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Nitrogen+Syngas 363 Jan-Feb 2020

A new focus


Editorial

A new focus

“The way to tackle this is via more efficient use of nitrogen fertilizer”

At the time of writing this editorial, the World Economic Forum was having its usual annual meeting in the Swiss resort of Davos. Prior to this year’s meeting, as usual the WEF had produced its annual Global Risks Report to serve as a talking point for the meeting. While some of the risks were as usual political and economic, from proliferation of weapons of mass destruction and the “retreat from multilateralism” to growing inequalities of wealth in the developed world and “domestic political polarisation”, for the first time in the organisation’s history, the top five global risks in the report ranked by likeliness – which looks at potential global pitfalls over the next 10 years – were environmental. Perhaps with the pictures of Australia’s bush fire season fresh in their minds, the 750 experts ranked extreme weather events as the most likely, but climate change, biodiversity loss and sustainability in agriculture all ranked highly.

The nitrogen and syngas industries of course have a role to play in helping to tackle these challenges facing humanity in the 21st century. On the production side, the rapidity of advances in the generation of electricity from renewable sources, and in particular the falling cost of electrolysis, is leading to serious consideration of ammonia production from hydrogen generated by water electrolysis or gasified biomass and even, as we reported in our previous issue, the potential use of ammonia or methanol as ‘energy carriers’ from large solar or wind arrays to point of need/use. In this issue, several advances in low carbon methanol production are discussed, from thyssenkrupp’s electrolysis-based process to BASF’s ‘carbon free’ methanol process, recycling CO2 back into methanol formation. As described on page 41, Johnson Matthey has also, via the process scheme it developed for the proposed NWIW methanol plant in Washington State, designed ways of incorporating renewable electricity into conventional production, lowering emissions from turbine trains and other mechanical parts of the plant.

But production is only part of the issue; on the consumption side, nitrate leaching into water courses and over-application of fertilizer are also major issues that need to be addressed, and excess nitrogen applied to fields is also a source of nitrous oxide emissions to air. In the UK, agriculture was responsible for 69% of all N2 O emissions in 2017. In March last year, during the closing plenary session of the fourth meeting of the UN Environment Assembly (UNEA), delegates adopted a resolution calling for “a coordinated and collaborative approach to sustainable nitrogen management”. The resolution recognised “the multiple pollution threats resulting from anthropogenic reactive nitrogen, with adverse effects on the terrestrial, freshwater and marine environments and contributing to air pollution and greenhouse gas emissions”, and highlighted ways to better manage nitrogen. UNEP followed this up in October 2019 with the so-called “Colombo declaration”, which pledged to reduce nitrogen waste by 50% by 2030.

The way to tackle this is via more efficient use of nitrogen fertilizer, and nutrient use efficiency (NUE) has become an area of focus for farming and industry bodies worldwide. The International Fertilizer Industry Association (IFA) has also moved on this topic, and in December staged a session on nutrient management at last year’s UN COP25 Climate Change Conference. This year, in early February, IFA is launching a Global Stewardship Conference with the backing of its agriculture, communications and public affairs, and safety health and environmental committees.

The advancement of these issues onto the agenda at Davos is a harbinger that these things are being taken seriously at the highest levels (with perhaps one or two notable exceptions), and surely a sign of things to come for the nitrogen and syngas industries as we move into the third decade of the 21st century.

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Protectionism casts a shadow over the new year

The start of a new year is a traditional time to take stock of the previous 12 months and look ahead to the next. In this regard, CRU’s most recent annual client survey, conducted at the end of December last year, makes interesting reading as to your own concerns for 2025 and beyond. There were numerous responses across commodity and financial sectors, and broadly based worldwide, if slightly skewed towards Europe and North America, but across all of these the key worry for the coming year clearly emerged as trade tariffs and protectionism. This is perhaps unsurprising, given incoming US president Donald Trump’s avowed intent to impose blanket 20% tariffs on all goods entering the US, and up to 60% on China. While most clients did not think tariffs would rise as much as some of Trump’s rhetoric might suggest, most expect rises of 5-10% across the board, and Asian businesses are most concerned. CRU’s most recent position paper on US tariffs highlights some of the internal political and legal challenges in implementing these, but does acknowledge that some rises will be inevitable, and may well produce the kind of reciprocal measures last seen in the previous Trump administration’s trade war with China and the EU in 2018.

Tariff uncertainties cloud the picture

Nitrogen+Syngas went to press just a few days before Donald Trump’s swearing-in as the next president of the United States. While it is sometimes difficult to sort the truth from the hyperbole in his public pronouncements, nevertheless, if taken at face value, they would seem to indicate that we may be in for a turbulent four years in commodity markets in particular. While he is an avowed military non-interventionist, on the economic policy side he has emerged as a firm believer in the power of tariffs to alter markets in the favour of the US, and has promised 20% tariffs on all goods entering the US, potentially rising to 25% for Canada and Mexico, and 60% for his particular bugbear, China, sparking a scramble for wholesalers to stock up in the last few weeks of the Biden presidency. Trump previously raised tariffs on Chinese goods entering the US to 20% during his first term, and the Biden administration made no attempt to reverse this, and even added some additional ones, for example 20% on Russian and Moroccan phosphate imports.