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Solar ammonia is cost-competitive with bunker fuel because it does not require carbon pricing
By Miguel Rico Luengo (aka Lambda), ETH Zürich engineer
This final part of the series will continue with the economics analysis. Part 3. It will address safety concerns in ammonia transportation, and list some of the many shipping projects that use ammonia as a propulsion engine. We will finish with a big-picture plan of how to decarbonize the shipping industry in the face of a climate crisis.
Comparing costs
This series has previously discussed the cost-competitiveness of ammonia compared to other fuels. A cost analysis revealed that ammonia in 2020 in Atacama could be produced and shipped for ¢1.70/MJ. This figure assumes that the electrolyzers have a nominal capacity of $460/kW, and that there is a possibility of solar-to-ammonia conversion efficiency of 85%. Electricity prices were set to $20/MWh. A fleet of 11 ships transporting ammonia halfway across the globe covered logistic costs. 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. A $10/MWh LCOE and decreasing electrolyzer costs would bring down the cost of Chilean solar ammonia by 2030. Let’s see how these numbers measure up to ammonia’s competitors:
Sources can be found Here.
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 all-in cost for bioethanol is approximately 90% of the ammonia produced at 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. Although it may seem excessive, the carbon price at $150/ton is in line with the level neededTo slow the global temperature rise Below or at the 1.5°C mark.
If we apply reasonable cost reductions to both solar PV and electrolyzers, as well as a $150/ton price for carbon, solar ammonia will be less expensive than high-sulfur fuel bunker fuel, and less than half of the production and carbon costs of cheapest bioethanol. It is possible to see solar ammonia at a $150/ton carbon cost, even if we subtract the ammonia carrier transport expenses. If costs are adjusted to conformity with climate targets, fossil fuels will be gone. Even without any carbon pricing, within about a decade, solar ammonia will equal and even slightly undercut today’s bunker fuel. This means that there will be less reason to switch to ammonia in ships and engines for both newbuilds and retrofits. We now turn our attention to the next topic: industry targets for ship- and engine manufacturers in the near future.
Ammonia’s viability is no secret
What might give credence to the analysis and arguments presented before? All of the Future ammonia-powered ships Under development, construction, and testing (only a handful will be mentioned here). MAN will offer ammonia-powered commercial products Newbuild engines by 2024; retrofits by 2020. Or WinGD, a Swiss engine designer, whose engines are capable of burning ammonia In 2025. There are even SOFC solutions for ammonia at sea, which will be tested by both sides by 2023. Wärtsilä and Eidesvik. Wärtsilä will also be launching Its Two-Stroke Future Fuels Conversion platform (applicable for both large and small engines) will be available in Q1 2022. The first commercial project will be Finished 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 launched the recently launched Yara Birkeland, An autonomous 120 TEU electric ship that can be operated on its own with its 9 MWh lithium battery. It will travel close to the coast and service a 3-port route. Yara Clean Ammonia has been developing ammonia for use as a fuel for ships. Multiple Japanese, Chinese, Korean and Japanese consortia are also vying to be the first to introduce ammonia. Ammonia-powered ships. Fortescue Industries is last but not least. It announced at COP26 that it would retrofit its MMA Leveque to run on ammonia fuel up to 100% by 2022. The rest of the company’s fleet is likewise to be converted to ammonia propulsion, “This decade was a good one..”
Another issue that could limit ammonia adoption is port infrastructure. It is unlikely to be a problem. 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.
Safety-wise, most comprehensive analyses agree that ship fueling with ammonia is dangerous. These risks are not negligible, and cannot be ignored. However, there are many ways to reduce them and keep them 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 with ammonium (not ammonia), and with modes of transport (road and rail), have been rare. They are almost always 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 RevisedYou can find more information atnd adapted to more widespread ammonia usage. For a more detailed examination of safety measures, please refer to the following detailed commentary and reports from people much more experienced than I am. 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.”
No wonder then that multiple ports, among them the Port of Rotterdam and the Port of Singapore, are looking to implement large-scale hydrogen and ammonia bunkering.
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.
Concluding remarks
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, 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 weThese are yet to make.
Featured Image: The shipping demand alone will require 2.5x the amount of hydrogen that is currently available to make ammonia. (Image taken from public domain.)
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