The domestic fertilizer sector is crucial for food security and for enhancing a resilient and sustainable food systems in Europe and beyond. The industry is committed to play its part in Europe’s objective of becoming climate-neutral by 2050. By transitioning to more sustainable, efficient fertilizer production using renewable energy and recycling nutrients we will get us closer to a sustainable food chain.
Antoine Hoxha is Director General of Fertilizers Europe.
From 2005 to 2020, the EU fertilizers industry already reduced its scope 1 and 2 emissions by 49%, mainly due to N₂O abatement in nitric acid. Such changes have placed European Industry as the lowest emitter of the global sector. To go beyond this level of efficiency and achieving the Green Deal objectives, a drastic change in the production process and huge investments are required together with a combination of policy solutions and access to affordable, low-carbon and renewable energy.
Ambitious Milestones Ahead
The European fertilizer industry has outlined clear milestones:
By 2026, all Fertilizers member companies will adopt a master plan for decarbonisation.
By 2040, a commitment to reduce scope 1 and 2 GHG emissions by 70% compared to 2020 levels.
By 2050, the vision is for European fertilizer production to be climate-neutral.
The European fertilizer industry collaborated with Guidehouse consultancy to develop a decarbonisation plan for the industry, outlining the journey to net-zero and the steps needed to turn this vision into reality.
Exploring Pathways to Decarbonisation
The fertilizer industry decarbonisation Roadmap explores two main transitional pathways for the sector in Europe. While diverse in their approach, both these pathways converge on the common goal of eliminating CO₂ emissions by 2050.
The Technology Neutral Pathway: This approach envisions decarbonisation using various available technologies: electrolysis, carbon capture and utilisation (CCU), carbon capture and storage (CCS), and bio-methane. The choice of technology is tailored to regional infrastructure and energy resource availability. Employing the technologies from across what many call the “Hydrogen Rainbow” depending on geographical location is the goal of this pathway.
The Green Hydrogen Pathway: This pathway relies exclusively on using renewable fuels of non-biological origin (RFNBO) to replace hydrogen derived from natural gas. Its success hinges deeply on the availability and cost-effectiveness of renewable energy sources and the necessary infrastructure for producing and distributing green hydrogen, hydrogen produced from the electrolysis of water using renewable energy for power.
Challenges and Considerations
The industry’s transition towards decarbonisation is not without its challenges. As important national assets, fertilizer plants are strategically located across EU Member States based on factors such as the availability of natural gas, raw materials, logistics infrastructure, and proximity to agricultural markets. To ensure a successful transition, there must be a dependable supply of competitively priced low-carbon and renewable electricity, biomethane, hydrogen, and CO₂ infrastructure.
The choice between these decarbonisation scenarios will depend on individual plant needs and the varying availability and cost of energy carriers across Europe. The implementation of a sustainable, climate-neutral nitrogen fertilizer economy will be region-specific and product-specific, necessitating adaptable policies which consider the different circumstances of sectoral players across the continent.
The Investment Landscape
Decarbonising the industry demands significant investment. As an example, if all hydrogen used in ammonia production was produced with offshore wind-driven electrolysers this would entail an investment of €64 billion for the wind parks, €17 billion for the electrolysers, and €3 billion for a hydrogen pipeline network. This greatly overshadows the current average annual sectoral investment of €1.2 billion. Furthermore, the industry’s lead time for such investments can extend to seven years or more.
Future Markets and Opportunities
As a producer and consumer of roughly 40% of the total European hydrogen, the fertilizer industry has a unique role to play in the EU Green Deal and the development of a hydrogen economy in Europe. The potential for low-carbon and renewable ammonia extends beyond purely fertilizers for agriculture. Ammonia, a hydrogen-dense molecule, opens up possibilities for decarbonisation by replacing fossil fuels in applications such as power and heat generation, for high temperature heat in industrial process, as a transport vector for hydrogen and as an alternative shipping fuel. Indeed, the IEA Net Zero Roadmap forecasts that the share of ammonia as a shipping fuel will reach 44% by 2050 (Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach – Analysis – IEA). As such a strategic product for agriculture and beyond, it is essential that the policy landscape ensures the continued production of ammonia in Europe.
Prerequisites for Success
While the production of renewable and low-carbon fertilizers is attainable and promising, several challenges must be addressed.
A supportive regulatory and funding framework should envisage:
Access to Low-Carbon and Renewable Energy and Feedstock: Affordable green and low-carbon energy access is essential to bridge the competitive gap between Europe and competing regions. Europe should continue to expand its renewable energy capabilities, with attention to regional variations on efficiency.
Demand for Climate-Neutral Fertilizers: The demand for climate-neutral EU-produced fertilizers must be supported through mechanisms like a labelling system accompanied by a mandatory purchasing target for all EU nitrogen fertilizer purchasers.
Targeted Investment: Measures to ‘de-risk’ early investments are required to close the cost gap between low-carbon and renewable routes and current production processes including accelerating the procedures for public funding. For example, a carbon contract for difference, where governments cover the difference in low-carbon and renewable and the traditional cost of production for a limited time, would de-risk investments.
Prevention of Unfair Competition: The timely and effective development and implementation of the Carbon Border Adjustment Mechanism (CBAM) will be crucial to prevent unfair competitive advantages for non-EU producers importing to Europe. However, there is currently no agreement on an export solution. Concrete safeguards will be required to ensure the continuous competitiveness of the European export-oriented production.
The journey of the European fertilizer industry toward a climate-neutral future is ambitious but necessary to keep the targets of the Green Deal, reaching net-zero emissions by 2050. With the appropriate legislative framework, investment landscape, and collaborative efforts, this vision can become a reality, ensuring Europe’s food security and strategic autonomy for generations to come.
For a deeper dive into the European fertilizer industry’s journey towards climate-neutrality, please visit: https://www.fertilizerseurope.com/decarbonising-fertilizers-by-2050/
Join a debate
On 14 November 2023, the event entitled “Decarbonising European Fertilizer Production – Pathways to Sustainable Food” will be an occasion to unveil the European Fertilizer Industry’s Roadmap to Climate Neutrality. To learn more about the event and to register visit our website.