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Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently he works as a Senior Researcher at Hill Tower Resource Advisors. Next…

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Ammonia Security Risks Could Harm Energy Transition Plans

  • Ammonia and green hydrogen have an associated transportation and storage risk.
  • One potential solution to mitigate these risks is the construction of a new pipeline infrastructure or ammonia-cracker.
  • Governments and the EU need to act swiftly to establish the right policy, law, and regulations to mitigate these risks.
Ammonia tanks

With the recent publication of the IPCC report warning of the devastating effects of global warming and the need for action, the push for energy transition away from hydrocarbons faces new challenges. While green hydrogen and green ammonia are being touted as viable substitutes for hydrocarbons in a low-carbon or Net-Zero future, security risks associated with their transportation and storage are being increasingly acknowledged. This poses a potential threat to Europe's green energy strategies, as NGOs and citizens may oppose these plans due to the higher risks involved.

A report by Berenschot, Arcadis, and TNO suggests that more needs to be done to set up the right policy, law, and regulations to mitigate these risks. The report also indicates that the maritime transport of green ammonia is more cost-effective, leading to an influx of this product in European ports, particularly the Port of Rotterdam. However, this also means that the overall transport volumes of ammonia will be exponentially higher, increasing the risks of a potential disaster involving ammonia.

One potential solution to mitigate these risks is the construction of a new pipeline infrastructure or ammonia-crackers, which would require significant investment and time. Until then, conventional transportation will likely remain the main source.

The current legal and policy arrangements or quotas per transportation volume are already showing major constraints, making it crucial for governments and the EU to act quickly. Failure to do so may result in insufficient transportation volumes for high-risk products, causing the expansion of green ammonia projects to hit a brick wall. Similarly, green hydrogen may also face challenges due to its inherent risk profile and higher emission risks when compared to CO2/CH4. Related: Will Brent Break Below $70 This Year?

While the push for a green transition away from hydrocarbons is supported by green and environmental activism, this may change if more reports about security risks are published. This could result in increased societal pressure and opposition, especially considering the higher costs and environmental risks associated with green hydrogen. With the potential for increased opposition, it is unclear whether a green transition without hydrocarbons in the long term is feasible.

In summary, while the push for energy transition away from hydrocarbons to green hydrogen and green ammonia continues, the security risks associated with their transportation and storage pose significant challenges. Governments and the EU need to act swiftly to establish the right policy, law, and regulations to mitigate these risks and ensure sufficient transportation volumes for high-risk products. Otherwise, the expansion of green ammonia projects and the adoption of green hydrogen may face significant opposition and challenges.

By Cyril Widdershoven for Oilprice.com

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