Fertiliser production is an obvious use case for green hydrogen, so why are producers more likely to want blue?
The amount of money a farmer is willing to pay is 'the number-one factor' being considered by manufacturers, World Hydrogen Week told
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This results in 1.1-1.3 billion tonnes of carbon dioxide equivalent being emitted each year, according to the International Energy Agency.
So why does the fertiliser industry not seem to be the number-one market for green hydrogen producers?
The problem is that fertiliser manufacturers are simply not keen on paying substantially more for green hydrogen or ammonia than the varieties made from unabated fossil fuels.
Speaking at World Hydrogen Week in Rotterdam yesterday, Kuide Qin, chief science officer at US-based agrichemicals supplier Verdesian Life Sciences, said that the amount of money a farmer is willing to pay for fertiliser is “the number-one factor” being considered.
“What is the extra value it brings to the grower, if [they’re] going to spend extra money to buy it?” he cautioned, noting that organic fertilisers already see a premium.
But Antoine Hoxha, director of trade association Fertilizers Europe, pointed out that agriculture has a “long supply chain”, which can absorb costs without impacting the final cost of food.
He estimated that a doubling or tripling of the price of ammonia may only increase the final price of bread in the supermarket by 3-4%. “It is something, but it is not unbearable,” Hoxha told the World Hydrogen Derivatives event.
“The big question is, how do you spread this effort along the supply chain?” Hoxha asked the Global Hydrogen Projects Summit, cautioning that farmers faced with more expensive fertilisers may opt for imported grey fertilisers in the short term due to costs.
Europe’s updated Renewable Energy Directive sets a minimum share of 42.5% renewable hydrogen as defined by the Delegated Acts to be used in ammonia production by 2030.
But this mandate only applies to industrial use within the EU, rather than farmers — who could use ammonia-based fertilisers that are not made using green hydrogen.
This is likely to mean that manufacturers will look for the lowest-cost options to reduce carbon intensity, rather than pushing them to use specifically green hydrogen as a feedstock.
But blue ammonia — made from hydrogen derived fossil fuels with carbon capture — is only about $210-449 per tonne, far cheaper than the renewable variety.
And while the cost of the green alternative could decrease to $450-500 per tonne by 2030, this is still far from cost parity with the dirtier types of ammonia.
Chemicals giant OCI’s global head of ammonia, Jong Chen Foo, told the event that it may just be easier for European fertiliser producers to import blue ammonia in regions where gas prices are stable due to supportive government policies, such as the US or Egypt.
“Those are low costs, and if there is a recognisable and economical means of capturing carbon and sequestration, then obviously the costs, even with importation and shipping costs… could be more competitive than domestic production,” he argued.
But even blue ammonia-based fertilisers in supportive markets such as the US could struggle to get off the ground, Qin said, citing recent reports of such projects being shelved by even large North American agrichemicals companies amid downturns in profit.