The Dual Ammonia Challenge: Securing Food Supply and Reducing GHG Emission
Ammonia sits at the intersection of global food security and the energy transition. Today, it underpins nearly 50% of global food production as the core input for fertilizers.
By 2050, with the world population projected to reach 9.7 billion—over half residing in Asia—ammonia will become even more critical, particularly for Asian markets. Beyond agriculture, new demand drivers are emerging: maritime fuel and power generation alone could add 174–336 MTPA by 2050. Taken together, these dynamics position ammonia as a strategic growth market, with global demand expected to expand by 112–197% over the next three decades.
Despite its strategic importance, ammonia production today carries a significant climate and energy footprint—accounting for around 1.3% of global CO₂ emissions and 2.0% of final energy consumption. This impact is largely driven by the continued reliance on fossil-based hydrogen and power inputs under the prevailing grey ammonia production model. As demand accelerates, decarbonizing ammonia is no longer optional—it is becoming a critical lever for achieving both energy transition and industrial competitiveness.
This presents the industry with a dual challenge: securing the food supply while simultaneously decarbonizing production.
Clean Ammonia Development and Its Growing Demand
To address the dual challenge, Asia’s “early mover” nations, such as Japan and South Korea, have tightened hydrogen import rules, treating hydrogen as primary feedstock for ammonia. Singapore is pursuing a similar path and aims to finalize its official standards by 2025. Collectively, these three nations alone are expected to demand more than 100 MTPA of clean ammonia by 2050.
As clean ammonia demand accelerates, producers are reorienting toward three strategic pathways: Blue, Green, and Pink Ammonia. Blue ammonia leverages CCUS to decarbonize fossil-based hydrogen; Green ammonia delivers near-zero emissions through renewable-powered electrolysis; while Pink ammonia applies the same model using nuclear energy—collectively redefining the future cost and carbon curve of ammonia production.
Indonesia Aiming to Become a Regional Clean Ammonia Hub Leader
Indonesia is well-positioned to capitalize on this shift. Indonesia currently produces approximately 8 MTPA of ammonia, accounting for 3–4% of global production. Pupuk Indonesia—the nation’s largest industry player—is planning at least seven blue ammonia projects. Their roadmap shows strong ambition, aiming to reach a production capacity of 6.5 MTPA for Blue Ammonia and 4 MTPA for Green Ammonia by 2050. Furthermore, they aim to become a major exporter, allocating 2 MTPA of each clean ammonia type specifically for international markets.
Core Challenges and Lesson Learned
Despite the massive potential, Indonesia’s transition to a clean ammonia hub faces significant regulatory hurdles, primarily due to the absence of standardized frameworks. Key gaps include undefined Carbon Intensity (CI) thresholds, a lack of “demand pull” mechanisms, and immature CCUS regulations. To accelerate growth, Indonesia can fast-track progress by adopting proven global playbooks; Japan’s Clean Hydrogen Act for clear standards, Korea’s Clean Hydrogen Portfolio Standards to catalyse demand, and Canada’s robust CCUS frameworks to de-risk investment.
Beyond regulation, economic viability remains a major barrier. Low-carbon ammonia carries a hefty price tag compared to traditional grey ammonia; green ammonia can be two to three times more expensive, while blue ammonia commands a significant premium, estimated at roughly $390 per ton versus $297 for grey. Bridging this cost gap through policy support and technological innovation is essential for widespread adoption and export competitiveness.
Call to Action: Decarbonizing for a Sustainable Future
Indonesia stands at a crossroads. With its vast natural resources and strategic location, it has the potential to power Asia’s transition to clean energy while ensuring global food security. However, capitalizing this potential is vital.
To unlock large-scale investment, the acceleration of a credible regulatory backbone—particularly on carbon-intensity thresholds and CCUS deployment—is urgently required. In parallel, decisive technology adoption is needed to compress the green premium and advance cost competitiveness across the value chain.
The transition from grey to green ammonia is no longer optional; it has become a strategic imperative. Through coordinated action, Indonesia can be positioned as Asia’s leading clean ammonia hub—strengthening long-term food security while advancing climate resilience for future generations.
