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Nobuhiko Kubota, IHI’s chief technology officer, is tasked with reinventing the nearly 170-year-old Japanese industrial conglomerate for a new era of green energy.
IHI — like its peers, including General Electric and Mitsubishi Heavy Industries — must race to come up with new technologies that can reduce heavy carbon emissions, in line with climate goals. The company, which makes products ranging from aircraft engines and turbochargers to LNG tanks, boilers and rocket boosters, is currently pinning its hopes on using ammonia as a low-carbon fuel.
This bold bet on ammonia – a compound of hydrogen and nitrogen often used to make fertilizers – has gained little traction with investors in the absence of concrete targets for its contribution to profits. But IHI executives say the success of its technology will have broader ramifications for energy policy in Japan, and in Asia more broadly.
“It doesn’t have to be the only option, but using ammonia is one of the main tools for moving toward carbon neutrality,” says Kubota. “The key is to gain social acceptance of a broader distribution of ammonia.”
In 2017, Japan became the first country in the world to make a national Hydrogen strategy – and within it highlighted the potential of ammonia.
But since then, Japan has lagged behind other countries in developing regulations for hydrogen use. Recently, the United States has been going after the European Union on a hydrogen strategy, with President Joe Biden’s $369 billion inflation-reduction bill.
Japan, which relies heavily on coal, natural gas and oil, has set a goal of generating 1 percent of all electricity from hydrogen and ammonia combined power by 2030.
To that end, the government in June unveiled a 15 trillion yen ($104 billion) public-private investment to build hydrogen and ammonia supply chains. Tokyo also has ambitions to sell IHI and other Japanese companies’ technologies to Southeast Asian countries, such as Indonesia, Malaysia and India, to help them replace some coal with ammonia — and thus reduce carbon emissions from coal-fired plants without stopping them. .
However, Japan’s promotion of hydrogen and ammonia as clean fuels drew a strong response from other G7 countries in April, when officials and environmental groups criticized its policy to extend the life of existing fossil fuel infrastructure. Although ammonia itself does not contain carbon, its production is highly dependent on fossil fuels and is not yet commercially viable.
According to research group Bloomberg NEF, co-launching a power plant that is 20 percent ammonia and 80 percent coal will emit more carbon dioxide than combined-cycle gas turbines, which are widely used to generate electricity from gas.
But a co-ignition rate of 50 percent ammonia or more is expected to be too expensive to compete with other low-emission technologies.
The alternative for Japan is to import ammonia produced in countries with large renewable energy sources, although this would increase their dependence on imported energy and potentially pose economic security risks.
IHI executives say ammonia has its benefits: It’s a liquid at minus 33 degrees Celsius, while hydrogen needs to be cooled to minus 253 degrees Celsius to become a liquid. And the infrastructure is already in place to ship the ammonia.
“For long-distance transportation and storage, ammonia has more economic benefits than hydrogen,” says Kubota. “Our motive is certainly not to prolong the use of fossil fuels but to contribute to reducing carbon dioxide emissions as much as possible.”
IHI aims to introduce gas turbines powered entirely by liquid ammonia in 2025, and in January, it signed a memorandum with GE about cooperating on large gas turbines using 100 percent ammonia. like that He said recently It will spend about 250 billion yen on its own ammonia development, to create a new profit engine along with its main pneumatic engine business.
Akihiko Numazawa, general manager at IHI’s Business Development Headquarters, points out that some of its existing businesses — due to their heavy CO2 emissions — could shrink significantly in as little as three years. Coal boilers, for example, generate just under 10 percent of the company’s annual revenue.
“There is a strong sense of crisis between management levels and that is why we want to turn our business around while still being profitable,” Numazawa explains.
But analysts say IHI’s ammonia technologies haven’t excited investors in the same way that marketing of liquid hydrogen, by competitors like Kawasaki Heavy Industries, has. “In the eyes of investors, you’re doing yourself no favors by not having specific (financial) goals,” says Graeme McDonald, analyst at Citigroup. “Because they can’t quantify the ammonia, the ammonia doesn’t get the attention the company wants.”
But Edward Borlett, an analyst at brokerage CLSA adds: “Ammonia has not yet been effectively marketed or photographed relative to hydrogen, and perhaps that offers potential. IHI could be the dark horse of heavy industry.”
