Pivot Bio talks insets vs. offsets, paying farmers, and why nitrous oxide is an overlooked emission

Last time AgFunderNews checked in with Pivot Bio, the company had just replaced synthetic nitrogen on 725,000 acres of US farmland via its N-OVATOR pilot, in which growers used Pivot’s microbe-based nitrogen-fixing product to replace synthetic nitrogen and reduce on-farm emissions.

The pilot became available to all Pivot customers in 2023, and recently, Pivot Bio said participating growers had received over $6 million in total from the program, which the company operates in partnership with food and bev companies looking to reduce Scope 3 emissions via purchasing offsets and insets.

Pivot’s nitrogen-fixing product, Proven 40, replaces roughly 20% of a grower’s synthetic nitrogen, according to Pivot Bio. The N-OVATOR program rewards growers for using Proven 40 by connecting them with companies wanting to reduce Scope 3 emissions.

The list of companies participating in the program includes a growing mix of “major” CPG companies, ingredient suppliers, spirit producers, and grain buyers.

The full results of the 2023 N-OVATOR program are forthcoming, says the company. In the meantime, Mitchell Craft (MC), Pivot Bio’s sustainability, executive, and corporate communications leader, and Clayton Nevins (CN), new venture lead at the company, chatted with AgFunderNews (AFN) to talk about why the program is unique and how it’s helping both growers and agrifood corporates.

AFN: Talk a little bit more about how the program worked this past year.

MC: We did a pilot on this N-OVATOR program, which was really about data collection, last year. We paid incentives to growers — $2 an acre — to get that data back.

This year we ran the program again and we scaled it up a lot. We [also] focused in on insetting opportunities. Offset is kind of the rage in ag with a lot of people talking about it and talking about the problems within the offset industry. That was the way we originally set up the N-OVATOR program — to sell offsets.

But we came into this past year and realized a lot of companies were really focused on how to take direction action in their supply chains and change the emissions that are happening there versus going out and buying offsets to mitigate after the fact.

AFN: How did the partnerships with participating companies wanting to buy insets work?

MC: We formed partnerships with seven different companies. These are very well known. They’re major downstream food and beverage companies, major grain buyers, and they basically paid a premium for corn that was grown with Proven 40 and reduced synthetic nitrogen.

That premium [came] in many different ways. Some [companies] paid specifically for the greenhouse gas changes that happened on the farm, some of them paid a per-bushel premium, some of the a per-acre premium.

What we were able to do through this program was to link growers making really impactful climate decisions on their farm with companies who had very ambitious commitments to reduce their scope three emissions. Through that we were able to get money going to those growers to incentivize a [farming] practice change and a very detailed impact report going to those companies so they would know exactly what growers had delivered.

Some of the downstream companies were grain buyers, so in those cases the growers who used our products just delivered grain into [those companies’] supply chains. In other cases, like in the CPG case that’s much further downstream, we used the mass balance calculation. We put draw areas around their manufacturing facilities then made sure we had growers who are within those areas that were making the practice change so that they were driving change within their geographies.

AFN: What to you is the most notable and/or unique thing about the program versus other emissions programs currently out there?

MC: One, it’s an annual change. With a lot of the carbon sequestration programs now, you have to sign on to do things for decades. But if you go through and till up a field that has been no till, you release all that carbon.

With ours, you’re just avoiding nitrous oxide and the emissions that are associated with fertilizer by not using the fertilizers. Once you do that, it’s done, it’s permanent. It’s an annual change that can happen.

The other thing that’s unique is that it’s the first program specifically targeting nitrous oxide. You look at ag sector emissions, you’ve got 40% that is methane, 40% that is nitrous oxide, the remaining 20% is something like CO2.

But there aren’t programs that are really targeting nitrous oxide because there haven’t been interventions to make a difference at scale. Our intervention can do that. Because of that, it’s also delivering really high value back to the growers, because [Scope 3] emissions are so impactful to companies. When you convert them to CO2 E [carbon dioxide equivalent], they’re much more valuable than like something like sequestration.

CN: Pivoting the conversation from carbon to nitrous oxide emissions reductions, we truly feel like addressing nitrous oxide emissions is the key to the decarbonization of agriculture.

MC: These growers, they signed up for the program in 2023, and in March of ’24 we put money into their pockets. It was about a third of what they paid for our product. When was the last time a fertilizer company wrote you a check for a third of what you paid for your synthetic fertilizer?

We see this as a really important way that our product is going to continue to scale as we start to increase our value proposition that we’re offering to growers.

AFN: Why don’t we hear more conversations around nitrous oxide in agtech?

MC: One is technologies — there just hasn’t been an alternative technology that you can use.

Half the world’s population is supported through the use of synthetic fertilizer; if we stopped using it we wouldn’t be able to produce enough food. Until our product, there just really hasn’t been a way to replace synthetic fertilizer. You can’t go organic and produce the food that we need. So the technology just wasn’t there and so the conversation never really got off the ground. There weren’t people looking into it because it wasn’t worth the time. That leads to the second piece, which is that we haven’t had a lot of clarity around measurement.

CN: Historically it’s been very challenging to measure nitrous oxide emissions in a scalable way. And so that technology is advancing really quickly. But if you’re trying to measure those things at the field or landscape scale, we are just now getting to the point where technology has evolved to be able to do that in a scalable way.