Case study: Green ammonia, fertilizers & industrial chemistry — a leading company's implementation and lessons learned

Yara International, the world's largest ammonia producer, committed in 2021 to building the first industrial-scale green ammonia plant at its Pilbara facility in Western Australia, with a production target of 740,000 tonnes per year by 2028. By late 2025, the company had completed construction of a 24 MW electrolysis unit producing green hydrogen feedstock for a pilot-scale 20,000 tonne per year green ammonia line, delivering the first commercial shipments to fertilizer blending operations in India and Brazil. This case study examines Yara's implementation journey from strategic decision through operational reality, documenting the technical choices, procurement challenges, cost dynamics, and organizational shifts that defined one of the most ambitious green ammonia projects in the world.

Why It Matters

Ammonia production accounts for approximately 1.8% of global carbon dioxide emissions, roughly 500 million tonnes of CO2 annually, making it one of the largest single industrial sources of greenhouse gases. The Haber-Bosch process, which synthesizes ammonia from nitrogen and hydrogen, has remained fundamentally unchanged for over a century. Its carbon intensity stems almost entirely from using natural gas as both the hydrogen feedstock and the energy source for the high-temperature, high-pressure reaction conditions required. Decarbonizing ammonia therefore requires replacing fossil-derived hydrogen with green hydrogen produced through water electrolysis powered by renewable energy.

The fertilizer industry consumes roughly 80% of global ammonia production, making it the primary demand driver. With the global population projected to reach 9.7 billion by 2050, fertilizer demand is expected to increase by 40-60%, creating an apparent tension between food security and climate goals. Green ammonia resolves this tension, but only if it can achieve cost parity with conventional production, a threshold that remains the central challenge.

Beyond fertilizers, ammonia is emerging as a promising zero-carbon shipping fuel and hydrogen carrier for long-distance energy transport. The International Maritime Organization's revised greenhouse gas strategy targets a 20% reduction in shipping emissions by 2030 and net-zero by approximately 2050, creating additional demand pull for green ammonia. Japan's Green Growth Strategy identifies ammonia co-firing in coal power plants as a transitional decarbonization pathway, with JERA planning 20% ammonia co-firing at its Hekinan thermal power station by 2027.

For procurement professionals, understanding the green ammonia supply chain is becoming operationally essential. The EU Carbon Border Adjustment Mechanism (CBAM), which entered its transitional phase in October 2023 and will impose financial obligations from January 2026, covers fertilizers as one of its six initial product categories. Companies importing nitrogen-based fertilizers into the EU will pay carbon costs equivalent to the EU Emissions Trading System price, currently ranging from 55 to 80 euros per tonne of CO2 equivalent. Sourcing green ammonia-derived fertilizers eliminates this carbon cost exposure entirely.

Key Concepts

Green Hydrogen via Electrolysis forms the foundation of green ammonia production. Proton exchange membrane (PEM) and alkaline electrolyzers split water into hydrogen and oxygen using renewable electricity. Current electrolyzer efficiency ranges from 55-70% on a lower heating value basis, meaning 45-55 kWh of electricity is required per kilogram of hydrogen produced. The cost of green hydrogen, the dominant cost driver for green ammonia, fell from approximately $6-8 per kilogram in 2020 to $3.50-5.00 per kilogram in 2025, with projections suggesting $1.50-2.50 per kilogram by 2030 in regions with excellent renewable resources.

Air Separation Units (ASUs) provide the nitrogen feedstock for ammonia synthesis. Cryogenic ASUs cool air to approximately minus 185 degrees Celsius, separating nitrogen from oxygen and argon through fractional distillation. These units are mature, commercially proven technology with energy consumption of 0.3-0.5 kWh per kilogram of nitrogen produced. In green ammonia plants, ASU energy represents a relatively minor fraction of total electricity demand compared to electrolysis.

Ammonia Synthesis Loop operates at 150-300 bar pressure and 400-500 degrees Celsius, combining hydrogen and nitrogen over iron-based catalysts to produce ammonia. Conventional Haber-Bosch plants operate continuously at steady state, but green ammonia plants must accommodate the intermittency of renewable energy inputs. This requires either oversized hydrogen storage buffers, grid-connected electrolyzers that can supplement renewable power, or advanced catalysts and reactor designs capable of dynamic operation.

Levelized Cost of Ammonia (LCOA) measures the total cost of producing one tonne of ammonia over a plant's lifetime, including capital expenditure, operating costs, fuel or electricity costs, and financing charges. Conventional grey ammonia LCOA ranges from $250-350 per tonne depending on regional natural gas prices. Green ammonia LCOA in 2025 stands at $600-900 per tonne, with the differential driven primarily by electrolyzer capital costs and renewable electricity pricing.

The Decision Process

Yara's board approved the Pilbara green ammonia investment in March 2022, following 18 months of internal analysis that evaluated three strategic pathways: carbon capture and storage (CCS) retrofits on existing plants (blue ammonia), standalone green ammonia facilities in renewable-rich regions, and a phased hybrid approach combining both technologies. The decision criteria centered on five factors: long-term cost trajectory, regulatory risk exposure, customer demand signals, technology maturity, and strategic positioning.

The analysis concluded that while blue ammonia offered lower near-term costs ($350-450 per tonne versus $650-850 for green), its long-term economics depended on continued access to low-cost natural gas, a variable that LNG market volatility in 2021-2022 had demonstrated was unreliable. CCS retrofit capital costs ($400-600 million per plant) were comparable to green hydrogen infrastructure, but blue ammonia still carried residual emissions of 10-20% and faced growing customer resistance in European markets where "green" certification carried premium pricing power.

Customer demand signals proved decisive. By early 2022, Yara had received binding letters of intent from three major European agricultural cooperatives willing to pay premiums of $100-150 per tonne for certified green ammonia-derived fertilizers, conditional on delivery by 2026. These commitments, representing approximately 150,000 tonnes of annual demand, provided the revenue certainty needed to underwrite initial capital expenditure.

Western Australia's Pilbara region was selected for its exceptional solar irradiance (averaging 6.1 kWh per square meter per day) and existing port infrastructure at Dampier, enabling direct export to Asian and European markets. The state government offered a concessional lease on 7,500 hectares of crown land for a dedicated 500 MW solar farm, with electricity costs projected at $25-30 per megawatt-hour under a 25-year power purchase agreement.

Execution and Implementation

Construction began in September 2022 with site preparation and solar farm development, followed by electrolyzer installation starting in April 2023. Yara selected a combination of alkaline and PEM electrolyzers from ThyssenKrupp Nucera and Plug Power, reasoning that alkaline systems provided lower capital cost for baseload hydrogen production while PEM units offered the rapid ramp rates needed to follow solar generation profiles.

The initial 24 MW electrolyzer installation, producing approximately 10 tonnes of hydrogen per day, was designed as a learning-by-doing phase before scaling to the full 500 MW configuration. This phased approach proved prescient. During commissioning in Q3 2023, three significant technical challenges emerged that would have been far more costly at full scale.

First, electrolyzer stack degradation rates exceeded manufacturer specifications by 15-25% during the initial 2,000 operating hours. Analysis revealed that cycling electrolyzers between 20% and 100% capacity to follow solar output imposed thermal and mechanical stresses not fully captured in manufacturer testing protocols, which typically used steady-state conditions. Yara and ThyssenKrupp Nucera jointly developed modified operating procedures limiting ramp rates to 10% of capacity per minute and maintaining minimum loads of 30%, which reduced degradation rates to within specification.

Second, water treatment systems required significant upgrades. Electrolyzers demand ultrapure water (less than 1 microsiemens per centimeter conductivity), and the Pilbara's available water sources, primarily desalinated seawater and brackish groundwater, contained trace contaminants that fouled membrane electrodes. Yara installed additional reverse osmosis and electrodeionization stages at a cost of $3.2 million, approximately 8% of the pilot-phase capital budget.

Third, integrating the ammonia synthesis loop with intermittent hydrogen supply required larger hydrogen buffer storage than initially designed. The original 12-hour hydrogen storage capacity proved insufficient during multi-day periods of low solar output (occurring 15-20 days per year in the Pilbara). Yara expanded buffer capacity to 36 hours by adding compressed hydrogen tube trailers, enabling the synthesis loop to maintain minimum throughput during extended low-generation periods.

Procurement Challenges

The electrolyzer supply chain presented the most significant procurement obstacle. Global electrolyzer manufacturing capacity in 2023 was approximately 15-18 GW annually, against announced project demand exceeding 100 GW. Lead times for alkaline stacks stretched from 12 months in 2021 to 18-24 months by mid-2023, forcing Yara to place orders for the full-scale 500 MW installation before pilot results were available.

Catalyst procurement for the ammonia synthesis loop encountered unexpected bottlenecks. The modified iron-based catalysts optimized for dynamic operation were produced by only two qualified suppliers globally, BASF and Haldor Topsoe, with combined annual capacity of approximately 2,000 tonnes against projected industry demand of 5,000-8,000 tonnes by 2026. Yara secured a three-year supply agreement with Topsoe at prices 35% above conventional catalyst costs, reflecting both scarcity premiums and the additional R&D embedded in dynamic-operation formulations.

Balance-of-plant equipment, including compressors, heat exchangers, and control systems, proved more straightforward to procure but required modifications for renewable-integrated operation. Standard ammonia plant compressors are designed for continuous duty; Yara specified variable-speed drives and modified control logic to accommodate the 4-6 daily start/stop cycles inherent in solar-following operation. These modifications added approximately 12% to compressor procurement costs but reduced energy consumption during partial-load operation by 18-22%.

Measured Results

By December 2025, the Pilbara pilot had accumulated 14 months of commercial operation, producing 18,400 tonnes of green ammonia against a target of 20,000 tonnes, a 92% achievement rate. Key performance metrics included:

Metric	Target	Achieved	Notes
Green ammonia output	20,000 t/yr	18,400 t/yr	92% of target; shortfall from unplanned electrolyzer maintenance
Electrolyzer availability	95%	88%	Improved from 79% in first quarter to 93% in final quarter
Renewable electricity consumed	170 GWh/yr	158 GWh/yr	Proportional to production shortfall
Carbon intensity	0.0 t CO2/t NH3	0.12 t CO2/t NH3	Residual from grid backup during extended low-solar periods
Levelized cost	$750/t NH3	$820/t NH3	Higher due to unplanned maintenance and lower utilization
Water consumption	1.5 m3/t NH3	1.8 m3/t NH3	Water treatment losses higher than modeled

The carbon intensity result of 0.12 tonnes CO2 per tonne of ammonia, while not perfectly zero, represents a 95% reduction compared to conventional grey ammonia production (approximately 2.4 tonnes CO2 per tonne). The residual emissions came from grid electricity purchases during 340 hours of extended low-solar periods when hydrogen buffer storage was depleted.

Cost performance came in at $820 per tonne, $70 above target, primarily due to lower-than-expected electrolyzer availability in the first two quarters and unplanned catalyst replacement in one synthesis loop module. Yara projects that the full-scale 500 MW installation, benefiting from economies of scale and lessons learned, will achieve $550-650 per tonne by 2028, narrowing the gap with grey ammonia to $200-300 per tonne.

Lessons Learned

Electrolyzer manufacturer specifications are optimistic for real-world renewable integration. Steady-state performance data from factory acceptance tests do not predict dynamic operation performance. Yara now requires suppliers to provide degradation curves under cycling protocols that match actual renewable generation profiles, and includes contractual remedies for underperformance against these specifications.

Water is an underestimated cost and risk factor. In arid regions like the Pilbara, securing sufficient ultrapure water requires dedicated treatment infrastructure that adds 5-10% to project capital costs. Future projects should conduct detailed water source characterization, including seasonal variability in contaminant profiles, before finalizing treatment system designs.

Hydrogen buffer storage sizing requires conservative assumptions. Solar resource models based on average annual data understate the frequency and duration of multi-day low-generation events. Yara recommends sizing hydrogen storage for at least 36-48 hours of synthesis loop demand, even in regions with excellent average solar resources, to maintain minimum 85% plant utilization.

The learning curve is steep but real. Electrolyzer availability improved from 79% in the first operational quarter to 93% in the fourth quarter, a trajectory consistent with industrial learning rates of 15-20% improvement in first-year availability. Organizations should budget for reduced output and higher costs during the first 6-9 months of operation and communicate this expectation to offtake customers.

Procurement teams must engage 24-36 months ahead of need. Electrolyzer and catalyst supply chains remain constrained, and lead times continue to extend. Early engagement with multiple qualified suppliers, combined with strategic stockpiling of critical spare parts, reduces schedule risk significantly.

Action Checklist

• Assess current ammonia and fertilizer procurement volumes and identify exposure to CBAM or similar carbon border mechanisms
• Request carbon intensity certifications from existing ammonia suppliers to establish baseline emissions
• Evaluate green ammonia offtake agreements from at least three producers, comparing pricing, delivery timelines, and certification standards
• Conduct water resource assessment for any planned green ammonia production investments, including seasonal contaminant profiling
• Require electrolyzer suppliers to provide degradation data under dynamic cycling protocols matching actual renewable generation profiles
• Size hydrogen buffer storage at 36-48 hours of synthesis loop demand to ensure minimum 85% plant utilization
• Negotiate performance-based contracts with equipment suppliers, including availability guarantees and remedies for underperformance
• Establish 24-36 month forward procurement timelines for electrolyzers, catalysts, and specialized balance-of-plant equipment

FAQ

Q: What is the cost premium for green ammonia compared to conventional grey ammonia in 2025-2026? A: Green ammonia currently costs $600-900 per tonne compared to $250-350 per tonne for grey ammonia, representing a premium of approximately 2-3x. However, this gap is narrowing rapidly as electrolyzer costs decline (falling 40% between 2021 and 2025) and renewable electricity prices decrease. Industry projections suggest cost parity in regions with excellent renewable resources by 2030-2032, and earlier in jurisdictions where carbon pricing effectively penalizes grey ammonia.

Q: How does CBAM affect fertilizer procurement decisions? A: The EU CBAM requires importers of nitrogen-based fertilizers to purchase certificates equivalent to the embedded carbon emissions at the EU ETS price (currently 55-80 euros per tonne CO2). For conventional ammonia-based fertilizers with embedded emissions of approximately 2.4 tonnes CO2 per tonne of ammonia, this adds 130-190 euros per tonne to import costs. Switching to certified green ammonia-derived fertilizers eliminates this cost entirely, effectively reducing the green premium for EU-bound products.

Q: What certifications verify that ammonia is genuinely "green"? A: The primary certification frameworks include the Green Hydrogen Standard from the Green Hydrogen Organisation, CertifHy (backed by the EU), and ISCC PLUS. These frameworks verify that the hydrogen feedstock was produced using renewable electricity, that the electrolysis process met specified efficiency thresholds, and that the overall production pathway achieves at least 70-90% emissions reduction compared to conventional production. Procurement teams should require third-party verification aligned with at least one of these frameworks.

Q: Is blue ammonia (produced with CCS) a viable alternative to green ammonia? A: Blue ammonia offers a lower cost pathway ($350-450 per tonne) but carries significant limitations. CCS capture rates typically reach 85-95%, leaving 5-15% residual emissions. Upstream methane leakage from natural gas supply chains adds another 3-8% to lifecycle emissions, meaning blue ammonia achieves 75-90% emissions reduction rather than the near-complete elimination possible with green ammonia. Additionally, blue ammonia depends on continued natural gas supply and geological storage availability, both of which face long-term regulatory and resource risks.

Q: What scale of renewable energy is needed to produce meaningful quantities of green ammonia? A: Producing 100,000 tonnes of green ammonia per year requires approximately 250-300 MW of dedicated renewable generation capacity, consuming roughly 800-900 GWh of electricity annually. This is equivalent to the output of a moderately sized solar farm covering approximately 2,000-2,500 hectares. At the scale of Yara's full Pilbara project (740,000 tonnes per year), the dedicated renewable capacity requirement exceeds 2 GW, highlighting why green ammonia projects are concentrated in regions with abundant land and excellent renewable resources.

Sources

• International Renewable Energy Agency. (2025). Green Hydrogen for Industry: A Guide to Policy Making and Project Development. Abu Dhabi: IRENA Publications.
• Yara International ASA. (2025). Pilbara Clean Ammonia Project: Annual Progress Report 2025. Oslo: Yara Investor Relations.
• BloombergNEF. (2025). Hydrogen Economy Outlook: 2025 Update. New York: Bloomberg LP.
• Royal Society. (2024). Green Ammonia: Policy and Practice for Sustainable Nitrogen Fixation. London: Royal Society.
• International Energy Agency. (2025). Ammonia Technology Roadmap: Towards More Sustainable Nitrogen Fertiliser Production. Paris: IEA Publications.
• European Commission. (2025). CBAM Implementation: Transitional Phase Review and Full Implementation Guidance. Brussels: EC Directorate-General for Taxation and Customs Union.
• Haldor Topsoe A/S. (2025). Dynamic Ammonia Synthesis: Catalyst Performance Under Variable Hydrogen Supply. Lyngby: Topsoe Technical Publications.