"Climate change mitigation in the face of nutrient supply risk: Limits of phosphorus supply and how they affect carbon dioxide removal."

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"The overarching aim of the research suggested in this proposal is to understand and quantify potential limits to P provision as a consequence of economic scarcity or out of environmental considerations, to identify the options available to improve the management of the P supply chain as well as to evaluate a range of policy options mitigating the hazards and adverse impacts of constrained P supplies. By assessing the impact of limited, expensive or even detrimental nutrient supply on biological sources of negative carbon emissions, established climate change mitigation strategies will be challenged. WP1: Quantification of economic scarcity of P i) Objective The objective is (1) to quantify the short-term systemic supply risk of the fertilizer trade network with respect to 'external shocks', for instance arising from one sided trade policy, health or environmental regulations or geopolitical crises; (2) to gain understanding of mid- and long-term economic scarcity as a consequence of inadequate investment strategies and responses to local resource depletion resulting in shortages of global production capacity; and to (3) investigate the impact of risks associated with the presence of oligopolies and cartels on an increasingly concentrated market and a trend of horizontal integration across agricultural input industries and vertical integration of the supply chain from mine to fork. ii) Methodology and tasks In order to achieve the objective, relevant and realistic narratives and P-market constellations are investigated, including the following: Political instability in regions such as North Africa or the Middle East (together accounting for roughly 85% of documented reserves19) could directly affect the supply of P, e.g. through strikes or revolts, or indirectly through inadequate capital investments, resulting in noncompetitive vintage structure being withdrawn from the market in the long run. Efforts to limit the maximum content of the heavy metal Cadmium in fertilizers traded within the EU20 could limit the number of suppliers available to deliver that quality, for instance Russia. What is intended to serve human health could therefore result in inflated price levels for the European agribusiness. China, the by far largest current producer (over 50% of global production in 2015 according the British Geological Service) has a P-economy based on a large number of small labor intensive mines21. Current market studies predict a significant decline in production capacity due to increasing costs and depletion. Assuming a static resource figure, the present production levels can only be sustained for another 20-30 years. A shift of demand of that magnitude towards sourcing at the world market would with no doubt disrupt the current P supply chain in the near future. Supply risk could arise from the very characteristics of the P-market being a demand driven market (i.e. surplus production is not acquired by the market but stockpiled by the producers). Price levels increasing only slowly and below the inflation rate cause sluggish capital investments, leading to insufficient resource adequacy. Only a subsequent price peak incentivizes the installation of new production assets11. The quantification of supply risks associated with such narratives requires a bottom up framework based on a global network of internationally active agents and country specific policy setups, as well as the reflection of potential strategies and expectations of different market players guiding their investment decisions. Existing P-supply models, however, either draw on the 'peak phosphorus' idea based on static reserve and production figures, or they use country or region level aggregates26, thereby hiding important variation at mine or industrial plant level and neglecting engineering-type constraints affecting the investment decision in production assets.