17 January 2024 (Lloyd's List) - SHIPPING requires at least $2trn to build green ammonia infrastructure capable of producing a minimum of 600m tonnes by 2050 to decarbonise, according to an Oxford University paper that analyses two separate scenarios.
Total investment needs to be between $1.98trn in the paper's moderately ambitious scenario, while the sum will be $2.25trn in its highly ambitious scenario.
"Out of the total investment need, 8% is on the demand-side, while the remaining 92% is on the supply side."
"We find that green ammonia production could reach up to 602m tonnes per annum under the moderately ambitious scenario and 750m tonnes under the highly ambitious scenario, equivalent to a three to four-fold increase of present-day production of fossil fuel-based ammonia."
Australia will be the top green ammonia exporter followed by Chile, with the former providing almost 50% of the total, according to the scenarios in the paper.
"What drives Australia's export potential is the relatively short shipping distance from Australia to Asian demand hubs, and its significant amounts of available land, which allows scaling-up of ammonia supply."
The paper estimates that the primary green ammonia producing locations will be located in West Africa, India and Southern Arabian Peninsula.
The energy transition will result in a shift in current bunkering trends that heavily rely on oil producing nations, according to the paper.
"Altogether, green ammonia as a maritime fuel will significantly shift the spatial pattern of the maritime fuel supply chain compared to the existing fuel supply network of heavy fuel oil," it said.
"For instance, of the total global investment needed, half of it would be needed to build infrastructure in lower- and middle-income countries."
The paper estimates that the weighted average levelised cost of producing green ammonia is $237-$260 per tonne, which would be equivalent to a heavy fuel oil cost of $490-$540 given the higher energy density of fuel oil. The levelised cost of energy is a metric that covers all relevant costs including pre-development, capital, operating, fuel, and financing.
