Japan has estimated its demand for fuel ammonia in the power and shipping sectors to be 30 million mt/year -- equivalent to 5 million mt/year of hydrogen -- in 2050 after introducing it commercially in the 2020s by developing new supply chains, according to a policy report released Feb. 8 by the Ministry of Economy, Trade and Industry.
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The latest policy development comes as Japan formulated at the end of December its Green Growth Strategy for 2050 Carbon Neutral with action plans including for ammonia, following the carbon neutrality target announced by Prime Minister Yoshihide Suga in October.
Ammonia -- three hydrogen atoms and one of nitrogen and, thus, about 18% hydrogen by weight -- releases no carbon emissions when combusted in a thermal power plant. It is a widely traded chemical globally.
Under an interim report released at METI's fuel ammonia council, which looks at ways to introduce ammonia as fuel with the private sector, Japan aims to introduce 3 million mt/year, or equivalent to 500,000 mt/year of hydrogen, of fuel ammonia by lowering ammonia supply costs.
By developing its supply chains, Japan expects to lower ammonia supply costs to high Yen 10s/normal cu m-H2 by 2030 by developing stable supply chains under the Green Growth Strategy for 2050 Carbon Neutral. The current cost is about low Yen 20s/normal cu m-H2, according to the interim report.
METI plans to start a three-year pilot project from fiscal 2021-22 (April-March) to co-burn 20% ammonia at a coal-fired power plant in order to start commercializing it in the late 2020s.
"This means we need to put together detailed [ammonia] procurement plans in the next several years," Ryo Minami, METI's director-general of oil, gas and mineral resources told S&P Global Platts on Feb. 8.
"It would take some time because detailed supply plans would include production sites and [procurement] volumes, and we may even need to build a ship," Minami said.
METI is calling out Japan's need to develop new fuel ammonia supply chains because there would not be enough ammonia supply once the country starts using it as fuel even just for co-burning it 20% with coal, which would be 20 million mt/year -- equivalent to the current global ammonia trade volumes.
Japan currently uses about 1.08 million mt/year of ammonia as feedstocks, roughly 80% of which are produced domestically with other 20% imported from Indonesia and Malaysia, according to the interim report.
To use ammonia as a fuel for power generation, Japan is serious about developing stable supply sources, the report said, while noting that the recent tightening of power supply and demand was due in part to "difficulty" faced in stable LNG procurement.
The country will not just procure ammonia from foreign companies but also aims to stabilize fuel ammonia supply by taking stakes in upstream gas development projects, and secure stable renewable power with diversified supplies and sources.
"To develop stable [fuel ammonia] supply chains, we will carry out comprehensive resource diplomacy," Minami said. "For instance, we are looking at needs to cooperate with North America, Australia, the Middle East, Indonesia and Russia," said Minami, adding that Indonesia is currently a major ammonia exporter.
"While we are aiming for complete ammonia burning [for power generation] in the future, we will need far more than just the 3 million mt/year level," Minami said. "In this sense we intend to diversify our supply sources just like what we have done with other energy, meaning we would not rely on [supply from] specified countries."
Minami, who signed Japan's first fuel ammonia cooperation deal with state-owned Abu Dhabi National Oil Co. in January, said Tokyo is open to signing similar cooperation agreements with other governments should other needs emerge.
By 2030, Japan intends to develop its fuel ammonia supply chain by building plants and stable supply networks through developing storage and other facilities at both loading ports and other ports in the country, according to the report.
On the basis of using ammonia as a shipping fuel, Japan aims to commercialize ammonia-fueled ships by 2028 as the country readies for the International Maritime Organization's target to cut international shipping's total greenhouse gas emissions by more than 50% and eliminate GHG emissions at the earliest possible date in the current century, according to the report.
Looking further ahead, Japan aims to develop a stable potential ammonia supply network of 100 million mt/year by 2050 by Japanese companies to meet demand domestically, in Southeast Asia and around the world, the report said.
"As ammonia consumption would help to reduce CO2, we hope Japan will be able to help contribute to Asia's decarbonization by transferring this new technology associated with ammonia to other countries in Asia," Minami said.