As the International Energy Agency (IEA) laid out in its 2021 report detailing a path to reaching net zero carbon emissions by 2050, by that year, 30% of transportation fuels need to be hydrogen-based fuels. This includes a fuel called ammonia: a compound of nitrogen and hydrogen that’s currently mostly used to fertilize crops that grow into the food we eat.
But what if it also powered our vehicles and could help decarbonize agriculture, mining, and industrial sectors? Austin, Texas-based startup, Talus, thinks it can, and with $22 million in Series A backing, it's not alone. The round was co-led by Material Impact and Xora Innovation, a deep tech early-stage investment platform of Temasek, and saw participation from by Cavallo Ventures, the VC arm of Wilbur-Ellis, and Rice Investment Group.
While the IEA report predicts that by 2030, cars will largely run on batteries, and planes on biofuels, hydrogen-based fuels like ammonia will be “vital” for decarbonizing the shipping industry in particular.
However, the deadline to decarbonize isn’t far. While ammonia is predicted to be the leading shipping source for the world’s cargo ships come 2050, the first “ammonia-ready” vessel wasn’t built until last year, and it wasn’t until last week that a Norwegian duo — ammonia producer and shipowner Yara Clean Ammonia and the container operator NorthSea Container Line — announced that the world’s first containership fully powered by ammonia would be entering markets. The target year for Yara Eyde is 2026, and it’s not the first to say it will be the first.
This year, Brooklyn-based Amogy also hopes to make history as the world's first ammonia-powered ship. Previously rolling out the world's first ammonia-fueled tractor and the world's first ammonia-fueled semi-truck, the company is, as of March, working on retrofitting a 1957 tugboat to be powered by ammonia with an electric drive system. While many experts agree that ammonia is the shipping industry’s best bet for decarbonizing, Talus thinks ammonia can do the world one better: decarbonizing across industries, beyond the seven seas, and at a lower cost.
But before it can do all that, ammonia has to go green.
Grey ammonia, which most ammonia currently is, is responsible for 2% of global carbon emissions. That’s on par with the aviation industry. Grey ammonia is derived from hydrogen produced by fossil fuels, usually coal, and is primarily used as fertilizer. It’s so essential to farming, that 80% of ammonia produced is used in the agriculture industry. Nevertheless, when 90% relies on coal and methane, its production isn’t so good for the environment.
Apart from that, ammonia has also made its way into a laundry list of other sectors including the manufacturing of plastics, fabrics, pesticides, dyes, chemicals for things like industrial cleaning products, and even explosives used for mining. And it’s only increasing in use.
According to the World Economic Forum, by 2050, the demand for ammonia is expected to increase by 40%, primarily driven by the demand for fertilizers. This is especially concerning when the IEA recommends that to align with the Net-Zero by 2050 scenario, the demand shouldn’t increase past 23%.
The main demand is expected to come from where much of the world’s food is grown: Africa, Latin America, the Middle East, and Southeast Asia.
Thus, the green ammonia revolution has began with a litany of startups attempting to scale a cleaner, greener version that is produced by a process known as water electrolysis, which is powered by renewable electricity.
However, current methods of developing green ammonia are costly and, according to Talus, have an unreliable supply chain. As the International Renewable Energy Agency (IRENA) reports in its 2022 Innovation Outlook, right now, the cost of green ammonia ranges from $720 to $1,400 per ton. Because green ammonia uses renewables, the lowest price is only at places that are either the sunniest or the windiest.
While the agency estimates that the cost of renewable ammonia will decrease by 2030 and reach price parity with fossil fuel ammonia beyond that year — especially with help from “blue ammonia” which uses carbon capture and storage (CCS) to decarbonize fossil fuel ammonia — current prices are still six times that of grey ammonia, which ranges from $110 to $340 per ton.
On top of that, blue ammonia still requires the production of fossil fuels, which as all climate reports agree, need to be phased out.
That’s why startups like Amogy, which is working to deliver green ammonia solutions across transportation, have emerged, but according to Talus, green ammonia can go beyond transportation and shipping, while getting the price down.
As Hiro Iwanaga, co-founder and CEO of Talus Renewables said in a statement, “The promise of rapidly deployable, modular, autonomous green ammonia systems will extend far beyond agriculture to industrial and renewable energy applications.”
So how are they getting the price down?
As Yale Environment 360 reported earlier this year, in March, a small plant in Nairobi, Kenya was the “first farm in the world to produce fertilizer, on-site, that’s free of fossil fuels.” That was Talus’s. As the CEO explained via Bloomberg, “The average bag of fertilizer in sub-Saharan Africa travels 10,000 kilometers,” However, with this plant, “you can locally produce a critical raw material, carbon-free,” Iwanaga added.
The Nairobi farm is exemplary of the startup’s plan: to locally produce green ammonia on-site, allowing farmers in developing countries — where ammonia demand is increasing — to tackle food insecurity while using a sustainable fertilizer. Not only are costs cut at the source by taking out the middlemen of shipping and international production, but according to the startup, the “containerized” on-site system is autonomous, further cutting costs.
By how much? Talus reports by 50%. That gets the green version a lot closer to where its grey counterpart is today.
If that wasn’t enough, Talus also reports that its method cuts carbon from ammonia’s supply chain. Even when the production is renewable-based, emissions can occur at several other points throughout the supply chain. Talus’s on-site method cuts 3 tons of carbon at production, 1-2 tons at shipping, 0-1 tons at loading, and 1-3 at distribution.
Thus, the startup can eliminate, at most, 6 tons of carbon per ton of green ammonia produced at its 100% renewable energy facilities. To put that into perspective, the farm in Nairobi, which was installed in partnership with the Kenya Nut Company in the Kenya Highlands, produces 1 ton of carbon a day.
The startup doesn’t plan to stop at the Nairobi plant.
According to Talus via its funding announcement, it plans to deliver up to 1.5 tons of green ammonia daily through its talusONE system and up to 22 tons with its talusTEN system, delivering multiple of each across U.S. and European markets later this year.
It hopes to reduce the carbon footprint of notoriously hard-to-decarbonize industries, whether it be using green ammonia as a fuel source in shipping, as a cleaner explosive for mining, for its storage properties and potential in long-duration energy storage, all while decarbonizing the fertilizer industry.
"Through the long-term vision that Talus has for a prosperous global economy backed by renewables, their first vertical application of creating green ammonia in situ will make a great impact in increasing the food supply chain sustainably and cost-effectively," Adam Sharkawy, a founding partner at Material Impact said in a statement.
"Material Impact, which focuses on high-tech scientific and engineering advances to solve large global problems, is excited to invest in Talus and support its capacity to be a clean energy game-changer."
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