The pair have signed a project framework agreement which will see JERA look into its ownership participation in the project and the offtake of around 500,000 tonnes of low-carbon ammonia per year to meet Japanese demand.

Expected to start production in 2028, the project at Exxon’s Baytown Complex near Houston is anticipated to have an annual production capacity of over one million tonnes of low-carbon ammonia.

However, the agreement comes after Exxon’s Chief Executive Darren Woods, said the project could be scrapped if it isn’t eligible for Inflation Reduction Act (IRA) incentives, according to Bloomberg.

At S&P Global’s CERAWeek, Woods said, “If we find the regulation gets heavily influenced by the lobbying and what I would say is people trying to pick winners and losers then we won’t move forward with it.”

A US Department of Energy (DOE) report suggested that most blue hydrogen would not meet the emissions criteria to be eligible for the lowest tier of the IRA’s 45V clean hydrogen production tax credit (PTC).

Read more: 45V emissions calculation rules could jeopardise blue hydrogen projects

The modelling for steam methane reforming with CCS estimated a lifecycle emissions intensity of 4.6kgCO2e/kg of hydrogen based on a 96.2% CO2 capture rate. Autothermal reforming (ATR) CCS was estimated at 5.7kgCO2e/kg of hydrogen at a 94.5% capture rate.

To be eligible for the lowest 45V PTC of $0.60/kg, hydrogen has to be produced with 2.5-4kg of CO2e/kg.

Having selected Topsoe’s SynCOR™ technology for the Baytown plant, Exxon expects to capture more than 98% of CO2 emissions. Final investment decision (FID) on the plant is expected later this year (2024).

Read more: ExxonMobil to install carbon capture technology at Baytown facility

Dan Ammann, President of ExxonMobil Low Carbon Solutions, said, “Building world-scale projects for new markets requires supply, demand and supporting regulation to all come together in sync. We appreciate JERA’s leadership in helping advance the hydrogen economy and see this agreement as an important catalyst.”

As one of Japan’s largest energy players, JERA hopes to progress decarbonisation by buying into the project, expanding its low-carbon hydrogen and ammonia supply chains.

Steven Winn, Senior Managing Executive Officer and Chief Global Strategist at JERA, said that by working with Exxon, JERA will contribute to “the transition to a global decarbonised society.”

In recent months, JERA has been exploring multiple clean hydrogen and ammonia supply chains with partners in Europe and the Middle East.