MOSCOW (MRC) -- Norwegian fertilizer maker Yara and Canadian pipeline company Enbridge plan to invest up to USD2.9 bn to build a low-carbon blue ammonia production plant in Texas, as per Hydrocarbonprocessing.
Blue ammonia, rather than green ammonia derived from renewable energy, refers to ammonia produced from natural gas, with the carbon dioxide (CO2) byproduct captured and stored. The plant, which would be Yara's biggest, would be built at an Enbridge oil storage and export facility near Corpus Christi, with production to start around 2027-28.
The companies have not yet made final investment decisions. Yara is the latest European company to announce a major investment in the United States. More than 200 low-carbon ammonia facilities are being planned globally and the U.S. Gulf Coast is becoming a major hub due to existing infrastructure, cheap natural gas and high government subsidies, said Alexander Derricott, senior analyst at consultancy CRU.
The number of projects that actually proceed depends largely on how much of a premium buyers of low-emission ammonia are willing to pay for the costlier production, Derricott said. While the project was planned long before last year's U.S. Inflation Reduction Act (IRA), the increase in carbon storage tax credits in that law made it more attractive, Yara said.
"We've focused on the United States for two reasons and the first is low energy prices, naturally, and the other is that carbon capture is accessible at an attractive cost," Magnus Krogh Ankarstrand, president of the Yara Clean Ammonia subsidiary, told Reuters.
Yara intends to buy all of the plant's output for feedstock in its global production system, including Europe, as well as for new clean ammonia markets such as shipping fuel. The plant will supply 1.2 million to 1.4 million tons of low-carbon ammonia per year.
We remind, Yara underline its commitment to sustainability. The eligible green projects are expected to create substantial environmental benefits by decarbonizing the food chain, including fertilizer production and application, and limiting the need to expand farmland. CICERO has provided the second party opinion and rated the framework medium-green. The company does not have specific debt ratio targets, but aim at having a medium investment grade credit rating.