Solar ammonia: no carbon pricing needed for cost-competitiveness with bunker fuel.
By Miguel Rico Luengo (aka Lambda), ETH Zürich engineer
This final part of the series will continue the economics analysis from part 3. It will touch upon the safety considerations of ammonia transportation and list a couple of the many shipping projects implementing ammonia as a propulsion fuel. We will conclude with a big-picture roadmap of how to cost-effectively decarbonize the shipping sector in the midst of a climate crisis.
Previous parts of this series have hinted at the cost competitiveness of ammonia relative to other fuels. A cost analysis revealed that ammonia in 2020 in Atacama could be produced and shipped for ¢1.70/MJ. This number assumes conservative electrolyzer numbers of $460/kW and achievable solar-to-ammonia conversion efficiencies. Electricity prices were set at $20/MWh. Logistic costs were covered by a 11-ship fleet transporting ammonia halfway around the world. Dispensing with these ammonia carriers for some regions in the Middle East and North Africa (MENA) region yielded costs as low as cents ¢1.35/MJ. By 2030, decreasing electrolyzer costs and a $10/MWh LCOE would lower costs for Chilean solar ammonia to under a penny a MJ. Let’s see how these numbers measure up to ammonia’s competitors:
Immediately, we can notice that today’s solar ammonia costs more than the two most commonly used shipping fossil fuels, which as far as I could tell continue to enjoy substantial subsidies. The cheapest bioethanol is about 90% the all-in cost of ammonia produced in Atacama. MENA ammonia, if produced at scale with today’s technology and electricity prices, would come in at about ¢1.35/MJ, compared to bioethanol’s ¢1.59/MJ, a figure which does not account for the costs of logistics or the difference in lifecycle emissions. While seemingly excessive, the carbon price of $150/ton listed in the table corresponds to the level needed to keep the rise in global temperatures at or below the 1.5°C mark.
By 2030, if we applied reasonable cost reductions to both electrolyzers and solar PV as well as a $150/ton carbon price, solar ammonia would be less than half the cost of high-sulfur bunker fuel and a little over half the production and carbon costs of the cheapest bioethanol. Incredibly, if we subtract ammonia carrier transport costs, it is not out of the question that we will see solar ammonia costing less than a third as much as VLSFO at a $150/ton carbon price. To put it bluntly, fossil fuels are toast if costs are adjusted for climate target conformity. Even without any carbon pricing, within about a decade, solar ammonia will equal and even slightly undercut today’s bunker fuel. In other words, there will be less and less of a reason not to switch to ammonia for ships and engines, both for newbuilds as well as retrofits. Which brings us to the next topic: near-term industry targets from ship and engine makers.
Ammonia’s viability is no secret
What might lend credibility to the hitherto presented arguments and analysis? All of the upcoming ammonia powered ships under development, construction and testing (only a few will be mentioned here). There is MAN, which will offer ammonia-powered commercial newbuild engines by 2024 and retrofits by 2025. Or Swiss engine designer WinGD, whose engines will be capable of burning ammonia in 2025. And there are even ammonia SOFC solutions being trialled at sea by the end of 2023, this time courtesy of both Wärtsilä and Eidesvik. Wärtsilä will also be launching its Two-Stroke Future Fuels Conversion platform (applicable to both large and small engines) in Q1 2022, with the first commercial project to be completed by mid-2023.
Staying in the Nordic region, we have Yara, a Norwegian chemicals company that happens to be the world’s second largest ammonia producer. Yara recently launched the Yara Birkeland, an autonomous and electric 120 TEU ship that will travel near the coast as it services a 3-port route with its 9 MWh battery. Nevertheless, Yara has also started development of ammonia as a fuel for ships through its subsidiary Yara Clean Ammonia. Additionally, multiple Korean, Chinese, and Japanese companies and consortia are racing to introduce ammonia-powered ships. Last but not least we have Fortescue Industries, which during COP26 announced that it would retrofit the MMA Leveque to run on near-100% ammonia fuel by the end of 2022. The rest of the company’s fleet is likewise to be converted to ammonia propulsion, “well within this decade.”
Port infrastructure, another would-be limitation to ammonia adoption, is unlikely to pose much of an issue. 120 ports worldwide are equipped with ammonia terminals, and ammonia has long made its presence felt in the maritime sector, naturally as cargo but also as a reagent in selective catalytic reduction (SCR) systems and as a refrigerant for on-board cooling systems.
With regard to safety, most comprehensive analyses seem to agree that using ammonia as a fuel for ships does indeed come with safety hazards. These are not negligible and cannot be handwaved away, but many measures can be implemented to keep the risks low and manageable. Nor would it be the first time we’d be handling ammonia on a large scale, as shown by the more than a century old fertilizer industry. Accidents have been few and far between, with most of them occurring with ammonium nitrate (not ammonia) and with modes of transportation (road and rail) that are entirely avoidable in the shipping industry. Many if not most of these accidents happened over half a century ago, when safety wasn’t as much of a priority as it is today. Overall, existing safety guidelines such as the International Maritime Organization’s IGF and IGC safety codes could be revised and adapted for more widespread ammonia use. For a closer examination of safety measures, please check out the following detailed commentary and reports by people much more knowledgeable than myself here, here, and here.
Overall, the Korean Register nicely summarizes the viability of ammonia for shipping as follows: “Ammonia is expected to have low production, storage, and transport costs compared to other carbon-neutral fuels, and the stable fuel supply is possible as the large-capacity ammonia synthesis technologies are already mature. It can be regarded as the carbon-neutral fuel for ships with the growth potential since it is expected to be at the allowable level technically and commercially from the storage temperature, energy density, and shipbuilding cost perspective.”
Electrolysis scaling considerations
If neither cost, carbon intensity, fueling infrastructure, or demand will put a halt to the shift to ammonia, what might? Maybe platinum group metals or rare earth elements? Not likely. Polymer electrolyte membrane (PEM) electrolyzers do use precious metals such as iridium or platinum, but alkaline electrolyzers can use non-precious metal electrocatalysts such as nickel, and the yttrium, zirconium, and cerium used in solid oxide electrolyzer cells (SOECs) will in all likelihood not be supply-constrained. Anion exchange membrane (AEM) electrolyzers also dispense with platinum group metals.
No, the real limitation to delivering a timely low-carbon shipping future will be the same as the one plaguing solar PV: a rapid manufacturing scale-up. With a capacity factor of 32.8% and a LHV efficiency of 76% LHV, we would require 1177 GW worth of electrolyzers just to cover the shipping industry’s 2020 energy demand of 2.57 million GWh. Aurora Energy Research estimates the current global installed capacity of electrolyzers to be 200 MW, while the IEA puts this figure at 0.3 GW. Clearly, both of these are dwarfed by the aforementioned 1177 GW. As far as I can see, there are two main ways to ease this problem.
The first is to source hydrogen from biogas as described in part 2 of this series. The second is to increase the electrolyzer capacity factor, even if production costs have to trend upward to account for energy storage expenditures or more expensive renewable electricity from wind, hydro, or concentrated solar power (CSP). Heliogen and Bloom Energy, for example, have set the goal of producing hydrogen at under $2/kg by 2026 using SOECs operated at an 85% capacity factor using CSP. That would cut electrolyzer requirements to 454 GW. But we can do better; marine fuel consumption can be reduced if we replace internal combustion engines with high-efficiency (solid oxide) fuel cells (SOFCs). 45% is a generous estimate for the average thermal efficiency of the world’s shipping fleet. By comparison, SOFCs have already demonstrated 60% electrical efficiency (LHV), with 72.5% efficient systems under development by Chinese SOFCMAN. I’ll assume the addition of a bottoming cycle to use the high-temperature exhaust heat will not fully offset ammonia cracking losses (among others), leading to an overall electrical efficiency of 65% (LHV). Assuming zero biogas hydrogen production, we now *only* need 305 GW (instead of 454 GW) of electrolyzers for a total 1.78 million GWh consumption.
But wait a minute. We just assumed that ships might use SOFCs. But as we’ve mentioned before in part 3, SOC technology can be adapted to be reversibly operated, capable of functioning both in electrolyzer (SOEC) and fuel cell (SOFC) modes. That means that our true production of SOCs would be significantly higher, since we need to account for both production and consumption! At 65% electrical efficiency and 95% capacity factor (ships are mostly out at sea), we will need to add a further 329 GW of r-SOCs production. This is not welcome news for availability, but it will certainly do wonders for cost reductions as the learning rate works its wonders.
In the end, we find that switching over to SOFCs for ships is not a good idea as long as SOC supply is constrained (329+305>454). In any case, we will be stuck with internal combustion engines for some time. According to some estimates, the average lifetime of container ships and bulk carriers is on the order of 10.6 and 16.6 years, respectively. The IEA’s estimates are higher, at 25–35 years. (Better sources are welcome.) A full ship fleet renewal, similar to the automotive sector, could be hastened by new technologies and early scrappage schemes. Even then, the transition time will almost certainly exceed the approximate 7 years and 7 months we have left as of writing until the 1.5°C CO2 budget is exhausted. Which is to say the shipping industry should have been hard at work implementing solutions yesterday, rather than dodging its climate obligations by avoiding international environmental agreements.
As a side note, I’d like to mention that, in theory, many fuels besides hydrogen can generate electricity when passed through a fuel cell. For now though, direct fuel cells for ethanol, and to a lesser degree ammonia, are firmly in the realm of academic research. We just cannot wait for silver bullet technologies to put out the (literal) climate change fires. Current fuel cell technologies, preceded by internal combustion engine retrofits, are sufficiently advanced to fulfill our immediate needs.
How to produce hydrogen in the meantime
To get a sense of what we are up against, I would like to put current hydrogen demand ammonia production in context. In 2019, ammonia claimed 31 million metric tons (Mt) of hydrogen in 2019. If we keep combusting fuels in internal combustion engines, a full ship fleet conversion to ammonia will raise this number to 77.13 Mt for 2020 shipping, a 2.5× increase. Under this scenario, synthetic fertilizer usage would be zero. That is 4000× as much as the currently installed 300 MW can manage at 76% LHV efficiency and 32% capacity factor. And while a May 2021 report estimated that approximately 214 GW of electrolyzer capacity are under development by 2040, we need to more than double that to 454 GW. And preferably by 2030, not 2040. We still fall short even if China was to follow through with plans to install 100 GW of electrolyzer capacity by 2030.
I see two main pathways to ease this problem. The first is to divert all current biofuel production to ships. If we ignored aviation usage (a more likely application of biofuels), worldwide biofuel production would cover 47% of shipping demand as discussed in Part 1. The environmental consequences would continue to be substantial. Since most biofuel production is corn-based, about a 50% emissions reduction compared to marine fuel oils is all we’d have to look forward to. The shipping sector as a whole would emit some 75% of current emissions. Further, the economics of retrofitting the newest half the world’s ships to operate on a fuel that’s on its way out would need to be justified. In other words, biofuels are far from a comprehensive solution, even in the near term. Any new biogenic energy sources should produce carbon-free fuels such as hydrogen for maximum climate mitigation. Longer term, all ethanol and biodiesel farming should disappear. Personally, I’d rather restore Brazil’s cerrado and North America’s prairie ecosystems as natural museums of great biodiversity rather than continue to exploitatively operate them as inefficient open-air hydrocarbon factories.
The second way to fulfill shipping demand with low-carbon fuels would be to use turquoise hydrogen (i.e., hydrogen that originates from the pyrolysis of methane — as discussed in part 2). Rather than attempting to sequester CO2 after methane combustion, a process that is unlikely to be economically competitive, methane pyrolysis would buy us some time to fully defossilize the shipping sector. We could mandate methane pyrolysis units at both fossil gas wells and landfills and operate them with energy from renewables or from the hydrogen they just produced. To keep the risk of corporate capture by fossil fuel companies to a minimum, only landfills would be subject to financial incentives and tax credits. Natural gas companies would be forced to adopt these measures and pay for them out of their own pocket, rather than the taxpayer’s. To avoid stranded assets as we get rid of CH4 as quickly as possible, these pyrolysis units would have to be fully compatible in a landfill setting. Ideally, the units previously used at fossil wells would be repurposed for landfill operation.
However, the priority should first and foremost be to scale up electrolyzer production as fast as possible for use in no-regret applications, namely long-distance shipping and aviation. As I have previously stated, hydrogen should not go anywhere near space heating or ground transportation, especially since I view it as unlikely that electrolyzers will scale more quickly than earth-abundant battery chemistries. I would also expect the capital intensity of both types of factories to be about the same.
Hydrogen is not a climate panacea. At the same time, we cannot deny its usefulness in a select few sectors, notably when used as ammonia. We have seen that ammonia’s lifecycle emissions, as well as electricity and electrolyzer costs, are not an impediment to widespread adoption. Further, ammonia propulsion will not have insurmountable engineering hurdles to overcome, an assessment backed by near-term industry plans. As with most if not all technologies put forth as solutions for this urgent energy transition, the main problem is one of time and scale.
Having delayed time and again the measures we knew would be necessary, the fight before us now requires all hands on deck. Novel fuels, technological innovations, but also energy efficiency, a rejection of wasteful consumerism and planned obsolescence, and globally distributed manufacturing all should and will have a role to play. All of these factors will have to overcome significant inertias: industry and public acceptance, vested interests, and the sheer scale of a problem at least 200 years in the making.
Fossil fuels have been cheap because we subsidized them by ignoring or socializing the environmental ravages they caused. We cannot afford to delude ourselves again. I can only hope that messages such as these will remind us to question the true environmental impact of our actions and of the fateful choices we are yet to make.
Featured image: Shipping demand alone will require 2.5 times as much hydrogen as is currently supplied to make ammonia. (Public domain image.)
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