Green Ammonia Supply Chain Development: Strategic Alliances and Infrastructure Gaps

The global shipping industry is at a crossroads. With the International Maritime Organization's (IMO) 2050 net-zero emissions target looming, the race to decarbonize maritime transport has intensified. Green ammonia—a carbon-free fuel derived from renewable hydrogen and nitrogen—is emerging as a critical contender in this transition. But the path to adoption is fraught with challenges: underdeveloped infrastructure, high production costs, and regulatory uncertainty. For investors, the question is not whether green ammonia will matter, but how to position themselves to capitalize on its potential while navigating the gaps in its supply chain.

Strategic Alliances: L&T and ITOCHU Lead the Charge

Larsen & Toubro (L&T) and ITOCHU Corporation, two titans with complementary strengths, are spearheading green ammonia's ascent. L&T, the Indian engineering giant, has committed Rs 48,000 crore ($6 billion) to build six green ammonia plants at Kandla's Deendayal Port over the next decade. Each plant, with a 300,000 metric ton per annum (KTPA) capacity, will rely on alkaline electrolyzers developed in partnership with French firm McPhy Energy. This project is not just about scale—it's about creating a hub for green ammonia exports, leveraging India's renewable energy potential and strategic port infrastructure.

Meanwhile, ITOCHU, the Japanese trading giant, is diversifying its ammonia value chain. In April 2024, it signed a Memorandum of Understanding (MOU) with Amogy, a U.S. ammonia-to-power innovator, to retrofit its maritime fleet with ammonia-fueled propulsion systems. Amogy's technology cracks ammonia into hydrogen and nitrogen, which are then used in fuel cells to generate electricity—a breakthrough for ships seeking to meet IMO emissions standards. ITOCHU is also building a 5,000 m³ ammonia bunkering vessel with Sasaki Shipbuilding, slated for delivery in 2027, and has partnered with Hive Hydrogen South Africa to develop a green ammonia project in the Eastern Cape. These moves underscore ITOCHU's ambition to dominate the ammonia bunkering market, a sector projected to grow exponentially as ports worldwide scramble to meet decarbonization mandates.

Infrastructure Gaps: The Elephant in the Room

Despite these strides, the green ammonia supply chain remains riddled with gaps. Unlike liquefied natural gas (LNG), which benefits from a mature global bunkering network, ammonia requires specialized infrastructure. Ammonia's high toxicity and low energy density demand double-walled storage tanks, dedicated pipelines, and advanced safety protocols. As of 2025, only a handful of ammonia bunkering terminals exist globally, and port authorities are still grappling with how to adapt existing facilities.

The production side is equally challenging. Green ammonia's current cost—$885 to $1,050 per ton—is far above conventional heavy fuel oil (HFO), which hovers around $300 per ton. While costs are expected to decline as electrolyzer efficiency improves and renewable energy prices fall, achieving parity with fossil fuels may take until 2030–2035. This lag creates a window of risk for investors, as early adopters must navigate high capital expenditures and uncertain returns.

Policy Tailwinds: Governments Fuel the Fire

The good news is that policymakers are accelerating the transition. The European Union's Delegated Act on Renewable Fuels of Non-Biological Origin (RFNBO) now includes green ammonia, offering book-and-claim certification and long-term offtake guarantees. In the U.S., the Inflation Reduction Act's Clean Fuel Production Credit provides a $3 per gallon tax credit for ammonia produced with low-carbon electricity. India's National Green Hydrogen Mission and Japan's Green Innovation Fund further sweeten the deal with subsidies and grants for ammonia co-firing in coal plants.

These policies are not just symbolic—they're reshaping market dynamics. By 2033, the global green ammonia market is projected to grow at a 72.81% CAGR, reaching $73.7 billion. The maritime sector alone could account for a significant share, as shipping lines face mounting pressure to comply with IMO regulations and avoid carbon penalties.

Investment Opportunities and Risks

For investors, the green ammonia sector offers a mix of high-reward opportunities and structural risks. The most compelling plays are in infrastructure development and technology integration. Companies like McPhy Energy, which supplies electrolyzers to L&T, and Amogy, which is pioneering ammonia-to-power systems, are positioned to benefit from the sector's growth. Similarly, firms involved in ammonia bunkering—such as ITOCHU's partners in Singapore and Spain—stand to gain as ports invest in ammonia-ready terminals.

However, caution is warranted. The sector's reliance on government subsidies and regulatory frameworks means that policy shifts could disrupt momentum. Additionally, the high capital intensity of green ammonia projects requires careful due diligence. Investors should prioritize firms with diversified revenue streams, strong partnerships, and clear cost-reduction pathways.

Conclusion: A High-Stakes Bet on the Future

Green ammonia is not a silver bullet for decarbonization, but it is a critical piece of the puzzle. The strategic alliances between L&T, ITOCHU, and their partners are laying the groundwork for a new energy paradigm—one where ammonia replaces fossil fuels in shipping and industry. Yet, the sector's success hinges on bridging infrastructure gaps and aligning policy incentives with market realities.

For investors, the key is to balance optimism with pragmatism. While the long-term outlook is bullish, the short-term risks are real. Those who can navigate the complexities of supply chain development, regulatory alignment, and technological innovation will be well-positioned to reap the rewards of this green revolution. As the world races toward net-zero, green ammonia is not just a fuel—it's a test of our ability to build a sustainable future.