CURRENT CHALLENGES IN REDUCING EMISSIONS FROM CROP PRODUCTION
Emissions from fertiliser are a significant contributor to agricultural emissions. Food and beverage companies and retailers can’t meet their scope 3 targets without farmers adopting cleaner fertilisers and smarter application methods. Without consumer demand to subsidise today’s expensive low emission fertiliser, companies must either perpetually subsidise greener fertilisers until they reach price parity or rely on the emergence of new technology which does not add costs for farmers or consumers.
INTRODUCTION
The immediate need to reduce anthropogenic greenhouse gas emissions is well documented and understood. To limit the global mean temperature increase to less than 2°C above pre-industrial levels, significant emissions reductions must be made by 2050 [1]. Emissions are categorised into three scopes to help delineate between the boundaries of responsibility. To date, most companies have identified a pathway to significantly reduce (or eliminate) emissions from scope 1 (direct emissions) and scope 2 (purchased energy). Significant work is required to reduce scope 3 emissions (indirect emissions) which, for many companies represents the majority of their footprint. Scope 3 emissions are difficult to reduce however, because they relate to activities outside the direct influence of the company. Companies have little control over how their input materials are manufactured and how their products are used and disposed of. Even large companies with significant market power have had limited success in changing the way products are made and delivered to them.
The complexity and multitude of stakeholders has meant that scope 3 emissions have been underreported and insufficiently addressed. This has not been a major issue to date, given the historical lack of requirements to provide robust emissions reporting for scope 3. However, driven by the introduction of new mandatory reporting standards (i.e. ASRS), visibility of, and reduction in scope 3 emissions has become a key focal point for companies. Companies must now identify, measure and report on relevant sources of scope 3 emissions in their value chain. This not only adds a level of forensic analysis and auditability to emissions reporting but connects emissions performance to company performance in the eye of the consumer. This allows consumers to vote with their dollars in the way they purchase and investors to invest in companies which demonstrate a solid plan to mitigate climate risk.
EMISSIONS FROM CROP PRODUCTION
The agriculture sector in Australia is a significant contributor to national emissions, producing over 80.3 Mtonnes CO2-eq in 2024 [2]. It is an essential industry supporting food, textiles and medicine. Fertiliser use in crop production is a significant contributor to those agricultural emissions, contributing an estimated 27% of global greenhouse gas emissions from food (marginally less than the 31% from livestock and fisheries) [3].
There are several key players within the crop supply chain: farmers, grower groups, manufacturers, distributors, and retailers. Although reduction in emissions is being driven by manufacturers and retailers, ultimately the farm is the major source of emissions. These emissions are the result of purchasing high-embodied emissions fertilisers and the subsequent emissions produced from their applications.
This creates a tension where downstream players (e.g. manufacturers, retailers) have committed to emissions reduction targets, but they rely on farmers to make changes to land management practices.
Figure 1: Overview of greenhouse gas emissions across the crop production supply chain [4]
Crop decarbonisation faces two major obstacles: tight margins and the number of independent operators.
More than any other industry, crop production operates on extremely tight margins. Crop producers are sensitive to changing input costs and the prices of the goods they sell, both of which are volatile commodities. This means that any proposed solution to reduce emissions must not be at the expense of producer margin. Farmers are unlikely to change practices if it results in reduced margins in an already challenging industry, neither should they be expected to.
Secondly, farms in Australia are for the most part, multi-generation independently operated businesses. Existing farming practices and processes reflect generations of wisdom and values of stewardship for the land that is being cultivated. Changes to processes and inputs require significant consultation which, given the sheer number of producers, presents a significant operational barrier to manufacturers and retailers.
CURRENT APPROACHES TO REDUCE SCOPE 3 EMISSIONS
Companies have worked with farmers to introduce a wide range of initiatives to reduce scope 3 emissions. These initiatives include education and resources, grants, and subsidies.
EDUCATION & RESOURCES
Existing initiatives aim to equip farmers with information and tools on best practices for fertiliser use, soil health management, and crop rotation to improve yield and environmental performance. This approach empowers the farmer to do the best given the tools and existing technology they have at their disposal. It has been shown to be effective for yields, but has a low abatement potential as it does not address the underlying cause of emissions.
GRANTS
Grants provide financial support to purchase new equipment and technology to enhance farming practices and reduce emissions. This could include the introduction of fully electric harvesting machinery or precision fertiliser application machinery to decrease on-farm Nitrogen use. Grants provide the upfront capital to lower the barriers to adoption of existing technology. For many farms, grants are a powerful bridge to replace aging infrastructure. Grants are typically one-off cash injections to catalyse a change but do little to support the underlying cause of emissions.
SUBSIDIES
Subsidies aim to bring price-premium, low-emission technology to cost parity with incumbent technology. Companies have had good success in subsidising low-emission urea with inhibitors to maintain farmer costs while lowering emissions. Given that urea is the world’s most widely used fertiliser, even a modest uptake could have a profound impact on application emissions. Although this has a significant abatement potential there are two key issues. The embodied emissions in the fertiliser remain unaddressed and this solution requires ongoing commitment and support from companies, raising concerns about long-term economic viability of this solution.
Current approaches and initiatives have reduced emissions and will play an important part in reaching 2030 reduction targets. However, given the limited abatement potential, these approaches will be insufficient to reach net-zero emissions targets
FUTURE SCENARIOS
Moving forward we see three scenarios for how crop emissions will likely be reduced without compromising margins for farmers: (1) expansion of company subsidies, (2) consumers begin to send price signals and, (3) emerging technology is commercialised.
The Current Scenario outlined above acts as the baseline for comparison with the three alternative scenarios. It has been successful in terms of farm output, but has failed to deliver good environmental outcomes.
Current Scenario
Scenario 1 – Expanded Subsidies
Scenario 2 – Consumer Demand
Scenario 3 – New Technology
Scenario 1 is an expansion of the subsidy scheme in which costly but low-emission fertiliser (i.e. low emissions fertilisers with inhibitors) is continually subsidised by companies to reduce emissions. In future this could also include subsidies for fertiliser produced via green chemical processes. In all variations of this scenario, all extra costs are supported by companies in perpetuity.
Scenario 2 reflects a future in which consumers begin to demonstrate a willingness to pay a premium for low-emission food. Similar to premiums on organic produce or free-range products, increased revenue from customers will enable farmers to increase spending on input costs (i.e. low emissions fertilisers with inhibitors) which are offset by higher sell prices, assuming farmers capture some of that revenue uplift.
Both scenarios 1 and 2 rely on extra production costs being subsidised by a third party and neither addresses the underlying problem of embodied emissions from the synthesis and transport of fertilisers.
Scenario 3 reflects the commercialisation of emerging production technology which is able to deliver a zero emission (embodied and application) and cost competitive fertiliser.
PlasmaLeap’s platform technology offers a transformative solution for synthesising Nitrogenous fertilisers. Our breakthrough solution, eNFix, synthesises nitrate-based fertiliser with an ultra-low emissions profile. PlasmaLeap’s eNFix units are situated on or adjacent to the farms enabling chemical production powered by renewable energy, effectively eliminating embodied emissions. The proprietary underlying technology delivers world-leading energy efficiency which, coupled with localised production allows the output to be cost competitive with urea and cheaper than other green fertilisers. Once adopted, the technology will allow farmers to maintain or even improve yields and margin, while delivering significant environmental benefits.
REFERENCES
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