By Hanh Nguyen, VP Global Sustainability at OCI Global
We rely on nitrogen fertilizers to produce the crops that feed our growing population. Those fertilizers might not be immediately associated with fossil fuels, but they are produced using ammonia, today’s production of which relies heavily on natural gas as a feedstock.
As the agricultural industry faces the twin challenges of climate change and food security, the need to continue producing nitrogen fertilizers, while at the same time decarbonizing them, is paramount.
Decarbonizing global ammonia production
Today, around 70% of the world’s ammonia supply goes into agriculture via the production of nitrogen fertilizers and about half the world’s food production relies on nitrogen fertilizers. This means that decarbonizing global ammonia production could have a huge impact on decarbonizing the agricultural industry, which is responsible for around a quarter of global greenhouse gas emissions.
Ammonia has been produced at an industrial scale using the Haber-Bosch process – a method of artificially converting atmospheric nitrogen into ammonia through a reaction with hydrogen and a catalyst – since the start of the 20th century. While the process’ discovery has enabled the supply of fertilizers that has underpinned the world’s population growth, it is an energy intensive process that is heavily reliant on hydrogen- usually from natural gas – and is estimated to account for 1% of annual global carbon dioxide emissions.
To decarbonize global fertilizer production and therefore the world’s food supply, the decarbonization of the industrial process behind making ammonia is crucial.
This can be achieved by either using renewable feedstocks for the process itself, or by capturing and sequestering the carbon dioxide emitted during the process, or a combination of both. Two key examples are green ammonia, which OCI produces from hydrogen from electrolysis based on renewable electricity achieving a carbon intensity reduction of at least 70% compared to industry average, and blue ammonia, which can be produced with low carbon hydrogen from natural gas with carbon capture and storage (CCS), which also achieves a carbon intensity reduction of at least 70% compared to industry average on a cradle to gate scope.
Tackling both ends of the ammonia chain
The key challenge facing the scaling up of production of lower carbon and renewable ammonia is demand. Without clear demand, it is hard for businesses to make the investments needed to develop new projects and infrastructure.
Lower carbon and renewable products including ammonia are more expensive than their fossil fuel counterparts. This is driven by a number of factors including new technology and infrastructure costs, but as a result, we can’t expect demand to be created voluntarily. That’s where regulation needs to come in.
We need regulations at both ends of the value chain – first at an industry level to drive demand for lower carbon and renewable fertilizers. We’ve seen evidence that the industries that have made progress in their decarbonization journeys are those who have been clearly mandated to do so. The fuels market is a good example of this, with first road fuels though the EU’s Renewable Energy Directive and US’s Renewable Fuel Standard and now marine fuels with the EU’s ETS, launching in 2024, and the FuelEU Maritime directive, launching in 2025.
The agriculture industry needs clear regulation, and following the example of the fuels market could be the answer. A “fertilizer blending mandate”, similar to blending mandates in the fuel industry, such as the Renewable Energy Directive in the EU and Renewable Fuel Standards in the US, could be crucial in kickstarting progress.
The European Commission has recently announced an initiative to introduce an emissions trading system (ETS) to farming, which is a step in the right direction to enable uptake of sustainable fertilizers, and thereby provides the demand support needed to scale up renewable ammonia and hydrogen production.
At a production level, by incentivizing the production of lower carbon and renewable ammonia, regulation can help businesses to invest in infrastructure. We’ve seen this in practice through the US’s Inflation Reduction Act (IRA) which has allowed companies like OCI to accelerate decarbonization projects thanks to the tax credits system supporting carbon sequestration and clean hydrogen use. One example is our blue ammonia plant in Texas, where our final investment was accelerated directly because of the IRA, and we’ve also recently announced an offtake agreement with New Fortress Energy for green hydrogen, which we can use to produce green ammonia, as well as green methanol.
Calling for coordinated global effort
While progress has been made, there’s much more than needs to be done. Cohesive and effective global regulation is the missing part of the puzzle. We need regulators to step up and provide the frameworks needed to support the agricultural industry in its decarbonization mission.
In the meantime, it’s the responsibility of incumbents like OCI to lead the way, whether that’s by scaling up supply, developing transport and logistics infrastructure, or through new partnerships across the agricultural value chain.
In the last year alone we’ve announced new partnerships to decarbonize food systems including with and Agravis Raiffeisen AG and Dossche Mills, we’ve continued to invest in our existing infrastructure, tripling our throughput at our ammonia import terminal in the Port of Rotterdam and progressing ammonia projects all over the world including our Egypt Green site where we produced our first tons of green ammonia as Fertiglobe, our strategic venture with ADNOC.
We can’t move the dial alone. Climate change and food security are global challenges that impact billions of people around the world, and we need others across the industry to join us in committing to decarbonizing the world’s food supply and reaching a cleaner future sooner.
A version of this article was first published in the Nov/Dec 2023 edition of Fertilizer Focus
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