Overview -- Nitrogen (N) is an essential element of life and a part of all animal and plant proteins. As a part of the DNA and RNA molecules, nitrogen is an essential constituent of each individual's genetic blueprint. As an essential element in the chlorophyll molecule, nitrogen is vital to a plant's ability to photosynthesize. Some crop plants, such as alfalfa, peas, peanuts, and soybeans, can convert atmospheric nitrogen into a usable form by a process referred to as 'fixation.' Most of the nitrogen that is available for crop production, however, comes from decomposing animal and plant waste or from commercially produced fertilizers. Commercial fertilizers contain nitrogen in the form of ammonium and/or nitrate or in a form that is quickly converted to the ammonium or nitrate form once the fertilizer is applied to the soil. Ammonia is generally the source of nitrogen in fertilizers. Anhydrous ammonia is commercially produced by reacting nitrogen with hydrogen under high temperatures and pressures. The source of nitrogen is the atmosphere, which is almost 80 percent nitrogen. Hydrogen is derived from a variety of raw materials, which include water, and crude oil, coal, and natural gas hydrocarbons. Nitrogen-based fertilizers are produced from ammonia feedstocks through a variety of chemical processes. Small quantities of nitrates are produced from mineral resources principally in Chile. In 2002, anhydrous ammonia and other nitrogen materials were produced in more than 70 countries. Global ammonia production was 108 million metric tons (Mt) of contained nitrogen. With 28 percent of this total, China was the largest producer of ammonia. Asia contributed 46 percent of total world ammonia production, and countries of the former U.S.S.R. represented 13 percent. North America also produced 13 percent of the total; Western Europe, 9 percent; the Middle East, 7 percent; Central America and South America, 5 percent; Eastern Europe, 3 percent; and Africa and Oceania contributed the remaining 4 percent (International Fertilizer Industry Association, 2003b, p. 1-4). In 2002, world ammonia exports were 13.1 Mt of contained nitrogen. Trinidad and Tobago (22 percent), Russia (18 percent), Ukraine (10 percent), and Indonesia (7 percent) accounted for 57 percent of the world total. The largest importing regions were North America with 36 percent of the total followed by Western Europe with 23 percent and Asia with 22 percent (International Fertilizer Industry Association, 2003b, p. 5L-11). In 2002, world urea production was 51.4 Mt of contained nitrogen, and exports were 12.0 Mt of contained nitrogen. China and India, which were the two largest producing countries, accounted for 48 percent of world production. The United States and Canada produced about 10 percent of the total. Russia and Ukraine together accounted for 28 percent of total urea exports; Central America and South America, 27 percent; and Asia, North America, and Western Europe, 10 percent each. North America accounted for 36 percent of the total urea imports; Western Europe, 23 percent; and Asia, 22 percent (International Fertilizer Industry Association, 2003f, p. 1-15). Ammonia production capacity in North America and Western Europe is projected to decline through 2004, and capacity in other world regions is projected to increase. Fluctuating natural gas prices are mainly responsible for the capacity decline in North America. Ammonia production capacity is continuing to shift to world regions that have abundant sources of natural gas, and away from those where costs (raw material, labor, environmental compliance) are higher.