Fertilizer International 514 May-Jun 2023
31 May 2023
Fertilizers: where food and energy markets meet
Editorial
Fertilizers: where food and energy markets meet
Alzbeta Klein, CEO and Director General of the International Fertilizer Association (IFA), sets the scene for IFA’s Annual Conference in Prague, 22-24 May.
Last year was a pivotal year for IFA and for the fertilizer industry. The importance of fertilizers in feeding the world’s population was brought into sharp focus – a focus that has barely lessened this year as the war in Ukraine continues.
All of us realised that if wheat, rice, maize and soy are essential goods, none of them would be productive if mineral fertilizers were not available, as exemplified by the dramatic impact of the zero mineral fertilizer policy last year in Sri Lanka. The world realized in 2022 that fertilizers are also essential goods.
The other lesson from 2022 was that – in our interconnected world – the global production, trade and distribution of fertilizers are highly susceptible to geopolitical events and supply chain disruptions.
As last year also illustrated, food and energy are inseparable. Every part of the food system uses energy and, most obviously, fertilizer production has been heavily impacted by the shortages of gas we saw in West and Central Europe last year.
Although energy costs have stabilised from their heights in 2022, and the picture is not as severe as it was a few months ago, the need for producers to diversify their sources of energy and decarbonise production has accelerated – both for sustainability purposes and to reduce their reliance on any single source of energy. And as the global population is projected to reach 10 billion by 2050, we must all plan for a fast-evolving and increasingly complex food, energy and climate future.
In addition to feeding the world, fertilizers also have a role to play in the energy transition. The use of ammonia as a shipping fuel and as a potential material to decarbonise coal for example will have a profound impact on demand. Also, an increasing share of extracted phosphate rock will be used for producing lithium iron phosphate (LFP) batteries, a fast-emerging market. How we tackle increased demand for these vital commodities will have lasting effects on food security in the coming years.
Farm level challenges
At farm level, the challenges in meeting the growing global demand for food are many and varied. Fertilizer availability and affordability both continue to present problems across world agriculture with uneven effects and consequences.
The impacts of climate change and the need to intensify production on existing agricultural land – to prevent further deforestation, related carbon emissions and biodiversity losses – are also affecting farmers. The challenge of how farmers manage their soils and balance the need to increase crop yields and nutritional quality, while replenishing and protecting the soil for future harvests, is significant.
Mineral fertilizers clearly play an important role in addressing soil degradation and rehabilitating marginal soils. Farming systems, especially in sub-Saharan Africa, lack sufficient plant nutrients to sustain healthy soils and productive crops. Tools and technologies have been developed to make site-specific recommendations for mineral fertilizer application, which further increases its use efficiency.
Energy and fertilizer production
From the perspective of an energy producer, fertilizer is one way to export that energy through industrial transformation. From the perspective of a nitrogen fertilizer producer, it is the energy that drives a substantial part of the cost of production. On the supply side, we may have more nitrogen fertilizer production if major energy producers decide to convert energy resources into ammonia. And on the demand side, we may see increased demand for ammonia to decarbonise shipping and other industrial sectors.
Development of electric vehicles and energy storage will support further expansion of battery manufacturing. Among the latest generation of batteries are LFP batteries, which are already being adopted by some leading car manufacturers. The phosphate industry, especially in China, is responding to this market.
Where does this leave us? Fertilizer and energy are closely interlinked, and we would be foolish not to look at the dynamics of global energy markets to see the future. Beyond fossil fuel-based energy, we need to consider the trajectory of renewables, as well as the production of blue ammonia incorporating carbon capture and storage/sequestration – a key part of the business case for investing for the future.
It is very clear that one sector’s decarbonisation challenge is another’s opportunity. This underscores the imperative for us to take the broader view of the energy transition, to ensure we are well-prepared for the impact of other industries’ decarbonisation efforts on our own future.
At this year’s IFA Annual Conference in Prague, our members will come together to discuss this ever-evolving landscape and the critical juncture of the global food and energy industries.
While the challenges we face are daunting, I have confidence that the commitment, innovation, and drive of the fertilizer industry can be brought to bear to successfully meet the challenge of feeding the world sustainably – now and into the future.
