Japan’s Top Power Producer Seeks Long-Term Clean Ammonia Deal

(Bloomberg) -- Japan’s top power producer will start one of the largest global auctions to buy ammonia, as it bets on the clean-burning fuel to curb emissions and hit its green goals. 

Jera Co. aims to sign a long-term contract to purchase the ammonia starting from 2027, which the utility will use to replace some of the coal at one of its power plants, according to a statement on Friday. The power producer will seek bids where carbon emissions are not generated in the ammonia production, or are captured and stored in the process.

While ammonia has historically been used as a fertilizer, it’s receiving attention as both the government and companies pledge carbon emission reduction targets and try to reduce emissions from fossil fuels. Much of ammonia is still produced by burning natural gas or liquefied petroleum gas, but there’s anticipation that it could be made from cleaner energy in the future. 

Jera will conduct an international competitive bid for as much as 500,000 tons of fuel ammonia a year from fiscal 2027 into the 2040s, and is looking to also participate in the production projects, the firm said Friday. A joint venture between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., Jera is targeting to have its domestic coal power plants operate on 20% ammonia by the early 2030s and 100% by mid-century.

The request for proposals is the first of its kind for mass procurement of fuel ammonia, and comes as Japanese utilities scrutinize various technologies to help reduce their carbon footprint. In October, Jera said the firm was in talks with about 40 firms for building an ammonia production project, and was aiming to choose partners in the next two to three years. 

Related story: Top Japan Power Firm Seeks Partners for Ammonia Supplies

Jera also signed a memorandum of understanding last year on introducing clean ammonia to Japan with Norway-based Yara International and Japanese oil refiner Idemitsu Kosan Co. 

Japan included ammonia and hydrogen in its national energy strategy for the first time last year, targeting to have the two fuels make up 1% of the nation’s energy mix by the year starting April 2030. Japanese utilities would need 100 million tons of ammonia a year, if all major power producers were to run coal-powered plants with 100% of the fuel source, according to estimates made by the Ministry of Economy, Trade and Industry.

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