Mass production of fertilizer was one of the most important advances of the past century with roughly half the world's food supply depending on it, but it comes with a large shadow. Between manufacturing and field application, nitrogen fertilizer accounts for five to seven percent of global greenhouse gas emissions. The inefficiency is just as striking: global nitrogen fertilizer use efficiency sits at about 33%, meaning roughly two thirds of every tank a farmer buys never reaches the crop. It runs off into waterways, where it drives algae blooms and dead zones, or it volatilizes into the air becoming a high impact greenhouse gas. As our guest Nico puts it in this episode, imagine buying $100 of gasoline and pouring $66 of it on the ground. And because the industry is so centralized, a disruption on one side of the planet can double a farmer's single largest input cost overnight. Today, Hilary and I are joined by Nico Pinkowski, co-founder and CEO of Nitricity, which is making liquid organic nitrogen fertilizer from almond shells, air, water and renewable power. Farmers can disburse the fertilizer through their irrigation systems, spoon-feeding nitrogen as the crop actually needs it rather than front-loading a season's worth of ammonia into the soil. The result is dramatically lower field emissions, far better nutrient uptake, and a product that competes on price with the animal byproducts that dominate organic farming today. We talk through the new plant Nitricity just finished in California's Central Valley, the multi-year fixed-price contracts that made it financeable, expansion into new geographies, and the reactor breakthroughs opening the door to decarbonize the conventional market. Let's dive in.
Mass production of fertilizer was one of the most important advances of the past century with roughly half the world's food supply depending on it, but it comes with a large shadow. Between manufacturing and field application, nitrogen fertilizer accounts for five to seven percent of global greenhouse gas emissions. The inefficiency is just as striking: global nitrogen fertilizer use efficiency sits at about 33%, meaning roughly two thirds of every tank a farmer buys never reaches the crop. It runs off into waterways, where it drives algae blooms and dead zones, or it volatilizes into the air becoming a high impact greenhouse gas. As our guest Nico puts it in this episode, imagine buying $100 of gasoline and pouring $66 of it on the ground. And because the industry is so centralized, a disruption on one side of the planet can double a farmer's single largest input cost overnight.
Today, Hilary and I are joined by Nico Pinkowski, co-founder and CEO of Nitricity, which is making liquid organic nitrogen fertilizer from almond shells, air, water and renewable power. Farmers can disburse the fertilizer through their irrigation systems, spoon-feeding nitrogen as the crop actually needs it rather than front-loading a season's worth of ammonia into the soil. The result is dramatically lower field emissions, far better nutrient uptake, and a product that competes on price with the animal byproducts that dominate organic farming today. We talk through the new plant Nitricity just finished in California's Central Valley, the multi-year fixed-price contracts that made it financeable, expansion into new geographies, and the reactor breakthroughs opening the door to decarbonize the conventional market. Let's dive in.
Links:
• Nitricity Website
• Nico Pinkowski's LinkedIn
Gil: I'm Gil Jenkins.
Hilary: I'm Hilary Langer.
Guy: I'm Guy Van Syckle.
Kenny: I’m Kenny Gayles.
Gil: And this is Climate Positive.
Nico
The other staggering statistic I'll sneak in here is that the global nitrogen use efficiency is about 33%. And what that means is that of every bag of fertilizer that's applied on a field, or every tank that's applied on a field worldwide, 66% is wasted, like runs off into a ditch. Could you imagine if you went to a gas station and you you bought $100 worth of gasoline and you poured $66 on the ground run off into a ditch?
Hilary:
Fertilizer helps feed the world, but has a massive climate impact. Nico Pinkowski, the co-founder and CEO of Nitricity, joins me and Guy Van Syckle to share a new approach. Nico's team at Nitricity makes fertilizer from air, water, and agricultural waste. Farmers benefit from locally produced fertilizer that can be tailored throughout the growing season, and the results have compelled farmers to participate alongside institutional investors.
Nitricity's recent funding rounds. In this episode, Nico unpacks why rethinking fertilizer is key to tackling climate change.
Guy
Nico, thank you so,
Guy
so much for joining us this afternoon. And to kick it off, when you look at someone with your background and incredible skill set and being a top top scientist, top PhD out of Stanford, would be curious on kind of what called you to the fertilizer.
Guy
problem and was it the climate math, the food security angle, supply chain, something more personal.
Nico
Well fertilizer is the coolest industry on earth, so it's pretty obvious.
Guy
I love
Hilary Langer
Ha ha
Hilary Langer
ha.
Guy
it. I love it.
Nico
No, I I it I I've always liked big industries, right? Where you can walk through a factory on on, you know, for for a critical industry anywhere in the world and it's got massive tanks and pieces of equipment and steel and and and so I I I was attracted to work in a in a big industry like that, a hard tech industry, and fertilizer is extremely important in the world.
Nico
without fertilizer we can't feed the world. We could only sport about a half to a third of our current global population. And and it involves one of the hardest technical challenges out there is you know capturing you know nitrogen from air in the conventional like hobberbosch process is is something that really let our population grow.
Nico
as a civilization and and but but also it's it it has a shadow. It it accounts for five to seven percent of global emissions and it's a highly centralized industry today. where fertilizer is needed most in the world, it is often the most overpriced. and so I think there's a big opportunity to combine this distributed energy generation trend that we're seeing worldwide with solar and wind with the fertilizer.
Nico
it. Why can't we make fertilizer closer to farmers that need it using solar power?
Guy
I love it. I love it. What what is that that short version of what nitricity does that you use to describe to folks that might not be as familiar?
Nico
Nitricity makes fertilizer using solar power and air air, water, renewable power, and we can use recycled agricultural waste as well. And we make fertilizer with smaller form factories closer to farmers that need it.
Hilary Langer
When you were developing nutricity with your co-founders, was there a moment when this concept clicked for you and you realized that it might be marketable?
Nico
There's been a a couple of piphanyes over the years. I wish I could say that we woke up one day and it was it was there. but really it's been years of of tough work. but we've had several pivots over the years and in in response to challenges. And
Nico
coming out of every challenging period is is where we grow and accomplish the most. And usually it's, you know, after months of, you know, studying documentation or looking at alternative pathways or or market insights that something really stands out. our first one was when we moved what was really when we realized that we wanted to focus on nitrates.
Nico
Instead of ammoniacal fertilizers. And so today when you say fertilizer, you're it's almost synonymous with saying ammonia. And because that's what the the fertilizer industry is built around. But ammonia is actually a pretty bad fertilizer. It's highly emitting, it's highly inefficient. and if you're producing ammonia with air and water,
Nico
It's a thermodynamic sin because it's a fuel. you can burn ammonia in a diesel engine and or in an engine and make power. And so you're producing a fuel with air and water, you have to climb a very large thermodynamic hill. and it's also a bad fertilizer in in the majority of global soils. the the caveat is is is flooded fields, ammonia is pretty good, but but for unflooded fields, ammonia is it's not a great product.
Nico
And so there's another type of fertilizer nitrogen fertilizer out there, and that's nitrates. And if you look at the thermodynamics, making nitrates from air and water is actually downhill. you should be able to get power out. So rather than having to climb a thermodynamic hill, you should be able to energetically get power out. Of course, that's probably impossible in practice, but from a thermo perspective, it's it's obviously the way the way to go. And that was the first big epiphany when we when we pivoted from
Nico
an ommoniacal worldview to a a nitrate worldview. and then the second one, yeah, we've had additional ones as the years have gone on. largely associate our first big one after that was associated with the go-to-market effort. We realized we really found a good market opportunity. And then our second one was probably about two months ago when we found a really big breakthrough on the technical side.
Hilary Langer
Excellent. Excited to hear more about those. One thing that stood out is your deep relationship with the farmers that you serve. How did you kick that off initially? And were there any early conversations that resonated?
Nico
Early on in nitricity we built a prototype solar powered fertilizer unit in East Palo Alto and we would carry it into investment offices in San Francisco. So we put this like solar fertilizer unit in the back of my Subaru and we drove up to like the Presidio in SF, or we drove up to like
Guy
It's phenomenal.
Nico
a financial district and and parked a car on the curb and carried this up and plugged it into the wall and it said yeah, this would run with solar, but we're inside.
Nico
and no one really got it. Everyone is like, wow, okay, this is interesting. But no one really got it. And then we brought the same prototype to Fresno County, really the heart of California AG. And people were literally jumping out of their seats. They got it immediately. They asked us where our security guards were because this is such a big deal. You gotta watch out for the existing fertilizer companies. And you know, they would stand up and and offer us deals to build it on their farm.
Hilary Langer
Wow.
Nico
and so it was it was just obvious. You could feel the feel it in each room and the difference between the investment offices and S F and farm country.
Guy
And and in those conversations in farm country, what aspects of the system or your offering were folks connecting with most? Like what elements was it sort of the the autonomy? Was it cost? Was it kind of a a supply chain security? What elements of it did folks find most compelling?
Guy
you know, out in the Central Valley.
Nico
Yes. It's it's really it was the ability to produce fertilizer a different way, closer
Guy
Mm.
Nico
to farmers that need it. Today fertilizer is one of farmers' largest expenses and there are no options. The price is what the price is. And I mean lately we've seen, you know, okay, the price is a hundred percent more expensive than it was last season. Okay, I mean that is what it is. We're gonna pay a hundred percent more on our most important.
Nico
mo b biggest input cost this season and it just is what it is and I can't negotiate it because I have you know two places to go and and that's just what the price is. And so to be able to produce fertilizer using solar power which you see you see solar projects going up left and right in in Central Valley right now. Everyone gets the value of that. And
Nico
And the this thought that you can make fertilizer using renewable power and ag waste c closer to farms that need it and you could have control over the supply. Or even if you didn't have if you didn't own it and you didn't control the supply, there would be another there would be someone else and and you could go somewhere else to get fertilizer rather than just taking whatever the price is at the from who you currently buy it from.
Hilary Langer
Could you walk us through what the production actually looks like? You have your ag inputs and what does the system look like and how does it work?
Nico
Yes, three parts. First is we we buy our our plant in Central Valley, California today uses almond shells, air, water, and renewable power to make fertilizer. And so it starts at the at the almond shell hulling companies.
Nico
And we buy, we don't buy the hull or the almonds, we buy the shell, which is between the almond and the and the hull. And it can be ground very nicely. It has a good amount of nutrients in it. it feeds into equipment really well and it's very affordable. And so we we we purchase a you know tonnage of almond shells.
Nico
And then we work with our the hulling company who grind who pulverizes those into a a fine dust. and and that's where the the process starts. And then the second step is is we have these advanced reactors and we feed in we feed in almond shells and we burn them and then we and then
Nico
The third step is we we are there brewing. is we send we we brew a a tea, a fertilizer product we call ash tea using the almond shell ash. and
Nico
from the reactors and water. And that tea is very nutrient rich and is qualifies as organic. And it turns a kind of a rich red color. And you get a lot of nutrients from the almond shell ash and the combustion process. The most valuable nutrient that you get is nitrogen from our manufacturing process.
Nico
And so that's our you know where the value is. And but you get a lot of other things as well, like magnesium, potassium. we we can mix in limestone to make to make to boost the calcium. and
Nico
It's a it's a nutrient rich product. It's a it's a liquid form. although we're also now commercializing the solid, the solids that come out of the the the reactors as well. but that's a second step. you today we just sell totes and soon tankers of the of the liquid.
Hilary Langer
And then is the liquid put into the irrigation system for distribution in the field?
Nico
It is, yeah. But it's a pretty simple manufacturing method. It's it burn almond shells and air and brew a rich tea with the resulting products and that that tea is then filtered to make sure the particulates don't end up in the product and then that product can be sent out with water to the fields, which is how how our customers in California prefer it.
Nico
Then they don't need to run a truck over the field or or mid-season or late season. Sometimes you can't run a truck over the fields. And so you can just send it out with the water. And what this enables you to do is provide nitrogen exactly when the crops need it. Rather than having to load up a bunch of nitrogen in the soil at the beginning of the season, you can spoon feed. That's it's called spoon feeding in the industry. You spoon feed a little bit of nitrogen as the crops develop following the nutrient uptake of the plant, and you can get really close to perfect.
Nico
nutrient use efficiency this way if you do it right. And you can minimize the amount of nitrous oxide emissions that are emitted
Guy
Course.
Nico
from the field. And so it's a huge sustainability benefit and you can also get higher yields for less product.
Guy
Right. so much
Hilary Langer
It's incredible.
Guy
to unpack there Could you pause on the nitrous oxide dynamic here? I feel like that's one that some of our listeners may not be as familiar with, and just talk about the associate impact there because I think that's a really important one.
Nico
Yes, and thank you very much. This is the the biggest opportunity, I think. The the lowest hanging fruit in the fertilizer sector is that so five to seven percent of global emissions, greenhouse gas emissions come from nitrogen fertilizer, both the production and the application process where you apply fertilizer to fields. When you apply fertilizer to fields, the the emissions come from a greenhouse gas known as nitrous oxide or laughing gas or N2O.
Nico
And that's comes out of microbial react processes in the soil. There's two different pathways to N2O emissions, but the lion's share comes from actually put differently, if you apply one fertilizer versus another fertilizer on a field, you can get 10x different nitrous oxide emissions.
Hilary Langer
Wow.
Nico
and so if you take the majority of global farmland, which is unflooded.
Nico
And you apply our fertilizer versus applying urea or a tank of ammonia, for example, you'll see massive differences in the amount of emissions. And nitrous oxide is the lion's share of the emissions that from fertilizer production and application. So fertilizer production only only contributes 1.8% of total global greenhouse gas emissions.
Nico
So that means field emissions of nitrous oxide accounts for you know 3 to 5% of total global emissions. And so we could have a huge impact on sustainability literally tomorrow if we just changed what tank of fertilizer we applied on different fields.
Guy
Hm.
Nico
If we applied the right type of fertilizer for the right field. And in California, that means we need to shift to nitrates.
Nico
And if we do that, we will see an immediate reduction in greenhouse gas emissions. And it doesn't matter how you make it, right? You can make them both with coal. If that was you know what you preferred, I prefer to make them both with you know solar power. But it and that that's huge. And then the other thing is is is you could you could reduce there's there's just the there's a lot of room for optimization. The other staggering statistic I'll I'll sneak in here is that the
Nico
global nitrogen use efficiency is about 33%. And what that means is that of every bag of fertilizer that's applied on a field, or every tank that's applied on a field worldwide, 66% is wasted, like runs off into a ditch.
Guy
Jeez.
Nico
Could you imagine if you went to a gas station and you you bought $100 worth of gasoline and you poured $66 on the ground and let it just
Guy
Wild.
Nico
run off into a ditch.
Hilary Langer
Well, and it's
Hilary Langer
not just going into a ditch, right? Doesn't that then cause issues in the watershed? We face some of those problems
Nico
Yes, it
Hilary Langer
on the Chesapeake Bay where you have a lot of farmland in the watershed, and if you put too much fertilizer on, it wrecks havoc in the quality of the water.
Nico
Yes. Yeah, it can ri it the it runs off into the water.
Nico
And it can create algae broom blooms and eutrophication of downstream water ecosystems, and it volatilizes into pollutants into the air, like nitrous oxide. so if you apply the wrong type of fertilizer, it can run off and it can it can go into the air as nitrous oxide. And so our nitricity's thesis for change is that this was one of the epiphanies that we had on the market side, is is like, okay, what is our job in growing a startup? Our job is to make the market.
Nico
more efficient. Well, you know, maybe we should talk about the fact that 66% of all global nitrogen is lost as pollution. And because if you can improve that, then you can make the market more efficient. And how do you improve the improve that? Well, the one of the the it's it's complicated. It's not as simple as I'm making it seem, but the the biggest lever is nitrates. Is if we if we can switch from more of a from the current ammoniacal world worldview to like a nitrate worldview.
Nico
you can have immediate huge pickups on unflooded fields. and and you can reduce you can improve nitrogen use efficiency and you can get like 90 plus percent. Now night yeah if you if you take nitrates and you apply them wrong, you can get a lot a lot of runoff too, right? If you just put nitrates, if you put them on the ground and you know when it's not planting season or you put too much in or you put them down when it rains, they can run off. So it's
Nico
there's there's dynamics at play here that I'm not fully capturing, but you know largely speaking we need to produce nitrates and we need to make them closer to where they're needed and using renewable power and that's how you can make a big impact.
Guy
Absolutely.
Hilary Langer
Fantastic.
Guy
Such impressive and and multifaceted impact that y'all are y'all are leaving at nitricity. A question around the organic nature of your fertilizer. And I know that was something that's kind of key as it relates to some pricing power in the market,
Guy
Could you talk us a l through a little bit kind of the path to securing the organic certification and or the relevance of that going forward?
Nico
Yeah. So since we were talking to farmers in twenty twenty one in California farmland, they would take us we on their farms, they would take us to their organic plots and say, you know, this is a problem I have. this is my clogged like irrigation kit, my clogged irrigation pipes. You know, I prefer a product that's got a little bit of a lower pH, so that I could, you know, make sure I maintain the lifetime or extend the lifetime of my irrigation equipment.
Nico
Organic farmers also, you know, complained about limited availability of good fertilizers. On there's a nature paper published about a year ago that I believe that showed that worldwide organic farmland is 30% has 30% lower yields than conventional farmland. And so this is the biggest challenge with organic farming, is if you go organic, you get lower yields.
Nico
That's just what people have accepted. And if that if organic farmland generates lower yields, then to feed the world, you need to you need more farmland, which means you need more land use displacement. And if you look at the main reason why organic farming has lower yields, it's because of a lack of access to good fertilizers. And
Nico
You know, if you use the the fertilizers in the market today, a lot of these are pretty polluting and that doesn't align with the values of organic farming. But there's a there's something you can't reconcile with organic farming and and sustainability today is is today organic farming is not sustainable because you it it you can't feed the world with it and it generates more emissions than conventional farming because you need to use more land to get the same amount of crop. And so our our you know, we
Nico
We we've long talked to farmers and that and the other thing about organic fertilizer is it's it's based on animal byproducts. So in in California today we serve organic fruit and vegetable farmers. They they use what what do like organic fruit growers use today? They use animal byproducts. So they'll use them a very common organic fertilizer is pelletized slaughterhouse fluids. So you take a a slaughterhouse.
Hilary Langer
Sounds lovely.
Guy
Yeah.
Nico
Yeah, you'll
Nico
take a slaughterhouse in Arkansas and you look you take the fluid that comes out of the drain in the bottom and you bake it and you pelletize it. And I'll note that it's not a con it's not an organic slaughterhouse. It's a conventional slaughterhouse, which means that all the pesticides and chemicals that you're putting into, you know, conventional cows are gonna then get into your
Nico
Organic fertilizer. And by the way, like does can we talk about the fact that we're using pelletized slaughterhouse fluids to make
Guy
Yeah, this
Nico
our organic salads? And by the way, if you look at the form of nitrogen in these pelletized slaughterhouse fluids, it's ammonia, which is leading to higher nitrous oxide emissions. And by the way, you have to apply it all at the beginning of the season because there's no good liquid available. And so it's a it's a solid. You load up the soil with a bunch of ammonia at the beginning of the season.
Nico
It then runs off, it then volatilizes into nitrous oxide and ammonia into the air. And then you d and then it's not available to the plant when it really needs it, when the plant is big, you know, three quarters of the way through the season. And so you get lower yields. And so you know what what we offer farmers is we use yeah, almond shell waste, air, water, and renewable power, to make a liquid fertilizer that we spoon feed to the crop over the course of the season. It's got less emissions
Nico
And can generate higher yields. And it's priced very competitively. And so another f fertilizer we compete with a lot is fish emulsion, which is f fish guts that are emulsified and and stabilized with chemical factory phosphoric acid. And so this is like the the second bread and butter fertilizer in the organic market, is you take a fish.
Guy
Yeah.
Nico
If and
Nico
by the way, fishy fish emulsion has extremely high greenhouse gas emissions because of fish it comes from fishing that comes from and and it's also really salty. And but you can get it as a liquid. That's that's the key is this fish, this fish guts fertilizer you can get as a liquid, but only if you can stabilize it with the chemical factory phosphoric acid, which for some reason is allowed in US organic farming.
Nico
And so today we compete with a lot of fish emulsion fertilizer companies. And and by the way, if you're eating an organic salad or buying organic fruits, those are produced with you know, either slaughterhouse fluids or blended up fish guts. And so this is just really something that we're not talking about in the organic space. And I think there's a big opportunity to be more sustainable about organic fertilizers.
Nico
And so and and that's the the market we started in because your your your your your double bottom line opportunity it just really stands out. On the emissions
Guy
Okay.
Nico
and sustainability side, the impact potential is huge. because this is a type of tech that you could expand like global organic acreage or feed the world with organic sustainably. and then versus competitive products, we see emissions in emissions reduction. and then on the pricing side, organic fertilizers.
Nico
are sulfur like twenty they're they're they're tw about twenty times more expensive than conventional fertilizers. And so for a startup working our way into the market, it's a sports car. And so you can develop in a high value, lower volume side of the market. And then as we get our technology improved and costs down, then we can
Nico
widen up the access to this organic fertilizer and actually compete against conventional fertilizer players in the long
Hilary Langer
Nika, when you think about your expansion globally, what other inputs do you have available beyond almond shelves?
Nico
We've used pistachio shells, walnut shells, and and
Hilary Langer
Typically nuts.
Nico
yeah, we've we've we've used nuts. We've we've we've you we're using sunflower meal for a product we're developing right now as well. we've used ash from like like dead dead dead trees in the forests in California are then
Nico
is being burned for for energy is like people are cleaning out that and burning that is energy and then that ash we we've used. and then earlier versions of our technology we we just used air and water too. So we didn't have a biomass component. And so these are all the ways that we've made fertilizer. The thesis is is use locally available materials and renewable power to make good performing products closer to farmers that need it.
Guy
Right. Yeah. And I I think what you highlighted there too on your ability to enter this organics market, serve the double bottom line, and then also come at a price point that I believe is beneath kind of existing organic options. Can you any guidance on like kind of how you're shaking out or thinking about pricing long term on your product?
Nico
Yes, I believe we're priced about twenty percent lower than fish emulsion fertilizer right now, or the phosphoric acid stabilized fish emulsion fertilizer right now. and the product is is a liquid organic product. And and so farmers you'll really like it. and now that being said, fish emulsion fertilizer has a higher nitrogen percentage than us right now. And so if you account for shipping, it's probably we're we're probably in a th a th
Nico
around the same cost or maybe like ten percent l delivered cost. and that's something that we're we're working on right now. but that makes a big difference, right? And then that's what farmers that that's ultimately what that's all about. You want to deliver a higher performing product to consumers as farmers for a lower cost.
Guy
Absolutely, especially, you know, for these these farmers that are, you know, operating on razor thin margins and navigating all a host of other price and supply shocks as they as they go. this would be I think a great time to congratulate you and your team on start a construction at the Delhi facility and I believe also selling a good portion of the production off of that.
Guy
we talked a little bit about some of the decision frameworks that farmers go through on how they buy fertilizer, but it'd be helpful to think about, you know, is this sort of a annual process, multi-year, are they buying in seasonally? How does kind of procuring of your fertilizer work? and who are the players in that process?
Nico
Yes, and we're actually just finishing construction on our factory over the next two
Guy
Fantastic.
Nico
weeks. And so would love to I'll extend an invitation to our opening ceremony. and how we how we've been selling fertilizer is in fixed price multi-year contracts, either three year or five year.
Nico
And what this it it's it's good for the farmer and good for us. It gives nitricity good contracts that we can take take to the bank and find financing for. and for farmers it gives them a set price and something that they know they can rely on year after year.
Nico
and today because of the fertilizer market just isn't structured like that. The the price in the conventional side of the market, as an example, you know, can fluctuate by it's a hundred percent more expensive than it was last last season. it fluctuates a little bit less in the organic side of the market, but it still fluctuates. And so farmers really like being able to buy it at a price that they know works and being able to lock that in for a couple of years. It just takes one thing off the table that they would have had to otherwise think about.
Guy
Yeah, and of course, I mean fertilizer has been much more in the news recently with disruptions of the Strait of Hormuz and before that Ukraine. Has that kind of whiplash in pricing and the broader global considerations on supply chains impacted interest in nitricity and in your offering?
Nico
You bet, you bet. We saw at the beginning of March this year, with the closure of the Strait of Hormuz.
Nico
across our inbound job applications that we monitor across our website inquiries and commercial interest over email or call. we track that in with CRM and softwares like you know HubSpot for example. we saw a 300% increase in comparison to the baseline if you take it from November to to the end of February.
Nico
So that that we measured that at the end of kind of mid April. So if it from March to mid-April, that data set versus the baseline was 300 is is 300 to 500% higher. I I forget exactly which one it might have been 500%, but it was it was e three more than three three times higher, which was which is huge. A lot of it is on that we we got a lot of great people who applied for jobs that we had open.
Nico
which is, you know, just fantastic. And we we have a lot of interest on the commercial side of course as well. and and those are they're working their way through our sales pipeline.
Hilary Langer
Given the demand for your product, what do you consider essential for you to scale? What will enable you to serve all of the customers that you want to?
Nico
Yes, I for us it's really about bringing our manufacturing costs down. we would like to expand into the conventional marketplace, the conventional fertilizer marketplace. And so you have a product that is organic, but you c it's at it doesn't it can compete it can compete in the conventional market as well.
Nico
and so we're we're very focused right now on improving our fundamental technology and bringing down our manufacturing cost. And our goal is and we're and we're seeing tremendous improvements there. It it's it's really amazing that we are from where we
Hilary Langer
What's driving those improvements?
Hilary Langer
How are you able to cut the costs there?
Nico
you know, it's hard work applied consistently over a long period of time. I mean, one I'll give an example. One big one is that, you know, we we've been doing R and D for a very long time and then also we go and we give talks.
Nico
And go try to go to as many conferences as as possible. And I've I've seen Guy at conferences, for example. And you know, one conference that I gave a talk at three years ago, the basement of that conference hall, I gave someone a business card and they reached out and sent us some papers from a, you know, another historical process. And we then incorporate that in our RD plan. And it led to like our most recent epiphany, which is really, really big. And it'll probably reduce by about a factor of at least five, the amount of energy needed.
Nico
Per unit fertilizer we make. And so absolutely not. Yeah. Yeah,
Hilary Langer
Wow. Can you share what that is at this point? Or not yet. Okay, okay. That's fair.
Guy
Good man. Good man. Yeah.
Nico
it's but it's I mean, the the reality is is the thermodynamic minimum is you know all the way down here is is like zero, right? You should be able to make turn water and air into nitrate fertilizer for zero energy.
Nico
It's actually negative. So you should be able to do it for close to zero, or if you need it, it's just a little bit of power. Of course, you're going to need some power. and but and we've been we've been working down the energy curve to try to get there. and historic processes have needed a huge amount. So putting it to units, like a a historic process that makes that made nitrates in 1905 needed 34 kilowatt hours to make a pound of nitrogen.
Nico
And the thermodynamic minimum for nitric acid is neg is negative 0.3 kilowatt hours per pound of nitrogen. And the hobber the green green Haber Bosch process that makes green ammonia needs about five to ten kilowatt hours per pound of nitrogen. So the goal is to beat the to beat the green Haber Bosch process, right? We should absolutely have in the thermodynamic minimum for the green Haber Bosch process is like four or five.
Nico
And so we should absolutely beat the thermodynamic minimum for the Green Harbor Bosch process. and that would be a huge engineering and scientific development. And
Guy
Potentially an
Guy
a Nobel Nobel Prize coming your way for that type of feat as well. Believe the Yeah.
Nico
For for our science team I think yes.
Nico
Yeah. I mean really. And so there so the the our ambitions are like crazy high and
Guy
Yep, yep.
Nico
and we're gonna get there. I I I I I see it. We we will we will get there. The question is is you know, how much time and money is it gonna take? Probably a little bit above.
Hilary Langer
Have the investors come on board with the farmers who are elated when they saw your technology? I know you've been raising a lot of capital
Nico
Yes, yeah.
Hilary Langer
recently. Can you elaborate on some of that?
Nico
Yes. we have farmers who have invested in nitricity throughout the last three or three rounds at least. and that's that's just been a pleasure. They so you'll have like coastal ventures and then you'll have, you know, a far California farmer growing almonds invest together. And that's
Hilary Langer
I love it.
Nico
just like you know, just amazing. And they do about the same at yeah.
Hilary Langer
It's a real testament to your product and your relationship
Hilary Langer
with the farmers.
Nico
Yeah. And they and farmers do hard due diligence too. I mean they they they do as much as an institutional investor. they're different types, right? They do different they they they ask different questions, but they they they're you know they're they're tough. and so we've re you know our most recent financing was a series B last year, co-led by Kostla Ventures and World Fund from the EU. And with with the World Fund
Nico
being the the primary and and we've also had investment from a group called cultivate next which is chipotle cvc and we work with a lot of farmers that supply chipotle in California and and they've just been a tremendous investment partner connecting us to a lot of farmers around the state and actually now in Arizona.
Nico
which really helps us build the relationship if you have a trusted partner who's making the introduction. and we we you know what we pitch is that you know our plan is to is the thesis of change that I outlined at the beginning of the podcast, which is we're targeting the emissions from nitrogen fertilizer. We want to produce fertilizer using renewable power closer to farmers. We wanna go after make yeah, a different worldview, a nitrate or or more
Nico
Performant nitrogen worldview, and that there's big inefficiencies in the industry. And if you correct them, it's a multi-hundred billion dollar market opportunity. And that we're starting with a very real organic market use case here in California. And then I share the results of a lot of field trials and sales progress from our work in South Southern California, Salinas Valley.
Nico
And now now Washington, Arizona, Oregon and southern Spain.
Guy
Amazing. Amazing. Yeah, no, such a exciting path ahead in terms of broadening your sites and expanding that impact. the obviously like kind of an impressive effort that y'all have taken on in terms of financing these first of a kind facilities and thinking through
Guy
the key contract structures that get there, get you there, obviously referencing your three to five, your off take. I know the team at Elemental Impact supported on some some creative solutions from your Delhi facility. shout out to I think mutual friend Mitch over there for some some good work. as you think about kind of moving toward more repeatable financing and facilities
Guy
What's been top of mind for you to help these projects become project financeable, if you will, and any kind of learnings for other founders out there, other teams that are trying to scale similarly impactful solutions?
Nico
Yes, we h we had a a great time building the capital stack for our first of a kind factory in in Central Valley. Elemental Impact came in with a innovative structure called DSAFE. and it's that was the nucleus of the deal, and so we started with them. and we
Nico
How did we go about it? So even before we started talking to Elemental, we wanted to prove the product market fit. So we we started signing these multi-year fertilizer sales contracts that started you know after a period of time that we thought would be required to build the factory. So you signed these these future sales agreements. and then
Nico
And we built the cost model working with engineering firms and our internal engineering to show you know the project's gonna cost this much. And and then we shared that the the project economics and then
Nico
we then went to folks like Elemental and Trellis Climate and others and applied to a lot of grants and tax credits and applied to something called the USDA Rural Development Loan Program as well.
Nico
And we just piece by piece built the the capital stack. Today we have a rural development loan, we have a tax credit, 48 C tax credit, we have a sales tax exemption for companies of a certain type in California, one of six companies that have that. and we have investment from the DSAFE note and other investment from philanthropic investors in a renewable energy company as well. And
Nico
And that all came together very well and then we started building the project and now we're delivering from that project. It has one of its fourteen big reactors on and the rest are gonna turn on hopefully this month or early next month. And so it's been a success. It was it took a l a a lot of a lot of work. We wanted to build the project in a year. It took after a year we had one of the reactors on, but it it's gonna end up taking us about a year and a half. And then on budget we were
Nico
We were we were pretty close, but certainly went a a little bit over from where we hoped. But all all in all I think we did pretty good and well within our our our financing. thanks.
Hilary Langer
Congratulations. That's quite
Guy
Yeah, super
Hilary Langer
the feat.
Guy
super impressive. The number of kind of more standard, you know, solar projects that we see with delays well past that. you know.
Guy
Sticking to a budget.
Nico
It wasn't perfect. Neither were perfect, but we we I think we've done pretty good and but our you know, our products want as much of this product as we can make as quickly as possible. So ultimately to serve them, we need to safely turn on a factory, you know, as quick as we can.
Hilary Langer
As you look forward, what are you most excited about?
Nico
I'm really excited about our technical advancements on our reactor side. I mean, I think we really have something. Yeah, we will.
Hilary Langer
I can't wait till you can disclose those. We're gonna do a follow up podcast
Guy
Yeah.
Hilary Langer
once we can talk about them.
Nico
We will. Yeah, we had like we had a big moment two months, three months ago, and we'll see, you know, it has to meet reality. but I'm very optimistic about our ability to approach the thermodynamic minimum for this particular reaction. And that's the type of thing that I think could really change the world. really.
Hilary Langer
Amazing.
Nico
so it'll it we're a ways out. but at this point it's not a question of is it possible? it's now a question of, you know, we know it's possible, you know, where are the other risks? and then are those engineering risks possible to solve, which is you know, a good trade, a trade I'll take any any day.
Hilary Langer
How does your team celebrate those wins?
Nico
we should celebrate more. We really should. we I don't think we have yet, but we will.
Hilary Langer
Okay.
Guy
given we are the climate positive podcasts here, what makes you genuinely optimistic right now in terms of kind of looking out at the the future of nitricity or the broader climate landscape?
Nico
It's a tough year for California farmers, but I think that there's a lot of room for optimism looking looking forwards. I think sometimes it takes a a tough year to realize how much change is needed. And I think we're we're talking to a lot of people who really see change as urgently needed today. There's a lot of public and private capital moving to back fertilizer innovations.
Nico
and I think that the world can economically produce fertilizer using renewable power, air and water rather than natural gas or coal. And it's just a matter of time. I would, you know, love nitricity to be the force that makes that happen in the next five, ten years. and rather than seeing that happen in the next fifty to a hundred years. very optimistic it can be done in a quicker timeline. And if you
Nico
prove it can be done with fertilizer, then I'm optimistic you can do it with almost any other chemical.
Guy
Similarly, similarly excited and optimistic for that future, Nico. and just one last question here. How can our audience support your progress going forward? whether it's sourcing talent, new partners, anything else, how can we help accelerate the important impact y'all are driving?
Nico
I think I think we should be talking about these tough industries and I think your team does a lot. this is where a lot of value for society can be generated is by tackling these really hard big tech industrial challenges. I think the electrifying our global fleet of factories is is kind of the next big exciting thing. and then as part of that too, anywhere where it's possible to kind of cut red tape.
Nico
is is is very useful. and so for your team that's, you know, or for your audience who's connected with policymakers, that that's really gonna be important in the upcoming transition.
Hilary Langer
Fantastic. Nico, this has been so inspiring. Thank you so much for taking the time. I love this.
Nico
Thank you.
Guy
Deep
Nico
Thanks for having me.
Guy
deeply grateful for it, Nico. Thank you to to you and your team for all the wonderful work.
Nico
Thanks, good chatting.
Guy: If you enjoyed this week's podcast, please leave us a rating and review on Apple and Spotify. It really helps us reach more listeners. You can also let us know what you thought via Twitter at ClimatePOSIpod, or email us at climate positive@hasi.com. I'm Guy Van Syckle and this is Climate Positive.