN = Calcium ammonium nitrate; UAN = urea ammonium nitrate; STEPS = Stated Policies
Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050 Scenario. Ammonia used as anenergy carrier is not included.

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In the Sustainable Development and Net Zero Emissions by 2050 Scenarios nitrogenprovided through the use of urea and urea-containing fertilisers falls by 29% by 2050,
substituted mainly by ammonium nitrate and calcium ammonium nitrate.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Box 2.2

Chapter 2. The future of ammonia production

The potential use of ammonia as an energy carrier

Ammonia has the potential to be used as a low-emission energy carrier in a variety
of applications. Ammonia has the potential to be used as a low-emission energy
carrier in a variety of applications. At 18.65 GJ/t and 12.7 GJ/m3 – on a lower
heating value basis and when in liquid state – it has around 40% of the energy
density of gasoline, and it contains no carbon atoms, so produces zero CO2emissions when combusted. At 18.6 GJ/t and 12.7 GJ/m3 on a lower heating value
basis, it has around 40% of the energy density of gasoline on a mass basis and
40% on a volumetric basis, and it contains no carbon atoms, so produces zero CO2emissions when combusted.
The key advantage ammonia has over pure hydrogen as a low-emission fuel is its
higher volumetric energy density and liquefaction temperature, making it mucheasier to transport and store. In 2020, 185 Mt of ammonia were produced andaround 20 Mt of it globally traded. This means that for ammonia, when comparedto hydrogen, the infrastructure and practices to support safe and reliable storage,
distribution and export are already highly developed. It is for these reasons thatammonia is gaining attention for its potential role in reducing emissions in specificsub-sectors of the energy system, particularly in power generation and as amaritime fuel. These uses of ammonia are outside the core analytical scope of thistechnology roadmap (see Box 1.1), and are covered in more detail in other IEA
publications, including the the Global Hydrogen Review 2021 and The Role of LowCarbon Fuels in Clean Energy Transitions of the Power Sector.
Ammonia can be used for many purposes in the power sector in the context of alow-carbon transition. Countries with limited direct access to sources of low-carbon
electricity could use ammonia as a vector for hydrogen imports. Ammonia can beproduced in regions with abundant renewable resources, or with low-cost natural
gas twinned with CO2 transport and storage infrastructure, and shipped at relatively
low cost to importing regions. Then the ammonia can be cracked to yield purehydrogen for use in gas turbines, or used directly by being fed into existing coal
power plants in a co-firing arrangement.

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Co-firing a 1% share of ammonia was successfully demonstrated by Chugoku
Electric Power Corporation at one of its commercial coal power stations in 2017.
JERA, another Japanese utility, plans to demonstrate a 20% co-firing share ofammonia at a 1 GW coal-fired unit by 2025. The direct use of ammonia in gas
turbines has to date been successfully demonstrated only in micro gas turbineswith a power capacity of up to 300 kW. The low combustion speed of ammonia
and flame stability have been identified as issues preventing its use in larger gas
turbines, alongside the matter of increased NOx emissions. However, Mitsubishi
Heavy Industries has announced plans to commercialise by 2025 a 40 MW gas
turbine directly combusting 100% ammonia. NOx and nitrous oxide (N2O)
emissions can and must be managed with end-of-pipe technologies (such as

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

scrubbers) – the resulting air pollution and climate impact of these gases would
significantly erode the benefits of adopting ammonia as an energy carrier if they
were not.
Ammonia can also be used as a seasonal storage medium for the power sector,
whereby electricity can be converted into ammonia when it is in surplus, andburned in power plants at times when solar PV and wind are scarce. Ammonia isan order of magnitude cheaper than batteries for storing energy for inter-seasonal
periods. Siemens demonstrated the use of ammonia for electricity storage during
2018 in the United Kingdom by converting wind electricity via electrolysis intohydrogen and then into ammonia for storage. The stored ammonia was then usedin an internal combustion engine to produce electricity at a time of need.
Ammonia is particularly well suited to serve as a fuel for ocean-going vessels.
Almost 200 harbours worldwide have ammonia terminals that serve theinternational trade of around 20 Mt of ammonia every year. The main hurdles forusing ammonia as a marine fuel is that it is toxic, and its use can lead to NOx andN2O emissions. The fact that ammonia has been used as a refrigerant gas for
decades highlight that industry actors have gained significant expertise in handlingit safely.
Ammonia use as an energy carrier in the Sustainable Development Scenario
and the Net Zero Emissions by 2050 Scenario
Shipping sector ammonia demand

EJ

Mt

Ammonia demand by sector
600
500
400

5.0

50%

4.0

40%

3.0

30%

2.0

20%

1.0

10%

300
200
100
0

2020

2050 SDS

Power generation
Existing uses

2050 NZE

Maritime fuel

0.0

2020

National

2050 SDS

International

2050 NZE

0%

Share of TFC (right axis)

IEA, 2021.
Notes: SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050 Scenario; TFC = total final
energy consumption in the maritime shipping sector. “Existing uses” refers to current agricultural and industrial uses,
coinciding with the core analytical scope for this technology roadmap.

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Two of the world’s leading maritime engine manufacturers (MAN and Wärtsilä) aredeveloping ammonia-fuelled internal combustion engines and are expecting to
make them commercially available by 2024. MAN stated that by 2025 it plans tomake an ammonia retrofit package commercially available, which will facilitate theAmmonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

conversion of an existing fossil-fuelled vessel into a low-emission one.
“Ammonia-ready” is becoming established as a designation for vessels that aredesigned to be converted to run on ammonia in the future.
In the Sustainable Development Scenario and Net Zero Emissions by 2050
Scenario, ammonia-fuelled maritime vessels start to be adopted in the mid-2020s.
Container shipping is the first sector to see ammonia-powered vessels enter the
fleet, because the routes these ships operate on are fairly consolidated and the
additional cost can be spread across many customers. Other early movers are
expected to be tankers carrying energy commodities that already have the storage
capacity and operational experience of handling fuels.
In the longer term, ammonia is considered to be the “destination fuel” forocean-going vessels in these scenarios, accounting for around one-quarter of total
final consumption in national and international maritime shipping in 2050 in the
Sustainable Development Scenario, and around 45% in the Net Zero Emissions
by 2050 Scenario. By then, the total tonnage of ammonia used as a shipping
fuel – which does not exist today at a commercial scale – is equivalent to morethan half the volume used for conventional agricultural and industrial uses in the
Sustainable Development Scenario and 110% in the Net Zero Emissions by 2050
Scenario.
The use of ammonia for co-firing in coal power stations climbs to 60 Mt per year
and 140 TWh of electricity generation by 2050 in the Sustainable Development
Scenario. In the Net Zero Emissions by 2050 Scenario the use of ammonia for thispurpose reaches 85 Mt. This is up from a handful of pilot and demonstration scale
projects today. Despite providing only around 0.2% of global electricity generationin 2050 in the Sustainable Development Scenario (and also only 0.2% in the Net
Zero Emissions by 2050 Scenario), this application accounts for around a third of
the consumption of ammonia for purposes other than its established uses today(25% in the Net Zero Emissions by 2050 Scenario).

Measures to improve nitrogen use efficiency
Considerable potential exists to reduce nitrogen demand through measures toimprove use efficiency. It has been estimated that nutrient use efficiency acrossthe full nitrogen chain globally is currently only about 20%. That is, out of all thenitrogen fixed through industrial production and by crops, only 20% ends up in
human food and durable products. The percentage varies depending on location
and application. For example, for the food system, nutrient use efficiency in

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different European countries has been estimated to range from 10% to 40%. The

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

UN Colombo Declaration on Sustainable Nitrogen Management of 2019 has
called for a halving of total nitrogen losses to the environment by 2030, a target
mirroring similar calls from scientists.
In the Sustainable Development Scenario various measures are adopted to use
nitrogen more efficiently across value chains. Consequently, nutrient use
efficiency improves considerably and global demand for ammonia for conventional
uses is 5% lower in 2030 and 10% lower in 2050 compared to the Stated Policies
Scenario. This reduction in ammonia demand relative to the Stated Policies
Scenario occurs while meeting the same demand for the services that ammonia
provides – for example the same provision of nutrition – since more efficientsystems result in fewer nutrient losses prior to final consumption. The greatest
potential for demand reduction comes from the largest end use, fertilisers,
accounting for 65% of the reduction in 2050. Plastics recycling accounts for about
10% of the reduction, driven by an increase in the average plastics collection rate
to 50% by 2050, relative to 16% today. Other measures in industry and other end
uses account for the remaining demand reduction.
Contribution of use and material efficiency to ammonia demand by
scenario

IEA, 2021.
Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050
Scenario. Ammonia used as an energy carrier is not included.

In the Sustainable Development Scenario use efficiency measures reduce demand forammonia by 10% in 2050 relative to the Stated Policies Scenario; fertiliser use efficiency
contributes 75% of the reduction.

Estimates of global nitrogen nutrient use efficiency (NUE) at the crop level –including nitrogen from mineral fertilisers, manure application, biological fixation

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and atmospheric deposition – vary by source, with estimates from key sourcesAmmonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

ranging from 45% to 60% in 2017-2018. 1 Over the past half century there havebeen substantial shifts in NUE. In 1961 global nitrogen NUE was higher than it istoday, with estimates averaging at 59% (ranging across 49-75%). Since then,nitrogen inputs to crop production have quadrupled, about two-thirds of whichwere from mineral fertilisers. This increased nitrogen provision has undoubtedly
led to benefits from improved crop productivity, but has contributed to a lower
global NUE. Improved nutrient management can help ensure that NUE is
optimised in tandem with increasing crop yields. Following a considerable decline
in global NUE in the 1960s and 1970s, nutrient management has been gaining
traction and there has been an upward trend in NUE in recent decades. Estimatesof the NUE increase at the global level range from 5 to 9 percentage points since
2000, and 4 to 5 percentage points since 2010.
At the regional level, nitrogen NUE varies considerably, influenced by various
factors including the mix of crops grown, the ratio between fertiliser and crop
prices, nitrogen fertiliser subsidies and policies to reduce nitrogen pollution.
According to FAO data, Asia Pacific currently has a relatively low NUE of around35%, although there has been an upward trend in the past decade, particularly in
China. In Europe, NUE has been improving over the past several decades, at leastin part due the introduction of the EU Nitrates Directive in 1991, and is currently ataround 45%. Meanwhile, the Americas and Africa are at the higher end of NUE,
in the range of 50-60%, although in Africa this may be in part due tounder-application of fertilisers in some regions rather than successful nutrient
management.
Sustainable agricultural systems must balance the benefits of high crop yields forfood provision with the environmental impacts of nitrogen losses to theenvironment and greenhouse gas emissions from the production and use ofmineral fertilisers. In the Sustainable Development Scenario global nitrogen NUE
on croplands improves by about five percentage points overall by 2050.
Underlying this is a higher increase in the NUE for mineral fertilisers. Improved
nitrogen management also leads to higher nitrogen recycling through increased
use of livestock manure. Since manure has a lower use efficiency, its increased
use results in a smaller increase in overall cropland NUE, even as it reduces
nitrogen losses within the full nitrogen system.
Optimal NUE will vary between farms, depending on factors such as the specificcrop and the local physical environment. There will always be some losses of

Key data sources for global NUE include the FAO and IFA. Note that the IFA’s current methodology does not include
atmospheric nitrogen deposition, leading to higher estimates of NUE compared to the FAO and other sources.

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1

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

nitrogen in agricultural systems. In fact, a very high NUE (over about 90%) may
actually be harmful, signalling depletion of soil nutrients or “soil mining”.
Conversely, a very low NUE is not only harmful to the environment, but may also
not be good economically. Additional fertiliser application results in diminishingreturns beyond a certain point; the cost of additional fertiliser will outweigh thefinancial benefit of increased yields. An ideal NUE target for a given system would
consider this economic optimum as well as environmental objectives, and for most
systems is likely to fall in the range of 50-90%.
The “4Rs” have become a common set of guiding principles for agricultural nutrient
management over the past few decades, encouraging farmers to apply “the rightnutrient source at the right rate, at the right time and in the right place” so thatnutrient losses are minimised while still meeting crop nutrient requirements.
Examples of management practices include timing fertiliser application according
to weather conditions (such as not before major rainfall), and using precision
agriculture and variable-rate application technologies to better match fertiliser
application to crop needs. A switch in the fertiliser type can also help. For example,
farmers may choose to use enhanced-efficiency fertilisers, which are coated withpolymers or have characteristics that slow the release of nutrients or inhibit
reactions in the soil that could lead to losses. Switching from urea to nitrate-based
fertilisers or other fertiliser forms may also help, since urea is more prone tonutrient losses through ammonia volatilisation on fields.
Increasing use of organic fertilisers is also an option if they are available. This is
closely connected to adopting circular economy practices – maximising reuse ofwaste nitrogen where possible (from crop residues, livestock excreta, food waste,etc.) can help make more efficient use of nitrogen inputs. Other beneficial
complementary management practices may include using cover crops,
conservation tillage, nitrification inhibitors, crop rotation, biostimulants and cropvarieties that use nitrogen more efficiently. Best management practices will vary
according to the cropping system, climate, soil and other site-specific conditions.
Additional measures along food value chains can also reduce the need for
fertilisers by reducing demand for crops. Potential exists to reduce post-harvest
losses and food waste at multiple stages, including at food manufacturing facilities,
during transport and storage, at grocery stores and restaurants, and in the homesof consumers. Additionally, shifting towards greater reliance on plant-based
proteins can reduce total fertiliser needs, assuming that plant-based proteins are
replacing animal protein from livestock whose feed comes from fertilised crops or

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pastures (as opposed to unfertilised pastures). Reducing consumption of animal

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

proteins would reduce requirements for livestock feed and improve full chain NUE,
since humans would obtain protein more directly from plants.
Other strategies can help improve use efficiency for other nitrogen-containing
products. Plastics recycling and efforts to reduce overall plastics demand will lower
the need for ammonia as an input to certain types of plastics, even as plastics
account for a relatively small share of total ammonia demand. For other industrial
uses, areas of overuse or waste can be identified and addressed. This could
include, for example, reducing over-application of pesticides, using industrial
cleaners with lower concentrations of ammonia where that is sufficient for theintended purpose, extending the lifetime of textile products and switching fromchemical to natural dyes. Given that nitrogen is present in such a wide range of
products, a diversity of actions from manufacturers to final consumers would beneeded to optimise efficiency across these various end uses.

Box 2.3

IEA demand projections for nitrogen fertilisers in context

This roadmap focuses on the most energy- and emissions-intensive step in thenitrogen fertiliser value chain: ammonia production. About 70% of ammonia is used
for fertilisers with agricultural applications. Of these, about 85% are applied tocroplands, while the rest are applied to other areas such as forests, grasslands,
fish farms and golf courses. Outside agriculture, ammonia demand comes fromvarious other industrial and commercial applications. Given these various demandsources, we have developed demand projections for the nitrogen-based products
discussed in this roadmap using information from two organisations with widely
recognised expertise in these different areas: the International Fertilizer
Association (IFA) and the United Nations Food and Agriculture Organization(FAO).

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The FAO is tasked with improving food security and fighting hunger around theworld. The organisation provides detailed information on all types of fertiliser used
across the world, for both cropland and non-cropland purposes, in its extensive
databases on the food system and regularly published reports on the future of
agriculture. In its 2018 publication, The future of food and agriculture – Alternative
pathways to 2050, the FAO published a number of future scenarios for the
agricultural system. We have used the FAO Business As Usual Scenario toestimate non-cropland fertiliser demand in the Stated Policies Scenario in thisroadmap. The underlying assumptions behind these two scenarios, mostimportantly with respect to population growth, are broadly similar. The FAO also
has a Towards Sustainability Scenario in which proactive measures are taken

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

towards more sustainable food and agricultural systems, through measures suchas reducing food waste and more resource-efficient food production.
For nearly 100 years the IFA has been working with actors across the fertiliser
value chain, from production to application, to promote best management practices
and reduce environmental impacts. The IFA collects statistics on fertilisers,
focusing on fertilisers applied to croplands, and also develops scenarios for future
demand. We used the IFA Business As Usual Scenario for fertiliser demand as abaseline to define cropland fertiliser demand in the Stated Policies Scenario in thisroadmap. Specifically we used the FAO Business As Usual Scenario’s agricultural
production levels and medium-level ambition on improving nutrient management.
The IFA has also developed a composite scenario to inform cropland fertiliser
demand in the Sustainable Development Scenario in this roadmap. It is informedby agricultural production levels from a combination of the FAO Business As Usual
Scenario and Towards Sustainability Scenario (depending on the region) and has
higher ambition on improving nutrient management.
We have used the outputs from these work streams – together with those of theOECD’s own work in this area – to inform the IEA’s long-standing framework formaterial demand projections, including the projections for nitrogen, ammonia andurea demand and production developed for use in this technology roadmap.
Demand is driven by industrial value added and population growth, with saturating
per-capita demand once an advanced level of economic development is reached.
We have also used the IEA’s evaluation of stocks of materials in society andmaterial efficiency opportunities that can reduce non-fertiliser ammonia use,
including increased plastic reuse and recycling.

The outlook for production
Increasing demand for nitrogen – driven by a growing population, higher living
standards and increased protein consumption – sees global ammonia production
grow by 37% in the Stated Policies Scenario relative to today to reach 253 Mt NH3(208 Mt N) by 2050. 2 At an average annual rate of 1.1%, this growth is somewhat
slower than the 1.5% annual growth seen in the previous three decades. In the
Sustainable Development Scenario ammonia production is 10% lower in 2050
compared to the Stated Policies Scenario due to the greater adoption of nutrient
use and material efficiency strategies. Thus, production grows by 23% to reach
228 Mt NH3 in 2050 (0.7% average annual growth). While total urea production

Production projections here comprise ammonia produced for established applications. Ammonia production for use as anenergy carrier is not included, given that it is outside the scope of this roadmap.

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2

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Chapter 2. The future of ammonia production

grows by 36% by 2050 in the Stated Policies Scenario, it declines by 14% during
the same period in the Sustainable Development Scenario. This results from lower
demand for urea fertilisers in order to reduce the release of CO2 when urea isapplied to soils, as discussed above.
Ammonia and urea production by region for Stated Policies Scenario andSustainable Development Scenario
Urea production

Mt urea

Mt ammonia

Ammonia production
250
200

250
200

150

150

100

100

50

50

0

2010

2020

2030

North America
AfricaAsia Pacific

2040

0

2050

2010

2020

Central and South America
Middle East
STEPS

2030

2040

2050

EuropeEurasia
SDS and NZE
IEA, 2021.

Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050
Scenario. Ammonia used as an energy carrier is not included.

In the Sustainable Development Scenario ammonia production grows moderately while
urea production declines. Growth is strongest in the Middle East, Central and SouthAmerica, and Africa.

The ammonia market is currently dominated by Asia Pacific, which produced 47%

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of the world’s ammonia in 2020. China alone accounted for 30% of global
production. Following rapid growth of 4% per year from 1990 to 2010, productionin China has grown at a slower rate of 1% per year since 2010, which is below the
global average rate of growth. In the Sustainable Development Scenario, Asia
Pacific remains the largest ammonia-producing region, even as its share declines
somewhat to 42% of global production in 2050. Production in China peaks in thenext 5 to 10 years and then declines by almost 35% by 2050, as a result of
restructuring shifting the economy away from heavy industry towards higher valueadded industries and sectors. Still, it remains the largest producing country in
2050, at 16% of global production. Meanwhile, production in India grows over
twofold to reach 15% of global production and Southeast Asia by 1.7 times toreach 8% of global production, as part of increasing industrial activity in these
rapidly growing economies. This more than makes up for the decline in China suchthat total ammonia production in Asia Pacific grows by 10% by 2050.

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Chapter 2. The future of ammonia production

The remainder of current global production is spread more evenly across the otherregions. Leading ammonia-producing countries include those with access tonatural gas supplies at competitive prices, including the United States, Russia andMiddle Eastern countries, as most ammonia outside China is currently produced
from natural gas, and energy inputs are one of the main contributors to production
costs. In the Sustainable Development Scenario access to competitive natural gas
supplies remains a key factor determining where production occurs, even as
natural gas-based capacity is increasingly paired with CCS (see Chapter 2,“Technology pathways towards net zero emissions”).
Advanced economies see relatively flat levels of production in the Sustainable
Development Scenario. In Europe and North America, production growth is lessthan 10% by 2050 relative to today, although both regions maintain about 10% of
global market share. Meanwhile, strong growth occurs in the Middle East, Africa,and Central and South America, all of which see roughly a doubling of production
by 2050 relative to today. These regions account for 14%, 8% and 7% of global
production respectively in 2050. The factors contributing to high growth in theseregions include economic development, industrialisation, and increasing
agricultural output to feed growing populations.
The regional distribution of urea production today and in the future is similar to thatof ammonia production, given the close link between production of the two
commodities. In the Sustainable Development Scenario a key difference fromammonia is that since urea production is declining globally, most regions have
either flat or falling urea production. Southeast Asia and the Middle East see
modest growth until about 2030, followed by eventual declines in production. This
contrasts with the Stated Policies Scenario where most regions continue to see
growing urea production, broadly in step with growth in ammonia production.

Box 2.4

Technology modelling methodology

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The technology model used to generate the results for ammonia in this technology
roadmap forms part of the IEA chemical sector model, which is one of the IEA’s
six detailed industry sub-sector models. The five other models cover the iron andsteel, cement, pulp and paper, aluminium and other industry sub-sectors. The
models interact with other models in the IEA via price signals (e.g. for fuels),

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Chapter 2. The future of ammonia production

availability of resources (e.g. biomass) and user constraints (e.g. CO2 emission
trajectories and the availability of CO2 storage). 3
The industry modelling architecture used for this publication consists of three main
components: activity modelling (production and demand), capacity modelling(examining the existing stock of production equipment) and technology modelling(the selection of technologies used to meet the required production levels). This
industry modelling framework sits within a broader energy system modellingarchitecture, with various cost signals and constraints being taken from othersub-sector model results. The aim of the modelling is to present energy, emissions
and investment implications of least-cost technology pathways for a given scenario
definition.
The technology modelling is at the heart of the model, with the other models
creating intermediate results with which to inform its inputs and constraints. The
technology model is implemented in the TIMES (The Integrated MARKAL-EFOM
System) model generator, using 40 model regions to obtain global coverage. The
chemicals model selects from a range of ammonia production technologies with atechnology readiness level (TRL) of five and above (for discussion of the IEA TRL
scale, see Box 2.6). The technology choice is performed in annual time steps,
based on constrained optimisation that aims to minimise system cost whilesatisfying demand for ammonia. System cost includes capital expenditure(CAPEX) and fixed operating expenditure (OPEX), along with energy andfeedstock costs where relevant. Cost and energy parameters for technologies at
an early stage of development are obtained in consultation with industry experts.
Ammonia demand and production projections are based on country-level
macro-economic data and historical production levels, informed by FAO and IFA
projections for fertiliser demand (see previous box). The technology model mustsatisfy these production levels while conforming to various scenario-specificconstraints, such as limits on the availability of certain energy carriers andconstraints on CO2 emissions, as well as other constraints to reflect the regional
political economy and other circumstances.
The capacity model provides a signal of the existing capacity of ammonia
production facilities, along with a projection of their phase-out rate over time. The
capacity model takes account of the regional variation in the predominance ofspecific technology types, as well as the timeframe since the installation or last
major refurbishment of each individual plant, to provide region-specific phase-out
rates for existing facilities.

More detailed documentation of the full ETP Model is found in the ETP 2020 annex.

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Chapter 2. The future of ammonia production

Technology pathways towards net zero
emissions
Energy consumption and CO2 emissions
Ammonia production is a highly energy-intensive process, accounting for 2% of
global final energy consumption in 2020. It is the third-largest single consumer ofenergy among industrial bulk materials, after steel (9%) and cement (3%)
respectively. Fossil fuels account for virtually all of the process energy andfeedstock inputs to ammonia production today. In 2020 the consumption of natural
gas for ammonia production stood at around 170 bcm, or around 50% of the wider
chemical industry’s demand. Coal also plays an important role, particularly in
China, with ammonia production using around 75 Mtce in 2020, or 44% of the coalconsumed by the global chemical industry. Ammonia production currently
consumes negligible quantities of oil, which accounts for around 1.4% of totalenergy inputs. Electricity use is also relatively modest today, at around 70 TWh,or 5% of the chemical industry’s total electricity consumption.
Of the energy consumed for ammonia production, 40% is used as feedstock. 4
Natural gas and coal account for 72% and 26% of the sector’s feedstock energy
inputs, with oil accounting for the remainder. Bioenergy and water (split into its
constituent hydrogen and oxygen atoms) can be used as a source of feedstock,
although they form miniscule contributions to the sector’s overall inputs today.
Process energy inputs (the remaining 60% of energy consumption) comprise fuels(68% natural gas and 25% coal) and electricity (5%).
Under current trends, global energy demand for ammonia production increases
by 8% by 2050 in the Stated Policies Scenario relative to 2020, but energy
intensity declines by 21%. The global average energy intensity of ammonia
production today is estimated to be around 50% higher than BAT energy
performance levels, assuming the same share of each route in total production. In
the Stated Policies Scenario all regions are on track to reach current BAT energy
performance levels soon after 2050, as plants are upgraded and replaced to meetstringent energy performance standards in several regions (e.g. the Perform

The share of feedstock energy use is approximated using the lower heating value (LHV) of the ammonia produced,
following IEA energy accounting conventions. The LHV approximation (18.6 GJ/t of ammonia) is kept constant over timeand between process routes. This does not affect the overall accounting of total energy consumption, but tends tounderestimate the share of feedstock energy use in the sector and allocates all efficiency gains to the process energy
inputs. In practice, the shares of feedstock and process energy will vary depending on the efficiency and precise processarrangement of a given plant. For example: the BAT plant characterisations presented in Chapter 1 consume between 55%
and 92% of their fuel inputs as feedstock. For plants with higher process energy consumption than a BAT plant, theseshares are lower.

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Chapter 2. The future of ammonia production

Achieve Trade scheme in India) and to maintain competitiveness in others.
Continued improvements in process energy efficiency are outweighed byincreasing demand for ammonia, pushing up overall energy consumption in this
scenario. No energy intensity improvements take place for the consumption offeedstock, as process yields are already close to their theoretical maximum. The
share of feedstock in total energy inputs therefore rises over time in the Stated
Policies Scenario, from 40% in 2020 to 50% in 2050.
With respect to its fuel mix, the sector sees an overall shift from coal- to natural
gas-based routes for ammonia production over time as a result of shifting regional
market dynamics. China, the largest producer today, remains heavily reliant on
coal-based production in the Stated Policies Scenario, but its share of global
production decreases as its economy shifts towards a service-driven model andother economies industrialise. China’s output of ammonia production declines by
25% between 2020 and 2050, whereas growth in other regions that predominantly
use natural gas, such as India, the Middle East and Africa, grow by 100-150%.
The result of these shifts is an increase in global energy demand for ammonia
production, but a decline in the share of coal from 26% today to 15% in 2050, andan increase in the share of natural gas from 70% in 2020 to 80% in 2050. Overall
CO2 emissions slightly drop in 2050 relative to today, despite ammonia output
rising by nearly 40%.
Achieving the goals of the Paris Agreement and other SDGs requires a completechange of course in the way ammonia is produced today and in the trajectory
outlined in the Stated Policies Scenario. In the Sustainable Development Scenario
CO2 emissions in the sector are 73% lower in 2050 than in 2020. Energy savings
achieved through the faster adoption of BAT – all regions reach today’s BAT
energy performance levels between 2040 and 2050 – and better operational
practices roughly equate to the additional energy needed to sustain growing
ammonia demand and to operate CO2 capture equipment. In 2050 in the
Sustainable Development Scenario the energy intensity of ammonia production
reaches a similar level to that reached in 2050 in the Stated Policies Scenario, butwith a very different energy mix. Electricity demand undergoes the largest increase(more than eightfold, relative to 2020 levels) at the expense of coal and natural

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gas, which drop by 75% and 20% respectively.

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Chapter 2. The future of ammonia production

40

6

30

1.0

4

20

0.5

2

10

0.0

0

2.0

300

1.5

200
100

STEPS
2020

SDS

NZE

STEPS
2020

2050

Energy emissions
Process emissions
CO₂ captured
Emissions intensity (right axis)

50

8

400

0

Energy consumption

10

Fossil with CCU
Electricity for hydrogen
Natural gas with CCS
Oil
Coal

SDS

NZE

GJ/t ammonia

2.5

EJ

Direct CO₂ emissions

500

t CO₂/t ammonia

Mt CO₂

Direct CO2 emissions and energy consumption for ammonia production
by scenario

0

2050
Other
Electricity
Natural gas
Coal with CCS
Energy intensity (right axis)
IEA, 2021.

Notes: CCU = carbon capture and utilisation; CCS = carbon capture and storage; STEPS = Stated Policies Scenario;
SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050 Scenario. “Other” is comprised mostly of
bioenergy, as well as a small amount of hydrogen-based synthetic methane imported via blending in the natural gas grid.
Ammonia used as an energy carrier is not included. Energy consumption includes that used as feedstock. Energy intensities
are shown on a net basis.

A 78% drop in the emissions intensity of ammonia production by 2050, as in the
Sustainable Development Scenario, hinges on electrolysis and CCS routes. Suchdependency is even more important to reach the 96% reduction in the Net Zero Emissions
by 2050 Scenario.

The main shifts in energy consumption in the Sustainable Development Scenario
stem from the deployment of innovative near-zero-emission technologies. In this
scenario 83% of the total electricity demand for ammonia production in 2050 isused to produce hydrogen via electrolysis, with the remainder supplying ancillary
units (e.g. air separation units) and carbon capture equipment. This requires
110 GW of electrolyser capacity by 2050, assuming an average capacity factor of
50%. Around 31% of the natural gas-based production of ammonia is equippedwith CCS by 2050 and a further 33% with CCU, the latter owing to the need tocapture CO2 for urea synthesis. This results in 83 Mt CO2 captured for storage and89 Mt CO2 for use in 2050. This is around 36% of the total CO2 capture in thechemical sector by that time, with a much larger extent of deployment taking placein methanol and high-value chemicals installations. A further 5% of natural gas
consumption is used for methane pyrolysis, and 26% of the remaining coalcapacity is also equipped with CCS. A small amount of carbon removal takes placein the Sustainable Development Scenario, owing to the CCS applied to process

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energy natural gas streams that in many regions comprise significant amounts ofAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

biogas by 2050. The overall carbon removal impact is around 2 Mt CO2 by 2050,
but this is outweighed by residual energy-related emissions.
For the ammonia industry to play its part in the overall energy sector reaching net
zero emissions by 2050, further emission reductions would need to take place. In
the Net Zero Emissions by 2050 Scenario, by 2050 overall emissions are 96%
lower than today, production is 23% higher and the average CO2 emissions
intensity of ammonia is 97% lower than today (compared with 73% lower, 23%higher and 78% lower, respectively, in the Sustainable Development Scenario).
Given that production levels and the pace of energy efficiency improvements arevery similar in the Net Zero Emissions by 2050 Scenario and the Sustainable
Development Scenario, the faster pace of emissions decline is achieved primarily
through more rapid deployment of innovative near-zero-emission technologies. By
2050, 41% of ammonia is produced via electrolytic hydrogen in the Net Zero
Emissions by 2050 Scenario, compared with 27% in the Sustainable Development
Scenario. CO2 capture for permanent storage from ammonia production would riseto 100 Mt CO2 by 2050 in the Net Zero Emissions by 2050 Scenario, with almost
50% of the fossil-based capacity equipped with CCS.
Innovation cycles (see Chapter 2, “Readiness, competitiveness and investment”)
are compressed in the Net Zero Emissions by 2050 Scenario, meaning that
innovative technologies can be deployed sooner and to a greater extent by 2050.
Technologies that are at too early a stage of development to be deployed within
the 2050 time horizon in the Sustainable Development Scenario see somecomparatively small-scale deployment in the Net Zero Emissions by 2050
Scenario. A key example is biomass gasification, which although costly, provides
a source of biogenic carbon in its feedstock that can be used for carbon removal.
Process emissions that are captured from this route result in around 6 Mt CO2 ofcarbon removal by 2050 in the Net Zero Emissions by 2050 Scenario. Together
with the contribution of emissions captured from the biogas that is blended withnatural gas, the gross carbon removal impact is around 8 Mt CO2 in 2050, about
five times that of the Sustainable Development Scenario. However, emissions arestill positive on a net basis at the global level, owing to the residual fossil energy-

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related and non-biogenic process emissions.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Box 2.5

Chapter 2. The future of ammonia production

How are indirect CO2 emissions tackled?

The production and use of nitrogen fertilisers lead to greenhouse gas emissions
during both the production and use phases. Non-CO2 greenhouse gas emissions
are beyond the core analytical scope of this roadmap, but Chapter 1 provides somecontext on this topic. In this scenario analysis we consider three main categories
of CO2 emissions from the sector: 1) direct CO2 emissions from fossil fuelcombustion and process CO2 emissions from the use of fossil fuel feedstocks;2) indirect CO2 emissions from generating the electricity that the sector uses; and
3) indirect CO2 emissions in the agricultural sector that result directly from the useof fossil fuel feedstocks in the production phase. We address the first category
throughout the analytical content of this chapter, while the latter two (indirectemissions) categories are explored here.
Indirect CO2 emissions from electricity generation for ammonia production totalledaround 40 Mt CO2 in 2020. This reflects a global power sector that runs on around
70% fossil fuels, with huge variation between ammonia-producing countries in theCO2 intensity of the power they use. For example Norway, which produces lessthan 0.5 Mt of ammonia, has an average power sector CO2 intensity of less than
10 g CO2/kWh. China, which accounts for 29% of global production, has anaverage power sector CO2 intensity of 621 g CO2/kWh. In the Sustainable
Development Scenario the global average power sector CO2 intensity declines by
98%, from around 474 g CO2/kWh today to 9 g CO2/kWh in 2050. This results injust a 27% decline in the indirect CO2 emissions from power generation forammonia production by 2050, to 30 Mt CO2, due to eightfold increase in electricity
demand.

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A principal feature of the demand profile for nitrogen fertilisers in the Sustainable
Development Scenario is reduced reliance on urea. As discussed in Chapter 1,
urea leads to significant CO2 emissions as it undergoes hydrolysis in the
agricultural sector, where these emissions cannot be practically captured. Urea
demand declines from 181 Mt in 2020 to 155 Mt in 2050 globally in the Sustainable
Development Scenario, compared to an increase in overall nitrogen demand of
25%. The indirect emissions from urea decline proportionately with its use to110 Mt CO2 in 2050, around 40% lower than the 180 Mt CO2 they reach by thesame year in the Stated Policies Scenario, which does not undergo the same shift
away from the use of urea. This shift contributes 22% of total (direct and indirect)
emission reductions in 2050 in the Sustainable Development Scenario relative to
the Stated Policies Scenario.

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Chapter 2. The future of ammonia production

Mt CO2

Direct and indirect CO2 emissions from ammonia production and use by
scenario
800

600

400

200

0

2010

2020

2030

Historic

2040

2050

2030

2040

STEPS
Direct CO₂

2050

2030

SDS

Indirect CO₂ (power)

2040

2050

NZE

Indirect CO₂ (urea hydrolysis)

IEA, 2021.
Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by
2050 Scenario. Ammonia used as an energy carrier is not included.

A portfolio of mitigation options
Like the wider energy system, the fertiliser sector cannot rely on one technology
or mitigation lever alone to make progress on its climate goals – it must pull on
all levers that can make a difference to allow its transition to zero emissions totake place as quickly as possible. However, the relative importance of different
mitigation options evolves over time.
More efficient use of nitrogen fertilisers is an important strategy pursued toreduce the overall quantity of ammonia demand in the Sustainable Development
Scenario and Net Zero Emissions by 2050 Scenario. Around 20% of the
cumulative emission reductions from ammonia production to 2050 in the
Sustainable Development Scenario are made possible by avoiding the
production and use of up to 25 Mt of fertilisers in that year (14% of today’s global
annual production) compared with the Stated Policies Scenario, while delivering
the same agricultural output. Strategies within the agricultural sector involve
minimising nutrient losses by applying fertilisers at efficient rates and withappropriate timing and placement, often aided by precision agriculture
technologies and specialised fertilisers. Outside agriculture, measures are also
taken to improve material efficiency, such as increased plastics recycling and

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reuse (see Chapter 2, “The outlook for demand and production” for more details).

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

Energy efficiency is a win-win strategy to enhance competitiveness in an industry
that is as energy-intensive and exposed to international trade as the fertiliser
industry. The amount of process energy required to produce a tonne of ammonia
from natural gas on average globally was about 40% higher in 2020 than BAT
energy performance levels. The remaining gap is narrow and producers
exploiting it in some regions face practical (e.g. physical constraints on existing
assets) and economic barriers that are overcome in the Sustainable
Development Scenario. The adoption of BAT, improved operating andmaintenance routines, and increased levels of process integration lead to all
regions achieving BAT energy performance levels for each process route in the
period 2040-2050 in the Sustainable Development Scenario.
The type of feedstock determines the lowest amount of process energy required
per unit of output: even with BAT, coal-based ammonia production is around
15% more energy intensive than natural gas-based production (and twice asemissions intensive). Thus, a shift towards the natural gas-based route, as takes
place in the Sustainable Development Scenario, contributes to further lowering
energy intensity, beyond the progression towards BAT energy performancelevels for each process route. Conversely, some innovative near-zero-emission
routes require additional equipment beyond the core ammonia production
process, which increases the energy demand per unit of output even if BAT isadopted. For instance, 3.5 GJ/t CO2 (or 2.4 GJ/t ammonia) are needed to capture
CO2 from flue gases resulting from the combustion of fuels in ammonia
production compared to the overall 28 GJ of process energy needed per tonneof ammonia in best performing natural gas-based plants today. After accounting
for these opposing trends, overall technology performance improvements deliver
24% of the cumulative emission reductions in the Sustainable Development
Scenario.
A further 10% of cumulative emission reductions in the Sustainable Development
Scenario stem from shifts towards less CO2-intensive feedstocks and fuels. A
shift at the global level from coal to natural gas-based routes is the main
contributor, stemming primarily from an underlying regional dynamic in which
coal-intensive Chinese ammonia production decreases and production in natural
gas-intensive regions increases. In the Sustainable Development Scenario
existing energy distribution infrastructure repurposed to the extent possible
facilitates the delivery of low-carbon fuels. Gaseous biofuels and hydrogen are
injected into natural gas distribution grids to lower their overall CO2 intensity by
5% on average globally by 2050, which constitutes an indirect form of fuel

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switching.

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Chapter 2. The future of ammonia production

About 45% of the emission reductions to 2050 in the Sustainable Development
Scenario come from deploying near-zero-emission technologies, comprising
CCS-equipped and electrolysis-based hydrogen production. Almost 30% of theCO2 savings through to 2050 result from ammonia production via electrolytichydrogen growing to 27% of total ammonia production in 2050, from a positionof initial projects about to start operating today. Similarly, another 16% ofemissions are saved cumulatively via permanent storage after capture fromammonia production, a greater than 50 times increase by 2050 relative to today’s
storage volumes from this CO2 emissions source.
Ammonia direct CO2 emission reductions in the Sustainable Development
Scenario by mitigation strategy
Cumulative direct emission
reductions between 2021 and 2050

Mt CO2/yr

Ammonia direct emission reductions
500
STEPS

400

16%

300

21%

24%

200
SDS

100
0
2020

2025

2030

2035

2040

2045

29%
10%

2050

Nutrient use and material efficiency
Other fuel shifts
CCS

Electrolytic hydrogen
Technology performance
IEA, 2021.

Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; CCS = carbon capture and storage.

Only an array of mitigation measures can significantly reduce emissions from ammonia
production. Nutrient use and material efficiency, electrolytic hydrogen and CCS account for
two-thirds of the cumulative emission reductions in the Sustainable Development Scenario.

Innovative technology pathways
Overview of global and regional technology trends
Whether in natural gas-based 5 or coal gasification-based routes, the CO2
emissions stemming from the feedstock energy use for hydrogen production(process emissions) are inherently captured as part of the ammonia
manufacturing process, which makes CCS a particularly competitive option for
substantial emission reductions from ammonia production (see Chapter 2,

Applicable both to steam methane reforming (SMR) and auto-thermal reforming (ATR) technologies.

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Chapter 2. The future of ammonia production“Readiness, competitiveness and investment”). The resulting CO2-rich stream only
requires purification and compression to make it suitable for transporting andgeological storage. By 2050 in the Sustainable Development Scenario,
200 Mt CO2 are captured, 17% of which are energy-related emissions and 83%
process emissions. Of the process emissions captured, 65% are utilised for urea
production, and 35% are permanently stored. In the Net Zero Emissions by 2050
Scenario a higher share of energy-related emissions is captured (33% of total
capture), as the process emissions are nearly fully abated in many regions.
In both scenarios some of the CO2 required for urea has to be obtained fromsources other than the process CO2 emission streams of ammonia plants. These
volumes, at around 4% of total CO2 capture in the Sustainable Development
Scenario and 11% in the Net Zero Emissions by 2050 Scenario in 2050, could besourced from the energy-related emissions of ammonia production that arecaptured for permanent storage, or more sustainably from an indirect emissions
perspective, from the power and fuel transformation sector, through the use of
DAC or from biogenic CO2 sources.
The concentration of CO2 in energy-related emissions from ammonia production(3-13% by volume) is typically significantly lower than that of process emission
streams (> 95% by volume), which increases the energy requirements to separate
it from the flue gas stream. This is particularly relevant for SMR plants. Virtually all
current natural gas-based production uses SMR. Existing SMR facilities have ahigher proportion of their total CO2 emissions as flue gas relative to ATR
technologies – the likely choice for new-build CCS-equipped plants – which
generate around 90% of their emissions in a concentrated stream as process
emissions. The CO2 capture unit that is integrated into conventional ammonia
plants to handle the concentrated CO2 generated from feedstock is typicallyspecified for that process stream and not able to treat the additional volumes fromflue gases. The expansion of such a unit or the integration of an additional capture
unit (depending on the possibilities at each individual site) would be needed toallow for full capture of the CO2 generated at a site using an SMR. Another option
for retrofitting SMR plants could be to meet the process energy requirements using
electrolytic hydrogen, generated on site or imported from merchant hydrogenplants. Process CO2 emissions capture would still be required, but this would avoid
the need to capture the more dilute energy-related flue gas stream, which would

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no longer contain CO2.

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Chapter 2. The future of ammonia production

Mt

Global ammonia production by technology and scenario
250

100%

200

80%

150

60%

100

40%

50

20%

Pyrolysis0%

Near-zero share

0

2020

2030

2040
STEPS

2050

2030

2040

2050

SDS

2030

2040

2050

Fossil with CCU
Oil
Gas with CCS
Gas
Coal with CCS
Coal
Biomass
Electrolysis

NZE

IEA, 2021.
Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050
Scenario; CCS = carbon capture and storage; CCU = carbon capture and utilisation for urea production. Near-zeroshare = aggregated share of near-zero-emission routes, excluding CCU.

Near-zero-emission ammonia production routes account for 50% of total production by
2050 in the Sustainable Development Scenario and 73% in the Net Zero Emissions by 2050
Scenario.

Electrolysis is the other innovative technology pathway that plays a major role in
the Sustainable Development Scenario and the Net Zero Emissions by 2050
Scenario. Water electrolysers 6 have been used in several industrial plantscommercially over the past century, including for ammonia production usinghydropower (see Chapter 1), although their use is not widespread today due totheir higher cost relative to fossil fuel-based ammonia production. For this route toachieve substantial reductions in both direct and indirect emissions, it needs to be
powered by low-carbon electricity. In the Sustainable Development Scenario theCO2 intensity of grid electricity drops by 56% by 2030 (75% in the Net Zero
Emissions by 2050 Scenario, in which electricity generation would already be at
net zero in 2048). In addition to grid-connected arrangements, dedicated VRE
installations for ammonia production are also attracting growing interest (seeTable 2.2). These could lead to zero-emission production, including both direct
and indirect emissions. In the Sustainable Development Scenario 27% (60 Mt) of
the ammonia produced globally in 2050 relies on electrolysis, more than China’s
current annual ammonia production. In the Net Zero Emissions by 2050 Scenario
this share reaches 41% by 2050 (92 Mt), limited from going further in many regions
by the need to provide CO2 from carbon-containing feedstocks for urea production.
Methane pyrolysis also plays an important role in specific regions, accounting foraround 7 Mt of ammonia production by 2050 in the Sustainable Development

This is aside from the use of brine electrolysis to produce chlorine, which is the dominant pathway in this industry.

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Chapter 2. The future of ammonia production

Scenario. Biomass gasification is a technology that is not deployed in any region
in this scenario due to its high projected costs and low technology maturity (noplants are being pursued using this technology today). In the Net Zero Emissions
by 2050 Scenario methane pyrolysis reaches production of 15 Mt by 2050, and as
the innovation cycles of early-stage technologies are compressed in this scenario,
biomass gasification plays a minor role (production of around 6 Mt by 2050
globally). This occurs in regions with access to plentiful supplies of sustainablebioenergy to alleviate the sourcing of carbon for urea production, which becomes
more difficult as the carbon-intensive routes are phased out more quickly.
Underlying these technology pathways at the global level are important regional
nuances. Both the Sustainable Development Scenario and Net Zero Emissions by
2050 Scenario are modelled regionally, but the results for the latter are only
presented globally in this technology roadmap. We use the Sustainable
Development Scenario to shed light on some of the major regional dynamics.
Ammonia production by process route and scenario in major ammoniaproducing regions
100%
75%
50%
25%
0%

2020

2050
STEPS

2050
SDS

2020

2050
STEPS

China

2050
SDS

2020

India

2050
STEPS

2050
SDS

2020

North America

2050
STEPS

2050
SDS

Europe

100%
75%
50%
25%
0%

2020

2050
STEPS

2050
SDS

Eurasia
Electrolysis

Pyrolysis

2020

2050
STEPS

2050
SDS

2020

Middle East
Coal

2050
STEPS

2050
SDS

AfricaCoal with CCS

Gas

Gas with CCS

2020

2050
STEPS

2050
SDS

Central and SouthAmerica
Oil

Fossil with CCU
IEA, 2021.

Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; CCS = carbon capture and storage;
CCU = carbon capture and utilisation for urea production.

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The electrolysis route makes important inroads in certain regional markets with access to
low-cost renewable electricity and relatively high natural gas prices.

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Chapter 2. The future of ammonia production

China
In September 2020 at the United Nations General Assembly, President Xi Jinping
announced that China will “aim to have CO2 emissions peak before 2030 andachieve carbon neutrality before 2060”. This bold new vision for China’s future
development comes in the midst of a groundswell of ambition among the world’s
major economies, recognising the need to achieve net zero emissions by midcentury. Achieving carbon neutrality means that CO2 emissions from heavy
industry, including ammonia production, cannot be ignored. The decline in China’s
emissions from ammonia production is just over 80% in the Sustainable
Development Scenario by 2050, compared with a 73% decline for the world as awhole. Output declines by 34% during this period, resulting in an emissions
intensity decline that is broadly in line with the global trajectory.
China’s technology portfolio for ammonia production is unique. Notably, thecountry relies heavily on coal gasification technology. Replacing this large, young
fleet (estimated at 12 years old on average) with near-zero-emission capacity is
the principal challenge China faces in the context of the Sustainable Development
Scenario. A wholesale switch to natural gas at the country’s coal ammonia plants
would halve the country’s CO2 emissions from ammonia production without
deploying any innovative technologies. However, this would result in a substantial
increase in natural gas imports, as the fuel is a scarce commodity (and expensiveat the margin) in China. This would also renew the life of an already young fleet offossil-fuelled plants well into the 2030s, and still retain the need for CCS retrofits
in the long term.
The evolution of China’s technology portfolio in the context of the Sustainable
Development Scenario can be characterised by the rapid build-up of electrolysis
capacity, supported by the continued rollout of carbon capture – alreadyunderway – to prolong the life of the youngest coal-based plants and avoid early
retirements. By 2050 China accounts for 15 Mt of electrolysis-based ammonia
production (requiring 124 TWh or 1% of total industrial electricity demand by thatpoint), equating to 42% of China’s output and 25% of global electrolysis-basedammonia production in this scenario. CCS-equipped plants account for around 6%of ammonia production in China in 2050, while its unabated coal-based ammonia
capacity declines by more than 70% by 2050 to account for less than one-quarterof production. The strong push for electrolysis also alleviates pressure on the rapid
CCS rollout (and associated infrastructure requirements) that is required across
China’s industrial sector as a whole. For process emissions from methanol andhigh-value chemical production in the chemical sector, and for clinker production

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in the cement sector, the alternatives to CCS for achieving significant emission

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Chapter 2. The future of ammonia production

reductions are limited or non-existent. Over 600 Mt CO2 are captured across
China’s heavy industry sectors by 2050, compared with the 3 Mt CO2 captured byindustry globally today. The deployment of electrolysis-based ammonia capacity
by 2050 avoids the need for a further 50 Mt CO2 capture capacity by 2050 thatwould be required if the coal-based plants were retained.

India
Ammonia production in India more than doubles in the period between 2020 and
2050 in the Sustainable Development Scenario. The country accounts for over
40% of the global increase in ammonia output, and is the fastest-growing major
producing region, followed closely by the Middle East. This large increase in output
means sustained capacity additions are required throughout the projection
horizon, particularly in the period 2030-2050. Despite this large increase in output,
emissions decline by 28%, requiring an almost 70% reduction in the direct CO2
intensity of ammonia production.
Existing ammonia production capacity in India is more than 90% natural gasbased, with the remaining share provided by comparatively less efficient oil-based
production facilities. Like China, India faces constraints in its indigenous
production of natural gas, with the country needing to rely on imports for any
substantially higher future demand. Imported liquefied natural gas is expensive inIndia, with prices of around USD 7-8/MBtu in recent years (compared with
USD 2-3/MBtu in the United States). Combined with the uncertainties andexpense associated with building up CCS infrastructure in the near future, thismakes continued growth in the natural gas-based production fleet a less attractive
prospect than in some other regions.
India has vast potential for low-cost renewable electricity generation. Solar PV
installations, in particular, have rapidly declined in cost over the last decade, andthe country is projected to be one of the largest markets for renewables
deployment in the coming years. These factors explain the large role played byelectrolysis in meeting the capacity additions required in the Sustainable
Development Scenario, where India accounts for 25% of global electrolysis-based
capacity by 2050, the same share as China, in a domestic market that is almost
equal in size by then. Natural gas-based capacity still grows modestly to accountfor 18 Mt of ammonia production in 2050 (25% increase by 2050, or a net additionof approximately three large new plants over that period), while around 30 GW ofelectrolysis is deployed – a technology that currently exists only at the multimegawatt scale for ammonia production today – such that electrolytic-based

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production accounts for 15 Mt (45%) of ammonia production in 2050.

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Chapter 2. The future of ammonia production

North America
North America, a region comprising the United States, Canada and Mexico, is aregion of plateauing ammonia output in the Sustainable Development Scenario.
Current production levels are around 21 Mt, with this quantity rising slightly to
23 Mt by 2050. Mexico accounts for all of the growth in production, and offsetsvery slight declines in the United States and Canada. The latter two countries
have in place ambitious net zero-emission commitments for 2050, which leads
the region as a whole to decarbonise at a faster pace than the world as a whole.
Emissions from ammonia production decline by almost 95%, with the decline inemissions intensity at roughly the same rate. This is broadly in line with the paceof emission reductions in advanced economies, many of which have similar net
zero targets in place.
The CCS-equipped natural gas pathway provides the majority of emission
reductions in the Sustainable Development Scenario. Low natural gas prices,established policy frameworks (e.g. the 45Q tax credit system in the
United States) and experience with several existing projects (e.g. the Alberta
Carbon Trunk Line in Canada) mean the region is poised for a rapid rollout of
this technology. For the region’s older SMR plants, some continued unabatedoperation and eventual replacement with a new-build ATR installation is the mosteffective strategy, given the lower costs of capturing a large percentage of theCO2 generated with this reformer arrangement. For the younger plants in theregion, and particularly any unabated plants built in the next decade in Mexico,
SMR retrofits with CCS would be the natural choice to avoid early retirements
and replacements.
Methane pyrolysis technology, though not yet deployed commercially at scale
for ammonia production, is being pursued in the United States in Nebraska.
From an initial commercial-scale plant in the early 2020s, this route expands toreach more than 10% of ammonia production in 2050. The constraint on further
expansion via this pathway is the co-production of solid carbon, which if
produced at a sufficiently high grade would start to saturate the domestic carbon
black market in North America, and need export markets if it is to generate its
cost-offsetting revenue. The alternative may be to store the solid carbon – asolid-phase form of CCS – although this is an uncertain prospect given it is yet
to be tested or regulated and would significantly affect the cost-competitivenessof the technology relative to the regionally more dominant natural gas with CCS

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pathway.

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Chapter 2. The future of ammonia production

EuropeSimilar to North America, Europe is a mature market for ammonia, and its overall
production stays flat at around 20 Mt through to 2050 in the Sustainable
Development Scenario. The European Union, which makes up aroundthree-quarters of the output of the region, has in place an ambitious net zero
greenhouse gas emissions target for 2050. Emissions from ammonia production
decline by around 90% for the region as a whole, with EU emissions declining
virtually to zero by 2050.
The region’s existing fleet of ammonia plants comprises mainly natural
gas-based production. Around 5% of output is via comparatively less efficientoil-based facilities, which are the first candidates for substitution by electrolysis
in this region’s rapid rollout of the technology. The EU hydrogen strategy, and asignificant degree of momentum behind electrolytic hydrogen projects on the
supply side, lay the groundwork for the near wholesale replacement of theregion’s existing natural gas stock by 2050 in the Sustainable Development
Scenario, when 70% of Europe’s ammonia production is via electrolysis. The
region accounts for a share of global electrolysis capacity similar to China andIndia by 2050.
CCS-equipped capacity deployment in the region is very limited for ammonia
production in the Sustainable Development Scenario, given the low levels of
public acceptance in many EU countries and several false starts for thetechnology over the past two decades. This is a major area of uncertainty in the
scenario results, as the policy framework in Europe is subject to change in the
future, and a large CCS project in Norway may do much to alter the current
prospects for the technology once fully operational in the early 2020s. The
United Kingdom and the Netherlands are other countries where CCS technology
and the required infrastructure is undergoing serious discussion anddevelopment, but as with China, there will be many competing CO2 sources forthe transport and storage infrastructure that ends up being realised. The cement
industry is a key example of an industry that is likely to be retained in some formin the region, so this and other sectors with few or no alternatives to CCS
technology for deep emission reductions are expected to take priority.

Other key regions
The regions discussed above account for approximately 60% of current

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ammonia production, this share falling to around 50% in 2050 in the SustainableAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

Development Scenario. The regions that account for the remainder generally
follow a similar trajectory to one of those outlined above, or a combination
thereof.
A broad distinction can be made between regions according to their growthtrajectory. Emerging and developing economies, particularly in Africa, the Middle
East, Central and South America, and Asia Pacific (aside from China and India,
addressed above), tend to see the highest growth rates in ammonia productionin the Sustainable Development Scenario, although in absolute terms they stillaccount for relatively small shares of global production. By 2050 the Middle Eastaccounts for 14% of global production (up from 9%), Africa for 8% (up from 5%)
and Central and South America for 7% (up from 4%). Other countries in the Asia
Pacific region, besides India and China, account for most of the rest. Advanced
economies and mature regions, such as Japan and most of Eurasia, seeplateauing or declining ammonia output. In contrast to the regions with strong
growth trajectories, these regions pursue technology strategies that arecompatible with falling output, such as retrofit technologies and strategically
timed replacements. High-growth regions are attractive prospects for new
capacity and infrastructure development, as the costs of production are likely to
be lower and they generally have growing domestic markets to serve.
The natural gas-based route equipped with CCS is the dominant near-zeroemission solution deployed in these other key regions, particularly in the Middle
East, which account for nearly one-third of CCS-equipped output by 2050. The
methane pyrolysis route, following successful scale-up in North America where
it is currently most advanced, is a complementary technology for deployment inthese regions, which tend to have low natural gas prices. Small amounts ofelectrolysis are also deployed in these regions, but natural gas tends to win on
cost where it is available indigenously (it is abundant in the Middle East, many
parts of Central and South America and North Africa), and where there are no
barriers to CCS in the regulatory and public acceptance spheres.

Considerations for the main innovative technologies
Dedicated VRE electrolysis
The electrolysis pathway for ammonia production plays a critical role in the
Sustainable Development Scenario. By 2050 the route accounts for around onefifth of ammonia production globally (up from less than 0.01% today), the sharerising to above 40% in regions such as Europe, India and China. In the Net Zero

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Emissions by 2050 Scenario the global share is significantly higher, more thanAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

40%. These quantities of electrolytic ammonia production would most likely be
produced in a combination of two possible arrangements: grid-connected
installations operating at high capacity factors (typically > 90%) and installations
fed by dedicated VRE generation that operate on a flexible basis, with lower
average capacity factors (typically around 50%). To explore in more detail theopportunities for the electrolytic route in the latter of the two arrangements, we
present results from analysis of specific sites and process arrangements tocomplement the core scenario results, which comprise the aggregate of the two
arrangements, as presented above.
Assuming a reliable source of grid electricity, and therefore a high capacity factor
at the installation (95%), the levelised cost of ammonia production via theelectrolytic route is determined in large part by the cost of electricity powering
the process. Levelised costs of ammonia production in the range of
USD 525-1 170 per tonne are achievable via this route today, assuming a gridelectricity price range of USD 10-40 per MWh and an electrolyser cost of
USD 1 477 per kW (including EPC). The lower end of this cost range puts theelectrolytic pathway within the range of historic ammonia prices, even in theabsence of a specific policy to promote its use. However, USD 30 per MWh is alow electricity price for grid electricity providing a near-100% capacity factor, withrelatively few countries seeing prices at this level for much of the year. Most
regions seeing wholesale electricity prices at this level today would achieve thisusing low-cost fossil fuels – and ammonia produced using such electricity would
be significantly more emissions intensive than producing it directly from naturalgas. Hydropower-rich countries would be the key exceptions, but the potential toexpand hydropower is limited in most cases, and demand for low-carbon gridelectricity is projected to rise dramatically in both the Sustainable Development
Scenario and the Net Zero Emissions by 2050 Scenario. Ammonia would be justone of many demands for hydropower and other low-cost, low-carbon, highcapacity factor generation.
An alternative approach to using grid electricity is to harness VRE directly in a
dedicated installation. Using a discount rate of 8%, solar PV generation costs
are as low as USD 35/MWh today at utility-scale installations, and are projected
to drop to around USD 20/MWh by 2030 in regions with the highest potential in
the Sustainable Development Scenario. It is a similar story for onshore wind
power. While our core scenario results are not prescriptive as to the geospatial
location of future installations, this low cost of VRE is an important explanatory
factor behind the critical role that the electrolytic pathway plays in reducing

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emissions from ammonia production.

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Chapter 2. The future of ammonia production

In addition to its low cost, VRE is an attractive energy vector for ammonia
production via the electrolytic route because this electricity can be generated
emissions-free. While a small amount of grid electricity (or some other form of
dispatchable power generation, such as a hydropower plant, a battery, or adiesel or ammonia generator) is still likely to be required in an installation run on
VRE, the CO2 intensity is lowered substantially relative to a 100% grid electricity
installation. Direct use of VRE in ammonia manufacturing and other industrial
processes could also ease the burden facing the electricity grid byaccommodating the variability directly, or by varying the proportions of gridelectricity consumed at times of supply shortage or surplus.
This utilisation of low-cost and ultra-low CO2 intensity VRE does impose
constraints. Because of the mismatch between the variability of VRE and theneed for stable operating conditions for large-scale industrial processes,
flexibility is a major cost driver. It can either be provided on the supply side(principally through the use of hydrogen buffer storage or battery electricity
storage) or on the demand side (tolerance of a certain degree of ramping of theHaber-Bosch synthesis unit, or periods of suspended production). Both options
result in additional cost, either in the form of additional equipment (e.g. hydrogenor electricity storage) or lower utilisation and therefore lower efficiencies andincreased maintenance costs for core process equipment (e.g. the electrolyser,
air separation unit and standalone Haber-Bosch synthesis unit).
To explore the implications for production costs of harnessing VRE directly to
produce electrolytic ammonia, we have examined nine specific locations acrossthe world that display significant potential for low-cost VRE from both solar PV
and wind. The key parameters that characterise these sites are presented inTable 2.1 and are based on data for 2020 and 2030 in the Sustainable
Development Scenario. The locations selected all have good or very good solar
and wind resources. With respect to the levelised cost of electricity, in 2020 thelocations in Chile, Spain, the United States and Saudi Arabia have lower-costsolar resources; those in China and Morocco have a cheaper wind resource, andthe locations in India, South Africa and Australia are more balanced. In 2030,
however, solar PV becomes cheaper than wind power in all locations except the

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site in China.

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Chapter 2. The future of ammonia production

Parameters for low-cost VRE sites in 2020 and 2030 in the Sustainable
Development Scenario

Site

Calama, Chile

Hebei, China

Karnataka, India

Andalucia, Spain

Assa, Morocco

Kleinsee, South
AfricaPort Headland,
Australia

Aqaba,
Saudi Arabia

Nevada,United States

Year

Solar
PV
CF

Wind
CF

Solar PV
LCOE
(USD/
MWh)

Wind
LCOE
(USD/
MWh)

Hydrogen
LCOH
(USD/
kg)

Electricity
curtailment

2020

32%

36%

41

55

4.3

8%

2030

32%

36%

26

51

2.2

7%

2020

18%

47%

51

33

3.8

14%

2030

18%

47%

32

31

2.3

13%

2020

24%

44%

35

33

3.7

7%

2030

24%

44%

23

30

2.0

5%

2020

23%

42%

39

51

4.4

15%

2030

23%

42%

27

48

2.6

16%

2020

26%

51%

67

48

4.8

16%

2030

26%

51%

40

44

2.9

9%

2020

28%

38%

62

65

5.5

11%

2030

28%

38%

38

59

3.1

15%

2020

25%

42%

50

50

4.5

14%

2030

25%

42%

35

46

2.6

4%

2020

27%

48%

37

45

4.1

18%

2030

27%

48%

20

41

2.1

16%

2020

26%

26%

55

83

6.0

16%

2030

26%

26%

34

79

2.9

19%

Notes: CF = capacity factor; LCOE = levelised cost of electricity; LCOH = levelised cost of hydrogen. For each site, hourly
data for one year are used for the calculation of all parameters. The LCOH and electricity curtailment result from an
optimisation of a hybrid wind/solar system. Main cost assumptions (incl. EPC): solar PV CAPEX (varies bycountry) = USD 580-1 140/kW in 2020, USD 310-657/kW in 2030; wind CAPEX (varies by country) = USD 1 039-1 737/kW
in 2020, USD 955-1 597/kW in 2030; electrolyser CAPEX = USD 1 477/kW in 2020, USD 559/kW in 2030.

The flexibility of the process arrangement – specifically that of the Haber-Boschsynthesis and air separation units – is a key uncertainty in this analysis. It is
assumed that the synthesis process can ramp down to 60% of its rated capacity,

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at a maximal rate of 20% per hour. The electrolyser is assumed to be 100%

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Chapter 2. The future of ammonia production

flexible; thus, the production of hydrogen is fully variable. As the synthesis unit canoperate with only partial flexibility, buffer storage of hydrogen is required between
the electrolyser output and the synthesis unit. These flexibility assumptions may
be deemed to be at the conservative end of what is possible once experience isgained with large-scale installations of this type. But, to date, no electrolyticammonia projects are operating at the scale of a single commercial ammonia plant(> 500 kt per year of production) fed by VRE directly, so to some extent this isuncharted territory and a conservative approach is warranted.
We consider two costs of hydrogen storage: “Low-cost hydrogen storage”, whichcorresponds to naturally occurring geological storage; and “High-cost hydrogenstorage”, which corresponds to high-pressure steel tanks. Our analytical approachaims to minimise the levelised cost of ammonia production by optimising the size
and utilisation of the main process units used in ammonia manufacture. They
include the solar PV and wind installations used to generate the electricity, andthe core process units (the electrolyser, the air separation unit and the HaberBosch synthesis unit).

5

1 200

4

900

3

600

2

300

1

USD/t

1 500

tCO2/tUSD/tLevelised cost of electrolytic ammonia production with VRE at nine keysites for a range of storage cost assumptions
1 800

UnitedStates

1 500
1 200

Chile

900

0

2020
2030
Grid

2020
2030
2020
2030
High cost storage Low cost storage

Electrolyser electricity
OPEX
Indirect emissions intensity (right axis)

0

Other electricity
CAPEX

South Africa

600
India

300
0

20

30

40

50

60

70

Weighted average LCOE (USD/MWh)
2020

2030

IEA, 2021.
Notes: On the column chart, the nine sites summarised in Table 2.1 are presented in aggregate in the “High-cost storage”
and “Low-cost storage” VRE result groupings, with the top of the columns showing the midpoint of the range of sites, and theerror bars displaying the range from the lowest to the highest cost sites. The weighted average LCOE is a function of thecosts and shares of solar PV and wind electricity at each selected site. Emissions intensities of electricity generation in 2020
and 2030 are the global average values in the Sustainable Development Scenario: 474 g CO2/kWh and 210 g CO2/kWhrespectively. See Table 2.1 notes for the main techno-economic parameters used.

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Dedicated VRE installations offer the possibility of producing ammonia at or below the costof an arrangement connected directly to the grid, and at much lower indirect CO2
intensities.

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Chapter 2. The future of ammonia production

Process flexibility is a prerequisite for dedicated VRE ammonia production, andthe more that is available, the lower the cost of production. Low-cost hydrogen
buffer storage offers the potential for significant further cost reduction, by 8-15%
relative to the cases with high-cost storage. Low-cost buffer storage is unlikely to
be available in many instances, so expensive high-pressure steel tanks (up to
40 times more costly than cavern storage) become the fallback option,
significantly raising the cost of stabilising the supply of hydrogen to the HaberBosch synthesis unit to within the bounds of the flexibility constraints considered.
Advances in hydrogen storage (cost reductions) will be critical to making this costadvantage less site-specific, but geological variation between sites is always likely
to create an imbalance.
The CO2 intensity of electrolytic ammonia production (including indirect emissions
from power generation) is almost completely reduced – by about 97-99% – byharnessing VRE directly, compared to utilising grid electricity at the global averagevalues of the Sustainable Development Scenario. This is because electrolysis
accounts for 93% of the electricity consumption, and thanks to its high flexibility it
can fully rely on VRE power. The residual need for grid power only stems from theneed to “firm up” the less flexible Haber-Bosch and air separation units, which canoperate only semi-flexibly during most of the year, and consume only 7% of thepower, which can also be sourced from VRE in most hours of the year. Battery
electricity storage, or electricity generation using hydrogen or ammonia, could
further reduce this reliance on grid electricity, and thus the residual indirectemissions of VRE-based ammonia production, perhaps with a slight increase in
overall costs.
Producing ammonia flexibly using zero-carbon VRE also provides value at theenergy system level, as few large producing countries and regions will have a fully
decarbonised electricity grid in the short to medium term, and demand for lowcarbon grid electricity is projected to increase dramatically in the Sustainable
Development Scenario. In the longer term, costs of VRE-based ammonia are
expected to drop such that the route can achieve parity with traditional fossil fuelroutes. Figure 2.11 displays a geospatial cost analysis of China in 2050 in the
Sustainable Development Scenario, providing insights as to the very low levelised
costs that can be achieved in the long term. Costs drop as low as USD 260-340/t
in huge swathes of the country, which even with significant exclusion zones (cities,
areas of natural beauty) would provide ample potential.
The most favourable sites would be located in the dryer western and northern
provinces where radiation and wind energy are high, and competition for rural land

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is less than in the more humid and agriculturally productive provinces of the east

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Chapter 2. The future of ammonia production

and the south. Water availability for electrolysis can be a limiting factor in locations
that are remote from the sea, or where desalination is not possible at reasonable
cost. This could result in many of the most favourable sites being far fromestablished industrial and consumption centres, which would mean a restructuringof the country’s industrial infrastructure. China is just one illustrative case, butsimilar themes are likely to be present in other regions.
Simplified levelised cost of ammonia production via electrolysis for
optimal mixes of wind and solar PV in China in 2050 in the Sustainable
Development Scenario

IEA, 2021.
Notes: This map is without prejudice to the status of or sovereignty over any territory, to the elimination of international
frontiers and boundaries, and to the name of any territory, city or area. Main cost assumptions (incl. EPC): solar PV
CAPEX = 280 USD/kW; wind CAPEX = 930 USD/kW; electrolyser CAPEX = 405 USD/kWe.

Dedicated VRE-based ammonia production plants in the long term offer the prospect of
cost-effective production, requiring gigawatt-scale VRE capacity in remote locations.

CCUS-equipped pathways
CO2 is routinely captured during the process of producing ammonia and used onsite for urea synthesis. Such installations have been operating commercially in thisway for decades because of the inherent need to separate the CO2 from the

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hydrogen required for ammonia production, and the relatively high share of

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia productionammonia that is converted to urea. Because this inherent capture takes place andproduces a highly concentrated CO2 stream, applying CCUS to any remaining CO2
beyond the portion needed for urea synthesis just requires compression anddehydration to ready it for transport and storage. Consequently, this is one of thecheapest options available to reduce a substantial share of the CO2 emissions
arising from ammonia production (see Chapter 1, “Fertiliser production
fundamentals” on production pathways and cost considerations). 7 To capture CO2from the dilute flue gas streams of ammonia production, the same technology(chemical absorption) used to separate the CO2 from the feedstock stream can be
employed; however, this requires additional investment in capture equipment
beyond that incorporated in a commercial ammonia plant today.
While CO2 capture is widespread in the ammonia industry, with more than
130 Mt CO2 captured in 2020, only a small fraction of the captured CO2 isgeologically stored (around 2 Mt CO2 per year). This fraction comes from the only
four large-scale ammonia CCS projects that are currently operating worldwide(two based in the United States, one based in Canada and one based in China),transporting CO2 via pipeline and using it for EOR. The rest of the captured CO2
is utilised for urea synthesis.
In the Stated Policies Scenario only limited deployment of CCS-equipped routes
takes place, the previously mentioned large-scale ammonia CCS projects being
joined by a handful of further installations that are expected to come online in thenext few years (Table 2.1). In the Sustainable Development Scenario 15 Mt CO2
are captured for storage in 2030 globally, with this quantity rising to 41 Mt CO2 in
2040 and almost twice as much in 2050 (91 Mt CO2), while in the Net Zero
Emissions by 2050 Scenario 101 Mt CO2 are captured for storage in 2050.
In the Sustainable Development Scenario North America captures the largest
share in 2050 (23% of total CO2 captured for storage), while more than half of thegrowth in CCUS deployment between 2030 and 2050 takes place in the Middle
East and in Asia Pacific, together capturing more than 50 Mt CO2 in 2050
(Figure 2.11). The conditions for CCUS in these regions are more favourable thanin others, and include low natural gas prices, existing oil and gas infrastructurethat could be converted for use in CCUS applications, abundant storage capacityand experience with the technology.
CCUS technologies increase the energy intensity of the ammonia production
process by around 1-2% for partial capture applications and by around 3-7% for

CO2 captured during ammonia production and used to make urea will be re-released into the atmosphere once the urea isapplied to the field.

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7

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Chapter 2. The future of ammonia production

full capture applications. 8 The increase in CAPEX depends on the final
configuration of the integrated plant, with limited increases in cost for retrofitted
solutions (around 5% for partial capture and 20% for full capture) and a wider
range of costs for new plant configurations (around 5% for partial capture and10-30% for full capture, with natural gas reforming at the lower end of the range
and coal gasification at the higher end of the range).
For large-scale applications CO2 is transported via pipeline or by ship, while tanks
transported by truck and rail are better suited for small-scale applications and shortdistances (for instance, within the same industrial hub). Pipelines represent a
cost-effective solution, on average between USD 1.5-16/t CO2/250 km, with themost economic opportunities where the transport capacity need is high, thelocation is onshore and the area sparsely populated. Repurposing existing
pipelines can substantially decrease (by 90-99%) the cost of transporting CO2 inregions where such infrastructure is available (e.g. United States, Canada and theNorth Sea region).
CO2 storage costs vary significantly depending on the rate of CO2 injection andthe characteristics of the storage reservoir, as well as the location of the storagesite, particularly with respect to whether it is situated onshore or offshore. Costs
can vary from just a few dollars to more than USD 50/t CO2 for storage reservoirs
with less favourable storage conditions. The costs can even be negative if the oilrevenue from EOR applications is taken into account. In the United States morethan half of onshore storage is estimated to cost below USD 10/t CO2, while about
half of offshore storage is estimated to be available at costs below USD 35/t CO2.
The regional availability of CO2 storage potential differs considerably by region,
with substantial capacity expected to exist in Russia, North America, Africa andAustralia, and global capacity far exceeding storage needs for the full energy
system over the period 2020-2050 in the Sustainable Development Scenario. 9
Therefore, regional availability of CO2 storage capacity would not be a limiting
factor for the deployment of this technology in the ammonia industry.
The levelised cost of CCUS-equipped ammonia production pathways depends on
multiple factors, with the main components being the CAPEX and fixed OPEX of
the core production and capture equipment, the feedstock and fuel costs. Natural
gas-based CCUS-equipped ammonia production starts to compete with that via

Partial capture involves capturing only process emissions, which are highly concentrated and only require compression
and dehydration before being transported and stored. Full capture targets both process and energy-related emissions, withthe latter being much more dilute and requiring higher energy inputs for CO2 capture. The CO2 capture rate (equivalent tothe captured CO2 as a percentage of the generated CO2 to which the capture is applied) for partial capture configurations isaround 95% of process emissions, while for full capture configurations is around 90% of combustion emissions (plus 95%
of process emissions).
9
Total global storage capacity is estimated at between 8 000 Gt CO2 and 55 000 Gt CO2. While potential storage volumes
are considerable, a smaller fraction will most likely prove to be technically or commercially feasible.

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Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

unabated natural gas when CO2 emissions are priced above USD 30/t CO2(Figure 2.14). While global average transport and storage costs are estimated ataround USD 20/t CO2, even a threefold increase to USD 60 /t CO2 (say, due tolow capture volumes, a large distance between the CO2 source and sink, only
offshore storage availability) would increase the levelised cost of ammonia by onlyaround 10-15%. This would still leave CCUS-equipped production competitive
with electrolysis-based production at moderate-to-high electricity prices.
The development of CCUS hubs with shared CO2 transport and storage
infrastructure could play a critical role in accelerating the scale-up of CCUS in thefertiliser sector, for which dedicated infrastructure may be both impractical anduneconomic. Previously identified potential CCUS hubs to co-locate fertiliser
production within larger industrial clusters include the Skagerrak/Kattegat area in
Scandinavia (lying between southern Norway, Sweden and northern Denmark).
Granular geospatial analysis can identify early opportunities for ramping up CCUS
around industrial hubs, reducing costs by exploiting economies of scale andmaking it feasible to capture CO2 at smaller industrial facilities.

Mt CO2

Captured CO2 for storage and utilisation in the Sustainable Development
Scenario
150

60%

125

50%

100

40%

North America
CSA
EuropeAfrica

75

30%

50

20%

25

10%

0

CCS

CCU
2020

CCS

CCU
2030

CCS

CCU
2040

CCS

CCU

0%

Middle East
Eurasia
Asia PacificShare of CO₂
generated (right axis)

2050

IEA, 2021.
Notes: CCS = carbon capture and storage; CCU = carbon capture and utilisation for urea production; CSA = Central andSouth America.

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In the Sustainable Development Scenario, the regions with the largest CO2 storage
requirements for the ammonia industry are Asia Pacific, the Middle East and North
America.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

Readiness, competitiveness and investment
Near-zero-emission technologies for the ammonia industry are currently at
different stages of development. They include technologies that are ready to be
deployed by industry today, and those that still have innovation hurdles toovercome before being fully placed on the market. Which technologies areultimately deployed will be context-specific, depending on factors such as energy
costs, availability of supporting infrastructure and the policy environment. The
future is uncertain, and factors such as the pace of innovation and extent oftechnology cost reductions may affect technology deployment. Regardless,achieving deep emission reductions in the ammonia industry will require a massive
shift in investment towards near-zero-emission technologies and the infrastructure
to support them.

Box 2.6

The TRL scale

One way to assess where a technology is on its journey from initial idea to market
is to use the TRL scale. Originally developed by the National Aeronautics andSpace Administration (NASA) in the United States in the 1970s and used in many
US government agencies since the 1990s, the TRL provides a snapshot in time of
the level of maturity of a given technology within a defined scale. The US
Department of Defense has been using the TRL scale since the early 2000s for
procurement, while the European Space Agency adopted it in 2008. In 2014 the
TRL was applied for the first time outside the aerospace industry to assess EUfunded projects as part of the Horizon 2020 framework programme. It is now widelyused by research institutions and technology developers around the world to set
research priorities and design innovation support programmes.

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The scale provides a common framework that can be applied consistently to any
technology, to assess and compare the maturity of technologies across sectors.
The technology journey begins from the point at which its basic principles aredefined (TRL 1). As the concept and area of application develop, the technology
moves into TRL 2, reaching TRL 3 when an experiment has been carried out thatproves the concept. The technology now enters the phase where the concept itself
needs to be validated, starting from a prototype developed in a laboratoryenvironment (TRL 4), followed by testing of components in the conditions it will be
deployed (TRL 5), through to testing the full prototype in the conditions in which it
will be deployed (TRL 6). The technology then moves to the demonstration phase,where it is tested in real-world environments (TRL 7), eventually reaching a first-

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia production

of-a-kind commercial demonstration (TRL 8) on its way towards full commercial
operation in the relevant environment (TRL 9).
Arriving at a stage where a technology can be considered commercially available(TRL 9) is not sufficient to describe its readiness to meet energy policy objectives,
for which scale is often crucial. Beyond the TRL 9 stage, technologies need to befurther developed to be integrated within existing systems or otherwise evolve tobe able to reach scale; other supporting technologies may need to be developed,
or supply chains set up, which in turn might require further development of thetechnology itself. For this reason, the IEA has extended the TRL scale it uses in its
reports to incorporate two additional readiness levels: one where the technology iscommercial and competitive, but needs further innovation for its integration into
energy systems and value chains when deployed at scale (TRL 10), and a final
one where the technology has achieved predictable growth (TRL 11).
Maturity categories and technology readiness levels along innovation cycles
Category

SMALL
PROTOTYPE or lab

TECHNOLOGYDEVELOPMENTLARGEPROTOTYPE

MARKET UPTAKE

MATURE

Level
1

INITIAL IDEA

2

APPLICATION FORMULATED

3CONCEPT NEEDS VALIDATION

4EARLY PROTOTYPE

5LARGE PROTOTYPE

6FULL PROTOTYPE AT SCALE

7

PRE-COMMERCIAL DEMONSTRATION

8FIRST OF A KIND COMMERCIAL

9COMMERCIAL OPERATION IN RELEVANT ENVIRONMENTSTEADY SCALE UP

10INTEGRATION NEEDED AT SCALE

MATURE

11

PROOF OF STABILITY REACHEDCONCEPT

SMALL PROTOTYPE

DEMONSTRATIONMARKET
DEVELOPMENT

Sub-category

LARGE
PROTOTYPE

DEMONSTRATIONEARLY ADOPTION

Basic principles have been definedConcept and application of solution have been formulated

Solution needs to be prototyped and applied

Prototype proven in test conditions

Components proven in conditions to be deployed

Prototype proven at scale in conditions to be deployed

Solution working in expected conditions

Commercial demonstration, full scale deployment in final form

Solution is commercially available, needs evolutionary improvement to stay competitive

Solution is commercial and competitive but needs further integration efforts

Predictable growth

IEA, 2021.

As technologies pass through each stage, the level of risk associated with theirperformance is reduced, but the level of overall risk rises as capital expenditure
requirements grow. However, innovation is rarely a linear progression. Not alltechnology designs make it to market or are deployed at scale. Stages ofdevelopment can accelerate or slow down depending on technical or cost factors,
and a given technology can be at different stages in different markets andapplications. As the development of a technology generates new ideas for
improvement, alternative configurations and potentially better components canappear even once a given technology configuration has become competitive.
Stages overlap and run concurrently, feeding off one another.

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In this report we refer to several broader readiness categories, each of which
comprises a different range of specific readiness levels from the full TRL scale:Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

mature, market uptake, demonstration, large prototype and small prototype(technologies at the small prototype stage of TRL 4 or lower are not included in the
Sustainable Development Scenario). Each technology type is assigned to one ofthese higher-level categories based on the granular levels of maturity of individual
technology designs or components currently associated with that technology:“Mature” for technologies that have reached market stability, and the number of
new purchases or installations are constant or even declining in someenvironments as newer technologies start to compete with the stock of existing
assets, for example ammonia production via SMR.
“Market uptake” for technologies that are being deployed in a number of markets.
This category includes the sub-categories “early adoption” for technologies thathave a cost and performance gap with established technologies and “steady scaleup” for technologies that are competitive but barriers to reaching their full market
potential remain, such as integration with existing infrastructure or consumer
preference. Policy attention is needed in both cases to stimulate wider diffusion to
reduce costs and to overcome existing barriers, with more of the costs and risks
being borne gradually by the private sector. An example is ammonia production
via SMR with CCS.
“Demonstration” for technologies where the first examples of a new technology
are being introduced at the size of a full‐scale commercial unit, for example
ammonia production via methane pyrolysis.
“Large prototype” for technology types for which prototypes are being developed
at a considerable size, as in pilot plants.
“Small prototype or lab” for technology types for which designs are being
developed into lab-scale prototypes. This category includes the sub-categories“small prototype” for technologies that have been proven in test conditions and“concept” for technologies still needing to be prototyped.

An array of technology options at differing levels of
maturity
Technologies that are not yet mature in the marketplace will be critical to achieving
deep emission reductions in the ammonia industry. Most of these technologies
either capture CO2 from fossil fuels for permanent storage or rely on electricity as
an important input. Within both categories there are several different technology
options with varying levels of readiness.
With regard to CCS, the ammonia industry has an advantage over many other

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industrial sectors in that CO2 separation is already an integral part of conventional

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 2. The future of ammonia productionammonia production processes. In conventional reforming to produce hydrogenfrom natural gas, process CO2 from the feedstock is removed using either
chemical or physical absorption technologies. Thus the CO2 capture technologies
are mature (TRL 11) for application to the concentrated CO2 stream fromfeedstock energy. Many ammonia plants are already utilising the captured CO2,
often for urea production.
It is not a huge leap from a technology standpoint to take the extra steps topermanently store the already-captured CO2. It simply needs to be compressed
and transported to the storage site. For several decades a number of fertiliser
plants in the United States have been providing their CO2 for EOR (through which
virtually all of the CO2 injected is ultimately retained in the reservoir over the life of
the project, although monitoring and verification is needed to confirm permanentstorage). A similar project came online in 2020 in Canada, with additional projects
in the construction or planning stages in the United States, the United Kingdom
and China. At least two of these projects are specifically intended to reduce
emissions, with the CO2 stored in dedicated geological storage sites rather thanbeing used for EOR. Given that the technology is ready, but deployment is not yet
widespread, the full chain of CCS for ammonia production – including CO2transport and storage infrastructure – is considered to be at the market uptake
stage (TRL 9) and would still benefit considerably from policy support for further
deployment.
Unlike the process emissions, CO2 emissions from fuel combustion to provide
process heat are not already captured as part of conventional production
processes. Thus a second capture unit would be needed, or the existing unit would
need to be expanded with some reconfiguration. Given the lower concentration of
CO2 in the combustion flue gas, chemical absorption is a probable technology
choice. This technology is being used to capture fuel combustion CO2 in two
known ammonia plant in Bahrain and Pakistan (the CO2 being used for urea andmethanol production) and for CO2 streams with comparable concentrations in the
power sector (TRL 9-10 for the capture technology and CO2 use). There are no
known ammonia plants capturing the dilute stream for permanent storage,
although transport and storage requirements would not present a technology
challenge given experience in other applications (TRL 8 for the full CCS chain).
The potential for applying CCS to ammonia fuel combustion emissions is less aquestion of technology readiness than a question of cost – using current
technologies, capturing CO2 from fuel combustion is about two to four times
costlier than from the process stream, and the CO2 capture from the process

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stream is already part of the costs of the ammonia plant’s costs anyway.

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

Various options exist to reduce fuel stream emissions to less than 10% of total
emissions, such as using ATR technology or diverting a proportion of the hydrogenproduced in the reforming process for use in the furnace. Thus, some operations
may opt out of capturing the small amount of remaining dilute fuel combustion
CO2. However, at least one known company is working towards full CO2 captureammonia production. The setup would use a cryogenic CO2 capture system
together with a process that displaces steam requirements by making use of highpressure CO2. The company is working towards a first commercial plant in
New Zealand that is expected to come online in 2024 (TRL 7).
Status of main near-zero-emission technologies in ammonia production

Technology

TRL, year
available,
importance Deployment status (selected projects)
for net zero
emissions

Carbon capture, utilisation and storage
Capture technology widely used commercially as part of the SMR hydrogenproduction process (TRL 11 for capture technology)
Multiple commercial plants in operation capture CO2 for use, often for urea
(TRL 10-11 for CCU). For example:•

Petronas Fertilizer; Kedah, Malaysia; operational 1999; 60 kt CO2/yr•

Indian Farmers Fertilizer Co-op; Aonla, India; operational 2006;
0.2 Mt CO2/yr

Chemicalabsorption –partial capture(concentrated
CO2 stream)*

9
Today
Very high•Koch Nitrogen; Enid, OK, United States; operational 1982; 0.7 Mt CO2/yr•

Nutrien (formerly Agrium); Geismar, LA, United States; operational 2013;0.25 Mt CO2/yr with capacity up to 0.6 Mt CO2/yr•

PCS Nitrogen (subsidiary of Nutrien); Geismar, LA, United States;
operational 2013; 0.3 Mt CO2/yr•

Sinopec; Zhongyuan, Henan Province, China; operational 2015;
0.1 Mt CO2/yr•

Some projects are also in the development stages, for example:•

CF Fertilisers; Ince, United Kingdom; at early development stage; 0.33
Mt CO2/yr; part of the Hynet North West industrial cluster that will store
CO2 in a dedicated geological storage site•

Horisont Energi; Hammerfest, Norway; concept study has begun,
expected to be operational by 2025; 1 Mt ammonia/yr capacity,ammonia may be used for fuel rather than fertilisers; dedicatedgeological storage.

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Several commercial plants in operation, using captured CO2 for EOR (TRL 9
for full CCS chain). Known projects are:

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Technology

Chemicalabsorption –full capture(dilute CO2
stream)Chapter 2. The future of ammonia production

TRL, year
available,
importance Deployment status (selected projects)
for net zero
emissions

8
Today
MediumFull capture involves additional capacity to capture the dilute CO2 stream
from fuel combustion for heat provision. Chemical absorption would be alikely candidate for this CO2 stream. It is already being applied commerciallyto the concentrated process emissions stream in ammonia plants, as well as
to dilute CO2 streams in a more limited number of cases in the power sector(TRL 9-10 for capture technology). However, it is likely currently being
applied to the dilute stream in only a very limited number of ammonia plants.
Two known ammonia plants are capturing dilute emissions for use (TRL 9 for
CCU):•

GCIP; Sitra, Bahrain; operational 2010; 0.16 Mt CO2/yr•

Engro; Daharki, Pakistan; operational 2010; 0.12 Mt CO2/yr

No known ammonia plants are capturing dilute emissions for permanentstorage, although based on other related experience there would be no major
technology hurdles to overcome (TRL 8 for full CCS chain).

Capture technology widely used commercially as part of the SMR hydrogenproduction process (TRL 11 for capture technology)

Cryogenic –full capture(dilute CO2
stream)9
Today
Very high72025MediumSeveral commercial plants in operation, using captured CO2 for EOR (TRL 9
for full CCS chain). Known projects are:•Coffeyville Resources Nitrogen Fertilizers; Coffeyville, KS, United States;
operational 2013; 1 Mt CO2/yr•

Nutrien; Redwater, AB, Canada; operational 2020; 0.3 Mt CO2/yr; part of
the Alberta Carbon Trunk Line project.

Pouakai NZ (subsidiary of eight Rivers Capital) is developing a zero-emissionhydrogen project in Taranaki, New Zealand, set to come online in 2024
capturing 1 Mt CO2/yr. It will produce fertilisers, hydrogen and power.
Through use of a cryogenic CO2 capture system and a process called theAllam-Fetvedt Cycle, which uses high-pressure CO2 instead of steam, theproject is aiming to store 100% of CO2 generated.

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Physicalabsorption –partial capture(concentrated
CO2 stream)Ammonia Technology Roadmap
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Technology

Chapter 2. The future of ammonia production

TRL, year
available,
importance Deployment status (selected projects)
for net zero
emissionsElectricity
Electrolysers have been used commercially over the past century, including
for ammonia production using hydropower. However, their use is notwidespread today, putting the electrolyser itself at TRL 9-10. Only one known
ammonia plant using electrolytic hydrogen from hydropower remains,
operated by Industrias Cachimayo in Cusco, Peru, since the 1970s.
The full chain of VRE-powered electrolysis to produce ammonia is being
developed, with several large-scale demonstration or first commercial plants
in the development stages (TRL 8 for full chain). Some of the projects thatare most advanced and/or most relevant to fertilisers and other current usesof ammonia include:8
2025
Very highFertiberia and Iberdrola; Puertollano, Spain; under construction, due tobe online by end of 2021; 20 MW electrolyser, solar-powered; for use infertiliser plant to enable 10% reduction in natural gas requirements;
three additional projects planned between 2023 and 2027 in Puertollano
and Palos de la Frontera for a total of 800 MW electrolysis•

Yara, NEL Porsgrunn, Norway, 25 MW electrolyser expected online in2023; expanded electrolyser capacity to fully shift 0.5 Mt/yr of ammonia
production away from natural gas in 2026-2028 (in partnership with
Statkraft and Aker Clean Hydrogen); grid-connected hydropower•

Yara and Ørsted; Sluiskil, Netherlands; at feasibility stage, expected
online 2025; 100 MW electrolyser, 70 kt/yr ammonia; powered byoffshore wind•

Yara and Engie; Pilbara, Australia; 10 MW electrolyser by 2023; solarpowered•

CF Industries; Donaldsonville, LA, United States; construction to begin in
2021, completion by 2023; 20 MW electrolyser, 20 kt/yr ammonia; gridconnected•

Enaex and Engie (Hyex project); Mejillones district, Chile; pilot with 26
MW electrolyser and 18 kt/yr ammonia expected online by 2024; fullscale operation with 1.6 GW electrolyser and 700 kt/yr ammonia by2030; solar-powered•

Balance Agri-Nutrients and Hiringa Energy; Kapuni, New Zealand;
expected online mid-2020s; 7 kt urea/yr; wind-powered

Other pilot to commercial-scale projects are also at various stages ofplanning and development, including some that would use ammonia for fuel.
They are located around the world, including in Australia (Queensland
Nitrates; Dyno Nobel; H2U; BP; Fortescue Metals Group; Origin Energy),
Denmark (Skovgaard Invest; Copenhagen Infrastructure Partners), Trinidad
and Tobago (Kenesjay Green Ltd), Germany (RWE), Chile (AES Gener;
CORFO; Austria Energy), Oman (ACME) and Morocco (OCP Group).

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Electrolytichydrogen
supplied byVRE•

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Technology

Chapter 2. The future of ammonia production

TRL, year
available,
importance Deployment status (selected projects)
for net zero
emissions
Several projects are working towards using methane pyrolysis to producehydrogen. While some are already planning to use the hydrogen to produce
ammonia, for others the intended use of hydrogen is not yet determined.
Projects include:

7
2025
High

Methanepyrolysis•

Monolith completed pilot testing in Redwood City, CA, United States
during 2013-15. First commercial unit - Olive Creek 1, 14 kt/yr carbon
black capacity; Hallam, NE; construction completed in 2020 withproduction expected to start in 2021. Second phase to begin
construction in 2021 on same site, Olive Creek 2; production expected to
begin 2023/24; will produce 275 kt/yr ammonia and 180 kt/yr carbon
black

•

BASF is pilot testing in Ludwigshafen, Germany; first industrial-scale
plant expected around 2030; technology expected to be used for
producing chemicals such as ammonia and methanol•

Hazer Group is preparing for construction of a commercial
demonstration project in Munster, Australia•

C-Zero is working on commercialising a methane pyrolysis technology
developed at the University of California, Santa Barbara in the
United States; in early 2021 funds were raised for a first pilot plant•

A number of other companies and research institutions have done labscale testing, with a few – including HiiROC in the United Kingdom, TNO
in the Netherlands and KIT in Germany – working towards pilot plants.

Bioenergy

Biomass/waste
gasification

5
Low

Techno-economic evaluation of producing ammonia via biomass
gasification completed, but suggests it is not yet economically viable. Higher
TRLs for other applications (for example biomethane, ethanol and methanol
production), but not yet applied to ammonia.

*For CO2 capture projects, if information on the type of capture technology was unavailable, the project was listed underchemical absorption.
Notes: TRL = technology readiness level; SMR = steam methane reforming; CCU = carbon capture and utilisation; CCS =carbon capture and storage.

Electrolytic hydrogen has already been used commercially for ammonia
production, powered by large-scale hydropower. In fact, ammonia production fromelectrolytic hydrogen was quite common until around the 1970s when cheap
natural gas led to the technology’s replacement by SMR plants. Only one
electrolytic ammonia plant remains in the world, a plant built in the 1960s in Peru.

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While electrolytic ammonia production in itself is a commercially provenAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

technology, producing ammonia from electrolysis powered by VRE has the added
challenge of adapting the production chain to the variability of electricity infeed.
Producing ammonia from electrolytic hydrogen has regained interest in recent
years due to the need to reduce CO2 emissions. Numerous projects around theworld are at various stages of integrating electrolytic hydrogen into ammonia
production, including in Europe, the United States, Chile, Australia and New
Zealand. Several will use the ammonia for fertiliser production, some for
explosives and some for energy. Many are beginning with smaller electrolysers(10-25 MW) to meet a proportion of the plant’s hydrogen input requirements, andhave plans to scale up in the subsequent years to gigawatt-scale electrolysers
providing 80-100% of hydrogen requirements. The first small-scale electrolyser forammonia production is scheduled to come online by the end of 2021, with larger
electrolysers coming online in the mid to late 2020s. While some will use gridelectricity, many will be powered directly by dedicated VRE. Given that several
projects to produce ammonia with electrolytic hydrogen from VRE are at advanced
stages, but the VRE integration challenge remains, the full chain of ammonia from
VRE is assessed at TRL 8.
Innovation of the electrolysers themselves also continues, which will bring down
capital costs and improve efficiency. Alkaline electrolysers have already beenused commercially (TRL 9). Polymer electrolyte membrane (PEM) electrolysers
are less commercially developed, but have been scaled up to industrial size withcommercial projects in operation (TRL 9) and have several advantages, such as
the potential to respond rapidly to required changes in capacity factor even more
rapidly than alkaline modules. Solid oxide electrolysers that could considerably
reduce electricity input requirements – although provide less flexibility than PEM
and alkaline electrolysers – are at the pilot stage (TRL 6). Of course, nitrogen
fertiliser production can benefit from technology learnings in the many othersectors where electrolysers are being advanced to produce hydrogen.
Methane pyrolysis is also approaching market readiness. What is expected be thefirst methane pyrolysis unit to produce ammonia at commercial scale is due tocome online in the United States in 2023 or 2024, putting the technology at TRL 7.
Other companies and research institutions – primarily in Europe, the United Statesand Australia – are also developing technologies to produce hydrogen frommethane pyrolysis, some of which are likely to be used for ammonia production.
Within the broader category of methane pyrolysis, there are three maintechnologies, plasma, thermal and catalytic, and different variations of these

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technologies are at different stages of readiness.

Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

Gasification of biomass or waste is also a possible technology option for nearzero-emission ammonia production. While techno-economic evaluations havebeen completed and biomass gasification is used for other applications, no known
projects are pursuing scale-up specifically for ammonia production. This puts
biomass gasification for ammonia still at the prototype stage (TRL 5). High costs
and competition for sustainable biomass resources from other sectors make thistechnology route unlikely to play a large role.
R&D is also underway on a variety of other technologies for low-emissionammonia production. Some involve modifications to producing ammonia with
Haber-Bosch, while others are based on processes other than Haber-Bosch.
These technologies are at the small prototype or lab phase (TRL 4 or lower) andwould require considerable further development to reach market readiness. As
such, they are not included in the scenarios discussed in this technology roadmap.
However, the innovation process involves many uncertainties and advances could
occur more rapidly than anticipated. Thus, it is a possible that they could play arole in sustainable ammonia production in the future. Major categories of earlier-Electrified SMR: hydrogen could be produced using a combination of natural gas
for feedstock – for which process emissions are more easily captured – and using
electricity to provide process heat. This is challenging given the high-temperature
heat required. Other renewable direct heat sources, such as concentrated solar
power or geothermal, could also be an option. The Haber-Bosch process would
be maintained for ammonia synthesis.

Biological enzymes: such processes would replace Haber-Bosch with biologicalenzyme catalysts – produced by genetically modified bacteria – that synthesiseammonia directly from water and nitrogen in the air. As such, they would mimic
natural biological nitrogen fixation.

Electrochemical production: such processes would replace Haber-Bosch byelectrolysis using specific electrolytes and electrocatalysts to synthesise ammonia
directly from water and atmospheric nitrogen in the air.

Chemical looping: such processes would produce ammonia as a by-product ofchemical and electrochemical reactions, while recycling the core reaction
chemicals. Some of these processes would avoid hydrogen production and thus
replace Haber-Bosch, while others would produce hydrogen for ammonia
synthesis via Haber-Bosch.



Low-temperature catalytic synthesis: such processes would use innovative
catalysts at low temperatures (around 50°C) to drive ammonia synthesis,
increasing yield and reducing process energy requirements relative toconventional high-temperature Haber-Bosch using an iron catalyst.

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stage technologies being researched include:Ammonia Technology Roadmap
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Chapter 2. The future of ammonia production

CO2 emission reductions in the Sustainable Development Scenario bytechnology maturity category

Mt CO2Ammonia direct emission reductions

Cumulative direct emission reductions
between 2021 and 2050

500
STEPS

400

26%

300
58%

200

16%

SDS

100
0
2020

2025

2030

2035

Mature

2040

2045

2050

Market uptake

Demonstration
IEA, 2021.

Notes: STEPS = Stated Policies Scenario. SDS = Sustainable Development Scenario. See Box 2.3 for a description of thetechnology maturity categories. Ammonia used as an energy carrier is not included.

Almost 75% of the emission reductions in the Sustainable Development Scenario comefrom technologies that are currently at the market uptake or demonstration stage.

CCS and electrolytic hydrogen from VRE are likely to play a critical role in nearzero-emission ammonia production. As such, most emission reductions in the
Sustainable Development Scenario are from technologies that are currently at themarket uptake and demonstration stages – they account for 16% and 58% of theemission reductions until 2050, respectively. Technologies and strategies toimprove ammonia use efficiency are already mature from a technology standpoint,
although there are cost, behavioural and co-ordination barriers remaining to be
overcome. These strategies, along with energy efficiency improvements withinconventional routes, account for most of the remaining 26% of emission reductions
from mature technologies. There is also a small contribution from the structuralshift at the global level in which natural gas-based production modestly increases
while coal-based production decreases. This is driven by China’s declining shareof global production, given that most coal-based production today occurs in China.

Exploring key uncertainties
While the results presented in the Sustainable Development Scenario take into
account many factors, including variations in regional circumstances, these figures
do not constitute a forecast and are subject to much uncertainty. Major aspects ofuncertainty include the future costs of production and the pace of technology

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down technology costs. These factors, which are explored in this section, canaffect the extent to which different technologies are deployed and could determine
what a sustainable future for the ammonia industry looks like.

Future production costs
The simplified levelised cost can be a helpful metric to compare the relative
sensitivity of production pathways to variations in their input costs. Two of the key
factors likely to affect future costs of ammonia production are energy costs andtechnology CAPEX. CO2 emission reduction policies, such as CO2 prices, would
also affect total production costs.
When comparing natural gas-based reforming production with and without CCS
and electrolytic-based ammonia production, natural gas-based reforming without
CCS is unsurprisingly the least-cost option in most energy price contexts and in
the absence of a CO2 price. The cost of adding CCS to natural gas-based
reforming is relatively modest. It increases the levelised cost of ammonia
production by about 25% in typical energy price contexts and would require a CO2
price of about USD 30/t CO2 to start being cost-competitive with unabated natural
gas reforming. Policies other than explicit carbon prices could similarly spur the
addition of CCS, such as CO2 emission regulations or technology subsidies.
Electrolysis-based ammonia production is able to compete with natural gas
reforming in a more limited range of contexts, but is most likely to when electricity
prices are low, natural gas prices are high and electrolyser costs low. Even in thecase of low electrolyser costs, electricity prices of USD ‘40/MWh or lower are
needed for electrolysis to become competitive. In regions with high natural gas
prices (USD 10/MBtu), electrolysis could already become competitive withelectricity prices of around USD 40/MWh. Such low electrolyser costs requireconsiderable reductions in the cost of electrolysers relative to today – on the orderof 60% reductions to reach about USD 400/kW e electrolyser capacity. Without
such reductions in electrolyser costs, even lower electricity prices of
USD 20-25/MWh would be needed. In regions with lower natural gas prices,
electrolysers at today’s costs may require electricity prices below USD 5/MWh to
be cost-competitive.
The CO2 price at which electrolysis becomes competitive with natural gas
reforming with or without CCS is highly dependent on the energy price context andelectrolyser costs, and could range anywhere from no carbon price to several

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hundred dollars per tonne of CO2.

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Levelised cost of ammonia production pathways at varying gas, electricity
and CO2 prices

IEA, 2021.
Notes: SMR = steam methane reforming; ATR = auto-thermal reforming; CCS = carbon capture and storage. Presented
costs account for regional variation. For left and right graphs: electricity costs = USD 90/MWh (USD 25/GJ) for electrolysis
high and USD 30/MWh (USD 8/GJ) for electrolysis low; electrolyser cost = USD 1 477/kWe for electrolysis high and
USD 405/kWe for electrolysis low. For middle and right graphs: natural gas costs = USD 10/MBtu (USD 9/GJ) for natural gas
high and USD 2/MBtu (USD 2/GJ) for natural gas low. For left and middle graphs no price on CO2 is imposed. CO2 transportand storage costs = USD 20/t CO2 captured. Electrolyser LHV efficiency = 64% for electrolysis high and 74% for electrolysis
low. CO2 streams are captured with a 95% capture rate. CAPEX comprises process equipment costs (including air separation
units, carbon capture equipment and electrolysers where applicable) plus engineering, procurement and construction costs.
For all equipment: discount rate = 8%; lifetime = 25 years; capacity factor = 95%.

Electricity prices of about USD 40/MWh or lower are required for electrolysis to be costcompetitive with natural gas-based ammonia production with or without CCS. Applicationof CCS to natural gas-based production becomes competitive at CO2 prices of
USD 30/t CO2.

Regions with electricity prices today in the range needed to make electrolyticammonia production competitive (USD 40/MWh or below) achieve low prices
either through low-cost fossil fuels that would make ammonia production evenmore emissions-intensive than natural gas reforming, or through large-scalehydropower that has limited potential for future expansion to supply new uses.
However, costs of solar and wind have fallen rapidly in recent years and are likely
to continue to fall. In regions with strong potential for wind and solar, for example
parts of Africa and Australia, electrolytic-based ammonia could indeed becomecost-competitive, including through strategically placed dedicated VRE capacity.
Furthermore, in regions expected to have quite high natural gas prices in the future– such as parts of Europe, a number of Asian countries such as China, Korea and

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Chapter 2. The future of ammonia production

appealing. Beyond costs, other factors may lead to choosing electrolysis-based
production, such as lack of access to CO2 transport and storage infrastructureneeded for natural gas reforming with CCS. Moreover, as discussed in the next
section, it may well turn out that technology costs fall more rapidly than expected,
enabling more widespread competitiveness for electrolysis.

Uncertainty in technology innovation
Technology innovation is a process of experimentation, often involving decades
to successfully bring technologies from the lab to market readiness. Manytechnologies will never make it out of the lab, while others may fail to scale-up tocommercial scale, often due technical complications or cost challenges. Even after
a technology reaches industrial scale, its longer-term uptake may depend onwhether continued innovation is able to bring costs down to competitive levels.
Conversely, some technologies can progress rapidly through the innovation
stages. Characteristics that facilitate rapid innovation include: small enough unit
size to be mass produced for rapid testing; modularity that enables sequential
addition of units; and synergies with technology advances elsewhere to enable
learning spillovers.
Due to the uncertainties inherent in technology innovation, the exact roles ofdifferent technologies in a sustainable future for the ammonia industry are also
uncertain. The Sustainable Development Scenario provides one possible path, butthere are others. The main uncertainties are the pace of development and extent
of cost reductions for the electrolytic and methane pyrolysis routes. As mentioned
in the previous section, while current estimates of future cost developmentssuggest that natural gas-based ammonia production with CCS may continue to be
the most cost-competitive option in many regional contexts, it could well turn outthat innovation on electrolysis and/or methane pyrolysis leads to greater cost
reductions and their more widespread cost-competitiveness.
Aside from technology innovation, other uncertainties also exist that could affectthe deployment of different production routes. For example, CCS-based
production could have lower deployment in some regions due to insufficient buildout of CO2 transport and storage infrastructure. This could result from challenges
related to public acceptability of CCS, the co-ordination of infrastructure planningand construction, or other factors.
To appreciate the range of the uncertainties, it can be useful to consider theextreme cases in which 100% of ammonia production in 2050 would be via theelectrolytic or methane pyrolysis routes. This is not to suggest that such an

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extreme case would occur in the real world – in all probability a mix of different

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Chapter 2. The future of ammonia production

technologies is likely. Rather it is to illustrate the outer bounds of the various
possibilities, to provide a sense of the implications if particular technologies took
more or less market share. In both of these cases, CO2 emissions from ammonia
production would be reduced to close to zero by 2050, which is more comparable
to the level of emission reductions reached in the Net Zero Emissions by 2050
Scenario than in the Sustainable Development Scenario.
In the case of 100% electrolysis-based ammonia production, 2.5 times more
electricity would be required in 2050 for ammonia production compared to the Net
Zero Emissions by 2050 Scenario (3.5 times more than the Sustainable
Development Scenario). This is an additional 1 200 TWh of electricity, roughly
equivalent to half today’s electricity demand in the European Union. Consideringthat in a sustainable future electricity demand will increase substantially in all enduse sectors, pursuing 100% electrolytic-based ammonia production could bechallenging. It would put additional pressure on the electricity system to build out
even more near-zero-emission generation and distribution capacity. Equally,
however, it would eliminate the need to build CO2 transport and storage
infrastructure for the sector. It is notable that total energy requirements for thiscase would be similar to that in the Sustainable Development Scenario or Net Zero
Emissions by 2050 Scenario. This is largely as a result of improvements inelectrolyser efficiency through technology learning, which reaches about 75%
efficiency in 2050 compared to about 65% today.
In the case of 100% methane pyrolysis-based ammonia production, compared to
the Sustainable Development Scenario, total energy requirements would be about
45% higher and electricity requirements about 10% lower in 2050; compared to
the Net Zero Emissions by 2050 Scenario, total energy requirements would again
be about 45% higher, but electricity requirements about 40% lower in 2050. As in
the case of 100% electrolysis-based production, infrastructure for CO2 capture andstorage would not be needed. However, a solution would be needed to deal withthe 120 Mt of carbon black than is co-produced through methane pyrolysis.
Carbon black is solid carbon that is currently produced in dedicated facilities forvarious industrial uses. Its primary use is as reinforcement and pigment in tyres;
other uses include as an agent for reinforcement, pigmentation, UV stabilisation,
conductivity and insulation in other rubber products, inks, coatings and plastics.
The market for carbon black is about 13 Mt per year, and with population andeconomic growth, demand from current uses could be expected to grow to about
20 Mt by 2050. Thus, producing all ammonia through methane pyrolysis would
alone co-produce about six times as much carbon black as is likely to be needed

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globally. Even for the 20 Mt of demand, ammonia producers that co-produce

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carbon black are likely to face competition with the output of dedicated carbon
black producers, as well as hydrogen producers using methane pyrolysis to
produce hydrogen for use in other sectors. As such, market prices for carbon black
are likely to be depressed, and the quantity of carbon black ammonia producers
can sell will be less than 20 Mt. Unless other uses can be found for carbon black,the unsold quantity would likely need to be landfilled. The absence of a market formuch of its carbon black may hurt the competitiveness of methane pyrolysis, as
the revenue from carbon black is currently a key aspect of the technology’s
economic case. Once the carbon black market is saturated, even greater
technology cost reductions through innovation would be needed for methane
pyrolysis to cost-competitively gain a larger market share.

12

100%

75%

9

6

50%

3

25%

% reduction relative to 2020

EJ

Ammonia production energy requirements and CO2 emission reductionsin 2050 in different technology contexts
Fossil with CCU
Electricity for hydrogen
Electricity
Other
Natural gas with CCS
Natural gas
Coal with CCS
Coal
0

SDS

NZE

100% electrolysis
case

100% methane
pyrolysis case0%

CO₂ emissions reduction(right axis)

IEA, 2021.
Notes: CCU = carbon capture and utilisation; CCS = carbon capture and storage; SDS = Sustainable Development Scenario;
NZE = Net Zero Emissions by 2050 Scenario. “Other” is comprised mostly of bioenergy, as well as a small amount ofhydrogen-based synthetic methane imported via blending in the natural gas grid. Ammonia used as an energy carrier is notincluded.

Producing all ammonia from electrolysis would quadruple electricity requirements in 2050.
Alternatively, producing all ammonia from methane pyrolysis would lead to a 45% increase
in total energy requirements.

An additional consideration if all ammonia were produced via either electrolysis ormethane pyrolysis is that neither route would generate CO2 for use in urea
production. In the Sustainable Development Scenario and Net Zero Emissions by
2050 Scenario about 155 Mt of urea are produced in 2050. This is even as urea’s
share of total nitrogen fertiliser production declines, stemming from efforts to
reduce the CO2 that is released after urea is applied to agricultural fields. In bothscenarios the 110 Mt of CO2 required to produce urea is supplied from natural gas

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SMR-based ammonia production. If using the most efficient technologies, thisAmmonia Technology Roadmap
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Chapter 2. The future of ammonia production

quantity of CO2 in a concentrated stream would be generated from 75 Mt ofammonia production, or about one-third of total ammonia production in 2050.
If this ammonia production were displaced by electrolysis- or methane pyrolysisbased production, another CO2 source would be needed for urea. The CO2 could
be supplied by other industries, or could be sourced from direct air capture (DAC).
Using CO2 from DAC would have an advantage that its later release during urea
application on fields would be carbon neutral, given that the CO2 was just recently
extracted from the air. However, DAC has not yet been demonstrated at large
scale and costs are currently very high – major developments are needed to bring
the technology to full scale and bring down costs. Furthermore, DAC has
substantial electricity and land use requirements compared to an ammonia plant.
About 265 TWh of electricity would be needed to capture the 110 Mt of CO2,
roughly equivalent to all the electricity consumed in Indonesia today. An alternative
option could be to further reduce the share of urea and instead produce otherforms of nitrogen fertiliser.

Investment
For the ammonia sector, the CO2 emission reductions in the Sustainable
Development Scenario translate into a massive overhaul of a large industrial
sector that has been built up over many decades and for which conventional
technologies are well established. It calls for large-scale investment in new, nearzero-emission processes and supporting infrastructure. By 2050 the global
fertiliser sector will need to install 155 GW of electrolyser capacity andinfrastructure to transport and store 90 Mt CO2.
At least in the initial stages of deployment, investing in new technologies may beconsidered riskier, considering the uncertainties involved and given that higher
total production costs for near-zero-emission routes may lead to lower profitability
for the project. As such, government support mechanisms will be needed to help
mobilise the required investment and align incentives to enable near-zeroemission production to be profitable (see Chapter 3). Despite the initial higher risk
and uncertainty of investing in near-zero-emission technologies, in the longer term
following the Sustainable Development Scenario investment pathway is likely to
be lower risk. In a future where the rest of the economy is transitioning towards
net zero emissions, investment in high-emitting capacity is at risk of becoming a
stranded asset, unable to produce ammonia competitively within the evolving

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market and regulatory conditions.

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Chapter 2. The future of ammonia production

The Sustainable Development Scenario will require on average USD 14 billion incapital investment in process technologies for ammonia production each year
between now and 2050, of which 80% are in near-zero-emission capacity. The
average annual investment required in the Net Zero Emissions by 2050 Scenario
is only slightly higher, at USD 15 billion to 2050. For context, in 2019 global GDP
was USD 88 trillion, of which USD 21 trillion (about 25%) was for capital
investment, of which nearly USD 2 trillion (9%) was for capital investment in theenergy sector.
Capital investment in process equipment for ammonia production by
scenario

IEA, 2021.
Notes: CCS = carbon capture and storage; STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario.
Ammonia used as an energy carrier is not included.

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While total cumulative capital investment is comparable to the Stated Policies Scenario, theSustainable Development Scenario requires a massive redirection of investment away fromconventional technologies and towards near-zero-emission technologies.

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Chapter 2. The future of ammonia production

Cumulatively from now to 2050 the global capital investment required for processequipment in the ammonia industry in the Sustainable Development Scenario iscomparable to that required in the Stated Policies Scenario – around
USD 400 billion. However, the nature of the individual investments is quite
different. In the Sustainable Development Scenario a large proportion of
investment goes towards near-zero-emission process routes. About 30% is inhydrogen-based routes, including electrolysers and synthesis units to produce
ammonia from electrolytic hydrogen, while 50% is in CCS-equipped routes,
including the CO2 capture equipment itself and the equipped SMR units. Thismeans that a considerable proportion of investment goes towards newtechnologies – a third of cumulative investment is in technologies that are today
at the demonstration or prototype stage. In contrast, virtually all investment in theStated Policies Scenario is in mature technologies. The uncertainty involved ininvesting in new technologies means the investment in the Sustainable
Development Scenario is higher risk, and thus government support will be
important.
Many factors contribute to the scenarios’ roughly equivalent investment needs –the dynamics in the Sustainable Development Scenario relative to the Stated

Half as much cumulative capacity addition to coal-based ammonia
production. Since the CAPEX of coal-based ammonia production is about doublethat of natural gas-based production, this puts a downward pressure on
investment.

Considerably higher deployment of CO2 capture technologies. Since applying
these technologies results in additional CAPEX, this puts an upward pressure on
investment, even as CO2 capture costs decline by about 20% throughout themodelling horizon.

Considerable deployment of electrolysis- and pyrolysis-based ammonia
production. The costs of electrolysers and methane pyrolysis decline by morethan 50% over the course of the modelling horizon due to technology learning as
deployment increases across the energy system. As such, in most regions theseroutes have higher CAPEX than natural gas-based ammonia production until
about 2030, whereas in later decades their CAPEX is lower. Regional differencesin the cost of capital equipment also affect the relative costs, and sinceelectrolysers are assumed to be more globally traded, they thus have less regional
differentiation in cost of capital. Thus, electrolysis and pyrolysis deployment leads
to both upward and downward pressures on investment, depending on the time
period and region.



Lower ammonia production, by 7% cumulatively, due to use efficiency
measures. This means less production capacity is needed, putting a downward
pressure on total investment. Note that the average investment per tonne of

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Policies Scenario include the following:Ammonia Technology Roadmap
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Chapter 2. The future of ammonia productionammonia produced over the course of the Sustainable Development Scenario is
1.5% higher than in the Stated Policies Scenario, with a 24% increase in the 20412050 time period.

Higher capacity turnover in some regions in order to meet CO2 emission
reduction requirements. Retiring capacity earlier than would otherwise havebeen the case, so it can be replaced by near-zero-emission technologies,
increases capacity additions and puts an upward pressure on investment.

At the global level, these upward and downward pressures balance out to lead toroughly equivalent cumulative investment in the two scenarios.
The share of total investment by region in the Sustainable Development Scenario
is aligned closely with the share of production. About 22% of cumulative
investment in the Sustainable Development Scenario occurs in China, which is
the largest producer. This is followed by 12% in India, 10% in the Middle East, 8%
in the European Union and 8% in the United States. Within each region, thedifference in investment between the Sustainable Development Scenario and theStates Policies Scenario is driven by the variation in technology routes followed
and regional cost of capital.
In China cumulative investment is about 25% lower in the Sustainable
Development Scenario than in the States Policies Scenario. Investment in coalbased ammonia production capacity is considerably lower, and a significant
amount of investment is in the electrolytic route that benefits from major costdeclines. In the United States and the Middle East, cumulative investment iscomparable in the two scenarios. In both regions, higher investment in CO2
capture technologies to equip natural gas-based ammonia production is
outweighed by a combination of investment in lower-CAPEX pyrolysis-based
production in the later decades and lower total capacity additions due to lower
demand for ammonia.
Meanwhile, the European Union and India see 10% and 7% higher cumulative
investment, respectively, in the Sustainable Development Scenario than in theStates Policies Scenario. In the European Union this is driven primarily by early
investment in considerable electrolytic-based production prior to 2030, when the
CAPEX of that route is still higher than for natural gas-based production.
Furthermore, the rapid deployment of electrolytic production capacity along withflat production volumes means a higher turnover of capacity. India also relies
primarily on the electrolytic route. Given that India has relatively low capital costs
for equipment manufactured domestically, including equipment for natural gas-

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based ammonia production, the electrolytic route relying on imported electrolysers

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Chapter 2. The future of ammonia production

retains higher CAPEX than the natural gas route throughout the modelling horizon,
leading to higher investment needs in the Sustainable Development Scenario.
It is important to keep in mind that capital investment in process technologies isonly one component of the costs of a more sustainable ammonia industry.
Investment in R&D and demonstration is still needed to bring the required nearzero-emission technologies to market readiness. Production with CCS will requireconsiderable investment in CO2 transport and storage infrastructure. While the fullcosts of this infrastructure are likely to be shared with other sectors, the cumulative
cost of transporting and storing the CO2 captured from just the ammonia sector in
the Sustainable Development Scenario through to 2050 is an estimated
USD 17 billion (assuming current costs of USD 15-55/t CO2, declining to
USD 12-30/t CO2, depending on the region).
For the electrolytic route, when electricity is produced on site from variable
renewables, investment will be needed in electricity generation capacity andhydrogen storage. When electrolytic hydrogen is produced using electricity fromthe grid, the additional investment in electricity generation capacity and distribution
infrastructure is seen by ammonia producers as electricity costs. Given thatelectricity costs more than natural gas and coal, the shift towards increasing
production from electrolytic hydrogen in the Sustainable Development Scenario
results in about USD 75 billion in additional cumulative energy costs globallyduring 2021-2050 relative to the States Policies Scenario, a 5% increase. This
increase in total energy costs occurs even though natural gas continues to be
used in the Sustainable Development Scenario at lower prices than in the States
Policies Scenario, given lower global demand for fossil fuels.
The efficiency measures that moderate ammonia demand in the Sustainable
Development Scenario also require investment. With regard to improved NUE on
farmland, the costs are associated with planning and implementing nutrient
management plans. Some of these investments are for equipment that enables
better monitoring of crops and more precise application of fertilisers, such as crop
sensors, weather monitors, GPS guidance systems, automatic swathe control
technologies (which prevent double application on areas where fertiliser has
already been applied) and variable-rate application technologies (which
automatically change the application level according to the management zone orinformation from crop sensors).
Other costs are the expertise and labour required to design and carry out nutrient
management, which may include efforts from farmers themselves as well as

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agronomists/crop advisers, soil scientists, extension agents and fertiliser dealers.

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The cost of a comprehensive nutrient management plan can vary considerably byfarm – available estimates are several thousand dollars per farm or anywhere from
USD 5 to USD 30 per acre (USD 1 000 to USD 7 000 per km2). These costs would
go towards activities such as soil and crop testing (both initially and monitoringover time), developing remote-sensing imagery maps, data analysis to develop
site-specific recommendations and plans, developing decision support systems,
field scouting, tracking yields and fertiliser application record-keeping.
Fortunately, despite the various costs of nutrient management, there is often apay-off not only in environmental benefits but also financially. A well-designed
nutrient management plan seeks to achieve a nitrogen application rate that
optimises profitability at the given site, taking into account the cost of fertilisers
and the revenue gained from increased crop yields, while also ensuring
environmental objectives are met. By reducing the over-application of fertilisers,
one estimate suggests that precision agriculture techniques could save anywherefrom 5% to 30% of input costs and would provide a return on investment within a

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couple of years.

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Chapter 3. Enabling more sustainable ammonia production

Chapter 3. Enabling moresustainable ammonia production
Highlights• Governments, producers and other stakeholders have already begun taking
action to reduce emissions from the ammonia industry. Some governments
have adopted carbon pricing and are funding innovation, while producers haveset emission reduction targets and are undertaking RD&D projects. Despite
these efforts, emissions continue to rise, and greater ambition is needed.
• Governments have a central role to play. They will need to establish a policy
environment supportive of ambitious emission cuts by creating transition plans
underpinned by mandatory emission reduction policies and mechanisms tomobilise investment. Targeted policy is also required to address existing
emissions-intensive assets, create markets for near-zero-emission products,
accelerate RD&D and incentivise end-use efficiency for ammonia-based
products. Governments should ensure that enabling conditions are in place,including a level playing field in the global market for low-emission products,
infrastructure for hydrogen and CCS, and robust data on emissions.
• Ammonia producers will need to establish their own plans for the transition, foraddressing existing capacity and deploying near-zero-emission technologies.
Accelerating RD&D on near-zero-emission technologies will help lower costs
and ensure the needed technologies are available in the market. Producers andindustry associations should engage in initiatives to develop supporting
infrastructure and improve data provision on emissions performance.
• Farmers and agronomists should prioritise best management practices for more
efficient fertiliser use. The food industry can adopt purchasing practices
supportive of low-emission production methods and inputs, based on
taxonomies developed by the research community. Financial institutions should
use sustainable investment schemes to direct resources towards emission
reduction opportunities, while diverting investment from emissions-intensive
assets that could become stranded. Non-governmental organisations can raiseawareness of the benefits and requirements of near-zero-emission
technologies.

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• Time is of the essence. The next decade – from now to 2030 – is critical to lay
the foundation for long-term success. Vital near-term actions include
establishing strong supportive policy mechanisms, taking action on energy anduse efficiency, developing supporting infrastructure, and accelerating RD&D.

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Chapter 3. Enabling more sustainable ammonia production

The current policy, innovation and financing
landscapeGovernments, producers and financial institutions around the world are putting inplace various policies and programmes to kick-start the transition towards a nearzero-emission ammonia industry. These endeavours are a promising start.
However, further action is needed to accelerate progress and put the sector on asustainable trajectory that achieves the goals of the Paris Agreement.

Ongoing efforts by governments
Governments have an integral role to play in the ammonia industry’s transition.
Without strong policy frameworks in place, it will be very challenging for ammonia
producers to achieve large emissions cuts while remaining competitive. Several
major ammonia-producing countries already have policies and programmes inplace to reduce the sector’s emissions (Table 3.1), although none yet has all theelements of a comprehensive strategy to facilitate deep emission reductions. The
majority of the policies in place today apply to the broader industrial sector(covering steel, cement, chemicals, etc.), while some elements target fertilisers
and ammonia in particular. Broader national climate strategies and emission
reduction targets also help signal the need for emission reductions in all sectorsof the energy system.

Carbon pricing and energy efficiency measures
Several governments are aiming to reduce industrial-sector emissions throughcarbon pricing, implemented via an emissions trading system (ETS) or carbon tax.
The European Union introduced the EU ETS in 2005, covering large industrial
emitters including ammonia production. The system had relatively limited impact
on industrial emissions in its early years due to an overabundance of allowancesand low prices. However, in recent years prices have risen considerably,
exceeding EUR 60 (USD 70) per tonne of CO2 in 2021. The revised EU ETS
Directive for the period 2021-2030 will require the sectors within its scope toreduce their emissions by 43% by 2030 compared to 2005 levels. Ammonia
production falls within the ETS scope and includes CO2 emitted from the ammonia
production facility and CO2 utilised downstream as a chemical feedstock (thus CO2
emissions that occur from urea decomposition when fertiliser is applied to thefields are attributed back to ammonia producers, given that ammonia is usually

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the source of the CO2 used for urea production).

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Chapter 3. Enabling more sustainable ammonia production

An ETS in China came into force in February 2021, initially only covering the power
sector. It is expected that initial prices will be low, equivalent to about CNY 25(USD 4) per tonne CO2. There are plans to include several industry sub-sectors,
including the chemicals industry, at an unspecified future date. The Chinese
administration required key energy-intensive industries to report their emissions in
2020, which signals a move towards better data collection for their eventual
inclusion in the ETS. Korea has also had an ETS since 2015, which reached anaverage price of KRW 32 600 (USD 28) per tonne CO2 in 2020. A number of othermajor ammonia-producing countries are making initial steps to trial ETS systems,
which could potentially be later applied to ammonia production. Indonesia isconsidering developing a national ETS, with a voluntary trial for the power sector
taking place in 2021. In Russia, the region of Sakhalin is planning to pilot a carbon
trading scheme from mid-2020, which the national government has said could
serve as an experiment for potential future scaling up at the national level.
Other countries are adopting alternative methods of carbon pricing for industry.
Canada, for example, has adopted an output-based carbon pricing system, which
resembles a tradeable performance standard. It is applied in those provinces
without their own equivalent or more stringent carbon pricing system. The scheme
is designed to reduce the impact on trade-exposed producers by only charging foremissions above a specified emission intensity threshold – similar in outcome to
the EU’s system with its current free allocation. It still provides an incentive for
additional reductions by issuing credits for performance improvements beyond
what is necessary to stay just under the threshold. The carbon price is CAN 40(USD 32) per tonne as of 2021 and is set to rise gradually to CAN 170 (USD 135)
per tonne by 2030.
As countries are adopting increasingly stringent carbon prices, several are looking
into mechanisms to help address the potential impact of carbon prices oncompetitiveness for trade-exposed industries. Since its inception, the EU ETS has
allocated free allowances for emissions equivalent to production at a benchmark
emissions intensity to those industries deemed at highest risk of production
relocation, including ammonia. The benchmark is set according to the averagegreenhouse gas emissions of the best-performing 10% of installations producing
the product in the European Union and other European Economic Area/European
Free Trade Association countries.
As the ETS carbon price continues to rise, the European Union has chosen to
explore another method of protecting competitiveness. In July 2021 theEuropean Commission adopted a proposal for a Carbon Border Adjustment

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Mechanism (CBAM) that will apply a carbon price to imported goods equivalent toAmmonia Technology Roadmap
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the EU ETS price. According to the proposal, starting in 2023 importers in the
sectors initially covered – including fertilisers – will be required to report embedded
emissions and purchase equivalent certificates starting in 2026, unless the
producer has already paid an equivalent carbon price in the country of origin. The
proposal must still undergo review and possible modification by the European
Parliament and Council of the European Union before being considered final.
Allocation of free allowances to sectors covered by the CBAM will be phased out
between 2026 and 2035. The United States and Canada are each also in earlier
stages of considering carbon border adjustments, as stated by the United Statesin its Trade Policy Agenda released in March 2021 and by Canada in its 2020 Fall
Economic Statement.
A number of notable energy policies applicable to industry have focused
specifically on improving energy efficiency, which may include investment in new
equipment and enhanced equipment operations. India’s Perform, Achieve, Trade(PAT) Scheme, which began in 2012, uses market-based regulation to drive
industry energy efficiency towards sectoral targets. The mechanism aims to beeconomically efficient – entities that reduce energy consumption beyond therequired threshold receive certificates, which can be sold to other entities thatneed to achieve compliance. China’s top energy-consuming enterprises
programme 1 requires large enterprises to undertake measures to achieve
specified energy savings targets, including establishing energy management
systems.

Support for near-zero-emission technology RD&D and earlycommercial deployment
Governments

are

also

funding

R&D

fornear-zero-emission

industrial

technologies. The EU Innovation Fund, the successor of the NER300 programme,
will provide grants to fund projects demonstrating innovative low-emission
technologies, including innovative processes in energy-intensive industries and
CCS. The first call for large-scale project proposals closed in autumn 2020, with
grants to be awarded by the end of 2021. Of the 311 large-scale projects thatapplied, two-thirds (204) are related to energy-intensive industries, of which onequarter (56) are related to hydrogen. The second call for large-scale projects is

Referred to as the Top 10 000 Program in the 12th Five-Year Plan and the 100, 1 000, 10 000 Program in the 13th FiveYear Plan; program inclusion and design for the 14th Five-Year Plan may be forthcoming in more specific five-year plansthat follow the release of the outline plan.

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1

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expected in October 2021. The first call for small-scale projects has already seen
32 successful projects funded, although none are for ammonia or fertiliser
production.
In the United States, Advanced Research Projects Agency–Energy (ARPA-E) is
supporting a diversity of advanced energy technologies, including a methane
pyrolysis cohort launched in 2019 that is funding several projects. The
UK Research and Innovation’s Industrial Decarbonisation Challenge announced
the successful applicants in March 2021, with GBP 171 million (USD 240 million)
in funding for nine industrial cluster decarbonisation projects. They include the
HyNet hydrogen and CCUS project and the Net zero Teesside CCUS project, bothof which include fertiliser production activities. In Australia, the Australia
Renewable Energy Agency and the Western Australia Renewable Hydrogen Fundhave provided funding for projects aiming to manufacture ammonia from hydrogenproduced from renewable electricity, including AUD 1.6 million (USD 1.2 million)
for a feasibility study completed in mid-2020 and AUD 2.0 million (USD 1.5 million)
for a capital works project, whose initial phase aims to produce 3.5 kt of ammonia
by 2022.
Incentives and funding are also being offered for early-stage deployment of nearzero-emission technologies and infrastructure, including CCS and hydrogen. CCS
projects in the United States are eligible for a tax credit under the Internal Revenue
Code Section 45Q, ranging from USD 20 to USD 50 per tonne of CO2 stored,
depending on the year (the credit increases over time) and whether the project
involves EOR or dedicated geological storage. The Canadian government’s 2021
budget proposed a tax credit for capital invested in CCUS projects, intended toenter into effect in 2022. Also in Canada, the Alberta Carbon Trunk Line, whichbegan operation in 2020 transporting CO2 captured at a fertiliser plant (0.3 Mt
CO2/yr capture) and a nearby oil refinery, has received close to CAD 500 million(USD 400 million) in funding from the Alberta government and CAD 63 million(USD 50 million) from the Canadian government. In Norway, hydrogen andammonia produced via electrolysis are supported by exempting the electricity
used from taxation.
Creating a market for materials produced with a substantially reduced emissions
footprint (near-zero-emission materials) is an area where government support isemerging. Germany is preparing plans to use carbon contracts for difference(CfDs) to support near-zero-emission industrial production, including ammonia,
through a guaranteed minimum strike price for near-zero-emission production.
The country’s National Hydrogen Strategy, released in mid-2020, proposed the

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launch of a pilot CfD programme, and draft plans for the programme were released

Ammonia Technology Roadmap
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Chapter 3. Enabling more sustainable ammonia productionin April 2021. Germany is also considering a rising demand quota for near-zeroemission materials. The European Commission is considering use of CfDs as partof its proposal for a revised ETS Directive.
Accelerating efforts to expand and decarbonise hydrogen production in recent
years are likely to assist the ammonia industry’s transition. Several jurisdictions
have developed hydrogen strategies, often covering ammonia and fertilisers. The
European Union launched its new “Hydrogen strategy for a climate-neutral
Europe” in 2020, which mentions a possible carbon CfD pilot scheme targetinghydrogen use in various industries, including fertilisers. In India, a National
Hydrogen Mission for 2021-2022 is under development, and may include
mandates to use green hydrogen in key industries such as fertilisers. Japanannounced in early 2021 a target to increase the country’s demand for ammonia
as a fuel from zero to 3 million tonnes by 2030. For a more detailed discussion ofpolicies for the use of low-carbon ammonia as an energy carrier, and otherhydrogen-based fuels, consult the IEA publications the Global Hydrogen Review
2021 and The Role of Low-Carbon Fuels in Clean Energy Transitions of the Power
Sector.

Policies for improving efficiency of use
On the demand side, many countries have in place policies and programmes
targeting more efficient cropland fertiliser application. In many cases, the primary
motivations are to reduce nitrogen pollution in aquatic ecosystems or nitrous oxide(N2O) emissions from nitrogen fertiliser use, rather than to reduce CO2 emissions
from fertiliser production. However, by enabling and incentivising more efficientuse of fertilisers, they reduce growth in fertiliser demand and moderate the levelof investment needed to deploy innovative technologies to reduce CO2 emissions
during the production phase.

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Some of the policies include broader nitrogen and fertiliser-related strategies andtargets. The EU Nitrates Directive, which came into effect in 1991 with the aim ofprotecting water quality, establishes voluntary codes of good agricultural practice,including measures to limit the timing of and set the conditions for fertiliser
application. The EU National Emissions reduction Commitments Directive,
originally legislated in 2001 and revised in 2016, sets limits on ammonia emissions
for its member countries, which should encourage more efficient use of nitrogen
fertilisers. In 2020 the EU launched its Farm to Fork Strategy, which includes atarget to reduce nutrient losses by at least 50% by 2030, with the expectation of a
20% reduction in total fertiliser use, and states the intent to develop an integrated
nutrient management action plan. In 2015 China adopted an Action Plan for the
Zero Increase of Fertiliser Use, targeting a halt in the growth of fertiliser use inAmmonia Technology Roadmap
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Chapter 3. Enabling more sustainable ammonia production

2020. Total fertiliser use in China has indeed declined since 2015, perhaps in part
thanks to the action plan. Canada’s updated climate strategy, “A Healthy
Environment and a Healthy Economy” launched in 2020, includes an objective to
reduce emissions from fertiliser application by 30% below 2020 levels.
Additionally, taxes on nitrogen fertiliser have been under discussion in a numberof countries, including France and New Zealand, although the proposals tend tobe met with considerable opposition.
A number of countries have requirements and programmes in place focused on
more specific aspects of fertiliser use. In India, a requirement has been in placesince 2016 for all urea used in the country to be coated with neem oil, which slows
the release of nitrogen. While partially motivated by the economic objective of
reducing the diversion of subsidised fertiliser into chemical applications, the policy
can also help encourage more efficient fertiliser application. Additionally, India’s
National Biogas and Manure Management Programme helps to reduce the needfor chemical fertilisers by supporting the creation of small-scale biogas plants. In
addition to producing biogas, the plants also produce a digested slurry that can beused as enriched bio-manure. A number of Indian states are also promoting zerobudget natural farming, which focuses on avoiding external inputs of fertiliser andpesticides to reduce costs for farmers and improve environmental outcomes. In
Brazil, the Inovagro programme run by the national development bank, BNDES,
helps finance technology innovation in agriculture, including precision agriculturalequipment and fertiliser application maps.
A number of policies are also in place that could curb demand for otherapplications that use smaller amounts of nitrogen, particularly plastics. Many
countries have been increasing their plastics recycling activity, including
improvements in collection and sorting. Japan and Korea lead the way, having
achieved single-digit landfill rates. Several jurisdictions have adopted or are
working towards policies to curb single-use plastics, including theEuropean Union, the United Kingdom and Canada.

International collaboration

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At the international level, a number of countries came together to launch theIndustrial Deep Decarbonisation Initiative in June 2021, focused on stimulating
demand for low-carbon industrial materials. An initiative of the Clean Energy
Ministerial (CEM) and co-ordinated by the United Nations Industrial Development
Organisation (UNIDO), it will initially focus on steel and cement, but could expand
to other materials in the future. It could present useful learning opportunities forother efforts to create market demand and harmonise emissions performance dataand standards.

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The Clean Development Mechanism (CDM) under the Kyoto Protocol provides amechanism for countries to fund greenhouse gas emission reductions in othercountries and to claim the emission reductions towards meeting their own targets
under international agreements. Projects to reduce N2O emissions from nitric acidplants have been a common project type under the CDM, with close to 100 suchprojects registered under the mechanism. Almost all of these projects, however,were initiated prior to 2013, after which time declining demand and thus
considerably lower prices for Certified Emission Reduction units have made N2O
abatement projects under the CDM less economically attractive and caused someprojects to be abandoned. Perhaps in future a reform of the CDM or a newmechanism could lead to a revival of international co-operation on N2O abatement,
which is a relatively low-cost, easy-win way of reducing greenhouse gas emissions
from fertiliser production. The experience with the CDM provides some importantlearnings for the design of mechanisms in the future, including the need to provide
certainty and stability for producers in order for mitigation measures to be seen
through to completion.
Efforts are also under way to address nitrogen pollution at the international level,
which could help improve the efficiency of nutrient use. Several existing United
Nations multilateral environmental agreements and resolutions are of relevanceto nitrogen – including the Paris Agreement, the Montreal Protocol, the Convention
on Biological Diversity and the Convention on Long-range Transboundary Air
Pollution – but none is dedicated specifically to nitrogen. The UN Environment
Programme (UNEP) is working towards developing an Inter-convention Nitrogen
Coordination Mechanism (INCOM) to bring together the nitrogen-related aspectsof existing initiatives, through the Nitrogen Working Group of the UNEP Committeeof Permanent Representatives.

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Various initiatives at the international level are moving closer to the goal of aco-ordinated and holistic approach to nitrogen management. In 2016 UNEP and
the International Nitrogen Initiative, supported by funding from the Global
Environment Facility, launched the International Nitrogen Management System, aplatform to bring together stakeholders from the spheres of science, policy andindustry to develop guidance on nitrogen management. The initiative is working to
produce the first International Nitrogen Assessment, due to be published in 2022.
In 2019 member states of the United Nations endorsed the Colombo Declaration
on Sustainable Nitrogen Management, a proposed plan for action on nitrogen that
includes the objective of halving nitrogen waste by 2030. Additionally, in 2020 theparties to the UN Economic Commission for Europe’s Convention on Long-range
Transboundary Air Pollution adopted a new Guidance Document on Integrated
Sustainable Nitrogen Management. It provides an overview of principles andAmmonia Technology Roadmap
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measures to be taken into consideration when formulating nitrogen management
strategies, including promoting a circular economy approach for nitrogen.
Key current government policies and programmes that could enable
progress towards sustainable ammonia production and use
Country or
regionChina

United States

India

Deployment
incentives forclean
technologies

Collaboration
andknowledge
sharingNational Key
Technologies
R&D Program--

EnergyEfficiency
Directive

Innovation
Fund; Horizon
Europe-Energy Star
fertiliser plant
energyperformanceindicator andcertification

ZEP and
EERA
under the SET
Plan

ARPA-E;
AMO
cost-sharing

Section 45Q
tax credit for
CCUS

Energyefficiency
policies

Emissions
Trading
SystemEuropeanUnion

Top 100/
1 000/10 000
Enterprises
Program

R&D
programmes
for cleantechnologies

Carbonpricing andstandards--

Perform,
Achieve,
Trade
Scheme-CanadaOutput-basedcarbonprice-

EIP; PERD;
Strategic
Innovation
Fund

Australia

ERF
Safeguard
Mechanism-

ARENA grants

Efficiency ofuse policies
and targets
Action Plan for
the Zero
Increase of
Fertilizer Use
Nitrates
Directive;
Farm to Fork
Strategy
Integrated
FarmManagement
Program
Option---Canadian
Industry
PartnershipforEnergyConservation

National
Biogas andManureManagement
Programme;
Fertiliser
neem coating
requirement
A Healthy
Environment
and a Healthy
Economyclimatestrategy---

Notes: This table features examples of key policies in a number of countries that are major ammonia producers and/or haveambitious ammonia-related emission reduction policies; it is not intended to be a comprehensive list of all policies in all
countries. Policies of subnational governments are not included, nor are proposed programmes (e.g. the China ETS
expanding coverage to industry). AMO = Advanced Manufacturing Office; ARPA-E = Advanced Research Projects AgencyEnergy; ARENA = Australian Renewable Energy Agency; EERA = European Energy Research Alliance; EIP = Energy
Innovation Program; ERF = Emissions Reduction Fund; PERD = Program of Energy Research and Development; SET Plan
= Strategic Energy Technology Plan; ZEP = Zero Emissions Platform (a European Technology and Innovation Platform for
CCS).

Encouraging progress in the private sector
Private-sector stakeholders are also making efforts to reduce emissions from thenitrogen fertiliser industry. A number of companies that produce ammonia aredeveloping climate plans and setting emission reduction targets. Major ammoniaproducing companies with targets for net zero emissions or climate neutrality by
2050 include CF Fertilisers, Yara, Sinopec and BASF, which together account for

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close to 15% of global ammonia production. Some companies have made shorter-Ammonia Technology Roadmap
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term targets, including Nutrien (30% per tonne reduction by 2030 relative to 2018),
CF Fertilisers (25% per tonne reduction by 2030 relative to 2015) and Yara (30%absolute reduction by 2030 relative to 2019). The IFA has also established an
ambition to reduce greenhouse gas emissions from nitrogen fertiliser production
by at least 30% per tonne by 2040.
Ammonia producers are already starting to implement measures to reduce CO2
emissions from their operations. Many are adopting energy efficiency measuresin their existing and new plants. Another emissions-reducing option that someproducers are instigating is to use waste materials as inputs for production, suchas ammonium nitrate from wastewater treatment plants. Companies are also
taking major steps towards the adoption of near-zero-emission technologies by
undertaking R&D and demonstration. See Chapter 2 Table 2.1 for information on
activities in this area.
Industry associations can also play a valuable role in promoting and aiding
emission reductions among their members, for example by providing comparative
metrics and facilitating knowledge exchange. Since 2004 the IFA has offeredammonia energy efficiency and CO2 emission benchmarks to its members, which
they can voluntarily use for tracking progress. Since then, members have achieved
a 14.5% reduction in CO2 emissions per tonne of ammonia produced and 5.5%
net improvement in energy efficiency on average. The Fertiliser Association ofIndia (FAI) has been monitoring and benchmarking the energy efficiency ofammonia and urea plants in India for many years, as well as calculating their CO2
emissions, which can help spur improvements. Through the modernisation of oldplants, commissioning of new efficient plants in the 1990s and shift in feedstockfrom liquid fuels to natural gas in the past 15 years, the FAI estimates that in thepast three decades India’s ammonia plants have reduced CO2 emissions by 45%
and energy consumption by 34%.
Fertilizers Europe has developed a Carbon Footprint Calculator, launched in 2014,
which enables fertiliser producers to measure and benchmark their CO2
emissions, as well as to report verified results via a certification scheme developedin partnership with the Carbon Trust. Certified results could be useful for attracting
buyers concerned about sustainability, including farmers looking to achieve theirown sustainability-oriented certifications under programmes such as the Cool
Farm Tool. Some fertiliser producers, such as CF Fertilisers, have already begun
certifying and labelling their production to promote their emission reductions to

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buyers. Industry association product stewardship programmes and requirements,

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including those of the IFA and Fertilizers Europe, can also help push producers to
improve their environmental performance and reduce emissions along the full
fertiliser value chain.
NUE is another area of private-sector action. The IFA has worked on promotion
and knowledge sharing in this area, including through a set of six Nutrient
Stewardship Commitments that affirm its members’ goal of working with farmers
towards improved NUE. In the spirit of helping accelerate progress, in May 2021
the association adopted an ambition to improve average global nitrogen use
efficiency in crop production from the current level of 50% to 70% by 2040. It alsoseeks to accelerate plant nutrition innovation through its Smart and Green
platform, which brings together the plant nutrition industry and the agricultural
technology start-up ecosystem. The EU Nitrogen Expert Panel, initiated by
Fertilizers Europe in 2014, has developed a nitrogen use efficiency indicator topromote efficiency improvements among famers. The 4R Nutrient Stewardship
Initiative was set up by Fertilizer Canada and The Fertiliser Institute, incollaboration with the International Plant Nutrition Institute and the IFA. Its
components include a series of online training modules, a research fund toestablish indicators and data, and an advocate programme.

Initiatives involving financial institutions and investors
In recent years the financial sector – including public, private and multilateralbanks – has been increasingly working on initiatives to channel finance towards
sustainable and lower-emitting projects. Providing information about climate risks
and sustainability performance is a key component of that. The Task Force on
Climate-related Financial Disclosures (TCFD), established by the Financial
Stability Board, is helping companies develop voluntary climate-related financial
risk disclosures to better inform investors. Various non-profit organisations areencouraging stakeholders to integrate climate risks into their investment strategies
and financial regulations. Many financial institutions are now offering
sustainability-focused products and services, such as green investment
opportunities and incorporation of environmental, social and governance factors
into credit ratings.
Various initiatives are endeavouring to define what constitutes “green” or“sustainable” investment. The EU Taxonomy establishes six environmental
objectives for determining whether an economic activity is environmentally
sustainable, including objectives related to climate change. The Taxonomy
Regulation came into force in summer 2020, with a delegated act published in

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April 2021 defining technical screening criteria for determining whether economic

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activities have a substantial positive impact on climate change adaptation andmitigation objectives. Under the Taxonomy, ammonia production is considered tohave a substantial positive contribution to climate change mitigation if it isproduced with hydrogen that has greenhouse gas emissions 73% lower thanunabated fossil fuels. Another classification being developed is the International
Organization for Standardization’s standard for green bonds (ISO 14030), whichbuilds upon the Green Bond Principles established by the International CapitalMarket Association and other existing classifications. Meanwhile, in 2015
multilateral development banks established a set of Common Principles to define
what constitutes finance for climate change mitigation. Dialogue is also ongoing
between stakeholders on standards for “transition bonds” for emissions-intensive
industries that may not yet be eligible for finance through “green” bonds, but willneed finance for their transition towards near-zero emissions.
Multiple international funds and programmes are making use of contributions fromnumerous governments to finance clean energy transitions. While no funds target
ammonia in particular, the sector could be eligible under several of these funds,
particularly those that include a focus on the industrial sector. Key funds andprogrammes – which use various mechanisms such as grants, concessional loans



The Green Climate Fund under the Paris Agreement, which aims to support
developing economies in achieving their emission reduction ambitions. Its HighImpact Programme for the Corporate Sector, administered by the European Bankfor Reconstruction and Development, targets uptake of low-carbon technologies
in industry.



The Clean Technology Fund under the Climate Investment Funds framework,
which is administered by several multilateral development banks to finance thedemonstration, deployment and transfer of low-carbon technologies in middleincome and developing economies, including industrial energy efficiency projects.



The Global Environment Facility established at the Rio Earth Summit, whichassists developing and economies in transition to meet international
environmental convention objectives, including those of the United Nations
Framework Convention on Climate Change.

The European Fund for Sustainable Development, which supports investments toachieve the SDGs in Africa and the European Union’s neighbouring countries,
including investment in the industrial sector.



The Nitric Acid Climate Auctions Program, administered by the World Bank incollaboration with the Nitric Acid Climate Action Group initiated by the German
government, which provides price guarantees for nitric acid plants to sell carbon
credits for their abatement projects.

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and guarantees – include:Ammonia Technology Roadmap
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Many countries also have their own funds and programmes targeted towards
domestic and international low-carbon technology investment.

Recommendations for accelerating progress
While encouraging activity is underway, it is far from sufficient. Greater ambitionis needed on multiple fronts from a diversity of stakeholders around the world to
put ammonia producers on a pathway to achieving deep CO2 emission reductions.
Many of the same components are needed universally for a sustainable transition,even though varied regional circumstances will affect the specifics of planning andpolicy design. Collaboration among stakeholders – including governments,
producers, consumers, technology suppliers, financial institutions, researchers,
non-governmental organisations and others – will be integral to accelerating
progress (Figure 3.1).
Governments must lead by laying the fundamental groundwork, consisting of aclear, reliable long-term policy signal for emission reductions and financial
mechanisms to help mobilise the necessary investment. Additional policies areneeded to target specific technology categories, including existing high-emission
plants, clean technologies that are market ready and clean technologies at earlier
stages of development. In addition, policies should promote improved NUE.
Supporting conditions must also be put in place, including establishing a levelplaying field for producers around the world, developing enabling infrastructure,

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and improving data collection and reporting.

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A framework for accelerating the sustainable transition of the ammonia
industry

IEA. 2021.

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Stakeholders will need to collaborate on multiple fronts to drive the ammonia industry’s
transition towards a more sustainable future, including long-term planning and policy
signals, targeted technology strategies and enabling conditions.

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Chapter 3. Enabling more sustainable ammonia production

Framework fundamentals
Establishing plans and policy for long-term CO2 emission
reductions
A clear vision of the path ahead, and a commitment to following it, is imperative toaccelerate the transition. Governments will be instrumental in providing clarity,certainty and a business case for investing in near-zero-emission technologies.
They can help establish a strong and stable market signal for emission reductions
by incorporating Paris Agreement-aligned medium- and long-term plans andtargets for the ammonia industry within climate, energy, and industrial strategies.
The industry should be actively involved in the planning process.
Planning for the ammonia industry’s energy transition should take carefulconsideration of broader strategies to achieve the UN SDGs, including the role of
the ammonia industry in addressing climate change (SDG 13), responsible
production and consumption (SDG 12), affordable and clean energy (SDG 7),
sustainable industrialisation (SDG 9) and zero hunger (SDG 2). Care should betaken that plans and policies are designed in such a way that addressing one
objective does not jeopardise another. In particular, given the importance ofnitrogen fertilisers in food production, governments should have in place
safeguards to ensure the energy transition does not negatively impact theaffordability of agricultural production and food. Measures may include monitoring
prices, maintaining dialogue with farmers and, if necessary, using carefully
designed support mechanisms (perhaps attached to NUE targets, in order toprotect affordability but disincentivise inefficient fertiliser use). Additionally, justtransition provisions should be incorporated into plans to minimise potential
employment and other social impacts, and ensure an orderly transition.
Strategies should be backed by mandatory long-term emission reduction policies,
with stringency increasing over time in a predictable manner. This may include
carbon pricing in the form of carbon taxes or an ETS, or a tradeable emissions
performance standard that would require a decreasing average emission intensityof ammonia production. As discussed above, a number of jurisdictions are alreadyadopting carbon pricing, but increased stringency is needed in those regions, as
is coverage of a greater number of countries. For low-cost measures such as N2O
abatement from nitric acid plants, governments could mandate the use ofabatement technologies to accelerate near-term progress. While an integral partof the overall strategy, mandatory policies are likely to be insufficient on their own
to enable the full sustainable transition, and must be complemented by other

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components discussed in subsequent sections.

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The ammonia industry should also establish corporate strategies for the energy
transition and climate governance plans, recognising that transitioning tosustainable production methods will be important for staying competitive in thelong run. Such strategies should include long-term targets aligned with the Paris
Agreement and a plan for how investment, plant retrofitting and R&D will enable
those targets to be achieved. Such planning would help facilitate long-termbusiness planning, bring shareholders and employees together behind a common
vision and show commitment to shareholders. Industry support for and input into
government policy design and planning processes are also important.
Key actions


Governments: in consultation with industry, develop sustainable transition plans
for the ammonia industry; establish long-term emission reduction policies such ascarbon pricing or emissions standards.

Ammonia industry: establish long-term corporate strategies for the energy
transition; engage in road-mapping exercises and support government policy
design.



Researchers and non-governmental organisations: contribute to roadmapping exercises and policy design; galvanise support for industry transition
plans.

Mobilising finance and investment
A massive redirection of capital investment will be required for the sustainableenergy transition, away from incumbent technologies and towards R&D,
demonstration and deployment of near-zero-emission technologies at existing andnew plants, and in supporting infrastructure. As discussed in the previous chapter,
80% of cumulative capital investments in the Sustainable Development Scenario
are in near-zero-emission capacity. Governments have a role to play in providing
funding through direct grants and other subsidies, most likely targeting areas withthe highest risk or other barriers to overcome, such as R&D, first-of-a-kindcommercial projects and perhaps shared infrastructure. They should also lead thedevelopment and application of sustainable finance taxonomies that set a clear
standard for sustainable investment in the fertiliser sector, as is being done at the
EU level.
Private-sector investment will also be crucial for the full rollout of sustainable
technologies. The public sector can help mobilise private investment throughmechanisms that take on some of the financial risk of early projects or provide
other incentives for investment. Such mechanisms may include concessional and

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subordinated loans, debt guarantees, early-stage equity investment, tax

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incentives and blended finance. Removing fossil fuel subsidies would also shorten
the timeline for new near-zero-emission technologies to reach cost parity and thus
help redirect existing sources of finance to sustainable technologies. Furthermore,governments can help mobilise private investment by ensuring they have a strong
policy framework for CO2 emission reductions in place, via the other policy pillar
discussed in this chapter.
The case for governments and banks to provide direct funding and financemechanisms within their countries is clear, as it enables domestic projects. But
there is also a critical need for international finance, particularly to enable a timelytransition in emerging markets and developing economies, as well as in othercountries where sufficient private-sector finance is not accessible. This could takevarious forms, including contributions to funds administered by multilateral
institutions and development banks, bilateral agreements and official development
aid. When adequately backed by their member governments, financing throughmultilateral development banks is likely to play a key role. While a number of funds
that could finance ammonia industry projects already exist, as discussed above,a successful global transition will require advanced economies to massively scale
up international finance. There is also a case for more targeted funds focusing on
the industrial sector, perhaps with funding allocated specifically to ammonia
production to ensure adequate coverage.
The financial sector has a valuable role to play in facilitating access to finance forthe energy transition, and it can leverage this finance to push the private sector
towards new, more sustainable business models. Financial institutions can help
bring sustainability criteria, climate and stranded asset risks, and otherenvironmental, social and governance (ESG) considerations to the forefront ofinvestment decisions among both investors and companies seeking finance. Thiscan be done through products and incentives such as responsible investment
schemes, ESG factors incorporated into credit ratings, and financial risk
disclosures. Financial institutions should also embed consideration of stranded
assets and other ESG risks into their own core risk evaluations. They can also
directly help raise capital by issuing green bonds and transition bonds that include
opportunities to fund emission reduction projects in the ammonia industry. The
financial sector should also work with the public sector in developing sustainablefinance taxonomies and delivering blended finance.
Producers in the ammonia industry can take steps to position themselves foraccess to green and transitional finance, which may include developing clear
energy transition strategies, integrating climate risks into their financial planning,

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and disclosing information on their environmental performance and climate risks.

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They can also directly raise capital by issuing their own green and transition bonds
in line with established sustainability criteria.
Key actions


Governments: provide direct funding to early-stage near-zero-emission projects;
develop finance mechanisms to mobilise private investments in near-zeroemission projects; increase contributions to international low-carbon development
funds; develop and apply sustainable finance taxonomies.

Financial institutions: promote investment in low-emission technology
deployment among investors through sustainable finance schemes; issue green
and transition bonds; work with governments on blended finance mechanisms andsustainable finance taxonomies.

Investors: consider environmental performance and climate risks in investment
choices, aided by sustainable investment schemes and taxonomies.

Ammonia industry: provide information to potential investors on environmental
performance and climate risks; issue green bonds to raise capital.



Researchers and non-governmental organisations: help define levels of CO2
emissions performance that align with a sustainable energy transition trajectory.

Targeted actions for specific technologies and strategies
Managing existing assets and near-term investment
Considering the long lifetimes of typically 20-50 years or more for ammonia plants,
specific attention is needed on emissions-intensive plants built recently and any
added in the coming few years before near-zero-emission technologies areavailable at commercial scale.
For existing assets, owners can pursue energy efficiency gains through equipment
upgrades to incorporate technologies such as waste heat recovery and improved
process operations. Efficiency improvements, however, should be balanced with
the need for a fundamental shift to new near-zero-emission technologies in themedium term, and should only be pursued to the extent that they do not create
investment “lock-in”. Governments can promote improvement through energy
benchmarking schemes, energy performance schemes (perhaps with time-limited
exemptions for plants close to retirement to avoid investments that will not pay off
in the long run) and incentives for energy efficiency improvements. Producers
should also consider opportunities to retrofit or convert existing assets toincorporate lower-emitting or near-zero-emission technologies such as CCS orelectrolytic hydrogen. In the shorter term, this may include switching to lower-

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emitting fuels such as from coal to natural gas. Another option may be to convert

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plants to a hybrid that uses hydrogen produced from electrolysis for processenergy while maintaining natural gas for feedstock, using the CO2 emissions fromthe feedstock for urea production.
Considering that near-zero-emission technologies for ammonia production are
already market-ready (in the case of CO2 capture) or fairly close to market-ready(in the case of electrolytic hydrogen), whenever possible new investments should
employ these near-zero-emission technologies. At the very least, new builds
should be retrofit-ready, that is, have the physical space and technicalcharacteristics to easily integrate near-zero-emission technologies at a later date.
Siting new plants in industrial clusters can also facilitate easier access to shared
supporting infrastructure. Governments can assist by setting mandatory retrofitready requirements for new builds in the near term, and specifying a medium-term
deadline when they will no longer grant operating licences to new high-emitting
plants. Financial institutions and investors can also play a role in directing financein support of near-zero-emission capacity additions.
Key actions


Governments: develop energy efficiency benchmarking and improvement
schemes; adopt retrofit-ready requirements for new-build plants; set a mediumterm deadline after which operating permits will not be issued for new highemission plants.

Ammonia industry: pursue opportunities to improve existing plants throughenergy-efficient process upgrades and retrofitting to incorporate near-zeroemission technologies; build new plants with near-zero-emission technologies, orat the very least retrofit-ready plants.

Financial institutions: use sustainable finance taxonomies and climate risk
assessment frameworks to guide investment away from emissions-intensive
technologies to avoid stranded assets.

Creating a market for near-zero-emission nitrogen products
Near-zero-emission ammonia production technologies are likely to be consideredhigher risk and initially have significantly higher costs than conventional
technologies, with production costs anywhere from 10% higher to more thandouble. Manufacturers may face challenges securing private finance andcompeting in the market due to their higher of cost production using thesetechnologies. Establishing stable, early market demand for near-zero-emissionammonia-reliant products would give certainty to producers investing in earlycommercial projects and would facilitate cost reductions through continued

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technology development.

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Niche markets have played a critical role in the deployment of new near-zeroemission technologies in the past, a prominent example being feed-in tariffs forsolar and wind. As mentioned above, a number of jurisdictions are considering
carbon CfDs to help create early markets for near-zero-emission industrial
production. Under such a policy, governments would tender for near-zeroemission production of ammonia, nitrogen fertilisers or other nitrogen products,
and fund the difference in the cost of production relative to conventional highemitting production for a guaranteed quantity of production. In this way CfDs would
act as a guaranteed carbon price sufficient for near-zero-emission production to
become economically viable. The level of support would gradually fall withincreased deployment and declining costs. The certainty provided by a carbon CfD
could present a considerable advantage over other instruments that may provide
shorter-term, less certain and more fragmented demand pull. Since the cost of
long-term support for an initial near-zero plant may be large, governments could
join together to share the cost.
Another source of demand pull for near-zero-emission production could be
private-sector purchasers. Farmers and industrial agricultural producers could
choose to pay a premium for fertilisers produced with near-zero-emission
technologies, motivated out of concern for sustainability and to assist in marketing
to food purchasers who share the same concern and are willing to pay a higher
price for a differentiated product. A number of certification schemes focused onsustainable food production already exist, such as the Farm Sustainability
Assessment of the Sustainable Agriculture Initiative Platform and the
GLOBALG.A.P. certification for good agricultural practices. The Cool Farm Tooldeveloped by the Cool Farm Alliance focuses in particular on greenhouse gases
from agricultural production, including emissions from producing fertilisers.
As corporate sustainability continues to grow in importance, purchasers ofagricultural products – in particular, large-scale buyers such as food
manufacturing companies and restaurant chains – may choose to procure certified
agricultural production, in some cases upon the request of retailers. The use ofcertification schemes for the final food products could enable food producers tocharge a premium, thereby passing on the additional costs of low-emission
agricultural and food production to the final consumer. Fertiliser producers could
also undergo their own certification and then work with agricultural productcertification schemes to increase the incentive for crop producers to use nearzero-emission fertilisers. They could also work directly with fertiliser distributors
and buyers to promote near-zero-emission fertilisers, including through productstewardship initiatives. While this could be challenging given that distributors and

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farmers are very numerous, a larger source of demand might be achieved by

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targeting large-scale industrial food production companies or farmers alreadyunited by agricultural co-operatives and associations. If possible, establishinglong-term purchase commitments for near-zero-emission production would
facilitate greater certainty for fertiliser producers.
Particularly after the first-of-a-kind commercial plants have been successfully
deployed, governments could apply market share regulations to support the rolloutof additional plants. Regulations could be formulated as a tradeable quota or
certificate system requiring a minimum and increasing share of ammonia, nitrogen
fertilisers or other ammonia-based products sold or purchased in the market tohave been produced with near-zero-emission technologies. Applying CO2
regulations or taxes to the life-cycle emissions of agricultural production could be
another method to generate demand for near-zero-emission nitrogen fertiliser
production, although this would require fairly complex emissions accounting. As
near-zero-emission production becomes increasingly widespread over time,earlier-stage regulations may eventually be phased out and carbon pricing would
take over as the primary driver of continued deployment.
Establishing clear standards and certification for near-zero-emission production
will be important to facilitate market creation mechanisms. This is discussed
further under “Tracking progress and improving data”. Additionally, governments
may need to adapt regulations and permitting procedures as they apply to newtechnologies, so that the legal framework does not pose a barrier to near-zeroemission technology diffusion.



Governments: develop support mechanisms for early deployment of near-zeroemission ammonia production, such as carbon CfDs or minimum market shareregulations; adapt permitting regulations to new technologies.

Ammonia industry: certify and label the CO2 emission footprint of nitrogen
fertiliser and other nitrogen products; seek out buyers willing to pay a premium fornitrogen products produced with low-emission technologies; work with agricultural
product certification schemes to include incentives for near-zero-emission fertiliseruse.



Fertiliser distributors and buyers, including farmers: consider purchasingnear-zero-emission fertilisers, possibly through long-term purchase agreements
and together with other buyers.

Food processors, suppliers and retailers: consider purchasing food ingredients
produced with lower-emission methods and inputs, and adopting sustainability
labelling for final food products to promote purchasing by final consumers.

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Key actions

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Developing earlier-stage near-zero-emission technologies
Increased

R&D

isneededtocontinue

developing

near-zero-emission

technologies for ammonia production. This will contribute to bringing down
technology costs and expanding the portfolio of near-zero-emission technology
options, enabling technology choices better suited to regional circumstances. R&D
is particularly needed for technologies that are not yet market-ready, such as
ammonia production from electrolytic hydrogen produced with VRE. For CCS,
which has already been deployed in a number of commercial ammonia plants for
EOR, continued R&D could help reduce costs, particularly for the capture step andfor energy-related emissions, and further optimise the full CCS value chain. The
fertiliser industry could benefit from other sectors’ learnings from applying andscaling up electrolytic hydrogen production, and CO2 capture technologies andtransport and storage systems. R&D and demonstration efforts in thesetechnology areas should be seen as a common knowledge pool across sectors,
with potential for high rewards from collaboration.
Public-sector financial support for R&D is helpful given the level of risk and theuncertainties of bringing technologies to market. While a number of government
R&D funding programmes for near-zero-emission technologies are already inplace, increased and more targeted funding would enable faster progress. In
particular, funding is needed to allow the ammonia industry to demonstrate
production via electrolysis and methane pyrolysis at a commercial scale indifferent regional contexts. Support may take various forms, such as grants,
concessional finance, public-private partnerships, procurement or carbon CfDs.
Particularly useful are public finance initiatives that unlock additional private-sector
finance by reducing the overall level of risk. Non-financial support fromgovernments can also play a role, such as by co-ordinating knowledge sharing
and collaboration on innovation. The ammonia industry itself has an integral roleto play in leading R&D and in co-ordinating with other producers and equipment
manufacturers.



Governments: provide R&D funding and financing for commercial-scaledemonstration of key near-zero-emission technologies in ammonia production;
co-ordinate innovation knowledge sharing.



Ammonia industry: undertake commercial-scale demonstration of near-zeroemission technologies in difference regional contexts; engage with otherproducers and stakeholders to share innovation learnings where possible.

Technology suppliers: undertake R&D on near-zero-emission technologies tocontinue improving them and lowering costs.

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Key actions

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Researchers: undertake research in relevant technology and strategy areas,
including materials for and the manufacture of electrolysers, absorption solventsfor carbon capture and more efficient use of fertilisers.

Improving use efficiency for ammonia-base products
By lowering overall demand, optimising the efficiency of use of nitrogen fertilisersand other ammonia products is an important lever to reduce the sector’semissions. Farmers and agronomists have a lead role to play in optimising fertiliser
application efficiency on farmland, through the “4Rs” and other best practices (seeChapter 2, section “Measures to reduce nitrogen demand”). Tools that farmers
can use to support best practice management include reference databases,
simulation models, decision support systems, and soil and crop testing.
Agronomists can provide advice and assist with developing nutrient management
plans. Knowledge exchange among famers may also prove beneficial. The
fertiliser industry and the agricultural technology industry also have a role to playby increasing alternative fertiliser options on the market, such as slow- andcontrolled-release and stabilised nitrogen fertilisers, as well as biostimulant
products and digital tools to facilitate efficient application.
Government policies can help reduce the inefficient application of nitrogen
fertilisers, achieving benefits from reduced CO2 emissions and reduced nitrogen
pollution. Countries with policies already in place would do well to examine gaps,
and then to fill those gaps through revising their policy framework or improving
monitoring and enforcement as needed. Meanwhile, countries without such aframework should adopt suitable policies. Mechanisms may include regulation,such as site-specific limitations on nitrogen application or discharge to theenvironment, backed by penalties for over-application; requirements to employ
catch crops; mandatory reporting on fertiliser application and total nitrogen use;and performance standards requiring increasing use of enhanced-efficiency
fertilisers. Researchers have suggested that a possible alternative to solely
regulating farmers could be to place nutrient efficiency-related requirements on
producers. This would have the advantage of needing to regulate a considerably
smaller number of entities. It could take the form of requiring producers to sell agiven percentage of enhanced-efficiency fertiliser out of total sales or to achievea specified nutrient efficiency level upon application. Such policies would take anextended producer responsibility approach and would encourage producers topromote NUE among the farmers who use their product.
Additionally, reform and where possible removal of fertiliser subsidies – which
remain quite common today in various countries – will be important. Taxes on

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carefully balanced with the objective of ensuring fertiliser affordability, particularly
in developing economies. Where possible, applying taxes and quotas to surplus
fertiliser use, rather than total fertiliser use, could help alleviate affordability
concerns.
Governments could also assist by developing and funding information, training,monitoring and evaluation programmes for farmers, as well as R&D on improved
fertiliser application decision support systems and the adoption of sustainable
farming practices. Crop planning and evaluating which lands to allocate for farming
can also influence the use of fertiliser in the longer term. Governments could also
provide financial incentives for converting to lower-impact farming practices, suchas those that rely less on mineral fertiliser inputs and circular economy approaches
that maximise the reuse of nitrogen waste (from crop residues, livestock excreta,
food waste, etc.).
Actors throughout food supply chains, including final consumers, can also help
reduce fertiliser use by reducing food waste. Citizens may also choose to reduce
their consumption of animal products, which would reduce fertiliser needs forlivestock feed. Users of other products that require ammonia, includingcommercial cleaners, pharmaceuticals and plastics, can also examine their use
and determine opportunities to increase efficiency and reduce consumption where
possible. While it may be difficult to reduce demand from particular applications,such as explosives, relevant end users may nonetheless benefit from examining
any potential to reduce overuse or wastage of the relevant products. Government
efforts to improve plastic recycling and curb single-use plastics can help reducethe demand that comes from plastics. Given that some of these other end uses
consume relatively small quantities of ammonia, efforts to improve their efficiency
of use will have a considerably smaller impact relative to efforts to reduce fertiliser
use.
Another aspect of the fertiliser-related transition that will need addressing is thepotentially growing shift away from urea towards other nitrogen fertiliser types,
such as ammonium nitrate. This is driven by the desire to reduce the CO2
emissions that occur when urea decomposes after application to fields.
Governments will need to ensure that adequate safety regulations are in place forthe transport, handling and storage of ammonium nitrate or other nitrogen fertiliser
types. Training for carriers and farmers on the safe handling and use of suchfertilisers may also be needed in regions where their use is not common today.
Measures in place in regions where they are already more common could be used
as models and drawn on for lessons learned when designing similar measures

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elsewhere.

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Key actions


Governments: set policies such as limitations, mandatory reporting and taxes toreduce inefficient use of fertilisers; develop and fund training and evaluation
programmes on fertiliser application efficiency; create incentives to promote more
efficient use of fertilisers and alternative cropping practices; reform, and phase out
where possible, subsidies for fertiliser production and use; ensure robust safety
regulations are in place for transport, handling and storage of all fertiliser types,
and implement safety training programmes as needed.

Farmers: adopt best management practices for more efficient fertiliser use,
including the 4Rs and other conservation measures; monitor soil and crops to aid
decision-making; share knowledge and learnings with other farmers.



Agronomists: assist farmers in understanding site-specific crop nutrient
requirements and in adopting best management practices.



Agricultural technology industry, including plant breeders and crop
equipment suppliers: continue R&D on crop varieties that produce high yields
and make efficient use of fertiliser, on equipment and digital tools that facilitate
efficient fertiliser application and on other plant nutrition technologies.



Fertiliser industry: increase the market availability of alternative fertiliser options
that facilitate NUE, include those suitable to site- and crop-specific conditions.

Consumers and other supply chain actors: reduce post-harvest losses andfood waste; reduce overuse and wastage of other ammonia-based products.



Researchers: generate knowledge on efficient nutrient use under varying
conditions; help create decision support tools and models for efficient fertiliser
application.

Necessary enabling conditions
Enhancing international co-operation and creating a levelplaying field
Nitrogen fertilisers and other ammonia-based products are traded in large
volumes in competitive global markets. This means it will be important for policy
makers to design emission reduction measures carefully to ensure that unevenpolicy ambition in different regions does not lead to the relocation of production tocountries with lower ambition. Ideally, governments around the world would work
together to develop a policy framework that provides a level playing field for
fertiliser

producersasproduction increasingly

shiftsto lower-emission

technologies. A least-cost solution from a purely economic perspective would bea uniform international carbon price, although in practice this may be very
challenging to achieve (at least in the short to medium term) and may not be the

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best approach given the diversity of regional circumstances.

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Another option could be an international ammonia industry agreement, in whichgovernments and/or producers make a formal commitment to ambitious,
commonly agreed-upon – although not necessarily uniform – CO2 emission
reduction objectives. This may also be challenging given the competitive nature of
the sector. However, an advantage of a sectoral approach is that a comparatively
small number of actors – namely the largest producing countries and companies– would be required to create a critical mass sufficient for a relatively effective
agreement. Existing collaborative structures, such as the frameworks forinternational co-operation under the Paris Agreement or co-ordination byinternational associations, might provide a helpful starting point for an agreement.
While actors continue to work towards increasing global ambition andco-ordination, a lack of uniform ambition should not be reason to delay action.
Initially governments may be able to adopt policies with lower levels of ambition
that begin to incentivise change but do not have major impacts oncompetitiveness. Special provisions for trade-exposed industries may help, suchas free allowances for emissions below a benchmark in a cap-and-trade system.
As policy ambitions increase, however, other measures will likely be needed.
Some regions are considering adopting carbon border tariffs on imports based on
their CO2 footprint, such as the EU CBAM described above. This would accountfor both explicit carbon prices and implicit carbon prices applied through otherregulations, such that domestic and imported production would face the same CO2
emission reduction requirements. Robust methods would be needed to certify andtrack the CO2 intensities of products, which may entail considerable technical andlogistical complexities. “Climate clubs” have also been posited by the researchcommunity as an alternative formulation, in which a coalition of willing countries
agrees to a common policy ambition and places a blanket tariff on all imports fromcountries outside the club. Careful design of such tariff policies would be
imperative to ensure compliance with international law, notably World Trade
Organization requirements. It should also be noted that exports would still facecompetitiveness challenges, and export subsidies to address this would likely be
costly and challenging to apply while remaining compliant with international tradelaw.
Consumption-based policies could present an alternative and potentially lesspolitically challenging solution than tariffs. Such an approach would placeemission requirements on fertiliser users rather than producers, through policies
such as a consumption-based CO2 tax or a regulation specifying a declining
average CO2 intensity for fertilisers sold in the jurisdiction. Since the requirement

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same CO2 requirements. This approach would also face challenges, including thelarge numbers of actors (i.e. fertiliser retailers or users) that would need to be
regulated, the need for CO2 intensity tracking and certification systems, and thecontinued competitiveness challenge for fertiliser exporters, the latter two of which
also pertain to tariff-based policies. Consumption-based fertiliser requirements
could also lead to increased domestic crop prices relative to imports, although thecompetitiveness impact for farmers of such as policy would likely be smaller thanthe competitiveness impact on fertiliser producers of having no policy in place,
given that fertilisers account for only a proportion of crop prices.
Increased international co-operation will be an important facilitator of the nitrogen
industry’s transition, offering benefits both from further emission reductions andby raising global ambition and coherence in approach towards establishing an
increasingly level playing field. Important aspects of this are international
technology transfer and capacity building, and international climate finance to help
emerging and developing economies deploy near-zero-emission technologies.
While its rulebook has proved contentious and remains to be agreed upon within
the United Nations Framework Convention on Climate Change (UNFCCC)
negotiations, Article 6 of the Paris Agreement could provide a valuable frameworkfor various aspects of voluntary international co-operation. Direct bilateral
co-operation under Article 6.2 could enable countries leading in near-zeroemission fertiliser production technologies to deploy their technologies in othercountries, particular emerging economies. The international carbon market
proposed until Article 6.4 could enable fertiliser companies to put their own
mitigation measures on the market for international support. Finally, the rulebook
for non-market-based co-operation in Article 6.8 could provide a formal basis for
initiatives such as an international ammonia industry agreement and technology
transfer.
In addition to global co-operation on reducing emissions from producing nitrogenbased products, increased collaboration is needed at the international level on
managing the nitrogen cycle. As described above, a number of initiatives, such as
the International Nitrogen Management System, are working towards improved
co-ordination. Given the scale of the challenges involved, governments would dowell to increase their participation and accelerate action.
Key actions
Governments: introduce provisions or mechanisms in CO2 emission reduction
policies that ensure domestic and imported products face the same emission
requirements; work towards greater policy coherence and ambition on reducing
emissions at an international level; assist international technology transfer and

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finance; collaborate towards a more holistic and robust international approach tonitrogen management.

Ammonia industry: explore options to work collaboratively to promote global
industry emission reductions; participate in government-led efforts to form aninternational ammonia industry emissions reduction agreement; engage in efforts
to transfer near-zero-emission technologies to other countries.



Non-governmental organisations: facilitate international dialogue andcollaboration through research networks, events and targeted programmes.

Financial institutions: create green finance mechanisms that incentivise
investment in near-zero-emission technologies across countries.

Planning and developing infrastructure
Large-scale, co-ordinated infrastructure planning and development will be needed
to enable near-zero-emission ammonia production routes. CO2 transport andstorage infrastructure will be needed for CCS-based production, enabling over
90 Mt of CO2 to be captured and stored from the sector globally in 2050 in the
Sustainable Development Scenario. Electrolytic hydrogen-based production will
require infrastructure to generate zero- or near-zero-emission electricity on a large
scale, to produce hydrogen, and to distribute the electricity or hydrogen if distantfrom ammonia plants. The Sustainable Development Scenario requires build-out
of over 110 GW of electrolyser capacity at ammonia production sites. The current
number of infrastructure projects globally is a mere fraction of what will be required
for the energy system transition.
Collaboration between governments, the ammonia industry, other industries andresearchers will be needed to plan and develop such infrastructure, positioned
around industrial clusters where possible. Considering the large scale and sharednature of supporting infrastructure, it is likely that governments will need to play aleading role in co-ordinating plans, ensuring sufficient financing, establishing asuitable regulatory framework for transporting and storing CO2 and hydrogen, andensuring affordable access to infrastructure in all regions. Separate companies
could also play a role in building and providing access to infrastructure, such ascompanies dedicated to CO2 transport and storage or hydrogen production anddistribution.
All stakeholders, including non-governmental organisations in particular, canassist with raising awareness and increasing acceptance of CCS among the

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Key actions


Governments: co-ordinate planning and ensure financing for infrastructure totransport and store CO2, and produce and distribute near-zero-emission electricity
and hydrogen; establish a clear regulatory framework for infrastructure,
particularly for CCS.



Ammonia industry: participate in planning and developing supporting
infrastructure; where possible, site new plants in industrial clusters for easieraccess to infrastructure.

Researchers: provide research into suitable locations for CO2 storage, near-zeroemission electricity generation, process flexibility and industrial clustering.



Non-governmental organisations: raise awareness and increase public
acceptance of CCS.

Other industries and dedicated infrastructure companies: collaborate withgovernments, the fertiliser industry and other industrial stakeholders in thedevelopment of infrastructure for CO2 transport and storage and hydrogenproduction and distribution.

Tracking progress and improving data
Robust data on the ammonia industry’s emissions, energy use, technology profileand nitrogen use efficiency are essential for identifying best practices andopportunities for improvement. By collecting the right data, stakeholders canmonitor progress towards objectives, develop industry-appropriate policies anddifferentiate near-zero-emission fertilisers. Tracking and evaluation are beneficial
both at the individual company and farm level, and at the sectoral level via
government and industry-led benchmarks and indicators.
Existing data collection and reporting systems can be improved with greater
participation from ammonia producers and farmers, and by making regionally
aggregated data available for researchers and governments. Governments might
consider implementing mandatory emissions reporting if they do not already haveit in place, as well as reviewing competition law to enable improved data
accessibility and transparency. International collaboration to increase levels ofreporting and transparency on emissions performance would provide greater
visibility on where progress is being made and where improvement is needed.
An important aspect of tracking CO2 performance will be developing and applying
standards for labelling the CO2 intensity of nitrogen fertilisers and differentiatingnear-zero-emission product, as well as possibly the life-cycle emissions ofagricultural production. Ideally government and industry would develop and agree
upon practical and uncomplicated standards that can be applied internationally.

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Such standards and labelling would be useful for regulation, including for carbon

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border tariffs, and for buyers willing to pay a premium for near-zero-emission
product. Aligning data reporting and labelling efforts with sustainable financeclassifications would be beneficial to provide consistency and reduce the datareporting burden.
Key actions


Governments: promote better collection and reporting of data on emissions andenergy use, perhaps through mandatory reporting; develop improved reportingand performance evaluation schemes; work towards increased transparency andpublic availability of data, including international efforts to increase data availability
across countries; collaborate with industry to define international standards fornitrogen fertiliser CO2 intensity labelling.



Ammonia industry: track own emissions and energy progress; identify
opportunities for improvement and share best practices; improve data reporting todata collection schemes, including timeliness and detail (e.g. production tonnage
by product type); engage in efforts to standardise CO2 intensity labelling.



Farmers: fully participate in data collection initiatives on fertiliser use andefficiency.

Researchers and non-governmental organisations: help develop near-zeroemission nitrogen fertiliser production and sustainable food production labelling
schemes.

Key milestones and decision points
The Sustainable Development Scenario and Net Zero Emissions by 2050
Scenario both require a massive transformation of the ammonia industry in only a
few decades (Table 3.2). The next decade – from now to 2030 – is a critical
window to lay the groundwork for long-term success. Both scenarios require
similar actions at a rapid pace, with the pace and degree of progress accelerated
in the Net Zero Emissions by 2050 Scenario. Many of the emission reductions inthe short term will come from efficiency upgrades to existing emissions-intensive
assets, deploying commercially available near-zero-emission technologies andaccelerating fertiliser use efficiency. In addition to these short-term reductions, thenext ten years require strong and co-ordinated action on multiple fronts to prepare
for deeper emission reductions from 2030 onward.
Important actions this decade include the following:
Establish long-term CO2 reduction plans, policies and finance mechanisms:
considering the long lifetimes of ammonia plants and the lead times needed forinfrastructure build-out, it is critical to long-term success to establish reliable
policies, support mechanisms and planning initiatives as early as possible. This

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Pursue better technology performance and fertiliser use efficiency: early
emission reductions can be achieved through readily available and easier toimplement measures. On the production side, energy and emissions can be saved
by improving plant process operations and integrating BAT. Meanwhile on the
demand side, farmers – supported by agronomists and planning tools – can work
to maximise the efficiency of fertiliser use. Not only would this enable shorter-termemission reductions, but it would also lay the foundation for long-term lower
demand for fertilisers. This eases the burden by reducing the absolute number ofnear-zero-emission ammonia plants that need to be deployed.



Build supporting infrastructure and incorporate plant readiness: theco-ordinated planning and development of supporting infrastructure – including for
CO2 transport and storage, low-emission electricity generation and hydrogenproduction – will take time. Planning should begin immediately, with build-out fromthe mid-2020s so that infrastructure is ready for use by the end of the decade.
Ammonia producers should already begin preparing to use near-zero-emission
technologies. Operators of existing plants should make plans in recognition of thedecline in CO2 intensity needed just one investment cycle away – they may include
retrofitting to incorporate lower-emission technologies or retiring the plant early.
New plants should be built with near-zero-emission technologies, or at a minimum
be retrofit-ready, and siting should be considered within industrial clusters thatenables easier access to shared supporting infrastructure.

RD&D: large-scale demonstration of ammonia production with electrolytichydrogen and methane pyrolysis will expand the portfolio of options available fornear-zero-emission production. Ongoing R&D can also help bring down the costof technologies related to low-carbon production routes. Government financial
support and co-ordination can give a strong push to innovation over the next
decade, enabling smoother technology roll-out thereafter. Additionally,
preparations can already begin on demand-pull mechanisms to create a market
that supports higher-cost near-zero-emission nitrogen fertiliser production.

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would send a strong market signal on the need for change and enable a smoothertransition. Within the next few years, governments should have in place plans forthe ammonia industry transition, including a decision on whether to pursue
hydrogen or CCS or a combination of both. These plans should be underpinnedby policies creating an initial market for near-zero-emission fertilisers and otherammonia-based products, aligning incentives for continued deployment of nearzero-emission technology in the long term and mobilising finance for thenecessary investment. Action to create a level playing field internationally also
needs to begin in the next few years.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Chapter 3. Enabling more sustainable ammonia production

Global ammonia industry technology milestone requirements for meeting
the Sustainable Development Scenario and Net Zero Emissions by 2050
Scenario
Technology

2020

2030

2050

SDS

NZE

SDS

NZE

Reduction in direct CO2 emissions
relative to 2020

-

21%

25%

73%

96%

Share of production via near-zeroemission routes

0.4%

10%

12%

50%

73%

Share of production with CO2 utilisedfor urea synthesis

23%

27%

27%

25%

21%

Hydrogen demand (Mt H2)

33

37

37

41

41

On-site electrolyser capacity (GW)

0

29

29

112

171

CO2 captured for storage (Mt CO2)

2

15

24

91

101

CO2 captured for utilisation (Mt CO2)

130

139

139

107

92

Notes: SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050 Scenario. Near-zero-emission routes
exclude production with CO2 captured and utilised for urea production.

Building out near-zero-emission capacity is at the heart of the challenge. Following
the Sustainable Development Scenario pathway, in each year between now and2030, about two ammonia plants would need to be equipped with CCS (eachcapturing 1 Mt CO2/yr including both process and fuel emissions, and producing
0.5 Mt/yr ammonia) and four ammonia plants would need to be built withelectrolytic hydrogen (each producing 0.5 Mt/yr ammonia). From the early 2030s
onwards, nearly all new capacity additions in the ammonia industry should employ
near-zero-emission technologies. This entails equipping four ammonia plants with
CCS and building about five electrolytic-based ammonia plants each year from2030 to 2050. Policy stringency and ambition should continue to ramp up over theforthcoming decades, such that by 2050, 50% of ammonia production employs
near-zero-emission technologies, in addition to 25% utilising CO2 for urea
production.
The scale of the challenge cannot be understated. Thus, early decisive action andsustained co-operation over the long term among stakeholders – both regionallyand internationally – will be critical to making the clean energy transition pathway

PAGE | 160

IEA. All rights reserved.

to 2050 and beyond achievable for the ammonia industry.

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

Annexes

AnnexesAbbreviations
Advanced Research Projects Agency-Energy
auto-thermal reforming
best available technology
bioenergy with CCS
capital expenditure
Carbon Border Adjustment Mechanism
carbon capture and storage
carbon capture and utilisation
carbon capture, utilisation and storage
Clean Development Mechanism
Clean Energy Ministerial
contract for difference
carbon monoxidecarbon dioxide
direct air capture
European Environment Agency
enhanced oil recovery
engineering, procurement and construction
environmental, social and governance
Energy Technology Perspectives
emissions trading system
Fertiliser Association of India
Food and Agriculture Organization of the United Nations
Fertiliser Industry Assurance Scheme
Global Positioning System
nitric acidhydrogenInternational Energy Agency
International Fertilizer Association
Inter-convention Nitrogen Coordination Mechanism
Intergovernmental Panel on Climate ChangeInternational Standard Industrial Classification
potassium
levelised cost of electricity
levelised cost of hydrogen
lower heating value

PAGE | 161

IEA. All rights reserved.

ARPA-E
ATR
BAT
BECCS
CAPEX
CBAM
CCS
CCU
CCUS
CDM
CEM
CfD
CO
CO2
DAC
EEA
EOR
EPC
ESG
ETP
ETS
FAI
FAO
FIAS
GPS
HNO3
H2
IEA
IFA
INCOM
IPCC
ISIC
K
LCOE
LCOH
LHV

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

N
NASA
NH3
NOx
N2
N2O
NUE
NZE
OECD
OPEX
P
PAT
PEM
POX
R&D
RD&D
REACH
SDG
SDS
SMR
SOEC
STEPS
TCFD
TIMES
TRL
UN
UNEP
UNFCCCUNIDO
VRE

Annexes

nitrogen
National Aeronautics and Space Administration
ammonia
nitrogen oxides
dinitrogen
nitrous oxide
nitrogen use efficiency
Net Zero Emissions by 2050 Scenario
Organisation for Economic Co-operation and Development
operational expenditurephosphorous
Perform, Achieve, Trade
polymer electrolyte membrane
partial oxidation
research and development
research, development and demonstration
Registration, Evaluation, Authorisation and Restriction of Chemicals
Sustainable Development Goal
Sustainable Development Scenario
steam methane reforming
solid oxide electrolyser cells
Stated Policies Scenario
Task Force on Climate-related Financial Disclosures
The Integrated MARKAL-EFOM Systemtechnology readiness level
United Nations
United Nations Environment Programme
United Nations Framework Convention on Climate Change
United Nations Industrial Development Organisation
variable renewable energy

Units of measure
exajoule
grammegrammes of CO2 per kilowatt hour
gigajoulegigatonne
gigatonne of CO2-equivalent
gigawatt
hectarekilogramme

PAGE | 162

IEA. All rights reserved.

EJgg CO2/kWh
GJ
Gt
Gt CO2-eq
GWhakg

Ammonia Technology Roadmap
Towards more sustainable nitrogen fertiliser production

square kilometre
thousand tonnes
kilowatt
kilowatt electricalkilowatt hour
cubic metre
million British thermal units
million tonnes
million tonnes of coal-equivalentmillion tonnes of CO2-equivalent
megawatt hourtonne
tonne of CO2-equivalentterawatt hour
year

PAGE | 163

IEA. All rights reserved.

km2
kt
kW
kW e
kWh
m3
MBtu
Mt
Mtce
Mt CO2-eq
MWhtt CO2-eqTWhyr

AnnexesCopyright © 2021: International Energy Agency (IEA)
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