US offers conditional loan of $1.56 billion for Indiana ammonia plant

The U.S. Department of Energy announced on Monday that it has granted Wabash Valley Resources a conditional guarantee of up $1,56 billion for the construction of a low-emissions production facility of ammonia in Indiana.

It said that the project would use petcoke as a waste product from oil refining to produce 500,000 tons of ammonia per year and store carbon dioxide permanently underground.

In a statement, DOE stated that the company must meet certain technical, legal and environmental conditions, as well as financial requirements, before it can provide the loan guarantee.

Why it's important

Ammonia is widely used to make fertilizers and contributes 1%-2% to global CO2 emissions. Nearly 10% of the total U.S. emission comes from direct emissions in the agricultural sector.

According to the Energy Department, the project will be the nation's first low-emission ammonia production facility for farmers in the Midwest states of the Corn Belt region.

Key Context

After the Russian invasion of Ukraine, global supplies were disrupted. Fertilizers prices have been volatile for several years.

Ammonia plants are being built by several fertilizer companies in the U.S., to take advantage of the Inflation Reduction Act subsidies.

As part of their efforts to reduce emissions, major oil companies like Exxon Mobil signed agreements with fertiliser producers to store CO2 generated by industrial activities in deep injection wells.

The energy department wrote in a letter that "This low carbon ammonia will be cost competitive compared to current ammonia imports and help to lower costs for local consumers and businesses."

NUMBERS

Wabash Valley hopes to invest $2.4 billion in the project by 2026.

Once fully operational, the facility will store 1.6 millions metric tons of CO2 per year.

(source: Reuters)