EU Aims to Boost Demand for Expensive, High-Emitting Fertilizers

The European Union is laying the groundwork to increase reliance on expensive, emissions-intensive fertilizers, a move that will hit hardest for developing countries looking for funds to deal with the impacts of climate change and reduce their own greenhouse gas emissions.

“In the midst of an existential crisis caused by hyper-addiction to fossil fuels,” and “in the face of developed countries’ steadfast refusal to make the money available for urgently-needed investments, the EU is proposing a strategy to increase public funding to ensure a steady supply of highly-emitting fertilizers, with subsidies for producers and ‘continued and uninterrupted access to natural gas for fertilizer producers’,” reported ECO, the daily newsletter produced during the COP 27 climate summit by Climate Action Network-International.

• The climate news you need. Subscribe now to our engaging new weekly digest.
• You’ll receive exclusive, never-before-seen-content, distilled and delivered to your inbox every weekend.
• The Weekender: Succinct, solutions-focused, and designed with the discerning reader in mind.

Subscribe

A byproduct of nitrogen fertilizers, nitrous oxide, is 285 times more potent a greenhouse gas than carbon dioxide, and there was some prospect earlier this year that sharp price increases triggered by Russia’s war in Ukraine would drive down demand. In its original list of 100 top climate solutions, Project Drawdown calculated that nutrient management would save the equivalent 1.81 billion tonnes of carbon dioxide emissions by 2050, and a separate field study revealed U.S. fertilizer plants emitting 100 times more methane than they were reporting.

But governments, including Canada, have been under intense pressure to prop up synthetic fertilizer production and slow-walk emission reductions.

“The EU could have used the recent drop in fertilizer use in Europe to double down on their proposed frameworks for green agriculture by reducing the sector’s greenhouse gas emissions, coupled with support for healthier diets and reduced consumption of animal-sourced foods,” ECO wrote. “There are good alternatives to synthetic fertilizers, developed and tested by farmers in agroecological systems that have shown their effectiveness. These alternatives are also better for biodiversity.”

But that wasn’t the focus of the EU plan released during the first week of the COP. Instead of setting emission reduction targets, “the strategy focuses on gaining alternative markets for imports of fertilizer ingredients,” the newsletter stated.

ECO cites a report by the Institute for Agriculture & Trade Policy and GRAIN that shows record chemical fertilizer prices driving up global hunger and inflation. It attributes high prices to “a combination of factors, including the high cost of natural gas, the war in Ukraine, and the oligopoly power of fertilizer companies.”

Across the G20, the study says, farmers are paying at least $21.8 billion more this year for three key fertilizers. A survey of nine vulnerable countries, seven of them in Africa, showed costs rising 186% in 2021 and 295% in 2022.

Canadian farmers will pay an extra US$1.6 billion this year for fertilizer, and Saskatoon-based global fertilizer giant Nutrien will see its profits soar from $3.2 billion in 2020 to $15.2 billion in 2022, according to the new analysis. Nutrien, by far the world’s biggest fertilizer supplier, will take home nearly 2.75 times as much profit this year as its nearest competitor.

“There is some evidence that fertilizer prices are fuelling food prices by increasing the cost of production or reducing yields as farmers cut the amount of fertilizer they apply or the area of land under production,” the report adds. With farmers around the world demanding lower input costs, “the rising prices are straining government reserves and budgets, making it difficult for governments to even maintain their existing fertilizer subsidies.”

In the years ahead, volatile fossil fuel prices and declining supplies will likely keep costs highs, and “given their market power, these companies have so far been able to pass on the increased costs of their raw ingredients and production processes to maintain or even increase their profit margins.”

Instead of trying to boost fertilizer supplies, as some G20 countries are doing, “it would be simpler and more cost-effective for governments to focus instead on reducing fertilizer consumption and reining in corporate profits,” IATP and GRAIN write. “Building new factories and ramping up production will take time and is unlikely to have an immediate impact on supply or prices.”

While the alternative, agroecology, is criticized in turn for reducing output, a growing body of research shows it delivering “immense economic, social, and food security benefits while ensuring climate justice and restoring soils and the environment,” the study says.

An earlier version of this story was originally produced for Quebec Farmers’ Advocate.