prodchem
Aug 18, 2026
Low-carbon fertilizer has spent years moving from concept to pilot projects, technology demonstrations, and ambitious decarbonization targets.
The bigger question has always been:
Who will actually pay for it?
In 2026, the answer is becoming clearer.
PepsiCo has emerged as a significant early buyer of lower-carbon fertilizer, signing commercial agreements with fertilizer producers including CF Industries and TalusAg. The agreements represent an important shift for the fertilizer industry because they connect low-carbon production with an identifiable downstream customer and agricultural supply chain.
This matters because fertilizer decarbonization cannot scale through supply alone.
Producers can build lower-carbon ammonia and fertilizer capacity, but long-term investment depends on credible demand.
The emergence of major food companies as buyers could provide that missing demand signal.
Nitrogen fertilizer is essential to modern agriculture.
However, producing ammonia—the foundation for most nitrogen fertilizers—is highly energy intensive.
Conventional ammonia production relies heavily on natural gas and generates significant greenhouse-gas emissions.
This creates a difficult challenge:
Agriculture needs more fertilizer productivity, while the fertilizer industry needs to reduce the emissions associated with producing that fertilizer.
The solution is not simply eliminating nitrogen fertilizer.
Instead, producers are exploring ways to manufacture the same agricultural inputs with a substantially lower carbon intensity.
Low-carbon fertilizer refers to fertilizer produced with significantly lower greenhouse-gas emissions than conventional products.
Several pathways are being developed.
These include:
Carbon capture and storage
Renewable hydrogen
Green ammonia
Biomethane
Improved process efficiency
Nitric-acid emissions reduction
Renewable electricity
Alternative production technologies
The important point is that low-carbon fertilizer is not one single technology.
Different producers may reach lower emissions through different production pathways.
In April 2026, CF Industries and PepsiCo announced a commercial agreement focused on reducing the carbon footprint of PepsiCo's U.S. potato supply chain.
The agreement represents CF Industries' first commercial launch of certified low-carbon UAN fertilizer.
The fertilizer is produced at CF Industries' Donaldsonville, Louisiana facility using carbon capture and sequestration alongside nitric-acid emissions-abatement technologies.
The lower-carbon UAN will be made available to farmers growing potatoes for PepsiCo's Frito-Lay brands.
This is significant because the fertilizer is being connected directly to a specific agricultural supply chain.
Instead of selling a low-carbon product into an undefined future market, the producer has a commercial customer with a measurable supply-chain objective.
PepsiCo is not a traditional fertilizer purchaser.
It is a food company with extensive agricultural supply chains.
That makes its purchasing decisions strategically important.
Food companies can influence agricultural emissions because they sit downstream from:
Fertilizer producers → Farmers → Crops → Food manufacturers → Consumers
By creating demand for lower-carbon fertilizer, a food company can influence emissions much earlier in its supply chain.
This is particularly relevant for companies with Scope 3 emissions-reduction targets.
Fertilizer production can represent a significant portion of the carbon footprint associated with crop production.
CF Industries and PepsiCo specifically note that fertilizer production represents approximately 15–20% of greenhouse-gas emissions in potato farming.
That creates a strong incentive for food companies to address fertilizer-related emissions.
The attraction of low-carbon fertilizer is that farmers can potentially maintain familiar nutrient-management practices while reducing the upstream carbon intensity of the input.
One of the most important features of the PepsiCo-CF Industries model is compatibility with existing agricultural operations.
Farmers can continue using the same type of nitrogen fertilizer while sourcing a product produced with a lower carbon intensity.
That reduces one of the biggest barriers to agricultural decarbonization:
operational disruption.
Farmers generally need solutions that work within existing equipment, application practices, crop systems, and yield expectations.
A lower-carbon fertilizer that can fit into the existing system is therefore commercially attractive.
The fertilizer industry's biggest challenge is not necessarily proving that lower-carbon production is technically possible.
The harder question is whether customers will pay for it.
Low-carbon production can require:
New equipment
Carbon capture infrastructure
Renewable electricity
Hydrogen production
New logistics systems
Certification
Measurement and verification
These investments require capital.
A credible buyer commitment can help producers justify those investments.
This is why commercial offtake agreements are strategically important.
The CF Industries agreement is not an isolated transaction.
In May 2026, PepsiCo announced another collaboration with TalusAg involving approximately 30,000 metric tons of low-carbon ammonia, with an option for an additional 41,000 metric tons. The initial agreements cover PepsiCo's Europe, Sub-Saharan Africa, Asia Pacific, and global teams.
PepsiCo has also entered into an agreement with Fertiberia for renewable fertilizer in Europe.
Industry sources report that PepsiCo's combined low-carbon fertilizer commitments with CF Industries, TalusAg, and Fertiberia amount to more than 345,000 tonnes per year by 2030, alongside additional agreements with Yara.
This suggests that low-carbon fertilizer procurement is beginning to move beyond isolated pilots.
The TalusAg agreement illustrates another pathway toward lower-carbon fertilizer.
TalusAg is developing distributed green-ammonia production systems that can produce ammonia closer to where it is needed.
Its model combines:
Renewable hydrogen
Distributed production
Local fertilizer supply
Environmental attribute tracking
The approach can potentially reduce dependence on long centralized supply chains while supporting lower-carbon production.
This is particularly interesting for regions where fertilizer logistics and supply security are major concerns.
The TalusAg agreement also introduces an important market mechanism.
Rather than requiring physical low-carbon fertilizer to travel through the entire supply chain to a specific end user, environmental attributes can be tracked separately through a book-and-claim structure.
PepsiCo's agreement with TalusAg uses environmental attribute certificates to track and retire the associated low-emissions attributes.
This can help solve an important early-stage problem:
The physical supply chain may not yet be ready, but the demand signal can begin today.
Low-carbon fertilizer needs credible measurement.
Without certification, customers may struggle to determine whether a product genuinely provides a lower carbon footprint.
Certification frameworks can evaluate:
Production emissions
Feedstock
Energy sources
Carbon capture
Process emissions
Product-level carbon intensity
CF Industries' lower-carbon UAN is certified through the Verified Ammonia Carbon Intensity Program, providing a framework for measuring its carbon-intensity advantage.
As the market expands, credible certification will become increasingly important.
The low-carbon fertilizer market includes multiple production pathways.
Green ammonia generally uses renewable electricity to produce hydrogen through electrolysis, followed by ammonia synthesis.
Its potential advantages include:
Very low production emissions
Renewable energy integration
Reduced dependence on fossil feedstocks
However, it can face challenges around:
Renewable power availability
Electrolyzer costs
Infrastructure
Project scale
Financing
Blue ammonia generally uses fossil-based hydrogen production combined with carbon capture and storage.
It can potentially reduce emissions substantially while using more familiar industrial infrastructure.
The commercial choice will depend on:
Carbon intensity
Production cost
Energy availability
Carbon-storage infrastructure
Certification
Customer requirements
Sustainability alone is unlikely to create a mass fertilizer market.
The economics must work.
Farmers ultimately need fertilizer that supports:
Competitive crop yields
Affordable input costs
Reliable availability
Consistent quality
Food companies also need cost-effective ways to reduce supply-chain emissions.
This creates a three-way economic relationship:
Producer economics + farmer economics + buyer sustainability goals
Low-carbon fertilizer will scale when these three interests increasingly align.
One of the industry's biggest unanswered questions is how much buyers are willing to pay for lower-carbon fertilizer.
A premium may be justified by:
Scope 3 emissions reductions
Consumer expectations
Corporate sustainability commitments
Regulatory requirements
Carbon accounting
Supply-chain differentiation
But the premium cannot become so large that it makes agricultural production economically unattractive.
The strongest business models will therefore likely combine:
Lower emissions + manageable cost + unchanged agricultural performance.
One reason lower-carbon fertilizer can scale relatively quickly is that some pathways can use existing fertilizer infrastructure.
For example, CF Industries' lower-carbon UAN can be distributed through existing agricultural channels to farmers supplying PepsiCo's potato business.
This reduces the need for farmers to completely redesign their fertilizer systems.
Infrastructure compatibility can therefore become a major competitive advantage for low-carbon fertilizer producers.
The business case is not only about carbon.
Distributed and regional fertilizer production could also improve supply resilience.
Global fertilizer markets can be exposed to:
Geopolitical disruptions
Natural-gas price volatility
Shipping constraints
Trade restrictions
Production outages
Regional supply shortages
Localized ammonia production can potentially reduce some of these risks.
TalusAg specifically positions distributed production as a way to strengthen fertilizer supply resilience and reduce exposure to long centralized supply chains.
For procurement teams, this development creates a new purchasing dimension.
Instead of evaluating fertilizer only by:
Price
Nutrient content
Availability
Supplier reliability
buyers may increasingly evaluate:
Carbon intensity
Certification
Production pathway
Traceability
Environmental attributes
Supply-chain emissions
Verification methodology
This can turn carbon intensity into another measurable procurement specification.
Large food companies may have an especially important role because they purchase agricultural products from thousands of farmers.
A single company can potentially influence fertilizer demand across an entire crop network.
This creates an interesting model:
One downstream buyer → many farmers → significant fertilizer demand
As more food companies adopt similar strategies, they could collectively create enough demand to support larger low-carbon fertilizer projects.
Traditional fertilizer producers have historically competed on:
Cost
Scale
Feedstock
Logistics
Product availability
The emerging low-carbon market adds another competitive dimension:
Carbon intensity.
Producers with access to:
Low-cost renewable energy
Carbon storage
Low-carbon hydrogen
Efficient production
Certification infrastructure
could develop new advantages.
This may eventually create a differentiated market alongside conventional fertilizer.
Lower-carbon fertilizer is also an R&D opportunity.
Companies are investing in:
More efficient ammonia production
Electrolyzers
Catalysts
Carbon capture
Nitric-acid emissions reduction
Renewable hydrogen
Enhanced-efficiency fertilizers
Nitrogen-use efficiency
Innovation can help lower the cost of decarbonization.
The most commercially successful technologies will likely be those that reduce emissions without compromising fertilizer performance.
Production is only one part of fertilizer emissions.
How efficiently crops use nitrogen also matters.
Technologies that improve nitrogen-use efficiency can potentially reduce:
Nutrient losses
Overapplication
Production requirements
Environmental impacts
This means the future fertilizer market may increasingly combine:
Low-carbon production + efficient agricultural use.
Procurement professionals should monitor:
How much lower are emissions compared with conventional fertilizer?
Is the carbon reduction independently verified?
What additional cost is associated with the lower-carbon product?
Can the supplier provide sufficient volumes?
Is the product based on CCS, renewable hydrogen, biomethane, or another pathway?
Can the environmental attributes be tracked through the supply chain?
Can farmers use the product without compromising yield or profitability?
For investors, the most important indicators include:
Commercial offtake agreements
Low-carbon fertilizer premiums
Production costs
Carbon-capture economics
Renewable hydrogen costs
Project financing
Certification standards
Customer commitments
Capacity expansion
Free cash flow
The transition will increasingly be judged by commercial results rather than announcements alone.
The significance of PepsiCo's agreements goes beyond the volumes involved.
They demonstrate a potential template for the market:
Producer develops low-carbon fertilizer → Food company commits to purchase → Farmers receive the product → Emissions are measured → Supply chain creates a lower-carbon agricultural product.
This structure can create demand that supports additional investment.
Other food and beverage companies have similar incentives.
Potential buyers include companies with large agricultural supply chains in:
Grains
Potatoes
Corn
Sugar
Oilseeds
Barley
Fruits and vegetables
As corporate Scope 3 targets become more specific, fertilizer emissions may become an increasingly important procurement category.
Low-carbon fertilizer has reached an important stage.
For years, the industry focused on whether lower-emissions ammonia and fertilizer could be produced.
The next question was whether farmers and downstream customers would actually use it.
The emergence of commercial agreements involving PepsiCo, CF Industries, TalusAg, Fertiberia, and other suppliers suggests that the market is beginning to answer that question.
The transition will not happen overnight.
Cost, certification, infrastructure, renewable energy availability, carbon-storage capacity, and farmer economics will all determine how quickly adoption expands.
But the market has crossed an important threshold:
Low-carbon fertilizer now has identifiable commercial buyers.
That changes the investment equation.
Producers have a clearer demand signal.
Food companies have a pathway to reduce agricultural supply-chain emissions.
Farmers can potentially adopt lower-carbon inputs without fundamentally changing their operations.
And procurement teams have a new category to evaluate.
The future of fertilizer may therefore be defined not only by how much nitrogen is produced, but by how efficiently and how cleanly that nitrogen reaches the farm.
Low-carbon fertilizer is moving from pilot projects toward commercial procurement.
PepsiCo has become an important early downstream buyer through agreements with multiple fertilizer producers.
CF Industries' agreement represents its first commercial launch of certified low-carbon UAN fertilizer.
PepsiCo's broader commitments demonstrate how food companies can create demand for lower-carbon agricultural inputs.
Low-carbon fertilizer can be produced through several pathways, including CCS, renewable hydrogen, biomethane, and process improvements.
Certification and carbon-intensity measurement will be essential for market credibility.
Book-and-claim systems can help create demand while physical low-carbon supply chains are still developing.
Farmers are more likely to adopt solutions that maintain familiar operations, crop performance, and input reliability.
Supply-chain resilience can provide an additional benefit alongside emissions reduction.
Procurement teams will increasingly need to evaluate fertilizer based on both price and carbon intensity.
Commercial offtake agreements can help derisk investment in new low-carbon fertilizer capacity.
The next phase of fertilizer decarbonization will depend on whether more buyers are willing to commit to lower-carbon products.
Featured Product
Found this useful?
Continue Reading
Explore how precision agriculture, AI, sensors, drones, smart spraying, and advanced agrochemicals are changing crop protection and creating a new yield premium through better targeting, efficiency, and product performance.
Discover how artificial intelligence, machine learning, laboratory automation, predictive modeling, and connected data are transforming chemical R&D and helping companies develop products faster, reduce costs, and accelerate innovation.
Explore why Corteva, ICL, and other premium-chemistry companies are emerging as growth leaders as the global chemical industry shifts toward differentiated products, innovation, specialty applications, and higher-value markets.
