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Speaker 1: This is Dana Perkins and you're listening to Switched on

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Speaker 1: the BENIF podcast. Green hydrogen is one of the most

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Speaker 1: talked about clean energy technologies today and that's for good reason.

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Speaker 1: It has the potential as a fuel source to address

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Speaker 1: the missions coming from some of the harder to abate

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Speaker 1: sectors like transport or heavy industry. But equally talked about

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Speaker 1: is the cost as well as how to get this small,

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Speaker 1: light and flammable gas from where it's produced to where

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Speaker 1: it needs to be used. But this isn't a show

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Speaker 1: about hydrogen. We're going to talk about ammonia because recently

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Speaker 1: one of BNF's analysts took a closer look at the

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Speaker 1: things you can make with hydrogen, and in this instance,

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Speaker 1: that's ammonia. Currently, production of ammonia accounts for anywhere between

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Speaker 1: one to two percent of global emissions, and overall it

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Speaker 1: could be as much as three percent of global emissions

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Speaker 1: coming from ammonia's production and use. Now let's just stop

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Speaker 1: there for a second, three percent of global emissions from ammonia.

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Speaker 1: And while ammonia is best known as a fertilizer, and

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Speaker 1: of course there are other use cases such as explosives,

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Speaker 1: we're going to talk about those a little bit later

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Speaker 1: in the show. For those that are closely watching the

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Speaker 1: hydrogen space, they may also be thinking about ammonia as

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Speaker 1: a potential for an innovative shipping fuel, or perhaps thinking

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Speaker 1: about how we're gonna ship hydrogen itself. Well, ammonia could

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Speaker 1: be an answer by converting hydrogen to ammonia and then

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Speaker 1: back again. But really what does this mean for cost

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Speaker 1: and just overall efficiency? Now to talk about this chemical,

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Speaker 1: I'm joined by Dithya Bashem. He's an associate from Benef's

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Speaker 1: hydrogen team. If you like this podcast, make sure to

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Speaker 1: subscribe to receive updates on future episodes on your device,

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Speaker 1: and give us a review on Apple Podcasts or Spotify,

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Speaker 1: which will make us more discoverable by others. But right now,

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Speaker 1: let's jump into my conversation with Addi about ammonia. Addie,

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Speaker 1: thank you very much for joining us today.

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Speaker 2: Great to be in the podcast. Thanks day Now.

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Speaker 1: So we set off on this journey initially thinking let's

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Speaker 1: let's do another show about hydrogen. It's an ever popular topic,

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Speaker 1: and as it turns out, this is not a show

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Speaker 1: about hydrogen at all. This is the show about ammonia,

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Speaker 1: which certainly hydrogen is a part of the discussion, but

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Speaker 1: it has such a let's say, fascinating history and future,

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Speaker 1: So let's get started with that. First of all, give

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Speaker 1: me a quick definition of what is ammonia for the

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Speaker 1: novice chemist.

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Speaker 2: Yeah, I mean that's how our journey started as well.

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Speaker 2: In the hydrogen team. Ammonia is its own world. Ammonia

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Speaker 2: is a molecule that is produced using hydrogen and nitrogen

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Speaker 2: from the air combined over a catalyst at high temperature

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Speaker 2: and pressure. And then that ammonia is really an intermediate product.

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Speaker 2: You make a lot of other things with it. In

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Speaker 2: eighty percent of the time, you make fertilizers with it,

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Speaker 2: nitrogen fertilizers, which are used on fields and sustain about

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Speaker 2: half of the world's food production. And about twenty percent

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Speaker 2: of the ammonia that we produce today is used in chemicals,

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Speaker 2: uses everything from textiles like nylon and refrigerans, pharmaceutical and

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Speaker 2: a lot of things that people don't really think about.

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Speaker 2: So it's a huge industry in itself, where hydrogen just

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Speaker 2: plays a role as a feedstock.

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Speaker 1: So ammonia has a lot of different use cases. But

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Speaker 1: additionally it and I think we'll want to go into

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Speaker 1: this in more detail, but as we first get started

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Speaker 1: on the show, it's also easier to transport. So give

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Speaker 1: us just a quick overview of the benefits of ammonia

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Speaker 1: when you think about it versus hydrogen.

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Speaker 2: Yeah, the problem with hydrogen is that it takes up

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Speaker 2: a lot of space, so that makes it extremely costly

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Speaker 2: to transport in bulk with ammonia. Once you combine that

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Speaker 2: hydrogen with nitrogen, ammonia liquifies at minus thirty four degrees

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Speaker 2: or ten bar atmosphere at ambient temperature. So because it

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Speaker 2: liquifies a relatively easily, the energy input to liquified is

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Speaker 2: quite low, which makes it less costly, and it's a

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Speaker 2: molecule that we are transporting across the globe on ships. Already,

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Speaker 2: there's about forty ships today that on a continuous basis

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Speaker 2: transport ammonia across the globe. There's another one hundred or

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Speaker 2: so one hundred to two hundred or so which do

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Speaker 2: that on and one off basis from time to time.

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Speaker 2: So it's already a traded industry and we have the

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Speaker 2: infrastructures to transport ammonia around, which makes it comparatively a

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Speaker 2: lot easier than hydrogen. What's also interesting is and something

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Speaker 2: that maybe is hard to grasp, is the fact that

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Speaker 2: per unit volume, so per cubic meter or per liter,

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Speaker 2: ammonia actually contains more hydrogen than liquid hydrogen itself. That's

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Speaker 2: because it's NH three, so it has another hydrogen molecule

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Speaker 2: in there, and it's not just H two, which is

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Speaker 2: the hydroen molecule itself. So within a unit volume, it

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Speaker 2: just contains my hydrogen. So it's a more efficient way

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Speaker 2: of transporting hydrogen as well.

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Speaker 1: So we know how to ship it already, We're already

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Speaker 1: doing it, which I think there is some conversation around

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Speaker 1: what the future of shipping hydrogen looks like, and this

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Speaker 1: could be a potential path. Let's talk a bit about Well,

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Speaker 1: first of all, it's current emissions profile and then what

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Speaker 1: the future of greening this industry could look like. So,

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Speaker 1: at this current point in time, how is the vast

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Speaker 1: majority of ammonia produced? I guess what's its feedstock, let's say,

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Speaker 1: And then additionally, what are the associated emissions?

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Speaker 2: Yeah, even today, you still need the hydrogen at the

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Speaker 2: end to make the ammonia. The difference the future may

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Speaker 2: be in a decarbonized wall is that we're getting the

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Speaker 2: hydrogen from either natural gas or coal, and in eighty

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Speaker 2: percent of cases it's natural gas across the world, and

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Speaker 2: in twenty percent of times, so twenty percent of the

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Speaker 2: feedstock that is being used as coal that's mostly used

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Speaker 2: in China, and the extraction of the hydrogen is really

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Speaker 2: where ninety percent of the emissions in the production of

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Speaker 2: ammonial lie. And that's why hydrogen and decarbonizing hydrogen is

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Speaker 2: such a key aspect to this. So, for example, if

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Speaker 2: you're producing ammonia using natural gas, that emits about two

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Speaker 2: tons of CO two equivalent per ton of ammonia, and

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Speaker 2: then you still have to do something to the ammonia

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Speaker 2: later to actually make it usable as fertilizers. So actually

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Speaker 2: that doesn't even cover it. And the problem with ammonia

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Speaker 2: is also that to two tons or so is just

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Speaker 2: the production emissions. Sixty percent of the emissions associated with

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Speaker 2: ammonia come from its use. So you combine it with

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Speaker 2: a carbon molecule turned into a fertilizer like urea applied

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Speaker 2: to the field, and at that point a lot of

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Speaker 2: the emissions from the nitrogen get released again into the atmosphere.

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Speaker 2: So actually ammonia itself was probably responsible for somewhere between

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Speaker 2: two and four percent of all global greenhouse gas emissions.

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Speaker 1: So for those who are listening and feel like they

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Speaker 1: are awash with different colors on the color we are

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Speaker 1: for hydrogen which we B and EF have actually moved

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Speaker 1: away from using these colors because they're somewhat confusing. And

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Speaker 1: I'm going to admit I actually just asked my producer

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Speaker 1: what the color was for hydrogen that's produced from natural gas,

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Speaker 1: and it's gray hydrogen. But what we're here to talk

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Speaker 1: about today is actually how green hydrogen that that is

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Speaker 1: produced from renewable energy sources could actually dramatically change the

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Speaker 1: upstream emissions associated with hydrogen production and therefore ammonia. So

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Speaker 1: let's talk a little bit about green hydrogen and the

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Speaker 1: emissions benefit and then you know, of course we'll acknowledge

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Speaker 1: some of the challenges because we know what the opportunities

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Speaker 1: are here. So, yeah, Addie, what are your views on

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Speaker 1: I guess the future potential for green hydrogen as it

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Speaker 1: relates to ammonia.

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Speaker 2: Sure, maybe making a step back. There's really two ways

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Speaker 2: of decarbonizing ammonia production. One is just adding carbon capture

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Speaker 2: and storage to the natural gas facility and then capturing

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Speaker 2: the emissions associated with it. We call that blue hydrogen.

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Speaker 2: The problem with blue hydrogen, or I guess the issue

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Speaker 2: long term, is that, yes, you save about seventy eighty

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Speaker 2: percent of the emissions with blue hydrogen already today or

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Speaker 2: blue ammonia, but you never get to zero with blue

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Speaker 2: blue ammonia or blue hydrogen. That's really the issue. It's

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Speaker 2: the easiest way to do it today, and maybe in

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Speaker 2: terms of the additional cost it has, it's much smaller

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Speaker 2: than what we will have for green, but it doesn't

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Speaker 2: lead you to an at zero future, and that's really

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Speaker 2: where green comes in. Green ammonia produced using hydrogen that

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Speaker 2: is again in itself produced using renewable electricity and a

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Speaker 2: machine called an electrolyzer that splits water into hydrogen and oxygen,

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Speaker 2: and then we take the hydrogen from that as an input,

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Speaker 2: can be as close to net zero as you can get.

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Speaker 2: The emission's reduction is up to ninety percent or so,

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Speaker 2: as if you're using renewable electricity, that's as good as

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Speaker 2: you can get with ammonia, and then you have a

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Speaker 2: little bit that you might need to offset. So long term,

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Speaker 2: we would say that if you really want to decarbonize

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Speaker 2: at least the production side of ammonia, you would need

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Speaker 2: to switch to green and the incentives to do so

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Speaker 2: will need to be there.

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Speaker 1: Now you're mentioning CCS, which is not currently incredibly cheap technology,

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Speaker 1: and then mentioning also that green hydrogen, and therefore this

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Speaker 1: other production process, which would be significantly cleaner, is even

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Speaker 1: more expensive. Do you see a situation where the ammonia

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Speaker 1: production is cost competitive at some point with current methods

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Speaker 1: of production?

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Speaker 2: I mean, starting again with CCS. If you add carbon

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Speaker 2: capture and storage to your existing ammonia facility today, with

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Speaker 2: a carbon price of about one hundred dollars potanol slightly

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Speaker 2: higher than that, it would be profitable to produce blue

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Speaker 2: ammonia blue hydrogen with that carbon price alone. And there

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Speaker 2: are markets where we have that, like in the EU.

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Speaker 2: The EUETS hovers around that price, and if you look

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Speaker 2: at our forecast for the EUETS carbon price out to

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Speaker 2: twenty thirty, we will be well in above the one

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Speaker 2: hundred euros per ton and would will make blue ammonia

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Speaker 2: cost competitive by itself. On top of that, there's tax

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Speaker 2: credits in the US which allow blue ammonia to be

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Speaker 2: competitive today already. Now, if you look at green ammonia,

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Speaker 2: the cost differential today could be about somewhere between two

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Speaker 2: and four times gray ammonia. So, if you want to

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Speaker 2: think of this in absolute numbers, gray ammonia or fossil ammonia,

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Speaker 2: over the last ten years has traded at a price

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Speaker 2: of about four hundred eighty dollars per ton or so,

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Speaker 2: and it's produced at a price about two to three

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Speaker 2: hundred dollars per ton or so. Green ammonia will cost

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Speaker 2: you anywhere between eight hundred to one thousand, two hundred

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Speaker 2: dollars per ton, and that's largely because of the cost

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Speaker 2: of hydrogen contained within it, because green hydrogen today costs

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Speaker 2: at least four or five times as much as the

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Speaker 2: fossil kind. So what really needs to happen is for

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Speaker 2: that cost gap to close down the line, and we

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Speaker 2: see that in hydrogen already. We see by twenty thirty

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Speaker 2: green hydrogen will be cheaper than blue hydrogen with so

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Speaker 2: hydrogen produced carbon captrin storage, and then down the line

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Speaker 2: in the late twenty thirties, early twenty forties or so

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Speaker 2: that green hydrogen will even outcompete gray hydrogen in most markets.

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Speaker 2: That we are looking at.

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Speaker 1: So in parts of the world where there is you know,

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Speaker 1: functioning carbon market, there is some real potential there now

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Speaker 1: just pivoting. Actually, you mentioned the price of ammonia, and

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Speaker 1: this is a fascinating part of the ammonia story, which

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Speaker 1: essentially is how the prices are formed and how trading works.

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Speaker 1: Can you talk a little bit about how our price

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Speaker 1: is dictated for when those who are actually purchasing ammonia

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Speaker 1: down the line.

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Speaker 2: Yeah, that's a great question. We produce about one hundred

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Speaker 2: and eighty million metric tons of ammonia globally today. Just

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Speaker 2: about ten percent of that ammonia is traded as is

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Speaker 2: so actually in the pure form of ammonia, and maybe

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Speaker 2: another fifteen percent or so are traded as a fertilizer product,

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Speaker 2: particularly urea. So about a quota to a third the

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Speaker 2: market is really traded in ammonia. But the key point

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Speaker 2: is that traded market sets the benchmark prices that all

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Speaker 2: the ammonias apply in the world use this as a

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Speaker 2: formula to set their own pricing methodology. There's one in particular,

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Speaker 2: which is the Tampa ammonia price, which is simply just

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Speaker 2: based on a contract between an ammonia producer called Yarra

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Speaker 2: and a phosphate fertilized a producer called Mosaic in the US,

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Speaker 2: and they import about a million metric tons of ammonia

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Speaker 2: every year to Tampa, and the price that they pay

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Speaker 2: for these cargoes is used as a global benchmark for

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Speaker 2: what ammonia prices really are, because why they use Tampa

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Speaker 2: is because it's the most transparent price benchmark, they have

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Speaker 2: the longest history, and that it then goes into a

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Speaker 2: lot of pricing formulas across the globe. They might add

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Speaker 2: an additional charge for transport and storage, some local discounts

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Speaker 2: and so on, but that's the benchmark price and in

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Speaker 2: that sense that that one contract really determines a lot.

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Speaker 2: There's other benchmarks as well that are used, like the

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Speaker 2: landed price of ammonia in Western Europe for example. All

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Speaker 2: of those matter, but the key thing is that maybe

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Speaker 2: ten to twenty percent of the market and the price

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Speaker 2: that that traded market receives sets the price for a

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Speaker 2: lot of the global supply and demand of ammonia.

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Speaker 1: So this is a future is rather than a spot

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Speaker 1: price market.

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Speaker 2: This is completely spot so there is actually no futures

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Speaker 2: market for ammonia. So ammonia is largely traded based on

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Speaker 2: spot prices. There are term contracts, so ammonia is typically

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Speaker 2: traded on one to three year term contracts where the

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Speaker 2: pricing is then set based on a monthly ammonia price

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Speaker 2: that varies every month. But the contract itself is up

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Speaker 2: to three years long. But there's no futures that it

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Speaker 2: can use, which makes actually hedging and protecting against risk

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Speaker 2: really challenging in the ammonia market.

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Speaker 1: Well, and talk to me a little bit about the volatility.

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Speaker 2: Yeah, ammonia is actually extremely volatile. The ammonia prices are cyclical,

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Speaker 2: so they go up and down with certain changes in

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Speaker 2: supply and demand and availability of natural gas. Again, I

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Speaker 2: mentioned four hundred and eighty dollars per ton was a

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Speaker 2: ten year average, including the spikes that happened due to

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Speaker 2: the Ukraine War. But actually ammonia prices have gone all

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Speaker 2: the way down from one hundred and fifty dollars a

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Speaker 2: ton to all the way to I think over one

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Speaker 2: thousand dollars per ton, particularly last year when the Ukraine

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Speaker 2: War happened and that cost a spike in natural gas prices,

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Speaker 2: So you can see how volatile the price of ammonia

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Speaker 2: is I just checked today and today in Europe the

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Speaker 2: price of ammonia is already again at four hundred dollars paton,

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Speaker 2: while his last year was about a thousand dollars paton.

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Speaker 2: Now it dropped tremendously because natural gas prices relaxed.

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Speaker 1: Where in the world is it really popular to import it?

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Speaker 1: And I guess just which countries and are the biggest buyers.

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Speaker 2: Yeah, the biggest buyers of pure ammonia are European countries.

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Speaker 2: In particular, India buys a lot of ammonia, and actually

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Speaker 2: the US is also a net importer of ammonia today,

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Speaker 2: even though they do produce a lot themselves. But then

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Speaker 2: there's a lot of buyers who buy ammonia not as

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Speaker 2: ammonia but as urea, so a carbon based molecule produced

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Speaker 2: using ammonia, And India and Brazil really top that ranking.

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Speaker 2: They're one of the largest fertilizer importers in the world

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Speaker 2: and really dependent on it. Sometimes countries also directly import

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Speaker 2: natural gas to produce their own ammonia, so that's not

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Speaker 2: accountid for within these figures, but that happens as well.

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Speaker 1: Well. Then let's talk about who the producers are then,

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Speaker 1: so it's clearly coming from somewhere.

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Speaker 2: Everyone in the world has some level of production of

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Speaker 2: ammonia because they see it as energy security issue. So

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Speaker 2: every country has at least a small amount of ammonia

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Speaker 2: production facilities domestically, even if that means they are importing

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Speaker 2: the natural gas itself. However, I think four or five

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Speaker 2: countries really dominate global supply of ammonia. That's first China.

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Speaker 2: China accounts for about a third of all global subpi

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Speaker 2: of ammonia, but China mostly uses that domestically. It's a

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Speaker 2: huge market. All the ammonia that they produce they use domestically.

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Speaker 2: They also have some sort of export restrictions on fertilized

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Speaker 2: products like urea, so not much urea or ammonia actually

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Speaker 2: leaves China. Ever, then that's about third, About nine to

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Speaker 2: ten percent typically outside of today's situation comes from Russia.

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Speaker 2: Russia is a major exporter. Over fifty percent of the

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Speaker 2: production that Russia produces in house is exported to other markets,

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Speaker 2: and both in the form of ammonia and as urea,

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Speaker 2: and that's a big one. What happened now is a

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Speaker 2: result of the Ukraine War, is that Russian ammonia exports

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Speaker 2: completely ceased. Why because Russia exports ammonia through a pipeline

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Speaker 2: and where ammonia pipeline that goes from Russia to Ukraine

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Speaker 2: to import in Ukraine from where it is then exported

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Speaker 2: overseas via ships, So that pipeline ceased operating as a

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Speaker 2: result of the Ukraine War. Well, Russia is still exporting

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Speaker 2: urea directly from Russia, but ammonia exports from Russia have

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Speaker 2: completely seized. The other two markets where a lot of

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Speaker 2: ammonia is produced are you the US in India, So

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Speaker 2: the US, even though it has a lot of natural gas,

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Speaker 2: is producing a lot of ammonia itself, but still needs

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Speaker 2: to import a lot of ammonia to satisfy its own demand.

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Speaker 2: Similarly with India, India produces a lot of ammonia domestically,

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Speaker 2: but all of that ammonia is typically through imported natural gas.

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Speaker 2: So in a sense they're not self reliant on fertilizers

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Speaker 2: at all. They just have a lot of production capacity

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Speaker 2: for it, it still need the feedstock to come in

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Speaker 2: or the import ammonia are other places, so on net basis,

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Speaker 2: they still import more ammonia than they produce.

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Speaker 1: The Inflation Reduction Act in the US has certainly got

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Speaker 1: hydrogen in its sites in terms of making the US

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Speaker 1: possibly quite big producer of hydrogen, in particular green hydrogen.

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Speaker 1: Have we started to see any of those projects come

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Speaker 1: online and come to light? And if not, because I

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Speaker 1: think I might know what the answer is. These are

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Speaker 1: large infrastructure projects. When do we expect to start seeing

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Speaker 1: some change.

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Speaker 2: Yeah. What's interesting about the Inflation Reduction Act, especially in

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Speaker 2: terms of ammonia, is the fact that in the law

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Speaker 2: there's nothing that says that a hydrid producer in the

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Speaker 2: US could not use the tax credit and then export

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Speaker 2: that subsidized hydrogen as ammonia, for example, to other markets,

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Speaker 2: which really means that US could become one of the

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Speaker 2: cheapest suppliers of clean ammonia of any kind. To the goal,

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Speaker 2: why we haven't really seen any impact of the Inflation

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Speaker 2: Reduction Act tax credit just yet, I would say, is one,

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Speaker 2: you're right, it's large infrastructure projects that will take another

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Speaker 2: three four years to actually become operational. And second, no

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Speaker 2: one has actually received any tax for it, at least

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Speaker 2: on the hydrogen part yet, and that's because they're waiting

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Speaker 2: on crucial guidance from the US Treasury and how you

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Speaker 2: can actually produce hydrogen and call that clean or green

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Speaker 2: hydrogen and meet the emissions thresholds that the Inflation Reduction

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Speaker 2: Act has set out for its tax credit. And there's

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Speaker 2: a heated debate. There's full page ads in the New

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Speaker 2: York Times and the Washington Post about how these criteria

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Speaker 2: should be set out, and that still needs to be determined.

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Speaker 2: And we're working actually on a publication to set out

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Speaker 2: our own view on this.

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Speaker 1: So we'll keep our eyes on what's going to happen

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Speaker 1: in the US with the IRA. There are other parts

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Speaker 1: of the world that are actively engaged in this market,

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Speaker 1: and certainly incumbents don't want to lose market share. Can

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Speaker 1: you talk a little bit about countries that are actively

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Speaker 1: involved in this space and more importantly, the companies that

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Speaker 1: are actually producing ammonia right now and really what they're

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Speaker 1: doing with it.

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Speaker 2: Yeah, that's a really good point. I mean, every market

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Speaker 2: with good renewable electricity sources like good sola and wind resources,

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Speaker 2: as well as abundant natural gas, has been looking at

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Speaker 2: one point at producing green or blue ammonia and trying

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Speaker 2: to export that, particularly in the Middle East. Australia, Latin America,

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Speaker 2: all of those markets have looked at it, and the

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Speaker 2: Middle East is probably one of the places where most

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Speaker 2: of the projects are concentrated. In One project in particular

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Speaker 2: that is worth highlighting here is in Saudi Arabia. It's

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Speaker 2: the Neo project. It's a two point two gigaboute electoralizer

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Speaker 2: project that has actually taken final investment decision, so it

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Speaker 2: is becoming reality very soon. It'll be operational by twenty

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Speaker 2: twenty six and it looks to export over a million

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Speaker 2: metric tons of ammonia. That's actually huge for the traded

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Speaker 2: market that is only about twenty millimetric tons today, so

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Speaker 2: that's going to happen. The challenge with NIOM is really

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Speaker 2: part of its business model. So in Saudi Arabia, producing

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Speaker 2: green ammonia makes a lot of sense because they have

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Speaker 2: both good solar radiation but also good wind speeds, which

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Speaker 2: means you can combine it to and produce really cheap

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Speaker 2: green ammonia in the region. And the project is financed,

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Speaker 2: so it's going ahead as well, and it has an

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Speaker 2: off taker in air Products, which has been willing to

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Speaker 2: sign a thirty year off take. So in a lot

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Speaker 2: of ways, the financial zion place, the renewables are in place,

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Speaker 2: and the ammonia will be cheap. The questionnaer on Neium

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Speaker 2: is really what they will do with the ammonia, because

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Speaker 2: air Product is buying the ammonia, but they're not the

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Speaker 2: final user of the ammonia. Air Product's role within this

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Speaker 2: is to take the ammonia, put it on ships and

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Speaker 2: then export it to other markets and then find willing

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Speaker 2: buyers in these other markets for that ammonia. So they're

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Speaker 2: really a trader of the ammonia. And the stated business

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Speaker 2: model right now is to take the ammonia, move it

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Speaker 2: via ship to Europe to an import terminal that air

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Speaker 2: Products is building, actually three of them, and then crack

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Speaker 2: it back to hydrogen, so not actually use the ammonia

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Speaker 2: as is, but crack the ammonia under high temperature back

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Speaker 2: to hydrogen, which in a sense makes it more useful

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Speaker 2: because there's more use cases for hydrogen and ammonia. But

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Speaker 2: that's where for us the economics really fall apart. We

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Speaker 2: think it could make a lot of sense for country

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Speaker 2: like Audi Area to produce ammonia in bulk ship it

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Speaker 2: and then for that ammonia to be used as ammonia,

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Speaker 2: and that will be broadly competitive with domestic production in

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Speaker 2: let's say Germany or so. Once you think about cracking

400
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Speaker 2: the ammonia bag, that's such an energy intense process that

401
00:19:32,000 --> 00:19:35,280
Speaker 2: the efficiency losses along the chain mean that the hydrogen

402
00:19:35,359 --> 00:19:37,160
Speaker 2: that you're getting out of that is probably a lot

403
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Speaker 2: more expensive than just domestic production of the hydrogen. And

404
00:19:39,920 --> 00:19:42,320
Speaker 2: right now the business model goes further to use that

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Speaker 2: hydrogen than in road transport in refueling stations, which is

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Speaker 2: also probably not the most viable use case for clean

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Speaker 2: hydrogen today. It will mean that needs to be heavily subsidized.

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Speaker 2: So there's a huge question around what happens to the

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Speaker 2: project and who's actually ends up buying it, and if

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Speaker 2: this stated use case will actually go ahead. Overall, I

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Speaker 2: would say any project that is looking to crack ammonia

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Speaker 2: back to hydrogen will struggle with finding buyers. Now, the

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Speaker 2: wider issue beyond nium is the fact that about half

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Speaker 2: of the world's hydrogen production is looking to export in

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Speaker 2: some form and not just use it domestically. Because export

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Speaker 2: projects tend to be quite large. Ninety percent of these projects.

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Speaker 2: Of these export projects are looking to export as ammonia,

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Speaker 2: and at BNF we really struggle where with all this

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Speaker 2: ammonia will go in the near term, at least, we

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Speaker 2: don't see enough demand for all of this ammonia because

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Speaker 2: the fertilizer industry is quickly saturated. Even if you put

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Speaker 2: all the government targets together, you struggle with demands for

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Speaker 2: that ammonia, especially as is and cracking makes it really expensive,

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Speaker 2: so that's not really a good option. So we really

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Speaker 2: need to talk about future use cases of ammonia and

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Speaker 2: how quickly those can be developed.

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Speaker 1: What are some of those future use cases and things

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Speaker 1: that they could green because certainly when I think of hydrogen,

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Speaker 1: I think about the hard to abate sectors and the

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Speaker 1: things that we're still trying to figure out the answers

431
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Speaker 1: for decarbonizing, and that's really where it comes into play.

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Speaker 1: That's where we start to hear some very creative solutions

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Speaker 1: to decarbonize that are really at the technology forefront. And

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Speaker 1: one of them that I think that we would love

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Speaker 1: to see in that hard to abate sector get cleaned

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Speaker 1: up is shipping, not the shipping of We've just went

437
00:21:10,520 --> 00:21:14,239
Speaker 1: through the fact that shipping ammonia and then returning it

438
00:21:14,280 --> 00:21:18,280
Speaker 1: into hydrogen again is very cost intensive, although technically feasible,

439
00:21:18,359 --> 00:21:21,399
Speaker 1: so certainly something that many people are thinking about. But

440
00:21:21,480 --> 00:21:24,800
Speaker 1: what about as a fuel and as a means to

441
00:21:24,840 --> 00:21:28,719
Speaker 1: decarbonize this critical part of how the world functions as

442
00:21:28,720 --> 00:21:29,760
Speaker 1: a global marketplace.

443
00:21:30,119 --> 00:21:32,760
Speaker 2: That would be probably the use case right after what

444
00:21:32,800 --> 00:21:34,879
Speaker 2: the low hanging food is, which is the fertilizer industry,

445
00:21:35,040 --> 00:21:37,600
Speaker 2: once you have decombonized that, or in parallel, the next

446
00:21:37,680 --> 00:21:41,159
Speaker 2: biggest use case will be the shipping sector. And we

447
00:21:41,200 --> 00:21:43,320
Speaker 2: have been have to do a lot of analysis on

448
00:21:43,359 --> 00:21:46,040
Speaker 2: how a net zero shipping industry will look like. And

449
00:21:46,080 --> 00:21:48,879
Speaker 2: in our net zero scenario, the way this actually looks

450
00:21:48,880 --> 00:21:50,920
Speaker 2: like is that sixty percent of the fuel used in

451
00:21:50,960 --> 00:21:54,760
Speaker 2: shipping will actually be reduced just through fuel efficiency. Efficiency

452
00:21:54,760 --> 00:21:56,639
Speaker 2: gain could be so strong that sixty percent of the

453
00:21:56,640 --> 00:21:59,800
Speaker 2: fuel you could just mitigate through efficiency. About forty percent

454
00:21:59,840 --> 00:22:02,119
Speaker 2: of the PI is then met through a combination of

455
00:22:02,160 --> 00:22:05,800
Speaker 2: biofuels and hydrogen based fuels, so we say each twenty

456
00:22:05,800 --> 00:22:08,160
Speaker 2: percent or so, So twenty percent of the total fuel

457
00:22:08,200 --> 00:22:10,960
Speaker 2: demand for shipping in twenty fifty could be met through

458
00:22:11,040 --> 00:22:14,159
Speaker 2: hydrogen based fuels. And there's really two competing fuels in

459
00:22:14,200 --> 00:22:17,760
Speaker 2: the hydrogen sector. One is methanol and the other is ammonia.

460
00:22:17,880 --> 00:22:21,080
Speaker 2: Just to put this into context, if that twenty percent

461
00:22:21,440 --> 00:22:24,720
Speaker 2: were to use ammonia only, the amount of ammonia you

462
00:22:24,760 --> 00:22:26,919
Speaker 2: need for that is about one hundred and fifty million

463
00:22:26,960 --> 00:22:29,480
Speaker 2: metric tons of ammonia, which is as large as the

464
00:22:29,520 --> 00:22:32,159
Speaker 2: ammonia industry today. So just with that, with just with

465
00:22:32,200 --> 00:22:34,680
Speaker 2: a small share of shipping, you're looking at doubling the

466
00:22:34,680 --> 00:22:37,359
Speaker 2: industry size of ammonia production today, which is crazy.

467
00:22:37,440 --> 00:22:38,960
Speaker 1: So that's where all the ammonia could.

468
00:22:38,800 --> 00:22:41,560
Speaker 2: Go potentially, right. The problem is that one ammonia has

469
00:22:41,600 --> 00:22:44,520
Speaker 2: competition from methenol, which is a carbon based molecule and

470
00:22:44,600 --> 00:22:47,240
Speaker 2: which a lot of shipping companies are investing in early

471
00:22:47,280 --> 00:22:49,399
Speaker 2: in terms of buying vessels that are capable of running

472
00:22:49,400 --> 00:22:52,520
Speaker 2: a methenol Long term, we do think ammonia could make

473
00:22:52,520 --> 00:22:54,920
Speaker 2: a lot of sense simply because it's cheaper to get

474
00:22:55,040 --> 00:22:57,280
Speaker 2: nitrogen out of the air than carbon out of the air.

475
00:22:57,320 --> 00:22:59,440
Speaker 2: It's just more expensive because the concentration of carbon in

476
00:22:59,480 --> 00:22:59,960
Speaker 2: the air is low.

477
00:23:00,280 --> 00:23:02,480
Speaker 1: And by long term, what timeframe are you talking?

478
00:23:02,840 --> 00:23:05,200
Speaker 2: I think right now, what we'll mostly see over the

479
00:23:05,280 --> 00:23:08,040
Speaker 2: next few years is methenol fueled vessels and then towards

480
00:23:08,040 --> 00:23:11,399
Speaker 2: the twenty thirties, there will be investment in ammonia fueled

481
00:23:11,440 --> 00:23:12,200
Speaker 2: vessels as well.

482
00:23:12,280 --> 00:23:14,879
Speaker 1: To the new vessels coming out will essentially be focused

483
00:23:14,880 --> 00:23:16,200
Speaker 1: on a different fuel source.

484
00:23:16,160 --> 00:23:19,080
Speaker 2: Exactly, or a dual fuel source. That's how shipping companies

485
00:23:19,080 --> 00:23:21,400
Speaker 2: are approaching it. So have be able to both run

486
00:23:21,480 --> 00:23:24,200
Speaker 2: on heavy fuel oil with just a conventional fuel and

487
00:23:24,400 --> 00:23:26,880
Speaker 2: today methanol for example, and then switch between the two

488
00:23:26,920 --> 00:23:29,720
Speaker 2: depending on which jurisdiction they're currently on and what carbon

489
00:23:29,760 --> 00:23:31,400
Speaker 2: restrictions they have within that jurisdiction.

490
00:23:31,680 --> 00:23:34,800
Speaker 1: How difficult would it be to retrofit existing ships.

491
00:23:35,040 --> 00:23:37,760
Speaker 2: That's a really good question. I mean, what we don't

492
00:23:37,800 --> 00:23:40,919
Speaker 2: have today is ammonia capable engines at all. There are

493
00:23:41,040 --> 00:23:43,960
Speaker 2: companies like m an with which have suggested they're working

494
00:23:44,000 --> 00:23:46,720
Speaker 2: on that and by about mid decade or so by

495
00:23:46,720 --> 00:23:50,200
Speaker 2: twenty twenty five that they will have ammonia capable engines.

496
00:23:50,359 --> 00:23:53,959
Speaker 2: Those could be retrofitted in existing ships, but I believe

497
00:23:53,960 --> 00:23:57,240
Speaker 2: also ammonia takes up more space than existing fuel oil,

498
00:23:57,320 --> 00:24:01,040
Speaker 2: which so you also reduce your voyage by that. So

499
00:24:01,160 --> 00:24:04,560
Speaker 2: there's challenges with retrofitting where I think probably most ships

500
00:24:04,600 --> 00:24:07,200
Speaker 2: will actually be new builds where they can run either

501
00:24:07,280 --> 00:24:10,439
Speaker 2: on existing fuel or ammonia. That's how methanol is being

502
00:24:10,480 --> 00:24:13,920
Speaker 2: approached today, and from the hydrand sectors, I think that's

503
00:24:13,960 --> 00:24:16,280
Speaker 2: the approach that most companies will take towards ammonia in

504
00:24:16,280 --> 00:24:18,960
Speaker 2: the beginning as well once ammonia ready vessels are available.

505
00:24:19,080 --> 00:24:22,760
Speaker 1: So this falls firmly into the new technology space which

506
00:24:22,880 --> 00:24:26,120
Speaker 1: we are watching closely but really is under development exactly.

507
00:24:26,160 --> 00:24:29,160
Speaker 2: I mean, the problem or the challenge with ammonia use

508
00:24:29,280 --> 00:24:32,080
Speaker 2: as a fuel is the fact that it's very different

509
00:24:32,080 --> 00:24:34,840
Speaker 2: to handling it as a cargo. We know very well

510
00:24:34,840 --> 00:24:36,679
Speaker 2: how to handle it as a cargo. The problem with

511
00:24:36,720 --> 00:24:38,520
Speaker 2: ammonia is that it's toxic. You don't want to be

512
00:24:38,600 --> 00:24:40,760
Speaker 2: near ammonia at all, so but we know how to

513
00:24:40,760 --> 00:24:42,840
Speaker 2: handle it as a cargo. Using it as a fuel

514
00:24:43,000 --> 00:24:45,240
Speaker 2: creates a new challenge, and we don't have any safety

515
00:24:45,240 --> 00:24:47,680
Speaker 2: protocols for that yet or these are being under are

516
00:24:47,720 --> 00:24:49,960
Speaker 2: still under development. So what first one needs to happen

517
00:24:50,000 --> 00:24:51,959
Speaker 2: is one the engines need to become available that can

518
00:24:52,000 --> 00:24:54,119
Speaker 2: actually combust ammonia, and the second is to have the

519
00:24:54,119 --> 00:24:56,320
Speaker 2: protocols in place to actually use it as a fuel,

520
00:24:56,320 --> 00:24:59,199
Speaker 2: which the IMO and other organizations are working on but

521
00:24:59,240 --> 00:25:01,160
Speaker 2: we don't have them to. All of those are short

522
00:25:01,240 --> 00:25:05,280
Speaker 2: term barriers to using ammonia as a shipping fuel. Long term, though,

523
00:25:05,400 --> 00:25:08,359
Speaker 2: if ammonia is being used, the industry could actually be

524
00:25:08,440 --> 00:25:10,439
Speaker 2: huge and the demand for it could be huge.

525
00:25:11,920 --> 00:25:14,880
Speaker 1: So let's back up a bit. When we first started

526
00:25:14,920 --> 00:25:18,840
Speaker 1: talking about using ammonia as a potential means to decarbonize

527
00:25:18,840 --> 00:25:22,200
Speaker 1: the shipping industry, you noted that the number one thing

528
00:25:22,320 --> 00:25:24,680
Speaker 1: that ammonia can do to reduce emissions is actually going

529
00:25:24,760 --> 00:25:27,480
Speaker 1: to be in the agriculture space. And we've talked about

530
00:25:27,520 --> 00:25:29,879
Speaker 1: it upstream, and I just want to know, am I

531
00:25:29,960 --> 00:25:35,160
Speaker 1: missing something given that ammonia actually has such a downstream

532
00:25:35,200 --> 00:25:38,600
Speaker 1: I guess in Scope three applications emissions profile, is there

533
00:25:38,640 --> 00:25:41,199
Speaker 1: anything that really can be done to reduce emissions on

534
00:25:41,520 --> 00:25:44,520
Speaker 1: that end of things? And kind of what's the problem there.

535
00:25:45,000 --> 00:25:49,640
Speaker 2: Decarbonizing ammonia use in agriculture will be challenging because even

536
00:25:49,640 --> 00:25:52,720
Speaker 2: if you introduce green hydrogen and reduce about ninety percent

537
00:25:52,760 --> 00:25:55,359
Speaker 2: of the production emissions, that's only about forty percent of

538
00:25:55,359 --> 00:25:59,040
Speaker 2: the emission's footprint of the ammonia use. Got sixty percent

539
00:25:59,080 --> 00:26:01,880
Speaker 2: of it is really happening on the field when it's

540
00:26:01,920 --> 00:26:05,560
Speaker 2: being applied and used by farmers, and that's partly because

541
00:26:05,640 --> 00:26:09,840
Speaker 2: ammonia releases nitrogen emissions, but also because the most common

542
00:26:09,880 --> 00:26:13,399
Speaker 2: way ammonia is applied to fields is not as is,

543
00:26:13,600 --> 00:26:16,720
Speaker 2: but in the form of a fertilizer called urea, which

544
00:26:16,800 --> 00:26:19,879
Speaker 2: is ammonia combined with a carbon source, which makes it

545
00:26:19,920 --> 00:26:22,240
Speaker 2: more easy to transport it across the globe and easier

546
00:26:22,240 --> 00:26:24,440
Speaker 2: to apply. But that there's the problem. You need to

547
00:26:24,480 --> 00:26:27,560
Speaker 2: have a sustainable carbon source able to decarbonize that, and

548
00:26:27,600 --> 00:26:29,959
Speaker 2: that's what most countries are using, and most countries are

549
00:26:30,000 --> 00:26:33,240
Speaker 2: not necessarily able to switch away from that. Other markets,

550
00:26:33,240 --> 00:26:36,119
Speaker 2: like in europemonium nitrate is being used as a source

551
00:26:36,160 --> 00:26:39,399
Speaker 2: of ammonia, the nitrogen fertilizer. That could be a solution,

552
00:26:39,480 --> 00:26:42,800
Speaker 2: so switching from urea to ammonium nitrate, But ammonium nitrate

553
00:26:42,880 --> 00:26:46,760
Speaker 2: is more expensive, it has explosive property, so that's also

554
00:26:46,800 --> 00:26:51,600
Speaker 2: a challenge. So partly the solution to decarbonizing nitrogen fertilizers

555
00:26:51,640 --> 00:26:54,159
Speaker 2: used in agriculture is one. One answer to this is

556
00:26:54,320 --> 00:26:57,560
Speaker 2: really using hydrogen and greening the ammonia production itself. There's

557
00:26:57,600 --> 00:27:00,480
Speaker 2: probably a part which means that you switch to fertilizes

558
00:27:00,560 --> 00:27:04,119
Speaker 2: that don't use any carbon with of themselves. There's probably

559
00:27:04,160 --> 00:27:07,480
Speaker 2: a part of this which just means reduction of nitrogen

560
00:27:07,520 --> 00:27:10,600
Speaker 2: fertilizer use overall. And these are questions that our sustainable

561
00:27:10,640 --> 00:27:12,920
Speaker 2: Agriculture team is looking at in a lot more detail,

562
00:27:13,480 --> 00:27:15,480
Speaker 2: and we'll come up with a more clear answer in

563
00:27:16,480 --> 00:27:17,000
Speaker 2: your future.

564
00:27:17,119 --> 00:27:18,760
Speaker 1: I mean, I guess that's part of the reason why

565
00:27:18,800 --> 00:27:20,200
Speaker 1: your job is a lot of fun, because you get

566
00:27:20,200 --> 00:27:22,520
Speaker 1: to overlap with the sustainable agriculture team and then the

567
00:27:22,560 --> 00:27:25,159
Speaker 1: clean energy team, and there's a lot of different people

568
00:27:25,160 --> 00:27:27,639
Speaker 1: to collaborate with because it is so interconnected to so

569
00:27:27,720 --> 00:27:30,359
Speaker 1: many different parts of the economy. One of the things

570
00:27:30,400 --> 00:27:33,320
Speaker 1: you had mentioned a little bit earlier on was policies

571
00:27:33,440 --> 00:27:35,960
Speaker 1: that may need to be formed around some of the

572
00:27:36,000 --> 00:27:40,040
Speaker 1: safety considerations. And certainly we know that hydrogen is flammable.

573
00:27:40,119 --> 00:27:42,879
Speaker 1: There are various other things in our daily lives, like

574
00:27:42,960 --> 00:27:46,000
Speaker 1: natural gas that are flammable, although albeit not quite as flammable.

575
00:27:46,080 --> 00:27:48,800
Speaker 1: But let's talk about ammonia and really whether or not

576
00:27:49,359 --> 00:27:52,760
Speaker 1: many countries around the world are really focused on this

577
00:27:52,960 --> 00:27:56,040
Speaker 1: safety consideration as something they're going to need to think

578
00:27:56,080 --> 00:27:59,320
Speaker 1: about in the future, as we do expect to see

579
00:27:59,440 --> 00:28:03,280
Speaker 1: ammonia taking off with some potential additional use cases in

580
00:28:03,320 --> 00:28:05,200
Speaker 1: the future. And the reason I bring this up really

581
00:28:05,240 --> 00:28:07,680
Speaker 1: specifically is I think in many of our minds there's

582
00:28:07,760 --> 00:28:11,680
Speaker 1: kind of this picture of a fairly recent explosion of

583
00:28:11,720 --> 00:28:14,880
Speaker 1: an ammonia facility in Lebanon, and that was just over

584
00:28:14,920 --> 00:28:17,160
Speaker 1: a year ago in twenty twenty two. In Beirut, When

585
00:28:17,200 --> 00:28:19,199
Speaker 1: we talk about hydrogen, we say, oh, well, you know

586
00:28:19,240 --> 00:28:22,479
Speaker 1: the Hindenberg, but it was so long ago, and maybe

587
00:28:22,520 --> 00:28:25,000
Speaker 1: you have this ability to almost put distance in time,

588
00:28:25,119 --> 00:28:27,800
Speaker 1: but we don't with this particular disaster that really was

589
00:28:27,880 --> 00:28:30,720
Speaker 1: quite fresh in people's memories. And therefore, do you think

590
00:28:30,760 --> 00:28:33,600
Speaker 1: that something that those on the policy side are really

591
00:28:34,040 --> 00:28:38,040
Speaker 1: looking at quite closely when they're thinking about whether or

592
00:28:38,080 --> 00:28:41,680
Speaker 1: not to really support certain parts of hydrogen and ammonia

593
00:28:41,720 --> 00:28:42,800
Speaker 1: production in their countries.

594
00:28:43,040 --> 00:28:45,120
Speaker 2: I think a lot of that is still being developed

595
00:28:45,120 --> 00:28:47,520
Speaker 2: at the moment, just because there is no green or

596
00:28:47,600 --> 00:28:51,000
Speaker 2: low carbon ammonia industry today. Really there's pilot's scale facilities,

597
00:28:51,040 --> 00:28:53,560
Speaker 2: but not really much use of ammonia. The aemonia that

598
00:28:53,680 --> 00:28:55,800
Speaker 2: is being used and sold is used into fertilizer and

599
00:28:55,840 --> 00:28:59,080
Speaker 2: agriculture industry, where we have safety protocols in place to

600
00:28:59,520 --> 00:29:03,160
Speaker 2: handle ammonia. But yeah, once you're talking about doubling or

601
00:29:03,160 --> 00:29:06,400
Speaker 2: tripling demand for ammonia, that will mean a lot more infrastructure,

602
00:29:06,400 --> 00:29:08,520
Speaker 2: a lot more people involved in this, which will be

603
00:29:08,600 --> 00:29:11,360
Speaker 2: exposed to ammonia, which is a toxic gas. If you're

604
00:29:11,400 --> 00:29:14,520
Speaker 2: converted to something like ammonium nitrate that's used in explosives,

605
00:29:14,560 --> 00:29:16,960
Speaker 2: so you have a flammability issue there. So all of

606
00:29:17,000 --> 00:29:18,680
Speaker 2: that will need to be handled with it, particularly when

607
00:29:18,680 --> 00:29:20,760
Speaker 2: you're using it as a fuel on ships. And that's

608
00:29:20,840 --> 00:29:23,080
Speaker 2: I would say that that's mostly are still under development

609
00:29:23,120 --> 00:29:26,040
Speaker 2: and still under discussion and something that needs to be

610
00:29:26,080 --> 00:29:28,280
Speaker 2: figured out. We haven't really spent a lot of time

611
00:29:28,320 --> 00:29:31,560
Speaker 2: and attention on it today because simply because there isn't

612
00:29:31,560 --> 00:29:34,200
Speaker 2: really an industry there today. I think these are questions

613
00:29:34,240 --> 00:29:36,760
Speaker 2: that we'll need to tackle as we go forward into

614
00:29:36,800 --> 00:29:40,520
Speaker 2: the future and ammonia's role increases. Safety protocols really vary

615
00:29:40,640 --> 00:29:44,640
Speaker 2: by by by markets. For example, in Europe, ammonia is

616
00:29:44,680 --> 00:29:48,000
Speaker 2: really only put on trains and then on one pipeline

617
00:29:48,000 --> 00:29:50,680
Speaker 2: that goes from Russia to Ukraine. Otherwise people don't really

618
00:29:50,720 --> 00:29:53,360
Speaker 2: like to handle ammonia inland. In the US, you can

619
00:29:53,360 --> 00:29:54,920
Speaker 2: put ammonia on a truck, you can put it on

620
00:29:54,960 --> 00:29:56,920
Speaker 2: a train, you can put it through a pipeline. There's

621
00:29:57,040 --> 00:29:59,480
Speaker 2: not very many restrictions on how you can handle ammonia.

622
00:29:59,520 --> 00:30:02,960
Speaker 2: So there's all the differences between countries on how risk

623
00:30:03,000 --> 00:30:06,040
Speaker 2: averse they are towards using ammonia and its safety issues.

624
00:30:06,160 --> 00:30:07,960
Speaker 2: So all of that will need to be harmonized to

625
00:30:08,000 --> 00:30:10,400
Speaker 2: some extent to be able to enable a globally traded

626
00:30:10,480 --> 00:30:14,080
Speaker 2: market for ammonia more widely than it is already traded today.

627
00:30:14,560 --> 00:30:16,840
Speaker 1: So we already discussed the US Inflation Reduction Act and

628
00:30:16,880 --> 00:30:19,960
Speaker 1: how that may spur the hydrogen industry in the US

629
00:30:20,040 --> 00:30:23,320
Speaker 1: to become much more prominent. What other sort of policies

630
00:30:23,480 --> 00:30:26,400
Speaker 1: are really in place to or could be in place

631
00:30:26,400 --> 00:30:28,240
Speaker 1: in the future to really get this going.

632
00:30:28,560 --> 00:30:30,760
Speaker 2: Yeah, it's actually something we're looking at as a research

633
00:30:30,800 --> 00:30:34,240
Speaker 2: partner of the Bloomberg New Economy FUM Climate Technology Coalison

634
00:30:34,360 --> 00:30:37,560
Speaker 2: and how to stimulate ammonia demand. And what we're settling

635
00:30:37,600 --> 00:30:41,320
Speaker 2: on is ammonia's probably needs both supply side incentive for

636
00:30:41,360 --> 00:30:44,040
Speaker 2: the hydrogen to scale up and become cheap, So that

637
00:30:44,080 --> 00:30:48,000
Speaker 2: could be anywhere from direct subsidies to fixed premium support

638
00:30:48,120 --> 00:30:51,320
Speaker 2: contract for difference mechanisms and so on to make hydrogen cheaper,

639
00:30:51,400 --> 00:30:54,920
Speaker 2: but also demand side mechanisms. We've talked about carbon pricing before.

640
00:30:54,960 --> 00:30:57,360
Speaker 2: That will be a huge one, particularly for blue ammonia,

641
00:30:57,640 --> 00:31:00,000
Speaker 2: which with a carbon price can already be competitive mechanic

642
00:31:00,280 --> 00:31:03,360
Speaker 2: like the carbon border adjustment mechanism in the EU, which

643
00:31:03,400 --> 00:31:06,160
Speaker 2: will incentivize importers to rely on more cleaner forms of

644
00:31:06,200 --> 00:31:09,560
Speaker 2: ammonia as well, and then just encouraging the use of

645
00:31:09,800 --> 00:31:12,760
Speaker 2: clean ammonia in sectors where there's no other alternative, right

646
00:31:12,800 --> 00:31:14,640
Speaker 2: like in the fertilizer industry and so on. That could

647
00:31:14,640 --> 00:31:17,320
Speaker 2: be for example, to quotas on mandates. For example, in

648
00:31:17,360 --> 00:31:19,800
Speaker 2: the EU, what we have is a quota to use

649
00:31:19,920 --> 00:31:24,040
Speaker 2: renewable hydrogen in existing industry that is already using fossil hydrogen.

650
00:31:24,160 --> 00:31:26,440
Speaker 2: The biggest user of fossil hydroen today in Europe is

651
00:31:26,440 --> 00:31:28,520
Speaker 2: the fertilizer industry. They use about I think two and

652
00:31:28,560 --> 00:31:31,160
Speaker 2: a half million metric tons of hydrogen, so they now

653
00:31:31,200 --> 00:31:33,480
Speaker 2: have a quota by twenty thirty to replace about forty

654
00:31:33,520 --> 00:31:36,800
Speaker 2: two percent of the hydrogen that they're using with green hydrogen,

655
00:31:37,000 --> 00:31:39,640
Speaker 2: meaning they will be producing green ammonia and by twenty

656
00:31:39,640 --> 00:31:42,120
Speaker 2: thirty five that's all the way to sixty percent. Quotas

657
00:31:42,200 --> 00:31:44,440
Speaker 2: like that and sort of carrots and sticks like that

658
00:31:44,480 --> 00:31:47,560
Speaker 2: will probably help a lot in scaling up the industry. Well.

659
00:31:47,600 --> 00:31:49,760
Speaker 1: And then how about one of the policy interventions that

660
00:31:49,920 --> 00:31:52,520
Speaker 1: certainly is more of a stick. How about the carbon

661
00:31:52,520 --> 00:31:53,720
Speaker 1: border adjustment mechanism.

662
00:31:53,920 --> 00:31:57,480
Speaker 2: Yeah, absolutely, I mean that will really define what form

663
00:31:57,520 --> 00:32:01,400
Speaker 2: of ammonia is treated and imported into the once the

664
00:32:01,440 --> 00:32:04,320
Speaker 2: carbon bordered adjustment mechanism is in place, which will it

665
00:32:04,320 --> 00:32:07,080
Speaker 2: will be fully in place from twenty thirty four. Carbon

666
00:32:07,120 --> 00:32:12,720
Speaker 2: prices alone will probably encourage domestic ammonia importers to rely

667
00:32:13,040 --> 00:32:15,800
Speaker 2: on lower carbon forms of ammonia because the carbon price

668
00:32:15,800 --> 00:32:18,040
Speaker 2: incentivizes you to do so. With the carbon price of

669
00:32:18,240 --> 00:32:20,640
Speaker 2: over one hundred years per ton, blue ammonia is already

670
00:32:20,640 --> 00:32:23,080
Speaker 2: in the money, and by the time green ammonia is

671
00:32:23,080 --> 00:32:25,600
Speaker 2: probably cheap enough that a carbon price alone will also

672
00:32:25,680 --> 00:32:30,360
Speaker 2: incentivize green ammonia use in low domestic industry over fossil fuels.

673
00:32:30,480 --> 00:32:33,720
Speaker 2: So the carbon border adjustment mechanism will really define what

674
00:32:33,880 --> 00:32:36,440
Speaker 2: ammonia is being imported, and not just for ammonia, other

675
00:32:36,560 --> 00:32:37,920
Speaker 2: other hydrid projects as well.

676
00:32:38,480 --> 00:32:41,440
Speaker 1: You've been great at giving us so much detail around

677
00:32:41,520 --> 00:32:43,440
Speaker 1: this industry and the pricing. And I am going to

678
00:32:43,480 --> 00:32:46,640
Speaker 1: ask one final, extremely novice question. Can you see it

679
00:32:46,640 --> 00:32:47,440
Speaker 1: and can you smell it?

680
00:32:49,320 --> 00:32:51,480
Speaker 2: I certainly don't want to smell it because that might

681
00:32:51,520 --> 00:32:55,800
Speaker 2: affect me in some way. Yeah, it's a colorless guys

682
00:32:55,840 --> 00:32:56,680
Speaker 2: with a pundit note.

683
00:32:56,720 --> 00:32:58,600
Speaker 1: Okay, so it smells bad. We might be familiar with

684
00:32:58,680 --> 00:33:01,440
Speaker 1: it in cleaning products and stuff, but it's uh, you'll

685
00:33:01,480 --> 00:33:03,239
Speaker 1: know it when you smell it, so to speak, but

686
00:33:03,280 --> 00:33:06,000
Speaker 1: not necessarily when you see it. Addie, thank you so

687
00:33:06,080 --> 00:33:07,120
Speaker 1: much for joining us today.

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00:33:07,200 --> 00:33:08,080
Speaker 2: Thank you for having me.

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00:33:17,160 --> 00:33:20,200
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00:33:20,320 --> 00:33:23,760
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00:33:23,800 --> 00:33:28,000
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