Local Ammonia Factories When Mini-Factories Are Truly Worthwhile

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Small plants could produce ammonia directly where it is needed in the future. A global analysis involving the Paul Scherrer Institute PSI shows at which locations and under which conditions such mini-factories could operate more climate-friendly and economically. Ammonia is essential for fertilizers and could also serve as fuel for ships in the future.

Ammonia is one of the most important chemicals in the world: without it and the fertilizers derived from it, fields worldwide would yield less food—many supermarket shelves would be empty. Currently, this essential raw material is mainly produced in a few large chemical plants and transported over long distances. Researchers from the Paul Scherrer Institute PSI, ETH Zurich, and the Carnegie Institution for Science in Stanford, USA, have now investigated where small plants could produce the substance in a more climate-friendly way and closer to demand in the future. "Decentralized plants can shorten supply chains, reduce greenhouse gas emissions, and make the supply of fertilizers more robust," says Tom Terlouw, a scientist in the Laboratory for Energy System Analysis at PSI and lead author of the study. "But they are not automatically more climate-friendly or economical. The key factor is where they are located and where the electricity comes from." To this end, the research team analyzed potential locations and conditions worldwide in around 13,000 scenarios – from Spain and the Netherlands to China and India to Brazil, Nigeria, South Africa, and Australia.

Haber-Bosch Now Electric

The current production of ammonia is estimated to cause one to two percent of global greenhouse gas emissions. The reason: in the traditional Haber-Bosch process, nitrogen from the air is combined with hydrogen. This hydrogen usually comes from natural gas; the reaction produces large amounts of carbon dioxide. A more climate-friendly alternative is hydrogen from electrolysis, where water is split into hydrogen and oxygen using electricity. If the electricity comes from wind, solar, or other renewable energy sources, ammonia can be produced with significantly lower emissions. "Ammonia is one of the most sensible applications for green hydrogen," says Terlouw. "Cars or heaters can be directly electrified. But for the production of ammonia, we still need hydrogen." Smaller, modular plants operate at lower pressures and temperatures than traditional large-scale plants and can be better integrated with renewable energy sources. Such mini-factories could reduce emissions and dependency on global supply chains. How vulnerable these supply chains can be was recently demonstrated by the tensions around the Strait of Hormuz: fertilizer prices temporarily increased sharply.

The Location Decides

It is clear that fully converting global ammonia production to hydrogen from electrolysis would require enormous amounts of electricity. "This is precisely why we need to carefully evaluate where the new production method truly makes sense," says Terlouw. "The technology should be used where it is both environmentally and economically viable." The best performers are so-called hybrid plants. They combine electricity from local wind and solar farms with electricity from the public grid. While completely off-grid plants generate the lowest emissions, they are usually significantly more expensive today as they require additional storage and larger solar and wind farms.

"Generally speaking, ammonia produced through the electric process is still more expensive than through the traditional production method," says Terlouw. "However, in some regions, it can already come closer to today's market prices—especially where electricity is inexpensive, renewable energy is abundant, and financing costs are low." This is the case, for example, in China and the Netherlands.

At the same time, the researchers caution against automatically classifying electrically produced ammonia as climate-friendly. Their study has shown that if the grid electricity primarily comes from coal-fired power plants—as in Poland or South Africa—the climate balance can even be worse than with traditional production. The team considered not only the direct emissions but also the environmental footprint over the entire lifecycle, including the production of electrolyzers, solar and wind plants, batteries, and storage systems.

Opportunities for Europe and Switzerland

Switzerland does not have an industrial ammonia production; it mainly imports both finished mineral fertilizers and the raw material itself from neighboring countries. Local plants are therefore fundamentally interesting, says Terlouw. An advantage is Switzerland's comparatively low-CO₂ electricity from hydropower and nuclear power; fossil fuels account for a very small share of less than two percent. By 2050, the economic viability of the electric process could improve significantly. Falling costs for electrolyzers, storage systems, and renewable energies could make decentralized ammonia plants competitive in many regions. "Technically, a lot is possible," says Terlouw. "But for this technology to gain traction, we need investments, clear standards for low-CO₂ ammonia, and above all, a stable political environment that reliably supports the decarbonization of industry."