Germany Speeds Up Green Economy

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Germany Speeds Up Green Economy

Germany’s new coalition has said they will stop burning coal for electricity by 2030 – 8 years earlier than planned.

Their goal is to offer more renewable energy sources and encourage their usage by placing additional taxes on the fossil fuel industry.

The new coalition plans on further developing climate legislation in 2022 and launching an immediate climate protection program. All sectors are planning to contribute: transport, construction, and housing, power generation, industry, and agriculture.

Outgoing Chancellor Angela Merkel wanted to reduce Germany’s dependence on the fossil fuel industry. However, her administration lacked the strategy necessary to get there.

Incoming Chancellor, Olaf Scholz, is hoping to change that. He has negotiated the terms of these changes for two months. So far, discussions have been well received. They include:

  • Allocating 2% of land throughout Germany to renewable farms, such as wind and solar.
  • Keeping carbon emission permit prices above 60 euros (or $67).
  • Eliminating a surcharge used to support clean power growth beginning in January 2023.

Germany’s economy is the largest in Europe and the 4th largest in the world. Their commitment to renewable energy can build on what was discussed at COP26 earlier this month, where world leaders promised to:

  • Help developing countries finance green initiatives.
  • Reduce overall emissions.
  • Create a global standard for the carbon marketplace.

Simply put, carbon credits are a way to offset carbon emissions. For every carbon credit purchased, one metric ton of carbon is offset from the atmosphere through an environmental project, like reforestation.

The carbon credit industry has boomed over the past year. It is expected to be valued at $100 billion by 2030 – up from just $300 million in 2018. Many expect this new global standard to cause it to grow even more.

To fight climate change, there needs to be a mix of technological innovation, government regulation, and carbon offsets. Each has an important role to play. With temperatures continuing to increase, nations must think big. Germany has shown us this and is leading the way.

Coal currently supplies nearly a quarter of Germany’s population with electricity.

Farms – The Focus of New Carbon Projects

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Farms – The Focus of New Carbon Projects

Demand for carbon credits has increased exponentially over the past year, as companies face pressure to show their commitment to fighting climate change.

In 2016, less than $200 million was invested in carbon projects. Now, carbon offset projects are valued at $1 billion.

Reforestation and methane capture has always been at the top of the environmental project list; however, new projects targeted to farmers could help remove over 570 million metric tons of carbon from the atmosphere.

For example, Indigo is currently paying farmers to reduce their use of carbon-intensive fertilizer. Famers are planting cover crops to draw carbon into the soil and then not tilling the land.

Indigo then measures the amount of carbon sequestered, generating carbon credits. These carbon credits are then sold to companies looking to offset their carbon emissions. Believe it or not, companies are flocking to purchase offsets generated by farms.

Chris Harbourt, the Global Head of Carbon for Indigo, told the New York Times, “It tells a great story if you can tell Americans buying a product that their dollars are going to an American program that benefits farmers.”

Though offsets through farmland seem promising, some critics are concerned. They feel that since these farmland projects are not long-term but annual, farmers could choose to give up on the program, negating any progress. They are also worried about the rigor of soil sampling and verification methods.

Indigo says they have ways to fight against this – and believe that the carbon credit industry will only improve.

When combined with innovative technology, and increased regulation, the carbon offset industry can help combat global warming while sparking economic growth. This is why leaders at COP26 were so focused on setting an international standard – they see the value carbon offsets can provide.

In the case of farmland – Indigo couldn’t be more right. Offsets will not only help in the fight against global warming but support local farmers as well.

Offsets continue to show that they are a win for the environment and the economy alike.

EU Carbon Price Hits All-Time High with Germany Considering a Floor Price

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EU Carbon Price Hits All-Time High with Germany Considering a Floor Price

European carbon price hit a record high today after Germany announced it may set a floor price of 60 Euros/tonne for emitters over the next few years.

The EU’s Emissions Trading System (ETS) went as high as 73.18 Euros (~$82 USD) per metric ton.

EU Carbon Price Germany

The EU’s ETS forces power companies, manufacturers, and airlines to pay for each tonne of carbon dioxide they emit.

The European Union made the carbon market a central part of its ‘Fit for 55’ package to accelerate pollution cuts this decade. The EU’s goal is to cut net CO2 emissions by 55% from 1990 levels by 2030.

Similar to the UK’s carbon price mechanism, the German decision on carbon prices would create an additional domestic levy. This added charge for emitters in Germany is on top of the price paid in the EU emissions trading system.

Germany is Europe’s largest economy and manufacturing accounts for 23% of Germany’s GDP compared to 11% of the UK’s GDP.

Manufacturing is a high-emitting industry and this significantly makes burning coal less attractive there faster than other EU members.

Other carbon prices are also reaching new highs. The Race to Netzero is on.

Boston Divests from Fossil Fuels

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Boston Divests from Fossil Fuels

With unanimous approval, newly sworn-in Boston Mayor, Michelle Wu, signed an ordinance to divest the city from fossil fuels. Under the ordinance, public funds cannot be invested in any company that receives more than 15% of its revenue from fossil fuels, tobacco products, or private prison industries.

The ordinance is expected to reduce investments within the fossil fuel industry by $65 million. As of Monday, Boston officials did not say whether current assets would be impacted.

During the signing ceremony, Wu stated, “This is deeply personal for many of us and urgent. My older son Blaise was born in the first year that I served in this building, and the first year that we started to hear it was the hottest year ever on record. Since then, his six years alive on this planet have each been our hottest on record.”

Wu went on to say, “We’re moving quickly to make sure that Boston will set the tone for what is possible for that brightest greenest future for all of our kids.”

According to Wu, the goal is to distance Boston from fossil fuels that are a driving force behind climate change. Since Boston is a coastal city, climate change, if not addressed, is a direct threat.

Boston joins a growing number of cities and organizations that are looking to keep their investments green:

• The Ontario Teacher’s Pension Plan recently said that they are focusing on green investments.
• Harvard University President Lawrence Bacow announced they will move away from fossil fuel investments.
• New York City officials announced that their two city work pensions funds will pull fossil fuel investments to focus on clean energy – which is about $4 billion worth of funds.
• Canadian Pension Plan Investment Board and Conservation International have partnered to invest in high-quality carbon offset projects.

As cities begin to look for ways to be a part of the climate change solution – net-zero goals seem more within reach. Per Senator Edward Markey, “What Boston represents here today is the future.”

Billions May Pour into Carbon Markets

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Billions May Pour into Carbon Markets

Though nations have been hoping for a global standard for the carbon markets for quite some time, one was finally implemented at COP26 in Glasgow this month.

This new standard will now govern how countries trade credits across the globe, easing the critic’s concerns by creating structure and transparency.

The carbon marketplace is a platform where countries, companies, and individuals can purchase carbon credits.

One carbon credit is equivalent to one metric ton of carbon. That ton of carbon is then “offset” through an environmental project, such as reforestation. Experts believe the global carbon market will reach $100 billion by 2030 – up from $300 million in 2018.

Two recent studies show some primary areas to focus on in the fight against climate change: conserving and growing forests, mangrove stands, and peatlands. They also include maps of high-carbon regions that could serve as a resource.

So, as multilateral corporations and carbon markets look to support biodiversity through offset projects, they can focus on these three areas (and others) with the promise of a global standard.

One potential project includes the African Great Green Wall: a 5,000-mile band through the Sahel to restore 247 million acres.

It is only about 4% complete (and costs about $3 billion a year). Currently, funding to restore this land has not come from carbon trading but rather through national budgets and international donors.

Alisher Mirzabaev, lead author and senior researcher at the University of Bonn’s Center of Development Research, said, “This paper, we hope, will be helpful in terms of targeting where to channel those investments. We would like to guide those investments to the most efficient use.”

Carbon Markets and COP 26: The Revenge of Supply and Demand

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Carbon Markets and COP 26: The Revenge of Supply and Demand

Two weeks of COP 26, plus an extra day of last-minute negotiations. And even then, all the agreements signed at COP 26 were riddled with complicated language and potential loopholes.

But stare a bit closer at everything, and some patterns start to emerge. First and foremost? In a world where there’s a limited amount of room for atmospheric carbon, emissions are becoming a precious commodity in their own right.

Put another way, the law of supply and demand is back – and better than ever.

The supply is the amount of room left for CO2e in the atmosphere, particularly if the goal is to keep global warming under 1.5C.

The demand is the number of industries that are still rapidly emitting vast quantities of CO2e into the atmosphere.

When demand is orders of magnitude greater than supply, what happens?

Yep – prices go up.

The Return of Article 6

Let’s back up a bit. COP 26 ended with a series of agreements, most of them promises for further action. Crucially, among those agreements was a new framework for Article 6, the international carbon market.

Now, framework might be a strong word, here. COP 26 didn’t establish any sort of regulatory body, and it didn’t solve all the long-running issues that had plagued previous Article 6 discussions.

But it did underline the role of private carbon markets – the voluntary carbon market, or VCM – in driving carbon prices higher.

More broadly, COP 26 acknowledged that the VCM is, at this point, one of the primary tools governments and organizations can use to influence carbon prices.

And despite some watering-down of the Article 6 rules (hello, zombie Kyoto Protocol credits!), the market responded almost instantly.

Within 48 hours of the close of COP 26, EU ETS credits reached a price of 67.65 euros a tonne – a record high.

Carbon Offset Price

Article 6 Framework

What are the takeaways from the new Article 6 framework?

  • Public/private carbon market for offsets
  • Bilateral credit trading framework between nations
  • 5% of credit price from every project deposited into a fund for developing countries to fight climate change
  • 2% burn rate – out of each project, 2% of the credits issued need to be over and above what is required to offset the emissions.

Beyond that, the framework finally clarified what, exactly, a carbon credit or offset is. To meet the definition of an Article 6 “activity”, a credit needs to demonstrate:

  • A baseline CO2e reductions calculation
  • Additionality for each project
  • Accurate monitoring
  • Clear emissions reduction calculations

These are already the VCM’s best practices – clarify a baseline for the definition of an offset, demonstrate additionality, monitor and verify the performance of the project, and demonstrate that a tonne of carbon emissions was actually removed by the project for every credit sold.

What did COP 26 do?

It reiterated that global warming makes carbon a precious commodity.

It clarified what a carbon credit is.

It highlighted the intense market forces that will drive carbon prices higher.

Finally, it underscored the colossal growth of the booming carbon market. Trading in carbon credits had exceeded $700 million by September, putting it on track to pass the $1 billion mark in 2021. And that was before COP 26 and the surge in carbon prices.

Supply and demand is back. Demand for carbon emissions remains high. Demand for entities to reduce those emissions also remains high.

Offsets and credits themselves are still in short supply.

Do the math.

Carbon Offset Subscription Service – Ecologi, Continues to Grow

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Carbon Offset Subscription Service – Ecologi, Continues to Grow

In 2019, UK start-up Ecologi had an idea: With subscription services all the rage, why not allow environmentally conscious consumers to subscribe to offset carbon emissions by funding environmental projects?

Let’s just say the idea took off.

Ecologi completed a seed investment round of $5.75 million (£4.05 million) in April. Their pre-money valuation was £16.5 million from lead investor General Catalyst, along with Entrée Capital. Now, Ecologi’s pre-money valuation is at £75 million. They also exceeded a £2 million crowdfunding target on Crowdcube.

Ecologi plans to use the money to expand in the US and EU. They also plan to use the funds towards product development.

Carbon offsets have grown in popularity over the past year as nations and businesses across the globe look for ways to reduce their carbon emissions. This is done by purchasing carbon credits. Each individual carbon credit is equivalent to one ton of carbon being removed from the atmosphere.

Though some have raised concerns over the role of carbon offsets in the fight against climate change, world leaders have voiced their support. Carbon offsets were a central discussion point during COP26, as nations agreed to standardize the offset process.

Some experts even believe the industry could reach $22 trillion by 2050.

According to Elliot Coad, Ecologi CEO and Co-founder, “Community ownership is at the heart of what we do and has been the driving force behind our growth over the last two years, so we felt it was only fitting that we offered our loyal subscribers the chance to own a stake in Ecologi. Since GC’s investment in April this year, we have spent the last three months turning down VC money in favour of a community-based crowdfund.”

Ecologi’s B-Corp certification is in process. Their ultimate goal is to plant one million trees every 10 days, reaching 1.7 billion trees by 2030.

As of now, subscribers through Ecologi have supported planting 26 million trees, offsetting 943,120 tons of carbon.

S&P Global Platts and Xpansiv Partner to Advance Price Transparency in Global Carbon Markets

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S&P Global Platts and Xpansiv Partner to Advance Price Transparency in Global Carbon Markets

S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets, and Xpansiv, the global marketplace for ESG commodities, today announced an agreement to collaborate on the development and distribution of assessed daily closing prices for voluntary carbon market instruments.

The agreement on international carbon accounting rules reached at COP26 provides a strong foundation to develop the collaboration.

The initiative will bring increased transparency, rigor, and integrity to the pricing of voluntary carbon market (VCM) assets, providing the market with greater confidence. It brings together Xpansiv’s expertise as the global leader in trading physical carbon offsets with Platts’ market-leading experience providing pricing transparency to the developing VCM markets.

“This partnership brings together all the necessary elements of a well-ordered market ecosystem—price transparency, liquid spot and futures markets, and robust market data,” said John Melby, Xpansiv President and Chief Operating Officer. “It will enable the carbon market to further scale to accommodate demand and provide much-needed investment in high-quality carbon offset projects.”

“The voluntary markets have the potential to play a pivotal role in helping close the gap between what governments can deliver and what the world needs to achieve in terms of overall emissions reductions,” said Saugata Saha, President, S&P Global Platts.

“The value of the market is now more than $1 billion and forecast to increase fifteen-fold by 2030, according to the Taskforce on Scaling Voluntary Carbon Markets. Our suite of VCM assessments is providing increased transparency and understanding of these markets, and this partnership with Xpansiv will enable us to develop scalable opportunities as this market continues to evolve.”

Under the agreement, Xpansiv marketplace CBL—the world’s largest exchange for spot-market trading of physical carbon offsets—will expand the data it makes available to Platts for the development and management of daily market price assessments. In addition, Platts and Xpansiv will collaborate with market participants to develop new types of price assessments and spot contracts to respond to rapidly evolving demand.

Notes to Editors

Xpansiv’s XSignals business unit currently assesses daily closing prices used to settle the CBL Global Emissions Offset™ (GEO®) and Nature-Based Global Emissions Offset™ (N-GEO™) which underpin CME Group’s futures contracts. As part of the collaboration, Platts will work with Xpansiv to establish the value of settlement prices, bringing its long track record of aligning with IOSCO objectives and principles to settling the value of carbon market prices.

S&P Global Platts launched the market’s first daily voluntary carbon credit assessments with the publication of Platts CEC, representing CORSIA-eligible carbon credits which have surged by 944% since being launched in January 2021, with the value now pegged at $8.35/mt at the close on Nov. 12. Throughout this year, Platts has expanded its suite of VCM assessments to include Platts CNC, which reflects nature-based carbon credits as well as a variety of project types including removal, avoidance, renewable, and methane-collection credits.

In October, Xpansiv and Platts launched a new benchmark for methane performance in natural gas production to support the launch of Xpansiv’s Methane Performance Certificate (MPC). The MPC enables natural gas producers to earn a premium for natural gas produced and transported with low methane emissions intensity.

About Xpansiv

Xpansiv is the global marketplace for ESG-inclusive commodities. These Intelligent Commodities bring transparency and liquidity to markets, empowering participants to value energy, carbon, and water to meet the challenges of an information-rich, resource-constrained world. The company’s main business units include CBL, the largest spot exchange for ESG commodities, including carbon, renewable energy certificates, and Digital Natural Gas™; H2OX, the leading spot exchange for water in Australia; XSignals, which provides end-of-day and historical market data; and EMA, the leading multi-registry portfolio management system for all ESG-inclusive commodities. Xpansiv is the digital nexus where ESG and price signals merge. Xpansiv.com

 

Uber to Focus on Latin America Offsets

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Uber to Focus on Latin America Offsets

To reach their 2040 carbon-neutral goal, Uber has decided to purchase offsets within Latin America. Uber’s initiative, “Uber Planet,” has already launched in Mexico. It offers customers the option to pay an extra .37 pesos per kilometer to purchase carbon credits. These credits are then used to offset the carbon from their ride.

Uber initially avoided buying carbon credits. Instead, they focused their efforts on drivers switching to electric vehicles (by providing subsidies). Unfortunately, this didn’t seem practical in Latin America, so they decided carbon credits, in addition to subsidies for electric vehicles, would be the way to go.

What are Carbon Credits and Carbon Offsets?

Carbon credits are purchased and used to “offset” carbon emissions through an environmental project. Some critics feel this process doesn’t encourage companies to reduce carbon. In fact, Uber felt this way, too, saying that offsets “effectively pay to be someone else’s responsibility.” Plus, they felt that verification challenges made the industry weak.

However, the carbon credit industry is changing. The verification process has significantly improved – and, since leaders at COP26 have decided to move forward with a global standard, the industry will become even more transparent.

Uber Planet Carbon Credits

Uber Planet credits are certified by the United Nations Framework Convention on Climate Change (UNFCCC) and the Climate Action Reserve (CAR). Both are well respected.

David Minguez, an Uber spokesperson in Mexico, said, “Every market where Uber is available is taking bold steps to develop locally relevant strategies that run in parallel with our commitments. At this moment, we are presenting Uber Planet, understanding the urgency needed to crack down on this challenge immediately.”

Minguez went on to say that the company would also take additional steps to “encourage more drivers to switch to electric or hybrid cars, including promotional prices for the vehicles and incentives like an extra 10,000 pesos per 160 trips.”

Uber recognizes that carbon offsets are not the only way to fight climate change. But, when used alongside new technology, they are an integral part. As more companies and countries merge the two, carbon neutrality and net-zero emissions goals can become a reality.

Billionaire Investor Mark Cuban Purchasing $50K in Tokenized Offsets Every 10 Days

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Billionaire Investor Mark Cuban Purchasing $50K in Tokenized Offsets Every 10 Days

Mark Cuban is the latest billionaire to recognize the power of the carbon offset industry. On Saturday, Cuban announced that he has been purchasing $50K worth of tokenized carbon offsets every 10 days and hopes to do even more.

“I’ve been buying 50k in offsets every 10 days or so, verifying them and putting them on-chain as BCT,” said Cuban via Twitter. “I would love to do the same thing and probably more with removal within KLIMA.”

What are carbon credits and carbon offsets?

If you aren’t familiar with the carbon credit industry – it is booming. Countries and companies alike recognize its role in the fight against climate change, which is why world leaders at COP26 agreed to create a global standard.

Simply put, carbon offsets are purchased using carbon credits on a carbon marketplace. For each individual carbon credit purchased, one metric ton of carbon is removed from the atmosphere through an environmental project – such as reforestation.

The carbon offset doesn’t only have the power to help improve the environment. The projects used to offset carbon can help spark economic growth across the globe.

How is Cuban purchasing carbon offsets?

Cuban is using blockchain technology to purchase offsets on Klima. Klima is a decentralized autonomous organization (DAO) with $100 million worth of carbon offsets (about 9 million tons of carbon).

The offsets on Klima DAO are Base Carbon Tonnes (BCT), a “digital” form of carbon credits. So, just like the regular carbon marketplace, one ton of carbon is equal to one BCT (just how one ton of carbon is equal to one carbon credit).

With new standards being put in place globally and more accessibility (through blockchain), the industry can improve and grow. Experts believe the carbon offset industry will reach $100 billion by 2030, up from just $300 million in 2018.

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