Scaling low-carbon fertilizers: agri-food sector calls for EU support

Agriculture is responsible for more than 10% of Europe’s greenhouse gas emissions, and fertilizers account for a significant share of that footprint. In fact, on average, 25-30% of the total climate impact of most crops come from fertilizers alone. These emissions arise during fertilizer production, which is today very energy-intensive and mainly based on natural gas. Deploying low-carbon fertilizers offers one of the fastest and most scalable opportunities to decarbonize food production, but uptake requires collaborative investment across the value chain.

The good news? The technology to reduce these emissions already exists.

Low-carbon fertilizers, produced using renewable ammonia or based on natural gas with carbon capture and storage (CCS), can reduce greenhouse gas (GHG) emissions related to the production of fertilizers by up to 95%. This reduction is measured at the factory gate and varies by fertilizer type, nitrogen content, extent of the CCS employment, and origin of the renewable ammonia. The reduced fertilizer footprint translates to up to -30% GHG emissions in crops.  Some of these fertilizers are already available on the market. Others are ready to scale. But they remain a niche solution in a food system that considers fertilizer as a commodity, and not as a high-value strategic input, despite its essential role in ensuring crop growth and crop quality. Yet, there is no technical barrier, as these fertilizers do not require changes in farming practices, rather an economic one. Producing low-carbon fertilizers costs much more today than conventional alternatives. However, fair cost-sharing mechanisms across the value chain are essential to empower farmers and contribute to emissions reductions.

How to overcome this challenge? Value chain partnerships are key to unlocking a decarbonized food future in Europe.

Collaboration across the agri-food value chain is crucial for accelerating best practices, and for a fair distribution of the decarbonization cost across the food value chain.  We, at Yara Europe and PepsiCo Europe, are pioneering together the climate transition of everyday foods – like bread, or crisps. Announced in 2024, our long-term partnership starts with farmers, who are provided with best-in-class crop nutrition products and advice as well as precision farming digital tools. This allows the farmers that PepsiCo locally sources ingredients from to further improve the nutrient use efficiency to optimize their yield, and to reduce the carbon footprint of their crops, such as potatoes, oats and corn. The collaboration supports around 1,000 farmers across Europe, representing about 25% of its farmers in the region. Yara is supplying PepsiCo, a global leader in convenient foods and beverages, with the services and products, including Yara Climate Choice^TM Fertilizers produced from renewable ammonia or lower-carbon ammonia via Carbon Capture and Storage (CCS). By 2030, the partnership is expected to support up to 80% reduction of fertilizer production emissions and up to 20% reduction of in-field fertilizer emissions across approximately 128,000 hectares within PepsiCo’s European supply chain.

So, the problem is solved and we can stop there? Not quite.

The agri-food sector lacks adequate support for investments in low-carbon solutions, and this must change, starting with clear, decisive policy. Agricultural emissions largely stem from natural processes occurring in open environments, making them inherently more complex and challenging to manage. Yet, this complexity should not be a reason for inaction.

At PepsiCo and Yara, we recognize that farmers cannot carry the burden of transition alone. Industry leadership, investment, and aligned public policy must work together to unlock new solutions at scale.

In many ways, low-carbon fertilizers are the perfect test case for Europe’s next phase of climate policy. They offer rapid and measurable emissions reductions, with no change required to farmers’ practices, nor to consumer habits. Their uptake can be tracked. Their impact can be verified. And they can be scaled – if demand is incentivized.

How could that look like in practice?

First, it means recognizing low-carbon agri-food value chain as a priority “Lead Market” under the Industrial Decarbonization Accelerator Act (IDAA), with targeted incentive schemes to bridge the initial cost gap and support deployment of low-carbon fertilizers at commercial scale. This includes addressing two critical enablers: the cost of transition and the infrastructure required for scale-up. For instance, production of renewable ammonia depends heavily on the availability of affordable renewable electricity and sufficient grid capacity, and lower carbon ammonia based on CCS relies on CO2 storage availability as well as transport and storage services affordability for the emitters.

Second, it means designing a set of measures that encourage uptake across the entire food chain. A mix of solutions should include clear and simple rules for making claims on products produced with lower GHG emissions, such as low-carbon fertilizers. By prioritizing investment in these infrastructure areas, and ensuring clear market signals and incentives, IDAA can create the foundation for industrial transformation and help scale up low-carbon fertilizers across Europe by establishing a harmonized certification for these agricultural inputs.

The European fertilizer industry stands ready to invest in cleaner production processes. The food chain is ready to partner in reducing its Scope 3 emissions. Farmers are ready to innovate – when solutions are affordable and they are rewarded with a premium. But none of these actors can act alone. What is needed now is a coordinated policy framework that connects innovation with impact, and technology with uptake. The IDAA is an opportunity to establish that connection. By including low-carbon fertilizers as a strategic investment priority, the EU can unlock fast, measurable gains in food system emissions, while supporting industrial competitiveness and farmer resilience at the same time.

The tools are here. The stakeholders are aligned. The benefits are clear. What’s missing is momentum, and political will.  This policy cycle is a crucial opportunity to act decisively, and address one of the most powerful levers for climate progress in Europe. Low-carbon fertilizers are not just a technical fix, they are a test of Europe’s ability to turn ambition into action, and words into lasting impact.