Modern farming depends on massive amounts of ammonia fertilizer, almost all of it made from fossil gas in enormous chemical plants. These facilities use high heat and pressure to split that gas, mostly made up of methane, into hydrogen and carbon dioxide. The carbon dioxide goes into the atmosphere, and the hydrogen is mixed with air, where it bonds with the nitrogen under high pressure via the century-old Haber-Bosch process.
The resulting ammonia is a carrier for the nitrogen that plants crave, but producing it this way is highly carbon-intensive, accounting for nearly 2 percent of global carbon dioxide emissions today. And that ammonia can be costly. The farmers who purchase it are subject to severe price spikes tied to the volatile fossil gas market. Transporting the fertilizer to farmers from where it is produced also adds hundreds of dollars per ton.
Outside the town of Boone, Iowa, startup Talusag and Landus, one of the state’s biggest farming cooperatives, are working on a new method for producing ammonia — tapping electricity to make the chemical from water and air, using technology that could be deployed at modular scale across the country and around the world.
Talusag’s first pilot-scale facility in North America, built at a cost of about $5 million and powered by on-site solar, is capable of producing 1 to 2 tons of ammonia per day, said Talusag CEO and co-founder Hiro Iwanaga. Earlier this year, a test batch was applied to farm fields, marking the first commercial delivery of “green ammonia” from a small-scale facility in North America, according to the partners.
Talusag has already started building a larger project in the nearby town of Eagle Grove, Iowa, that will be capable of producing up to 20 tons of ammonia per day. That facility, which Iwanaga said will cost about $15 million and be running later this year, will tap into grid supplies of wind power, which provides nearly three-fifths of Iowa’s annual electricity generation.
“We only deploy projects where we are cost-competitive or better with the incumbent competition,” he said.
That’s fairly straightforward in the markets that Iwanaga and his team initially targeted. The startup launched in 2021 “largely as a philanthropic venture” to help farmers in developing countries, he said, where fertilizer is far more expensive due to shipping costs. Its first project uses solar power at a nut farm in Kenya, for example. Talusag is pursuing more projects for remote farms, as well as for mining operations that use ammonia to produce explosives, where transportation costs are a significant burden.
But even in America’s agricultural heartland, Talusag can propose long-term contracts at set prices at or below the cost of ammonia shipped via pipeline from the Gulf Coast and then by tanker trucks to further-flung farms, Iwanaga said.
There’s an important caveat to that, however. Talusag’s ammonia is only cost-effective in U.S. markets if generous federal incentives for producing hydrogen with low or zero carbon emissions remain in place — a prospect that is looking increasingly uncertain.
Can small-scale green ammonia plants supply cheaper, more reliable fertilizer?
Talusag’s facilities use electrolyzers to split water into oxygen and hydrogen. The gas, commonly called “green hydrogen,” is then fed into miniaturized versions of the gigantic Haber-Bosch reactors at industrial ammonia plants. That chemical process yields no greenhouse gas emissions — and if it uses clean electricity, it’s completely carbon-free.
Those green credentials are a nice “ancillary benefit” of the green ammonia that Landus plans to obtain from Talusag’s two Iowa facilities, said Brian Crowe, the cooperative’s vice president of strategic initiatives. But far more important to Landus and its farmer-owners are the prospects of securing a lower-cost source of fertilizer that’s made closer to home, he said.
Landus was first introduced to Talusag back in 2022, when ammonia prices rose to nearly double their typical levels, due in large part to the global disruptions to fossil fuel supplies caused by Russia’s invasion of Ukraine, Crowe said. Landus buys, stores, and transports tens of thousands of tons of ammonia per year for its farmer-members, and the agriculture industry at large was “kind of scrambling to figure out, how do we hedge against this?”
The Talusag offering “seemed like a practical solution,” he said. “Make it close to where it’s needed, do it modularly, and lock in the price to create more price stability. They produce it, we take it and pay them for it — or they don’t, and we don’t.”
Iwanaga noted that Landus isn’t taking on financial risk with these projects. Talusag pays for building and producing its green ammonia. That structure puts the pressure on Talusag to deliver on the quality and the low price it has promised to buyers.
But it also potentially provides the company with the long-term revenues it needs to secure project financing, rather than relying on equity capital. Talusag raised a $22 million series A round in 2023 and is exploring projects with other farmer cooperatives in the Midwest and Pacific Northwest, as well as outside the U.S., Crowe said.
The economic balancing act for green ammonia in the U.S.
Shorter supply lines and fixed long-term prices are valuable features of Talusag’s modular model for producing green ammonia. But Iwanaga conceded that the company’s future in U.S. markets hinges on a key federal incentive that may not be around much longer — the 45V hydrogen production tax credit created by the Inflation Reduction Act.
