Japan’s toxic narrative on ammonia
By Seb Kennedy, Jacqueline Tao and Joo Yeow Lee
Southeast Asian countries are being misled about the emissions savings potential of co-firing ammonia with coal. New analysis by TransitionZero confirms that converting Asian coal plants to run on ammonia would be an immense waste of capital that could do more harm than good.
Japan’s industrial heavyweights are peddling the false narrative that ammonia-coal co-firing is an effective emissions reductions strategy for Southeast Asian countries
A 20% ammonia co-firing coal plant would emit 94% more CO2 than the average unabated gas plant in Malaysia, 77% more in Thailand, 60% more in the Philippines, and 44% more in Indonesia
Co-firing ammonia could even be worse for the environment than burning unabated coal due to the very high embedded upstream emissions and energy losses from production of hydrogen and NH3
There is no ammonia-based pathway to a net zero-aligned power sector, even when using ‘green’ ammonia produced from renewables
Burning ammonia for power is a wasteful use of a precious resource that could have genuine emissions-reductions impact when used in other non-energy applications
When energy ministers from the Group of Seven nations meet this weekend in Sapporo on Japan’s northernmost island Hokkaido, they will thrash out a statement that is likely to endorse the use of ammonia to reduce power sector emissions. A leaked draft of the G7 ministerial statement revealed that ammonia co-firing would be highlighted as an “effective emission reduction” tool – a technology being actively pursued by Japan, which this year holds the revolving G7 chair.
Superficially at least, the attraction of ammonia is understandable for Japan, a densely populated island nation not endowed with significant energy resources. Ammonia (NH3) is a high energy density fuel that can be stored and transported relatively easily and with a well-established supply chain. Combustion of NH3 does not release carbon dioxide but rather nitrogen and water, which is why it has been identified as a convenient ‘drop-in’ fuel for countries with large and relatively new coal fleets.
Under the euphemism of ‘clean’ or ‘advanced’ coal, proponents are using ammonia co-firing to extend the use of thermal power generation assets that would otherwise need to close. They claim that this is compatible with emissions reductions goals, a false assertion that could legitimise newbuild coal in the eyes of financiers and lenders. The truth is that widespread adoption of ammonia co-firing in existing coal fleets is strewn within transition risks that could create a new generation of stranded assets.
Why? The emissions reductions potential of ammonia co-firing is at best modest and at worst non-existent. Investing in a wholesale transition of coal-fired power plants to run partially on ammonia represents a misallocation of capital, since these plants will fall foul of net-zero emissions trajectories during their extended economic life.
Japanese policymakers and utilities intend to convert Japan’s existing coal plants to run partially on ammonia, and then export their technology and expertise in this area by promoting ammonia as a drop-in solution for coal-reliant countries. This approach is based on the false narrative that ever-higher mix rates will incrementally reduce power sector emissions.
There has been a flurry of announcements from Japanese companies promoting ammonia in Southeast Asia since the end of 2022. Japanese utility JERA is undertaking co-firing feasibility studies with local partners in the Philippines, Thailand and Malaysia. In Indonesia, Japanese heavy industry conglomerates IHI and Mitsubishi Corp are studying the technology with state utility PLN.
Paltry carbon savings
In response to this push, TransitionZero analysed the emissions reductions potential of ammonia co-firing in the Philippines, Malaysia, Indonesia and Thailand. The findings confirm that Japan’s ammonia export strategy would lock these countries into high-emissions pathways when significantly cleaner and more cost-effective solutions are readily available.
The current technologically feasible co-firing rate is 20%, and solutions to increase this to 50% are being tested. Going beyond 50% is theoretically possible but not yet commercially available. TransitionZero’s analysis finds that both the 20% co-firing rate and the more aggressive 50% mix would deliver only paltry emissions savings at a prohibitively expensive cost of abatement.
Co-firing ammonia in Southeast Asian coal plants would deliver plant-level emissions that are still significantly above those of existing unabated gas-fired power plants. Specifically, emissions from a 20% ammonia co-firing coal plant would be 94% higher than the average gas fleet in Malaysia, 77% above gas in Thailand, 60% above gas in the Philippines, and 44% above gas in Indonesia. In fact, unabated gas-fired power would be a slightly less polluting option even at the more ambitious 50% blending rate.
Moreover, none of these solutions are aligned with the 2030 power sector emissions trajectories outlined in the International Energy Agency’s 2050 net zero emissions (NZE) scenario. If the Philippines, Malaysia, Indonesia or Thailand were to convert their entire coal fleet to run on 20% or 50% ammonia, or even unabated gas, they would still need to close or abate those plants within a few years in order to achieve their emissions goals.
Prohibitively expensive
The insignificant emissions reductions attainable from ammonia co-firing are only half of the problem for Japan and its coal-reliant regional neighbours. The other challenge is that these diminutive CO2 savings come at an exorbitant cost of abatement compared to the direct use of renewables for power generation.
In the Philippines, Malaysia, Indonesia and Thailand, the range of abatement costs for 20% ammonia co-firing is between $159 and $191 per tonne of avoided CO2, with a median of $175/tCO2. This is up to four times more expensive than using solar or wind to displace coal on these countries’ grids.
The largest delta was found in sun-drenched Malaysia, where solar PV enjoys a very low cost of abatement of $50/tCO2. The next cheapest options are onshore wind and solar PV in Indonesia at $53 and $54/tCO2, respectively. Even the most expensive renewable power option studied – onshore wind in Thailand, with a cost of abatement of $90/tCO2 – offers a significantly cheaper way to cut emissions than burning ammonia with coal.
Energy losses: Ammonia’s Achilles heel
The cost and emissions analysis above measures emissions only at the point of combustion, excluding upstream supply chain emissions. When these hidden emissions are taken into consideration, the picture changes drastically. Severe energy losses make ammonia a hugely wasteful fuel that could result in an increase in power sector lifecycle emissions compared to the status quo.
Ammonia will always be an economically challenged fuel for power generation because the laws of physics are not in its favour. Ammonia is produced by fixing nitrogen from the atmosphere with hydrogen using the energy- and emissions-intensive Haber-Bosch process. In fact, NH3 production accounts for about 2% and 1.3% of global energy demand and carbon emissions, respectively.
There are significant energy losses incurred at every stage of the process. Between 20% and 30% is lost in the production of hydrogen, followed by another 5% to 20% in the production of ammonia (depending on whether waste heat is recycled). A further 5% to 10% is lost in liquefaction and transportation.
But the greatest loss is incurred at the point of combustion: since thermal power plants at best convert ~40% of their fuel into electricity, an additional 55% to 64% of the energy content is lost at the burner tip. Taken together, these losses result in just 18% to 32% of the ammonia feedstock’s original energy content being converted into electricity.
How is ammonia made?
Natural gas is the most widely used feedstock for ammonia production. This involves releasing methane’s hydrogen molecules via steam methane reformation (SMR), a process that heats the gas to 500°C and 250 times atmospheric pressure. Coal and (less often) oil can also be used as feedstock.
Carbon dioxide is a by-product that is typically vented off. The hydrogen molecules are then fixed to nitrogen using the Haber-Bosch process, resulting in ‘grey’, ‘brown’ or ‘black’ ammonia depending on the fossil fuel feedstock used. If the CO2 emissions are captured then the resulting NH3 is classified as ‘blue’ ammonia.
An alternative pathway is to split hydrogen molecules from water via electrolysis. If the electrolyser is powered by zero-carbon electricity, then the resultant hydrogen and ammonia can both be classified as ‘green’. However, this is a highly power-intensive and inefficient process: it takes around 50 kWh to produce one kilogram of hydrogen, which will then generate around 20 kWh of electricity.
The embedded emissions of ammonia vary greatly depending on the production process. Brown ammonia (from coal) has the highest, at more than 2,000 gCO2/kWh. Grey ammonia has an emissions factor of around 1,000 gCO2/kWh, while blue comes in at around 280 gCO2/kWh depending on the capture rate.
Notably, both grey and brown ammonia have lifecycle emissions factors that are higher than unabated coal combustion in Malaysia, Thailand and Indonesia. This confirms previous analysis by TransitionZero that a pivot towards a hydrogen/ammonia economy that is dependent on fossil fuels as feedstock may have no climate benefit, or worse, do more harm than good.
Green ammonia benefits from emissions factors below 100 gCO2/kWh in the countries studied. This is the only type of ammonia that is below the emissions threshold for a 2030 net-zero aligned power sector, which could be read to imply that – theoretically at least – burning 100% pure ammonia for thermal power generation offers a viable decarbonisation route.
However, this is not consistent with reality. The maximum feasible co-firing blend rate today is 20%, and achieving a higher rate of 50% is subject to numerous commercial and technical risk factors. Committing to a programme of ammonia-based coal plant conversion on the hope that 100% pure NH3 combustion becomes possible at some point in the early 2030s is a strategy that is destined to fail.
Costly strategic misstep
Ongoing volatility in energy markets has served to underscore the energy security benefits of coal for many countries. Introducing ammonia to the fuel mix complicates matters because making ammonia requires large amounts of natural gas, a fuel that some coal-dependent countries must import from unpredictable global markets.
The Philippines does not have coal or natural gas resources that can be used to produce ammonia domestically, so pursuing ammonia does not improve its energy security situation. The same holds true for G7 chair Japan. Indonesia, Thailand and Malaysia all have ample gas resources that could be used for large-scale blue ammonia production.
However, this overlooks the competing uses for low-carbon NH3, such as fertiliser for decarbonising food production. And as the above analysis shows, burning ammonia for power is a wasteful use of a precious resource that could have genuine emissions-reductions impact when used in other non-energy applications.
Contrary to the forthcoming G7 statement, ammonia co-firing is an entirely ineffective pathway for reducing power sector emissions. Due to the lifecycle emissions from ammonia co-firing from production to combustion, the technology will not help Southeast Asian countries reach their net-zero goals.
Instead of investing into ammonia co-firing for the power sector, Japan should invest instead into renewables in Southeast Asian countries to keep them in line with their climate targets in a more economical way and to avoid stranded assets.
