Implications of the Inflation Reduction Act on Deployment of Low-Carbon Ammonia Technologies

Chi Kong Chyong, Eduardo Italiani, and Nikolaos Kazantzis

November 2023

Building on the stochastic economic analysis of the plant-level ammonia production (AP) model, this study comprehensively considers key low-carbon AP pathways – steam methane reforming with carbon capture and storage (CCS), biomass gasification (BH2S), and electrolysis (AEC) – under multiple policy frameworks – subsidies, carbon pricing, renewable hydrogen rules. CCS and BH2S demonstrate strong economic potential under the Inflation Reduction Act due to cost-effectiveness and limited public support requirements. In contrast, AEC faces economic challenges due to high costs and low efficiency. To efficiently decarbonize AP, policymakers and academia should prioritize (i) adapting Haber-Bosch (HB) processes for variable bioenergy quality, (ii) ensuring safe CO2 transport and storage while mitigating CCS value chain risks, (iii) supporting R&D to reduce costs and enhance efficiency in flexible HB, renewable energy, and storage technologies, and (iv) establishing a technologically neutral policy framework that considers dynamic cost reductions and interactions between policy instruments and technologies.

Keywords: Ammonia; Inflation Reduction Act; US Energy Policy; Energy; Carbon Tax; Carbon Cost; Carbon Capture; Biomass Gasification; Alkaline Electrolysis; Haber-Bosch; Techno-Economic Analysis; Social Cost of Carbon; Hydrogen Production Tax Credits.

JEL classification: Q48; H25; Q42; Q54; Q55; G11