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London – June 8, 2021 – These two gases are some of the best options for zero-carbon fuel. That could make them the hottest commodities on the planet … and the future stars of a multi-trillion-dollar energy transition. Everyone from governments and institutions to Big Tech, energy companies, and the investing universe may get fully locked in. Mentioned in today’s commentary includes: Royal Dutch Shell plc (NYSE: RDS-A), BP p.l.c. (NYSE: BP), Chevron Corporation (NYSE: CVX), Toyota Motor Corporation (NYSE: TM), Baker Hughes Company (NYSE: BKR).
The first gas is hydrogen, and investors are already taking note of this, and one report says that demand for hydrogen may rise eight-fold by 2050. Governments across the world are taking action and spending trillions of dollars on clean energy infrastructure. One report estimates the total investment necessary to meet the Paris Agreement targets that aim to keep global warming to below 1.5°C above pre-industrial temperatures is a staggering $131 trillion. And now, after decades of multiple false dawns, we think the hydrogen economy is primed for a major takeoff.
That’s where our second gas comes into play: Ammonia the answer to the hydrogen conundrum. The ideal hydrogen carrier, ammonia may be used in the future to power everything from cars to vans, trucks, forklifts… and more. All thanks to ammonia’s unique properties including being much safer to transport than hydrogen as well as being a much better hydrogen carrier than even liquefied hydrogen itself.
Over the past few years, visions of green ammonia’s potential as an energy source and an energy carrier in a future carbon-free economy may have started to transition towards a viable reality. And one company is positioning itself as a global leader in green ammonia production AmmPower Corp. (AMMP; AMMPF) is working on the development of a proprietary solution to produce green ammonia and hydrogen-based fuel options for industrial-scale transportation platforms.
Possibly The Perfect Transition Fuel
At first glance, one might wonder why anyone would consider using anhydrous ammonia rather than hydrogen. Hydrogen, after all, contains much higher LHV (lower heating value) energy than ammonia (51,500 BTU/lb vs 7,987 BTU/lb or 119.93 kJ/g vs 18.577 kJ/g) on a weight basis. But that’s the only advantage pure hydrogen has over ammonia. Everywhere else where it really matters, ammonia looks like it beats hydrogen hands down.
Ammonia has several desirable characteristics that make it an effective hydrogen carrier and could make it an excellent transition fuel. First off, on a volume basis (which is what really matters), ammonia is a much better hydrogen carrier than even liquefied hydrogen. The energy density of liquefied hydrogen is 8,491 kJ/litre compared to ammonia’s 11,308 kJ/litre. Although ammonia contains 17.65% of hydrogen by weight, the fact that there are 3 hydrogen atoms attached to a single nitrogen atom allows ammonia to contain about 48% more hydrogen by volume than liquefied hydrogen.
Second, ammonia can be liquefied under mild conditions, with a melting point of minus 33 degrees celsius compared to minus 253 degrees celsius for hydrogen. This makes it much easier to transport hydrogen as ammonia and transform it back. In fact, ammonia stores and handles very much like Liquefied Petroleum Gas (LPG). Its boiling point is -33.35 °C (-28.03 °F), slightly higher than propane, the main constituent of LPG, which has a boiling point of -42.07 °C (-43.73 °F).
In contrast, the low energy density of compressed hydrogen gas makes storage and transport very expensive. Indeed, transporting compressed hydrogen gas any significant distance by truck can consume more energy in diesel fuel than what is contained in the hydrogen. Liquefied hydrogen is obviously more energy-dense than compressed hydrogen gas but a significant amount of energy must be expended to liquefy hydrogen and keep it refrigerated because its boiling point is a very low–423 ºF (–253 ºC).
Finally, ammonia may make for an excellent transition fuel. It can potentially be burned directly in an internal combustion engine (ICE) with no carbon emissions; converted to electricity directly in an alkaline fuel cell or cracked to provide hydrogen for non-alkaline fuel cells (FC).
Ample growth runways
After lagging for decades, we think there’s little doubt that the hydrogen economy is finally ready to take off. And few sectors have been hotter than hydrogen fuel cell companies lead by Plug, Bloom and Ballard. That’s because energy experts and Wall Street believe that sector is at a tipping point.
Bank of America says hydrogen technology is poised to take off as falling production costs, technological improvements, and a global push toward sustainability converge. The firm believes this will generate $2.5 trillion in direct revenue –or $4 trillion if revenue from associated products such as fuel cell vehicles is counted–with the total market potential reaching $11 trillion by 2050.
Last year, the European Union set out its new hydrogen strategy as part of its goal to achieve carbon neutrality for all its industries by 2050 with the objective to see the regional bloc develop a minimum of 40 gigawatts of electrolyzers within its borders and a similar amount of green hydrogen capacity in neighboring countries that can export to the EU by the same date.
The Green Hydrogen Catapult Initiative, another key play to watch in the space, is a brainchild of founding partners Saudi clean energy group ACWA Power, Australian project developer CWP Renewables, European energy giants Iberdrola and Ørsted, Chinese wind turbine manufacturer Envision, Italian gas group Snam, and Yara, a Norwegian fertilizer producer.
Green ammonia as a marine fuel
Green ammonia is gaining particular ground, both for combustion as a marine fuel and in fuel cells on ships. A number of new green ammonia projects were launched in 2020, the largest–an ambitious $5bn joint venture in northwest Saudi Arabia–will see a 1.2mn t/yr green ammonia plant being built in the new cross-border city of Neom. The project is a joint venture between US firm Air Products, Saudi-based ACWA Power and Neom, and the plant will run on 4GW of renewable solar and wind energy.
AmmPower Corp. (AMMP; AMMPF) is aiming to pioneer green ammonia in North America. The company is working on innovative ways to improve the ammonia production process by developing proprietary technologies that may potentially move away from the traditional Haber-Bosch process altogether.
A Growing Industry
Hydrogen may eventually end up taking a very large role in heavy industry. Green ammonia will enable it to do that, and so much more. In our view, this could be far bigger than lithium. This could mean AmmPower (AMMP; AMMPF) is sitting on a massive opportunity. The technology it’s developing may be used to safely store and ship hydrogen.
Energy Majors Dip Into Alternative Fuels
Royal Dutch Shell (RDS.A) has one of the most well-known brands in the world. The company is based in Holland, where it was founded over a century ago and employs almost 100,000 people. It’s also one of the biggest oil companies on the planet with operations in more than 90 countries around the world. Yet despite Shell’s size and reach, it still faces plenty of challenges as it tries to meet worldwide demand for energy sources while balancing environmental concerns.
Despite being one of the largest names in Big Oil, Shell is also working hard to create and harness new forms of energy, particularly hydrogen. In fact, the company already has green hydrogen projects in Germany, Netherlands, and even China. And it’s all produced using clean energy.
BP (BP) also known as British Petroleum, is a multinational energy company that has been around for over 100 years. BP was formed in 1909 by the merger of two rival companies- Anglo-Persian Oil Company and Royal Dutch Shell. With operations in more than 80 countries and regions, BP is one of the world’s largest oil and natural gas producers.
BP is another oil giant dipping its toes into the hydrogen realm. In fact, just this year, it announced plans to build the largest hydrogen project in the United Kingdom, producing as much as 1GW of ‘blue’ hydrogen by 2030. The project would support job creation and development in the region, as well as producing as much as 20% of the UK’s hydrogen target.
Chevron (CVX) is a multinational oil and gas company. It was founded in 1879 in California by John D. Rockefeller and partners as the Standard Oil Company of Ohio, which became part of the Standard Oil trust when it was dissolved on January 1, 1911. One year later, Chevron Corporation (then Texaco) bought out its former partner for $10 million ($2 billion today). The new corporation then changed its name to reflect this shift from being primarily an oil refining business to one also involved in natural gas exploration and production.
Though still an oil company at the core, Chevron has emerged as one of the fossil fuel industry’s biggest proponents of hydrogen, even playing a major role as a global advisory body to the Hydrogen Council in order to provide a long term vision for the role of hydrogen in the energy transition.
Just this year, Chevron also announced a strategic alliance with major automaker Toyota Motors (TM). The two companies have teamed up to lead the development of commercially viable long-term development of hydrogen.
Bob Carter, executive vice president, Toyota Motor North America, explained, “This is another important step toward building a hydrogen economy,” adding, “Combining Toyota’s decades of experience in developing hydrogen-powered fuel cell electric technology with Chevron’s deep resources in the energy sector has the potential to create new transportation choices for both consumers and businesses that move us toward our goal of carbon neutrality.”
Baker Hughes (BKR) is the world’s largest oil field services company. They provide drilling, completion, production, and reservoir management products and services to customers in more than 100 countries around the world. Founded in 1919 as Geophysical Services Inc., Baker Hughes has grown into a global corporation with operations in over 120 locations across 30 countries.
Like many of its peers, Baker Hughes has also faced mounting pressure to join the green revolution. And it’s risen to the call-to-arms. Surprisingly, however, it wasn’t investor pressure that got Baker Hughes into the hydrogen boon. In fact, it’s been in the game for well over half a century. It built its first hydrogen compressor in 1962, and hasn’t stopped since.
By. Chris Hope
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Forward-Looking Statements
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that the global demand for ammonia and hydrogen as commodities will continue to increase; that the research and development in the energy sector will lead to adoption of hydrogen and ammonia as commercially viable fuel sources for the automotive, aircraft, marine, industrial or other sectors in the future; that governments will continue to implement initiatives supporting reduced carbon emissions and that ammonia and hydrogen will gain traction and commercial viability as potential carbon-free or low carbon fuel alternatives; that AMMP will be able to develop an efficient process and proprietary intellectual property for the production of green ammonia and that AMMP’s process, if developed, will be adopted commercially to allow use of green ammonia and/or hydrogen as a viable fuel sources; that investors will continue to seek opportunities for investment in green technologies and that hydrogen and ammonia will be considered as viable investment opportunities in the future; and that AMMP can carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include the global demand for ammonia and hydrogen may not actually continue to increase if other energy alternatives such as solar, wind or hydroelectric are favored over ammonia and hydrogen; that the research and development in the energy sector may lead to rejection of hydrogen and ammonia as commercially viable fuel sources for the automotive, aircraft, marine, industrial or other sectors in the future, and that research may find that other fuels or energy sources provide safer, more cost efficient and/or more viable fuel alternatives; that governments may not implement the anticipated funding and initiatives to support reduced carbon emissions sufficient for ammonia and hydrogen to gain necessary traction or commercial viability as fuel alternatives; that AMMP may be unable to develop an efficient process or any unique proprietary intellectual property for the production of green ammonia or, even if developed, may ultimately fail to be adopted as commercially viable for various reasons; that investors favour other clean energy opportunities than hydrogen and ammonia or that other fuel alternatives such as solar, wind and hydroelectric may be considered more commercially viable; and that AMMP may, for any number of reasons, fail to carry out its intended business plans. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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