Asia turns to ammonia to cut coal emissions despite cost and supply hurdles
Tuesday, August 19 2025 - 08:42 AM WIB
By Romel S. Gurky
Amid growing pressure to cut emissions from coal-heavy power systems, several Asian countries are turning to ammonia co-firing as a transitional strategy toward net-zero goals, according to a new report from Rystad Energy. However, progress may be hindered by high costs, supply constraints, and underdeveloped infrastructure.
Coal accounted for 54% of Asia’s power mix in 2024, posing a serious challenge to regional decarbonization. Countries such as China, Indonesia, Japan, and South Korea are now exploring or scaling up ammonia co-firing — blending low-carbon ammonia with coal or gas — as a way to cut emissions while maintaining reliable baseload power.
Rystad Energy estimates that the region will require 8.8 million tonnes of ammonia per year by 2030 to meet energy transition targets. But with limited domestic production capacity, especially in countries like Japan and South Korea, much of this ammonia will need to be imported — adding pressure to accelerate foreign partnerships and infrastructure development.
Cost hurdles remain
Despite growing momentum, ammonia co-firing remains significantly more expensive than coal. Assuming a hydrogen price of $5 per kilogram (or $1,000 per tonne of ammonia), Rystad estimates that the cost of electricity from a 10% ammonia blend could be about 50% higher than from coal alone.
“Ammonia demand from power generation is expected to grow ninefold by 2030,” said Minh Khoi Le, Head of Hydrogen Research at Rystad Energy. “But without firm offtake commitments and faster infrastructure development, growth could stall.”
China takes a strategic lead
While Japan and Indonesia were early movers, China has taken a more aggressive approach by incorporating ammonia co-firing directly into its national decarbonization policy. Under its 2024–2027 Action Plan, China will require upgraded or new coal plants to reduce emissions by half by 2027, partly through 10% co-firing with biomass and green ammonia.
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China’s strong position in renewable energy — particularly in Inner Mongolia — is expected to give it an edge in scaling up domestic low-carbon hydrogen and ammonia production. This year, Envision Energy commissioned the world’s largest green ammonia facility in Chifeng, with a capacity of 0.32 million tonnes annually and expansion plans to reach 1.5 million tonnes by 2028.
South Korea launches second hydrogen auction
South Korea is supporting clean hydrogen and ammonia through long-term contracts. Its second clean hydrogen power generation auction, launched this year, mandates that winning bidders begin producing power from hydrogen or ammonia by 2029 under 15-year agreements.
Although the volume offered is smaller than the inaugural auction in 2024, it still requires approximately 200,000 tonnes of low-carbon hydrogen annually. To boost participation, the Ministry of Trade, Industry and Energy (MOTIE) has introduced new mechanisms, including exchange rate-linked settlements and a hydrogen volume borrowing system.
These adjustments aim to address challenges experienced during the 2024 auction, which saw limited participation and only one qualifying bid from Korea Southern Power (KOSPO) for its Samcheok plant.
Japan expands supply deals and support programs
Japan, a pioneer in ammonia co-firing, continues to lead through global supply deals and new incentives. In 2025, the country secured contracts to import blue ammonia from the U.S. and green ammonia from China and India, helping to offset domestic supply gaps.
Japan is also preparing to announce winners of its first contract-for-difference (CfD) program in early 2026, offering additional financial support to developers involved in ammonia-for-power initiatives.
While hydrogen and ammonia are increasingly seen as key components of Asia’s decarbonization strategy, their success hinges on reducing costs, scaling infrastructure, and securing long-term offtake agreements. If these hurdles are addressed, ammonia co-firing could serve as a critical bridge in the region’s transition from coal to cleaner energy sources.
Editing by Reiner Simanjuntak