Market and product

Content editor: Bảo Hiền

Instead of relying on massive centralized chemical complexes, the future of fertilizer production may lie in small-scale ammonia plants located close to where fertilizers are needed, according to a new international study. Researchers say the decentralized approach could shorten supply chains, reduce greenhouse gas emissions, and make fertilizer supplies more resilient to geopolitical disruptions.

The study, conducted by scientists from the Paul Scherrer Institute (PSI), ETH Zurich, and the Carnegie Institution for Science at Stanford University, was recently published in Energy & Environmental Science. The research team evaluated approximately 13,000 global scenarios to determine where decentralized ammonia production could become both environmentally sustainable and economically competitive.

Ammonia is an essential feedstock for nitrogen fertilizers and plays a critical role in global food production. Today, most ammonia is manufactured at a relatively small number of large industrial facilities before being transported over long distances to agricultural regions. While this centralized model benefits from economies of scale, it also depends heavily on fossil fuels and vulnerable global supply chains.

According to the researchers, recent disruptions around the Strait of Hormuz, which contributed to sharp increases in fertilizer prices, highlighted the fragility of today's supply networks.

Renewable electricity replaces natural gas

Conventional ammonia production accounts for an estimated 1–2% of global greenhouse gas emissions. The primary source of these emissions is the Haber-Bosch process, which relies on hydrogen produced from natural gas, generating significant amounts of carbon dioxide.

The researchers propose replacing fossil-based hydrogen with hydrogen produced through water electrolysis powered by renewable electricity such as wind and solar energy. The hydrogen is then combined with nitrogen from the air to produce ammonia. They describe ammonia production as one of the most promising applications for green hydrogen, since many other sectors can be directly electrified while ammonia manufacturing still requires hydrogen as a chemical feedstock.

Unlike conventional ammonia plants that produce millions of tonnes annually, the proposed modular facilities would operate at lower temperatures and pressures and could be integrated directly with local renewable energy resources.

The researchers say this decentralized approach could reduce transportation requirements, improve operational flexibility, and strengthen fertilizer supply security.

Location determines environmental benefits

However, the study emphasizes that electrically produced ammonia is not automatically low-carbon.

The environmental performance depends largely on the electricity source. If grid electricity is generated primarily from coal-fired power plants, the carbon footprint of so-called "green" ammonia could actually exceed that of conventional production. The researchers identified countries such as Poland and South Africa as examples where this could occur under current electricity mixes.

By contrast, regions with abundant renewable energy, low electricity prices, and favorable financing conditions offer the strongest potential. Based on the simulations, China and the Netherlands currently rank among the most promising locations for decentralized low-carbon ammonia production.

The researchers also compared three production configurations: fully off-grid renewable systems, grid-connected systems, and hybrid systems combining renewable generation with grid electricity. Hybrid plants delivered the best overall economic performance, while fully off-grid systems achieved the lowest emissions but required significantly larger investments in renewable generation and energy storage.

Costs could become competitive by 2050

Although electrolysis-based ammonia remains more expensive than conventional production today, the researchers expect the cost gap to narrow substantially over the coming decades as electrolyzers, battery storage, and renewable electricity continue to become cheaper.

Other recent studies have similarly suggested that once transportation costs and supply-chain risks are taken into account, decentralized ammonia production could become economically competitive in many regions, particularly in areas far from existing industrial hubs or those vulnerable to supply disruptions.

The researchers note that wider adoption will require continued investment, internationally recognized standards for low-carbon ammonia, and stable government policies that support industrial decarbonization.

Beyond fertilizer production, green ammonia is increasingly attracting attention as a potential carbon-free marine fuel and as an efficient carrier for transporting and storing hydrogen, making it a strategically important technology in the global energy transition.

Sources
• Paul Scherrer Institute (PSI). Fertiliser from the neighbourhood – where local ammonia plants make economic sense. July 16, 2026.
• Tom Terlouw et al. Energy & Environmental Science. Research on decentralized low-carbon ammonia production systems.
• ETH Zurich.
• Carnegie Institution for Science, Stanford University.