Technology choices to meet the EU’s new climate targets for 2040

The European Parliament and member states have agreed to set a legally binding climate target for 2040, with implications for the ammonia sector.

The European Parliament and member states have agreed to set a legally binding climate target for 2040, at a 90% greenhouse gas (GHG) emission reduction versus 1990 levels. Of this, 85% of the GHG emission reduction must come from emission reduction within the EU, with up to 5% of GHG emission reductions via offsetting in non-EU countries. For context, the current target for 2030 (also legally binding) mandates a 55% GHG emission reduction versus 1990 levels.

An example of GHG emission reductions via offsetting in non-EU countries is DeNO_X installations in nitric acid plants outside of Europe, to both decrease nitrous oxide (N2O) emissions (a potent greenhouse gas), and nitrogen oxide (NO_X) emissions. The German government launched the Nitric Acid Climate Action Group (NACAG) at COP21 in Paris, ten years ago. NACAG aims to promote the installation of effective nitrous oxide (N2O) abatement technology in nitric acid plants globally, including technical, political and financial assistance. According to NACAG, the global nitric acid sector has an annual emission reduction potential of 100 million tons CO₂ equivalent.

Impact on the ammonia sector in Europe

In short, the 2040 targets are a more significant deviation from “business as usual” than the 2030 targets.

The hydrogen feedstock and nitrogen feedstock for an European ammonia plant is usually produced via steam methane reforming (SMR) (or more accurately two-step reforming). This results in about 2.0 tons of CO₂ produced per ton of ammonia produced, of which 1.2 tons of CO₂ is “process” CO₂ produced at high purity, with the remaining 0.8 tons of CO₂ is emitted in flue gas (dilute).

The current European ammonia industry is largely used to make fertilizers and chemicals other than urea, which do not require CO₂ as feedstock. Thus, the high-purity process CO₂ from ammonia production in the EU can be (and in many cases, is) captured and used in other sectors. This represents a theoretical maximum of 60% of the CO₂ produced at the ammonia plant (already above the 55% GHG emission reduction target set by the EU in 2030).

Technology pathways forward

While the focus in many discussions has been on RFNBO-compliant renewable hydrogen to replace unabated gas-based hydrogen as feedstock for industry, some countries have adopted legislation for technology neutral decarbonization, allowing technology pathways like gas-based hydrogen with CCS to help reach decarbonization goals. For example, the Dutch government passed a motion to exempt the Dutch ammonia industry from the obligatory use of green hydrogen to meet decarbonization goals.

Various projects are under development. Yara will permanently sequester around 800,000 tons of process CO₂ per year at Northern Lights (off the coast of Norway) from its Sluiskil ammonia production site in the Netherlands, to produce around 670,000 tons of ammonia per year, with reduced emissions from early 2026 onward. This requires investments in CO₂ compression and dehydration, as well as CO₂ liquefaction and storage at the production site. However, no fundamental modifications are required to the reformer for hydrogen production (and nitrogen production).

But the new binding 2040 target will have a significant impact on the core technologies, and require choices to be made. As discussed above, steam methane reformers produce around 0.8 tons of flue gas CO₂ per ton of ammonia. To achieve 85% emission reduction, flue gas CO₂ carbon capture and storage would be required next to storage of process CO₂, or (as we discuss below) feedstock substitution.

As CO₂ is not concentrated in the flue gas, up to 15% additional energy could be required on top of the normal energy consumption of a gas-based ammonia plant without flue gas carbon capture. The additional energy requirement for flue gas carbon capture means that two-step reformers are not the best available technology for this pathway. Other gas-based hydrogen production technologies like autothermal reforming (ATR) and partial oxidation (POX) allow for producing essentially only concentrated process CO₂, at a lower overall energy consumption.

Upstream emissions from gas extraction and transport can be mitigated by blending in biogas combined with CCS. Furthermore, biogas can act as a biogenic CO₂ source for sustainable urea production. Examples of biogas blending in European ammonia plants include BASF Ludwigshafen (Germany) and OCI Geleen (the Netherlands).

Of course, emissions from these natural gas-based pathways can be significantly reduced via feedstock substitution. Hydrogen can be produced from electrolysis coupled with renewable electricity, or from gasification of waste or biomass. Operational electrolyzers for this purpose in the EU include the 54 MW electrolyzer at BASF Ludwigshafen (Germany), the 20 MW electrolyzer operated by Iberdrola for offtake by Fertiberia in Puertollano (Spain), and the 24 MW electrolyzer at Yara Porsgrunn (Norway). One of the proposed gasification projects is FUREC, a project of RWE that aims to process solid municipal waste for hydrogen production, with subsequent offtake in discussions with OCI Geleen (the Netherlands).

We should note that all these clean technologies for hydrogen production (ATR, POX, water electrolysis, and gasification) require a separate air separation unit (ASU) for nitrogen purification. In many cases, this requires a complete revamp of the front-end of the ammonia plant, with multi-billion euro investments per ammonia production site.

Public-private partnerships required to maintain European ammonia production

Governmental support will inevitably be required for such investments. But here, we can take inspiration from the steel sector. For example, the EU approved €2 billion of German state subsidies to decarbonize thyssenkrupp’s steel plant in Duisburg. Also, the Dutch government will provide a subsidy of a maximum of €2 billion to transition Tata Steel in IJmuiden from coal-based steel production to gas-based steel production.

An total estimated capital investment of €30-60 billion would be required to decarbonize European production locations, totalling 17.7 million tons of capacity. A portion of this can be achieved through governmental support. Additional investments will be required outside the ammonia plants. In the case of CCS, CO₂ pipeline infrastructure and permanent storage locations must be developed as well, while renewable hydrogen requires zero-carbon electricity deployment such as renewables and nuclear power.

The alternative to deploying such technologies in the EU is importing clean ammonia from outside the EU, from locations with lower cost gas or lower cost renewable electricity. While economically feasible (in the short term), strategic independence for food security will remain a priority for most nations. European governments can bridge the capital investment gap, to help keep ammonia production active in Europe. But, as other sectors are more difficult to decarbonize to meet the new targets, we could consider decarbonizing the EU ammonia sector (with governmental assistance) a low to no-regrets decision.