April 8 (Reuters) - CF Industries ( CF ) said on Tuesday

it has formed a joint venture with Japan's largest power

generator, JERA, and trading house Mitsui & Co ( MITSF ) to build

one of the world's largest low-carbon ammonia facilities for

about $4 billion.

WHY IS IT IMPORTANT

Former President Joe Biden passed the largest climate change

legislation in U.S. history in 2022, meant to kick off a boom in

American clean energy development including low-carbon emission

products.

Ammonia producer CF Industries ( CF ) said it is expected to

qualify for 45Q tax credit on sequestration of about 2.3 million

metric tons of carbon dioxide (CO2) per year.

According to JERA, the Japanese government is also expected

to provide price support for the difference between ammonia and

coal prices for 15 years.

Hydrogen and ammonia, which emit no CO2 when burned, are key

to Japan's energy security strategy as the country seeks to

reduce its reliance on traditional fossil fuels.

CONTEXT

The joint venture will construct an autothermal reforming

(ATR) ammonia production facility with a CO2 dehydration and

compression unit at CF Industries' ( CF ) Blue Point Complex in

Louisiana, to prepare captured CO2 for transportation and

sequestration.

Occidental's carbon capture firm, 1PointFive, will

provide transportation and sequestration of CO2 for the joint

venture.

Production of low-carbon ammonia is expected to begin in

2029.

BY THE NUMBERS

CF Industries ( CF ) will hold a 40% stake in the joint venture,

with JERA owning 35% and Mitsui ( MITSF ) the remaining 25%.

The facility will have an annual production capacity of

about 1.4 million tons, which would be the largest ammonia

production facility by nameplate capacity in the world, CF

Industries ( CF ) said.

Each partner will fund the project in proportion to their

stake and offtake ammonia accordingly.

JERA plans to offtake 490,000 tons and is considering

supplying it primarily to its Hekinan thermal power station in

central Japan, though specifics are yet to be finalised,

Executive Officer Yuichiro Kato told reporters.

"We expect ammonia demand from Europe and other regions for

power, industrial, and marine use to emerge at the time of

project launch," he said.

JERA, jointly owned by Tokyo Electric Power ( TKECF ) and

Chubu Electric Power ( CHUEF ), aims to start commercial

co-firing of 20% ammonia with coal at two Hekinan units by 2030,

requiring about 1 million tons of ammonia annually.

Mitsui ( MITSF ), Japan's biggest ammonia importer, also sees growing

demand in Europe as emissions regulations continue to tighten, a

company official said.