Decarbonizing the Ammonia Fertilizer Supply Chain in Brazil – RMI

Report on Brazil’s Transition to Sustainable Fertilizer Production and Alignment with Sustainable Development Goals

1.0 Introduction: Current Challenges and SDG Implications

Brazil’s agricultural sector, a cornerstone of its economy and a critical component for achieving SDG 2 (Zero Hunger), is highly dependent on imported nitrogen fertilizer. Approximately 97 percent of the national demand is met through imports, creating significant vulnerability to global market volatility and geopolitical instability. This dependency threatens national food security and economic stability, directly impacting the nation’s ability to maintain sustainable agricultural output. Furthermore, the reliance on conventionally produced fertilizers undermines progress towards SDG 13 (Climate Action) due to the high carbon footprint associated with their production.

2.0 Opportunity for a Sustainable Transition

Brazil possesses abundant renewable energy resources, presenting a strategic opportunity to develop a self-sufficient, low-carbon domestic fertilizer industry. This transition aligns with several Sustainable Development Goals:

• SDG 7 (Affordable and Clean Energy): Leveraging renewable resources to produce green ammonia and fertilizer via electrolysis promotes the use of clean energy.
• SDG 9 (Industry, Innovation, and Infrastructure): Establishing a domestic green fertilizer supply chain fosters industrial innovation and builds resilient infrastructure.
• SDG 8 (Decent Work and Economic Growth): The shift from import dependency to domestic production can stimulate significant economic growth and create new employment opportunities.
• SDG 12 (Responsible Consumption and Production): Localizing production of low-carbon fertilizers encourages more sustainable production patterns within the agricultural sector.

Analysis indicates that green ammonia produced through electrolysis is already cost-competitive with fossil-based alternatives in certain regions of Brazil, making this transition economically viable.

3.0 Barriers to Achieving Sustainable Production

Several challenges impede the scaling of a domestic low-carbon fertilizer industry and the realization of associated SDGs. These include:

• High upfront capital investment required for renewable energy and green ammonia projects, hindering progress on SDG 9.
• Elevated natural gas prices for conventional production methods, complicating the transition.
• Limitations in energy infrastructure, which constrain the integration of green hydrogen and biomethane needed for SDG 7.
• A lack of clear regulatory frameworks, including standards, certification systems, and financial instruments for low-carbon fertilizers, which inhibits market development aligned with SDG 12 and SDG 13.

4.0 Strategic Recommendations for Action

To overcome these barriers and capitalize on the opportunity, a coordinated, multi-stakeholder approach is required. The following five strategic actions are recommended:

1. Develop a Strategic Vision: Formulate a national roadmap for fertilizer decarbonization that integrates agricultural productivity goals under SDG 2 with Brazil’s net-zero commitments under SDG 13.
2. Ensure Policy Alignment: Harmonize national policies to create clear definitions, targets, and incentives for low-carbon fertilizers, fostering a supportive environment for achieving climate and sustainability goals. This requires robust partnerships as outlined in SDG 17 (Partnerships for the Goals).
3. Mobilize Investment: Implement blended finance models and long-term offtake agreements to reduce capital costs and de-risk private investment in green fertilizer projects, thereby accelerating progress on SDG 8 and SDG 9.
4. Expand Infrastructure: Prioritize investments in energy infrastructure to improve connectivity and facilitate the integration of lower-cost green hydrogen and biomethane, which is fundamental to scaling up actions for SDG 7.
5. Activate Demand: Create market mechanisms that ensure value recognition for sustainable products and coordinate demand from buyers, driving the market towards responsible production and consumption patterns as envisioned in SDG 12.

5.0 Conclusion

Through deliberate policy implementation, targeted investment, and market coordination, Brazil can transition from a fertilizer importer to a global leader in sustainable fertilizer production. This strategic shift will not only enhance food security and economic stability for its agricultural sector but also significantly advance its commitments to the Sustainable Development Goals, particularly those related to climate action, clean energy, and sustainable industry.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article addresses several interconnected Sustainable Development Goals (SDGs) by focusing on Brazil’s transition from an import-dependent fertilizer market to a self-sufficient, sustainable, and low-carbon industry. The following SDGs are relevant:

• SDG 2: Zero Hunger: The article directly links nitrogen fertilizer to “Brazil’s agricultural output” and “national food security.”
• SDG 7: Affordable and Clean Energy: The proposed solution relies on Brazil’s “rich endowment of renewable energy resources” to produce “green ammonia and fertilizer made from electrolysis technologies.”
• SDG 8: Decent Work and Economic Growth: The transition is presented as an “economic opportunity” that can “drive economic growth” and create a “competitive” domestic industry.
• SDG 9: Industry, Innovation, and Infrastructure: The article calls for “infrastructure expansion” and building a “robust domestic low-carbon fertilizer supply chain” using innovative technologies.
• SDG 12: Responsible Consumption and Production: The shift from conventional “fossil-based blue and gray options” to “low-carbon fertilizers” promotes sustainable production patterns.
• SDG 13: Climate Action: The core theme is “fertilizer decarbonization” to create a “climate-aligned industry” that supports “Brazil’s net-zero goals.”
• SDG 17: Partnerships for the Goals: The article emphasizes the need for “deliberate policy, investment, and market coordination” and “blended finance” to achieve the transition.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s discussion of food security, renewable energy, economic growth, and climate action, the following specific SDG targets can be identified:

1. Target 2.4 (under SDG 2): By 2030, ensure sustainable food production systems and implement resilient agricultural practices. The article’s focus on creating a “sustainable fertilizer production” system directly supports this target by reducing reliance on volatile import markets and promoting climate-friendly agriculture.
2. Target 7.2 (under SDG 7): By 2030, increase substantially the share of renewable energy in the global energy mix. The proposal to use Brazil’s renewable resources for “electrolysis technologies” to produce green fertilizer is a direct application of this target.
3. Target 8.2 (under SDG 8): Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. Developing a domestic “low-carbon fertilizer” industry represents a technological upgrade and economic diversification away from import dependency.
4. Target 9.4 (under SDG 9): By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies. The call to build a “robust domestic low-carbon fertilizer supply chain” and “improve energy infrastructure” aligns perfectly with this target.
5. Target 13.2 (under SDG 13): Integrate climate change measures into national policies, strategies and planning. The recommendation to build a “coordinated vision and roadmap for fertilizer decarbonization” and harmonize policies within “Brazil’s national frameworks” is a direct implementation of this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article implies several indicators that can be used to measure progress, even if it does not cite official SDG indicator codes:

• Indicator for SDG 2: The article states that Brazil’s imports “fulfill 97 percent of the national demand.” A key indicator of progress would be the percentage of national fertilizer demand met by domestic, low-carbon production. Another implied indicator is “price stability for farmers,” which could be measured by tracking the volatility of domestic fertilizer prices compared to global prices.
• Indicator for SDG 7: The article discusses the “high up-front capital costs for renewable projects.” Progress could be measured by the amount of new renewable energy capacity (in MW) installed specifically for green ammonia and fertilizer production. The cost-competitiveness of green ammonia versus fossil-based options is also a key metric mentioned.
• Indicator for SDG 9: The need for “Infrastructure expansion” is highlighted. An indicator would be the total investment mobilized (e.g., through “blended finance”) for new energy and production infrastructure related to low-carbon fertilizers.
• Indicator for SDG 13: The goal is “fertilizer decarbonization.” A direct indicator would be the reduction in greenhouse gas emissions (in tons of CO2 equivalent) from Brazil’s fertilizer production sector compared to a baseline of imported, fossil-based fertilizers.

4. Table of SDGs, Targets, and Indicators

Source: rmi.org