Advancing Green Ammonia Economics: Towards Decarbonization of China’s Chemicals Industry

Ammonia (NH₃) is an important basic chemical product with a wide range of applications in agricultural and industrial sectors. Globally, more than 70 percent of ammonia is used to produce nitrogen-based fertilizers to secure the food supply. Meanwhile, as an emerging energy source, ammonia also has great potential to help decarbonize the shipping and power sectors.

China is the world’s largest producer and consumer of ammonia with coal as the dominant feedstock for ammonia production. The carbon intensity of coal-based ammonia ranges from 4.4 to 4.8 t CO₂/t NH₃, which drives its product-level energy consumption much higher than the global average. During ammonia production, hydrogen generation is the most carbon intensive producing over 85 percent of the carbon emissions. Therefore, using clean and low-carbon feedstocks, such as green hydrogen from renewables powered water electrolysis, plays an important role for ammonia’s decarbonization.

China’s green ammonia industry is experiencing rapid development in recent years, while still facing challenges in terms of technology and cost. Green ammonia is produced with renewable electricity, which is a fluctuating and intermittent power supply. This must change to a continuous and stable power supply for chemicals production use. From a cost perspective, using green ammonia in various scenarios costs much more than traditional production routes. This report explores potential technologies and possible solutions by integrating multiple market mechanisms (i.e., policy, downstream premium, and carbon markets) to achieve green ammonia’s cost parity in various scenarios. It also suggests actions from the perspectives of policy, industry, and enterprises to accelerate the development of China’s green ammonia industry and help enable the chemicals industry to achieve the green low-carbon transition.