Depleted Gas Reservoirs Hold CO2 and Carbon Credits

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Depleted Gas Reservoirs Hold CO2 and Carbon Credits

Australian gas producer Santos has secured a network of depleted gas reservoirs for carbon storage – with the potential to keep up to 100 million metric tons. Santos can then issue carbon credits worth as much as $25M annually.

These reservoirs serve as a piece of the puzzle for Santos’ carbon project called Moomba.

Beach Energy has partnered with Santos on Moomba. The is to capture 1.7 million metric tons of carbon each year. So, the storage option proposed could last more than 50.

They expect to start in 2024.

How does carbon capture and storage (CCS) work?

Carbon capture is when carbon is collected from the atmosphere and then reused or stored. The technology behind it is quite complex.

While governments and industries support carbon capture and storage, it is only just starting to pick up steam. This is mainly due to the high cost.

As such, once the technology becomes more accessible, CCS will continue to grow.

“[Carbon capture and storage] is a critical technology to achieve the world’s emission reduction goals, and we only have to look at current carbon prices to see how valuable 100mn tons of storage is,” chief executive Kevin Gallagher said in a statement on Tuesday.

What are carbon credits?

For every carbon credit purchased on the carbon markets, one metric ton of carbon is offset through an environmental project.

The Santos capture and storage project qualifies.

Santos can claim one Australian carbon credit for every ton of carbon they capture and store. They could then sell the credits for A$17 (US$12) per ton, which the Australian government would then retire, or sell them privately.

On the private carbon market, ACCUs are going for more than A$55 (US$39).

Santos can capture and store carbon at Moomba for $24 a ton if prices stay where they are now – though many expect carbon prices to continue to increase over the next several years.

CME to launch CBL Core Global Emissions Offset (C-GEO) futures in March.

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CME to launch CBL Core Global Emissions Offset (C-GEO) futures in March.

CME Group plans to launch CBL Core Global Emissions Offset (C-GEO) futures in March. As such, it is currently pending review.

“CBL C-GEO futures are the latest in our suite of risk management tools to help bring standardized benchmarks to the rapidly evolving voluntary carbon markets,” said Peter Keavey, Global Head of Energy and Environmental Products at CME Group.

“As our clients closely follow the implications of Article 6 and other developments in this space, we are responding to demand for scalable market-based solutions that will allow them to execute their reduction strategies more effectively.”

What will C-GEO futures focus on?

C-GEO will deliver energy, renewables, and other technology-based offset credits based on the Core Carbon Principles. Also, credits will roll forward each year for new projects and markets.

“The CBL Core GEO spot contract has been tremendously well-received, with more than 1 million metric tons traded since its January launch,” said Xpansiv Chief Commercial Officer Ben Stuart.

“The launch of CBL C-GEO futures will bring expanded risk management and forward pricing capabilities to the market, the benefits of which have been clearly demonstrated by the introduction of futures on our GEO and N-GEO spot instruments.”

What are carbon offsets? Why are they so popular?

If you don’t know how carbon offsets work, they are pretty simple to understand.

One offset is equal to one metric ton of carbon.

So, for every offset purchased, one metric ton of carbon is “offset” through an environmental project. Hence the term carbon offset. You are essentially neutralizing carbon emissions through something positive.

Many different projects count, like reforestation and agriculture. These projects are great for the environment and farmers, who receive compensation.

So, investing in carbon offsets is a win for all.

C-GEO futures will work with CBL GEO and N-GEO futures. Those funds were launched last year.

Both contracts traded more than 57 million tons of carbon. Also, they delivered 6.5 million offsets. There are about 230 million offsets available.

Xpansiv market CBL helped create C-GEO futures.

Carbon is Forever – Is this the End of the Diamond Industry?

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Carbon is Forever – Is this the End of the Diamond Industry?

The world’s first “Air” mined diamonds could signal the end of the diamond industry as we know it.

Diamonds have been around for a long time, they were not a very important gem until De Beers began their successful marketing campaign in the 20th century.

De Beers began to convince people that diamonds were a show of love and that size matters. Over time celebrities and the global PR machine made diamonds extremely valuable and “rare”.

Traditional mined diamonds have a much larger environmental impact than lab-grown diamonds.

Lab-grown diamonds are nothing new, they are cheap and can produce the same quality as mined diamonds, the problem is perception.

It was ingrained in our minds that diamonds must be expensive to show how much you love someone, but that is changing fast.

Millennials and Generation Z, are now the main purchasers of diamonds for engagement rings. They are eco-conscious and 70% of them are considering buying lab-grown diamonds.

Climeworks has partnered with Aether Diamonds to produce Carbon-Negative Diamonds.

For every carat of diamond, Aether says it removes 20 metric tons of carbon dioxide from the air (i.e., 20 carbon credits). That is more than a year’s worth of emissions for the average American.

The costs are a lot more than traditional lab-made diamonds to produce, but then again diamonds are only expensive based on perception.

With Carbon set to become one of the biggest commodities of the future, maybe one day all diamonds will be graded by the 5 Cs: carat, cut, clarity, color, and carbon credits.

Canadian Carbon Credit ETF’s set to Launch

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Canadian Carbon Credit ETF’s set to Launch

The carbon markets are heating up, so much so that Canada is getting two carbon credits ETF’s.

Both are claiming to be the “first” Canadian Carbon credit ETF.

Horizons ETFs Management (Canada) and Ninepoint Partners LP are launching their own respective carbon credit ETF’s on the TSX and NEO exchanges.

Horizons Carbon Credits ETF will trade under the ticker “CARB” and the goal is to replicate the performance of its Horizons “Carbon Credits Rolling Futures Index”. That index seeks to provide exposure to investments in cap-and-trade carbon allowances.

CARB will begin trading on February 10, 2022 on the TSX exchange.

The Ninepoint Carbon Credit ETF has a US and Canadian denominated ticker. The Canadian ticker is “CBON” & the US Dollar ticker is “CBON.U”. Both are set to launch on the Canadian NEO exchange around February 16th, 2022.

The Ninepoint offerings have a similar investment strategy as CARB, by investing in carbon emissions allowance futures in jurisdictions with cap-and-trade regimes such as Europe and California.

Both have claimed to be Canada’s first Carbon ETF’s and to check if these are “carbon copy” funds you will need to review their prospectus’ as both have a similar management fee structure of 0.75%.

Here’s the link to the official press releases here – CBON & CBON.U & CARB.

Investors are demanding more options to get exposure to the carbon credit sector which grew to over $850 billion last year.

Sustainability Conservation Firm Launched by Kyle Bass and Terry Anderson

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Sustainability Conservation Firm Launched by Kyle Bass and Terry Anderson

Kyle Bass and Terry Anderson launched Conservation Equity Management, LP – a sustainability and conservation firm. Conservation Equity will buy large parcels of land in Texas. They are searching in other states nearby too.

They plan to protect ecosystems while raising their value. Plus, they will use the land they buy to create environmental credits.

How do environmental credits work? 

Environmental credits are just like carbon credits. A company invests in an environmental project to offset its carbon emissions with carbon credits.

So, one carbon credit equals one metric ton of carbon. Pretty simple.

But environmental credits are a bit different.

Environmental credits restore wetland, water, and habitat resources. They also reduce air pollution.

So, they are not just focused on carbon.

However, Conservation Equity wants to do all the above.

They plan to mitigate wetland, stream, and endangered species habitat destruction. Plus, they want to generate sustainable income as well.

“There is a substantial opportunity to acquire larger timberland and rangeland parcels as ESG solutions to carbon capture, utilization or storage (CCUS), biodiversity offsets, and as hedges to inflation risk,” said Anderson, Principal.

Environmental credits and sustainability and conservation.

“As more companies and people move to Texas and other pro-business, low-tax states, there will be devastating environmental consequences, forcing firms to consider their physical environmental impacts, carbon footprints, and mitigation options,” said Bass, CEO.

So, environmental projects will be needed to promote sustainability and conservation efforts. Hence the need for environmental credits.

Bass continued, “This is the right moment for Conservation Equity.”

To date, Conservation Equity has successfully completed two transactions. One is in Cameron County, TX. The other is in Cherokee County, TX.

Per Bass, “The Bahia Grande and Cherokee Ridge properties are both outstanding opportunities to create value by employing various levels of conservation and mitigation strategies.”

Carbon Credit Program Launched by Phillips 66 Aviation

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Carbon Credit Program Launched by Phillips 66 Aviation

Phillips 66 Aviation has partnered with 4AIR to launch a carbon credit program.

Phillips 66 is one of the largest refiners in the U.S. and a major contract jet and fuel supplier to private, commercial, and military aviation.

Through this program, flight operators and airports can offset carbon from jet fuel, gasoline, and diesel emissions. Emissions created by vehicles and operating are also included.

The 4AIR program has 4 different rating levels for clients to chose from:

  1. Requires a 100% carbon dioxide (CO2) offset.
  2. Requires a 300% offset to comprehensively offset emissions.
  3. Requires a 5% direct emission reduction.
  4. Requires a direct contribution to the Aviation Climate Fund.

“4AIR’s rating system is designed specifically for aviation and makes compliance with industry goals and sustainability efforts simple,” said Kennedy Ricci, president of 4AIR.

Lindsey Grant, Manager, Phillips 66 Aviation said, “We’re giving pilots and FBOs the right tools to help them on their carbon journey. We look forward to working alongside the 4AIR team to bring sustainable offerings to our customers.”

Sustainable Aviation Fuel (SAF) emits 80% less carbon than jet fuel. However, SAF is not easy to make. So, it is difficult to make the switch.

Phillips 66 Aviation hopes to change that by converting its San Francisco Refinery into a place to produce SAF. They would like it to be one of the most significant SAF production facilities in the world.

Carbon Capture Startup Verdox Gets Investment from Bill Gates

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Carbon Capture Startup Verdox Gets Investment from Bill Gates

Verdox, a carbon capture start-up in Massachusetts, has raised $80 million from investors, including Bill Gates-backed Breakthrough Energy Ventures.

Increased interest in Verdox is due to a recent breakthrough in their technology.

According to CEO Brian Baynes, it involves a critical material used to trap GHG emissions.

What is carbon capture?

Carbon capture is when carbon is separated from the atmosphere and stored deep within the earth’s surface.

Most technology uses a liquid that attracts carbon like a magnet.

This takes a lot of time, energy, and, quite frankly, money.

Many do not feel it is an efficient or cost-effective way to reach net-zero.

How is Verdox’s technology different?

Verdox has developed a new plastic that can pull carbon from the air when charged with electricity. This could cut the total energy usage for direct air capture by more than 70% – which is a big deal.

Verdox hopes this technology will enable millions of tons of carbon to be captured at $50 per/tonne or less.

It is important to note that Verdox’s technology is still only operable at the lab scale.

What are carbon credits?

Carbon credits are permits that companies can buy to emit more carbon than regulated.

Each carbon credit represents an environmental project that helps offset carbon in the atmosphere.

One carbon credit = one metric ton of carbon.

So, carbon credits are different than carbon capture because carbon capture takes carbon out of the atmosphere (while credits just offset it).

Carbon credits have reached an all-time high of $851 billion. Much of that growth is due to the EU’s Emissions Trading System, now trading over 90 Euros per ton.

Verdox is now competing with Canada’s Carbon Engineering Ltd. and Switzerland’s Climeworks AG – which have raised more than $100 million each.

U.S. based Global Thermostat is another competitor.

Global Carbon Market Value Soars to $851 Billion in 2021

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Global Carbon Market Value Soars to $851 Billion in 2021

According to analysts at Refinitiv, Global Carbon Markets grew 164% in 2021 – reaching $851 billion.

90% of the global value is due to the European Union’s Emissions Trading System (EU ETS) which opened in 2005. It is the world’s most established carbon market.

The EU ETS is currently worth 683 billion euros (approximately $769 billion).

Regional markets in North America have grown by 6% as well.

What are carbon markets?

Carbon markets are tools that are used to limit GHG emissions.

As countries cap emissions, companies can purchase carbon credits beyond the acceptable levels. These credits represent carbon offset through an environmental project (such as reforestation or renewable energy).

This allows companies to continue operating as they develop the technology needed to reduce their carbon output.

How do carbon markets differ from the voluntary carbon market (VCM)?

Simply put, voluntary carbon markets are just that – voluntary. So, individuals or organizations choose to purchase carbon credits to reduce their emissions (but are not regulated to do so).

Last year, the VCM was valued at $1 billion – up from just $300 million in 2018.

Per Refinitiv, “We expect interest in the VCM to keep growing, boosted by an increasing number of companies worldwide taking on carbon neutrality goals and other climate commitments that involve the use of carbon offsets.”

Why does the price of carbon keep increasing?

Because the EU’s goal is to reduce emissions by 55% by 2030, the price of carbon has doubled since the end of 2020.

Ingvild Sørhus, the lead-carbon analyst at Refinitiv, said, “More expensive emission permits hit coal power plants relatively harder than  gas plants, but because of the soaring gas prices in the second half of 2021, coal generation was still more profitable.”

Analysts expect the price will continue to rise.

China’s Voluntary Carbon Market Set to Relaunch

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China’s Voluntary Carbon Market Set to Relaunch

China is getting ready to relaunch the China Certified Emission Reduction (CCER) system, the voluntary carbon credit plan that was abandoned 5 years ago.

This coincided with the completion of the first compliance period for China’s new carbon trading market, the national Emissions Trading Scheme (ETS).

The CCER will play a crucial role in attaining carbon cost reductions and renewable energy goals as an important additional mechanism to the ETS.

CCER is projected to play a significant role in attaining carbon cost reductions and renewable energy goals.

CCER is carried out on a voluntary basis by firms and certified by the Chinese government. Projects such as renewable energy generation and waste-to-energy initiatives, as well as forestry projects, are set to benefit.

Carbon emitters must pay CCER owners, such as renewable energy generators, for their credits.

These voluntary CCER credits can be used to offset emissions by companies that are part of the compliance ETS.

The carbon credits can be used to offset China Emissions Allowances (CEAs) shortfalls or credits that companies participating in the national ETS can buy or trade under the program.

The offset rate of CCER credits is limited to 5% of emissions that exceed national ETS targets.

The earlier CCER plan was scrapped in 2017 due to low trading volume and a lack of standards in carbon audits.

Since China introduced its national ETS in July of last year, the concept of reinstating the CCER system has gained traction.

In a January interview, Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange, which manages the national ETS, stated that the government was actively planning for the relaunch of CCER in 2022.

Analyst Lin Yuan for Refinitiv believes the reintroduction of CCER will increase demand for offsets and that the supply volume of CCERs could be over 300 million tonnes.

Domestic and foreign institutions, companies, communities, and individuals are eligible to participate in transactions involving voluntary emissions reductions.

It is expected that in the future, Hong Kong-based and abroad enterprises will be able to participate in the CCER system by including CCERs that meet international criteria into their overall carbon-offsetting plan.

Last August, China’s carbon market saw its first cross-border transaction, with a Hong Kong-based organization and individual purchasing approximately 10,000 tonnes of CCERs from a solar power facility in the Kubuqi Desert.

The CCER relaunch finally started operation in 2023 under the management of China Beijing Green Exchange (CBGE).

Infographic: 3 Carbon Stocks You Should be Keeping Eyes On in 2023

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Infographic: 3 Carbon Stocks You Should be Keeping Eyes On in 2023

Click on the image to expand the view.3 Best Carbon Stocks of 2022 infographic

Please read our full DISCLOSURE here.

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