🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Yara narrows new 'blue' ammonia site choice to two to tap U.S. tax credits

Published 23/06/2023, 14:01
© Reuters. The Yara International company logo is seen on Yara Birkeland, the world's first fully electric and autonomous container vessel, in Oslo, Norway November 19, 2021. REUTERS/Victora Klesty
NG
-

OSLO (Reuters) - Norway's Yara is considering two sites for a second North American project which would take advantage of U.S. subsidies and cheap natural gas to make low-carbon "blue" ammonia and export it to Europe, a senior executive said.

The main driver for building ammonia plants in North America is the lower cost of natural gas, where the key ingredient is about a quarter of the benchmark price in Europe.

"When you build large-scale blue ammonia with CCS (carbon capture and storage) and get the tax credits in the U.S., that ends up being cheaper actually than that produced in Europe today," Magnus Krogh Ankarstrand, president of the Yara Clean Ammonia subsidiary, told Reuters.

So-called blue ammonia is produced from natural gas, with the carbon dioxide (CO2) byproduct captured and stored.

The new investments Yara is considering in North America, will benefit from the U.S. Inflation Reduction Act (IRA) incentives. The fertiliser maker will also earn credits under the European Union's emission permits trading scheme when importing low-carbon ammonia into Europe.

U.S. taxpayers would effectively subsidise removing CO2 from ammonia which is then exported for European use, he said.

Canadian pipeline group Enbridge and Yara said in March they aimed to invest up to $2.9 billion in blue ammonia output in Texas in what would be Yara's biggest production site.

"The new one will be of a similar size to the one in Corpus Christi," Ankarstrand said.

© Reuters. The Yara International company logo is seen on Yara Birkeland, the world's first fully electric and autonomous container vessel, in Oslo, Norway November 19, 2021. REUTERS/Victora Klesty

Yara estimates that the IRA tax credits, including $85 per tonne of CO2 stored, represent about $150 in tax credit per tonne of ammonia produced.

The company has scheduled a capital markets day on June 26 at which it is due to update investors on its investment plans.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.