There is no single path that will lead the world to net zero. Getting there will require us to develop many technologies in parallel. Renewable energy sources such as wind, solar and hydropower are making significant contributions to decarbonization. But one of the most promising technologies is hydrogen and the hydrogen derivative ammonia. Industry analysts Wood Mackenzie estimate the investment opportunity for low-carbon hydrogen to be at least $600 billion — with the right policy support. And by 2025, it sees nearly half of the demand for hydrogen coming from ammonia production. The question is how to produce enough of the two elements to meet growing demand — going from their current applications to a much wider range of uses as low-carbon fuels for industry, power generation and even home heating. On top of this, the world has to consider how to scale up low-carbon and emission-free production when the majority of hydrogen and ammonia today is synthesized from fossil fuels.
Solar and wind energy are intermittent — generation levels depend on the weather. They are also not dispatchable, meaning they cannot be dialed up or down on demand and therefore cannot be relied upon to provide electricity on tap. To ensure a steady grid supply, we need to put in place more energy storage facilities. This will allow excess electricity generated on very windy and sunny days to be stored and then dispatched when needed. Batteries are one option for renewable energy storage, but a more scalable technique is using the extra electricity to power the electrolysis that can produce hydrogen and ammonia. What is more, hydrogen and ammonia can also fuel thermal power plants to balance out the grid when there is not enough renewable energy — without emitting CO₂. And they can replace fossil fuels in transportation and industrial settings, such as steel- or cement-making. As industries and nations chart their course to net zero, hydrogen and ammonia can offer them a unique level of flexibility. The International Energy Agency (IEA) describes hydrogen as “a key pillar of decarbonization for industry”. The fuel has been in the ascendant for some years, with more and more countries across the globe throwing their weight behind it. The IEA reported in November 2021, after the COP26 conference, that 26 governments had committed to hydrogen to decarbonize their energy systems, with many more pledging to follow suit. Its hydrogen project database lists close to 1,000 low-carbon projects that are both operational and at different stages of development. The market for carbonfree (“green”) hydrogen alone is forecast to grow from $444 million in 2021 to almost $4.4 billion by 2026 — a compound annual growth rate of 58%. Now momentum is starting to build for ammonia, a derivative of hydrogen, too. Ammonia has many advantages. It can serve as a carrier for hydrogen, has higher energy density than hydrogen, and is easier to store and transport. It can also serve as a low-carbon fuel in its own right, such as in the shipping industry. Another benefit is ammonia’s established global supply chains and infrastructure, thanks to its long-time use in areas such as agriculture, where it serves as a fertilizer. The International Renewable Energy Agency predicts that the ammonia market would have to nearly quadruple by 2050 to meet the Paris Agreement targets.
As with all net zero pathways, policy will be a key part of building a market for hydrogen and ammonia. The extent to which governments and regulators throw their weight behind these transition fuels will have a significant impact on how quickly output can grow — and how quickly the world can move from gray production methods to green and other low-carbon approaches.
The hydrogen-ammonia pathway to net zero emissions is opening up thanks to technological advances, industry demand and a public focus on fighting climate change to put our future on a sustainable footing. It is worth remembering that hydrogen and ammonia have been used in a broad range of applications for many years — the basic technology is proven and available today. A favorable policy environment is now helping to feed innovation and accelerate their potential and affordability. However, much still needs to be done to scale up the production of hydrogen and ammonia, establish the required infrastructure and boost demand across the spectrum. Alongside policy support, unlocking the best, most effective technologies for the job will be crucial to making this pathway as broad as possible, and hitting ever tighter CO₂ reduction targets.