Norwegian chemical company Yara has announced the signing of a memorandum of understanding (MoU) with marine fuel suppliers Bunker Holding to develop ammonia for use as shipping fuel.

The Yara Clean Ammonia subsidiary will work to provide clean ammonia, made from green hydrogen, as an alternative to using fossil fuels in international shipping.

Murali Srinivasan, SVP commercial of Yara Clean Ammonia, said: “We look forward to collaborating with Bunker Holding to support the acceleration of the net-zero carbon energy transition for the shipping industry with clean ammonia.”

Srinivasan added that he hoped the partnership would bring “safety, reliability and security of clean ammonia supply as shipping fuel” and develop the value chain for the future.

Yara Clean Ammonia already operates a network of ammonia terminals across the Baltic sea and beyond. In April 2022, the company ordered 15 ammonia terminals for deployment across Scandinavia to refuel ships with the product. The current number of existing productive terminals Yara operates now stands at 18.

The MoU comes in the same week as Yara narrowed down the choices for its “blue ammonia” site in the US to two. The company is setting up production in the US to benefit from tax credits under the Inflation Reduction Act (IRA). These include receiving tax credits worth $85 per tonne of CO2 stored, equal to around $150 per tonne of ammonia.

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Blue hydrogen is hydrogen made from natural gas, but with the added presence of carbon capture and storage technology. In contrast, green hydrogen uses renewable energy fed into an electrolyser. The price of natural gas is around 75% cheaper in the US than in Europe, driving the decision economically.

Yara is just one of a number of companies setting up production in the US in order to benefit from the IRA’s provisions. Companies have called upon other governments to offer competing incentives, as their countries are “less attractive” to investors.