CRU Sustainable Fertilizer Production Technology Forum

CONFERENCE REPORT

CRU Sustainable Fertilizer Production Technology Forum

More than 230 delegates from 45 countries participated in CRU’s Sustainable Fertilizer Production Technology Forum, 20-23 September 2021. To highlight this successful virtual event, we report on keynote and selected technical presentations.

The time for change is now

Chris Lawson, CRU’s head of fertilizers, welcomed delegates and set the scene for this year’s event:

“This forum comes at a critical juncture within the fertilizer industry. On a daily basis, we’re seeing new policies, new projects, new initiatives all surrounding decarbonisation and sustainability.”

That’s particularly important right now with the November COP26 meeting fast approaching. That very important meeting is something the fertilizer market is going to have to react to.

And right now the market is in a state of hyperactivity. We haven’t seen anything like this before.

High natural gas prices in Europe, the aftermath of Hurricane Ida in the US, volatile policy decisions in India, soft export barriers in China, sanctions on potash from Belarus, booming agricultural commodity prices. All of this is resulting in very volatile and fast price rises within the fertilizer market.

These pressures have also been exacerbated by the lingering effects of the Covid19 pandemic. While fertilizer supply chains have been resilient throughout the pandemic, they are really being tested by a lot of externalities right now.

And we truly do think that these external factors are only going to become greater going forward. Carbon emissions, carbon pricing, ESG investor pressure, increased regulatory scrutiny are all going to grow in weight and importance for fertilizer producers and the industry’s market participants.

This shows how important an orderly transition into a new way of producing, distributing and consuming fertilizer is going to be. With that comes the increasing importance of new technologies.

These technologies need to be efficient, they need to be low cost and they need to be low emitting. The industry can’t stick its head in the sand when it comes to emissions, sustainability and ESG issues.

The time for change is now. Scientists from around the world agree that climate change is real and that we’re already seeing its impacts in full force.

We can curb and adapt to these impacts. That’s why we need to change the industry now – and quickly.”

Green ammonia project finance

CRU’s Willis Thomas gave the CRU view on the financing of green ammonia projects. He identified three key factors governing the availability of project finance: market feasibility, project competitiveness and economic feasibility. These, in turn, raised the following critical question for investors:

• Will the project be able to place its planned sales volumes in target markets?
• How certain is it that customers (off-takers) will take sales volumes long term?
• How well positioned is the project relative to existing and future producers?
• Will this project be cost competitive enough to place its product?
• What returns will be made investing in the project and can it withstand cyclical lows?
• Finally, what market developments could make or break this project?

Opportunities for green ammonia will certainly abound, suggested Thomas, if the major ammonia import markets globally were to go low-carbon. These include 4.7 million tonnes of import demand in Europe, 3.0 million tonnes in East Asia (Korea mostly) and 4.2 million tonnes in North America. The demand for alternative shipping fuels from the maritime sector also provides another attractive market opportunity – although this is unlikely to become fully commercialised until after 2030.

“There are certainly opportunities for sales of carbon-free ammonia in traditional and new markets, but there are also a number of important limitations which must be understood for each project,” Thomas said. “Developers need to carefully assess their ability to place products in the market – where, when and to what extent.”

Cost is also a barrier currently. “The wide range of green ammonia costs are not competitive… yet,” said Thomas. Green ammonia production costs are in the range $500-800/t at present versus the <$250/t levels typical of ‘grey’ ammonia producers on the cost curve. Reducing the capital cost of electrolysers will be key in closing this cost gap, said Thomas.

The fact that there isn’t a real market for green ammonia today also makes any price forecasts theoretical. This situation will change though, as the first green ammonia cargoes are likely to be sold within the next 18 months. Green ammonia is likely to be sold within the $600-800/t range out to 2023, suggests CRU, but could reach parity with green ammonia by the 2040s.

Future cost reductions for green ammonia are predicated on factors such as lower renewable prices, upscaling of the technology, access to financing and willingness to pay a ‘green premium’. At the same, production costs for grey ammonia look set to escalate in future due to increasingly stringent environmental regulations, carbon pricing and cost inflation.

“The commercial feasibility of green ammonia projects will vary greatly depending on the time required to bring down opex and capex costs, the individual plant configurations, the business models and the locations of these projects,” said Thomas. “Developers need to consider delivered cost too, and prices in different geographical and application markets, to fully understand their project.”

Green ammonia projects will require strong business cases to win financing, Thomas concluded:

“The growing numbers of green ammonia projects globally will mean developers face increasing competition for financing. Thus, they must build and stress test their project business case both early and often.”

Industry-wide action

Volker Andresen of the International Fertilizer Association (IFA) provided an overview of the latest development in fertilizer industry sustainability. “I will try to answer the question whether sustainable fertilizers are a challenge or an opportunity for our industry,” he said.

Two landmark developments in 2015 – the UN’s adoption of 17 sustainable development goals (SDGs) and the signing of the Paris climate accord – have helped mainstream sustainably, in Andresen’s view. Importantly, the UN Environment Programme (UNEP) later went on to specifically link 11 of the 17 SDGs to the fertilizer industry.

External pressures on the sector have just kept on rising too, noted Andresen, including the:

• UNEA resolution on the health and environment impacts of pesticides and fertilizers
• UNEA resolution on the sustainable management of nitrogen
• FAO code of conduct for the sustainable management and use of fertilizers.

Andresen outlined what the IFA is doing to accelerate sustainability in response to these and other pressures. The launch of IFA’s new sustainability committee this year has certainly provided the necessary added impetus.

“One of the first things that we did is reach out to IFA members and asked them to select their top priorities,” said Volker. “They selected eight top must-win battles for us.”

In order, these are as follows:

• Ammonia technology roadmap
• CO2 reduction commitment
• Nutrient stewardship roadmap
• Nutrient stewardship benchmark
• Sustainability committee vision
• IFA sustainability principles
• Sustainability metrics
• Sustainable fertilizer academy.

The ammonia technology roadmap has been IFA’s priority number one. The roadmap – a collaboration between the International Energy Agency (IEA), the European Bank for Reconstruction and Development (EBRD) and IFA – was published in October, in advance of November’s COP26 climate conference in Glasgow. It sets out a plan to decarbonise ammonia production globally by 85-95 percent by 2050, with milestones at both 2030 and 2040.

In tandem, IFA has also been working on an industry-wide CO2 reduction strategy – its second most important sustainability priority – and is set to make a firm public commitment on this next year.

Looking ahead, Andresen said: “We will publish a roadmap on nutrient stewardship, similar to what we’ve done for ammonia production. We are also working on nutrient stewardship benchmarking which we hope to launch next year.

“That is just the tip of the iceberg – there are many other things the IFA is doing.”

The carbon emissions challenge

In his presentation, CRU’s Alex Derricott highlighted a noticeable shift by policymakers towards prioritising emissions reduction.

“Are we entering a new normal for fertilizers when it comes to carbon emissions? Well, governments previously had to balance food security and emissions. We’re now seeing a swing towards climate and emissions policy taking priority,” he said.

Fertilizer production can occur with low emissions, pointed out Derricott – contrasting the emissions from producing potash (0.16 t CO2 /t KCl) with more energy intensive ammonia production (2.48 t CO2 /t NH3 ). The emissions per tonne for ammonia production are, in fact, similar to steel, but lower than that of either copper or aluminium. On a total CO2 emissions basis, the ammonia industry is also placed third behind steel and aluminium.

“Overall, fertilizers are not the most polluting products – but nitrogen production, and ammonia in particular, are the most exposed. Within the ammonia industry, everyone has a part to play, both gas and coal producers. However, Chinese coal is a particular challenge and the pathway to reduce emissions in China isn’t necessarily all that straightforward and clear,” commented Derricott.

Carbon taxes look like they’re here to stay, suggested Derricott, with more carbon pricing schemes emerging internationally to incentivise emissions cuts. These include:

• The long-standing EU emissions trading scheme (ETS) – the world’s most advanced cap-and-trade system – and its forthcoming extension via a carbon border adjustment mechanism (CBAM).
• The launch of the Chinese ETS scheme in July this year. This currently covers the power generation market but will be rolled out to encompass nitrogen production in future.
• The Canadian carbon tax which affects the country’s potash and nitrogen producers. This could add around $10/t to ammonia production costs in 2021.

“However, with the rise of carbon taxes being introduced around the globe, ammonia producers are probably going to be the most exposed, particularly in the immediate term, and could face some significant increases in costs,” concluded Derricott.

Green ammonia on a mega scale

Trevor Brown of the Ammonia Energy Association spoke about how low-carbon ammonia is enabling the energy transition.

By 2050, around 70 million tonnes of existing fossil fuel-based ammonia capacity will be shut down or converted to renewable inputs, according to some estimates, while 500 million tonnes of additional green ammonia capacity is set to be developed using renewable inputs (electricity, biomass). The established fertilizer market supplemented by substantial emerging markets for maritime fuel, hydrogen carriers and fuels for electric power generation are all expected to ratchet up demand for ‘clean’ ammonia.

In the fertilizer industry, announced projects include the following (pilot-scale/fullscale electrolyser capacity shown):

• Yara and partner Engie, Pilbara, Australia: 10/500 MW
• Fertiberia and partner Iberdrola, Spain: 20 MW/800 MW
• Yara and partner Orsted, Sluiskil, the Netherlands: 100 MW/2 GW
• Yara and partner HEGRA, Porsgrunn, Norway: 25 MW /500 MW
• CF Industries and partner thyssenkrupp, Donaldsonville Louisiana: 20 MW/Not known.

These are dwarfed by newly-announced non-fertilizer projects for green ammonia. These include the following mega projects (maximum ammonia and electrolyser capacity shown):

• Asian RE Hub, Australia: 9.9 million tonnes, 16 GW
• Svevind, Kazakhstan: 15 million tonnes, 45 GW
• Aman, Mauritania: <20 million tonnes, 30 GW
• Al Wusta, Oman: <10 million tonnes, 15 GW
• Western Green Energy Hub, Australia: 20 million tonnes, 50 GW l Grand Inga Dam, DRC: >20 million tonnes, 40 GW hydroelectric.

Projects on this scale are going to be needed if industries are going to be fully decarbonised over the next two to three decades, Brown suggested. Even five percent decarbonisation of the shipping industry by 2030 – via the adoption of zero-carbon maritime fuels – would require 60 GW of electrolyser capacity making 30 million tonnes of green ammonia. Furthermore, the 93 percent decarbonisation of shipping by 2046 would necessitate one terawatt of capacity generating 300 million tonnes.

“In various stages of development, we’ve got about 100 million tonnes of green ammonia underway from roughly 200 gigawatts of renewable electricity, with some more committed than others,” commented Trevor Brown. “When you’re scaling up to this size, it’s a lot easier to see how the economies of scale are going to come in, and how financing – on oil & gas scale – is going to enable a molecule like ammonia to actually support decarbonisation in industries like the maritime fuel sector.”

Selected technical presentations

Clariant’s Stefan Gebert explained how the company innovative catalysts are reducing carbon intensity and paving the way for blue and green ammonia.

In blue ammonia production, the company’s proven range of catalysts offer significant energy savings and CO2 reductions in process routes used prior to carbon capture and storage (CCS). These include the:

• Steam methane reforming (SMR) route: EARTH reformer
• Autothermal reforming (ATR) route: ReforMax
• Partial oxidation (POX) and water gas shift (WGS) routes: ShiftMax.

“It’s a lot easier to see how economies of scale and financing are going to enable a molecule like ammonia to support decarbonisation.”

Clariant is also offering AmoMax 10 Plus as a solution for green and blue ammonia. This superior wustite-based catalyst enables sustainable and cost-efficient ammonia production. Global annual ammonia production generates more than 450 million tonnes of CO2 emissions. Yet Clariant calculates that AmoMax 10 series catalysts – if widely adopted – could potentially deliver a global emissions savings of more than two million tonnes CO2 annually.

Bernd Mielke of thyssenkrupp Uhde examined what the new blue ammonia plants of the future might look like. He suggested that only large plants – in excess of 3,500 t/d, for example – would be able to satisfy increasing demand for blue ammonia from markets such as low-carbon marine fuels. Blue ammonia production via the autothermal reforming (ATR) route also offers distinct advantages, in his view. These include:

• Lower capex for large-scale ammonia plants (both blue and grey)
• Potential for simpler CO2 capture when a high degree of removal is required – as CO2 is removed from one point only
• High degree of modularisation and prefabrication that reduces on-site construction cost.

thyssenkrupp Uhde has a strong offering for blue ammonia that includes its own proven and effective ATR technology and access to technology from partner GasConTec.

Joey Dobree revealed how Stamicarbon is developing the world’s first commercial-scale, renewable-powered nitrate fertilizer plant in Kenya. This will have the capacity to produce 550 t/d of calcium ammonium nitrate (CAN) or NPK fertilizers. This innovative plant is being built by three Maire Tecnimont subsidiary companies – MET Development, Stamicarbon and NextChem – at the Oserian Two lakes Industrial Park, near Lake Naivasha, 100 kilometres north of the capital Nairobi (Fertilizer International 503, p9).

The renewable power-to-fertilizer plant incorporates new Stami Green Ammonia technology (Fertilizer International 504, p20) and the company’s existing nitric acid technology. Front end engineering design (FEED) is scheduled to start later this year with construction due to follow in 2023.

At the heart of Stamicarbon’s novel green ammonia technology is an efficient, high-pressure ammonia synthesis loop and a reliable electric compressor for condensing ammonia. These features should improve plant reliability and deliver substantial capex savings. Four plants are currently operating with this innovative, small-scale technology, in addition to the newly-announced plant in Kenya.

The Lake Naivasha plant, which is located next to Kenya’s largest geothermal energy basin, will require around 70 MW of renewable power. It will also be partly powered by on-site solar electricity generation. Switching to production based on renewable energy is expected to cut carbon emissions by 100,000 t/a, compared to an equivalent gas-based fertilizer plant. On completion, the plant’s fertilizer output should reduce Kenya’s import dependency for nitrogen fertilizers by around 25 percent, as well as improving domestic fertilizer affordability and availability.

Ricardo Sepulveda of PegasusTSI outlined the potential for green methanol and green ammonia production via carbon capture and hydrogen generation at existing phosphate fertilizer production sites.

A typical one million tonne capacity phosphoric acid plant, for example, will generate 150,000 t/a of CO2 . Flue gas from these plants contain 4-10 percent CO2 , while fertilizer granulation plant flue gas also contains 0.3 percent CO2 . Carbon dioxide can be captured from these gases by CO2 absorption in amine solution using proprietary systems such as CANSOLV.

Waste heat from on-site sulphuric acid production, meanwhile, can also be captured and converted to medium pressure steam with a heat recovery system (HRS) – and then used to generate electricity. This, in turn, can generate hydrogen from water using an alkali electrolysis unit.

Together, CO2 capture and heat recovery can provide the feedstocks for two different production routes. Firstly, captured carbon dioxide and electrically-generated hydrogen can be combined to manufacture green methanol. Alternatively, hydrogen can be combined with nitrogen in ammonia synthesis to manufacture green ammonia. Pegasus TSI has calculated the investment costs and the revenue potential for both routes.

Efficient phosphoric acid production technologies, such as Technip Energies’ Diplo process, could significantly boost phosphogypsum recycling and reuse, according to Marieke Maenhaut. Valuably, the two-step Diplo process combines higher P2 O5 recovery with the advantages of the dihydrate (DH) production route, such as the flexibility to accept different phosphate rock types.

The Diplo process can also be combined easily with a simple phosphogypsum purification process, avoiding the need to consume costly high-quality phosphate rock. Other benefits include process simplicity, ease of operation, low maintenance cost, high plant availability and low capex (Fertilizer International 502, p58).

Dirk Köster of thyssenkrupp Uhde introduced a new process that allows phosphogypsum to be reused and turned into new products as part of the circular economy. In future, the new process should allow full-scale phosphogypsum treatment units to be integrated within phosphoric acid plants (Fertilizer International 501, p48). Upgraded phosphogypsum from the new process can be reused in two different ways: firstly, for sulphuric acid and clinker production and, secondly, as gypsum (plaster, stucco) for the building industry.

thyssenkrupp has successfully tested its innovative two-step phosphogypsum treatment and purification process at laboratory-scale. It has also devised a conceptual model and cost estimate for a full-scale commercial treatment unit. A pilot plant is currently in planning and will be used as a springboard for developing the full-scale plant. Full commercialisation of this treatment technology will, however, require close cooperation between phosphogypsum producers and cement producers or off-takers.