Washington Green Fertilizer Incentive Study

Washington farms apply more than 575,000 tons of nitrogen fertilizer a year. Photo: Dan Meyers/Unsplash

Designing incentives to bring low-carbon fertilizer to Washington farms

Nitrogen fertilizer is one of agriculture's largest sources of greenhouse gas emissions and one of its most volatile costs, tracking the price of natural gas. Washington State will make an alternative: the state's first green fertilizer plant, planned for Richland with production targeted for 2027, will use renewable hydrogen instead of fossil gas.

A 2024 budget proviso directed the Washington State Department of Agriculture (WSDA) to convene a work group and recommend a grant program to encourage the use of green fertilizer made in the state. WSDA retained Greene Economics to lead the research.

We worked with the departments of Ecology and Commerce, grower associations, and manufacturers to shape the research. Our team calculated fertilizer and nitrogen as a share of variable and total production costs from crop enterprise budgets for potatoes, sweet corn, onions, and tree fruit. We interviewed growers, commodity associations, distributors, and agency staff, held listening sessions for members of the state's Environmental Justice Council, and evaluated four working incentive programs as design models.

Cost was the most significant barrier, regardless of farm size or crop. Fertilizer is 19 percent of variable costs for potato growers, and every grower and but one ranked it their top concern. The manufacturer estimates a $200 per ton gap at the plant gate for its first decade but has not shared the underlying calculations. Growers also want proof: trials they can visit and see for themselves.

No single grant closes that gap. We recommended a blended package: a payment to offset the price difference, a guarantee against lost yield or product unavailability, equipment and training support for new, emerging, and underrepresented growers, and funding for independent field research. The work group proposed a $50 to $65 million biennial investment of Climate Commitment Act dollars.

The report and recommendations will help WSDA and the Legislature match incentives to different crops and farm sizes, meet HEAL Act equity requirements, and give Washington farms a lower-carbon, less volatile source of nitrogen.