Trafigura to invest in large-scale ammonia production

Trafigura is planning to invest in large scale production facilities of low-carbon ammonia, a gas which can be used as an energy source to power ships and cut emissions, the commodity trader's Chief Executive Jeremy Weir told Reuters.

Shipping currently accounts for around 3% of global greenhouse gas emissions (GHG), but that percentage is expected to climb to untenable levels unless the industry goes greener.

U.N. shipping agency the International Maritime Organization (IMO) is aiming to reduce GHG emissions from ships by 50% from 2008 levels by 2050, but industry groups are calling for accelerated action.

Marine GHG emissions at Trafigura come primarily from the ships used to transport commodities. Trafigura reported 8.88 MM tons of CO2 emissions from shipping in the yr to Sept. 30 2020, 58% of the total.

Weir declined to give any detail on Trafigura's plans to produce green and blue ammonia, but said it "will help decarbonise the shipping industry".

Green ammonia is made by combining hydrogen made from water electrolysis and nitrogen using heat from renewable energy, while blue ammonia is made from nitrogen and natural gas, with the carbon dioxide byproduct captured and stored.

The shipping industry is also looking at hydrogen as a fuel source to cut emissions. However, hydrogen requires twice the tank space for the same amount of energy as ammonia. Hydrogen is difficult and expensive to transport as it needs to be cooled to -250 Celsius, while ammonia requires -33 Celsius. But ammonia works out more expensive than the very low sulphur fuel oil used for ships as more -- about 2.3 times more by volume -- is needed.

Trafigura has also invested in ammonia-fueled engines for maritime vessels being developed by Germany's MAN Energy Solutions, which if successful could be a game-changer for the shipping industry, Weir said.

MAN Energy's ammonia engines are expected to be available commercially for large ocean-going ships by 2024. It expects to be able to replace existing internal combustion engines in ships with ammonia engines the following yr. The challenge for Trafigura switching to ammonia fueled vessels is cost.

"Our gross margins for moving commodities from A to B are around 3%. We can't use ammonia if others aren't, it doesn't work from the competition aspect," Weir said in an interview for LME Week, a gathering of the metals industry in London.

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