The Canadian government wants to
reduce fertilizer emissions by 30% by 2030
According to a study unveiled in Glasgow at COP26, global production and use of synthetic nitrogenous fertilizers contributes to 21.5% of annual emissions from the agricultural sector, which represents 2.4% of global greenhouse gas emissions. Nitrogen fertilizers are produced from natural gas, the main component of which is methane, a GHG that is 25 times more potent than CO2 at trapping heat. The adverse environmental effects go beyond emissions. Excessive application of synthetic nitrogen fertilizers has been shown to acidify and degrade the quality of soils, which affects productivity. In addition, the escape of nitrogen into waterways stimulates algal blooms and leads to the destruction of aquatic ecosystems.
The demand for these products continues to increase year after year. In 2021, the size of the nitrogenous fertilizer market was estimated at USD $57 billion and is projected to reach USD $88 billion by 2030. In terms of supply chain hurdles, the cost of fertilizer has increased drastically over the passed year. Canadian agricultural producers import up to 90% of their nitrogenous fertilizer from Russia, the world’s largest exporter. Given the sanctions imposed against Russia in the current geopolitical context, producers are dealing with the fallout. In Quebec alone, the price of nitrogen fertilizer is now $1200 per ton, compared to $650 last year.
In Canada, fertilizer use per capita is eight times higher than the world average. To address this problem, the federal government set out a goal to reduce GHG emissions from nitrogen fertilizers by 30% by 2030. According to a recent survey by the Canadian Federation of Independent Business, three-quarters of farmers believe this would reduce their overall food production. In a second survey conducted by the same group, 361 farmers reported that they have already implemented measures or plan to adopt better practices to manage or reduce their nitrogen fertilizer emissions. These include conservation tillage (53%), annual soil nitrogen testing (50%) and crop rotation including legumes and other types of nitrogen-fixing plants (50%).
Although methods and processes exist to reduce the use of nitrogenous fertilizers, farmers face a multitude of challenges. Whether it’s the availability of existing technologies, the know-how or access to capital, achieving environmental goals ultimately depends on the collaboration between various market participants. Governments, the private sector, and financiers all have important roles to play in supporting agricultural producers.
Cleantech innovation and the commercialization of new agricultural technologies are key to overcoming the challenges of the 21st century. One of our AgriTech portfolio companies, ChrysaLabs, commercialized a mobile probe for real-time soil sampling. By providing agricultural producers with data on soil health, it allows them to apply the right amount of fertilizer in the right places, at the right time. The Ecofuel Fund supports companies in AgriTech that offer solutions for reducing the environmental impacts of fertilizers.