(432f) Optimizing the Transition to Sustainable Ammonia Fertilizer Supply Chains

Renewable ammonia production using hydrogen sourced from electrolysis is an emerging approach to alleviating the 2% of global emissions attributed to synthetic nitrogen fertilizer production. A distributed implementation of renewable production facilities close to the agricultural end user has additional potential to mitigate the costs and emissions associated with interstate or even international transport of ammonia currently produced at large-scale centralized facilities. Local ownership of new renewable ammonia production could insulate the end user (e.g., the farmers) against fluctuations in fertilizer prices that have historically occurred on the global ammonia market. In the United States, recent federal policy such as investment and/or production tax credits for power generation and hydrogen production with low associated carbon intensity [1] has improved the economic viability of this approach to decarbonizing agriculture.

Despite the potential benefits, replacing ammonia fertilizer produced using fossil fuels and transported over a national or even global scale with such locally produced renewable ammonia will not be instantaneous. To this end, we develop a multi-scale optimal supply chain transition model which maximizes the economic benefit of developing a local renewable ammonia supply chain. We first optimize renewable ammonia production facility to minimize the levelized cost of ammonia over a range of (i) installation years from present-day to 2030 which affects cost curves of constituent technologies such as electrolysis, (ii) production scales, and locations with differing wind and solar renewable generation potential. Renewable variability is accounted for through a combination of intermediate storage (e.g., batteries, hydrogen buffer) and oversized chemical production pursuing variable production rates. These design features are optimized through simultaneous technology selection, sizing, and hourly scheduling with hourly resolution representative years for wind and PV capacity factors in each location used as input data, as is the prevailing approach in the literature [2-4]. The results of this production facility optimization are subsequently used as input data to a supply chain transition optimization model. This model has annual resolution and determines the installation year, production scale, and location of new renewable ammonia production facilities as well as how this new means of ammonia production will augment and eventually replace importing ammonia from the existing producers in meeting spatially resolved (e.g., county-by-county) demands [5] in a manner which minimizes the 30 year net present cost of the supply chain.

We present a case study for Minnesota’s ammonia fertilizer supply chain transition demonstrating the economic viability of such a transition by 2032 over a range of historically observed market ammonia prices. This analysis includes constraints on the scale of renewable generation facilities informed by existing installations in Minnesota as well as electrolysis availability informed by global projections of annual manufacturing. The analysis also incorporates the possibility of claiming investment or production tax credits for renewable power generation and clean hydrogen production to understand how such policy incentivizes the adoption of decarbonized fertilizer production and to quantify the economic opportunity created by such policy from the perspective of the state of Minnesota. Ultimately, we hypothesis that such an economically optimal renewable ammonia supply chain transition will enable significant reduction in the carbon intensity of fertilizer supply along with considerable opportunities for local economic development.

References

[1] Inflation Reduction Act of 2022, H.R.5376 (2022). https://www.congress.gov/bill/117th-congress/house-bill/5376/text

[2] Fasihi et al. (2021). Global potential of green ammonia based on hybrid PV-wind power plants. Applied Energy, 294, 116170.

[3] Bose et al. (2022). Spatial variation in cost of electricity-driven continuous ammonia production in the United States. ACS Sustainable Chemistry & Engineering, 10(24), 7862-7872.

[4] Palys & Daoutidis (2022). Power-to-X: A review and perspective. Computers & Chemical Engineering, 107948.

[5] Palys et al. (2018). Exploring the benefits of modular renewable-powered ammonia production: A supply chain optimization study. Industrial & Engineering Chemistry Research, 58(15), 5898-5908.