Myth-busting Green ammonia, fertilizers & industrial chemistry: separating hype from reality

Green ammonia production costs remain 3-4x higher than conventional ammonia at $736-$911 per metric ton versus $200-$326 per metric ton, yet the market is projected to grow from $291 million in 2024 to $18.33 billion by 2032—a 67.98% CAGR that signals transformative disruption ahead (IMARC Group, 2025).

The promise of green ammonia as a decarbonization pathway for agriculture and heavy industry has captured enormous investor attention, but the gap between ambitious announcements and operational reality reveals critical lessons for practitioners navigating this emerging sector.

Why It Matters

Ammonia production accounts for approximately 1.8% of global CO₂ emissions, with the fertilizer industry consuming roughly 80% of the world's 150 million metric tons of annual ammonia output (USGS, 2024). The Haber-Bosch process, which produces conventional ammonia using natural gas as both feedstock and energy source, has remained fundamentally unchanged for over a century. Green ammonia—produced using renewable electricity to power electrolyzers that split water into hydrogen, which then combines with atmospheric nitrogen—represents a genuine pathway to decarbonizing this essential industrial chemical.

However, the transition faces substantial economic headwinds. According to Oxford Energy research, green ammonia in 2025 costs approximately $936 per ton when produced using onshore wind, compared to conventional ammonia at roughly $200-$326 per ton depending on natural gas prices (Oxford Energy, 2024). This 3-4x cost premium creates immediate challenges for adoption, particularly in price-sensitive agricultural markets where fertilizer costs directly impact food security and farmer livelihoods.

The European Union's Carbon Border Adjustment Mechanism (CBAM), scheduled for full implementation by 2026, will reshape competitive dynamics by imposing carbon costs on imported ammonia. This regulatory shift could narrow the green premium significantly for European producers, though questions remain about enforcement mechanisms and international trade implications.

Key Concepts

The Green Premium Reality

The levelized cost of ammonia (LCOA) depends critically on electricity costs. Analysis from ScienceDirect demonstrates that decentralized green ammonia systems require electricity prices below $19/MWh to achieve cost parity with fossil-based production—a threshold currently met only in regions with exceptional renewable resources (ScienceDirect, 2025). This explains why project announcements cluster in locations like Chile, Australia, and the Middle East, where solar irradiance or wind capacity factors enable lower renewable electricity costs.

Electrolyzer Technology Trade-offs

Alkaline Water Electrolysis (AWE) dominates current deployments with 55.3% market share, offering the lowest capital costs for large-scale installations. However, Proton Exchange Membrane (PEM) electrolyzers provide superior flexibility for integrating with intermittent renewable power, albeit at higher upfront costs. The choice between technologies reflects a fundamental tension: minimize CAPEX with mature AWE systems, or optimize for renewable integration with more expensive but flexible PEM units.

The Hydrogen-Ammonia Value Chain

Green ammonia requires green hydrogen as feedstock, creating a cascading dependency on electrolyzer capacity expansion. The International Energy Agency projects global electrolyzer manufacturing capacity must reach 134 GW annually by 2030 to meet net-zero scenarios, compared to approximately 25 GW installed capacity in 2024 (IEA, 2024). This supply chain constraint represents a binding limit on green ammonia scale-up regardless of project announcements.

KPI	Current (2025)	Target (2030)	Best-in-Class
LCOA ($/ton)	$736-$911	$500-$600	$380
Electrolyzer CAPEX ($/kW)	$500-$800	$200-$300	$150
Renewable Electricity ($/MWh)	$30-$50	$15-$25	<$15
Capacity Factor	30-45%	50-60%	70%+
Carbon Intensity (kgCO₂/ton NH₃)	0-50	0-20	0

What's Working

Integrated Project Development

Yara International has demonstrated that co-locating electrolyzer capacity with existing ammonia production infrastructure reduces integration costs substantially. Their Herøya facility in Norway, featuring a 24 MW electrolyzer producing 20,500 tons of green ammonia annually, began operations in mid-2024. The project leverages Norway's abundant hydropower and Yara's established logistics and customer relationships, reducing market development costs that would burden standalone greenfield projects (Yara, 2024).

Strategic Offtake Agreements

ACME Group's 320 MW green ammonia project in Oman, scheduled for operations in 2026, secured long-term offtake commitments before construction began. This project finance model—anchoring capital investments against contracted revenues—has become essential for bankability given green ammonia's cost premium over conventional supply.

Blended Blue-Green Production

Research published in Energy & Fuels demonstrates that combined blue-green ammonia production systems achieve 7% lower LCOA than standalone approaches while reducing lifecycle greenhouse gas emissions by 63% compared to conventional blue ammonia (ACS Publications, 2025). This hybrid approach offers a pragmatic near-term pathway that preserves optionality as green hydrogen costs decline.

What Isn't Working

Announcements Without Financing

The green ammonia sector has accumulated project announcements totaling hundreds of millions of tons of capacity, yet Final Investment Decisions (FIDs) remain rare. Analysis from the Ammonia Energy Association indicates that fewer than 5% of announced projects have achieved financial close, revealing a substantial "announcement gap" driven by unresolved economics and infrastructure constraints (Ammonia Energy Association, 2024).

Underestimated Infrastructure Requirements

Green ammonia projects require not only electrolyzers and ammonia synthesis equipment but also renewable power generation, grid connections or behind-the-meter installations, water treatment systems, and often port or pipeline infrastructure for product export. Several high-profile projects have experienced significant delays when infrastructure development timelines exceeded initial projections.

MRV Complexity

Measurement, Reporting, and Verification (MRV) for green ammonia greenhouse gas accounting remains fragmented. Different certification schemes apply varying boundaries for lifecycle emissions, creating confusion for buyers seeking credible environmental claims. The lack of harmonized standards complicates offtake negotiations and undermines price premiums that might otherwise compensate for higher production costs.

Key Players

Established Leaders

• Yara International (Norway): World's largest ammonia producer, operating the flagship Herøya green ammonia facility and developing additional projects globally
• CF Industries (USA): Largest North American ammonia producer with 7+ million MT annual capacity, investing in blue and green hydrogen projects
• BASF (Germany): Major ammonia consumer with offtake agreements for green ammonia to decarbonize chemical production
• Nutrien (Canada): Integrated fertilizer producer exploring green ammonia for agricultural applications
• thyssenkrupp Uhde (Germany): Leading ammonia plant engineering firm with green ammonia technology offerings

Emerging Startups

• ACME Cleantech (India): Developing large-scale green hydrogen and ammonia projects in Oman and India
• Hy2gen (Germany): Focused on green hydrogen derivatives including ammonia for maritime fuel
• Fortescue Future Industries (Australia): Aggressive green hydrogen and ammonia development across multiple continents
• Starfire Energy (USA): Modular ammonia synthesis technology for distributed production
• Jupiter Ionics (Australia): Novel electrochemical ammonia synthesis bypassing conventional Haber-Bosch

Key Investors & Funders

• Breakthrough Energy Ventures: Bill Gates-backed fund with significant green hydrogen investments
• AP Møller Holding: Shipping conglomerate investing in green ammonia as maritime fuel
• European Investment Bank: Providing concessional financing for EU green ammonia projects
• JBIC (Japan Bank for International Cooperation): Supporting Japanese trading house investments in overseas projects
• Green Climate Fund: Multilateral funding for developing country green ammonia initiatives

Real-World Examples

Example 1: Iberdrola-Fertiberia Partnership (Spain)

Iberdrola and Fertiberia commissioned a 20 MW electrolyzer in Puertollano, Spain, producing green hydrogen for fertilizer manufacturing. The project represents the first industrial-scale green ammonia-to-fertilizer operation in Europe, demonstrating commercial viability in markets with strong renewable resources and supportive policy frameworks. The facility produces enough green hydrogen to abate approximately 48,000 tons of CO₂ annually while supplying Fertiberia's domestic fertilizer production needs.

Example 2: NEOM Green Hydrogen Company (Saudi Arabia)

The $8.4 billion NEOM project, a joint venture between ACWA Power, Air Products, and NEOM, targets 1.2 million tons of green ammonia annually by 2026. The project leverages Saudi Arabia's exceptional solar and wind resources, with renewable electricity costs projected below $15/MWh. Air Products has committed to purchasing the entire output under a 30-year offtake agreement, providing the revenue certainty required for project finance.

Example 3: Yara Brazil Low-Carbon Fertilizer (Brazil)

In November 2024, Yara launched its first commercial eco-friendly nitrogen fertilizer in Brazil with 90% lower carbon emissions than conventional products. This market entry demonstrates that premium positioning can support green ammonia economics when targeting sustainability-focused agricultural buyers willing to pay for verified environmental benefits.

Action Checklist

• Assess regional renewable electricity costs and availability before site selection—electricity represents 60-70% of green ammonia production costs
• Secure long-term offtake agreements before seeking project finance to demonstrate revenue certainty
• Evaluate hybrid blue-green production pathways as interim solutions while green hydrogen costs decline
• Engage with MRV certification bodies early to ensure product claims meet buyer requirements
• Build relationships with electrolyzer manufacturers to secure equipment delivery slots amid supply chain constraints
• Monitor CBAM implementation timelines and carbon pricing trajectories to inform investment timing

FAQ

Q: When will green ammonia reach cost parity with conventional ammonia? A: Most projections suggest cost parity will not occur before 2035, assuming continued declines in renewable electricity and electrolyzer costs. Oxford Energy research projects green ammonia costs declining from $936/ton (2025) to approximately $380-$749/ton by 2035, approaching parity with conventional ammonia at $200-$326/ton in regions with carbon pricing or other policy support.

Q: Is green ammonia suitable as a maritime fuel? A: Green ammonia shows promise as a zero-carbon maritime fuel, but significant challenges remain including engine technology development, bunkering infrastructure, and safety protocols for ammonia handling. The International Maritime Organization's decarbonization targets are driving shipping company interest, though commercial-scale adoption is unlikely before 2030.

Q: What is the difference between green, blue, and grey ammonia? A: Grey ammonia (conventional) uses natural gas as feedstock with unabated CO₂ emissions. Blue ammonia uses natural gas with carbon capture and storage, reducing but not eliminating emissions. Green ammonia uses renewable electricity to produce hydrogen via electrolysis, theoretically achieving zero carbon emissions when renewable power is fully utilized.

Q: How does green ammonia compare to green hydrogen for energy storage? A: Green ammonia offers significant advantages for long-distance transport and storage compared to hydrogen, as ammonia liquefies at -33°C versus -253°C for hydrogen and contains higher volumetric energy density. However, reconverting ammonia to hydrogen for end-use applications incurs energy losses of 15-25%, making direct ammonia applications (fertilizers, maritime fuel) more efficient.

Q: What role do government subsidies play in green ammonia economics? A: Government support is currently essential for project viability. The US Inflation Reduction Act provides production tax credits up to $3/kg for green hydrogen, substantially improving green ammonia economics. EU mechanisms including CBAM and national hydrogen strategies similarly provide policy support, though subsidy levels and durability vary across jurisdictions.

Sources

• IMARC Group. (2025). Green Ammonia Price Trend and Forecast.
• Oxford Energy. (2024). Fuelling the Future: A Techno-Economic Evaluation of E-Ammonia Production.
• ScienceDirect. (2025). Techno-economic Feasibility of Centralized and Decentralized Ammonia Production in the United States.
• ACS Publications. (2025). A Comprehensive Costing and Emissions Analysis of Blue, Green, and Combined Blue-Green Ammonia Production. Energy & Fuels.
• USGS. (2024). Mineral Commodity Summaries: Nitrogen (Ammonia).
• International Energy Agency. (2024). Global Hydrogen Review 2024.
• Yara International. (2024). Herøya Green Ammonia Project Update.
• Ammonia Energy Association. (2024). Project Tracker Database.