Nitrogen fertilizer is critical to Brazil’s agricultural output and has a significant role in its national economy and food security. However, Brazil’s nitrogen fertilizer supply is almost entirely dependent on imports, which fulfill 97 percent of the national demand. This exposes the country to global volatility and geopolitical uncertainties, as highlighted by the Russia–Ukraine conflict and the ensuing hike in imported urea prices in 2022.

However, with its rich endowment of renewable energy resources, Brazil has an economic opportunity to transform its fertilizer supply from import-dependent to a self-sustaining, competitive, and climate-aligned industry. This Insight Brief explores the agricultural and fertilizer landscape in Brazil, outlining key challenges and opportunities to scaling a robust domestic low-carbon fertilizer supply chain.

The key challenges include high up-front capital costs for renewable projects, high natural gas prices for conventional production, energy infrastructure limitations, and an absence of clear standards, certification systems, and financial instruments for low-carbon fertilizers. However, RMI’s analysis shows cause for optimism: green ammonia and fertilizer made from electrolysis technologies are cost competitive with fossil-based blue and gray options in some locations with favorable conditions.

Renewable ammonia prices are now cost-competitive with fossil ammonia in some regions

There is a clear need for bold, early action with effective levers to overcome the challenges and bring this opportunity to reality. This brief highlights five key areas for action that can be taken immediately:

• Strategic vision: Build a coordinated vision and roadmap for fertilizer decarbonization that aligns agricultural productivity with Brazil’s net-zero goals.

• Policy alignment: Harmonize policies and develop clear definitions, targets, and incentives for low-carbon fertilizers within Brazil’s national frameworks.

• Investment mobilization: Reduce capital costs and de-risk projects through blended finance and long-term offtake mechanisms.

• Infrastructure expansion: Improve energy infrastructure connectivity to enable lower-cost green hydrogen and biomethane integration.

• Demand activation: Build demand-activation mechanisms to ensure value recognition and create coordinated demand expectations from buyers.

Deliberate policy, investment, and market coordination will allow Brazil to transition from a fertilizer importer to a global leader in sustainable fertilizer production, and to drive economic growth and price stability for farmers into the future.

This report was written with support from Sequoia Foundation. Views reflect those of the authors and not necessarily those of the supporting organization.