Tucked deep in the mammoth One Big Beautiful Bill (OBBB) that President Trump signed into law on July 4th is a provision that threatens the planned expansion of the ammonia industry. To see how, let’s review the pre-OBBB ammonia landscape.
ORVI’s March 2025 report on the ammonia industry showed that if all the proposed facilities were to be built, US ammonia production would more than quadruple in less than 10 years, from 18 million metric tons of capacity to 80 million.
Proposed ammonia projects would more than quadruple US production
Historically, producing ammonia has been a carbon intensive process. Ammonia is produced through the Haber-Basch process by combining hydrogen, nitrogen, and heat. The standard process is shown below by the gray pathway, in which hydrogen is produced from natural gas. By adding carbon capture and sequestration (CCS) to this process, producers claim they can dramatically reduce emissions, though research by the Institute for Energy Economics and Financial Analysis shows that current CCS technology falls far short of the 95% capture rate targeted by industry and policymakers. About 90% of the proposed new ammonia capacity would be “blue” ammonia, made from “blue” hydrogen.
Alternatively, ammonia can be produced from “green” hydrogen, shown below by the green pathway. In this pathway, hydrogen is produced through electrolysis powered by renewable energy, and the nitrogen and heat is also produced by renewable energy powered electricity. Less than 10% of the proposed new ammonia capacity would be “green” ammonia.
Financing for this buildout was in large part dependent on access to clean hydrogen production tax credits passed in the 2022 Inflation Reduction Act (IRA), especially the 45V tax credit. To qualify for the 45V tax credit for clean hydrogen production under the IRA, facilities had to have begun construction before January 1, 2033, and their entire production process would need to emit less than 4 kilograms of carbon dioxide per kilogram of hydrogen produced.
The OBBB changed how facilities can qualify for the 45V tax credit in a very simple way: it moved up by five years the date by which construction must begin, from January 1, 2033 to January 1, 2028 (OBBB Section 70511).
With a single act of Congress, companies went from having more than 7 years to navigate the various state, federal, and local review and permitting processes to less than 2.5 years.
There will likely be two primary impacts of this change. First, companies may try to speed through the review process to begin construction on their facilities before the January 1, 2028 deadline. A rushed review process could heighten safety risks for frontline communities if regulators do not have sufficient time to properly review the impacts of proposed facilities. At the same time, companies may abandon projects deemed unlikely to pass through the review processes in time.
Second, there may be a shift from “green” ammonia facilities to “blue” facilities. This is because the OBBB did not change the timeline to qualify for the 45Q tax credit for carbon sequestration. The 45Q tax credit is available to “blue” ammonia facilities but not “green” facilities because “green” facilities do not emit any carbon that they could then sequester. Still, the 45Q tax credit offers reduced financial incentives for the least-carbon intensive facilities compared to the 45V tax credit (facilities have to choose either the 45V or 45Q tax credit). This difference could shift the economic and carbon-sequestration calculus in favor of increased carbon emissions for some “blue” projects that had planned on the more generous 45V credits.
In ORVI’s March report, we identified 37 proposed ammonia facilities: 26 “blue” facilities, 8 “green” facilities, and 4 “gray” facilities (one project is double counted as it would produce both “green” and “blue” ammonia). According to ORVI’s July analysis of the Oil and Gas Watch database, 32 of those facilities remain in the permitting process. The other five facilities are shown below. Two have met the 45V tax credit construction deadline: the Donaldsonville Green Ammonia project is operational, and the Woodside Beaumont Clean Ammonia Complex is under construction. Of the last three facilities, the Geismar Clean Ammonia Project has been canceled, and the Blue Bayou Ammonia project and the CF Industries Blue Ammonia Plant are on hold, meaning they are unlikely to be permitted in time to meet the 2028 deadline.
The full impact of the OBBB on the ammonia industry will not be known for several years. But this initial analysis suggests that what looked to be a huge buildout of ammonia facilities just two months ago may turn out to have been a mirage.