CASE STUDY INNOENERGY & OCI
From grey to green – decarbonising ammonia for green end products
3Keel worked with Dutch chemical producer, OCI, and European Green Hydrogen Acceleration Centre of EIT InnoEnergy, to explore the markets for green ammonia.
AREA CLIMATE CHANGE
LEAD MICHAEL LORD
CLIENT INNOENERGY & OCI
n October of 2021, 3Keel began a project with EIT InnoEnergy — the innovation engine for sustainable energy across Europe supported by the European Institute of Innovation & Technology (EIT), a body of the European Union — and OCI — a leading global producer of natural-gas based fertilisers and industrial chemicals located in the Netherlands — to assess the opportunities for commercialising green ammonia.
Ammonia is one of the world’s most important industrial chemicals. It plays a central role as a building block in nitrogen fertilisers, and is also used to manufacture products like dyes, synthetic fabrics, refrigerants, and laminates. The manufacturing process involves combining nitrogen, extracted from air, with hydrogen. The usual way of making hydrogen is to extract it from natural gas. This makes ‘grey’ ammonia – an emissions intensive product which accounts for 1.8% of global carbon dioxide emissions (The Royal Society, 2020).
An alternative way to make hydrogen for ammonia is to electrolyse water using renewable energy. This hydrogen can be used to make ‘green’ ammonia without producing any carbon emissions during production.
The cost of producing green ammonia can be greater than the fossil-based (grey) production process — depending on the cost of natural gas. OCI came to 3Keel with several questions, namely: who would be interested in buying this low-carbon product to reduce their supply chain emissions? Would they be willing to pay a price premium for it?
3Keel answered these questions through a combination of desk-based research, product emission reduction modelling, and interviews with stakeholders along the green-ammonia value chain. Given that 80% of ammonia is used to produce nitrogen-based fertilisers, our analysis focused on products that use fertilisers in their supply chains.
Using existing data on emissions associated with various agricultural, food and chemical products, 3Keel modelled the potential emission reductions that could be achieved by switching from grey (fossil-based) ammonia to green ammonia for 46 products. We looked into results that could be achieved for staple crops like wheat, maize and rice — all of which account for more than 50% of global demand for nitrogen fertilisers derived from ammonia.
The results we found were significant. For example, nitrogen-based fertilisers make up 19% of the emissions associated with producing wheat (when considering the cradle-to-market carbon footprint). As such, switching to green ammonia in the product of wheat and derivative products could deliver supply chain emission reductions for food retailers, and producers.
We also found significant interest in low-carbon or zero-carbon fertilisers across the food, beverage and agricultural industries as more companies are setting Science-based Targets and looking for opportunities to reduce their Scope 3 emissions.
We anticipate that demand for green ammonia, derivative chemical products and zero-carbon fertilisers will only increase in the years and decades to come. 3Keel are proud to have helped two organisations that are driving positive change in this space, by working to make green ammonia available on the global market.
“The world cannot afford to wait for subsidies to drive down costs of green ammonia. Thankfully, there is another way to bring this decarbonised product to market, 3Keel has been an invaluable partner in connecting us with other stakeholders and contacts who will help to make this a reality”.
Carina Krastel, Commercial Director of the European Green Hydrogen Acceleration Centre (EGHAC).