The Nitric Acid Climate Action Group (NACAG)

A global initiative with a big impact for a climate-friendly transformation in the chemical industry.

Climate change is undisputedly one of today’s greatest challenges. The fertiliser industry is a major source of greenhouse gas (GHG) emissions around the world. The application and use of synthetic fertilisers account for most of the sector’s emissions, but the production processes of ammonia and nitric acid are also major contributors.

Nitric acid is a nitrogen compound used throughout the world as a raw material in fertiliser manufacturing. Nitrous oxide (N₂O) is an unwanted by-product of the production process and a potent ozone-depleting GHG with a global warming potential 265 times that of CO₂. Even though extensive abatement is neither technically difficult nor expensive, this harmful GHG is released into the atmosphere unabated by most production facilities around the world. Respective abatement technology is currently applied consequently in the European Union (EU), where its operation is highly incentivised by the European Emissions Trading System (EU-ETS). Outside the EU, only a few countries or regions have implemented similar incentive systems, however often with a limited reach. In addition, there is a small number of nitric acid plants that continue to operate N₂O abatement technology as they still hold valid contracts for selling emission reduction certificates through the Clean Development Mechanism (CDM), either through individual purchase agreements or option rights from the Pilot Auction Facility (PAF).

While GHG mitigation can be challenging or expensive in many sectors, proven N₂O abatement technology for nitric acid installations is readily available and mitigation is possible at a comparatively low cost of approximately 1 to 5 US-Dollars per tonne of CO₂ equivalent. Moreover, the technology can be installed in existing plants relatively easily and can reach very high abatement efficiencies of up to 98 per cent. Estimates suggest that there is an additional abatement potential of up to 180 million tonnes of CO₂eq per year globally. Given the ongoing challenges of climate change, we are duty bound to exploit this cost-effective mitigation potential.

NACAG's launch and offer

Driven by this rationale, the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) launched the Nitric Acid Climate Action Group (NACAG) at UNFCCC’s 21st Conference of the Parties in Paris (COP 21). This global action group’s ambitious vision is for all nitric acid production plants worldwide to implement and permanently operate effective N₂O abatement measures; in other words, transform the entire industry sector towards climate-friendly production.

To achieve this goal, NACAG supports its partner countries in the technical aspects as well as in designing effective policies to ensure the permanent abatement of these emissions. In addition, NACAG offers financial support for N₂O abatement measures to plant operators in countries which do not have sufficient resources to implement these activities.

The financial support is provided through two different mechanisms. For plant operators which have not operated N₂O abatement technology in recent years, NACAG provides direct grants to purchase and install nitrous oxide abatement technology and emission monitoring equipment. For plant operators which have recently mitigated production-related N₂O emissions, usually incentivised by the CDM, NACAG offers participation in a climate auction for price guarantees on emission reduction certificates. This second financing programme is based on the World Bank’s Pilot Auction Facility and operates under the Nitric Acid Climate Auctions Programme (NACAP).

Financial support linked to partner country commitment

All countries worldwide are invited to join the NACAG by signing the NACAG Declaration, a non-binding expression of support for the action group’s goals. To qualify for NACAG funding, the partner countries need to formally commit to implementing effective policy measures that guarantee a commitment to N₂O abatement in nitric acid production after 2023. All countries are invited to count this easily tapped potential towards their own Nationally Determined Contributions (NDCs) to the Paris Agreement, thus contributing to raising the ambition. From the perspective of the partner countries, it makes sense to use these ‘low-hanging fruit’ emission reductions for their own climate commitments, rather than for any form of international trading of mitigation outcomes through existing schemes or possible future set-ups under Article 6 of the Paris Agreement.

This firm commitment is expressed by the government of the partner country through a unilateral Statement of Undertaking (SoU), which ensures that a one-time investment is turned into permanent mitigation.

The initiative has been in close discussions with more than 30 countries to offer technical and financial support. So far, 14 countries have joined by signing the Declaration, thereby expressing support for the initiative’s goals. Moreover, five countries (Georgia, Mexico, Tunisia, Uzbekistan and Zimbabwe) have already signed the formal political commitment (SoU) and thus qualify for financial support.

Beginning of March 2021 the Tunisian fertilizer manufacturer Groupe Chimique Tunisien (GCT) and NACAG have signed the first grant agreement under NACAG’s support programme. Therefore the purchase and installation of greenhouse gas abatement technology and monitoring equipment for GCT’s production facility in Gabès, Tunisia, will be possible. It is estimated that roughly 400.000 tons of CO₂ equivalent will be mitigated annually with the implementation of this measure. The closure of this grant agreement follows the commitment of Tunisia’s Government to ensure that nitrous oxide emissions from nitric acid production in Tunisia will effectively and permanently be mitigated in the future.

Outlook

In working towards the Paris Agreement’s goals to keep global warming well below 2 °C, it is impossible to ignore an industry sector that generates considerable amounts of GHG emissions which can easily be mitigated at a comparatively low cost. Mexico and Colombia have included the sector in their current NDC and there are positive signs from a variety of other countries worldwide to do the same.