Ammonia and CBAM: What South African Producers Need to Know

Ammonia and CBAM: The South African Perspective

Ammonia (CN 2814.10 — anhydrous; CN 2814.20 — aqueous solution) is directly in CBAM scope as a precursor to nitrogen fertilisers. South Africa's ammonia production is dominated by Sasol, which produces ammonia as a by-product of its coal-to-chemicals (CTL) operations at Secunda.

Sasol's Ammonia Production

Sasol's Secunda operations produce ammonia from coal-derived syngas using the Haber-Bosch process. This production route is highly carbon-intensive:

• Feedstock: Coal-derived syngas (CO + H₂)
• Process emissions: CO₂ from coal gasification
• Energy source: Coal-fired utilities at Secunda
• Estimated embedded emissions: ~4–6 tCO₂/t ammonia

The EU default emission value for ammonia under CBAM is approximately 2.85 tCO₂/t (fertilisers category, with 10% markup). Sasol's coal-based ammonia has actual emissions significantly above this default.

The Green Ammonia Opportunity

The global ammonia industry is undergoing a fundamental transition from "grey" (fossil fuel-based) to "green" (renewable hydrogen-based) production. South Africa has significant potential for green ammonia production due to its world-class wind and solar resources.

Green ammonia production route:

1. Renewable electricity (wind/solar) → Electrolysis → Green hydrogen
2. Green hydrogen + Nitrogen (from air separation) → Haber-Bosch → Green ammonia
3. Green ammonia → Fertiliser production (urea, ammonium nitrate, etc.)

Green ammonia has embedded emissions of approximately 0.1–0.5 tCO₂/t — dramatically below both the EU default (2.85 tCO₂/t) and conventional production (4–6 tCO₂/t).

South African Green Ammonia Projects

Several large-scale green ammonia projects are under development in South Africa:

• HyDeal South Africa — proposed 3 GW renewable hydrogen project in the Northern Cape
• Hive Energy — proposed green hydrogen hub at Coega IDZ, Eastern Cape
• Enertrag — wind-based green hydrogen project in the Eastern Cape

These projects target EU export markets and would benefit from CBAM's preference for low-carbon production.

CBAM Implications for SA Ammonia Exporters

For any South African ammonia exported to the EU:

1. The CBAM liability at the EU default (2.85 tCO₂/t) and €65/tCO₂ is €185.25/t
2. For Sasol's coal-based ammonia (actual ~5 tCO₂/t), using actual emissions would result in higher CBAM liability
3. Green ammonia producers could use actual verified emissions to demonstrate near-zero CBAM liability

Use the CBAM Calculator [blocked] to model your specific ammonia CBAM exposure.