Europe must push for low CO₂ bread, says fertilizer group boss

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Europe needs to move faster to put low-carbon bread on the table if it is to meet its emissions targets, according to one of the world’s biggest producers of crop nutrients.

Fertilizers, derived from fossil fuels and used to help produce wheat, account for almost half of a loaf of bread’s emissions, a figure that could be slightly reduced, Yara International chief Svein Tore Holsether said. However, producers needed financial help in a developing field where profitability was hard to come by, he added.

Nitrogen-based crop nutrients, which are key to plant growth, are obtained 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 manure, fertilizers were among the main sources of greenhouse gas emissions from the agricultural sector, accounting for 5% of the global total.

While Yara continued with its own green fertilizer initiatives, “we need to get support from regulators with incentives so that there is a primary advantage to drive that transition,” Holsether said. Governments “fail to take it seriously,” he added.

The industry challenge was to produce crop nutrients from green ammonia made from clean hydrogen, replacing fossil fuels. Yara is stepping up its environmental efforts with a new plant that produces clean hydrogen and ammonia.

The Norwegian crop nutrients group has also agreed the world’s largest clean fertilizer purchase deal with UK-listed green crop nutrients start-up Atome.

Decarbonized ammonia is a “game changer” for the ecological transition not only in agriculture, but also in shipping and energy. However, development is lagging in Europe as most players have adopted a “wait and see” attitude, Holsether said.

Yara opened Europe’s largest green hydrogen and ammonia plant in the southern Norwegian town of Porsgrunn in June. In July, it announced a partnership with food giant PepsiCo to provide decarbonized fertilizers to European farmers. Since the beginning of the year, the company has also signed purchase agreements with renewable fertilizer producers in India, Egypt and Oman.

Ammonia is also used as a refrigerant gas, for purifying water supplies, and in the manufacture of plastics, explosives, pharmaceuticals, and textiles.

“The beauty of ammonia,” Holsether said, is that it can be used in fertilizer production, and then as demand increases from other sectors such as shipping, Yara “can turn more into that.”

Green or decarbonized ammonia is obtained by electrolysis of water using renewable energy sources. For example, Atome, which is due to start production from 2027, uses hydroelectric power from the Itaipu hydroelectric dam in Paraguay, 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 abandoned, and less than a third are expected to be operational by the end of the decade.

“Everyone 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 have set ambitious goals, have not been able to find customers willing to pay for green fertilizers at higher prices. Where government subsidies are available, the money has often been slow to arrive.

The profitability of green manures also depends on the general market prices of crop nutrients. While the price of fertilizer rose after Russia’s invasion of Ukraine, the market fell, leaving many green fertilizer start-ups struggling.

The complexity and costs of producing green ammonia “should not be underestimated,” Holsether said.

Compared to the US, which offers cash incentives to promote the transition, Europe has implemented punitive regulations, he said. In Europe “you pay emission taxes if you don’t (transition), whereas 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 domestic production of green hydrogen and ammonia less financially viable, a 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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