Clarifies details of funding withdrawal from Baytown project in fourth paragraph
Japan remains committed to scaling up the emerging clean ammonia industry for direct combustion through consistent government support mechanisms, despite government roll backs on funding and commitments in other regions.
"Renewables and EVs cannot solve everything, so serious demand for hydrogen and ammonia is waiting in heavy industry, heavy duty trucks, thermal power and other [applications]," Japan's economy, trade and industry ministry (Meti) director of hydrogen and ammonia, Daisuke Hirota, told delegates at the Argus Clean Ammonia Asia conference in Tokyo this week.
Meti continues to focus on addressing the price gap between clean ammonia for use in power in generation when compared with traditional coal feedstocks. The government's contract for difference (CfD) scheme is progressing, with Meti currently in discussions with the 27 applicants.
"Clear and consistent policy is really what is required [for project developers]," ExxonMobil's commercial director for Asia-Pacific low carbon solutions, Kon Wai Seng, said. The US Department of Energy withdrew $332mn in funding from ExxonMobil's Baytown Olefins plant carbon reduction project in Texas last week. The project aims to replace natural gas feedstock for ethylene production with hydrogen. ExxonMobil also has a 1mn t/yr carbon capture and storage (CCS) enabled ammonia project planned in Baytown, with a final investment decision expected later this year. The firm has previously announced a 250,000 t/yr supply agreement with Japanese petrochemical trading firm Marubeni from its CCS-ammonia project. Marubeni is relying on the successful commissioning of the Baytown project for its bid in Meti's CfD scheme, which requires supply to start from 2030.
The US' 45Q internal revenue code tax credit for carbon capture is likely to survive with some modifications, despite cutbacks on other US tax credits. This will provide "consistent benefit" for Japanese companies involved in CCS ammonia production projects in the US, according to Institute of Energy Economics (IEEJ) senior economist Yoshikazu Kobayashi.
Japanese firms Jera and Mitsui announced a joint financial investment decision with partner CF Industries on a CCS-ammonia project at Blue Point in Louisiana. The partners plan to benefit from the 45Q tax credit that grants $85/metric tonne of CO2 geologically stored. Jera and Mitsui plan to ship their offtake from the project to Asia, including Japan.
But the price ceiling under the CfD scheme cannot cover all additional costs as it stands, Kohei said. Meti is currently exploring expanding the scheme to include price differences from upstream projects, which would add an additional layer of support.
And significant progress has also been made in addressing nitric oxide and nitrogen dioxide (NOx) emissions in ammonia combustion. Trials of 20pc ammonia with coal co-firing have delivered more than a 20pc reduction in NOx emissions to 106ppm NOx emitted, according to Japanese engineering firm IHI Power Systems. A demonstration project with a 1GW power plant had successfully been completed at the Jera Hekinan thermal power plant in 2024. Trials for 50pc and more co-firing rates or mono-firing of ammonia are ongoing.
Japan revised its "basic hydrogen strategy" 2023 but the numerical target of 3mn t/yr of supply by 2030 remains the same, with 12mn t/yr targeted in 2040 and 20mn t/yr in 2050, and are supportive of ammonia demand, Hirota said.
Asia-Pacific paves the way
South Korea opened the second round of its clean hydrogen power generation bidding market in May. Ammonia market participants in the country are much more positive for the second round, following the implementation of an "exchange-rate linked settlement system" to reduce currency risks, delegates heard at the conference. Participants in the scheme are largely looking towards projects in the Middle East and the US to supply the tender.
In China, momentum is building fast in the renewable ammonia industry. The Chinese government is exploring ammonia co-firing at a 10pc rate, China's main planning agency the NDRC announced last year.
And Marubeni has just confirmed a binding offtake agreement with Chinese renewables company Envision from its 300,000 t/yr renewable ammonia project in Chifeng, Inner Mongolia, which started commissioning in 2024. The plant is due to start commercial production in September, and Marubeni expects its first export shipment from the fourth quarter of this year.
Chinese trading firm Ampro also has ambitious plans in the renewable ammonia market and has signed agreements with major producers, anticipating the export of around 300,000t of green ammonia from north China in 2028. Ampro has signed supply agreements with at least four producers — China Energy Investment Group, State Power Investment, China Energy Engineering and China Huadian.
Chinese renewables technology company Longi's renewable ammonia demonstration plant in Da'an with an initial output of 180,000 t/yr of ammonia is also expected to reach commissioning this year. Envision and Longi's projects place China firmly in the first mover category for renewable ammonia projects globally.
