INTERVIEW: Japan's Marubeni targets 3 mil-5 mil mt/year of clean ammonia by 2030

Japan's Marubeni Corp. is planning to produce 3 million-5 million mt/year of clean ammonia from global projects by 2030 and add up to five new sites for carbon capture, utilization and storage (CCUS) as it advances its energy transition strategy with the aim of being a leading player in the new energy sector, a senior executive said May 7.

The Japanese company's most advanced projects are the 1 million mt/year Blue Ammonia project in Alberta, Canada, slated to start production in Q1 2028–Q2 2029 and the Central Queensland Hydrogen (CQ-H2) project in Australia, due to start in 2029, both for exports to Japan and other locations.

"We want to be a forerunner in clean hydrogen, ammonia and SAF," Ikushima Wataru, General Manager of New Energy Business Development Department at Marubeni, told S&P Global Commodity Insights. "This year there will be many discussions with the potential offtakers -- maybe the (price) range will be arrived at."

Wataru said talks on offtake deals are expected to get more fine-tuned when the company gets "more accurate information" from vendors and also as details from the governments' clean hydrogen support plans are unveiled.

Japan and South Korea are expected to release details on their clean hydrogen subsidy plans this year, while Australia and India are engaged in the process of disbursing subsidies to renewable hydrogen developers for promoting the industry.

Meanwhile, for the Alberta and CQ-H2 projects, Marubeni hopes to complete the front end engineering design (FEED) this Japanese fiscal year (April-March) with a final investment decision (FID) targeted for the next fiscal year, Wataru said, highlighting the upcoming milestones.

Other prominent projects include a large-scale renewable ammonia project in Oman, a renewable hydrogen project in Saudi Arabia and a clean ammonia project in the US. Marubeni's 2030 target of 3 million-5 million mt/year clean ammonia refers to both renewable and low-carbon fuels.

Marubeni is also aiming to produce 160,000 mt/year sustainable aviation fuel by 2030. It will also add four-to-five new CCUS projects, Wataru, who earlier looked after the conventional power business of Marubeni, said.

"The phase-one period of Carbon Offsetting and Reduction Scheme for International Aviation has begun from this year, and we are aware that some countries and regions are moving to impose mandates of SAF use on the fuel and aviation industries with a target year of 2030," Wataru said.

"To meet those 2030 targets, production projects will be expected to be launched in the next few years, and we believe the market will expand accordingly."

Cost outlook

With high costs of producing renewable hydrogen owing to rising cost of electrolyzers, labor and materials, it is getting more difficult for the clean energy industry sponsors to make a decision on final investment, Wataru said.

"Energy cost is going down but it is still higher than what we expect," he said. However, "gradually all the prices will go down."

One positive development that may lead to a fall in prices is that the small, locally produced, locally consumed hydrogen projects are progressing and would create demand for electrolyzers.

As for the benchmark $2/kg for renewable hydrogen, specifically targeted by Australia, Wataru said, it is a "very challenging production cost."

Platts, part of S&P Global Commodity Insights, assessed Queensland hydrogen produced via alkaline electrolysis (including capex) at $4/kg May 6, down 16.3% month on month.

It assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $4.95/kg May 7, up 0.4% from a month ago.

Demo shipment

Marubeni is scheduled to make a demonstration shipment of renewable hydrogen via metal hydrides from its South Australia renewable hydrogen project to Indonesia. In Jakarta, it will be converted to power and heat using fuel cells in an industrial park.

The "shipment can be made over this summer -- June, or going up, till August -- depending on the progress of the project," Wataru said, noting that such a shipment may be a first for Asia Pacific.

Metal hydrides have hydrogen bonded to them where the metal absorbs hydrogen through cooling and pressurizing and discharges hydrogen through heating and decompression. These are put in a container and placed on a ship, so a special vessel is not needed, making storage and delivery easy.

After this demonstration, the renewable hydrogen will be supplied to gas-fired plants in South Australia.

In 2022 Marubeni was involved in the Hydrogen Energy Supply Chain (HESC) project in Australia which shipped the world's first liquid hydrogen cargo on the Suiso Frontier demonstration tanker that traveled from Australia's Victoria to Kobe in Japan.

Wataru said both the technologies involved high costs, but, development is needed all across in order to progress the hydrogen industry.

"I cannot exclude any technology at this moment [just] because all the systems are very expensive," Wataru said. "If many people purchase those [fuels produced by different technologies] then the price will go down."

CCUS

Marubeni is developing CCS/CCUS projects in countries where regulations for carbon tax, subsidy and carbon tax credit are advanced such as the US, Canada, the UK and Australia, Wataru said.

"We are going to put some more dots on the map for CCUS [new projects]," he said. "We have four or five projects in the pipeline for CCUS."

The company is betting big on carbon capture, because without it net zero by 2050 cannot be achieved, Wataru said.