Boosting the cost competitiveness of low-carbon ammonia by expanding emission trading system coverage in China

Abstract

Transitioning to low-carbon ammonia is vital for China’s carbon neutrality goal; however, the economic viability of large-scale deployment remains uncertain. Here, we combined a prospective life-cycle assessment with an integrated assessment model to evaluate the impact of emission trading system (ETS) on the levelized cost of ammonia (LCOA) for six production technologies across 30 provinces in China between 2018 and 2060. Our results indicate that in the absence of ETS or with ETS coverage limited to the electricity grid, photovoltaic hydrogen-derived ammonia emerges as the only cost-competitive low-carbon option, projected to achieve cost parity with conventional ammonia by 2050 in 25 provinces. Expanding ETS coverage to the life cycle of ammonia production would accelerate the timeline of cost parity by 8-37 years across all 30 provinces. Northwestern China, which benefits from the abundant renewable resources or favorable fossil energy costs, stands out as the most cost-effective region.