Good morning, ladies and gentlemen, and welcome to the Yara's First Quarter Results 2025 Conference Call. [Operator Instructions]
I'd now like to hand the call over to Maria Gabrielsen, Head of Investor Relations.
Thank you, and welcome to everyone to this conference call for Yara's first quarter results. I'm here together with representatives from Yara's management, including our CEO, Svein Tore Holsether; our CFO, Magnus Ankarstrand; Acting EVP, Strategy and Corporate Development, Thor Giæver; and Head of Market Intelligence, Dag Tore Mo. We're not planning to give a presentation as we hope you will all have watched our webcast a few hours ago, and we will therefore go straight into questions.
So operator, you may please open the first line.
[Operator Instructions] Your first question comes from the line of Christian Faitz of Kepler Cheuvreux.
Congrats on the results. Two questions, please. First of all, can you update us on the timing of the Sluiskil CCS project? And in relation to that, any updates on the regulatory side? And the second question would be also staying in Europe. Any appetite to consolidate the Western European nitrogen market at this point in time?
Yes. Thank you, Magnus Ankarstrand here. So the Sluiskil CCS project, we aim to finalize next year and go into operation there. On the regulatory side, there are no updates per se in Europe as it pertains to that project. The major benefit of -- for the project or for the investment itself will, of course, be avoided ETS as well as such CO2 taxes. And then we are working actively with customers all over the world in terms of the additional premiums for the low-carbon fertilizer that will be produced as a result.
In terms of your second question, on consolidation, we don't comment on that typically. I think we're -- I mean, as Yara, we're always looking at value-creating growth opportunities all over the world.
Your next question comes from the line of Aron Ceccarelli of Berenberg.
Congratulations on a very strong set of results. I would have 3 questions, please. In your outlook, you mentioned that European industry deliveries were up 5% in Q1 versus your 15% increase. So what's -- maybe what's driving these market share gains? And how sustainable is that?
And the second one is on the EBITDA bridge, where you reported a positive contribution from fixed cost of $34 million. Maybe can you help us understand what's the run rate we should be expecting for the remainder of the year as the cost savings looks they are progressing very well?
And the third one is on the -- what I think is the big elephant in the room, which is represented by the potential comeback of the Chinese exports. Domestic urea prices continue to fall. So what would prevent these guys from resuming exports today?
Yes. No, thank you. In terms of the market share gain, I think, I mean, it's of course, a reflection also of the fact that we, through Q4 and Q1 ran our assets full blast in Europe. So we had a significant project to sell. And of course, very strong commercial performance of our teams as well in the markets where they should perform well. So we think all in all, I mean, given our relative competitiveness on the European cost curve, that this is something that is sustainable. And of course, we know it's been a slightly early spring, but nevertheless, it is a real market share gain as well.
In terms of on the fixed cost side, I think we stick to the estimate that we have given you in terms of what we believe our run rate will be by the end of this year which is, of course, a bit by coincidence the same as where we are now last 12 months. But you also need to keep in mind that on that entire cost base, there is, of course, inflation in that period as well. And our aim is then to be at a run rate of $2.4 billion by the end of the year. And then, of course, that means that we need to make reductions of the -- yes, according to the plan and in the same dimension.
If I may -- it's Svein Tore. On the cost side, so we're almost exactly to the number on the fixed cost target. But also and as Magnus has already explained, but we also get some help from currency here, $50 million and our target is currency adjusted. So that means that we have additional activities that we're carrying out, and that will have impact and where we'll see the full run rate impact from that according to plan by the end of this year.
On the China situation, we can, of course, not know what is in the cards here as nobody else outside China either can, but you can observe some elements. I think one is that the government of China has a very strong priority recently and now on food production domestically in order to reduce their import dependency. And it's interesting just how this is also expressed by a record grain crop last year of first time more than 700 million tonnes. So according to the last USDA estimate now, imports of grains into China is cut by more than half this season compared to last season.
So there is a strong priority in China in boosting their own food production. And I think that makes them very careful on the export policy because as soon as they open up for exports, domestic prices will immediately increase. And they are concerned about timing of that and the impact in the local market. So that's why it's not possible to kind of guess or to forecast exactly how they are thinking around this. So we just have to -- we are just pointing to it as probably the #1 supply uncertainty. There are other supply uncertainties as well, but #1 supply uncertainty is for next year and beyond.
Your next question comes from the line of Joel Jackson of BMO Capital Markets.
Good results. A couple of questions. First, urea and nitrate prices are rising and strong, especially urea prices. We're seeing ammonia prices stay weak. Can you -- so the first question would be, can you comment on the divergence of those 2 prices? And what does that mean for your business? What are you doing to try to extract that margin difference between urea and ammonia?
And my second question would be, you talked a lot about the Americas, good strength, but [ you really talked about ] Brazil. Can you talk about how the North American market has played out in Q1 and into early Q2?
On the ammonia versus urea, it's a good question. And of course, long term, there is a strong correlation between the 2. They are both nitrogen products. But particularly in the short to medium term, it's -- apart from the U.S. market where there's a certain segment of direct application, there is no substitution on the demand side between ammonia and upgraded ammonia products because farmers and others cannot utilize it. So in that sense, the ammonia supply-demand balance can be totally dependent on the nitrogen supply-demand balance because the demand segments for merchant ammonia, that's phosphate production, it's industrial applications and to some extent, nitrate and NPK production.
And as you said, we have a little bit different dynamic where there is more supply on ammonia relative to demand compared to for upgraded products. And what we are doing at Yara here is trying to optimize as best as we can on this to try to import or reduce production or optimize our portfolio to take advantage of wherever we can get low ammonia as much as we can. So -- and as a company in total, we are almost balanced, let's say we have a surplus of 0.5 million tonnes of ammonia or something like that. So it's not a big issue when it comes to our financial exposure.
And on the -- sorry, so on the North American market, you talked about Brazil is really strong. I didn't see a lot of comments on North America. How did the North American market playing out in Q1 into Q2?
Yes. I think what we see, very -- I mean, a fairly low starting inventory in the U.S. market and, of course, with a high expected corn acreage on the planting side. We see a very tight U.S. market as well which is, of course, now reflected in NOLA prices close to 500 tonnes per metric tonne on urea. So we -- I mean, so that looks very, very strong. And of course, we'll eventually also move into [ summer fill ] pricing a bit later than what we see in Europe. So I think from our perspective, fundamentals for the U.S. and North America in general look very strong.
Just to follow up on that. Would that mean that the U.S. market -- I mean, putting words in your mouth, right, the U.S. market was more slow developing but start to really take off into the second quarter is where you see the strength. Does that make sense?
It picked up already in the first quarter, I think from December and onwards actually. And I think the U.S. buying from December and onwards, one of the key drivers behind the urea price increase that we have seen, that there were basically zero coverage on the imports through November, and the 3 million tonnes that is needed had to be bought during a very concentrated period. And it's still, as Magnus said, it's still very tight. I mean if you have a cargo in position, you can make now $100 on it just as a trader.
So now the game is kind of how long will the season last and how long we [ will use there ] to have -- to take that exposure on that market. But it's interesting that you can still sell May cargoes or May barges at between $450 and $500. So you may have seen that Egypt today sold a large cargo, 30,000 tonnes probably for the U.S. Gulf market just this week. So it's still a very active market.
Your next question comes from the line of Angelina Glazova of JPMorgan.
Congratulations on the good results. I have 3 questions, please. And the first one is just a quick follow-up on the question asked earlier on the market share gains. And maybe looking forward to the rest of 2025, could you highlight some factors for us which could help you sustain this market share? For example, how do you think about the proposals by the European Commission to impose tariffs on Russian natural fertilizer imports? Is it something that you would expect to be supportive already starting from this year if it is approved?
And then my second question is on the blue ammonia project. You have mentioned as part of prepared remarks that there is no change in the time line of FID, which is first half 2026. But could you just remind us what are the key steps for you between now and the time line of FIDs? So what needs to be done for you to be prepared to take a decision at that time?
And the last question is a clarification on the CapEx guidance. So we've discussed in detail the maintenance and committed growth part of CapEx. But could you please outline what is included in the uncommitted growth part of $150 million, which is included as part of the guidance for this year.
Thank you. I think to the market share question, I think from our perspective, I mean, we will continue to take advantage of the asset setup that we have in Europe both in terms of, of course, running capacity and keeping productivity high, but also flexing between own produced and imported ammonia as needed. And then of course, we will put all commercial efforts into protecting our market share and around the chimney of our plants.
I think in terms of competition and sort of other questions, I think that this is something that we are sort of well accustomed to dealing with. And I mean important also to highlight that, of course, the reductions that we've seen on market share in previous years, of course, has been driven by very extreme conditions in the European market, as you will recall, with the gas prices in 2022 and so on which, of course, takes time to recover. But I think in terms of the tariffs, any -- Svein, any point?
Well, it's a step in the right direction that this is now in process. I still think it's too little too late, but at least it's addressed and it's about creating something that resembles a level playing field here as consistency around that. And as we've seen in terms of Russian imports into the -- into Europe, not only has it continued, but when it comes to urea, it is at a much higher level than it was even before Russia's war on Ukraine. And to also reflect the competitive disadvantage that we have in Europe when it comes to energy prices, at least in the short term, it needs to be addressed for such a vital industry. And I think it's a step in the right direction from EU to address this. And then that will be gradually phased in, but there are also some volume triggers here so that if it exceeds certain volume thresholds, these tariffs would then be accelerated.
And then I just wanted to add on the -- also on the way that we're working in the market. And as Magnus said, we've been extremely busy in the last few years on managing extreme volatility throughout our whole supply chains and managing production and moving products and so on. And perhaps in that -- in previous presentations from us and how we talked about how we work in the market, we haven't been able to communicate enough about how our agronomists work throughout the value chain together with the farmers in order to also capitalize on the next step on the fertilizer production. That's the application and how we do that with the Crop Nutrition programs and the value that we create for farmers as well.
And just as a side note here, but I just wanted to mention a concrete example that I saw myself in -- when we're visiting a farmer in China just last month, where she followed the Yara Crop Nutrition program for her melon production, of course, had a yield impact of that, nutritional impact of that, quality impact, yield impact. But also through following the Yara way of working together with our agronomists, she was able to have her melons ripe and ready for the market 2 weeks ahead of the competitors. And that's also value. And that's part of the Yara value proposition that is also very important in our business model.
It's good to see how that is materializing, and it's also something that we see every day in Europe. You've seen the announcement from a few months ago together with PepsiCo as well, working on potatoes and other crops. So this is something that we also need to take into consideration that it's not only about the fertilizer, it's about which fertilizer, when to apply it and to optimize that as well. And with that, that also opens up opportunities to increase market share now in an environment that is still volatile, but compared to what we've been through since 2022, somewhat less.
I think in terms of our ammonia projects in the U.S., nothing has changed there in terms of the development and development activities. There is, of course, a lot of technical activities to perform before you come to the point where you can evaluate your FID. So that's ongoing now. And then, of course, we are in parallel also doing -- I mean, taking that time to evaluate both market conditions, regulatory conditions, geopolitical conditions and yes, what you would normally see between the different stage gates in the large-scale investment program.
In terms of CapEx guidance, I think maybe just to sort of recall a bit also what we've said previously compared to -- on the maintenance side first, compared to our guidance a year ago of $900 million, we have now, as we said in the program, down on $750 million. The growth portion as pointed out today, $300 million is, as mentioned, previously committed projects where the Sluiskil CCS project and our YaraVita plant project are the 2 main elements and then some investments in our phosphate mine in Finland.
And of course, those are all projects where we expect a significant return, and we will also follow up that we get that return once these projects enter into the market. And when it comes to what is uncommitted then, of course, that -- it means uncommitted in the sense that we don't have any plans to spend that as of now. And of course, if we did, it will be if there were significant, I would say, somewhat smaller opportunities with significant and relatively immediate returns.
[Operator Instructions] Our next question comes from the line of Bengt Jonassen of ABG Sundal Collier.
I have 2 questions. One is related to the European nitrogen market. Did you see volumes push forward into the first quarter compared to what we have seen historically at the expense of second quarter volumes? That's one thing. Or it's another explanation that buying pattern is moving back to the pattern you saw before the Ukraine invasion and higher nitrogen deliveries or nitrate and NPK deliveries in the European market that the product has regained market share at the expense of urea?
The second question would be on the cost side, you still target $2.38 billion. But as you stated, the $50 million is related to FX. Is it sound to assume that the actual realized cost will be lower despite the headwinds on inflation, given the FX development since the initiation of the program?
Thank you. I think in terms of the European nitrogen market, I would say that probably to some extent, also given that it's in early spring, we have some movement from Q2 into Q1, but I think still majority of the increase that we've seen is a regain of market share. And I think you sort of -- I mean, that's kind of underlined by the fact that our production rates moving into Q1 have been significantly higher as well.
In terms of the buying pattern, when it comes to sort of nitrate market share compared to urea, yes, there we see a [ slight increase ]. When it comes to, I mean, buying pattern in terms of timing, if that's a return to prewar level, I think the answer is more no. But that remains as it has been over the last couple of seasons.
On your fixed cost question, I mean, obviously, we will target -- I mean, our target remains unchanged, but we are looking to -- I mean, we are targeting this ex currency impact. So of course, what that will be at the end of 2025 also will -- I mean, what the actual number will be at the end of 2025 will, of course, be impacted on what kind of currency effects that we have. But our target remains the target despite of the currency impact.
Yes. So just to add on what Magnus said, if this quarter had been at the end of the year and we were at [ 2.3, if I like now ] with the current currencies, then we would have been $50 million behind. So we're adjusting for currencies that the underlying improvement should be $150 million. So we're not taking headwind or tailwind from currency in that regard. So if this has been at the end of the year, we would have been $50 million short of our ambition levels, at this stage, but we are on track.
Your next question comes from the line of Magnus Rasmussen of SEB.
Congratulations on a good report. Continuing on the FX and fixed costs, we have seen the dollar weakening, especially against the euro over the past few weeks. Now I'm just wondering whether that will reverse some of that currency gain on fixed costs? And also to what extent that is anyway captured by your sensitivities? Also, how you have calculated then the split between the $34 million fixed cost impact and the currency impact of $25 million in your bridge for this quarter year-on-year?
And finally, a question on the sensitivities. You have adjusted down your European gas price sensitivities by 25% and also increased the U.S. sensitivities by 25%. It just seems like a lot given the decrease in -- even taking into the account the decrease in your consumption of European gas. So I'm just wondering if there is something else going on as well.
Yes. I can answer a bit in general terms, and then I'll hand the word to Maria for some of the sensitivities to the extent we can answer those. But I think on the fixed cost, I mean, obviously, we have significant fixed cost in euros, Norwegian kroner and reais and, of course, some other currencies. So fixed costs were low. And then, of course, our underlying business is in U.S. dollar, and that's what we report. So fixed costs will always be impacted by currency shift that's kind of out of our control. And hence, with sort of the previous answer that our aim is the cost reduction irrespective of the currency changes. So we want underlying cost reduction.
As it pertains to the gas price sensitivities, we haven't had normal production years in Europe for the last couple of years. So that's also impacting a bit the changes that we now updated. And obviously, with a more stable production, we also achieve higher energy and gas efficiency in our plants, which is impacting as well. But Maria, do you want to say something more about the sensitivities?
Yes. It's mostly reflecting that we have a 2024 more normal production year. So it's easier to see the true effects of all the energy efficiency impacts we have, and then that reduces to a more normal European gas consumption level basically. For the currency effect, I just want to say that if you look at last 12 months fixed cost with the $50 million currency impact, then that includes currency from the second quarter '24 when we launched the program to 1Q '25. If you look at the bridge in the EBITDA bridge for the quarter result it's from 1Q '24 to 1Q '25. But you are right, if the dollars depreciates, it will move the other way, of course, so that can reverse quickly as we move across the year depending on how it materializes.
And then just to add, I would encourage also looking at the slide that Magnus showed in the quarterly presentation when it comes to ammonia production in Europe versus finished goods production and how we're optimizing that to also reduce ammonia production in Europe and how we can flex that with imports as well, and that also impacts the sensitivities as where we stand right now. So that's also a factor that you need to take into account.
Your next question comes from the line of Lisa De Neve of Morgan Stanley.
I have 2 left. So the first one, we discussed the U.S. and European market dynamics, but it would be very helpful to sort of see or get some insights on what you're seeing in the Brazilian market because farmers are still struggling a little bit with credit tightness and mixed farmer economics. But on the other side, they do may face a better setup if China-U.S. tariff tensions persist. So any insight there, that would be great.
And the second one is, I would like to come back to Aron's question on Chinese urea exports. Do you have any insights on whether urea production has been running as normal through the period where China was not exporting any product, at least not for agricultural purposes? And therefore, they have been building quite material inventories, and especially so because we know that domestic demand hasn't fundamentally changed in the last 2 years. So any insights on that would be great as well.
Yes. I think on the Brazilian market, I have not observed any kind of major developments that are not normal or anything. They have been a little bit more careful on their import from starting the calendar year, which is hardly surprising given particularly where nitrogen and phosphate prices have developed become quite expensive. So they are down on their urea imports and fairly slow. But I think, as you say, I mean, it's fundamentally a strong market for the agricultural products. So it's not only -- you mentioned soybeans related to the China issue. Corn is not bad, coffee, sugar, there's a lot of strong segments there. So we have not seen anything other than fairly normal developments although, as I said, a little bit more careful on the sourcing. I think as for prebuying for the -- is for the next season starting in the third quarter.
On the China situation, the China urea production is still increasing year-over-year as it has been over the last few years. But consumption is also increasing. I think it was a double-digit consumption growth last year. So I don't think that's stable. That has increased in parallel with the ambitions and signals from the government to boost the food production in China. So that is an open question, [ open ended there when ] it was there. Are there inventories now? And I think that's what many people are asking themselves, to what extent the supply increase this season has ended up in inventories versus on the field.
So that is something I think that's not -- where we don't have the answer and others are also trying to kind of get some more information around that because as you hint that, it will probably be quite important for what kind of policies will be resulting now following the main season.
Your next question comes from the line of David Symonds of BNP.
I just wanted to come back on some of your prepared remarks around the flexibility of your European ammonia supply, helping you to mitigate potential future carbon costs. Do I understand that, that means that you would be willing to buy somebody else's blue ammonia to feed into European plants and sacrifice the premium? Or is that just a reference to being able to import your own blue ammonia from the U.S. if you take FID on that project?
I think it's all of the above. I mean -- but first of all, of course, it means that with -- I mean, when it comes to our production in Europe, we will, with our CCS project in Sluiskil, avoid ETS on more than 800,000 tonnes of CO2. So that in itself is a significant amount. And also keeping in mind that we, of course, today have significant additional CO2 volumes as well that are ready for capture. So I think -- so that is sort of the main impact of that. I think when it comes to ammonia sourcing, today already, I mean we have flexibility in the sense that roughly 70% of our ammonia consumption is own produced and 30% is sourced in the market. And that's a split we like very well and something that we want to see in the future as well. And this is, of course, the rationale why we're seeking equity exposure in blue ammonia projects in the U.S. through our ammonia projects.
So clearly, I mean, there is a -- I mean, we believe that there will be a premium, as you alluded to, for a low-carbon ammonia in Europe in the future, which will be reflected in pricing as well. And I think that's -- I mean, that's the rationale behind why we're looking at those investments.
Understood. Maybe if I could just ask a follow-up on that. Is the thinking that -- I guess the fact that you spend a premium for blue ammonia by the [indiscernible] 2034 suggest that you still expect the marginal tonne of ammonia supplied to Europe to be gray. How close are we given all the projects that have been announced and the fact that European carbon prices are highest in the world and therefore, the ammonia is likely to enter Europe as the first destination? How close are we to a situation where the marginal tonne in Europe is actually blue ammonia by 2034?
I think I missed parts of your question and including the year you mentioned. But I think -- I mean, obviously, that depends on how many projects actually develop in the end, which I think is also highly dependent on to what extent these projects can get firm offtake in demand prior to their investment decisions. So that's -- I think that remains to be seen. And as you know, there has been relatively few actual FIDs so far.
And then also if you sort of go back to the wave of ammonia urea projects that were announced in 2012 and 2013, as we know, only a fraction of those actually came into fruition in the end. And of course, the other part of that is the demand side and particularly as we sort of move into the -- well into the 2030s and beyond then, of course, you have potential new demand from Asia, which looks to be even sooner.
But of course, also from shipping, but also from other decarbonization efforts in the rest of the world, in addition to Europe. Of course, there is -- I mean, obviously, the ammonia tonnes -- blue ammonia tonnes or decarbonized ammonia tonnes that are there will, of course, to a large extent, seek towards Europe. And of course, at some point, you could see that almost all the ammonia into Europe will be decarbonized, and gray will no longer be marginal. But I think we also need to keep in mind that there is significant ammonia production in Europe today. And I think -- so that will require quite significant amounts as well.
Your next question comes from the line of Tristan Lamotte of Deutsche Bank.
I've got 3, please. The first is on market share. I'm just a bit confused on the comments on market share gains. You alluded it's related to a change in costs in your earlier response. So are you dropping your prices to undercut competitors? Or is there another dynamic here as well, which I think you also alluded to, which is maybe with decreased volatility, there's an ability for the sales force to focus more now? Or is it really just actually the case that it's quite difficult to definitively state why you've gained market share? So that's the first question.
Second is on blue ammonia and CF Industries' recent announcement around the project. Looking at the project costs, I think they're quite a bit higher than you alluded to in your CMD. So are you seeing kind of 50%-plus cost inflation versus the numbers you quoted initially for those 2 blue ammonia projects? And also, does the CF project increase the pressure to make a decision yourselves?
And the third question is just theoretically, without decarbonizing at all, what would the cost headwinds at a group level be if you can't source any decarbonized ammonia when the carbon allowances run out? Would this be in the hundreds of millions? And on the other side, do you think that European farmers can actually absorb price increases, given where profitability is?
Yes. Thank you. On the market share part, we didn't allude to any cost or reduction in pricing or anything like that. I think when -- what I said was that one key contributor has been the fact that we've been able to keep production running throughout Q4 and Q1 which is, of course, a change from the volatility that we've seen in previous years. And then, of course, also as you alluded to, that reduction of volatility has, of course, made it possible for us to focus more. That's, of course, clear. But I think at the end of the day, I mean, our commercial force has worked very, very diligently in the market all along. But of course, their job is a bit easier when there's more stability around production in our system, obviously.
So I think that's the main reason for the increases that we've seen. And of course, it's our aim to always be the most competitive around production assets as we should be. I think when it comes to CF and their announcement, we don't typically comment on other company's projects or investment decisions. I think we have many times in the past, developed new projects at the same time as others have made investment decisions as well. Freeport, as an example, back in 2015 is an example of that. And we make our decision based on our independent assessment of what we think the project viability is, which depends on everything from CapEx to supply-demand price expectations for the future and so on.
I think in terms of CapEx, we don't have any further updates based on what we've said in addition to what we've said earlier in terms of how much we sort of directionally said that we thought that we could spend or will spend. But other than that, we don't have any updates on the CapEx estimates. Of course, we monitor any development there, inflation and so on, very, very carefully.
Final question [indiscernible]. And today, if you assume the production we have of ammonia in Europe today, we need roughly 7 million tonnes of EU ETS quarters to a year. So you can do cost calculation based on your assumed CO2 price. But I think more importantly is what happens to the European urea price. Once this gets implemented, right, we think urea will be the marginal nitrogen product in Europe setting the price. And since we cannot decarbonize urea, that will increase carbon cost element in it above what we would pay above carbon cost for our products.
So keep in mind that we have a huge advantage here with the setup that we have in nitrate production ability to bring in ammonia as well. And we're a large player in the ammonia space all ready, and we represent significant potential captive demand as well. So we have several competitive advantages regardless of the solutions we go for here.
And I think maybe to add one final point on that is, of course, that when it comes to ammonia imports and ammonia pricing that, of course, will be reflected in the market and market pricing as well. So from that perspective, I mean, with our flexibility, I think -- and in terms of our ability to generate operating margins above ammonia and premiums above ammonia, I think we're in a good position on that even in the future.
Your next question comes from the line of John Campbell of Bank of America.
I wanted to continue this discussion on the topic of blue ammonia. I'd be interested if you can share any light on Japan's ambitions to 20% co-fire blue ammonia in its coal plants. I believe in August -- sorry, January 2023, you signed a memorandum of understanding with JERA, one of the utilities. I'd be particularly interested on how this technology compares in terms of cost per megawatt hour produced and emissions of CO2 per megawatt hour versus, say, for example, incremental gas-fired generation using imported LNG. And perhaps if you can give any details or updates on Japan's plannned CfD subsidy scheme for imported blue ammonia? And any word or comment you can make on the U.S. 45V or 45Q production tax credits? When do you expect to have full clarity on the status? That would be very helpful.
Yes. I think when it comes to the specific energy efficiency per megawatt hour compared to LNG and so on, we don't -- I don't have that data specifically in front of me. I think when it comes to Japan in general and the subsidies, I mean, they are out tendering both -- I mean, both tendering and taking in input on potential supply options. And what we have heard is that during this year, they will officially launch the subsidy scheme that they're looking into.
So from what we can see, I mean, their commitment and willingness to continue with their ammonia co-firing program remains strong. And then we're awaiting, of course, news from that end.
And on this, it's also important to look into the ability to use existing infrastructure, which co-firing allows to be done both in Japan and other parts of the world as well. We need not only one solution but several solutions there in order to solve the energy transition in Asia and across the world. So this is one of these elements and where there's continued a lot of activities, in particular, in Japan, but that could be also transferred to other parts of Asia as they develop this further.
And on the regulatory side, I think as it pertains to 45Q, there is clarity in the sense that 45Q -- I mean, the Section 45Q in the Internal Revenue Code exists today and has existed for many, many years. So that's, I mean, implemented and I mean companies are claiming tax credits for CO2 capture already today and have done for a long time. So that in itself is -- I mean, there's clarity around that. Now whether there will be any changes to that is, of course, I mean, an unclear question per se, and we don't know what kind of changes the new administrations have in mind.
But what we do know is that there is strong bipartisan support for 45Q in particular. There's significant benefits to several states and both Democratic but also Republican-led states. And indication so far is that, that so far is strong. And then, of course, we'll see. And this is a key thing, of course, that we're also paying close attention to over the next year, what kind of developments that will come and what kind of intentions the new administration has in terms of 45Q.
Your next question comes from the line of Hans-Erik Jacobsen of Nordea.
I have another question on the market share. Several of your competitors have closed quite a bit of capacity over the past couple of years. To what extent has this impacted your ability to raise the market share as we saw in the first quarter? And if it has impacted, is this a sustainable development? In other words, could we see Yara's market share increase in Europe for the long term?
And also, if you could comment on the market share in European market that Russia has gained from the increased exports, I would appreciate it.
I think the main point that what Magnus said already that for us, I mean, the key competitor is imports. So we run our plants almost exclusively OPP production that we own produced products that we sell in Europe. So it's a matter of selling what we produce basically. And then you get a certain market share based on that, actually lower the higher the market is. So that is the key driver here. But your comment on the rest of the industry is actually correct, that we have now almost kind of returned to a level that we had before the energy crisis and the war hit, but the rest of the industry has not done that. So there is a structural downward shift in nitrogen production in Europe, so which is likely to be sustained.
So there will actually -- let's say, if you assume that Yara now is close to where it should be or based on our assets, then -- so similarly with imports in a way. And on the market share growth, all the questions that have come on that, I think most of the market share gain has been against imports, but some also versus the rest of the industry in Europe.
No. And I think just to add to that, I mean, obviously, it's also a question of strong commercial performance from our team. But also, I would say, important to highlight the strength of the portfolio that we have and the flexibility that we have on the ammonia side which, of course, is important for finished fertilizer production output, right? And that's -- and as you point to, I mean, there has been curtailments in Europe even in this season, but we have not curtailed. But what we have done over the last years, given all the volatility and all the challenges in European market is that we have adjusted our portfolio. And even though, of course, our efforts continue in that field, we have achieved, I would say, a stronger portfolio now than what we had before. And that also contributes to sort of returning to a more normal situation as it comes to market share.
Your final question comes from the line of Thomas Warner of S&P.
I really appreciate it, all of your time and insights today. I've got a question coming from a colleague of mine specifically about green ammonia. He's very interested in how you see European demand for green ammonia through to 2030. And as a little bit of a follow-up, what plans you would have to meet that demand yourselves, whether or not you'd be importing or getting it from somewhere or making it?
Yes. No, I think -- I mean, for green ammonia, I assume you mean RFNBO-compliant ammonia. I think as you may know, we have developed our own pilot project in our plant in Porsgrunn. This is now running fully which is, of course, is a small contributor of 20,000 tonnes of green ammonia. But of course, that's given us significant both in technical insight and market insight into that field. As you may have seen, we've also entered into some collaborations on green ammonia offtake from producers in the Middle East, Oman specifically, which we have announced. And then we are exploring a portfolio of other offtake opportunities worldwide that we sort of evaluate and match up to the demand we see for that in Europe. We don't have a specific target for RFNBO ammonia into our system per se.
I'd now like to hand the call back over to Maria Gabrielsen. Please go ahead.
Just like to thank you for all the questions and for participating in today's call, and wishing you a nice day. Bye.
Thank you for attending today's conference call. You may now disconnect. Goodbye.
