Report: Nitrogen Oxide Emissions are concerning, but new abatement technologies are promising
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Nitrous oxide (N2O) has a global warming potential nearly 300 times as potent as CO2, and is the most significant contributor to stratospheric ozone depletion since the successful adoption of the Montreal Protocol. Mitigation measures are crucial to the path toward decarbonization. A new report from Boulder-based venture capital and research firm Saoradh Enterprise Partners (SEP) details the feasibility of hopeful new abatement technologies and investable opportunities.
One thousand years prior to 1800, atmospheric N2O concentrations were ~ 270 parts per billion (ppb), which increased to ~ 320 ppb today. Additionally, N2O is currently the most significant contributor to stratospheric ozone depletion due to the large volume released, so N2O emissions are cause for serious environmental concern.
Global anthropogenic N2O emissions have many sources including agriculture (50%), chemical production (6%), fuel combustion (23%), and wastewater industries (21%), which require several abatement methods and solutions.
Most anthropogenic N2O emissions originate from ammonia products which is produced with hydrogen sourced from fossil fuels and has a separate and large CO2e emissions footprint. Most of the ammonia produced globally is for production of the fertilizers that drive agriculture’s large N2O footprint.
Perhaps the most exciting aspect of these N2O abatement technologies is the relatively low cost: 6% of N2O emissions can be eliminated for under $11 per mt CO2e, and 26% of N2O emissions can be eliminated if all abatement options are implemented. These costs are cheaper per unit CO2e than other CO2e mitigation measures such as direct air capture.
Agriculture
Agriculture contributes 74% of US N2O emissions and 50% of global emissions. Agricultural emissions are harder to monitor and measure due to the lack of a single point source. 97% of agricultural N2O emissions come from the nitrifier denitrification process, which is a two-step process in which ammonia is converted to nitrate and nitrites, and the nitrates are converted to N2O and N2 in denitrification.
The most promising abatement method within the agriculture industry is precision farming: 67% of agriculture global startup and growth companies (S&G) covered by this report are developing aerial and soil sensors to determine the variable nitrogen-based needs of different regions in a field. Every year, about 10 million metric tonnes (mt) of excess nitrogen-based fertilizers are applied in the US. Michigan State University Distinguished Professor Dr. G. Philip Robertson’s research posited that precision farming via aerial imagery and historical yield maps are the best solution to reduce excess nitrogen due to its scalability and cost-effectiveness.
Another abatement technology involves the use of microbes. Microbial populations are added to soils to reduce N2O emissions from the soil. However, the science behind this technology is undeveloped and it may face problems if modified microorganisms compete unfavorably with natural microbes. Startups are active in this space as 18% of agriculture S&G companies are focused on microbes.
Other Sources: Chemical Production, Fuel Combustion, and Wastewater
N2O is also generated from various industrial, transportation, and power generation processes. It is a byproduct from the production of adipic acid, nitric acid, and fertilizer production; these industries had a market size of $226 billion in total in 2021 and are expected to grow.
Combustion reactions involving SOx, NOx, and water reactants can also produce N2O as a byproduct in an effort to abate other toxic criteria pollutants.
Chemical production facilities already partly abate N2O emissions; for example, 17% of global nitric acid plants abate N2O. Fuel combustion sources do not abate N2O. There are several market solutions in this space, including selective catalytic reduction, selective non-catalytic reduction, direct catalytic decomposition, and thermal decomposition.
The catalytic reduction process is the most developed solution and uses catalysts and reducing agents to convert N2O and oxygen to N2, H2O, and CO2. This process can mitigate 85-90% of N2O emissions and has the highest efficiency in commercial applications.
While wastewater contributes 21% of N2O emissions globally, there are few startups decarbonizing the industry.
Policy
SEP found that strong European measures for N2O abatement may trickle down to the United States, which has generally underdeveloped public policy. In particular, Europe’s Carbon Border Adjustment Mechanism (CBAM) tax scheme places a tax on carbon-intensive industrial imports including fertilizers. Under CBAM, reporting is mandatory starting January 2023, and importers will need to purchase tradable certificates by January 2026. The Carbon tax scheme and border adjustment mechanism regulates carbon dioxide and nitrous oxide. Another notable part of the US policy is the US CHIPS and Science Act, which directly funds research in microbe genomes, sensors, and nitrogen control.
Interesting Companies
SEP found 115 S&G companies and 472 corresponding investors. 92% of them operate in the agricultural technology industry. The median company is seven years old, has 15 employees, and $4.4 million in trailing twelve month revenue (TTM). 56 SBIR and STTR awards and 11 ARPA-E awards were awarded to these companies.
Of those 115 companies, SEP identified 20 companies to be most interesting. They operate mainly in the Clean Food, Industry Edge, and Advanced Materials Cleantech Sectors as defined by SEP.
PURCHASE THE REPORT
The Nitrous Oxide Topic Report includes:
A 207 page report in slide deck format.
A global database of notable companies (with a US focus).
Two hours of individualized support from the SEP team.
Find more details, including an executive summary, purchase the report on the SEP Marketplace.
ABOUT TOPIC REPORTS
Topic reports explore cleantech investment spaces with the aim to calibrate investors, uncover opportunities, and identify possible solutions to Solving Climate+ by 2050. SEP produces topic reports twice per quarter to gather data and insights important to evaluating key cleantech investment spaces as part of our Innovation Flow Reporting (IFR) service. Recent and upcoming reports include BattRe (lithium-ion battery recycling), Biochar, Bioplastics, Clean Food, Concrete and Cement, Desalination, Direct Air Capture, Solar Photoconversion, Green Steel, and Refrigerants.
ABOUT INNOVATION FLOW REPORTING
SEP’s Innovation Flow Reporting (IFR) service is designed to illuminate innovation hubs and identify and capture the best cleantech commercialization opportunities for SEP and our corporate clients. More than just market research, Innovation Flow Reporting delivers actionable information. IFR uncovers new cleantech opportunities for corporate venture capital offices, innovation programs, product development teams, and R&D departments. We know it works because we use it to drive our investing.
ABOUT SAORADH ENTERPRISE PARTNERS
Saoradh Enterprise Partners (SEP) is a cleantech venture capital and research firm based in Boulder, Colorado. SEP partners with innovators, entrepreneurs, and corporations to find solutions at the magical intersection of science (what’s possible), finance (what’s bankable), industry (what’s needed), and planet (what matters). Learn more at www.saoradh.com.