Asia: Ammonia's New Frontier to Reduce Coal's Weight

With coal accounting for 54% of Asia's electricity mix in 2024, the region faces a huge challenge in meeting its climate neutrality goals . To reduce emissions, several countries are increasingly looking at ammonia as a generation source, especially through co-firing , the joint combustion of coal or natural gas and low-emission ammonia. According to Rystad Energy , China , Indonesia , Japan , and South Korea will be the main hubs of this transition. But a significant gap remains: meeting the 2030 targets will require approximately 8.8 million tonnes of ammonia per year , which is currently unavailable.

Asia is suffering from decades of dependence on coal : it lacks the regulatory framework and market demand to justify new infrastructure investments. Countries like Japan and South Korea also suffer from structural constraints, such as limited natural gas availability or limited renewable generation capacity, which are hindering the domestic development of clean ammonia. To approach net-zero targets, they will therefore have to rely on imports from abroad, gradually replacing coal as a baseload source without compromising energy security and affordability.

The problem remains cost : co-firing with ammonia is still very expensive today, primarily due to the costs associated with producing low-carbon hydrogen , converting it into ammonia, and transport. If we assume a hydrogen price of $5/kg (equivalent to $1,000 per ton of ammonia), the levelized cost of electricity for a mix with 10% ammonia would be 50% higher than coal-fired generation alone. Making this technology competitive will require innovation, economies of scale, or effective carbon pricing mechanisms.

Despite the challenges, demand is expected to grow : Rystad estimates that by 2030, ammonia demand for power generation will be nine times higher than current levels. But without long-term purchasing agreements and an acceleration of import infrastructure and co-firing-enabled power plants, growth could slow. Japan, Korea, China , and Indonesia have already established international partnerships to secure supplies, but faster terminal openings and plant upgrades are needed.

China , in particular, has chosen a decisive approach: its 2024-2027 Action Plan sets direct national targets, without waiting for large-scale pilot tests. From 2027, new or converted coal-fired power plants will have to halve emissions compared to 2023 levels, focusing on a mix of co-firing with biomass and green ammonia , combined with CO2 capture and utilization technologies. Its feasibility remains to be demonstrated, especially since the enormous fleet of coal-fired power plants will require complex retrofits, but if the model works, it would become crucial for the twin objectives of peak emissions by 2030 and climate neutrality by 2060.

China also has a competitive advantage: abundant renewable resources in Inner Mongolia , where Envision Energy started up the world's largest green ammonia plant this year (initial 0.32 Mtpa, expansion to 1.5 Mtpa by 2028). If the projects accelerate, Beijing could become a key ammonia supplier for Asia, with export prospects as well.

South Korea, on the other hand, is looking ahead to 2029, when the winners of the second national hydrogen electricity generation auction will be required to produce 3 TWh annually , equivalent to approximately 200,000 tons of low-carbon hydrogen. The first auction, in 2024, saw limited participation, with only one plant (Kospo in Samcheok) meeting the ministry's criteria. To increase its appeal, the 2025 edition introduces new measures: exchange-linked prices to reduce currency risks and the possibility of "borrowing" hydrogen volumes from subsequent years, thus guaranteeing operators greater flexibility.

Japan , a pioneer in ammonia co-firing , has already secured strategic contracts and attracted foreign investment. It plans to import blue ammonia from the United States and green ammonia from China and India to offset domestic shortages and consolidate a stable supply. In 2026, it will also announce the winners of the "contract for difference" program, designed to financially support projects and guide the country toward climate targets.