A new initiative by the Climate Action Reserve, a non-profit organization based in Los Angeles, could play a significant role in curbing emissions of a potent climate pollutant from chemical plants in China while filling a gap in international climate agreements and China’s environmental regulations.

However, a former industry insider who worked for chemical producers decades ago when they  voluntarily reduced their emissions of the pollutant, nitrous oxide, said the new initiative would unfairly reward bad actor companies who continued to pollute, long after low-cost pollution controls were widely adopted by their peers.  

Nitrous oxide is a potent greenhouse gas that is nearly 300 times more effective at warming the planet than carbon dioxide on a pound-for-pound basis. It is also  the leading, ongoing source of atmosphere ozone depletion after more harmful chemicals were banned in recent decades under the Montreal Protocol, an international environmental agreement.

The pollutant is an unwanted byproduct of the manufacturing of adipic acid, a key ingredient in the production of nylon 6,6, a highly durable plastic used in airbags, seat belts and carpeting.

Most—but not all—adipic acid plants outside of China installed pollution controls in the 1990s that eliminate 99 percent of nitrous oxide emissions. It can be reduced from adipic acid plants at a cost of approximately $5 per metric ton of carbon dioxide equivalent, according to a study published last year in the journal Science of the Total Environment, making it one of the least expensive ways to combat climate change.  Emerging efforts to remove carbon dioxide from the atmosphere, by comparison, can cost hundreds of dollars per ton.

“In terms of a cost effectiveness perspective, this is probably one of the lowest costs, both in terms of economic costs, and also in administrative costs of reducing greenhouse gas emissions,” said Jiang Lin, a China energy policy expert at the University of California Berkeley and lead author of the 2022 study, noting that there are a limited number of adipic acid plants worldwide with significant nitrous oxide emissions.

Eleven adipic acid plants in China and one in the U.S. emitted approximately 500,000 metric tons of nitrous oxide in 2021, equal to 141 million metric tons of carbon dioxide or the annual greenhouse gas emissions of 31 million automobiles, according to a recent report by Global Efficiency Intelligence, an industrial decarbonization research and consulting firm based in Tampa.

The Climate Action Reserve seeks to establish a “protocol” or rules for verifying nitrous oxide emissions and for issuing emissions reduction credits from chemical plants in China. As the Chinese chemical companies reduce their nitrous oxide emissions, other companies anywhere in the world could then purchase the credits to help offset their own emissions as part of their own “net zero” targets or other voluntary emissions reduction goals.

Ascend Performance Materials, a chemical company that operates an adipic acid plant near Pensacola, Florida, recently began earning emissions reduction credits and selling them to others, based on a similar protocol that the Climate Action Reserve developed for U.S. plants in 2020.

Craig Ebert, president of the Climate Action Reserve, said the new protocol could have a significant impact at little cost.

“Humanity is missing its climate targets horribly and this is a way to get a lot of bang for our buck,” Ebert said. “If we get enough plants to adopt, it could lead to tens of millions of tons [of carbon dioxide equivalent] annually, if not more, being taken out of the atmosphere.”

The new protocol seeks to thread a needle of incentivizing Chinese chemical companies to slash their nitrous oxide emissions without overpaying them.

The Clean Development Mechanism

A United Nations program known as the Clean Development Mechanism (CDM) tried, unsuccessfully, to do this in the mid-2000s. At the time, two Chinese adipic acid plants installed pollution controls and reduced their emissions by 99 percent. However, the program soon became a victim of its own success.

The companies earned nearly $1 billion in emissions reduction credits over a 5-year period, yet their combined costs to construct and then operate the emissions-reduction reactors for those five years were less than $40 million. The European Union, the largest buyer of credits, stopped purchasing the credits after they realized the program was driving overproduction in China to the detriment of the European chemical industry.  An Inside Climate News investigation found that when funding for the CDM dried up, adipic acid producers in China most likely stopped abating their nitrous oxide emissions. 

The Climate Action Reserve, which played a key role in developing the mandatory carbon market for greenhouse gas emissions reductions in California, seeks to avoid past mistakes for a new round of emissions reductions in China.

“Everyone feels collectively snake-bit by what happened 15-20 years ago,” Ebert, who helped develop some of the Clean Development Mechanism protocols prior to working for Climate Action Reserve, said.  “But where we are today is we have these major emitting plants, [with] uncontrolled emissions, just generating incredible amounts of greenhouse gases. We have to tackle it.”

The Reserve’s draft protocol calls for setting a 90 percent baseline for emissions reductions. This means that if an adipic acid plant in China were to reduce its emissions by 99 percent, it could only earn credits on the final 9 percent of those emissions cuts. The draft protocol also sets production caps as a further guardrail to try to prevent overproduction in the event that the emissions reduction credits prove highly lucrative.

“I firmly believe that establishing that 90 percent baseline [and] putting on a production cap takes all that gaming away,” Ebert said.

Guardrails aside, Robin MacDonald, a former industry insider, feels that any effort to incentivize emissions reductions is the wrong approach.

“I find it perplexing that apparently the only way to get people to amend this awful behavior is to give them money,” he said, ”when these people have more than enough money to do it themselves.”

MacDonald worked for 14 years for adipic producers as a research scientist and business manager starting with British chemical company Imperial Chemical Industries (ICI) in 1990 and later for U.S. manufacturer DuPont. He then was managing director of PCI Nylon, a nylon and adipic acid market research firm, for 11 years, before working for Wood Mackenzie where he helped oversee chemical market analysis for several years. 

Soon after MacDonald started working in the adipic acid industry, a study published in the journal Science in 1991 warned about the potential impacts of nitrous oxide emissions from adipic acid plants on the “greenhouse effect” and ozone depletion.  ICI collaborated with DuPont and other producers worldwide to address the problem. They quickly developed pollution controls that reduced emissions by 90 percent or more and then agreed to voluntarily deploy the technology.

“I was incredibly proud to work for a company that behaved that way,” MacDonald said of ICI, and later, DuPont. He said he is troubled by companies that, three decades later, still haven’t adopted pollution controls.

“As someone who spent nearly all my working life in the nylon business, this behavior really, really shames me,” he said.  

Starting sometime in 2018 or 2019 and continuing until 2021, MacDonald led a behind-the-scenes effort to try to get the global adipic acid industry to agree to voluntarily abate their nitrous oxide emissions as almost all producers did in the 1990s.  The effort failed when some companies declined to participate. 

He said the best approach would be for countries to pass regulations requiring emissions reductions, but that the proposal to incentivize emissions reductions simply rewards bad behavior.

“Essentially the producers are identifying themselves and then saying, ‘I’m a horrible polluter, and the only way you’re going to stop me is by giving me money,’” MacDonald said.

The Largest US Producer

 Ascend Performance Materials, which has owned an adipic acid production facility in Pensacola since 2009, is the largest producer of the chemical in the nation. 

In early 2020, IInside Climate News reported that Ascend had emitted 33,046 metric tons of nitrous oxide in 2018, the latest year for which data was then available, and was the largest emitter of the pollutant in the U.S. The emissions were what was left after the company voluntarily destroyed 75 percent of their total nitrous oxide pollution stemming from adipic acid production.  

Company officials said at the time that they were working on a process to reduce the remaining emissions by 50 percent that year and more in two years. 

In 2021, Ascend voluntarily abated 82 percent of its nitrous oxide emissions from adipic acid production,  according to the EPA. As it reduced its emissions, Ascend sold offsets to other companies. The remaining 22,741 metric tons of N2O that Ascend vented into the atmosphere equaled 6.2 million metric tons of carbon dioxide, the annual greenhouse gas emissions equivalent of approximately 1.4 million automobiles. 

Ascend Performance Materials executives, who had indicated in previous interviews that they were working to abate more than 95 percent of  emissions, did not respond to multiple requests for comment from Inside Climate News.  

Invista, a subsidiary of Koch Industries based in Wichita, Kansas , and the only other adipic acid producer in the U.S., abated approximately 99 percent of its nitrous oxide emissions from its adipic acid plant in Victoria, Texas in 2021, according data the company reported to the EPA.

The EPA won’t publish 2022 greenhouse gas emissions data from individual facilities until later this year. However,  emissions reduction data posted by the Climate Action Reserve and verified by an independent third party company, show that Ascend made significant emissions reductions in 2022. 

The statements show that Ascend reduced nitrous oxide emissions by approximately 4 million metric tons of CO2 equivalent in 2022, more than twice the emissions reductions that it reported to the Reserve in 2021. Based on the additional reductions in 2022, Ascend may have reduced its total nitrous oxide emissions from adipic acid production by approximately one third  from 2021 to 2022. 

MacDonald said the reductions, if correct, were good news. “Any reduction in N2O emissions from AA [adipic acid] is to be welcomed,” he said.  However, he reiterated his preference for mandatory reductions and a level playing field that doesn’t reward some producers for abating their emissions while not rewarding others.  

Invista, and DuPont, the prior owner of the Victoria, Texas adipic acid plant, initially abated 90 percent or more of their nitrous oxide emissions without any legal requirement to do so. However, a 2016 update to the federal operating permit for Invista’s plant requires the company to abate 90 to 95 percent of its nitrous oxide emissions depending on the specific emissions control technology it uses. The company is not eligible for emissions reduction credits, due to the EPA’s abatement requirements for the facility.

DuPont and then Invista have for 30 years or so “done what they should do, in my view,” MacDonald said. Doing so, he added, has put them at a competitive disadvantage to Ascend. 

Ebert, president of the Climate Action Reserve, said he agrees that a regulatory approach to nitrous oxide would be a good way to reduce emissions. But in the absence of such policy measures, he said setting a price on emissions and crediting reductions is a legitimate and effective way to reduce emissions.

“All we’re trying to do is put a price on carbon for our planet and get companies to make the investment and stop the emissions. If we have that outcome, that’s a good thing,” he said. 

Could the US and China Cooperate on Emissions? 

Neither the U.S. nor China currently regulate nitrous oxide emissions from adipic acid. The EPA told Inside Climate News that it has no plans to regulate N2O from the production of adipic acid beyond the existing requirements for Invista’s plant.

China stated that it will “formulate nitrous oxide emission reduction plans for key industries” and “strengthen the emission control” of nitrous oxide in a document submitted to the United Nations last year. The document was the country’s updated, non-binding pledge of emissions reductions under the Paris Climate Agreement.    

Another policy measure that could reduce nitrous oxide emissions would be an expansion of the Montreal Protocol, an international environmental agreement, to include nitrous oxide. The agreement originally focused on curbing ozone depleting pollutants that were responsible for creating the ozone hole, but was expanded in 2016 to include hydrofluorocarbons, which do not harm ozone, but are potent greenhouse gases.

“That does create a basis, or a good example of how the Montreal Protocol could be further amended, potentially to address nitrous oxide,” Kate Logan, associate director of climate at the Asia Society Policy Institute, a Washington think tank, said of nitrous oxide, noting that it is both an ozone depleter and a potent greenhouse gas.  

Lin, the UC Berkeley researcher, suggested the U.S. and China might collaborate on reducing N2O emissions.

“I thought it was ironic that the U.S. and China are the only ones that are not completely abating this potent pollutant, given these countries are the largest emitters of greenhouse gases globally,” Lin said. “This is something that perhaps we can work together on.”