CF Industries and POET to Demonstrate the Use of Low-Carbon Fertilizer in Corn Production to Reduce Carbon Intensity of Ethanol

Rhea-AI Summary

CF Industries and POET have announced a collaboration to pilot the use of low-carbon ammonia fertilizer in corn production to reduce the carbon intensity of ethanol. This initiative aims to decrease the carbon intensity of ethanol by up to 10%. The companies plan to begin applying low-carbon ammonia in fall 2024 and spring 2025, with the first crop harvested in fall 2025.

The project will develop a low-carbon fertilizer supply chain, tracking and certifying carbon intensity reduction from CF Industries' Donaldsonville Complex to POET's bioprocessing plants. The collaboration includes implementing supply plans with fertilizer retailers and creating monetization opportunities for farmers using low-carbon fertilizer. Initially, the project will use green ammonia produced at CF Industries' Donaldsonville Complex using a 20MW electrolyzer.

Positive

• Potential to reduce carbon intensity of ethanol production by up to 10%
• Development of a traceable low-carbon fertilizer supply chain
• Creation of monetization opportunities for farmers using low-carbon fertilizer
• Utilization of green ammonia from CF Industries' 20MW electrolyzer at Donaldsonville Complex

Negative

• None.

Insights

Financial Analyst

CF Industries' collaboration with POET to develop low-carbon ammonia fertilizer is indeed noteworthy. One key takeaway is the potential for increasing ethanol demand with lower carbon intensity, aligning with low-carbon fuel standards. This initiative could enhance CF Industries' future revenue streams by catering to a more environmentally conscious market. Investors should watch for the upcoming financial reports to verify if CF Industries reports an increase in sustainable fertilizer sales and any discernible impact on CF Industries' top and bottom lines.

In terms of capital investment, the installation of a 20MW electrolyzer and the imminent start-up marks a significant capital deployment. While this upfront cost might temporarily hinder margins, the long-term benefits of reduced carbon emissions and alignment with regulatory standards likely outweigh these initial expenses. This could position CF Industries as a market leader in green ammonia, a growing segment within the hydrogen economy.

Focusing on the long-term, investors should consider the scalability of this project. If the initial application in 2024-2025 proves successful, CF Industries could replicate this across more locations, amplifying its revenue potential and market share in sustainable agricultural inputs.

Environmental Sustainability Expert

This collaboration is significant for the agricultural and biofuel sectors in addressing climate change. Using low-carbon ammonia fertilizer can cut the carbon intensity of ethanol by up to 10%, a substantial reduction. Furthermore, the term 'green ammonia' is important here—it refers to ammonia produced using renewable energy, which drastically reduces its carbon footprint compared to conventional methods reliant on fossil fuels. This move aligns well with many governments' increasing regulatory pressures and incentives for cleaner agricultural and industrial practices.

However, investors should note the feasibility and scalability of green ammonia production. The electrolyzer's effectiveness and the consistent supply of renewable energy are both critical. The project's success could set a precedent for large-scale adoption, but any technical hitches or inconsistencies in renewable energy supply could present significant drawbacks.

In the short-term, the initiative may not heavily impact financials immediately, but the long-term environmental benefits and compliance with future regulations could be a game-changer, providing CF Industries and POET a competitive edge in a market increasingly leaning towards sustainability.

Market Research Analyst

The partnership between CF Industries and POET comes at a time when the market for low-carbon fuels is rapidly expanding, driven by stringent low-carbon fuel standards globally. This initiative places both companies ahead of the curve in delivering products that meet these evolving standards. The expected increase in ethanol demand with lower carbon intensity could be substantial, particularly in regions with aggressive decarbonization goals.

From a market perspective, the initiative could open up new revenue streams not just for CF Industries but also for POET's bioproducts by emphasizing sustainability. This could attract environmentally-conscious consumers and investors, potentially increasing market share and stock valuation. Besides, the development of a low-carbon fertilizer supply chain could provide a unique selling proposition for POET's ethanol, differentiating it from competitors.

In the long-term, the ability to validate and certify carbon intensity reduction will be critical. This transparency and traceability could become a strong marketing point, enhancing brand credibility and consumer trust. Investors should monitor how this initiative progresses and its reception in the market, as this could indicate future profitability and stock performance.

NORTHBROOK, Ill.--(BUSINESS WIRE)-- CF Industries Holdings, Inc. (NYSE: CF), a leading global manufacturer of hydrogen and nitrogen products and the world’s largest producer of ammonia, and POET LLC, the world’s largest producer of biofuel and a global leader in sustainable bioproducts, today announced a collaboration to pilot the use of low-carbon ammonia fertilizer to reduce the carbon intensity of corn production and ethanol. Demand for ethanol with a lower carbon intensity is expected to increase significantly to meet low-carbon fuel standards.

Ammonia is commonly used as a direct application fertilizer for U.S. corn production, but the conventional ammonia production process is emissions intensive. As a result, ammonia production is a significant contributor to the lifecycle carbon intensity of corn production and thus ethanol production. Producing ethanol with corn grown using low-carbon ammonia can reduce the carbon intensity of ethanol up to 10 percent. The companies are targeting the fall of 2024 for the first applications of low-carbon ammonia with subsequent applications in spring of 2025, to produce a first crop to be harvested in the fall of 2025.

“We are pleased to collaborate with POET on this important step forward in developing a low-carbon ethanol value chain that links low-carbon fertilizers to farmers to ethanol production,” said Bert Frost, executive vice president, sales, supply chain and market development, CF Industries. “Fertilizers manufactured with a lower carbon intensity provide a quantifiable and certifiable method of decarbonizing bioethanol inputs. We look forward to demonstrating these benefits not just for ethanol production but for corn growers as well.”

“At POET, we have always striven to bring new value to our producers and our partnership with CF Industries continues this mission,” said Christian McIlvain, President of POET Grain. “We want to prepare and educate our corn producers on the realities of the impact of the carbon in their grain. This initiative not only gives producers a low-carbon ammonia option but also provides the opportunity to educate them on their farm’s carbon score and what that could mean for their grain value.”

The companies intend to jointly develop a low-carbon fertilizer supply chain to track, validate and certify carbon intensity reduction originating from low-carbon ammonia manufacturing at CF Industries’ Donaldsonville Complex in Louisiana, through ethanol production at POET’s locations in Bingham Lake, MN, Emmetsburg, IA, Fairmont, NE and North Manchester, IN. This includes implementing supply plans with fertilizer retailers serving farms that supply corn to these POET bioprocessing plants and developing monetization opportunities for farmers who use this low-carbon fertilizer. Producers can reach out to their local POET grain merchandiser for more information.

For the demonstration project’s fall 2024 and spring 2025 low-carbon ammonia applications, the companies will leverage green ammonia produced at CF Industries’ Donaldsonville Complex. Green ammonia refers to ammonia produced with hydrogen sourced from an electrolysis-based production process that produces no carbon dioxide emissions but is otherwise identical to commodity ammonia. CF Industries recently completed installation of a 20MW electrolyzer at its Donaldsonville Complex. Start-up of the electrolyzer is imminent and the Company intends to purchase renewable energy certificates to pair with the start-up to enable green ammonia production. CF Industries will have additional low-carbon ammonia at the Donaldsonville Complex beginning in 2025 when a large-scale carbon capture and sequestration project at the facility commences.

About CF Industries Holdings, Inc.

At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our manufacturing complexes in the United States, Canada, and the United Kingdom, an unparalleled storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy. CF Industries routinely posts investor announcements and additional information on the Company’s website at www.cfindustries.com and encourages those interested in the Company to check there frequently.

About POET

POET’s vision is to create a world in sync with nature. As the world’s largest producer of biofuel and a global leader in sustainable bioproducts, POET creates plant-based alternatives to fossil fuels that unleash the regenerative power of agriculture and cultivate opportunities for America’s farm families. Founded in 1987 and headquartered in Sioux Falls, POET operates 34 bioprocessing facilities across eight states and employs more than 2,400 team members. With a suite of bioproducts that includes high-quality animal feed, corn oil, green asphalt rejuvenator, purified alcohol, and renewable CO2, POET nurtures an unceasing commitment to innovation and advances powerful, practical solutions to some of the world’s most pressing challenges. Today, POET holds more than 100 patents worldwide and continues to break new ground in biotechnology, yielding lower-carbon, more efficient renewable energy and bioproducts.

Cautionary Statement

All statements in this communication by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other than those relating to historical facts, are forward-looking statements. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These statements may include, but are not limited to, statements about strategic plans and management’s expectations with respect to the production of low-carbon fertilizer, the development and implementation of the low-carbon supply chain with POET in a timely or economic manner, the development of carbon capture and sequestration projects, greenhouse gas reduction targets, projected capital expenditures, statements about future financial and operating results, and other items described in this communication.

More detailed information about factors that may affect the Company’s performance and could cause actual results to differ materially from those in any forward-looking statements may be found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent annual and quarterly reports on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the Company’s web site. It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events, plans or goals anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on our business, results of operations, cash flows, financial condition and future prospects. Forward-looking statements are given only as of the date of this communication and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240715373596/en/

Media

Chris Close

Senior Director, Corporate Communications

847-405-2542 – cclose@cfindustries.com

Investors

Darla Rivera

Director, Investor Relations

847-405-2045 – darla.rivera@cfindustries.com

Source: CF Industries Holdings, Inc

FAQ

When will CF Industries (CF) and POET begin applying low-carbon ammonia fertilizer for corn production?

CF Industries and POET plan to begin applying low-carbon ammonia fertilizer in fall 2024 and spring 2025, with the first crop expected to be harvested in fall 2025.

How much can low-carbon ammonia fertilizer reduce the carbon intensity of ethanol production?

According to the announcement, using low-carbon ammonia fertilizer in corn production can reduce the carbon intensity of ethanol by up to 10%.

Which POET bioprocessing plants are involved in the CF Industries (CF) low-carbon fertilizer project?

The project involves POET's bioprocessing plants in Bingham Lake, MN, Emmetsburg, IA, Fairmont, NE, and North Manchester, IN.

What is the source of green ammonia for CF Industries' (CF) initial low-carbon fertilizer applications?

The initial low-carbon fertilizer applications will use green ammonia produced at CF Industries' Donaldsonville Complex using a recently completed 20MW electrolyzer.