Without a single sales contract in hand, Dutch fertilizer company OCI is building a $1-billion plant in Texas to produce ammonia with low greenhouse gas emissions, a gamble requiring heavy government subsidies, new markets and a contingency plan.
Producing blue ammonia costs up to $119 per metric ton more than the conventional method, but U.S. Inflation Reduction Act subsidies worth roughly $145 per ton cover the difference, said CRU Group fertilizers analyst Alexander Derricott. If utility premiums don’t emerge, OCI plans to use its Texas blue ammonia to make fertilizer in The Netherlands, where the company has under-utilized its plants due to high natural gas prices. It can also sell it to industrial buyers looking to decarbonize, or sell it in the United States, El-Hoshy said.Global ammonia demand looks to climb 10 per cent by 2030 from 2021 to 203 million tons annually, according to TD Cowen and Yara data.
Investors and analysts are not yet convinced. Yara last month postponed an initial public offering of its clean ammonia business, citing low market valuation. Co-firing ammonia could result in extended life for coal plants, rather than phasing them out, said Katrine Petersen, senior policy advisor at environmental group E3G.