The time is right to build out Europe’s green ammonia exports

Excess renewable energy output in Europe could jump-start the manufacture of green hydrogen and its derivatives. There is still time for some countries to claim early mover advantage, but also a danger that the opportunity may be missed, writes Sam Mackilligin, Hydrogen Director for Europe at AECOM.

On the banks of the Paraguay River, 35km south of the capital Asunción, a construction project is underway that could provide a blueprint for a new wave of green industrialisation in Europe.

For the last 20 months AECOM has acted as engineer and project manager for the Villeta project, where ATOME plc is building a plant that will provide 250,000 tons of green ammonia fertiliser for the region’s agricultural sector. The electricity used at the plant for the electrolysis process that splits water into oxygen and hydrogen will be 100 per cent renewable, derived from the excess energy of the nearby Itaipu hydro-electric plant that provides most of Paraguay’s electricity.  

The hydrogen then goes through a second process to produce green ammonia, which is less volatile and easier to transport and store than hydrogen. This ammonia is then further processed into calcium ammonium nitrate for direct application as fertiliser in Paraguay’s agriculture sector. 

The market for green hydrogen derivatives such as ammonia is growing as industrial customers seek to decarbonise their energy use and supply chains and become less vulnerable to geopolitical turmoil.  

As Europe’s energy transition gathers pace, there is a significant opportunity for countries with a potential surplus of renewable resources to claim early mover advantage. While Spain, Italy and The Netherlands have shown ambition, it’s not clear that the opportunity has been recognised by all governments and policy makers in the region, and there is a danger it could be missed. 

Feeding the growing appetite of German industry

In late January, ThyssenKrupp Steel launched a tender for the annual supply of up to 151,000 tonnes of clean hydrogen for facilities in its Duisburg plant, Germany’s largest steel mill. The tender is indicative of growing demand for low-carbon alternatives to replace coal in blast furnaces. This demand is attracting significant investment in green hydrogen preparedness.  

As part of the National Hydrogen Strategy, the federal government and states have 62 Important Projects of Common European Interest underway, in which they are investing €8bn. Many are clustered around northern ports such as Hamburg and Bremerhaven, which serve the heavily industrialised Ruhr Valley.    

European countries with fast greening energy supply, such as the UK, Spain and Ireland, could direct excess renewable electricity to the production of green hydrogen and its derivatives, kick starting a new industry in coastal regions. The potential prize is not just the production itself, but the entire ecosystem and supply chain required to support it, including the manufacture of electrolysers.  

The UK’s offshore wind industry, with 13.9GW deployed and an ambition of 50GW by 2030, faces the prospect of many thousands of hours of wasted energy output later in the decade due to significant capacity constraints in the grid. For coastal areas north of the Humber and throughout Scotland, green hydrogen derivatives can transform that excess power into a sustainable source of investment and employment.  

 “The potential prize is not just the production [of green hydrogen and its derivatives], but the entire ecosystem and supply chain required to support it, including the manufacture of electrolysers.”  

Replacing imports from further afield

Early suppliers of green ammonia and hydrogen will export to Europe’s industrial heartlands from the Middle East, North Africa and even further afield. The NEOM Green Hydrogen company expects to export 200,000 tonnes of green hydrogen annually from Saudi Arabia from 2026. One import destination for this will be Lincolnshire’s Immingham Green Energy Terminal on the south bank of the Humber Estuary, for which AECOM is providing planning support.  

However, Europe needs both resilience and security of supply for such critical raw materials that could be developed more locally, reducing transport complexity and the potential for geopolitical disruption. 

Spain, with its high capacity of wind, solar and hydro generation, has already recognised this potential with key projects such as the strategic partnership established by energy producer Cepsa and Yara Clean Ammonia to set up a “green hydrogen maritime corridor between the ports of Algeciras and Rotterdam for the decarbonisation of European industry and maritime transport”. 

Ammonia rather than hydrogen is the short-term opportunity 

Much of the focus in the UK in recent years has been preparing for green hydrogen specifically, but despite examples such as Duisburg, more attractive commercial markets lie elsewhere in green ammonia and other derivatives. Hydrogen’s volatility means that it requires specific infrastructure for storage and transportation, much of which is yet to be built.  

Ammonia can be stored and transported at lower pressures, closer to ambient temperatures, and therefore much more easily. It is also an established and traded commodity with a developed transportation and storage infrastructure already in place. It can be used as a fuel in shipping and is particularly useful in industries such as agriculture that required nitrogen-based compounds, as in the case of the Paraguay project.    

Laying the groundwork

Developing an ammonia export economy offers significant policy wins for the UK government in particular, both in the development of clean industry and in the advancement of its levelling up agenda as infrastructure would almost exclusively be based in the north of England and Scotland.  

Capitalising on the opportunity, whether in the UK or elsewhere, requires clarity in industrial and energy policy to encourage investment.  

The new regional energy strategic planning bodies, tasked with ensuring a balanced electricity system at local levels, can play a key role in unlocking “local economies by creating new jobs and new sectors” helping grid operators to find ways to incentivise flexible load for unused electricity and its use in electrolysis and ammonia production.  

Policy options including grants, subsidies and tax incentives – such as have been offered for offshore wind infrastructure – could stimulate investment, while simplified and accelerated planning and permitting will be essential. More broadly, the UK government may need to implement a regulatory framework to attract investment and replicate its success in developing new low carbon industries, such as offshore wind. 

Seizing first mover advantage

For the UK and other likely European exporters, there is still time to earn first mover advantage and build valuable export markets for green hydrogen derivatives that make productive use of excess green energy. It requires action now, however, not least in the recognition that this nascent market is gathering momentum and presents very valuable opportunities.  

With our extensive global experience and expertise in large sustainable infrastructure projects such as Immingham and Viletta, AECOM offers end-to-end planning, project management and engineering services to transform vision into reality. We believe in the strong future potential of the green energy economy and are ready to work with governments, regulators and corporations to make it happen.