World-class chemical project cancelled!

BASF and Yara International jointly announced on August 26 that they have decided to terminate development of a low-carbon ammonia project along the U.S. Gulf Coast.

In June 2023, BASF and Yara announced a joint study to develop and build a world-scale low-carbon blue ammonia production facility equipped with carbon capture. The new plant was designed for an annual capacity of 1.2–1.4 million tonnes, and was planned to capture and sequester approximately 95% of production emissions.

Explaining the decision to abandon the U.S. low-carbon ammonia project, the two companies said they will “focus 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 caught in a financing and investment squeeze, and policy uncertainty in Europe and the U.S. is directly impeding market development. Ambiguity around decisions by U.S. President Trump and the Senate on the 45V clean hydrogen production tax credit in the so-called “Big and Beautiful Act,” together with uncertainty about the impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will be implemented in phases starting January 1, 2026, have both delayed progress in the low-carbon ammonia market.

Although many projects were announced earlier, the market has recently shifted to a more cautious stance. Data from Fertecon, part of S&P Global Commodity Insights, show that 530 low-carbon ammonia projects are currently being tracked, but only a small number of clean ammonia projects have reached a final investment decision. Those projects that have reached FID amount to roughly 6.8 million tonnes per year of capacity in total — about 4.2 million t/yr of blue ammonia and 2.6 million t/yr of green ammonia — which is insignificant compared with conventional (grey) ammonia capacity.

BASF and Yara said the two companies remain long-term partners and will continue to jointly operate the world-scale ammonia plant located in Freeport, Texas. BASF also produces ammonia in Ludwigshafen, Germany, and in Antwerp, Belgium. Yara operates the world’s largest ammonia system and has production facilities in Europe, the Americas, and Asia.