Ammonia for fertilisers, feedstock and energy carrier: a clean market with booming opportunities

Context and Challenges

• Ammonia, as a critical input for fertilisers, is still predominantly produced from natural gas, making it both carbon‑intensive and highly exposed to geopolitical volatility in energy and fertiliser markets.
• Europe faces a strategic vulnerability: high reliance on imports and a growing tension between decarbonisation goals, industrial competitiveness, and food price sensitivity.
• Although RED III sets ambitious targets, panellists stressed that targets have not yet translated into effective demand creation, maintaining activity at pre‑FID levels.

Perspective

• Green ammonia for fertilisers is a system test for the hydrogen economy: scaling requires aligning policy with demand signals, financing and infrastructure, while managing the political sensitivity of agriculture and consumer prices.
• The core question is not whether green ammonia is needed, but how to make it bankable and socially acceptable at scale.

Main messages

1. Green ammonia for fertilisers could be one of the strongest demand anchors to scale the hydrogen economy, but demand is not yet effectively activated
 

• Christelle Werquin positions fertilisers as the main current ammonia outlet and therefore a key segment for the hydrogen economy, linking decarbonisation, food security and sovereignty.
• Laurent Donceel highlights that despite the sector’s scale and strategic importance, low willingness to pay and import pressure prevent projects from moving beyond the pipeline stage.

2. Carbon Border Adjustment Mechanism (CBAM) and subsidies help protect EU production, but only binding offtake commitments can unlock FIDs

• José Antonio de las Heras underlines that CBAM, and subsidies are necessary to protect European production, but insufficient to trigger FIDs without binding offtake commitments.
• Laurent Donceel confirms that price signals alone will not close the cost gap in the short term, making lead markets essential to translate policy ambition into investable projects.

3. Policy design must reflect the sector’s political sensitivity and redistribute the cost away from farmers to downstream consumers
 

• Laurent Donceel points out that fertilisers are politically sensitive and that transferring additional costs to farmers is not viable, calling for demand creation further downstream in the good value chain.
• José Antonio de las Heras supports downstream obligations as a way to create a level playing field and enable market-wide uptake.

4. Industrial scale-up will rely on complementary models combining European production and international supply
 

• Yousra Souaf presents Morocco as a complementary green ammonia hub for Europe, provided that regulation, financing, export corridors and infrastructure are aligned.
• Jean Freysz shows that ammonia cracking is a key enabler to connect international ammonia supply with European hydrogen demand and support concrete project deployment.

Key takeaways

• Fertilisers can anchor large-scale hydrogen demand: decarbonising ammonia for fertilisers is one of the fastest ways to build stable volumes, but projects will not move forward without stronger market pull.
• Lead markets are more decisive than additional targets: CBAM and subsidies are helpful, yet FIDs will only materialise if demand-side instruments create bankable offtake for low-carbon fertilisers.
• Cost allocation will determine acceptability: the additional cost cannot be borne by farmers; hence, demand mechanisms must be designed downstream in the food value chain to preserve competitiveness and social acceptance.
• Hybrid model to scale-up: Europe will need a combination of domestic production and strategic imports, enabled by infrastructure and technologies such as ammonia cracking.

Analytical synthesis courtesy of SIA Partners