The government aims to convert 10% of coal energy into ammonia by 2027
China's strategy for co-firing renewable ammonia is expected to significantly boost demand for ammonia transportation, benefiting the market for very large ammonia carriers (VLAC). As part of its 2024-2027 economic action plan, China intends to upgrade coal-fired power plants to co-fire at least 10% ammonia by 2027, requiring approximately 200 million tons of ammonia-based fuel annually.
A potential upheaval for the VLAC markets
To support this transition, the Chinese government is speeding up the funding and approval of large-scale ammonia production projects, with several renewable ammonia plants already announced. This increase in production will boost ammonia trade volumes, thereby enhancing the demand for maritime transport and strengthening the long-term fundamentals for VLACs. As China focuses on decarbonization, VLACs will play a crucial role in facilitating the global ammonia supply chain.
Source: Ammonia Energy Association