Ammonia as Fuel for Internal Combustion Engines in Agriculture by Ivoryorange

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									The Business Case for Ammonia as Fuel in

        Agricultural Operations




                  27 March 2009




                  Submitted by:


          Matthew Zipchen, B.Com, M.P.P.
                 Élan Consulting
              362 Waterloo Crescent
              Saskatoon, SK S7H 4H6
Executive Summary

This report is the result of reviewing the current literature and case studies to
determine the feasibility of using ammonia as a fuel in agricultural operations and
cooperatives.

Ammonia has been used as fuel many times in the past. During World War II, busses in
Brussels, Belgium were running on ammonia. Since then there have been cars, buses,
tractors and even jets powered by ammonia.

The research revealed that there are many benefits to using ammonia as a fuel. The
first is that there are zero carbon dioxide emissions and at least 25% less nitrogen oxide
emissions when burnt in internal combustion engines.

The second advantage is that it is widely produced at prices that are less than or
comparable to gasoline and diesel. If gasoline were $0.90 per litre, the comparable
price of ammonia would be $619 per tonne. Diesel is similar where at $0.80 per litre the
equivalent price of ammonia is $470 per tonne. The current (March 2009) ammonia
price of $250 per tonne translates to $0.37 per litre of gasoline and $0.43 per litre for
diesel.

The third advantage of using ammonia as a fuel is that it is relatively safe compared to
gasoline or hydrogen. It is liquid at room temperature and moderate pressures, it is
non-flammable, and it is fairly biologically safe in the case of spills because it quickly
converts to ammonium and dissipates in the environment.

Fourthly, there already exists an extensive distribution infrastructure. There is
significant experience using ammonia in industry and farming, with safe handling and
storage procedures already in place.

Finally, while not the case today, ammonia can be produced renewably and will likely
be produced this way in the next few years.

While ammonia fuel is very promising for future agricultural operations and
cooperatives, there are still two major barriers to its wide spread adoption.

Firstly, while the conversion of internal combustion engines to ammonia is fairly
straightforward, the products to do so are still in their infancy and have yet to be
massed produced. However initial prototypes are promising.
In October of 2007, Hydrofuel Inc. announced the launch of one of the first aftermarket
ammonia fuel vehicle conversion systems in the world. They estimated that the
conversion costs would be $6,000 - $8,000, including installation.

To be on the conservative side, an all-in conversion cost of $10,000 was used to
calculate the return on investment, assuming an ammonia price of $250/tonne and an
engine life of 10 years, as seen in the following table:

            Annual     Price /   Annual     Equivalent   Annual      Present
                                                                                  ROI
            use (L)      L        costs     NH3 costs    savings    Value (8%)
     Gas     6,534     $0.90     $5,881       $2,374      $3,507      $25,412     254%
   Diesel   10,334     $0.80     $8,267       $4,398      $3,870      $28,042     280%


The annual savings and the resulting return on investment increases as the price of
gasoline and diesel increase and/or as the price of ammonia decreases.

These positive numbers make a strong business case for converting to ammonia fuel
once the technology is more widely available. This may also be of interest to innovative
cooperatives that want to be early adopters of the technology.

The second major barrier to market adoption of ammonia fuel is the lack of stable
production at a stable price. As discussed in another report, ammonia prices have been
highly uncertain and unstable. The ammonia prices seen in 2007 and 2008 would make
its use as a fuel uneconomical. While a dual fuel system would allow the farmer to move
to either fuel depending of the prices, the best option would be to produce ammonia
renewably, thereby ensuring a stable price.
Table of Contents


Introduction ................................................................................................................ 5


Ammonia as Fuel ........................................................................................................ 6

   Advantages ............................................................................................................. 6

       Emission Reductions ............................................................................................ 7
       Fuel Costs ............................................................................................................ 7
       Safe Transportation Fuel...................................................................................... 8
       Easy Engine Conversion ....................................................................................... 8
       Existing Production and Distribution Infrastructure .............................................. 9
       Can Be Produced Renewably................................................................................ 9

   Disadvantages....................................................................................................... 10

       Low Flame Speed .............................................................................................. 10
       Caustic .............................................................................................................. 10
       Current Production Based on Fossil Fuels ........................................................... 10
       Availability of Engine Conversion Technologies .................................................. 11

   Summary .............................................................................................................. 11


Technology Providers & Industry Landscape .............................................................. 12


Financial Analysis ...................................................................................................... 14


Conclusions .............................................................................................................. 16
Introduction

Industrial agriculture greatly depends on liquid fuels, currently gasoline and diesel. With
production of light crude having reached it peak, the world oil prices are expected to
rapidly rise and we are moving to unconventional sources like the tar sands and deep-
sea drilling. Combined the urgent need to reduce greenhouse gas emissions, this poses
a significant problem for agriculture.

The key problem in transitioning to a new low-carbon energy system is the power
source for individual transportation. Stationary power generation has many options,
but in the case of transportation the options for replacing gasoline and diesel fuel are
severely limited. Electric vehicles have a limited range and battery technology needs to
improve in cost and toxicity. Liquid fuels can be produced from coal although the
investment cost is high and this approach generates significant carbon dioxide
emissions. Plant-based liquid fuels such as ethanol and bio-diesel offer the benefit of
being carbon neutral when consumed, yet their lifecycle impacts are unclear when
fossil fuels are used in farming, transportation, and processing these bio-fuels and there
are of course land use issues with the diversion of food crops to make fuel.

Hydrogen is also being touted as the answer, and in a way it is, however there are
currently many barriers and issues with this technology. The economics of high-
pressure storage aren’t great, nor is the driving range that it provides. There are also
the safety issues in the case of car accidents, and adequate hydrogen infrastructure is
still decades away.

In this context, there is renewed interest in using ammonia as a fuel because it is the
only liquid fuel that can be produced from air, water and electricity, and it has no more
serious issues as an alternative fuel compared to petrol or diesel, including: toxicity,
flammability, use in engines, pollution, energy density, and available infrastructure.

This study gives an overview of the uses, advantages and disadvantages of using
ammonia as a fuel. It gives a summary of the current technologies available for using
ammonia as a fuel and then it presents a basic financial analysis to evaluate the
economic case for converting to ammonia fuel.
Ammonia as Fuel

Ammonia has a history of being used as a fuel. During World War II is was used to
power buses in Belgium as seen in Figure 1.

Since then, liquid ammonia has been used as a fuel in a
variety of applications. It was used to power the X-15
rocket-powered aircraft, which was part of the X-series of
experimental aircraft in North America. The X-15 set
speed and altitude records in the early 1960s, reaching
the edge of outer space and returning with data that was
used in aircraft and spacecraft design. It currently holds
the world record for the fastest speed ever reached by a
manned aircraft.                                                   Figure 1 - Ammonia-fueled bus,
                                                               Belgium, 1943 - Ammonia Fuel Network
                                   In 1981 a Canadian
                                   company converted a 1981 Chevrolet Impala to operate
                                   using ammonia as fuel. That company has re-emerged
                                   as a technology provider, and can be seen in the section
                                   Technology Providers &
                                   Industry Landscape.

Figure 2 - X-15 Jet powered by ammonia


In the early 1980’s, the National Research Council of
Canada completed a report on ammonia fuel               Figure 3 - University of Michigan
technology and found it to be viable. It recommended    ammonia demonstration vehicle
that the Canadian Government consider it as an option,
however both the Canadian and Saskatchewan governments ignored this and focused
on oil and gas development instead.

The following subsections summarize the advantages and disadvantages of using
ammonia as a fuel.


Advantages
There are many critical benefits to using ammonia as a fuel:

    1. Significant emissions reductions,

    2. Ammonia prices are lower or comparable to gasoline and diesel,
   3. On-board storage is relatively safe and economical,

   4. The conversion of vehicles to use ammonia fuel is relatively straightforward,

   5. The distribution infrastructure already exists, and

   6. It can be produced renewably.

These advantages are significant. Even though the industry is fairly new, the economic
and environmental benefits are compelling and are driving a renewed interest in
ammonia as a fuel.


Emission Reductions

Using ammonia as a fuel has the potential to achieve very significant emission
reductions in the transportation sector. Along with hydrogen, ammonia is the only fuel
that has the potential to not produce greenhouse gases (GHGs) on combustion.

       Hydrogen combustion: 2H2 + O2  2H2O (water vapor)
       Ammonia combustion: 4NH 3 + 3O2  2N2 + 6H2O (nitrogen and water vapor)

Ammonia has no carbon so there are no carbon emissions. The concern would be if
there were increased nitrogen oxide (NOx) emissions, which is a greenhouse gas and
contributes to acid rain. However real world trials have found that ammonia fuel results
in 75% less NOx emissions than gasoline, when burned in an internal combustion
engine and combined with a catalytic converter, as cars are today.

Currently ammonia is mainly produced using natural gas, so there are lifecycle
emissions to be accounted for, however it is possible to produce ammonia using
electricity, water and air.

Fuel Costs

Comparing ammonia energy content shows that at current prices (March 2009) it is less
expensive than gasoline and diesel. The following table shows that energy content of a
variety of fuels:
                                                                                 1
                          Table 1 - Properties of fuels in their liquid states
                                      ENERGY CONTENT
                                    Density           Low heating value              H2 Density
                 Fuel                 Kg/L             MJ/kg            MJ/L         Kg H2/m3
              ammonia                  0.76             22.5            17.1            136
                diesel                 0.84             45.8            38.3            126
              methane                  0.47             55.5            25.8            116
               gasoline                0.70             46.7            32.7            110
               propane                 0.51             48.9            24.8            106
               ethanol                 0.78             29.7            23.2            102
              methanol                 0.79             22.7            17.9            98


Currently, ammonia is approximately $250 per tonne. On an equal energy basis (you
need twice as much ammonia to get the same amount of energy as gasoline), this is
equivalent to $0.37 /L of gasoline and $0.43 /L for diesel. Ammonia prices would have to
rise to $450-$600 /t to be equal to today’s gas and diesel prices of $0.90 and $0.80 per
litre.


Safe Transportation Fuel

One of the key issues with hydrogen as a transportation is that it needs to be stored at
high pressures. This is expensive and causes safety concerns in the case of an accident.

Ammonia on the other hand is a liquid fuel at ambient temperatures and moderate
pressures (-125 psi), which means that it is readily obtained and handled in liquid form
without the need for expensive and complicated refrigeration technology.2

In accident scenarios, ammonia is not flammable and is lighter than air so will dissipate
into the atmosphere. 3


Easy Engine Conversion

Ammonia will power diesel and spark-ignited internal combustion engines (ICEs), direct
ammonia fuel cells, and even combustion turbines. There are no large development
costs because ammoniated fuel will power an engine or burner with very little
modification. and the price of the resulting vehicle is not significantly increased. 4



1
  Ammonia Fuel Network – www.ammoniafuelnetwork.org
2
  http://www.apolloenergysystems.com/_pdfs/Portland%20Paper%20B.pdf
3
  Ammonia Fuel Network – www.ammoniafuelnetwork.org
4
  The Ammonia Economy – Vito Agosta. www.memagazine.org
In 2007, a Canadian company called Hydrofuels Inc announced the world’s first
ammonia-fuel conversion systems for gasoline engines. They expect it to cost $6,000 to
$8,000, including installation. 5


Existing Production and Distribution Infrastructure

Ammonia is produced throughout the world in large
volume, approximately 170 million tonnes a year, and is
used for agriculture, refrigeration and a variety of other
applications. 6 By volume, it is the second most widely
produced chemical in the world. Canada produces between
4 and 5 million tonnes a year. 7


Farmers and industry have been using ammonia for over
sixty years and so procedures for its safe handling and
storage have been developed in every country.

Unlike hydrogen, facilities for storage and transport by
barges, trucks and pipelines from producer to ultimate
consumer are available throughout the world. 8

Can Be Produced Renewably

Most in ammonia in the world is produced with natural gas, which is non-renewable and
creates carbon emissions. However, ammonia can be produced cleanly from biomass,
renewable energy sources and nuclear power, using nitrogen from the air.

New technologies are emerging that will make ammonia from electrolysis (electricity,
water, and air) cost competitive with natural gas.

Ammonia can also be recovered from agricultural animal waste.




5
  www.gregvezina.com
6
  International Fertilizer Industry Association - www.fertilizer.org
7
  Natural Resources Canada - http://oee.nrcan.gc.ca/industrial/technical-
info/benchmarking/ammonia/introduction.cfm?attr=24
8
  http://www.apolloenergysystems.com/_pdfs/Portland%20Paper%20B.pdf
Disadvantages
There are only four disadvantages to ammonia as a fuel, however all of them can be
overcome:

      1.   Low flame speed,
      2.   Caustic,
      3.   Currently not being produced renewably,
      4.   Technologies have yet to be mass-produced.


Low Flame Speed

By itself, ammonia has a low flame speed and so is not suitable for use in high-speed
engines. However, “ammonia can be doped by environmentally friendly chemical
additives, and thus be compatible in high-speed engines.” 9 Ammonia is already
compatible in other energy devices, such as low-speed engines and fuel cells.

Caustic

Direct contact with liquefied gas can cause frostbite and corrosive burns. Symptoms of
mild frostbite include numbness, prickling and itching in the affected area. Symptoms
of more severe frostbite include a burning sensation and stiffness of the affected area.
Corrosive burns of the skin have resulted from direct contact with a jet of liquefied
ammonia. 10

In the case of a spill, liquefied ammonia will likely become gaseous and dissipate in the
air. Fortunately ammonia gas had a strong odour and can easily be detected by smell.

Current Production Based on Fossil Fuels

The majority of the world’s ammonia is produced using natural gas, with a little being
produced with coal, and even less being produced with renewable energy. More
ammonia needs to be produced renewably in order to convert to ammonia fuel on a
grand scale. Currently electrolytic ammonia is only economical in areas with very cheap
electricity. However, new technologies are coming to market to address this and it is
likely that renewable ammonia will be cost competitive within a few years.




9
    The Ammonia Economy – Vito Agosta. www.memagazine.org
10
     http://www.ccohs.ca/oshanswers/chemicals/chem_profiles/ammonia/health_ammonia.html
Availability of Engine Conversion Technologies

While the conversion of internal combustion engines to run on ammonia fuel is
relatively straight forward, there are not yet and mass-produced out-of-the box
products that do this. The research revealed that there are two companies that are
operating in this space, but that their products are just beginning to come to market.
Refer to Section Technology Providers & Industry Landscape for more details.

Even though the economics and environmental performance are compelling, the lack
of commercialized technology is a major barrier to full market adoption of this
technology.



Summary
Ammonia has been used as a fuel many times since humans started producing it
industrially. It has proven not only feasible as a fuel to replace gasoline and diesel, but
offers many advantages over them, especially regarding emissions and costs.

The disadvantages are few and can be overcome. The major barriers to full market
adoption are that (1) the technology is just now getting to market and its diffusion will
take some time, and (2) current ammonia production relies on fossil fuels, but new
technologies will soon enable cost-effective renewable ammonia production.

The next section reviews the current technologies that are available (or will be soon) for
using ammonia fuel.
Technology Providers & Industry Landscape

Ammonia fuel technology is new and the products have yet to be full commercialized, let alone mass-produced. However, there are
a few prominent companies that have begun to sell ammonia fuel systems and are described in the following table.

    Name            Type                                      Description                                         Website        Key Contact
                               Privately owned Canadian company with subsidiaries in the US and
                                Australia. Hydrofuel® is a registered Trademark of the Canadian
                                Alternative Energy Corporation.
                                                                                                                                 Greg Vezina
                               Leading developer of NH3 fuel and energy technologies. Has filed 20 US
                 Engine                                                                                                          info@hydrofue
                                Provisional Patent Applications on ammonia fuel, V2G (vehicle to grid),        www.hydrofueln
Hydrofuel Inc.   conversion                                                                                                      lnh3.com
                                electrical power generation technologies, ammonia synthesis and                h3.com
                 systems                                                                                                         (905) 712-
                                carbon capture, municipal, human, agricultural waste and global
                                warming reduction technologies                                                                   3023
                               Oct. 2007 - announced the world’s first aftermarket ammonia fuel
                                vehicle conversion system.
                               Designs, manufactures and distributes alternative-fueled internal
                                combustion engines and power generation equipment for distributed
                                power, agricultural, industrial, airport ground support, off-road vehicular,
                                business and home applications
Hydrogen         Engines,      All HEC engines and power generation equipment are capable of
                                running on a multitude of fuels, including, hydrogen, gasoline, propane,       www.hydrogene
Engine           irrigation                                                                                                      515-295-3178
                                natural gas and ethanol.                                                       nginecenter.com
Center, Inc.     pumps
                               HEC trades on the Bulletin Board under the symbol "HYEG.OB."
                                Principal offices are located in Algona, Iowa
                               June 5, 2007 – HEC demonstrated its proprietary ammonia/hydrogen-
                                fueled Oxx Power™ engine.
                               Prototype truck developed at the University of Michigan, which then
                 Engine and     spawned the company NH3 Car.                                                   www.nh3car.co
NH3 Car
                 car design                                                                                    m
                               The test vehicle is a Gasoline and Ammonia "Duel Fuel System(TM)“.
      Name         Type                                        Description                                       Website         Key Contact
                                Developer of advanced alkali fuel cells - Apollo Fuel Cell
                                A new ammonia-based "Propulsion Fuel" has been developed together
                                 with an Ammonia Cracker. This Propulsion Fuel is fed into the Cracker
                Fuel cells       which then breaks down the ammonia (NH3) into hydrogen for the fuel
                for vehicles     cell and harmless nitrogen.
Apollo Energy   and home-       Prototypes will be made at the Company’s new pilot plant for use in         http://www.electr
Systems         based            Electric Propulsion Systems for electric vehicles and in Apollo™ Power      icauto.com/         954.969.7755
                power            Plants for supplying on-site power to homes independent of the national
                plants           electric power grid.
                                Products to be manufactured by AES Sub-Contractors or Licensees
                                 include: Propulsion Fuel, Ammonia Cracker Aqua-Ammonia De-watering
                                 units & Hydrocarbon Reformers, Fuel Tanks, Fuel Pumps.
                                Acumentrics Canada Ltd., is partnering with Natural Resources               http://www.acum
                                                                                                                                 613-545-1111
Accumetrics     Fuel cell        Canada's CANMET Energy Technology Centre to investigate the use of          entrics.com/inde
                                                                                                                                 (Kingston ON)
                                 ammonia as a fuel for Acumentrics' solid oxide fuel cells (SOFCs).          x.htm


                Electric       ZAP is manufacturer of electric cars. ZAP and Apollo intend to use the fuel   http://www.zapw     (707) 525-
Zap
                cars           cell powered Smart car in a coast-to-coast demonstration program. (2004)      orld.com            8658
Financial Analysis

This section examines the return on investment to a consumer who converts their
gasoline vehicle to run on ammonia. It was assumed that Hydrofuels’s technology was
used, but since they are not yet commercially available the costs are estimated based
on what was found in the research.

First, the fuels are compared based on energy content, as previously presented and
seen in Table 2.

                                Table 2 - Energy content of ammonia, diesel and gasoline
                                                    Energy Content
                                              Density           Low heating value              H2 Density
                       Fuel                     Kg/L           MJ/kg            MJ/L            Kg H2/m3
                    ammonia                     0.76            22.5            17.1               136
                       diesel                   0.84            45.8            38.3               126
                    gasoline                    0.70            46.7            32.7               110



Energy content is used because at an equal volume these fuels have very different
amounts of energy. One litre of ammonia cannot do the same amount of work as one
litre of gasoline.

The next step is to determine the number of litres of gasoline and diesel used in a year.
Table 3 shows the total amount of fuel used in agriculture in Canada in 2006.
                                                                                       11
                                   Table 3 - Annual fuel use in Canadian agriculture
                              Fuel             Amount Used in Canadian Agriculture 2006
                        Gasoline (L)                           1,498,700,000
                         Diesel (L)                            2,370,300,000


These numbers were then divided by 229,373, which is the total number of farms in
Canada in 2006. 12 The result is the average amount of fuel use per Canadian farm. The
following table shows this, along with the equivalent amount of ammonia that would
be needed to replace these fuels.

                           Table 4 - Average fuel use per farm and ammonia equiviliant
                                     Fuel use/farm (L)            Energy (MJ)               NH3 Eq. (t)
              Gasoline                     6,534                    213,662                    9.50
              Diesel                       10,334                    395,792                  17.59


11
     The Canadian Federation of Agriculture -
12
     Statistics Canada - http://www.statcan.gc.ca/ca-ra2006/articles/finpicture-portrait-eng.htm
The next table shows the total yearly fuel savings for converting to ammonia fuel,
assuming a price of $250/t for ammonia and today’s prices for gasoline, diesel (March
2009).

                          Table 5 - Annual savings after converting to ammonia fuel
                            Price/L       Total Cost         NH3 Cost          Annual Savings
        Gas (/L)             $0.90          $5,881             $2,374                  $3,507
        Diesel (/L)          $0.80          $8,267             $4,398                  $3,870



Finally, assuming that the total cost of converting to ammonia fuel is $10,000 and the
life of the vehicle is 10 years, then a simple return on investment can be calculated by
finding the present value of the annual fuel savings over the life of the vehicle and
dividing this by the initial investment, as seen in Table 6.

                        Table 6 - Return on investment for converting to ammonia fuel
                                  Annual Savings        Present Value (8%)              ROI
             Gas (/L)                  $3,507                  $25,412                254.1%
             Diesel (/L)               $3,870                  $28,042                280.4%


The return on investment is quite significant, however this high return is dependent on
the prices of each of the fuels. It is informative to look at what price ammonia needs to
be just to break even on the conversion. Assuming the same prices for gasoline and
diesel, then in the case of gasoline, the breakeven ammonia price is about $620 per
tonne. In the case of diesel, the breakeven ammonia price is $470 per tonne. However,
these breakeven prices assume that gasoline and diesel will remain at current levels for
the next ten years.
Conclusions

The research has shown that there is a strong economic and environmental business
case to be made for converting to ammonia for fuel, especially in agricultural
operations where distribution infrastructure is already in place and industry actors are
familiar with ammonia handling procedures.

Significant emission reductions can also be achieved by switching to ammonia fuel,
even more so when the ammonia is produced from renewable resources.

Even more compelling is the financial case to switch to ammonia fuel, or at least
convert to a dual system. Returns of over two hundred percent are hard to ignore, as
seen the following table.


                            Annual Savings     Present Value (8%)      ROI
            Gas (/L)            $3,507              $25,412           254.1%
            Diesel (/L)         $3,870              $28,042          280.4%



However, there are still two key market barriers for the wide adoption of this
technology. The first is that the engine conversion technology is not yet widely
available and the second is that ammonia is still mainly produced using fossil fuels. This
means that there is a lack of stable production at a stable price. As discussed in the
previous section, current ammonia prices have been highly uncertain and unstable. The
ammonia prices seen in 2007 and 2008 would make its use as a fuel uneconomical.
While a dual fuel system would allow the farmer to move to either fuel depending of
the prices, the best option would be to produce ammonia renewably.

In conclusion, it is recommended that the Saskatchewan and Canadian Cooperative
Associations monitor the development of this technology and as these barriers
diminish, be prepared to facilitate the transition to ammonia fuel in agricultural
operations.

								
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