CF Industries Holdings, Inc. (CF.US) and a Japanese company have established a joint venture to invest $4 billion in building a low-carbon ammonia plant.

CF Industries Holdings, Inc. (CF.US) announced on Tuesday that it has formed a joint venture with Japan's largest power company, JERA, and trading giant Mitsubishi Corporation to invest approximately $4 billion in constructing one of the world's largest low-carbon ammonia production facilities. Former U.S. President Biden passed the largest climate bill in U.S. history in 2022 to promote the development of clean energy fuels, including low-carbon emitting products by Clean Energy Fuels Corp. Ammonia producer CF Industries stated that the project will sequester around 2.3 million tons of carbon dioxide (CO2) annually and is expected to qualify for the 45Q tax credits. According to JERA, the Japanese government is expected to provide a 15-year ammonia-coal price difference subsidy. Hydrogen and ammonia do not emit carbon dioxide when burned, making them crucial to Japan's energy security strategy as the country seeks to reduce its reliance on traditional fossil fuels. The joint venture will build a self-heating reformer (ATR) ammonia production facility equipped with CO2 dehydration and compression units at CF Industries' Blue Point complex in Louisiana, preparing for the transportation and storage of captured CO2. Occidental Petroleum Corporation's carbon capture company, 1PointFive, will provide CO2 transportation and storage services for the joint venture. Low-carbon ammonia production is expected to begin in 2029. CF Industries will hold a 40% stake in the joint venture, JERA will hold 35%, and Mitsubishi Corporation will hold the remaining 25%. CF Industries stated that the facility will have an annual production capacity of approximately 1.4 million tons, making it the largest ammonia production facility globally based on rated capacity. Each partner will provide funding for the project according to their ownership stake and receive ammonia products accordingly. Yuichiro Kato, Executive Director of JERA, stated that the company plans to purchase 490,000 tons of ammonia, primarily for supplying the Binan Thermal Power Station in the central part of the country, but specific details are yet to be finalized. "We anticipate a demand for ammonia for power generation, industry, and maritime use in Europe and other regions by the time the project is operational," he said. JERA, jointly owned by Tokyo Electric Power Company and Chubu Electric Power Company, plans to achieve commercial operation of 20% ammonia-coal co-combustion in two units at the Binan Power Plant by 2030, requiring approximately 1 million tons of ammonia annually. As Japan's largest ammonia importer, Mitsubishi Corporation officials stated that demand in the European market is growing continuously as emission regulations become stricter.