The EU is taking steps to boost the production and use of renewable hydrogen, a low-carbon alternative to natural gas, in the fertiliser sector and beyond, according to Christian Holzleitner, Head of Unit for Low Carbon Solutions at DG CLIMA.
Holzleitner delivered the keynote address at the recent Euractiv Media Partnership with Fertilizers Europe. The “Decarbonising fertiliser production: Pathways to sustainable food” event brought together industry experts to chart a holistic path towards net zero.
Euractiv spoke with Holzleitner during Hydrogen Week, just as European Commission President Ursula von der Leyen announced that the Commission is launching a second auction for green hydrogen projects with €2.2 billion in spring 2023.
The first European Hydrogen Bank auction, with €800 million in pilot tender bids, is now underway and offers a fixed premium to lower the hydrogen price. Von der Leyen said the aim is to create “a one-stop-shop under the European Hydrogen Bank” and directly link hydrogen producers and consumers.
In addition to von der Leyen’s announcement, Holzleitner said the EU is also launching a new call under the Innovation Fund, with a budget of €4 billion, to fund projects along the entire hydrogen value chain, including the manufacturing of electrolysers and the production of hydrogen.
He said Europe is strong on carbon capture, utilisation, and storage (CCUS), and the EU has already funded the first two ammonia projects in Austria and Norway under the Innovation Fund – ammonia being a key component of fertilisers, with a growing market potential.
Noting that the EU is also working on a Commission Communication on Industrial Carbon Management, Holzleitner spoke about setting a storage target (NZIA) and a framework for negative emissions in industry and agriculture while promoting a more sustainable use of fertilisers – in part, by supporting the development and adoption of nitrification inhibitors, which reduce nitrous oxide emissions; and by providing better services and incentives for farmers, such as certification of emissions reductions and carbon removals.
He said Europe aims to create markets for high-value products, such as low-carbon and renewable fertilisers, and to mobilise the willingness of consumers to pay for sustainable food.
Holzleitner highlighted a new study on how to price agricultural emissions and reward climate action in the agri-food value chain, which provides insights on how the agriculture and land use sectors can reduce greenhouse gas emissions and contribute to the EU’s climate neutrality goal by 2050.
The study will inform the policy debate on the EU’s climate ambition for 2040. The Commission is scheduled to adopt a Communication on the 2040 ambition in Q1 2024, but the Climate Law proposal will be for the next Commission.
Farmers and food
“In terms of food, we are currently a net exporter,” said Holzleitner, “It’s one of our strong competitive industries. We are exporting many high-value products… the drinks sector… champagne, for example, but also like cheese, fruit juices, you could also think about perfumes, which have had their fair share of agricultural inputs.”
Holzleitner said he’s not concerned about the prospects for agriculture: “There’s a lot of demand for land. For me, it’s more asking, ‘How do we want to use agricultural land in the future?’ If meat demand is decreasing, for example, as we’ve seen – the demand for certain animal meat is decreasing at about two, three, 4% per year – what do we do with this land on which we currently produce the feed for the animals?”
“There could be options to use the land to produce feedstock for our chemical industry, producing fibres and other products, which could be an attractive proposition for farmers compared to an international market for meat with highly fluctuating prices. Essentially, it’s a discussion about the product mix.”
Asked which levers exist to incentivise carbon reduction, Holzleitner points to the potential for carbon removal certification and a system like Emissions Trading Scheme (ETS) pricing, which could deliver improved payments to farmers.
Fertiliser companies, he says, could come to be viewed more as service providers to farmers, advising farmers on how to use products effectively and profitably. For more innovative farmers and fertiliser companies, there could be a reward system where they gain “extra points” if they use fertiliser produced from renewable hydrogen and enzymes.
On the question of using public funds to bring about the net-zero transition, Holzleitner is unequivocally in the “yes” camp.
He said farmers should be supported in their transition to more sustainable management practices, including for transitional risks, such as a possible dip in soil fertility for a limited period.
“So, Europe’s agricultural policy could finance that transition period like all low-carbon farming. However, would Europe finance it publicly, or do the big food processors take their share of the responsibility and help finance that transition?” he asked.