How war and climate crisis are reshaping the global fertilizer industry

Although fertilizers are essential for global food production, they also contribute to greenhouse gas emissions. The war in Ukraine has caused supply chain disruptions and price increases. How can fertilizer production become more sustainable and resilient to geopolitical crises?

In an article in the journal One Earth, a team from the Research Institute for Sustainability (RIFS) at the GFZ Helmholtz Centre for Geosciences analyzes this question.

“In 2022, Russia’s war of aggression against Ukraine brought about an increase in fertilizer prices and a disruption of supply chains, jeopardizing food security in the Global South. This war and other geopolitical crises pose a threat to the goal of securing the supply of fertilizers. Green hydrogen has a central role to play here: It offers the possibility of simultaneously decarbonizing fertilizer production and achieving independence from Russian exports,” explains lead author Rainer Quitzow from the RIFS in Potsdam.

A range of coordinated measures is needed in order to solve the intertwined problems.

The growing influence of China

The researchers identify three key factors that exert a significant influence on the fertilizer market.

First, the supply structure has changed substantially in recent years, mainly due to China’s growing influence. The country has emerged as the largest global producer of nitrogen and phosphate fertilizers and controls a significant share of the global mining of phosphate rock for fertilizer production. The Chinese government employs political measures to steer supply and prices, with one of the aims being to ensure the domestic availability of fertilizers.

Secondly, geopolitical competition has been amplified by the war in Ukraine and by growing food insecurity in the Global South. The war has interrupted export routes via the Black Sea and resulted in sharp increases in fertilizer prices. Thus, prices have remained unpredictable. In particular, this affects countries in Latin America and Africa that are dependent on fertilizer imports. But it also presents the EU with new challenges in securing fertilizer production.

Reduced emissions through new technologies and greater nutrient use efficiency

A third driver for changes in the fertilizer landscape is the imperative of decarbonization. The basis for synthetic nitrogen-fertilizers is ammonia, which is produced using nitrogen and hydrogen in an energy-intensive process. Unless it is made with green hydrogen from renewable energy sources, the production requires large amounts of fossil-fuel based resources. However, the authors estimate that the costs of producing so-called green ammonia with renewable hydrogen are currently more than twice those of conventional processes. Concepts are therefore needed to finance the transition costs.

In addition to technological solutions, decarbonizing the sector also requires reducing synthetic fertilizer use.

“Sustainable fertilizer management practices must be promoted to address the twin challenges of climate change and disruptions of bio-geochemical flows in the earth system,” explains Quitzow. Nutrient recycling, i.e., the recovery of unused nutrients from agricultural waste products, for example, can also help reduce the dependence on fertilizer imports.

Similiar challenges for other supply chains

The transformation of the fertilizer sector is already underway. With the goal of alleviating fertilizer supply shortages, the United States has launched a “Global Fertilizer Challenge,” which the EU has joined. Brazil has launched a national fertilizer strategy, while Russia is seeking to strengthen its influence in Africa through the donation of fertilizers.

These developments, the researchers argue, have implications that extend beyond the fertilizer sector.

“They also bring to the fore more fundamental questions of how commodities and their supply chains are being reshaped against the background of new geopolitical realities,” according to Quitzow.

The developments following Russia’s invasion of Ukraine have underlined the political significance of the fertilizer sector. Its embeddedness in the nexus of food, climate change, energy and mineral resources, the environment and security, and also its use as a foreign policy tool to pursue “soft-power” goals, warrant closer examination.