Blue Ammonia Market Size, Share, Analysis & Forecast [2035]

Report Description

Market Outlook:

The global blue ammonia market was valued at USD 76.7 Million in 2023 and is projected to reach USD 11,858.6 Million by 2035, expanding at a CAGR of 49.9% during the forecast period.

Blue ammonia is made from nitrogen and blue hydrogen derived from natural gas feedstocks, with the carbon dioxide by-product from hydrogen production captured and stored. Ammonia has a broad range of industrial uses as a low-carbon fuel, such as power generation, transportation, and the manufacturing of steel, cement, & fertilizer. Blue ammonia is produced in a low-carbon method by employing steam methane reformation.

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Steam methane reforming involves reacting methane (from natural gas) with steam under high temperatures to produce hydrogen, carbon monoxide, and carbon dioxide. However, there is a significant environmental problem with this method, as it produces a lot of carbon dioxide emissions. This is where the blue in blue ammonia emerges. The term blue refers to the techniques used in manufacturing that integrate carbon capture and storage (CCS). CCS technology captures CO2 emissions from steam methane reforming underground or underwater, preventing it from releasing into the environment.
 

Macro-economic Factors:

Tax Credit

Energy carriers other than fossil fuels need to be found to meet the global climate targets. Promising alternatives that are carbon-emission-free at the point of combustion include hydrogen and ammonia. Ammonia is essential to the manufacturing of fertilizers and, therefore, food across the globe. Additionally, low-carbon ammonia is a potentially valuable fuel for shipping, power generation, and industry. Nonetheless, the production of ammonia currently contributes to around 2% of the global carbon dioxide emissions. Blue ammonia is produced by decarbonizing conventional methane reforming-based ammonia production through the use of carbon capture and storage. Large-scale commercial low-carbon ammonia projects are gaining attention, due to the United States Inflation Reduction Act (IRA) and production tax credits (PTC) for clean hydrogen generation through the 45V and carbon sequestration through the 45Q. The goal of these incentives is to make low-carbon technology more economically competitive as compared to conventional ammonia. The IRA provides tax credits of up to 85 USD/tCO2 for permanent carbon sequestration under tax code 45Q, which proves appealing for blue ammonia projects in addition to PTCs for the generation of clean hydrogen under tax code 45V. The inflation reduction act's production tax credits for low-carbon hydrogen significantly change the economics of producing low-carbon ammonia. Even if only the second highest credit tier of USD1 USD/kgH2 is attained, blue ammonia becomes the most cost-effective production option, despite its estimated 50% higher cost than traditional ammonia without the subsidies.
 

Government Policies

The European Union has set out on an ambitious decarbonization route with the goal of reducing CO2 emissions in the upcoming decades. New regulations have been put in place to compel industries with high emissions such as the ammonia industry to decarbonize the manufacturing processes. Approximately 2.5 metric tons of CO2 are generated for every metric tons of ammonia produced, which is twice as much as is produced during the emission-intensive manufacture of steel. Ambitious goals for the utilization of low-carbon ammonia and hydrogen in national energy strategies have also been established by South Korea and Japan. Japan intends to increase the utilization of ammonia to reach its 2050 decarbonization target. The government of Japan is encouraging carbon capture and storage (CCS) to store carbon dioxide (CO₂) in businesses where CO2 emissions are inevitable, to attain carbon neutrality. The government has set a target of storing 120–240 million tons of CO₂ by the year 2050. This amounts to around 10–20% of present emissions of the country. In September 2020, Saudi Arabia delivered the first shipment of blue ammonia to Japan, where it was utilized for producing power, providing an opportunity for oil and gas producers. According to the Institute of Energy Economics in Japan, blue ammonia is essential to the goal of zero carbon emissions of Japan to maintain the equilibrium between the environment and the economy. It is possible to generate around 10% of Japan's power with 30 million metric tons of blue ammonia annually.

Market Dynamics:

Driver: Climate Change Mitigation

Manufacturing sectors across the globe are struggling to strike a balance between production economics and environmental sustainability as the implications of climate change become increasingly apparent. Ammonia manufacturing is one of the industries reevaluating its traditional production routes. Reducing carbon emissions is essential in a time when concerns about climate change are widespread. Blue ammonia provides a viable solution that lessens the environmental impact of these emissions by effectively capturing and repurposing carbon emissions. Therefore, blue ammonia is viewed as a potential way to lower greenhouse gas emissions, especially in industries such as transport and power generation, supporting international efforts to tackle climate change.

Driver: Growing Demand for Industrial Decarbonization

In recent years, the role of ammonia in the global food chain and fertilizer industry has changed from that of an essential ingredient to that of a transportable and dispatchable carbon-neutral form of energy. By 2050, there is expected to be two billion more people on the planet than there are now, which is expected to increase the demand for fertilizers. However, manufacturing techniques need to become less carbon-intensive in order to meet global carbon reduction goals. Russia is a major exporter of fertilizers, and the conflict in Ukraine is putting further demand for ammonia production. Countries are currently being forced by export sanctions to develop new supply lines. It is expected to lead to a rise in the need for new fertilizer production in nations that were once importers and now strategically need domestic production. This situation also hastens the need for technological advancements in the generation of hydrogen, a vital ingredient of ammonia. When combined with carbon capture, blue low-carbon ammonia lowers its carbon emissions more than 90%. Industries as well as countries striving for net-zero emissions are gravitating towards green and blue ammonia, as they show promise as long-term carriers of energy and as low- or zero-carbon fuels that reduce greenhouse gas emissions. Japan, for instance, has focused on testing cofiring ammonia in coal-based power plants to eventually transition to ammonia completely. Hence, driving the demand for blue ammonia during the forecast period.

Restraint: High Initial Capital Costs

CCS technology is used to lower blue ammonia CO2 emissions. However, CCS is costly, not often utilized, and many of the CCS projects that are currently underway globally have not functioned up to par. According to a research report by the Japan-based think tank group Climate Integrate, even if CCS becomes feasible in practice, carbon capture rates reportedly still be around 80% to 85%, which means that zero emissions still not be possible. The persistent high costs of CCS are attributed to high design complexity and the need for customization that limits the deployment of CCS. Therefore, the cost of producing blue ammonia is expected to be higher than that for conventional ammonia production techniques, particularly when it comes to hydrogen synthesis and carbon capture. This makes it difficult for blue ammonia to be widely adopted, particularly in markets where costs are a concern.

Opportunity: Increasing Blue Ammonia Projects in the Near Future

A surge in the number of blue ammonia projects during the forecast period presents various opportunities for the blue ammonia market in the near future. The delivery of the first blue ammonia shipment in record to Japan from Saudi Aramco was in 2020, indicating a change in the nation's energy mix. Japan is considering implementing low-carbon ammonia with ammonia coal cofiring to maintain the operation of its current coal-fired power plant system. Blue ammonia is becoming increasingly popular as an energy carrier in the region owing to several projects of this kind. However, the resulting rise in CO2 emissions serves as a warning that increasingly viable and sustainable alternatives are required. In the US Gulf Coast region, BASF and Yara Clean Ammonia are working together on a collaborative study to design and build a global scale low-carbon blue ammonia production facility with carbon capture. The companies are looking into the viability of constructing a plant with an annual capacity of 1.2 to 1.4 million tons p.a. to meet the increasing demand for low-carbon ammonia on a global scale. The goal is to sequester and store permanently in the ground around 95% of the carbon dioxide (CO2) produced during the manufacturing process. Yara is expected to be able to provide clean ammonia to its customers while significantly reducing the carbon footprint of its products. The new plant is expected to serve as a backward integration for BASF, meeting the company's ambition for low-carbon ammonia, by lowering the carbon footprint of its ammonia-based products. In the first quarter of 2026, Qatar aims to build the largest blue ammonia plant in the world, with an annual capacity of 1.2 million tons (MT)., creating opportunities for the blue ammonia market during the forecast period.

Scope of the Report:

The report on the global blue ammonia market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Segmental Outlook:

In terms of technology, the global blue ammonia market is segmented into steam methane reforming (SMR), autothermal reforming (ATR), gas partial oxidation, and coal gasification. The steam methane reforming (SMR) segment held XX.X% market share in 2022. Blue Ammonia is a carbon-neutral hydrogen produced from pyrolysis of natural gas. In terms of technology readiness level, the production of hydrogen from natural gas is not new. For many years, the established process of steam methane reforming (SMR) has been utilized to produce hydrogen, an essential ingredient in blue ammonia. Steam methane reformation (SMR) is a process that produces a mixture of hydrogen and carbon monoxide that is used as fuel and in organic synthesis. The methane from natural gas is heated with steam, usually with the help of a catalyst. The most popular method for producing hydrogen in the energy sector is SMR.

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In terms of application, the global blue ammonia market is segmented into hydrogen carrier, bunker fuel, power generation & energy storage, fertilizers, and others. The fertilizers segment held XX.X% share of the market in 2022 and is expected to expand at a CAGR of XX.X% in the forecast period. The market for blue ammonia is expected to expand in the coming years, as blue ammonia is used a sustainable substitute for grey ammonia. Blue ammonia has the potential to decarbonize the fertilizers industry and help in meeting the Paris Agreement objective by 2050. For example, the Norway-based fertilizer manufacturer Yara recently stated to increase its clean ammonia operations by investing in blue ammonia capacity in the US as a part of its efforts to decarbonize agriculture and serve clean ammonia segments.

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Based on end use, the market is segmented into transportation, energy & power, industrial feedstock, and others. The energy & power segment accounted for XX.X% share of the market in 2022. It is projected to expand at a CAGR of XX.X% in the forecasted period. Blue ammonia is expected to be used as a fuel in the future by the power and marine industries. For instance, with support from the Ministry of Economy, Trade and Industry in Japan; Aramco; and the Institute of Energy Economics, Japan, in partnership with SABIC, successfully demonstrated the production and transport of blue ammonia from Saudi Arabia to Japan in September 2020. Japan received forty tons of high-grade blue ammonia to be used in power generation.

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Regional Outlook:

Based on region, the global blue ammonia market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. North America held XX% market share in 2022. The announcement of the Inflation Reduction Act (IRA) subsidy mechanism in mid-2022, which encourages the production of both green and blue hydrogen/ammonia, led to a significant surge in blue ammonia projects in the US. The manufacturing costs of blue ammonia are reduced by subsidies, increasing its competitiveness with traditional fossil fuel-based substitutes. Blue ammonia is an attractive option for companies looking to cut carbon emissions while maintaining cost effectiveness, driving the demand for blue ammonia in the region.

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Key Benefits for Industry Participants & Stakeholders

• In-depth Analysis of the Global Blue Ammonia Market

• Historical, Current, and Projected Market Size in terms of Value

• Potential & Niche Segments and Regions Exhibiting Promising Growth Covered

• Industry Drivers, Restraints, and Opportunities Covered in the Study

• Recent Industry Trends and Developments

• Competitive Landscape & Strategies of Key Players

• Neutral Perspective on Global Blue Ammonia Market Performance