Greener Fertilizers: How Clean Hydrogen Can Transform Global Agriculture

The World Bank’s report highlights the urgent need to decarbonize ammonia-based fertilizers using clean hydrogen to reduce emissions while ensuring global food security. Transitioning from fossil-fuel-based production to renewable and low-carbon alternatives requires policy support, subsidies, and technological advancements.

The World Bank’s latest report highlights a pressing issue in global agriculture, the significant carbon footprint of fertilizer production. Conducted with contributions from institutions like the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), and the Energy Sector Management Assistance Program (ESMAP), the report underscores the urgency of reducing emissions from ammonia production, which accounts for up to 2.4% of global greenhouse gas emissions. Fertilizers are indispensable to modern agriculture, ensuring food security for billions by increasing crop yields and soil fertility. However, their production is highly energy-intensive and reliant on natural gas, making them a major contributor to climate change. The key to decarbonization lies in replacing fossil-fuel-derived hydrogen with clean hydrogen—produced through renewable electricity or low-carbon methods involving carbon capture and storage (CCS). This transition could reshape global agriculture while simultaneously advancing climate goals.

The Role of Clean Hydrogen in Fertilizer Production

Ammonia is the foundation of nitrogen fertilizers like urea and ammonium nitrates, with over 85% of global ammonia production dedicated to fertilizers. The Haber-Bosch process, the dominant method for ammonia synthesis, requires high temperatures and pressures, making it heavily dependent on fossil fuels. Renewable hydrogen, produced via electrolysis using solar, wind, or hydropower, presents the most sustainable long-term solution. However, the intermittency of renewable power sources poses challenges, as the Haber-Bosch process operates continuously and is difficult to adjust to fluctuating energy inputs. Researchers, particularly in Denmark and Chile, are working on ways to enhance process flexibility to better integrate renewable electricity into ammonia production.

For a more immediate transition, low-carbon ammonia production through auto thermal reforming (ATR) of natural gas combined with CCS offers a practical alternative. Unlike traditional steam methane reforming (SMR), which captures only about two-thirds of emissions, ATR can achieve a carbon capture efficiency of up to 99%. This makes it a cleaner option while leveraging existing natural gas infrastructure. ATR is particularly suited for regions where natural gas remains abundant and cost-effective, such as the United States Gulf Coast and parts of Africa. While not entirely emissions-free, ATR serves as an important interim step until fully renewable ammonia production becomes economically viable.

Clean Ammonia’s Expanding Role Beyond Fertilizers

Beyond fertilizers, ammonia’s potential as a hydrogen carrier, a long-term energy storage medium, and even as a marine fuel makes it an essential component in the energy transition. However, growing demand for ammonia across industries could introduce competition, potentially increasing costs and straining supply chains. This could impact its affordability for agricultural use, particularly in developing countries.

A significant challenge in transitioning to cleaner fertilizers is shifting away from urea, which is widely used due to its ease of application and stability. Moving toward ammonium-based fertilizers will require not only new manufacturing processes but also adjustments in subsidy structures and farming practices. Governments must play a key role in facilitating this transition, ensuring that farmers have access to training programs and incentives to adopt more sustainable fertilizers.

The Cost Barrier and Government Interventions

The cost disparity between clean and conventional ammonia remains a major obstacle to widespread adoption. Estimates place the cost of renewable ammonia at $794–$1,543 per ton, compared to conventional “grey” ammonia derived from fossil fuels, which costs between $121 and $518 per ton, depending on natural gas prices. This highlights the need for government intervention in the form of subsidies, carbon pricing, and long-term purchase agreements to stabilize markets and encourage investment.

In India, for example, conventional urea is heavily subsidized, making it the preferred choice for farmers despite its environmental impact. To drive adoption of cleaner alternatives, governments must recalibrate subsidy structures to support ammonium-based fertilizers, which have lower emissions but higher production costs. Without such policy support, clean ammonia will struggle to compete with its fossil-fuel-based counterpart.

Several global projects are already demonstrating the feasibility of clean ammonia production. India’s AM Green Ammonia Project in Andhra Pradesh aims to produce 1 million metric tons of renewable ammonia annually by 2026 using solar and wind energy. Chile’s HyEx initiative leverages the country’s abundant solar power to generate renewable ammonia for both domestic use and export. Morocco’s Tarfaya Green Ammonia Project, a $7 billion investment, seeks to integrate wind and solar resources to produce up to 3 million metric tons of ammonia per year by 2032. Meanwhile, Brazil’s Port of Açu Blue Ammonia facility and Nigeria’s Brass Fertilizer and Petrochemical Company are developing low-carbon ammonia projects utilizing CCS to minimize emissions. These initiatives highlight the growing momentum behind clean ammonia and its potential to reshape global fertilizer markets.

The Path to a Sustainable Agricultural Future

Decarbonizing fertilizer production requires a coordinated global effort. Governments and international financial institutions must bridge the cost gap through targeted subsidies and long-term offtake agreements that provide market stability. Access to green financing instruments, such as concessional loans and carbon credits, will be crucial in reducing the high upfront costs associated with renewable ammonia production. Agricultural policymakers must also invest in farmer education programs to facilitate the transition from urea to alternative nitrogen fertilizers, ensuring that farmers can adapt to new methods.

Additionally, niche markets for clean fertilizers such as organic farming and sustainability-focused agricultural sectors must be developed to justify higher price points. Raising consumer awareness about the environmental benefits of low-carbon fertilizers can drive demand and encourage a broader shift toward sustainable farming practices.

Decarbonizing fertilizer production is not just a climate imperative—it is essential for global food security. Transitioning from fossil-fuel-based ammonia to clean hydrogen-based alternatives presents a transformative opportunity to reduce emissions while maintaining agricultural productivity. While cost and technological challenges remain, continued advancements in renewable energy and hydrogen production, coupled with strong policy support, can drive this shift toward a sustainable and resilient agricultural future. The World Bank and its partners, including IEA and IRENA, emphasize that clean hydrogen has the potential to accelerate the clean energy transition, particularly in countries with abundant renewable energy resources. With the right financial, policy, and technological frameworks in place, the fertilizer industry can play a crucial role in achieving global climate goals while ensuring that food production remains sustainable for future generations.