towards more sustainable food and agricultural systems, through measures such as reducing food waste and more resource-efficient food production.

For nearly 100 years the IFA has been working with actors across the fertiliser value chain, from production to application, to promote best management practices and reduce environmental impacts. The IFA collects statistics on fertilisers, focusing on fertilisers applied to croplands, and also develops scenarios for future demand. We used the IFA Business As Usual Scenario for fertiliser demand as a baseline to define cropland fertiliser demand in the Stated Policies Scenario in this roadmap. Specifically we used the FAO Business As Usual Scenario’s agricultural production levels and medium-level ambition on improving nutrient management. The IFA has also developed a composite scenario to inform cropland fertiliser demand in the Sustainable Development Scenario in this roadmap. It is informed by agricultural production levels from a combination of the FAO Business As Usual Scenario and Towards Sustainability Scenario (depending on the region) and has higher ambition on improving nutrient management.

We have used the outputs from these work streams – together with those of the OECD’s own work in this area – to inform the IEA’s long-standing framework for material demand projections, including the projections for nitrogen, ammonia and urea demand and production developed for use in this technology roadmap. Demand is driven by industrial value added and population growth, with saturating per-capita demand once an advanced level of economic development is reached. We have also used the IEA’s evaluation of stocks of materials in society and material efficiency opportunities that can reduce non-fertiliser ammonia use, including increased plastic reuse and recycling.

The outlook for production

Increasing demand for nitrogen – driven by a growing population, higher living standards and increased protein consumption – sees global ammonia production grow by 37% in the Stated Policies Scenario relative to today to reach 253 Mt NH3 (208 Mt N) by 2050.2 At an average annual rate of 1.1%, this growth is somewhat slower than the 1.5% annual growth seen in the previous three decades. In the Sustainable Development Scenario ammonia production is 10% lower in 2050 compared to the Stated Policies Scenario due to the greater adoption of nutrient use and material efficiency strategies. Thus, production grows by 23% to reach 228 Mt NH3 in 2050 (0.7% average annual growth). While total urea production

grows by 36% by 2050 in the Stated Policies Scenario, it declines by 14% during the same period in the Sustainable Development Scenario. This results from lower demand for urea fertilisers in order to reduce the release of CO2 when urea is applied to soils, as discussed above.

Ammonia and urea production by region for Stated Policies Scenario and Sustainable Development Scenario

Notes: STEPS = Stated Policies Scenario; SDS = Sustainable Development Scenario; NZE = Net Zero Emissions by 2050 Scenario. Ammonia used as an energy carrier is not included.

In the Sustainable Development Scenario ammonia production grows moderately while urea production declines. Growth is strongest in the Middle East, Central and South America, and Africa.

The ammonia market is currently dominated by Asia Pacific, which produced 47% of the world’s ammonia in 2020. China alone accounted for 30% of global production. Following rapid growth of 4% per year from 1990 to 2010, production in China has grown at a slower rate of 1% per year since 2010, which is below the global average rate of growth. In the Sustainable Development Scenario, Asia Pacific remains the largest ammonia-producing region, even as its share declines somewhat to 42% of global production in 2050. Production in China peaks in the next 5 to 10 years and then declines by almost 35% by 2050, as a result of restructuring shifting the economy away from heavy industry towards higher valueadded industries and sectors. Still, it remains the largest producing country in 2050, at 16% of global production. Meanwhile, production in India grows over twofold to reach 15% of global production and Southeast Asia by 1.7 times to reach 8% of global production, as part of increasing industrial activity in these rapidly growing economies. This more than makes up for the decline in China such that total ammonia production in Asia Pacific grows by 10% by 2050.

The remainder of current global production is spread more evenly across the other regions. Leading ammonia-producing countries include those with access to natural gas supplies at competitive prices, including the United States, Russia and Middle Eastern countries, as most ammonia outside China is currently produced from natural gas, and energy inputs are one of the main contributors to production costs. In the Sustainable Development Scenario access to competitive natural gas supplies remains a key factor determining where production occurs, even as natural gas-based capacity is increasingly paired with CCS (see Chapter 2, “Technology pathways towards net zero emissions”).

Advanced economies see relatively flat levels of production in the Sustainable Development Scenario. In Europe and North America, production growth is less than 10% by 2050 relative to today, although both regions maintain about 10% of global market share. Meanwhile, strong growth occurs in the Middle East, Africa, and Central and South America, all of which see roughly a doubling of production by 2050 relative to today. These regions account for 14%, 8% and 7% of global production respectively in 2050. The factors contributing to high growth in these regions include economic development, industrialisation, and increasing agricultural output to feed growing populations.

The regional distribution of urea production today and in the future is similar to that of ammonia production, given the close link between production of the two commodities. In the Sustainable Development Scenario a key difference from ammonia is that since urea production is declining globally, most regions have either flat or falling urea production. Southeast Asia and the Middle East see modest growth until about 2030, followed by eventual declines in production. This contrasts with the Stated Policies Scenario where most regions continue to see growing urea production, broadly in step with growth in ammonia production.

Box 2.4 Technology modelling methodology

The technology model used to generate the results for ammonia in this technology roadmap forms part of the IEA chemical sector model, which is one of the IEA’s six detailed industry sub-sector models. The five other models cover the iron and steel, cement, pulp and paper, aluminium and other industry sub-sectors. The models interact with other models in the IEA via price signals (e.g. for fuels),

availability of resources (e.g. biomass) and user constraints (e.g. CO2 emission trajectories and the availability of CO2 storage).3

The industry modelling architecture used for this publication consists of three main components: activity modelling (production and demand), capacity modelling (examining the existing stock of production equipment) and technology modelling (the selection of technologies used to meet the required production levels). This industry modelling framework sits within a broader energy system modelling architecture, with various cost signals and constraints being taken from other sub-sector model results. The aim of the modelling is to present energy, emissions and investment implications of least-cost technology pathways for a given scenario definition.

The technology modelling is at the heart of the model, with the other models creating intermediate results with which to inform its inputs and constraints. The technology model is implemented in the TIMES (The Integrated MARKAL-EFOM System) model generator, using 40 model regions to obtain global coverage. The chemicals model selects from a range of ammonia production technologies with a technology readiness level (TRL) of five and above (for discussion of the IEA TRL scale, see Box 2.6). The technology choice is performed in annual time steps, based on constrained optimisation that aims to minimise system cost while satisfying demand for ammonia. System cost includes capital expenditure (CAPEX) and fixed operating expenditure (OPEX), along with energy and feedstock costs where relevant. Cost and energy parameters for technologies at an early stage of development are obtained in consultation with industry experts.

Ammonia demand and production projections are based on country-level macro-economic data and historical production levels, informed by FAO and IFA projections for fertiliser demand (see previous box). The technology model must satisfy these production levels while conforming to various scenario-specific constraints, such as limits on the availability of certain energy carriers and constraints on CO2 emissions, as well as other constraints to reflect the regional political economy and other circumstances.

The capacity model provides a signal of the existing capacity of ammonia production facilities, along with a projection of their phase-out rate over time. The capacity model takes account of the regional variation in the predominance of specific technology types, as well as the timeframe since the installation or last major refurbishment of each individual plant, to provide region-specific phase-out rates for existing facilities.