December 2023Agriculture PracticeFrom green ammonia to lower-carbon foodsA sample consumer basket shows that employing green fertilizer could reduce greenhouse-gas emissions from agricultural end products by about 5 percent. This article is a collaborative effort by Peter Aagaard, Jens Riis Andersen, Tomas Nauclér, Pradeep Prabhala, and Kristina Wedege, representing views from McKinsey’s Agriculture Practice and McKinsey Sustainability.Agriculture is one of the primary contributors to greenhouse-gas emissions (GHG) and climate change. Agriculture is responsible for about 24 percent of global emission, making agricultural emissions a major focus of decarbonization efforts. Unless addressed, emissions from agriculture production and land use are likely to grow by 15 to 20 percent by 2050.1 Limiting the impact of climate change to 1.5°C will be difficult without cutting agricultural emissions substantially. Reducing GHG emissions fast and effectively may be more challenging for agriculture than for other sectors.2 While other sectors have a set of technologies through which they can choose to substantially reduce emissions, such options are less available in agriculture, and most known levers could disrupt existing production processes. In this article, however, we focus on one decarbonization lever that has great potential: replacing fossil-fuel-based ammonia (so-called gray ammonia) with green ammonia for fertilizer production. Fertilizer is the main application of ammonia; about 70 percent of global ammonia is used in its production. Ammonia production from fossil fuels is a sizable emissions contributor because the conventional gray ammonia production process generates carbon dioxide as a byproduct. Between 1.9 and 2.6 metric tons (t) of carbon dioxide are generated for every t of ammonia produced.3 In 2020, global ammonia production accounted for about 450 million metric tons (Mt) of carbon dioxide emissions—about 1.2 percent of global emissions—which is about 37 metric gigatons (Gt) of CO2 equivalents. In comparison, crop and livestock rearing generate about 5.3 GtCO2 per year.4 Eliminating those emissions would contribute substantially 1 Robbie Andrew et al., “A review of trends and drivers of greenhouse gas emissions by sector from 1990 to 2018,” Environmental Research Letters, June 2021, Volume 16, Number 7; Food and Agriculture Oganization, 2022; Robbie M. Andrew et al., “Global carbon budget 2020,” Earth System Science Data, December 2020, Volume 12, Number 4; Climate Watch; Sustainability Insights EMIT database; Nico Bauer et al., IAMC 1.5°C Scenario Explorer and Data hosted by IIASA, Integrated Assessment Modeling Consortium & International Institute for Applied Systems Analysis, 2019.2 “Reducing agriculture emissions through improved farming practices,” McKinsey, May 6, 2020.3 Amgad Elgowainya, Xinyu Liu, and Michael Wanga, “Life cycle energy...
