By: Nghiinomenwa-vali Hangala
A comparative study by a German research institution has indicated that Namibia could produce green ammonia more competitively, enabling the production of fertilisers and decarbonisation of the agricultural sector.
This can be attributed to Namibia’s favourable location and ideal conditions for renewable energies.
The German study was prompted by aims to enhance Germany’s nitrogen-linked fertilisers through green ammonia, evaluating three alternative paths for supplying the nation’s fertiliser industry with green ammonia.
The “Green Route” envisages both hydrogen electrolysis and ammonia production taking place in Germany.
This path is compared with two exemplary import routes: the intra-European pipeline importation of hydrogen using Spain as an example – “Green Route (ESP)”, and the extra-European ship importation of ammonia from Namibia – “Green Route (NAM)”.
Spain and Namibia were selected as case studies due to their favourable production conditions for green hydrogen and ammonia, respectively. With both countries being pioneers in green hydrogen and ammonia, they are therefore realistic potential exporters.
The research findings revealed that Namibia could supply green ammonia at significantly lower prices.
For 2035, the study forecasts supply costs of only €693/t (N$13,740.53) in Namibia, while in Germany they will remain at €1,130/t (N$22,405.19) despite learning curves.
In terms of the fossil-derived ammonia, the study found that it would still cost around €716/t (N$14,196.56), pricier than Namibian-produced green ammonia.
According to the study, the advantage arises from the study’s assumption of electricity procurement costs that are half as high (3 ct/kWh versus 7 ct/kWh) and around 6,000 instead of 4,000 full-load hours for the electrolysers.
This means that if Germany decided to domestically produce ammonia base, their subsequent fertiliser production would be around 40% more expensive than an imported solution.
Thus, buying or importing ammonia from Namibia seems more ideal for their aspirations to boost said fertiliser production.
Namibia’s competitor in this aspect, Spain, requires a pipeline to export hydrogen to Germany.
According to the study’s assessment, the pipeline “hardly reduces costs, while the purchase of green ammonia from Namibia with subsequent processing in Germany remains the cheapest scenario for urea and ammonium nitrate.”
The assessment also revealed that transport costs played only a minor role in their research.
The cost analysis showed that domestic production of green ammonia in Germany is currently not competitive.
“Even in the long term, domestic production of green ammonia in Germany is not expected to be competitive with imports from countries such as Namibia,” the report reads.
The key assumption is that there will be competitive financing costs in all countries due to government-guaranteed long-term purchase agreements, with Namibia offering 10%.
The study also recommended that the entire energy-intensive industry in Europe becomes climate-neutral by 2040. Thus, cost-effective imports of green ammonia would allow the industry to fulfill its obligation to climate neutrality and continue to produce competitively, according to the researchers.
An analysis of cost developments in the fertiliser sector shows that the cost differences between fossil and green fertilisers will even out by 2035.
Germany will also introduce a mandatory quota for nitrogen fertilisers produced from green ammonia to support the decarbonisation of agriculture, and create stable purchasing structures.
The quota proposed for the fertiliser sector refers to the proportion of ammonia obtained from green hydrogen in mineral nitrogen fertilisers.
In the German market in particular, where ammonia is primarily used in fertiliser production, there are structural obstacles to dynamic market development.
As a result, a regulatory measure in the form of a gradually increasing minimum quota for the use of green nitrogen fertiliser “offers the opportunity to overcome this structural barrier to demand and at the same time contribute to the climate-friendly transformation of industry and agriculture,” indicates the analysis.
The study revealed that a gradual increase in the use of green ammonia for the production of nitrogen fertilisers as a result of the quota can support the transformation of the chemical industry and agriculture.
Moreover, it would create a leading industrial market for renewable fuels of nonbiological origin (RFNBOs) and thus secure demand for the hydrogen market ramp-up.
Green ammonia is ammonia (NH3) whose hydrogen content consists entirely of green hydrogen, which is hydrogen (H2) that meets the relevant requirements of European law.
The study indicated that the introduction of a national quota in Germany for distributors of green nitrogen fertiliser is legally permissible in principle and can make a significant contribution to achieving climate targets and ramping up the market for green hydrogen and its derivative ammonia.
The quota will start at 7% in 2031 and rise to 70% by 2035.
Only green, electrolytically produced hydrogen that is produced in accordance with the RFNBO definition (renewable fuels of non-biological origin) is considered a compliance option.
Scenarios involving biomethane or blue hydrogen are not considered.
The nitrogen fertilisers examined were urea and ammonium nitrate, with both based on ammonia as a precursor.
