Energy supply

Energy is a key driver of economic and social development. At the same time, economic growth challenges the world’s ability to secure sufficient energy supplies while moving towards a lower-carbon energy system. New and cleaner energy sources must be developed in order to meet future demand in the face of rising global temperatures and human consumption.

A key component of the challenge is to switch to renewable energy, as an alternative to the fossil fuels that dominate today’s energy supply.

The International Energy Agency (IEA) has projected that energy demand will have grown by 55 percent between 2005 and 2030. Demand for energy is now rising particularly in economies that have seen strong growth, such as China and India. In less-developed regions, such as Africa south of the Sahara, there is a critical shortage of energy. Still, China and India alone are expected to account for about 45 percent of the estimated total increase in world primary energy demand by 2030, transforming the entire global energy system.

The steep rise of world energy prices in 2007–2008 created major concern in many countries, threatened economic growth and public services in general and food security in particular, because the prices of energy and food are closely related. In developing countries a main concern is basic energy supply. In the developed world, a major concern is lasting energy security.

Global energy security, however, is both strategically important and politically sensitive precisely because it involves economic development along with national security, climate change and ecological diversity. A worldwide effort is needed to tackle the issue through conservation and development of renewable energy sources, with a new level of collaboration between the public and private sectors. One alternative source of energy that has come into political fashion is bio-energy. Production has risen in recent years but came under pressure during the food crisis of 2007/2008, when the moral dilemma of fuel versus food arose. Declining oil prices in 2008 and early 2009 reduced the commercial benefit of bio-fuel, which is still costly to produce.

The industrial sector and Yara have an important role to play in the energy supply issue, and can make a significant and positive difference. Use of best available technology and operating procedures, maintenance and upgrading of production facilities and careful capacity utilization can all improve industrial energy efficiency and reduce harmful emissions. Adopting energy efficiency policies also makes sense both for business and society, yielding good economic, environmental and social returns on investment.

Industry represents close to 30 percent of the world’s primary energy consumption. Fertilizer production, Yara’s major business, accounts for about 1 percent of world energy consumption, mostly for the synthesis of ammonia. The manufacturing of Yara’s industrial products also involves energy-intensive processes. Yara therefore consumes a great deal of energy, most of which is derived from fossil fuels. Yara’s business contributes to the extraction of non-renewable raw materials as well as to the emission of greenhouse gases. Modern ammonia plants, however, use about half the energy-per-ton-of-product compared with those designed in the 1960s, and energy efficiency efforts will continue with greater urgency. Yara is one of the world’s most energy-efficient fertilizer producers and is committed to continued improvement.

While the production of fertilizers depends on energy, it is important to note that fertilizer also generates energy. Mineral fertilizer boosts crop growth, resulting in extra biomass, which in turn captures additional solar energy. When this effectively concentrated energy is then used as food or feedstuff, transformed into calories, it increases the positive energy balance of agriculture. Fertilizer then, is a catalyst for capturing solar energy, a clean energy source.

With growing pressure to use land for cultivation of bio-fuel crops, mineral fertilizers are also playing a new and increasingly important role in global energy security. The energy balance of crop production is positive, although there are large differences in the energy output depending on the energy crop used and its growing conditions. What is beyond dispute is that energy yields can be increased substantially by the use of fertilizers, particularly in developing countries. Fertilizer is the key factor in increasing a crop’s biomass, and consequently its energy yield.

Operating in an energy-intensive industry, Yara aims to take a lead in meeting the energy challenge. By leveraging its global reach, driving the industry towards sustainable business development and setting global standards for production processes and distribution models, Yara will continue to offer leadership. Yara will also leverage the company’s ongoing research and innovation (by licensing clean technology for commercial use, for example) to help steer the industry towards a more sustainable future.