The planned collaboration includes both blue and green ammonia, terms which denote the different production methods while yielding the same output and releasing no CO2 emissions into the atmosphere.
Ammonia is called green when produced from renewable electricity while the blue version is made with fossil fuel and a subsequent carbon capture and storage process (CCS).
The collaboration would give Yara, one of the world's top fertiliser makers, a footprint in the strategically important Japanese market, Chief Executive Svein Tore Holsether said in a statement.
JERA, a thermal power and fuel joint venture between Tokyo Electric Power Company Holdings and Chubu Electric Power, said last October that it aims to use greener fuels such as ammonia and hydrogen at its thermal plants to reach a 2050 target of becoming carbon neutral.
It plans to start a pilot programme to use ammonia as a fuel with coal in mixed combustion at its Hekinan thermal power station in central Japan by 2030 and hopes to achieve 20% use of ammonia at its coal-fired power plants by 2035.
(Reporting by Victoria Klesty; additional reporting by Yuka Obayashi; editing by Terje Solsvik)