The Energy Markets Podcast

S3E24: 'Food is energy.' So what is the energy-intensive fertilizer industry doing to decarbonize while still keeping the world fed?

December 28, 2023 Bryan Lee Season 3 Episode 24
S3E24: 'Food is energy.' So what is the energy-intensive fertilizer industry doing to decarbonize while still keeping the world fed?
The Energy Markets Podcast
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The Energy Markets Podcast
S3E24: 'Food is energy.' So what is the energy-intensive fertilizer industry doing to decarbonize while still keeping the world fed?
Dec 28, 2023 Season 3 Episode 24
Bryan Lee

The world's burgeoning billions have been kept fed thanks to the "Green Revolution" of the 20th century, which featured new hybridized crops with enhanced yields. Often deemed a miracle of science, it was also made possible by energy-intensive industrial fertilizers. Fritz Haber and Carl Bosch were each awarded the Nobel Prize for their contributions to the widely used processes for synthesizing ammonia from nitrogen taken from ambient air and hydrogen derived from fossil fuels. These ammonia-based nitrogen fertilizers, along with mined fertilizers, today help to feed the world, something Thomas Robert Malthus never envisioned in his 18th century writings warning of overpopulation. 

Today we are concerned with another green revolution that seeks to end the use of fossil fuels, which when burned create emissions that are dangerously warming the atmosphere and creating the need for a second agricultural revolution to ensure the world's billions can still be fed in the face of drastic climatic extremes. So as we look to decarbonize the world's economy and phase out the use of fossil fuels, what is the fertilizer industry doing to green its highly fossil fuel-dependent industrial and mining processes?

We talk with Alzbeta Klein, CEO of the International Fertilizer Association, freshly returned from COP28 in Dubai, where for the first time the world's nations agreed to the need to phase out fossil fuels to temper the runaway climate change we are experiencing. "Food is energy, and we need to understand that connection," Klein says. "We need to understand the transition for the energy markets, and we need to understand the transition for the food market because the two go hand-in-hand."

We also hear from Hiro Iwanaga of Talus Renewables, a nitrogen fertilizer startup at the forefront of using photovoltaics to crack hydrogen from water, rather than fossil fuels. Also freshly returned from Dubai, Iwanaga talks about his company's demonstration project now under way in Kenya, and the company's next projects here in the United States. "The green hydrogen tax credit that was passed as part of the Inflation Reduction Act makes our product cost-competitive," he explains.

Also, Brandon Kail of Rocky Mountain BioAg speaks to his company's approach employing soil microbes as the foundation of a non-fossil fuel-based approach to plant nutrition, and Divina Gracia P. Rodriguez of the Norwegian Institute of Bioeconomy Research tells us about an EU-funded project in Ethiopia she is spearheading that seeks to address barriers to the adoption of human urine-based fertilizers.

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Show Notes Transcript

The world's burgeoning billions have been kept fed thanks to the "Green Revolution" of the 20th century, which featured new hybridized crops with enhanced yields. Often deemed a miracle of science, it was also made possible by energy-intensive industrial fertilizers. Fritz Haber and Carl Bosch were each awarded the Nobel Prize for their contributions to the widely used processes for synthesizing ammonia from nitrogen taken from ambient air and hydrogen derived from fossil fuels. These ammonia-based nitrogen fertilizers, along with mined fertilizers, today help to feed the world, something Thomas Robert Malthus never envisioned in his 18th century writings warning of overpopulation. 

Today we are concerned with another green revolution that seeks to end the use of fossil fuels, which when burned create emissions that are dangerously warming the atmosphere and creating the need for a second agricultural revolution to ensure the world's billions can still be fed in the face of drastic climatic extremes. So as we look to decarbonize the world's economy and phase out the use of fossil fuels, what is the fertilizer industry doing to green its highly fossil fuel-dependent industrial and mining processes?

We talk with Alzbeta Klein, CEO of the International Fertilizer Association, freshly returned from COP28 in Dubai, where for the first time the world's nations agreed to the need to phase out fossil fuels to temper the runaway climate change we are experiencing. "Food is energy, and we need to understand that connection," Klein says. "We need to understand the transition for the energy markets, and we need to understand the transition for the food market because the two go hand-in-hand."

We also hear from Hiro Iwanaga of Talus Renewables, a nitrogen fertilizer startup at the forefront of using photovoltaics to crack hydrogen from water, rather than fossil fuels. Also freshly returned from Dubai, Iwanaga talks about his company's demonstration project now under way in Kenya, and the company's next projects here in the United States. "The green hydrogen tax credit that was passed as part of the Inflation Reduction Act makes our product cost-competitive," he explains.

Also, Brandon Kail of Rocky Mountain BioAg speaks to his company's approach employing soil microbes as the foundation of a non-fossil fuel-based approach to plant nutrition, and Divina Gracia P. Rodriguez of the Norwegian Institute of Bioeconomy Research tells us about an EU-funded project in Ethiopia she is spearheading that seeks to address barriers to the adoption of human urine-based fertilizers.

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EMP S3E24: Decarbonizing the fertilizer industry
(transcript edited for clarity)

EMP: Welcome to the last episode of Season 3 of the Energy Markets Podcast. I'm Bryan Lee, and for this episode we dive into decarbonization of the fertilizer industry. Fertilizer production is an energy-intensive industry primarily using natural gas as a feedstock. Market price fluctuations in natural gas will affect prices for fertilizer, which will affect prices we pay for food produced with that fertilizer. First, we're going to talk with the CEO of the International Fertilizer Association to learn the industry's views on decarbonization. Then we will talk with several folks pursuing alternatives to natural gas in the production of fertilizer. But first let's welcome Alzbeta Klein, CEO and Director General of the International Fertilizer Association. Alzbeta, thanks for joining the podcast.

AK: Thank you, Bryan. Delighted to be here.

EMP: You've just returned from COP28. So, clearly, decarbonization must be a concern for your industry.

AK: Absolutely. And more than just decarbonization, it's also the role of food systems and climate and what one needs to do to feed the planet sustainably.

EMP: So what sort of discussions are your colleagues and you having in terms of decarbonizing the industry? COP 28 set a deadline for global decarbonization. We'll see if that's any more effective than the Paris agreement but nevertheless, it's out there. What sorts of things are you all talking about, considering, etc.?

AK: Right, thank you, Bryan. So first of all, let us just spend a couple of minutes on what decarbonization means for the industry. When it comes to plant nutrition – plant nutrients, which is what fertilizers are – there are three types of macronutrients and that's nitrogen, potash, and phosphate. Without those not much would grow. Without those about half of the world would go hungry. So when it comes to carbon footprint, the most important one for the discussion for carbon footprint is nitrogen. As you rightly pointed out in your introduction, to produce nitrogen – even though it's all around us, it's in the air – to actually get it in the form that is usable by a plant, you have to actually crack the molecule with a lot of energy. And that energy, by and large, today comes from fossil fuels. When it comes to two other macronutrients that plants need, those are phosphate and potash. And those are mined commodities. So when it comes to mined commodities, it's very different issues that we need to think about. This is about community concerns. This is about biodiversity. This is about doing the mining right and everything that goes into doing the mining right. So when we come to COP, it is about primarily about nitrogen, because it has such a huge carbon footprint. As an industry we welcome what happened at COP, even though it was last minute in Dubai, and we are very excited about the potential to decarbonize our value chain and to produce food sustainably. So fundamentally, when you're thinking about how to decarbonize, there are two buckets that we need to think about – what happens in a factory and what happens on a farm. In a factory, it's how do you produce nitrogen? We can delve deep into it because that is really where the crux of the matter is. But equally important is what happens on a farm. How do you apply fertilizer so that you have minimal losses? So those are the two issues that I'd love to discuss further. 

EMP: According to your website, fertilizer production accounts for 1.3% of global greenhouse gas emissions, but application of fertilizers is a whopping 6% of global emissions. Your industry’s focus is on reducing emissions from the application of fertilizers? 

AK: We are looking at both Scope 2 and Scope 3. So Scope 2 for us is what happens in a factory and how do you decarbonize that? And Scope 3 is what happens on a farm. How do you do agriculture?

EMP: Your website talks about, quote, “accelerating progress to put ammonia production on a pathway to achieving deep CO2 emissions reductions,” and about reducing emissions of nitrous oxide, a greenhouse gas with a warming potential 300 times that of CO2. That's a primary objective for your industry? “This could be significantly cut by up to 70% by improving nitrogen-use efficiency.” Does that mean the plant uptake?

AK: Absolutely. So this is a remarkable industry in the sense that sustainability and economics go hand-in-hand. Farmers have to purchase fertilizer and if you ask any farmer what she would like to do, she would like to use every drop of that fertilizer – every granule of that fertilizer – so that it goes to the plant because that's what actually gets the plants to grow. So economics, which is sustainable use of fertilizer and proper use of fertilizer, goes hand-in-hand with sustainability. So that is what we call our Scope 3 for our industry. How do you use it on a farm and nutrient-use efficiency and particularly nitrogen-use efficiency is basically using every drop or every granule of fertilizer, so it doesn't leach into the environment and it actually goes into growing whatever you want to grow on the land. 

EMP: In this country, anyway, it becomes a huge pollution runoff issue. Because so much of it gets washed away. 

AK: There are countries where we use too much and there are countries where we don't use enough. If you look at, you know, a fundamental concept, Bryan, in our industry is that agriculture is basically soil mining. If you think about it, a plant, when it grows, takes nutrients from soil, whatever nutrients there are. And when you take it, when you harvest it, you take those nutrients with you and that goes into the food chain. Because some fertilizers improve root structure of a plant, some fertilizers improve protein content of the plant. So it's plant biology. But once you take it out, you're taking those nutrients out. And then the fundamental question is how do you replace nutrients in soil? And as an industry association and what we call a broad-tent association, we welcome any and all providers of plant nutrients. We provide services to mineral fertilizer producers, but we also invited startups who are doing new technology – so organic, biologicals, microbials, you name it. You have any plant nutrients, bring them in because fundamentally, what is going on in agriculture is that we grow food and then we have to replenish those nutrients in soil. And if you don't replenish those nutrients, your yields are going to go down eventually to very low levels. And at some point, you need to think about other important environmental equations which is we cannot convert any more land into agriculture. So how do we produce, how do we feed the world with land that we already converted to agriculture at the most sustainable levels? 

EMP: It's all fascinating, but I think for our audience, the Scope 2 is probably the most significant interest here. What sorts of things are your industry members pursuing in order to cut back on energy intensity? 

AK: That's the first place to start. And we teamed up with the International Energy Agency and the European Bank for Reconstruction and Development back in 2021 to prepare the first industry ammonia technology roadmap. So this was a study which was presented at COP in Glasgow and this is basically our scope to study – looking at what can happen in the factory to lower the emission footprint of production of nitrogen-based fertilizers. Since then, we have taken the roadmap, as we say, on the road. We are finalizing the study for Egypt. We are very close to getting the study down for Turkey. Those are both countries that have a number of nitrogen producers. And we are working on getting the delivery to many other countries, basically operationalizing the roadmap. So what is the roadmap? So you have fundamentally two things that you can do. You can provide a renewable feedstock, and you can produce nitrogen through renewable feedstock. So that is solar. That is wind. That is other sources of renewable energy. Alternatively, you can also capture CO2 at the end of the process. Whereas the first one is basically what are called green ammonia and green hydrogen because it comes from renewable sources of energy. The other one is blue. It's carbon sequestration. It's taking the CO2 at the end of the process and then either bury it underground or reuse it for other things that one may want to use them. In terms of the uptake, our membership has started on green, where there are sources of renewables available to them. But more importantly, given the most recent Inflation Reduction Act in the United States, we have seen a fundamental increase in blue ammonia, blue hydrogen – that is where the industry is going today. We can argue whether green or blue is better. The main issue, Bryan, is that there is not enough renewable energy today to be able to produce nitrogen that we need to produce. And as an association, as an industry association, we welcome scale up of renewable energy wherever it can be, whether it's solar, whether it's wind, whether it's other alternative energies. We would welcome fundamental growth of those renewables so that they can power the production of ammonia.

EMP: Let's get into the color code here. I have gray hydrogen and green hydrogen and you talked about blue?

AK: Gray is the one produced traditionally using fossil fuels. By and large, it's produced through natural gas. That's the key feedstock. However, there are some countries in which there is still the usage of coal to produce nitrogen, namely China, but most of the world produces nitrogen through natural gas. That's what we refer to as gray – gray hydrogen, gray ammonia. If you replace fossil fuels with renewables as a energy source to produce hydrogen or ammonia, you will call it green. And if you capture CO2 at the end of the production process that will be blue. There is also in the color code there is also a reference to pink hydrogen, which is based on using nuclear. But we would like to leave the colors aside and we would like to talk about a lower emissions product because at the end of the day, that's what it is. And we can look at the carbon footprint of each of each production process. And at the end of the day, it's a lower lower-emission product when it's produced differently than from the traditional fossil fuels, namely natural gas.

EMP: Well, the whole carbon capture and sequestration issue is rather controversial. The green community, the environmental community, lambasts it as an excuse to continue using fossil fuels. But the whole transition here is fraught because we're completely dependent on fossil fuels, and we don't really have a good structure to get us to a decarbonized future here.

AK: That is the issue because we do not have enough renewables in place today. And that's why our earlier conversation about the need to scale up substantially the creation of capacity for renewable energy. What we don't have is, on the supply side, we don't have enough renewables. Period. And on the demand side, we do not know how to feed ourselves any other way. This is how we feed ourselves and, yes, we can look at smaller companies that are starting to do something new. But what they need is financing to scale up. So if you look at various companies that are doing microbials in the United States and elsewhere, there's a number of startups and we open our doors to them. The problem there is the scale up because what they do is often on an experimental farm – pilot projects – but they need to be scaled up they need to be financed, they need to be scaled up. And what we are seeing in terms of financing, it has not been as strong as we would like to see. But back to the colors, color’s a little bit misleading. I think at the end of the day, we need to get to a lower-carbon product one way or another. And there will be methodologies, technologies that are going to be what we label transition technologies just like we have a transition in energy, we'll have a transition in agriculture. And through the transition phase, we will still probably muddle through until we get to something which resembles a fully decarbonized food system.

EMP: And it's all very price sensitive. Years ago when I worked at the Federal Energy Regulatory Commission, this was the early 2000s, natural gas prices had doubled, tripled or even quadrupled. And there were concerns among policymakers that the U.S. was running out of gas. And folks were investing in liquefied natural gas import terminals. Well, fracking quickly popped that price bubble and all of these import terminals were quickly rejiggered to become export facilities. But I remember before this happened, there was a very marked price contrast between prices for natural gas here in the U.S. domestically and for manufacturers overseas. And at the Commission we were under great pressure to put price controls on natural gas so that industries like fertilizer producers could remain competitive in the international market. Today I gather the situation is rather reversed with the market shock from Putin's invasion of Ukraine, I would imagine that fertilizer producers in Europe have been concerned about their competitiveness in international markets?

AK: Absolutely. So let me tackle your first point, which is how the price of natural gas impacts fertilizers. About 70% of the cost of producing nitrogen is energy costs. So we have seen a spike in prices in 2022 as a result of the war in Ukraine because that gas that was fed to nitrogen producers in Western Europe from Russia was no longer available or was not available in quantities or prices that were affordable and we have seen a number of shutdowns, temporary or permanent shutdowns, in Western Europe. So the competitiveness of the nitrogen industry, in any jurisdiction at this point in time, depends on the cost of energy that is available to those producers because it translates immediately. 2022 was also a year when policymakers finally realized that cost of food and cost of energy are interlinked and the transmitting mechanism between the two is nitrogen fertilizer. It's not a miracle, but that's how it gets translated. And that's why we have seen tremendous food inflation in the developed countries in the last 18 months or so. So the two are absolutely interlinked about 70%. At this moment, the regions that are competitive in producing nitrogen-based fertilizers are the regions that have availability of natural gas and that is writ large North America – Canada and the United States – the Middle East and Gulf region – so Saudi Arabia, Qatar, few others – and selectively a few other countries. But that is where we have the opportunities to produce cost-competitive nitrogen fertilizers. Now if we see a scale up of renewable energy, as we hope we will, this can change the equation because we can see Morocco coming on the map with development of solar. We can see Egypt through the Benban project. Renewable energy probably will change the map as we see it today. But it's you know, it takes quite a while to build out those renewables. It is a process that takes several years. But fundamentally the competitiveness of the industry today is highly dependent on the sources of energy. 

EMP: You used the word miracle just a moment ago. But many people deem the Green Revolution, the agricultural revolution, as a miracle. It was pretty much made possible by the Haber-Bosch process that is behind natural gas being such a critical part of fertilizer production. So the consequences for our being able to eat is fraught here.

AK: We depend, whether we like it or not, we depend on mineral fertilizers to be able to feed ourselves. And estimates tell us that it's about 50% of us that eat because we have mineral fertilizers available. We are seeing what happens in the regions where fertilizer is applied properly. And we see what happens in the regions where it's not. The issue that we worry about, as an association, is the ability to feed Africa. And we believe that Africa can and should be able to feed itself, but it needs to have access to fertilizers, it needs to have access to seeds, it needs to have access to good infrastructure that gets the seeds and plant nutrients at the right place at the right time. But there is one other question that we should mention on the energy podcast and that is the role of ammonia in transportation of hydrogen. Because this is where the future is also rather interesting. And we'll see where this goes. So let me just elaborate a little bit. Hydrogen, as such, is really hard to transport because it has to be transported under particularly stringent conditions, namely the temperature control etc., etc. And that infrastructure globally, is not yet developed. What is developed is the transportation of ammonia, because we transport ammonia around the world, and hydrogen can be transported if it's enrolled in a molecule of ammonia. So this humble ammonia that we talked about, has potential to be a decarbonization fuel the future. It is already being used to decarbonize cogeneration. There are memoranda of understanding with Japan and South Korea, where clean ammonia, blue ammonia will be used to decarbonize existing grid, at least partially. There is also a lot of discussions about using ammonia as a shipping fuel. And there has been experiments, and even more than experiments, to use ammonia as a shipping fuel. So, what comes to mind and what we worry about a little bit is that a shipping company will always have a higher ability to pay for decarbonized product compared to a subsistence farmer in sub-Saharan Africa. And so if you're looking at the market of ammonia in the future as a decarbonization fuel and as a fertilizer, you may see a bifurcation in the market where the clean product will go into decarbonizing other industries such as shipping, for example. And regular product, if you will, they'll go to farms, which poses questions of how do you decarbonize the food system? How do you decarbonize food production? Why? Because you can have this bifurcation in the market for green versus other types of nitrogen fertilizers.

EMP: We don't have to look any further than the Hindenburg disaster to see how transportation of hydrogen poses issues and having worked at FERC and dealt with communities that don't want LNG shipped into their harbors, certainly having a safer means of transporting the hydrogen via ammonia is huge.

AK: And when you think about it, ammonia also needs to be transported under a particular set of conditions. But the advantage is that we know how to do it because we are globally transporting large amounts of ammonia, nitrogen-based fertilizers. So we have value chains, we have supply chains that are dealing with it properly, that have operational health and safety in place, etc, etc. So it's not without its risks, but we know how to do it. The industry has figured out how to do it. And obviously overall health and safety is absolutely sine qua non – nothing happens without that.

EMP: Then there's the robbing Peter to pay Paul, if you'll pardon the cliche, competition for the resource between energy and agriculture.

AK: That is something that worries us because at the end of the day, the mission of our organization is helping feed the world sustainably. But we are seeing how the energy markets and food markets coalesce. And I think we're coming out of COP last couple of days. The critical piece is to make sure that we sequence it correctly and make sure that we understand how the transition is going to play out. Just like with any kind of fuels we cannot switch them tomorrow because we don't have the alternatives when it comes to decarbonizing the food system. And it will be a transition that will take us some time and we cannot switch it off because we don't have the alternatives. Our board of directors of IFA approved our startup strategy last month. We are very keen in bringing any startups that can produce any plant nutrients into the association and help us understand how to do it better. We have open doors. We have already accepted a number of them to be part of the association and we welcome anyone who can actually help us think it through and rethink the decarbonization of the food system and the transition of how we get there. There are some unintended consequences, as we've seen, you know, with the war in Ukraine. Who would have thought that we would be short on food last year? But we were. We still have a global food crisis that goes on. Maybe we don't focus on it as much because we have other issues to worry about. But the global food crisis continues, unfortunately, and we have more people that are food insecure today than three years ago prior to COVID. So between COVID, which definitely impacted supply chains, and then the war in Ukraine, we have our work cut out for us. The critical question for us is, how do you scale it up? There are new technologies coming through. Every week we see someone coming up with something new, but the question is, how do you scale it up? And the other thing that we need to think about and on the decarbonization podcast, decarbonization discussion, is counting the total cost of getting those plant nutrients to the farmer. And let me give you a small example here. When it comes to manure, organic manure, manure from cattle, for example, or from poultry, or others. There's a couple of things that we all need to think about when we count the total carbon footprint to the farmer. Manure generally contains a lot less nutrients than urea produced out of ammonia – about 7% versus let's say 40% to 43%. So you are transporting a lot more manure to the farmer to bring him the same amount of nutrients and that needs to go into the calculation – holistic calculation – of carbon footprint for that farmer and for production of the food. The other thing is uncertainty what you're going to get because nutrient content in manure varies just like animals vary and depends on what animals do. So nutrient content varies, whereas we know fertilizers have a steady nutrient content. So again, you need to take that into account. Predictability of yields leads to predictability of outcomes. And this is not against organic. We have them in the association. Bring them in. This is just a conversation about what goes into understanding the value chain of our food. Understanding how our food systems are created, where the carbon sits in the value chain, and what we need to do collectively to lower that and eventually decarbonize the whole system.

EMP: It was interesting, you used the phrase “scaling up.” Not only does your industry need to scale up these alternatives, but we need to scale up the renewables to help support what you're trying to do. It's a huge problem.

AK: We are supporting that wholeheartedly. And we would love to see not just the announcements, but the actual implementation of many other Benbans – Benban is the Egypt project. But we need to have many more Benbans around the world, especially in emerging markets that have good conditions for solar, good conditions for wind, to bring that online to bring that onstream because without it, it is going to be very difficult to decarbonize. Again, we cannot burn our old house before we have the new one built and that is where the transition comes in. So kind of full circle going to go into COP, we are very excited that there is an agreement on how we move forward, even though we can pick at it. It doesn't have proper deadlines. It doesn't have lots of things that we would like to see. But there is a way forward and we welcome that. We are also very happy to see that food is on the agenda of COP. It took us 23 COPs to even consider that we need to think about food and climate. And what I'm really happy to see is that today, at COP in Dubai, food was part and parcel of the conversations. We even had World Soil Health Day, which was the first at COP. And we need to focus on it because as we discussed on this podcast food is energy. There is no other way to do it for his energy and we need to understand the connection. We need to understand the transition for the energy markets, and we need to understand the transition for the food market because the two go hand-in-hand.

EMP: Many guests on this program have said that one of the things that could best enable the energy transition would be assigning a cost to carbon emissions. Is that something you think your membership would welcome?

AK: Carbon pricing works because you've got a regulatory environment that is clear to the producers. And a number of the companies in our association call for a clear regulatory environment. Give us a level playing field. Tell us what it is. Give us visibility into the future, which is extremely important, and then we will play by those rules. What is difficult is the predictability – or unpredictability as the case may be – of the policy. So, yes, we had one of the roundtables that we had in Dubai, we had the whole value chain from the farm all the way to consumer goods companies. We had Nestle with us and Unilever, a few others, all the way to the consumer. The call that all of them made was, give us a level playing field, give us the rules and we will deliver that. We will deliver that. In terms of the awareness among the senior executives, it is all the way, every single senior executive that I met in my 10 days out there at the COP confirm that this is a top priority. And at IFA we actually created an e-learning platform called Sustainable Fertilizer Academy because we see that the CEOs get it. The lower levels, not as much. The middle management, not as much. So we now have an e-learning platform that allows us to bring that knowledge further in the companies.

EMP: Well, this is just a fascinating topic and I appreciate all your time. And I guess, just to kind of wrap things up, if I understand what the industry's position is it would very much welcome a scaling up of renewables and other inputs into the industry to allow for better decarbonization, but in the near term, it's looking at carbon capture and sequestration as something that will get you across the finish line.

AK: That plus what do we need to do at the farm to use the fertilizers effectively and efficiently? That is critical because as you mentioned at the beginning, that's part of our footprint, but not the whole footprint. So what happens on a farm is as important as to what happens in the factory.

EMP: Well, as I do with all my guests, I'll put it over to you if there's anything that we haven't discussed here that you think is good to bring up for the good of the order before we sign off.

AK: Thank you for the opportunity to talk to you and I think I'd like to leave your listeners with one fundamental issue which is food is energy, and we need to understand that connection before we do anything related to both because they are interconnected in more ways than we ever imagined.

EMP: Alzbeta Klein with the International Fertilizer Association. Thank you very much. Let’s take the conversation now to Hiro Iwanaga, founder and CEO of Talus Renewables, a “modular green ammonia company.” Talus will use solar energy to make green hydrogen as a feedstock for ammonia fertilizer at a demonstration project in Kenya. Hiro, welcome to the podcast.

HI: Bryan, thank you for having me. I'm excited to be here and thank you for your support.

EMP: Tell us about your exciting project that you've got underway at the Kenya Nut Company.

HI: So we deployed what we think is the world's first modular green ammonia system put into actual commercial service. We lower the cost of fertilizer in remote communities, in our case all of sub-Saharan Africa to start by 20% to 40%. We make it more reliable by displacing a costly and carbon-intensive supply chain, and we make it more sustainable. Our systems are fully carbon-free, so we're 20% to 40% cheaper. The average bag of fertilizer into sub-Saharan Africa travels 10,000 kilometers and so a farmer in Africa often pays double for fertilizer as a farmer in the United States. So if we take a step back, we started this effort philanthropically over the last 10-15 years really funding the research into building a modular green ammonia system that could locally produce this critical raw material that's responsible for feeding 40% to 50% of the world on site to lower costs, make it more reliable and make it more sustainable. And we've done that. We deployed this first system to Kenya Nut Company, and we're excited about our partnership with them. They're rolling it out to several of their farms across Kenya, and potentially a couple neighboring countries. What we're really excited about also is we are deploying our next batch of systems into Europe and the United States next quarter.

EMP: Well, let's talk about that as well. But in terms of this Kenya project, you have some funding support for this? 

HI: We have recently raised our Series A. Our Series A was funded by Xora Innovation, a Temasek platform, Material Impact, the big, deep tech VC based out of Boston, Wilbur-Ellis, the ag group, and Rice Energy, the infrastructure investor. We're excited to have their support. And that funding allowed us to deploy the Kenya system, which has already been deployed, and this next batch of systems that will deploy into Europe and the United States. 

EMP: The Kenya project is up and running now?

HI: It's up and running. 

EMP: And how does that work? 

HI: I'm sure you are deeply familiar with this, but ammonia is the second-most-produced chemical in the world, 80% of which is used for fertilizer. Again, it's responsible for feeding 40 to 50% of the world. There are two problems with ammonia one is we produce it in big centralized plants, and get the core feedstock for ammonia is natural gas or coal when we produce it industrially. So it's both carbon-intensive – ammonia is probably 2% to 4% of global carbon emissions by itself. And because it's produced in big, centralized plants and shipped all over the world, distribution ends up being the majority of costs in many of these locations. And so it makes basic fertilizers, which can double crop yields and reduce water consumption inaccessible in many places in the world, including all of sub-Saharan Africa. When you think about industrial ammonia, ammonia is 82% nitrogen, 18% hydrogen – nitrogen and hydrogen. Nitrogen is relatively easy to get. We can get that from air. Hydrogen has always been harder and the way we get it industrially is we pull it from coal or natural gas, which is easy and relatively cheap, but incredibly carbon-intensive. And again, you need to build big, big, big plants in centralized locations and ship it all over the world. We get nitrogen from air like a big industrial plant. That's not that different. But we get hydrogen from water. Getting hydrogen from water is something that's always been possible but it's very power intensive. So a few key enabling technologies for us. One is, frankly, it's cheap renewable power. If you think about renewables, one of the things that I think is really interesting is solar and wind, renewable power, has declined in price by 90% over the last decade or a little bit more than a decade. Those prices continue to come down. And one of the really interesting questions is what can we do with this cheap, abundant power that can be locally installed in distributed locations to get power to every community in the world? And one of the things that we have been focused on or what we've been primarily focused on till now is the production of a carbon-free ammonia from using hydrogen from water. We take solar power, we run it through our hydrogen generator and our nitrogen generator. The nitrogen generator doesn't take that much power. We get nitrogen from air. We use an electrolyzer to pull hydrogen from water. Once you have nitrogen and hydrogen, making the ammonia is relatively easy, right. Once you have nitrogen and hydrogen, you pressurize it, heat it up and ride it over a bed of iron-nickel, and they bond to form ammonia. And the world has done that since 1907 when Fritz Haber discovered a process for synthesizing ammonia. But that process itself, the Haber-Bosch process, hasn't changed that much over the last 100 years. Our focus in our system makes that Haber-Bosch process, a little bit more efficient, a little bit more power efficient. We designed our system to work on intermittent power so it can run on solar and run fully off-grid and in our case, allows us to do that in a relatively power-efficient manner.

EMP: So tell us about the upcoming projects. You've got the project in Kenya underway. What are you looking to do in the future now? 

HI: The mission of the company was to improve access to basic fertilizers in the developing world. And that's still our mission. And we're focused on that. We're focused on tackling food security and climate change globally. What we're doing to scale is we're deploying a system to Europe, in partnership with a couple global mining companies where they will use that system at their R&D site to test the production of a carbon-free blasting material, which will help decarbonize mining for heavy metals like copper. Where we're really focused and where we're really excited, is in the United States supported by the green hydrogen tax credit, we are launching modular green ammonia systems with Landis and Wilbur-Ellis and several others. They are our launch customers. Landis and Wilbur-Ellis are some of the largest ag companies in the world. And we're excited to be launching our systems with them in the United States. We expect to have systems in Iowa sometime mid-to-late 1Q.

EMP: How was your company received at COP28?

HI: Great, so we've had a lot of support from government, from NGOs, and obviously from corporates. The philanthropic mission the company has been for 15 years improving access in the developing world. What we know, though, is ultimately to decarbonize a difficult-to-abate sector, ammonia, which is, which again, accounts for 2% to 4% of global carbon emissions, we're going to have to tackle emissions in the developed world as well. And so when you look at the United States, I actually think over the next couple of years, Talus will deploy the majority of its systems into the United States supported by the green hydrogen tax credit. That would not have been possible a couple of years ago. Our systems are cheaper, more reliable and more sustainable in the developing world because distribution costs into a farm in Sub-Saharan Africa, a farm in South America, a farm in inland Southeast Asia, distribution costs can make up 50% to 75% of that final cost. In the United States, as you might expect, we have efficient infrastructure to move ammonia around and move fertilizer around. So distribution costs and materials are just not as high as the rest of the world, the green hydrogen tax credit that was passed as part of the Inflation Reduction Act, makes our product cost-competitive, and as it is in the rest of the world, on site and more reliable and carbon-free and more sustainable.

EMP: That's all very exciting, as I do with all my guests, anything you want to say before we sign off here?

HI: One of the things we didn't speak about as much that we're really trying to focus people on, is with our big customers in the developing world, they're very focused on supply-chain resiliency. Some of the big farms there keep six to nine months of fertilizer inventory in their warehouses because they're so afraid of supply chain disruptions. If you're a farmer, you need a kilogram of nitrogen at a certain time in a certain place and you can't afford not to have that or your harvest could be ruined. What surprised me is we’re hearing the same things from our farmers in the United States. And so why they're so excited about our systems is we are placing our systems directly onto their farms, directly at their retail sites, directly where there's local ammonia storage. And so in addition to it being sustainable, just because the production of ammonia is carbon-free, placing these smaller modular systems at the point of demand, removes this long, expensive, unreliable and often unsafe supply chain.

EMP: Hiro Iwanaga, Talus Renewables. Thank you very much. So now we're going to talk with Brandon Kail, Vice President of Montrose, Colorado-based Rocky Mountain BioAg. Brandon, thanks for coming on the podcast.

BK: Hey, Bryan, thanks a lot for having us.

EMP: So we invited you on because, as we explained, this is an episode where we're exploring decarbonization of the fertilizer industry. I thought it would be interesting for our listeners to hear about what your company offers as an alternative to natural gas- and fossil fuel-based fertilizers. 

BK: Yeah, we started back in 2008, basically based off of soil microbiology. And through time we've been able to get other types of natural fertilizers, a lot of them are based from manures and then some of them are even based from food scraps that had already been put into basically the system and, you know, they're composted, and they're broken down and you utilize them as fertilizer for crops. All the fertilizers that we deal with are natural and organic, and they're basically focused on feeding soil microbiology. And as we feed the soil microbes, based strictly around soil microbiology, what happens is we're able to grow more and more microbiology, which naturally fixes nitrogen from the atmosphere through nitrogen-fixing bacteria that's grown in the soil. And so it's kind of a, I guess, you could say two-pronged approach. We're trying to get the soil microbes back into very healthy levels, which will naturally fix nitrogen from the atmosphere. And then not only that, but we're also providing those natural organic and biological fertilizers to those microbes. They're all based off of feedstocks. So when I say that, it's manures, its foods, things like that. So we're not tied to heavy fossil fuel usage or any of those things.

EMP: So you provide a manure or food-scrap based fertilizer? Or you provide the microbes as well?

BK: Yeah, so we started out with just providing the microbes themselves because that's really the most important part to the system, to fixing soil, which will then help you cut down on massive amounts of fertilizer, even synthetic or conventional fertilizers, if we have very healthy soils. But we do provide the microbes themselves to be able to repair soils and make sure that the proper microbiology is built into the soil, but then we also provide the fertilizers as well. So we do provide both of those things. The fertilizers do come in a dry and liquid form, and they're very low, low NPK rating. You know, you're talking about balanced fertilizers usually like a 4-4-4 but it's all derived naturally or organically from like I said, manures or food that has been put into, you know, to feed humans, say, that then goes to waste or in supermarkets. They take that food and they run it through certain processes and turn it back into fertilizers.

EMP: In the Montrose Press article that I read that called my attention to your company, you said when you were first promoting your biological bacterial alternatives to chemical fertilizers back in 2008, you said, “They thought we were nuts.”

BK: Yeah, that's the easiest way I can put it. In 2008, when we brought the first concept, specifically the microbes, we were kind of tasked with bringing that into the marketplace and building the market for it. And when we had the first meetings with producers, conventional agricultural producers that are used to using conventional fertilizers and things like that, to show them an alternative, they kind of looked at us like we were absolutely just 100% nuts about what we were talking about. Needless to say, now you look 15 years later, and it is being accepted more and more as the new norm to have healthy soil. Healthy soil provides the proper amounts of nutrition meaning if we have healthy soil, fixed nitrogen from the atmosphere, that's one of the big things. Those bacteria do other things as well. There's many different things they do but, yes, they thought we were nuts. Absolutely.

EMP: And from what I can tell from reading on your website, these products that you provide are better than chemical fertilizers?

BK: Chemical fertilizers are very similar to like drugs, right? You utilize them, you know, one year, the next year, you have to use more and you'll be hooked on them or you’ll get your soil hooked on them for years and years and years and years where those crops then become – and not only the crops, but the soils, mostly the crops though – become dependent on utilization of conventional fertilizers. The fertilizers that we utilize they’re more of an investment into a farm or a garden or whatever we may be doing because the fertilizers that we offer, yes, they do provide some nutrition obviously to the plants, but they also help rebuild the soil. So as we're able to rebuild the soil and actually make the soil better and better and operate properly, the usage of even the fertilizers that we provide starts definitely to decline drastically. So the producer or whoever it may be that’s utilizing them, they're making an investment more so into their farm or their garden or whatever it may be rebuilding their soil, as long as they continuously take care of their soil naturally, the soil will rebuild and they will use less and less inputs until the hope is to get them to 100% or as fully sustainable as possible, where anything that they produce, maybe even on their farms, they're potentially utilizing that and recycling it back into the soils just like a forest operates. If you look at a forest, it's the perfect example of how we try to get producers or farms or people that have gardens to think about it. Those forests they come up, they flourish every year, they grow healthy. They naturally drop leaves and the plant material it goes back into the soil, it composts and it’s recycled, being reused, in that it's regenerative in that state.

EMP: So it actually builds the soil into a more healthier state. So is it more cost effective than chemical fertilizers?

BK: That's a great question, actually. A couple of years ago whenever synthetic fertilizers or commercial fertilizers and chemicals and all of those things were just going through the roof, I would say two years ago, pricewise, we actually had a lot of conventional farmers start to reach out to us because the numbers really started to make sense. They wanted to build hybrid programs. They wanted to actually take what they were doing conventionally and they wanted to supplement organic and biological inputs in to help them reduce the amounts of conventional fertilizers and chemical sprays that they were using. Even today we're getting closer and closer to that point where there is not going to be a difference in price. The hardest part is and what we have found in this is that a lot of these conventional producers, they will definitely take a hit if they just cold turkey go directly away from chemical fertilizers and say I'm not doing it anymore. I'm going to use organic fertilizers only. There is usually a drop in crop yields. And that's where the cost comes in. What we do is when we deal with situations like that is we help wean them away from utilization of conventionals. Now to answer the question and kind of come full round on it, the biggest thing I can say is that after you get that soil rebuilt, which may take a few years depending on budgets, depending on things like that, what happens is actually then it becomes very, very affordable for the producer. They might not grow quite as high of yields. They might not have those things but their input costs are so much drastically lower that their margins increase. So then actually the producers really at the end of the day it becomes very beneficial for their farms. Especially if we can move them closer and closer to sustainability. Not even using the products or the technologies we have, but definitely moving them away from the costs of being tied to that fossil fuel market, for sure. 

EMP: Organic farmers or organic growers are customers of yours?

BK: Absolutely, yes. So we have a lot of organic producers that utilize the products that we have. They don't have to use as much, you know, so maybe it's just like, hey, we want to add some microbiology or a little bit of fertilizer. They use a lot less inputs on their farms, which is the whole goal. We want people to become sustainable. It's an odd business model. A lot of people think, oh man, these guys are nuts, but if we can help people get to sustainability, at the end of the day it's only going to benefit, for one, the farm, those organic farms or biological-based farms. But it's also going to at the end of the day, help bring more business to us because we're helping more and more people. It's kind of the old adage the more we give the cheaper it gets, the better off the company is going to be and not only that, but it's really going to help the population of the world really into eternity. I mean, you're talking cheaper foods, things like that, which that's the way it should be. Things are getting more and more expensive right now. And that's due to inflation and a lot of other things that's going on, as we know. But really, the reality should be is that things should get cheaper and cheaper as we become more and more efficient. So, at the end of the day that's our whole adage as well. You know, organics are one thing, but we take the biological approach. So “Biological Beyond Organic” is our tagline. And when I say that, we really focus on the soil bacteria because in those organic farms that we work with, we focus on the soil microbiology because that is the engine – that's the gut of the soil. And it's very important in this whole scheme of things including with the fertilizers. 

EMP: The gut of the soil. I like that. Yeah, it was interesting, you were talking about price sensitivity a couple of years ago, I guess that would have been around the time of the Russian invasion of Ukraine when we had a spike in natural gas. But when you started out in 2008 was right before we had fracking in this country, and natural gas was very, very expensive even compared to two years ago and that bump you were citing. Maybe your business would have done a lot better fracking and natural gas had stayed high.

BK: You know it very well could have. You know, and not only that, it's also tied to commodities markets. When we very first got into it, we were trying to help conventional farmers – guys with large acreage that use conventional practices – move away from that. So we were actually going in helping farms integrating biological plans into their conventional systems to move them away from the usage of chemicals – of conventional fertilizers and chemicals –which we got a lot of pushback at the time. It wasn't real popular for anybody, especially big Agri-Chem companies, Monsanto, and we can go on and on to Wilbur Ellis, all of these massive companies really didn't like what was going on you know, and it was really kind of hush-hush they kind of kept it down. Now if you really start to look into it, as times have changed, a lot of these larger companies that do conventional fertilizers, they're all starting to slowly adopt these practices. It's taken 15 years, but they're all slowly starting to move and make investments into organic companies, biologicals, things like that. It is the next level of agriculture. But you are 100% correct – if all of that energy wouldn’t have been freed up and things got cheaper At the end of the day, it very well could have pushed us along a lot faster and then also with commodities markets. As commodities fall in price, these conventional farmers are the guys that we use different really focused on to help out at the beginning because it was in our heart that we're like, man, these guys need help. All of their margins are so thin and they are calculated. These companies know exactly what they can take for them just to keep them continuously moving forward. As those commodity prices fell, of course, at the time, even our biologicals and our organic fertilizers and the things we were using were pushed to the wayside, because they knew that they had to have XYZ to grow their crops. Everything was fixed in price, they had no more room to help build their soil or help do anything. So yeah, I think it's a two-pronged thing there as well. So energy markets for one, and for two, commodity prices.

EMP: Probably the reason you're seeing so much movement from traditional companies into your space is because they recognize that they need to decarbonize their sector if they're going to respond to climate change.

BK: I would have to agree with that. And not only that, I hate to say it this way, but the other thing is, is they see profit, right? They see that a lot of these farmers and a lot of these producers are starting to question like, hey, wait, is there a better way to do this? So not only do they want to move into that zero-carbon type of footprint or make themselves look like, oh, man, we're doing great things. They're also on the flip side of it they're looking at the dollar, the bottom line, because more and more of these producers and people just in general, even people with lawns, they're starting to say, hey, where's the organic option, Scott's, or whoever it may be? And so they are starting to, to come into the space more and more and purchase companies and acquire companies, things like that. So, yeah, and also with the hope that they are for sure looking at the long run, right? That they want a better environment. They understand it and they're able to do that. And with their billions of dollars, they should be able to make a lot of changes for the good.

EMP: Making money does not have to come at the expense of the environment.

BK: Not at all. Not at all. 

EMP: Well, Brandon, thank you very much. Anything you want to add before we go?

BK: You know, I think that's pretty much about it. You know, I just if I can say anything to anybody out there, your listeners or anything like that, the biggest thing I can say is definitely when you're making those choices, whether it be for your lawn or potentially a farm, take a look at some of the other options that are out there that are biological because they really are investments versus just a direct expense, especially if you treat them as an investment. And that's not just the products or the technologies we sell, but a lot of companies out there have a lot of great, great technology that really if you spend the money with them, at the end of the day, it's an investment versus just a direct expense. And as you compound those, you know, those wins or those investments, more and more, all of your expenses go down in the long run. If I can leave with anything, that for one. And then, for two, always think about the environment, whenever you put something down or your kids or your grandkids, grandkids or whatever it may be, because at the end of the day, they're the one inheriting all this stuff, that's all I can say.

EMP: Well said. Thank you. Now let's turn the conversation to Divina Gracia P. Rodriguez, Agricultural and Applied economist with NIBIO, the Norwegian Institute of Bioeconomy Research. She is spearheading an EU-funded study into the barriers to using human urine as fertilizer. Divina, thanks so much for joining the podcast.

DGPR: Thanks for having me, Bryan.

EMP: Okay, so tell us about the FOODSECURE program and the project that is being funded.

DGPR: So the title of the project is “food security through better sanitation, the case of urine recycling.” So the project is actually an answer to the Research Council of Norway's call for research on food security and climate-smart agriculture in developing countries. We're going to implement this project in Ethiopia by mainstreaming a safe sanitation value chain surrounding the collection, safe treatment, transportation of urine, and then its application of urine-based fertilizers, so farmers can use it. So we aim to pilot the development and field testing of the technology – alkaline urine dehydration – in shared sanitation systems like communal-scale toilets.

EMP: Why is urine a good alternative to fossil fuel-based fertilizers?

DGPR: That's a very good question. Large-scale urine diversion and recycling has the potential, of course, to significantly improve the sustainability of both food production and water management. Urine-based fertilizers can provide a sustainable source of essential macro and micro plant nutrients to low-income countries struggling with food insecurity challenges and then mineral or synthetic fertilizers will be replaced by a locally made and readily accessible (urine-based fertilizers) UBFs. Also, urine-diversion toilets require little to no water flushing, resulting in substantial water savings that can be used in agriculture instead. And also, if we recycle urine at large scale, it significantly reduces carbon emissions as it substitutes energy-intensive phosphate rock mining and industrial ammonia synthesis that also uses natural gas. And I think our project is very timely, because current global fertilizer prices now are also at an all-time high due to rising natural gas costs and increasing food demand.

EMP: But what is it about the characteristics of urine that make it a good fertilizer? 

DGPR: An average person excretes 550 liters of urine per year and that contains 4,000 grams of nitrogen, and 1,000 grams of kalium (potassium) and 365 grams of phosphorus. And these are the macro essential nutrients that plants need in order to grow.

EMP: We have an expression in English called, they're so poor, they don't have a pot to pee in. So I don't believe there's anything really new about this. I think people knew back before the Haber-Bosch process that urine could be used as a fertilizer and they paid people for the urine, correct? 

DGPR: Yes, exactly. I remember my grandparents would use their pee, you know, they're using this pot and then they use their urine to fertilize the plants. But it hasn't been really adopted. It's because of the – I mean, there's urbanization, development of sewer systems and the industrialization of chemical fertilizer production have made it less common to use. And of course, in our project, we are dealing with many barriers for urine recycling at a large scale. The use of urine fertilizer is not common because there are so many barriers that we have to address before we can really use it at a large scale.

EMP: Why don't you tick those off for us? 

DGPR: It's not really viable to collect, store transport and apply liquid urine as fertilizer. So to give you an idea, if you want to apply maybe in the States, I think they use 90 kilograms of nitrogen per hectare. And if you just want to apply liquid urine that is about 15,000 liters of liquid urine. So it's very difficult to (do) if we adopt liquid urine. And then also it's very difficult to collect. And the next barrier would be of course, there would be human health and maybe safety barrier and environmental risks. You might think of possible communicable pathogens or micro pollutants or heavy metals in the urine, but the overall risk to human health from heavy metals excreted in urine or those accumulated in dried urine fertilizer is very minimal. Urine also contains lower concentrations of heavy metals and hormones than found in livestock manure and very few pathogens are excreted via urine. But the problem here actually is the fecal cross contamination during urine collection that can increase the risk of transmission of disease. Are you familiar with ascaris, Bryan?

EMP: The Greek figure?

DGPR: (laughter) It's the type of parasitic worm known as soil-transmitted helminths, and it's endemic in Ethiopia and it lives in the intestine. So ascaris eggs are passed in the poop of infected people. So if we use the urine and that urine is contaminated with ascaris, ascaris worm eggs can be deposited on soil which can then grow into a parasite that can infect others. So that's also one barrier. And then micro pollutants – we talk about organic micropollutants such as pharmaceuticals. It is possible for this also to be accumulated in the soil and be taken up by plants. So there is concern surrounding its agricultural use or the use of urine-based fertilizers.

EMP: So there is a concern about pharmaceuticals and the buildup in the soil. Okay, well, I understand the directing this at the developing world to begin with, but if we're going to reach the pseudo goal of the COP28 conference and decarbonize industry in the developed world, we need to really look at this writ large, don't we? 

DGPR: So in our project we want a large-scale adoption of urine and we are introducing a technology called alkaline urine dehydration. The idea is we will dry the urine, safely treat it and when once it's dried 90% volume of the liquid urine is removed. And then the leftovers are essentially the solid fertilizers.

EMP: Well, I think it's a wonderful project that you have going on. The industrialized world should look at this as well and consider it especially given the concerns of climate change and water availability going forward. It makes little sense for us as a society to be using treated drinking water to flush valuable fertilizer down the toilet. 

DGPR: Exactly. Yes. But before we can actually recycle, we have to train people or encourage people to use urine-diversion toilets, because as I said earlier here, we don't want to contaminate the urine with feces. And it requires some investments and also the idea is we need to from household urine to farmland, so there should be a new sanitation value chain that can connect household to farmland and right now we don't have the infrastructures yet to be able to adopt urine recycling at a large scale. 

EMP: We'd have to develop all new toilet systems, we’d have to develop collection systems and distribution systems. And given that we have markets in our name, Energy Markets Podcast, certainly if you create a commodity market for the urine, then then a lot of those problems can be overcome. 

DGPR: But you know one barrier also is the institutional barrier. Because, for example, in most countries, current laws and regulations offer vague or ambiguous guidance on the use of human excreta in agriculture. And these regulations do not include the use of bio-based fertilizers like human urine and thus national certification systems for bio-based fertilizers are on very different levels of development and effective use in different countries. And actually in many countries, there is no government certification. And urine-based fertilizers must be monitored for quality and hygiene compliance and quality certification can influence the perception and demand for urine-based fertilizers by farmers and consumers.

EMP: We need to do something about the climate threat. And this seems like a good opportunity for the world, not just for Ethiopia. Divina Gracia P. Rodriguez, agricultural and applied economist with NIBIO, the Norwegian Institute of Bioeconomy Research. Thank you very much. 

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