Emissions reduction initiatives: What's in store for Asia's fertilizer industry

A version of this article was first published on Sustainable Fertilizers , a quarterly newsletter from S&P Global Commodity Insights' Fertecon.

The Asia-Pacific region, home to almost 60% of the world's population, plays a significant role in global agriculture production. But the some of the region's agricultural practices, including the use of synthetic fertilizers and the increase in livestock production, have led to a substantial contribution to greenhouse gas emissions. Agriculture is Asia's fourth largest GHG emitter, contributing to more than 10% of the region's total emissions.

Emissions from the fertilizer sector

Fertilizers have played a crucial role in increasing agricultural productivity to meet the food demand of a growing population and reducing the need to expand agricultural land.

The application of nitrogen-based fertilizers, which leads to GHG emissions, is responsible for emissions of approximately 700 million mtCO2e each year, in addition to causing nitrogen pollution. Among these emissions, Asia alone contributes around 400 million mtCO2e.

Since 1990, Asia's GHG emissions related to the use of synthetic fertilizers have exceeded those of the rest of the world. This can be attributed to various factors, including the region's rapid population growth – Asia is the world's most populous continent with over 4.7 billion people – which led to demand for food placing significant pressure on agricultural production. Fertilizers play a crucial role in enhancing crop yields, making them indispensable to meet the region's escalating food demand. Furthermore, Asia's remarkable economic growth has made it the fastest-growing economic region globally, resulting in increased disposable income spent on food, further straining agricultural production and necessitating the widespread use of fertilizers to meet the rising food requirements.

The Asian fertilizer industry is actively searching for ways to tackle these emissions, in line with the objectives of the Paris Agreement, which aims to keep global warming well below 2°C. The goal is to strike a balance between reducing emissions and ensuring a consistent supply of fertilizers to support farmers in feeding an expanding population.

Emissions are categorized into three scopes and the fertilizer industry's main source of GHG emissions is classified as Scope 1. These emissions are direct and originate from sources owned or controlled by companies. They include emissions from fuel combustion, fugitive emissions from natural gas and emissions from on-site waste management.

Scope 2 emissions, on the other hand, are indirect and stem from the generation of purchased electricity, steam, heat and cooling. These emissions occur when a company buys electricity from a power plant that relies on fossil fuels.

Given the significant electricity consumption within the fertilizer industry, Scope 2 emissions play a substantial role in its overall environmental impact.

Scope 3 emissions encompass all other indirect emissions throughout the company's value chain. These emissions involve transportation, the use of sold products and waste disposal.

Source: IFA Reducing emission from fertilizer use, September 2022

Consumption vs emissions

There has been a steady increase in emissions from synthetic fertilizers in Asia over the past decade. This is due to several factors, including the growing demand for food, the increasing use of synthetic fertilizers to improve crop yields, and the lack of effective policies to reduce emissions from the agricultural sector.

As much as 68% of emissions from synthetic fertilizers in Asia are from nitrogen, the most important nutrient for crop production and the most emission-intensive nutrient to produce. Phosphorus emissions account for 16% of total emissions, while potassium emissions account for a little less than 6%, with others accounting for the remaining 10%.

In 2020, global nitrogen fertilizer consumption was approximately 119 million mt, with Asia accounting for around 60 million mt. About 30% of the nitrous oxide, or N2O emissions in the agricultural sector can be attributed to fertilizer usage.

The worldwide emissions of N2O from fertilizers amounted to approximately 2.35 million mt, with Asia accounting for roughly 1.37 million mt. Together, India and China they account for approximately 70% of the total N2O emissions associated with fertilizers, according to a 2014 research paper by Lassaletta et al. published in Environmental Research Letters.

The production and transportation of fertilizers also contribute to the release of significant amounts of GHG such as carbon dioxide, or CO2; methane, or CH4; and N2O. Since the excessive application of fertilizers in agriculture is a significant contributor to N2O emissions, it is crucial to ensure their appropriate use to align with the climate objectives outlined in the UN Sustainable Development Goals and the target of the Paris Agreement to limit global warming below a 2°C threshold.

The emissions of GHG resulting from the use of synthetic fertilizers have shown a notable upward trend, rising from 100 million mtCO2e in 1961 to 410 million mtCO2e in 2020. In terms of specific figures for N2O emissions in 2020, China reported 160 million mtCO2e, while India reported 130 million mtCO2e.

Here are the major initiatives and policies in the Asian countries to curb GHG emissions in the fertilizer industry.

These emission reduction initiatives are expected to have a significant impact on the fertilizer industry in Asia. By reducing emissions, the industry will be able to save money and improve its environmental performance. The initiatives are also likely to have a positive impact on the agricultural sector, as they will help to mitigate climate change, which will benefit agriculture in the long run.

Challenges

• Implementing measures to reduce emissions in the fertilizer industry presents difficulties due to its complexity and competitive nature.
• The expensive nature of emission reduction technologies poses a challenge for businesses as they may find it difficult to afford their adoption.
• The absence of well-defined government policies in several Asian countries hampers businesses' understanding of expectations and access to funding for emission reduction projects.
• Limited public awareness in many Asian countries regarding the significance of emissions reduction creates obstacles in garnering support for initiatives and encouraging behavioral changes.

Technology and policy

Emissions reduction initiatives in Asia are gaining momentum, despite the obstacles they face. By consistently investing in emission reduction technologies and implementing supportive policies, Asia has the potential to make a substantial contribution to addressing climate change. These initiatives are propelled by several factors:

• Increasing awareness of climate change impacts : The growing recognition of climate change consequences in Asia is generating a greater public demand for action.
• Improved accessibility of emission reduction technologies : Decreasing costs associated with emission reduction technologies are making them more affordable and accessible to businesses.
• Rising importance of the clean energy market : The clean energy sector's rapid growth in Asia is creating new opportunities for businesses to invest in emission-reducing projects.

While challenges exist, continuous investment in research, development and innovation can help overcome them. Ultimately, emissions reduction efforts in Asia are vital in tackling climate change and, with persistent action and commitment, Asia can take a leading role in mitigating the impacts of climate change and building a sustainable future.

Sustainable Fertilizers is a new quarterly newsletter that extends the coverage of Fertecon's Fertilizer Market and Regional Reports and aims to inform on sustainable developments, providing thought leadership on how these developments will impact the industry. Relevant pricing information for these products is included where available. View a sample here .