Sustainable Future

Firms line up 'green' ammonia for fertilizer and future fuel

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Key Points
  • A number of firms are attempting to reduce the environmental effects of ammonia production.
  • In the latest development, Statkraft, Aker Clean Hydrogen and fertilizer specialist Yara have launched a company focused on the production of "green" ammonia.

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As society attempts to find ways to reduce its environmental footprint, decarbonizing a broad range of sectors and industrial processes will be crucial in the years ahead.

Time is of the essence when it comes to finding new solutions and technologies to do this, if the Intergovernmental Panel on Climate Change's latest findings are anything to go by.

Published last week, its report warned that limiting global warming to close to 1.5 degrees Celsius or even 2 degrees Celsius above pre-industrial levels would "be beyond reach" in the next two decades without immediate, rapid and large-scale reductions in greenhouse gas emissions.

Against this sobering backdrop a number of firms are attempting to reduce the environmental effects of ammonia production, which is responsible approximately 1.8% of the world's carbon dioxide emissions, according to a policy briefing from The Royal Society.

On Monday, for instance, three Norwegian firms – energy powerhouse Statkraft, Aker Clean Hydrogen and fertilizer specialist Yara – launched a company focused on the production of so-called "green" ammonia.

The new company, called HEGRA, is jointly owned by the three businesses. According to Statkraft, which is itself owned by the Norwegian state, HEGRA will focus on electrifying and decarbonizing an ammonia plant located in Herøya, Norway.

The broad idea behind the initiative is that it will use renewable energy to generate ammonia at scale. The ammonia would then be used to produce carbon-free fertilizer. Statkraft also described green ammonia as "a promising zero-emission fuel for the maritime sector."

Speaking to CNBC's "Squawk Box Europe" on Monday morning, Yara CEO Svein Tore Holsether stressed the importance of developing big-picture solutions.

"The technology is there, but it's also about turning it into a product," he said. "And the nice thing about ammonia production and fertilizer production is that you have an existing infrastructure already."

"By converting part of that to renewable energy using hydropower, as we're talking about here in Norway, we can produce a renewable fertilizer product and supply that to the farmers at scale, rather quickly."

In terms of a timeline, Holsether indicated it would take five to seven years to get the project up and running.

The creation of HEGRA is just one example of how companies are looking into ways to reduce the emissions associated with ammonia production.

In Australia, Yara is also working with ENGIE on the development of a plant that will produce renewable hydrogen and ammonia. The project is backed by a grant of 42.5 million Australian dollars ($31.15 million) from the Australian government.

Last week, oil and gas giant BP announced that "the production of green hydrogen and green ammonia using renewable ‎energy" was now technically feasible at scale in Australia.

The energy major's conclusion is based on the findings of a feasibility study announced in May 2020 and supported by the Australian Renewable Energy Agency, solar developer Lightsource bp and professional services firm GHD Advisory.

In a statement, BP described the vast state of Western Australia as being "an ideal place" for the development of "large scale renewable energy assets that ‎can in turn produce green hydrogen and/or green ammonia for domestic and export markets."

— CNBC's Sam Meredith contributed to this report