The closure of the Strait of Hormuz has sent shockwaves across the energy and food markets of the EU, Africa and Asia. Nitrogen fertilisers are particularly hard hit: the Gulf region exports both fertilisers and the natural gas used to produce fertilisers elsewhere. This may be a crisis in the making – one that will hit some more than others.
Price hikes haven’t yet matched the 2022 start of Russia’s war, but some analysts warn that the current crisis could have an even bigger effect, as Middle Eastern natural gas is tied to multiple geographies. Stockpiles may buy short-term relief for some, but others are already facing immediate supply chain disruptions.
As there is no end in sight, governments and farmers need to act swiftly to contain these effects, but also think how to mitigate the medium-term impacts and reduce their vulnerability long-term, including by going green.
Calm before the storm?
In 2022, the EU responded to the global repercussions with emergency aid, international coordination, and commodity market support, only a month into the war. This fast response came in part to rally support against Russia’s position in the multilateral system, but also to address the major disruptions in grain shipments exports from Russia and Ukraine, which impacted food markets immediately. Today, the mood in Brussels is that ‘this is not the EU’s war’ and comes on top of other priorities, resulting in a quite muted response.
Internally, however, the energy crisis has added pressure on the already-strained EU decarbonisation agenda. Some member states have called to exempt fertilisers from the carbon border adjustment mechanism and for using revenue from its emissions trading system to lower gas prices. Others are subsidising fuel for farmers. These responses may offer short-term relief, but risk complicating the EU’s longer-term decarbonisation and energy security.
Sub-Saharan Africa’s fertiliser dependency is laid bare – again
The war once again exposes the extreme fertiliser dependency of Sub-Saharan Africa. The region is uniquely vulnerable as it almost entirely imports (up to 90%) its limited usage from outside. Low local production and high inland transport costs makes Sub-Sahara African fertilisers some of the most expensive in the world. The result is a deep underutilisation by African farmers, a gap that economic shocks only widen. The 2022 fertiliser crisis showed that even when global fertiliser usage stays steady, profitability for low-income African farmers can still plummet.
Europe has been hesitant to support mineral fertiliser production in Africa as inconsistent with EU energy and environment policies. It follows a too narrow interpretation of sustainability: fertiliser production and use does emit much carbon, yet Africa’s underfertilisation is driving hunger, huge land use change emissions and biodiversity loss.
African leaders recognise ‘the fertiliser’ problem of underuse and import dependency. The 2006 Abuja target, focused on increasing use, was widely missed. The 2024 Nairobi Declaration seeks to triple domestic production, and some African countries are well placed to start. Those with natural gas reserves – Nigeria, Egypt and Ethiopia – are looking to expand grey (i.e., natural gas-derived) fertilisers, while those without – Uganda and Kenya – are seeking to leverage their renewable energy potential to produce green (i.e., low-carbon) fertilisers.
Though no fix for the current crisis, its urgency may spur investments into greater African fertiliser production – or at least provide a push to turn the pipeline into reality. In East Africa, for example, there have been a slew of announcements, but realising them would be helped by a regional approach to achieving the necessary economies of scale – a sore point still.
The EU needs industrial partnerships – including with (North) Africa
The current crisis underscores a hard truth for Europe: it remains an energy-poor continent, dependent on imported LNG and fertilisers. Without a rapid increase in clean energy and hydrogen production, the EU will struggle to achieve fertiliser strategic autonomy. A case in point is that Russia, even after four years of aggression, is still a top exporter of fertilisers to the EU.
One way forward is to develop deep industrial partnerships with other countries to stabilise energy and fertiliser supply chains. While natural gas sources can be diversified somewhat, the risk is further dependence on US LNG, jeopardising the EU’s long-term decarbonisation goals and energy security by further delaying its energy transition.
The alternative is green (low-carbon) fertilisers, but the economic case for making this in the EU is troublesome. With electricity prices well above those of its competitors, it is more costly to produce green fertilisers in the EU than in areas with better renewable energy potential. Transporting the green hydrogen faces technical obstacles. In some cases it may be cheaper to produce it elsewhere (e.g., Brazil or Morocco) and import the final (green) product, or at least the intermediary green ammonia. This is similar for other energy-intensive products like green iron and steel or synthetic fuels.
The challenge lies in avoiding replacing current energy and fertiliser dependencies with other, greener ones, and rather build strong relationships that secure EU fertiliser supply even if not everything is produced domestically.
“Developing deeper EU-Africa industrial partnerships can combine African investment needs with EU industrial strategy and supply chain diversification.”
Developing deeper EU-Africa industrial partnerships can combine African investment needs with EU industrial strategy and supply chain diversification. The EU’s approach to such partnerships is rapidly evolving, but on-the-ground results can be patchy and slow. Even in green (low-carbon) hydrogen production, EU investors are being outrun – such as in the case of the green fertiliser plant in Kenya by the Chinese investor Kaishan.
The 2026 energy and fertiliser crisis should especially serve as a wake-up call for industrial partnerships with North Africa. Egypt and Morocco on paper have everything to become frontrunners in green hydrogen and low-carbon fertilisers. The Mediterranean region could simultaneously help European energy security and support African long-term fertiliser production goals.
Yet despite ambitious plans, and early pilots, project pipelines have been shrinking amid high financing costs, and weak European demand signals for green hydrogen and low-carbon goods. Green energy and low-carbon fertilisers, however, can be a hedge against future disruptions – something not well factored into finance and investment decisions.
Green fertilisers are the future, but where will they come from?
This war exposes vulnerabilities where European and African countries have limited options. But the urgency of this crisis offers a rare opportunity to reassess the partnerships needed for a resilient fertiliser sector on both sides. European and African partners should take this moment to account more explicitly for supply chain risks and the strategic value of diversification, and where their interests overlap.
About the Authors:
Dr Koen Dekeyser is a policy analyst in ECDPM’s sustainable food systems and climate action and green transition teams.
Alfonso Medinilla is the head of ECDPM’s climate action and green transition team. He focuses on the geopolitics of the global green transition and renewable energy.