Fertilizer International 509 Jul-Aug 2022
31 July 2022
IFA Global Sustainability Conference
CONFERENCE REPORT
IFA Global Sustainability Conference
Some 410 delegates from 208 companies and 45 countries participated virtually in the IFA Global Sustainability Conference, 28-31 March 2022. We report on the main highlights of this four-day event.
Fireside chat
The conference began with a ‘fireside chat’ on business sustainability. In his opening remarks, Svein Tore Holsether, IFA’s chair and the CEO of Yara International said: “We, as an industry, have a huge responsibility to limit hunger crises while also building resilient food systems.”
Greater resilience, in his view, would require closing crop yield gaps, investing in renewable energy and regenerative agriculture – and the recycling and recovery of nutrients to ‘close the loop’.
Sustainability is an existential issue for a company like Nespresso, said its CEO Guillaume Le Cunff: “We’ll never be successful selling empty [coffee] capsules in future. We’re either in or out of business.” That made sustainability both a business necessity as much as an opportunity, in his view.
What also emerged from the fireside chat was the central role fertilizers play in the sustainability of the whole food system. Farm livelihoods – and creating value in general – depend on greater crop yields, for example, while net zero could only be achieved by reducing the carbon footprint of crop nutrients.
For his business, Guillaume Le Cunff gave the example of the 100 grams of CO2 (Scope 1, 2 and 3) emissions associated with a single seven gram cup of coffee. Coffee itself generated 50 percent of these emissions, the packaging 15 percent, while crop inputs – notably fertilizers – were responsible for the remaining 35 percent.
Guillame believes the coffee industry can make it to net zero within the next decade by actions such as switching to regenerative agriculture and the circular economy. Nevertheless, driving down fertilizer emissions would be key.
“If we don’t manage to turn around that [crop] input footprint, we’re not going to get to net zero. It’s going to be make or break,” said Guillame. “We have a common responsibility to get to net zero. Your industry [fertilizers] is critical. Now is the right time to partner.”
Because crop yields are crucial for farmer incomes, yield improvements, not just yield stability, are needed to make a difference.
“We have to reward the work and efforts of farmers, including being able to guarantee some kind of yield stability and consolidate a living income to keep farmers on the farm,” said Guillaume.
Svein Tore agreed that a new approach was necessary: “Commodity thinking is hurting the whole food system. For a £3 cup of coffee, in general, the grower of coffee beans gets one penny – the farmer is marginalised.”
He also believed that crop nutrients have a clear role in making food heathier and more sustainable: “Fertilizers help quality, nutritional value and carbon footprint. By adding micronutrients we can make food more nutritious.”
Mobilising the necessary finance for sustainability was a key issue for Tensie Whelan, the director of NYU’s Stern Center for Sustainable Business. “Finance in companies has been late to the table on sustainability and have seen it more as a cost than an opportunity,” she said. “It’s not about affordability vs sustainability. The two can go hand-in-hand.”
Roads to net zero carbon emissions
The role of blue, turquoise and green ammonia in delivering a net zero ammonia industry was discussed by Vinod Patel of Intercontinental Energy, Bjorgulf Eidesen of Horizont Energi and Rob Hansen of Monolith Materials.
InterContinental Energy is major developer of gigawatt-scale renewable fuel projects globally. The company’s portfolio is building a total of 200 gigawatts of green hydrogen and 80 million tonnes of green ammonia capacity. Its announced projects include the Asian Renewable Energy Hub and the Western Green Energy Hub located in Western Australia, as well as Green Energy Oman in central Oman and the Saudi Arabia Renewable Energy Hub.
Norway’s Horizont Energi is part of Barents Blue, the largest clean energy project in Europe. It is seeking to build Europe’s first world-scale (three million tonne capacity) blue ammonia plant by 2025.
Monolith Materials is developing a number or turquoise ammonia (methane pyrolysis) projects globally. These include Olive Creek 2, an expansion to its existing Olive Creek 1 project in Nebraska. The company also has tens of other projects in the pipeline in the US, South Korea and Japan.
Moderator Trevor Brown of the Ammonia Energy Association asked whether colour-coded green, blue and turquoise labels for ammonia were actually valuable.
Monolith’s Rob Hanson said he was “technology agnostic” on low-carbon ammonia production: “To be nuanced and precise, I prefer carbon intensity, not colour or production method. We should make CO2 going into the atmosphere the metric, not colour.”
Bjorgulf Eidesen was similarly sceptical: “We have found colours troublesome. In the EU there’s a focus on green. But green is not always green, blue is not always blue. It not about colour, it’s about carbon intensity, water resources etc.”
Looking ahead, all three panellists agreed that action on ammonia decarbonisation was necessary, both now and over the longer term.
“We overestimate what we accomplish in a year, but underestimate what can be achieved in a decade,” said Rob Hansen. “Climate change is the challenge of our time. It’s a century long challenge. We need to think longer term.”
“The coming four years are the years for action for low-carbon ammonia,” added Vinod Patel: “There are challenges still to be addressed – new technologies can help address these.”
Summing up, Bjorgulf Eidesen said: “We believe that blue and green ammonia are key enablers of net zero. The 2030 [EU] goal is particularly challenging. We need the political will and innovation to see that happen.”
Scope 1, 2 and 3 emissions
Driving down emissions will be necessary to place global agriculture on a low-carbon trajectory. But how will this be delivered? In this conference session, Rupert Simons of SystemIQ and Tony Siantonas of the World Business Council for Sustainable Development (WBCSD) unveiled the latest results of two pioneering collaborative projects with IFA.
SystemIQ is developing a ‘fertilizer in-use roadmap’ for cutting fertilizer Scope 3 emissions. This is due to be completed by the end of June.
Mineral fertilizer use globally generates (in the form of N2 O) around 0.6 gigatonnes of CO2 equivalent emissions, or about 30 percent of total agricultural N2 O emissions. This is equivalent to around one percent of world greenhouse gas (GHG) emissions – roughly the same amount generated by Germany. In terms of total life cycle impacts, fertilizer production and transport (Scope 1 and 2) is responsible for 20-50 percent of fertilizer GHG emissions, while downstream use (Scope 3) is responsible for 50-80 percent.
Fertilizer Scope 3 emissions currently stand at around 650 million tonnes CO2 equivalent. Looking ahead, SystemIQ has identified opportunities for 84 Mt CO2e emissions savings across six global crop systems. These are primarily achieved by adopting best fertilization practices and changing crop rotations, with better nutrient use efficiency (NUE) delivering about 70 percent of the abatement potential. Many measures offer cost savings, although barriers to adoption by famers were also identified.
“Over half of projected CO2 emissions could be abated by 2050 by increasing nutrient use efficiency, crop rotating and land sparing, all while ensuring that people do not have to reduce their consumption of protein,” said Rupert Simons.
SystemIQ’s fertilizer in-use roadmap is part of the wider ‘Fertilizer 1.5’ project. This project, a collaboration between IFA, WBCSD and SystemIQ, is described as a “pre-competitive initiative to align the fertilizer sector to a 1.5°C pathway”. It consists of three workstreams:
- Sectoral Decarbonisation Approach (SDA)
- Fertilizer in-use roadmap
- Climate Action Leadership Coalition.
As part of the SDA, the fertilizer sector needs a credible, independent science-based method for aligning to a 1.5°C trajectory by 2050. “We are looking at the development of a robust standard for the fertilizer sector while making sure that these pathways are inclusive and relevant for the whole industry,” said Tony Siantonas.
Game changers
Game changers for sustainability were the subject of a panel discussion between Olivier Noterdaeme, a partner at McKinsey & Company, World Bank economist Dominik Englert and Olivier Mussat, the CEO of green hydrogen/ammonia company Atome.
The green hydrogen market represents a $10 trillion market opportunity according to Olivier Mussat. The 0.4 GW of green hydrogen capacity currently available is projected to increase to around 465 GW by 2050.
Atome is developing its first green ammonia project in Paraguay. This 50MW project will capture excess hydropower and use this to generate 45,640 t/a of green ammonia by 2023/24. It is also pursuing a second 31,000 t/a green ammonia project in Iceland
Such projects will need to be developed rapidly. “Over the next five years there will be a shortfall between the supply and demand for green ammonia and hydrogen,” said Olivier Mussat.
The decarbonisation of global shipping could be done in collaboration with the fertilizer industry’s ammonia producers, suggested Dominik Englert. “In the future ship fuelling will much more decentralised as ammonia-powered ships will fuel more frequently and fuel production will be more democratic. Shipping moving to ammonia is a $1.4-1.9 trillion business opportunity,” he said.
Financing sustainability
To help decarbonise its business, CF Industries’ is pursuing a number of green and blue ammonia projects currently. Commenting on these, CEO Tony Will said: “Finding new, disruptive opportunities to expand business – it’s not cheap, it’s not without risk.”
But the key question on sustainability in his view was: “Do you want to lead or be led?” Answering his own question, Tony Will suggested that CF industries was very much positioning itself as a leader by introducing a new vision for the company as a provider of clean energy to feed and fuel the world. He described this as “a very noble purpose” that staff could be proud of and connect with.
Embracing sustainability is also going to require corporations to redefine their purpose, in his view. “Stakeholder capitalism will support employees, vendors, the community and shareholders,” he said.
The IFC’s Irina Likhachova highlighted the scale of biodiversity loss currently: “One million species are threatened with extinction and 14 of 18 assessed ecosystem services are in decline.”
Fortunately, business is starting to take action to address this. In 2021, for example, a total of 89 financial institutions from 19 countries with over e13 trillion in assets signed the Finance for Biodiversity Pledge.
Around $44 trillion of economic activity globally depends on nature to a high or moderate degree, according to the World Economic Forum. Because of this, the scaling up of finance to address biodiversity loss could eclipse climate finance. “Get ready for biodiversity as a topic. It’s coming faster than you think. Nature finance is climate finance on steroids,” said Likhachova.
Carbon markets
Globally, soils remove five gigatons of carbon every year – with potential for carbon farming to increase this by a further one gigatonne annually.
Agoro Carbon Alliance, a new start up owned by Yara International, is helping bring this about by launching a carbon credit schemes for farmers. “It’s a new way of bringing capital to the farm… [and] seize the benefits of carbon farming,” said its CEO Alex Bell. “I believe carbon farming is the future in so many ways.”
Companies can buy credits to offset their emissions through the voluntary carbon market (VCM). There are currently around 5,800 VCM projects globally. About 44 percent of these are land-use projects and 31 percent renewable projects. These projects avoid or reduce about 1.1 billion tonnes of CO2 . They are certified by an authorised third party to assess their capacity to sequester, reduce or avoid CO2 emissions.
Pablo Verra of Deloitte was confident that they have a future: “VCMs are here to stay. The fastest way for a company to go carbon neutral is to buy carbon credits.”
ESG-related loans
ICL’s Kobi Ilia presented a case study on a e250 million sustainability-linked loan (SLL) secured by the company. SLLs enable companies to capitalise on their environmental, social, and corporate governance (ESG) performance and use this to benefit their bottom line.
The granting of SLLs is linked to verifiable sustainability commitments and their associated key performance indicators (KPIs). ICL, for example, had already committed to a reduction of its Scope 1 & 2 emissions of more than 20 percent by 2025. It was also assessed for the SLL on two other KPIs: supplier score cards and the number of female senior employees.
Chief Finance Officers have a key role to play in delivering company sustainability, concluded Kobi Ilia. Internal cooperation is also necessary. “Alignment between ESG and finance teams is essential to get results,” he said.
Bank of America’s Lizabeth Bronder discussed ESG debt instruments and the choice of loans versus bonds. This market is no longer fringe and instead is becoming an increasingly popular investment choice. “Investors are increasingly making requests to invest in the sustainability debt market,” Bronder said.
CEO roundtable discussion
Sustainability success was the topic under-discussion in this session.
“Sustainability is about doing the right thing. Optimising the use of resources for the long term as we now we have another stakeholder – the planet,” said ICL’s CEO Raviv Zoller.
Tip O’Neill, IRM’s CEO, agreed that to become more sustainable the industry needed “stakeholder capitalism over shareholder capitalism” as it was “important that money follows mission” and not the other way around. He also said the industry was going to have to “figure out a way of tracking carbon”.
“In a few years from now we will all need to know the carbon footprints of our operations and projects. Products will have carbon labels on them,” O’Neill said.
OCI’s CEO Ahmed El-Hoshy agreed. “Environmental tracking will be very important. By labelling carbon intensity you can incentivise people to invest in lower carbon products via open markets.”
ESG reporting
Reporting on environmental, social, and corporate governance (ESG) is becoming a bottom-line issue for business. “75 percent of financiers, for example, are now looking at ESG performance when making investment decisions,” said OCP Group’s Bachir Mouhy.
The top three risks faced by business over the next decade – climate action failure, extreme weather and biodiversity loss – are also all ESG risks, according to the World Economic Forum.
Asking “who is your key audience?” was important, according to Kelvin Roth of CF Industries. “When it comes to ESG reporting, the numbers are important but so are the stories,” he said.
Being open to scrutiny and external benchmarking is also becoming standard practice in ESG reporting. This requires transparency and engagement with external organisations such as the Global Reporting Initiative (GRI), the UN Global Compact, the Task Force on Climate-Related Financial Disclosures (TCFD) and ratings agencies. “Don’t do this on your own,” urged Kelvin Roth. “Sustainability and ESG are a collective effort.”
“ESG reporting is a learning process,” said Bachir Mouhy. So start where you’re comfortable, as you can’t go to 100 in months. Sustainability is a moving target – you just need to reach for the stars!”
Carbon cutting commitments
Netherland-headquartered nitrogen producer OCI is decarbonising its operations by reducing its Scope 1 & 2 emissions by 20 percent by 2030, from a 2019 baseline. Up to three-quarters of this target will be met through operational improvements, while much of the remainder will be achieved via green and blue ammonia projects.
“OCI has a 20 percent emissions reduction target and its transition pathway will use blue and green hydrogen and bio-methanol among other solutions,” said OCI’s Hanh Nguyen.
The Mosaic Company, meanwhile, has set itself a net zero target for its Florida operations (Scope 1 & 2) by 2030. This target has been extended to 2040 for the company’s operations elsewhere. “We will achieve net zero by addressing the emissions from our four walls – harnessing low carbon energy, optimising operations and capturing carbon through our land holdings,” said Mosaic’s Natali Archibee.
Reducing Scope 3 emissions
“Companies with highest exposure to nitrogen fertilizers have the highest exposure to [Scope 3] emissions,” said Nutrien’s Matthew Salens. This was because of their association with agricultural N2 O emissions.
Nutrien is addressing its Scope 3 emissions through actions such as its 75 Mha farmland initiative and carbon farming programme. It is also committed to the IFA/ WBCSD sectoral decarbonisation approach (see above), as well as developing a vessel powered by low-carbon ammonia with Exmar.
Shipping is responsible for three percent of global emissions and these are currently on a trajectory to increase by 17 percent by 2050. Bulk carriers alone generate 440 million tonnes of CO2 emissions annually. Although not covered by the Paris Agreement, the International Maritime Organization (IMO) has set an emissions reduction goal of 50 percent for global shipping by 2050.
“The biggest sustainability challenge the shipping industry faces today is the lack of availability of alternative fuels,” says Nitron’s Felix Dostmann. Consequently, to kick-start action on Scope 3 emissions, Nitron has set up a carbon offset pilot programme for the shipping industry. The pilot is backed by two offset projects in Colombia and Chile.
Circular economy
EasyMining is helping Europe to recover valuable phosphorus present in sewage sludge ash (SSA). The company is currently planning a 15,000 tonne capacity calcium phosphate plant in Germany, based on its proprietary Ash2Phos process. “We have a responsibility to ensure that the SDGs are really implemented. Phosphorus recovery can reduce pressure on the market and help the poor get access to fertilizers,” said EasyMining’s Christian Kabbe.
Aleff Group’s Julian Hilton gave an update on progress towards phosphogypsum (PG) reuse. “Of all the nutrients, phosphorus is the most recyclable and essential for life. I’m increasingly optimistic. My view is that by 2035, we might get to 100 percent [phosphogypsum] use,” he said.
Julian listed the countries that are “clearing the way” for complete PG reuse: “Indonesia is using all its PG. Belgium and Brazil are at 100 percent use; India is about 70 percent, China 40 percent.”
Phosphogypsum by promoting afforestation also offers clear climate benefits. “PG works very well as a man-made soil to improve forest growth that can help improve carbon sequestration,” said Hilton.
Soil carbon sequestration
The ‘4 per 1,000’ initiative was launched at the COP21 climate conference in France in 2015. It is working with a consortium of 310 signatories to implement better farm practices for sequestering carbon. These include integrated soil, fertilizer and water management, greater use of cover crops, conservation agriculture and agroforestry.
“We need to get inspiration from the way nature performs to help us to redesign our farming systems,” said 4 per 1,000’s Paul Luu.
Evidence that, in future, nitrogen fertilizers can act as a sink instead of a source of greenhouse gas (GHG) emissions was presented by Holger Kirchmann of the Swedish University of Agricultural Sciences (SLU).
“As long as you can increase crop yields you can increase soil carbon. If yields stagnate you get no soil carbon increase. Through nitrogen fertilization, more carbon is actually sequestered than by no-tillage,” he said.
Nutrien has launched a pioneering carbon pilot programme, as Sally Flis explained: “We looked at five main carbon practices in our pilot schemes based on nitrogen management, soil health and optimised productivity.”
The nitrogen management practices being adopted as part of the pilot include the use of slow- and controlled-release fertilizers (SRFS/CRFs), urea inhibitors and variable rate fertilization (VRF). The costs and returns on investment are being evaluated. This will take time, though, as the benefits of some practices (cover crops, no-till) can take more than five years to fully emerge.
The measurement and verification (MRV) of the rapidly expanding voluntary carbon market (VCM) presents challenges, according to the Environmental Defense Fund’s Emily Oldfield. “There is substantial investment going into carbon credit programs and a rapidly expanding voluntary carbon market but there are many complexities and challenges involved,” she said. The solution, in her view, was to ensure that MRV was based on consistent measurements and standards – as this would guarantee high-quality soil carbon credits.
Verra runs Verified Carbon Standard (VCS), the world’s leading voluntary GHG programme. The company is refining its accounting methodologies for VCS to improve measurement and verification.
“We are looking to implement 4Rs best management practices (BMPs), update and expand applicable emissions factors (EFs) and have a stronger focus on biological nitrogen fixation in our agriculture methodologies,” said Verra’s Viridiana Alcantara-Shivapatham.
Summing up
IFA’s director general Alzbeta Klein thanked the organisers, sponsors, presenters and delegates for contributing to a successful event.
“Reducing and reversing biodiversity losses and reducing carbon emissions will come with costs. But these are outweighed by the priceless benefits of helping to ensure the future wellbeing for the planet,” she said.
