Co-firing ammonia in coal power plants is an emissions dead-end.
Ammonia coal co-firing is being heralded as a solution for the clean electricity transition in ASEAN. But there are financial and health risks.
Japan wants ammonia coal co-firing to be part of the growing #CleanEnergy movement in Asia. However, experts say the technology is unviable, and that Southeast Asia may do better moving to renewables, cost-wise.
Co-firing ammonia in coal power plants is an emissions dead-end. Here’s why.
After governments in Asia moved to end coal financing in 2020, ammonia co-firing has gained interest as a potential means to lower emissions of existing coal plants. In the final G7 Communiqué, Japan's promotion of co-firing with coal led to a recognition that some countries may pursue the technology if it is "aligned with the 1.5C pathway."
But research shows that for several Asian countries, the technology will not reduce emissions in line with the IEA’s 2050 net-zero target.
Ammonia (NH3) is a colorless gas with a distinctive, suffocating odor. Composed of nitrogen and hydrogen, 70% of ammonia is used for fertilizers in agriculture, with most of the remainder used in industrial applications. Ammonia has a lower energy density compared to coal, at about 18.6 MJ/kg for ammonia compared to 24-35 megajoules per kilogram MJ/kg for coal. This means more ammonia is needed to produce the same amount of energy as coal.
Ammonia co-firing (or ammonia coal co-firing) is the process of burning ammonia and coal together at an existing, retrofitted coal plant, in order to supplement the primary fuel. The mix of ammonia and coal can vary from 20:80 (ammonia : coal) up to a theoretical maximum of 100% ammonia.
Ammonia itself does not result in carbon emissions when burned. For over 99% of ammonia today, though, production of ammonia is based on fossil fuels, and results in 1.6 tons of CO2 emissions per ton of ammonia. That's even if the most advanced equipment is used. On top of this, transporting and storing ammonia also results in emissions. The rare exception is green ammonia, which is produced from renewable energy and has relatively low emissions.
When calculating emissions produced by ammonia co-firing, researchers include upstream emissions (emissions attributed to the production, storage and transportation of ammonia) as well as emissions during ammonia co-firing. Excluding upstream emissions in emissions calculations therefore results in an overly rosy (and inaccurate) emissions rate for co-firing ammonia.
At present, Japan and South Korea are the only countries to actively pursue efforts to use ammonia for power generation. Japan in particular is actively promoting ammonia coal co-firing technology as a decarbonization tool, both at home and abroad.
Although the technology is still in the testing stage, Japan plans to deploy it across Southeast Asia from 2030 onwards, and has signed MoUs with major power utilities in the region to do so.
Ammonia co-firing is part of Japan’s domestic and global climate plans. Its Green Transformation strategy, for instance, was launched in February 2023 and is backed by a budget of at least 150 trillion yen (about USD$1.1 trillion) to support ammonia, hydrogen, nuclear, and carbon-capture technology.
Ammonia co-firing is also part of Japan’s Asia Energy Transition Initiative, launched in May 2021. The AETI is the Japanese government’s initiative to help Southeast Asia achieve both economic growth and carbon neutrality, and is backed by approximately USD$10 billion.
This kicked off efforts by Japanese power utilities and turbine manufacturers such as JERA, IHI and Mitsubishi Heavy Industries, which are currently testing ammonia co-firing technology in Indonesia, Malaysia, the Philippines and Thailand.
The rationale behind Japan's push is that ammonia co-firing is a useful means to help Asia and Japan reach its net-zero target by 2050.
But the technology also raises the risk that aging coal plants–one of the largest single sources of emissions globally–are kept running for longer to recoup retrofitting costs. Prolonging the life of coal plants is a stumbling block to “phasing out all unabated coal and oil power plants by 2040,” a step the IEA recommends in decarbonizing the power sector. It says this is critical for keeping the increase in average global temperatures within 1.5 C.
Researchers’ calculations (see below) demonstrate that emission cuts from ammonia co-firing are not in line with net-zero targets in Indonesia, Malaysia, Thailand and the Philippines.
A 20% ammonia - 80% coal co-firing rate is the most feasible, based on current developments. That means 80% of coal emissions remain untouched.
In fact, a 20% ammonia co-firing coal plant would emit more carbon dioxide than the average unabated gas plant, as seen below:
Ramping up the ratio to 50% ammonia - 50% coal still cannot bring these countries in line with net-zero targets, since this has an emissions rate comparable to burning gas in all four countries.
Recently, green ammonia has been promoted as a clean fuel source for power generation. However, TransitionZero's data shows that even emissions from a hypothetical 20% co-firing rate with green ammonia are not in line with net zero targets for Malaysia, Indonesia, and Thailand*.
Currently, the world produces 175 million tons of ammonia per year, using processes that are primarily emissions-heavy. The production of green ammonia only comprises a tiny fraction of that amount; for example, only 0.01% of ammonia production in 2021 was green, according to the IRENA Ammonia Outlook 2022.
Note: The Philippines does not have enough domestic coal or natural gas to produce blue ammonia.
Emissions are also produced throughout the entire ammonia lifecycle, from producing to transporting to combustion.
The most established type of ammonia right now is produced from emissions-heavy fossil fuels such as coal (brown ammonia) and gas (gray ammonia)–99% of ammonia is produced in this way right now. Current manufacturing methods are responsible for 1-2 percent of global carbon emissions, making the ammonia production industry one of the most polluting on the planet.
Cleaner types of ammonia, such as blue and green ammonia, are not commercially viable yet. Blue ammonia requires carbon capture, which is still under development worldwide. Green ammonia, which is made from renewable energy, takes more energy to make than it produces.
A more cost-effective and climate-friendly option is to use renewables directly on the grid to displace thermal generation. Combining this with energy efficiency improvements achieves much higher emissions savings at a lower cost of abatement.
Comprehensive disclosure of information regarding the rationale and risks of deploying [ammonia and coal co-firing] is essential, and any necessary measures and corrective actions must be taken accordingly.
Source: Statement from Japan Climate Leaders’ Partnerships (JCLP), a coalition of 230 Japanese companies committed to climate action. In March 2023, JCLP urged the Japanese government to speed up initiatives to decarbonize the power sector and phase out unabated coal power plants.
In order to co-fire coal with ammonia, existing coal plants must first be retrofitted with compatible infrastructure. This includes equipment such as storage tanks and upgraded ammonia burners, as well as additional safety measures and expenses to handle ammonia.
This makes the technology "economically unviable," according to an analysis by Bloomberg NEF. The same analysis shows retrofitting existing coal plants for ammonia co-firing at a ratio of 20% increases capital expenditures by 11%.
High levels of investment in ammonia co-firing infrastructure may be financially risky due to the limited low-carbon potential of this technology. According to TransitionZero, “widespread adoption of ammonia co-firing in existing coal fleets is strewn within transition risks that could create a new generation of stranded assets.”
“Our view is that there is a significant risk for investors in transition bonds that ammonia co-firing will not reduce emissions but rather prolong and lock-in the use of coal plants,” writes Cedric Rimaud, senior credit analyst at the Anthropocene Fixed Income Institute.
He noted recent research that showed co-fired ammonia must be delivered using green hydrogen throughout the production cycle, while stressing there is currently a global lack of technical capacity to do so.
Unlike the EU, there is currently no single authoritative list or taxonomy of sustainable activities in Asia.
In response, Japan launched its own transition finance guidelines, which includes provisions for ammonia co-firing.
However, the guidelines should not be taken as representative of the entire region, according to think tank Asia Research & Engagement, which called the guidelines “inappropriate” for Southeast Asian countries, “where the circumstances differ from Japan and investing in renewable power is viable.”
Other studies comparing abatement costs of ammonia co-firing in comparison to other renewable technologies in Southeast Asia are in favor of solar and wind, cost-wise.
According to a study by the Center for Research on Energy and Clean Air (CREA), a 20% ammonia co-firing combustion rate at Unit 4 of Hekinan Thermal Power Station in Japan would increase fine particulate matter (PM2.5) and other gasses by 67 percent. With a 50% co-firing rate, particulate matter is increased by 176 percent.
Fine particulate matter contributes to as many as 8 million premature deaths globally and approximately 43,000 deaths in Japan each year, according to CREA. Ammonia coal co-firing produces fine particulate matter (PM 2.5) and may add to the global toll as a result, says CREA.
Long-term exposure also can lead to ischemic heart attacks, lung cancer, lower-respiratory infections, chronic obstructive pulmonary disease (COPD), stroke, Type 2 diabetes, and adverse birth outcomes such as autism, according to the State of Global Air.
According to CREA, in addition to PM2.5, ammonia co-firing emits several different types of emissions, such as sulfur dioxide, nitrogen dioxide and unburned ammonia, through its production, transport and combustion. These have the potential to affect human health, in particular lung and skin health.
A push for ammonia together with coal runs the risk of crowding out renewable power development and funding, even in areas where the latter might be better suited.
Cedric Rimaud, senior credit analyst at the Anthropocene Fixed Income Institute.
Solar and wind power are more economical and more effective emissions-cutting options for the region.
Developing more solar and wind energy sources in Southeast Asia is critical to cutting emissions in line with the IEA’s net-zero by 2050 pathway (and keeping temperatures within 1.5 C, experts say.)
Fortunately, current data shows there is potential for both types of renewable energy sources to grow in the region.
The costs are on solar and wind’s side for Thailand, Indonesia, Malaysia and the Philippines. The cost it takes to remove CO2 from business-as-usual emissions is much higher for ammonia than it is for solar and wind in all four countries, according to TransitionZero.
Despite its high potential, solar and wind supply still accounts for less than 5% of Southeast Asia's electricity mix – except in Vietnam where it reached nearly 15% of the power supply in 2022. Greater deployment of renewables in the region must be prioritized as the most cost-effective decarbonization tool, irrespective of domestic and global hydrogen demand, according to think tank Agora Energiewende.
Thailand, the Philippines, Indonesia and Malaysia will see their shares of solar and wind energy increase within the next decade, according to their national power plans.
Recent boosts have expanded wind and solar energy in ASEAN countries. For instance, in 2021, the amount of electricity generated by solar grew to 11 percent in Vietnam. In 2022, Indonesia secured a USD$20 billion deal to get off coal-fired plants and speed up the transition to clean energy.
Yet this growth is still insufficient for reaching the IEA’s net-zero target.
If growth predictions bear out, solar and wind generation will make up only 11 percent of Southeast Asia’s electricity generation by 2030–less than half of the IEA target. According to Ember, more ambition is needed to keep these countries in line within the IEA Net-Zero pathway.
To meet the IEA’s net-zero targets and growing power needs, a rapid scale-up of renewable energy is needed. Governments in Southeast Asia need to roll out more ambitious solar and wind deployment plans. This includes reconfiguring electricity grid infrastructure to accommodate further penetration of wind and solar.
Otherwise, current renewable energy targets leave an energy gap that could be filled by emissions-producing coal or ammonia co-firing technology.
ASEAN countries have a lot of work to do to increase their combined wind and solar share of power mix from current levels (currently around 5 percent in many countries) to 40 percent, which the IEA’s Net Zero by 2050 roadmap calls for.