CF Industries and JERA Mitsui form a joint venture to build a $4 billion ammonia plant with low carbon emissions

CF Industries announced on Tuesday that it had formed a joint-venture with Japan's biggest power generator, JERA and trading house Mitsui & Co. to build one the world's most massive low-carbon ammonia plants for around $4 billion.

Why is it important?

The largest climate change legislation passed in the U.S. in history by former President Joe Biden in 2022 was meant to spark a boom in American energy development, including low-carbon emissions products.

Ammonia manufacturer CF Industries has said that it expects to qualify for a 45Q tax credit based on the sequestration and storage of approximately 2.3 million metric tonnes of carbon dioxide per year.

According to JERA the Japanese government will also provide price support to the difference between the ammonia and the coal prices for a period of 15 years.

The Japanese energy security strategy is based on hydrogen and ammonia which, when burned, emit no CO2. This helps the country reduce its dependence on fossil fuels.

CONTEXT

The joint venture is building an ammonia autothermal reforming facility (ATR), with a CO2 compression and dehydration unit, at CF Industries Blue Point Complex located in Louisiana. This will prepare the captured CO2 to be transported and buried.

1PointFive will transport and sequester CO2 on behalf of the joint venture.

The production of ammonia low in carbon is expected to start by 2029.

By the Numbers

CF Industries holds a 40% stake, JERA 35%, and Mitsui 25%.

CF Industries announced that the facility would have a capacity of 1.4 million tonnes per year, making it the largest ammonia plant in the world by nameplate capacity.

Each partner will contribute to the project proportionately to their stake, and each partner will offtake ammonia in accordance.

JERA is planning to sell 490,000 tonnes and will consider supplying them primarily to Hekinan Thermal Power Station in central Japan. Specifics have yet to be finalised. Executive Officer Yuichiro Kato informed reporters.

He said, "We expect that ammonia will be in demand for use by Europe and other regions, including power plants, industries, and ships, at the launch of this project."

JERA, owned jointly by Tokyo Electric Power (TEP) and Chubu Electric Power (CEP), aims to begin commercial co-firing with coal of 20% ammonia at two Hekinan plants by 2030. This will require about 1,000,000 tons of ammonia per year.

A company official revealed that Mitsui is also seeing a growing demand for ammonia in Europe, as emission regulations continue to tighten. (Reporting from Tanay Dhumal, Bengaluru. Additional reporting by Yuka Obaashi, Tokyo. Editing by Maju Sam and Jacqueline Wong.)

(source: Reuters)