Mitigating Rice Methane

Hi there,

We’re Overview Capital and we invest in the mitigation of methane and other super pollutants at the earliest stages. Welcome to the seventh edition of our newsletter, The Overview: Our biweekly dispatch on the world of methane and other super pollutants.

Today, we’re excited to introduce you to one of our portfolio companies, Mitti Labs, a team building an operating system and measurement stack to help smallholder farmers in India reduce methane emissions from rice cultivation while improving profits.

The topline

Rice farming drives 10%+ of human-caused methane emissions globally, making it an important short-term warming driver (methane is much more potent than carbon dioxide but is shorter-lived in the atmosphere, driving warming more quickly). The reason rice contributes heavily to methane emissions is that rice paddies are often flooded to prevent weed growth, yielding ideal anoxic (absence of oxygen) conditions in which bacteria that produce methane (methanogens) thrive. As methanogens consume decaying organic matter in flooded fields, they make methane.

Rice provides more than 20% of the calories consumed globally. While reducing demand for beef and dairy products is a viable strategy to lower agricultural emissions, especially when focused on wealthier countries where beef and dairy consumption is a consumer choice rather than a necessity, reducing demand for rice isn’t as viable, given that it is the backbone of how many feed themselves globally.

However, there are practice changes that can significantly reduce methane emissions from rice farming, though efficacy varies by geography, farm type, climate, and more. For instance, simply breaking up the periods during which rice paddies are flooded in a practice known as alternate wetting and drying (AWD) can have a significant impact. Additionally, practices like dry seeding – a method where dry, untreated rice seeds are sown directly into the field without soaking – and breeding rice varieties to control for and reduce methane emissions – which can also contribute to higher yields – can reduce emissions. When combining different approaches, the methane emissions reduction benefits can reach as high as 90%. Other practice changes include not burning leftover rice stubble and other biomass, a large driver of air pollution and emissions in India.

Beyond methane and other emissions, rice consumes an enormous amount of water, roughly a quarter to a third of global freshwater, and it's often produced by some of the poorest people globally. When you combine those factors with the emissions from rice cultivation, rice becomes a complex but rewarding challenge to tackle.

What’s needed now are organizations and programs that make it easy for farmers to adopt these practice changes and to create incentives for them to do so. That’s where Overview Portfolio company, Mitti Labs, comes in.

Meet Mitti Labs

Mitti Lab’s co-founders include Nate Torbick, whose experience lies in measurement, verification, and reporting of emissions reduction projects, Devdut Dalal, whose experience lies in agriculture and food processing and who knows the Indian rice farming market well, and CEO, Xavier Laguarta (“Xavi”). Xavi and “Dev” met at Harvard, where both attended Business School; after business school, Xavi and Dev spent over a year in India studying the intersection of smallholder farming and climate challenges.  The product of their study and subsequent work is Mitti Labs, which exists to transform smallholder agriculture, starting with methane and rice farming in India, to drive a variety of beneficial outcomes.

India is the largest global rice producer, with 40 million hectares dedicated to rice cultivation (out of ~150 million hectares globally). However, India also has the lowest rice productivity per hectare globally, meaning there are opportunities to improve livelihoods and economics. 

Mitti Labs wasn't focused on rice at first. But after spending a lot of time in India to understand challenges and opportunities, they honed in on it, given it's not an area within agriculture that many others are focused on, either. Here’s how Xavi describes why rice hasn't been a focal point for other companies or people historically:

Mitti Labs’s operating system, designed to make it easier for farmers to adopt valuable practice changes in rice farming and to reward them for doing so, combines three elements:

1. Practice changes: Educate farmers on valuable practice change opportunities

2. Measurement: Build the hardware and software stack to improve measurement and modeling of emissions reduction outcomes, water usage, yields, and more

3. Incentives: Use measured data to develop carbon-equivalent credit projects to reward farmers for their work

Technically, the most complex piece is part two. Methane emissions from rice farming are more diffuse than from, say, a leaky pipeline in midstream oil and gas. Hence, the purview of measurement technologies has to cover larger areas, which really means there’s inevitably a lot of modeling involved.

Mitti Labs built its measurement and modeling stack out with larger rice companies that manage active projects. It uses satellite imagery to track and validate practice changes. That, combined with process models and better ground truth data collected via gas chambers, can translate practice changes into greenhouse gas reduction estimations and water reduction estimations, as well as yield predictions. Mitti Labs uses synthetic aperture radar, a sophisticated type of satellite imagery, to detect changes across all these different parameters at different wavelengths and machine learning to calibrate their greenhouse gas models. 

The remote sensing piece isn’t easy. The physical elements you want to understand include metrics like water level, an integral component of modeling outcomes in alternate wetting and drying. Those metrics, as well as things like soil moisture, need to be tracked at an acre-level resolution. It isn’t just the efficacy of satellite imagery that matters; something as fickle as cloud cover can disrupt data collection. 

In this area, namely measurement and modeling, more innovation, data, and experimentation is needed. Today, experiments look like a few gas chamber boxes on fields where you test control sites and measure methane, nitrous oxide, and carbon dioxide fluxes against other sites. Processing that information in a lab can cost $30,000 or $40,000 per season for one test. It’s expensive. Improving the quality of data and reducing costs to run much more experimentation globally would help a lot in terms of then improving models to simulate entire regions with higher confidence. That’s all challenging and there’s not yet consensus on the best sampling approaches and model calibration methods. At the end of the day, however, actually doing the work is the most catalytic factor for improvement.

Making improvements to the entire measurement and monitoring process isn’t all complicated, however. In the past, data from many of these projects was tracked on physical notepads. Even basic digitization can help a lot in operationalizing and scaling change in rice methane mitigation.

Scaling practice change

The rest of Mitti Labs’s business is predominantly productization, i.e., making it easy for farmers to say ‘yes’ and effectively shift practices. From a business model perspective, Mitti Labs goes directly to farmers rather than working with big corporations. Most rice grown in India is consumed locally; hence, the Mitti Labs team realized they needed to launch their own projects and own them to make this work. They work with NGOs, like Syngenta Foundation, to onboard smallholder farmers, and they aggregate the results of their practice changes to develop carbon credit projects. The steps here aren't that complicated; Mitti Labs onboards farmers, trains them, monitors their work, and then generates credits. To date, they've onboarded around 30,000 hectares and 40,000 farmers into their programs in a year, a product of day-to-day manual onboarding and 120 field agents on the ground. For its field agents, Mitti Labs is developing apps to onboard farmers, optimizing the sign-up process, onboarding process, and the training process. Here's how Xavi describes it:

The end goal is to reduce operational expenses and barriers to entry. Mitti Labs wants to productize as much of the project lifecycle as possible to unlock scalability. This involves everything from remote sensing to creating transparency for credit buyers. 

In terms of the competitive landscape, Mitti Labs is far from the first to develop carbon credit projects based on rice farming. The challenge with rice is that some legacy methodologies for carbon crediting came under intense scrutiny and weren't always rigorous. Some projects did very little in the way of measurement and monitoring and were over-credited as a result. As more carbon credit buyers prioritize fidelity, developing highly sound rice projects is a significant opportunity.

There are several other startups in the space, ranging from CarbonFarm, Varaha, and Rize. Here’s how Xavi views the competition:

In the future, Mitti Labs may expand from supporting farmers with practice change to inputs into their processes. There are other levers one can use to drive beneficial outcomes in rice farming. Whether it's better fertilizers or integration of methanotrophic organisms that 'eat' methane into fields, these input changes, while less well-tested, can offer methane reductions and potentially increase yield. Xavi closed our conversation as follows:

The bottom line

Methane emissions from rice cultivation are a perfect example of an under-discussed emissions source and an under-invested opportunity, both from a climate and economic perspective, as rice is a half-trillion-dollar market globally that’s expected to continue to grow markedly out to 2030 and beyond. Even with methane emissions in general, themselves under-discussed and under-invested in, methane from rice stands out. That’s why we’re such a proud investor in Mitti Labs.

To stay up-to-date on Mitti Lab’s progress, follow them on LinkedIn here.

News and policy

• Over the past twelve months, the world was an average of 1.64°C higher than during pre-industrial reference periods. This marks the first time the world has surpassed 1.5°C of warming over a twelve month period.

• Mars, the global brand behind M&Ms and Snickers, announced plans to invest $47 million over the next three years in climate-smart dairy farming practices.

• Tesco is backing a four month methane-reducing feed supplement trial with 400 cows in the UK using Bovaer.

• The government of Alberta, a Canadian province with a significant oil and gas presence, announced it will invest $15 million over the next five years to test new methane emissions monitoring and mitigation technologies.

• Proposed in December of 2021 and approved on May 27th this year, the EU has a new Methane Regulation governing coal mines that will require stricter monitoring, reporting, and verification of methane emissions. Coal mine operators are also now challenged to reduce emissions both at active and closed mines. This is the first regulation of its kind globally.

• The U.S. Court of Appeals for the D.C. Circuit rejected an attempt by several states and oil and gas trade associations to block new EPA standards for oil and gas companies to reduce their methane emissions.

Odds and Ends

For anyone wondering, it’s nearly impossible to find low-methane labeled rice on store shelves today. But fifth and sixth generation Arkansas rice farmers Jim Whitaker and Jessica Witaker Allen are trying to change that. For a farmers perspective, watch their TED talk here.

Thanks for reading the seventh edition of The Overview. If you are a methane or super pollutant focused company or want to connect on methane or our investment work, please reach out to [email protected].

– Team Overview