Landus expects small 'green' ammonia plants to make big dent in farmers' fertilizer costs

• Talus Renewables plans to build nearly 80 modular "green" ammonia plants in Iowa and other Midwestern states over the next two years.
• The green ammonia, produced with water, air and renewable energy, will be used to make nitrogen fertilizer needed by farmers to help grow crops that feed people and livestock.
• The Talus plants' planned production is small compared to U.S. farmers' total nitrogen fertilizer purchases. But the company says its modular plants, using wind or solar energy instead of fossil fuels, can lower farmers' carbon intensity score by 25% and cut costs by up to 30%, thanks to federal tax credits.

An initiative that began in Africa and is taking root in Iowa is expected to bring competition to the nation's highly consolidated fertilizer industry and dramatically shrink farmers' climate impact.

Talus Renewables, a Reno, Nevada, startup, plans to build nearly 80 modular "green" ammonia plants, primarily in Iowa and other Midwestern states, over the next two years. As many as 20 could be built in Iowa in partnership with Des Moines-based Landus Cooperative, says Hiro Iwanaga, Talus’ CEO and cofounder.

Already TalusAg, a Talus subsidiary, is building a $10 million modular green ammonia plant near Eagle Grove in northwest Iowa for Landus farmer members. And a demonstration plant near Boone at Landus' elevator is nearly operational.

The green ammonia, produced with water, air and renewable energy, will be used to make nitrogen fertilizer needed by farmers globally to help grow crops that feed people and livestock. In Iowa, tractors towing tanks of ammonia fertilizer are a common sight during the planting season for corn, the state's leading crop.

Most of the world's fertilizer, including ammonia, currently is made using natural gas or coal, contributing 2% of the world's greenhouse gas emissions. Talus says its modular plants, using wind or solar energy instead of fossil fuels, can lower farmers' carbon intensity score by 25% and cut costs by up to 30%, thanks to federal tax credits.

"When you can take 25% or greater out of our farmers' carbon intensity score just by purchasing green fertilizer, and at a discount, you can imagine farmers are pretty excited about this," says Matt Carstens, Landus' CEO.

"It feels somewhat like winning the lottery," Carstens says.

Seeking to bring competition to industry dominated by four firms

The Talus plants' planned production is small compared to U.S. farmers' total nitrogen fertilizer purchases. With all the plants, Talus would produce 546,000 tons annually in a U.S. market that consumes about 12 million tons of commercial nitrogen fertilizer annually.

The Talus operation near Eagle Grove, for example, will produce about 7,000 tons of ammonia a year, enough for nearly three dozen area farmers. Still, Talus is adding competition in an industry dominated by just a few players, says Matt Chambers, a north-central Iowa farmer who leads Landus' board of directors.

CF Industries, Koch Industries, Nutrien and Yara-USA hold 75% of the nitrogen fertilizer market, the U.S. Department of Agriculture reported last year. Under President Joe Biden's orders to increase competition in the U.S. economy, the U.S. Department of Agriculture is pumping $500 million into sparking more sources of domestic fertilizer.

“Competition should drive prices down,” says Chambers, who farms near Audubon. “Right now, there isn’t anyone else producing” fertilizer in the U.S.

And there are other financial benefits, he says: Corn becomes more valuable in markets that pay extra for crops produced with slimmer carbon emissions — whether it’s used to feed cattle and other livestock or to make soda and snacks or renewable fuel like ethanol.

“Then you’ve got multiple markets … that are willing to pay more money,” Chambers says.

Green fertilizer plants can learn, think for themselves

Large, white containers sit near Landus’ new $15 million fertilizer production and distribution facility at its Boone elevator. Inside the containers are the guts of Talus' modular green ammonia plant, expected to produce 1 ton of ammonia a day.

TalusAg designed its plants for sub-Saharan Africa, where nitrogen fertilizer for growing crops is extremely expensive and difficult to obtain. Talus wanted to develop a plant that could be “rapidly deployed, with very little installation work,” Iwanaga says, given the challenges of finding the experts needed to build conventional plants in rural Africa.

The plants also needed to be able to run on intermittent power, both in Africa and the U.S.

“If you want to be green, you can’t run 24-7, unless you have hydro, right. If you’re next to the Hoover Dam, maybe,” says Iwanaga, a former investment executive who co-founded Talus with engineer David L. Toyne. With “solar and wind, you just can't do that.”

And the plants need to operate autonomously, says Iwanaga, who describes the facility as a “a large learning algorithm machine” that takes in data about the weather and renewable power availability and “maximizes production of ammonia based on that power availability.”

Using electrolysis, powered by solar or wind energy, Talus will separate hydrogen from oxygen in water, H2O. Then it will use a chemical process to combine the hydrogen with nitrogen from outside air to make ammonia, the key ingredient in nitrogen fertilizers.

Iwanaga says the Iowa plants will be the first commercial operations of their type in the U.S.

Talus has built a solar array near its Boone demonstration plant, which will provide about 80% of the project’s energy. It will use renewable energy credits to purchase the remainder of its power needs.

The company will take a similar approach at other locations, Iwanaga says: Build its own wind or solar energy projects, where possible; buy renewable energy from local providers through power purchase agreements; and purchase renewable energy credits.

While the plant operates autonomously, Talus has full control remotely.

“We can start or shut it down,” Iwanaga says, adding that Talus engineers also are on site for six months while the plant is commissioned.

The systems must meet federal safety requirements and are fully tested before they arrive at sites, he says.

Since plants will be built in rural areas, near where farmers will use the fertilizer, the company doesn’t anticipate opposition, Iwanaga says. If the company finds, however, that a community is uncomfortable with a plant, “we understand. We’ll move on down the road,” he says.

Tax credits make the difference in cost

Chambers says his fertilizer prices nearly tripled in 2022, when Russia invaded Ukraine. Russia is the world’s largest fertilizer exporter, and the war exacerbated “an already tight global supply situation that had begun in 2020 with COVID-19-related worker shortages and factory shutdowns,” the St. Louis Federal Reserve reported.

“It was shocking,” Chambers says, adding that luckily, corn, soybean and other commodity prices rose along with fertilizer prices, so farmers could support the higher costs. That is, if farmers could get the needed fertilizer, he says.

Talus should provide a stable supply and price, Chambers says.

Iwanaga says federal tax credits that were part of the 2022 Inflation Reduction Act to spark green hydrogen production make the price of green ammonia 20% to 30% less costly than traditional “fossil fuel-derived” fertilizer. The tax credit equals about $500 per ton.

“That’s how we get to a price that’s cheaper than fossil fuel-derived commodity,” he says.

For its part, Landus has agreed to long-term purchase agreements with Talus.

Iwanaga says that it’s important that the tax credits stay in place for 10 years as outlined in the federal spending package. They’re supporting American farmers, manufacturing and energy independence. When the tax credits sunset, technological improvements and efficiencies should help keep prices low for farmers, says Tristan Peitz, who leads business development for Talus.

While the plants themselves don’t create a lot of jobs where they’ll be located, Iwanaga says the cost savings can help create on-farm jobs.

“Those aren’t Talus jobs. They’re farm jobs,” he says.

Climate change; A lot of farmers 'want to do something about it'

Chambers says not all farmers accept that climate change is happening, even while growing crops in more and more extreme weather, which includes a statewide, crop-smashing derecho in 2020 and a just-ended four-year drought that was followed by record flooding.

But there also “are a lot of farmers that get it. They feel it, they know it and they want to do something about it,” he says.

Not only is Landus helping farmers lower their environmental impact, the cooperative is helping them document it. And that data — from tracking the impact of using conservation practices like green fertilizer, growing cover crops or eliminating tillage — has value that likely will increase in the years ahead.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.