Local fertilizer manufacturing: A new look at agro-business

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Courtesy of Verde LLC

The American farmer works in a tough business. Aside from the demanding physical and mechanical processes to raise fertile crops from tiny seeds, the farmer must also battle against supply for adequate water, the right seeds, pest and weed control products, and various fertilizers. All these elements have added stress and cost to bring a crop to market, making it less profitable than ever to operate an effective farm business and keep employees paid. As the world gets more connected and technology becomes more advanced, you would think there must be a way for the farmer to take back what’s theirs, to take the reins of their destiny so to speak. In fact, there are emerging technologies that are giving control back to farmers, with small scale equipment for producing required materials closer to the farmgate, reducing costs and making farms more profitable. To explain what I am getting at, I bring up the case of fertilizer production. Specifically, producing anhydrous ammonia – the most common nitrogen fertilizer in the world.

The ammonia production technique preferred by large, wholesale manufacturers uses reformed natural gas to create hydrogen, the primary element of ammonia. The essential element of ammonia fertilizer, nitrogen, is easily taken from the surrounding air. Hydrogen is necessary for the process because of it fixates nitrogen in a form that is easily applied to soil. Producing hydrogen, however, takes significant energy. Prior to reforming hydrogen containing natural gas, hydrogen was obtained through early electrolysis technology – running electric current through water to create hydrogen and oxygen. When it was discovered that using natural gas to make ammonia at a very large scale was cheaper than using electricity, market demand pushed manufacturers to greater use natural gas and electrolysis was abandoned in ammonia production.

For the last 60 years, natural gas has been the primary fuel stock for fertilizer manufacture, controlled by a handful of multi-national manufacturers. Because the business is so competitive, manufacturers often source their ammonia from less expensive countries in the Middle East, Asia, and Eastern Europe. In the following paragraphs I will argue the case for returning fertilizer manufacture using electrolysis, on a small and local scale, and providing economic, social, and environmental benefits to farmers and farming communities. Today, new advances in electrolysis technology and how it is applied make a good case for ammonia users, distributors, and manufacturers to turn their attention towards this alternate production method.

For perspective on current fertilizer manufacturing, the carbon emissions from steam reforming natural gas are estimated to contributing to 10% of greenhouse gas emissions as carbon monoxide and carbon dioxide. This article will not support the position of greenhouse gases causing “global warning,” however, there is no disputing the toxic nature of both gases to human health. This is especially the case for carbon monoxide, and every year thousands of people die silently in their homes due to faulty natural gas furnaces or gas-main leaks. The amount of pollution that steam reforming of natural gas contributes to our air is noteworthy. Because every step should be taken to reduce the input of poison into the lungs of humanity, reducing the use of this manufacturing process should be a priority.

As mentioned previously, using electrolysis to make the hydrogen in ammonia was common practice before the discovery of natural gas reforming. The cost of the practice, and the pollution from the source of electricity (coal electric plants) were what drove natural gas in favor of electrolysis. Today though, the economics and the environmental concerns with the process have changed. Huge advancements in electrolysis devices have made the process much more efficient. Additionally, the proliferation of renewable, clean energy sources enables electrolysis using energy which does not pollute. Furthermore, there is an inherent characteristic of renewable electricity which makes electrolysis for ammonia production worthy of consideration: the price of electricity is extremely low at certain times. Renewable electricity like from wind turbines or hydro-electric dams often produces power when there are not people to use it – especially at nighttime. Because of low demand, electricity prices are very low and therefore ammonia manufacturers can run electrolysis devices very inexpensively. In some instances, ammonia producers may even find the benefit of their own renewable energy assets to produce their own electricity at an even lower cost.

But how is this cheaper than using natural gas? Natural gas prices are an all-time low right now – that is undisputable. But, everybody understands that prices do not stay constant, especially for oil and gas. Natural gas prices will rise, which begs the question, what are the implications for fertilizer manufacturers who have invested heavily in natural gas infrastructure? What is obvious is that those who invest in more sustainable business models will be the ones that last, and maintain profitability. Because wind and solar are natural resources and therefore free, they don’t have price fluctuations like natural gas. So while gas prices go up and up, fertilizer producers using electrolysis can lock in their price – remaining profitable and independent of large oil and chemical companies.

An electrolysis based ammonia system has benefits beyond what can be measured in dollars and cents. Because you don’t need large infrastructure like gas pipelines or reforming equipment, hydrogen electrolysis and small scale ammonia production can be performed in any small town or farming community. Rather than pay big companies thousands or even hundreds of thousands each year for the chemicals that enable farmers’ livelihood, small scale ammonia production offers another option. Locally made product keeps money within the community and reduces expenses that are tacked on because of cross-state transportation. Further, because the infrastructure is all local there will be new jobs created to operate the equipment and manage the new product. Last, small scale ammonia production is truly suited for the Midwest because electricity prices are already low and there is an abundance of renewable energy from wind turbines already on many farms. Utilizing low cost electricity and their own ammonia production technology, farmers and farm communities can continue to grow and thrive in the changing economy.

This model may not be for everyone, but the numbers and the facts don’t lie. Producing your own supplies has real logistic and economic benefits. The low cost of electrolysis and ammonia forming equipment make the case even stronger. If the region is constrained by a lack of renewable energy, renewable energy grants and low interest loans are still available to rural communities through state and federal government. The next five years will see new competitors in the ammonia business; I believe the main competitor is going to be the American farmer.

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