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Europe needs to move faster in putting low carbon bread on the table, if it wants to meet its emission targets, according to one of the world’s largest crop nutrient producers.
Fertilisers, derived from fossil fuels and used to help produce wheat, account for nearly half of the emissions of a loaf, a figure that could easily be cut, said the head of Yara International, Svein Tore Holsether. However manufacturers needed financial help in a nascent area where profitability was hard to come by, he added.
Nitrogen-based crop nutrients that are key to plant growth are made from ammonia, which in turn is derived from mixing nitrogen from the air with hydrogen from fossil fuels such as natural gas or coal. Along with farm manure, fertilisers have been among the leading sources of the agricultural sector’s greenhouse gas emissions, accounting for 5 per cent of the global total.
While Yara was pushing ahead with its own green fertiliser initiatives, “we need to get support from regulators with incentives so that there’s a first mover advantage to drive this transition,” said Holsether. Governments “fail to take it seriously”, he added.
The industry challenge has been to produce crop nutrients from green ammonia made from clean hydrogen, replacing fossil fuels. Yara is stepping up its environmental drive with a new plant making clean hydrogen and ammonia.
The Norwegian crop nutrient group has also agreed the world’s largest clean fertiliser purchase deal with UK-listed green crop nutrient start-up Atome.
Decarbonised ammonia is a “game changer” for the green transition not only in agriculture, but also shipping and energy. However, development is lagging behind in Europe because most players have taken a “sit back and wait and see” stance, said Holsether.
Yara opened Europe’s largest green hydrogen and ammonia plant in Norway’s southern town of Porsgrunn in June. In July it announced a partnership with food giant PepsiCo to provide European farmers with decarbonised fertiliser. Since the start of the year, the company has also signed purchase agreements with renewable fertiliser producers in India, Egypt and Oman.
Ammonia is also used as a refrigerant gas, for purification of water supplies, and in the manufacturing of plastics, explosives, pharmaceuticals and textiles.
“The beauty of ammonia,” said Holsether, is that it can be used in fertiliser production and then, as demand grows from other sectors, such as shipping, Yara “can shift more into that”.
Green or decarbonised ammonia is made by the electrolysis of water using renewable energy sources. For example, Atome, which is due to start producing from 2027, uses hydropower from Paraguay’s Itaipu hydroelectric dam, the second-largest hydroelectric dam in the world.
There are more than 1,500 green hydrogen projects that have been announced around the world, but many of them are now being shelved with less than a third expected to be operating by the end of the decade.
“Everybody in the hydrogen industry is over promising,” warned Atome chief executive Olivier Mussat.
Producing clean hydrogen using renewable energy is more expensive, and many projects, which set out with ambitious targets, have failed to find customers willing to pay for higher priced green fertilisers. Where government subsidies are available, the cash has often been slow to come through.
The profitability for green fertilisers also depends on prices of the general crop nutrients market. While the price of fertilisers surged after Russia’s invasion of Ukraine, the market has fallen back, leaving many green fertiliser start-ups struggling.
The complexity and costs of producing green ammonia “should not be underestimated”, said Holsether.
Compared with the US which is offering cash incentives to drive forward the transition, Europe has put in place punitive regulations, he said. In Europe “you pay emission taxes if you don’t [transition], while in the US you get paid if you do, so it’s a very different mindset”, he said.
Europe also has an “energy disadvantage”, Holsether added, referring to the higher cost of renewable energy in the region, which makes producing green hydrogen and ammonia domestically less financially viable, he said. “In Europe, we failed to invest in renewable energy ahead of time, we were not prepared for the climate crisis.”
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