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Resources for the FutureA Hydrogen Future? Exploring Pathways to

DecarbonizationMarch 2021

Linda DempseyVice President, Public Affairs

CF Industries

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CF Industries

• 10 million tons ammonia (NH3) produced annually

• 9 manufacturing complexes• 23 owned distribution facilities• 1.5 million tons of storage• 5 deep water docks able to load

ocean-going vessels• Additional shipping capacity via

pipeline, barge, rail, truck

A leading U.S. and global manufacturer of hydrogen and nitrogen products for fertilizer, emissions abatement, clean energy, and other industrial applications.

CF nitrogen complexCF owned distribution facility

NuStar Pipeline

Ammonia Export Capability

Canada

UK

United States

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CF Industries has numerous initiatives to achieve its goal of decarbonization by 2050

Ammonia as a fuel

Developing numerous carbon capture and sequestration (CCS) projects near CF production facilities

In discussions for supplying ammonia as marine fuel and for global power generation

Evaluating certified CO2 abatement projects within the existing network

Partnering with companies developing blue end-market applications/demand

Initial investment in green ammonia electrolysis project at Donaldsonville Nitrogen Complex

CO2sequestration

Green ammonia

manufacturing

CO2abatement

Ammonia for Hydrogen storage & transport

• Established carbon reduction targets

• New board committee: Environmental Sustainability and Community Committee

• Aligned executive compensation with ESG objectives

Committed to decarbonizing the world and the clean energy economy

*Source: IEA, Wood Mackenzie, Bernstein: Hydrogen Highway 2020: Ready for Prime Time Deloitte: Australian and Global Hydrogen Demand Growth Scenario Analysis, prepared for COAG Energy Council – National Hydrogen Strategy Taskforce, November 2019(1) Deloitte (DT) Scenarios: Energy of the Future –Hydrogen demand where all aspects of industry development are favorable for Hydrogen; Targeted Deployment – Countries adopt a targeted approach which aims to maximize economic value in the development of Hydrogen; (2) IRENA is the International Renewable Energy Agency; (3) Each short ton of ammonia contains 17.65% hydrogen by mass. 5.67 short tons of ammonia are required for each short ton of hydrogen

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Hydrogen is a critical domestic resource that can meet environmental and economic goals

• Decarbonized hydrogen is vital to achieving U.S. climate goals by: • Enabling large-scale, efficient renewable energy integration in U.S. power

grid• Decarbonizing sectors like industrial energy use, transportation and building

heating

• Hydrogen can be sourced, produced, and used in the United States, capturing the full economic and jobs benefits of the value chain for workers and industry

• Investments in hydrogen production, manufacturing, fueling, and other end uses can accelerate hydrogen-related job growth

• With policy support, a U.S. hydrogen economy could produce 700,000 jobs by 2030 and 3.4 million jobs by 2050 (Road Map to a U.S. Hydrogen Economy, Fuel Cell and Hydrogen Energy Association)

Environment

Economy

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Green and blue ammonia can accelerate the move to hydrogen

• Produced in more than 70 countries globally, 180 million tons of ammonia (NH3) are safely produced, stored, transported and consumed globally.

• Ammonia has a much higher boiling point (-28° F) and is an efficient storage and transport medium for hydrogen

• Ammonia’s energy density allows for more economic transport and storage of energy

• Global ammonia transportation and storage infrastructure already exists with a presence in 120 seaports globally

• Ammonia disassociation to create pure hydrogen is a mature technology

• Ammonia can also be used directly as a fuel in addition to a storage and transport medium for hydrogen

• Used directly for power generation in ammonia-fired turbines, engines, marine vessels and mixed with coal in power plants

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U.S. movement towards hydrogen is falling behind globallyHydrogen investment is growing mostly outside the United States . . .

as other governments move aggressively on government-wide approaches . . .

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with substantial government support.

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Time for the United States to Catch-Up in Policy and InvestmentDOE’s H2@Scale and other policies have made positive contributions, but . . .

Without policy changes, energy projections continue to see industrial reliance on natural gas and hydrocarbons.

U.S. lacks roadmap and policies and support comparable to other countries or U.S. renewables development.

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Decarbonization of energy-intensive trade-exposed (EITE) industries requires appropriate policies

• Fertilizer is one of several EITE industries; others include cement, chemicals, paper and steel.

• Policies to help EITE industries decarbonize must take into account global competitiveness dynamic:

• Leakage – policies need to prevent shifting emissions offshore

• Manufacturing and jobs – policies can be crafted to support workers and industry transition

Ensuring global competitiveness to support economic and environmental objectives

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Path forward National hydrogen roadmap

Engage globally on supply and demand approaches

Implement policies to promote both supply and demand for green and blue hydrogen

• Level the playing field for hydrogen technologies with other clean energy approaches

• Adopt incentivizing production and investment tax credits/other programs

• Enhance 45Q tax credit for carbon capture utilization and sequestration

• Develop needed infrastructure and regulatory approaches

• Support industry development of common standards

• Participate in global activities, e.g., International Maritime Organization (IMO)

• Create long-term certainty through adoption of a national hydrogen strategy

• Recognize hydrogen is a critical addition to a broader all-of-the-above clean energy strategy to meet aggressive U.S. climate goals

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For more information:www.cfindustries.com

ldempsey@cfindustries.com