Expanding the emissions trading system coverage can increase the cost competitiveness of low-carbon ammonia in China

Transitioning to low-carbon ammonia is vital for China’s carbon-neutrality target; however, the economic viability of deployment remains uncertain. Here, we projected the economic and carbon costs of seven ammonia production technologies by combining a prospective life cycle assessment with the Global Change Assessment Model and a provincial-level power system optimization model. Using this integrated approach, we evaluated the impact of the emissions trading system on the levelized cost of ammonia across 30 provinces in China from 2018 to 2060. Our results indicated that without the emissions trading system or with it covering the electricity industry, renewable ammonia cannot achieve cost parity with conventional ammonia for almost all provinces until 2040. Expanding emissions trading system coverage to the life cycle of ammonia production would accelerate the timeline of cost parity by 6–37 years across all 30 provinces. Regionally, northwestern China stands out as the most cost-effective region for low-carbon ammonia production. Expanding the emission trading system coverage to the life cycle of ammonia production in China could accelerate cost parity between low carbon and conventional production by up to 37 years, according to an analysis based on life cycle assessment and the power system optimization model.