On August 26th, BASF and Yara International jointly announced their decision to terminate the development of a low-carbon ammonia project in the U.S. Gulf Coast region.
In June 2023, BASF and Yara announced a collaboration to conduct a joint study for the development and construction of a world-class low-carbon blue ammonia production facility, equipped with carbon capture infrastructure. The new facility was designed to have an annual production capacity of 1.2 million to 1.4 million metric tons, with a plan to capture and sequester approximately 95% of production-related emissions.
Regarding the reason for abandoning the U.S. low-carbon ammonia project, the two companies stated that they would "concentrate resources on projects with higher value-added potential." Yara will continue to advance its ammonia strategy and evaluate other investment opportunities in the United States.
Currently, the low-carbon ammonia market is mired in investment and financing difficulties, with uncertainties in European and U.S. policies directly hindering market development. The ambiguous decisions by U.S. President Trump and the Senate regarding the 45V clean hydrogen production tax credit under the Inflation Reduction Act (commonly referred to as the "Big and Beautiful Act" in the original text), as well as the uncertainty surrounding the impact of the European Union's Carbon Border Adjustment Mechanism (CBAM) – which is set to be implemented in phases starting January 1, 2026 – have all slowed down the progress of the low-carbon ammonia market.
Despite a surge in preliminary projects earlier, the low-carbon ammonia market has recently shifted towards prudence. Data from Fertecon, a subsidiary of S&P Global Commodity Insights, shows that 530 low-carbon ammonia projects are currently being tracked. To date, the number of clean ammonia projects that have reached a Final Investment Decision (FID) remains scarce, with a total production capacity of approximately 6.8 million metric tons per year – including around 4.2 million metric tons per year of blue ammonia and 2.6 million metric tons per year of green ammonia. This volume is negligible compared to that of gray ammonia.
BASF and Yara noted that they are long-term partners and will continue to jointly operate a world-class ammonia plant located in Freeport, Texas, U.S. Additionally, BASF produces ammonia in Ludwigshafen, Germany, and Antwerp, Belgium. Yara operates the world's largest ammonia system, with production facilities in Europe, the Americas, and Asia.
