Yara and Enbridge plan $2.9 billion ammonia plant in Texas

the norwegian yara and the Canadian Enbridge plans to invest up to $2.9 billion to build a low-carbon blue ammonia production plant in Texas, the companies said on Friday.

Unlike green ammonia, which is derived from renewable energy, blue ammonia is produced from natural gas, with the by-product carbon dioxide (CO2) captured and stored.

The plant, which will be Yara’s largest, will be built at the Enbridge Ingleside Energy Center near Corpus Christi, Texas, with production start planned for 2027-28, the companies said.

Yara, which already has a majority stake in a facility in Freeport, further along the Gulf Coast, is the latest European company to announce a major investment in the U.S.

Although the project was planned long before last year’s US Inflation Reduction Act (IRA), the increase in tax credits associated with carbon storage in that act made it even more attractive, the Norwegian company said.

Yara also intends to take advantage of low gas prices in the US, said Magnus Krogh Ankarstrand, president of Yara Clean Ammonia.

“We focused on the United States for two reasons: one is low energy prices, of course, and the other is that carbon capture is accessible at an attractive cost,” he told Reuters.

Fertilizer maker Yara intends to buy all of the plant’s output and supply low-carbon ammonia as a feedstock in its global production system, including Europein addition to serving new markets for clean ammonia, such as fuel for ships.

The plant will be able to supply 1.2 million to 1.4 million tonnes of low-carbon ammonia per year.

It is expected that around 95% of the CO2 generated in the production process will be captured and transported to permanent geological storage.

The Oslo-listed company last year cut much of its European production, citing high energy costs, and currently imports around 1 million tonnes of ammonia into Europe a year.