The goal of the project is to capture CO2 from the smokestacks of industrial facilities in Texas. These particularly include the sites in Port Arthur and Beaumont.
The captured carbon will travel in a pipeline to an offshore tract. It will then be pumped into the seafloor under Texas-owned waters on the Gulf Coast.
The image below shows how carbon capture works in a typical underground CO2 injection.
Chevron’s Bayou Bend Carbon Capture and Storage Project
Chevron project partners, Talos and Carbonvert, made a joint venture called the Bayou Bend CCS – carbon capture and storage. It’s the first-ever and the only offshore lease devoted to CO2 sequestration.
Under their MOU, Chevron takes the majority stake in exchange for cash and capital needed by the project. Equity shares in their joint venture would be 50% for Chevron and 25% for each of the other two companies.
Bayou Bend CCS is the winner of the lease bidding process held by the Texas General Land Office last August. The agency handles state-owned lands and mineral rights.
Chevron’s carbon capture project Bayou Bend gave the three partner firms access to over 40,000-acre expanse on the Gulf Coast.
They estimated that this area can store 225 to 275 million metric tons of CO2. That amount equals around 40% of Texas’ energy-related CO2 emissions in 2019.
The Role of Carbon Capture and Storage in Reducing Emissions
Climate justice advocates find carbon capture and storage a controversial CO2 reduction option. They contend that CCS will further extend the use of fossil fuels and the facilities that use them.
But for major industries, carbon capture is one of the few measures they can opt to cut their emissions. This is true in the case of oil and gas, cement, and steel industries.
And so, Chevron invested in the Gulf Coast carbon capture project. Other firms and governments also think that the location is perfect for this pioneer CCS.
The site has a high concentration of industrial facilities and a big potential to capture CO2 offshore.
Estimates from the Department of Energy show that geologic formations in the area are great. It has the capacity to sequester hundreds of billions of metric tons of CO2.
In October 2021, Exxon Mobil suggested turning the 50-mile-long Houston Ship Channel into a CCS hub. This hub will carry the CO2 in pipelines and inject it deep under the seafloor of the Gulf of Mexico.
The oil and gas giant called on public and private sectors to raise $100 billion for that aim. Chevron is one that got interested in this carbon capture venture.
What’s in it for Chevron?
The CCS solution can get so costly but there’s a tax credit accessible to help project developers. It’s called 45Q which offers as much as $50 for each ton of CO2 kept underground for a long time.
But it remains a question of how the Bayou Bend CCS project can benefit from the tax credit. Plus, there’s no existing regulation requiring firms to capture their CO2 emissions.
Yet, Chevron gets inspired by the climate threat and growing pressure from investors. The energy firm also has properties on the project site. It includes its Phillips Chemical plant in Port Arthur which violated the Clean Air Act.
The company faced penalties from the US Justice Department and
the CCS project is a part of its efforts to address the sanctions.
Chevron also announced a $10 billion dollar investment into low carbon business initiatives last year. Half of that budget will be spent on reducing emissions from fossil fuel initiatives. And $3 billion is for carbon capture and offsets.
The Bayou Bend project is in its very early stage and it will take a long way to materialize.
Chevron and its partners need to do “extensive site characterization” first before the carbon capture project can start. They also have to get a permit from the Environmental Protection Agency to begin drilling.
Still, the parties to this joint venture are optimistic about its potential.
According to Talos CEO and president,
“Chevron brings significant expertise and experience to this project… and we are excited about what this partnership can deliver.”
While Carbonvert’s CEO said that,
“We look forward to the opportunity to partner with Chevron on such a monumental project supporting decarbonization and partnering with customers on their paths to net zero.”
A study showed that California’s forest carbon offsets buffer pool is undercapitalized and does not fully cover the risk of increasing fires.
Last year, Governor Newsom of California signed a $15 billion environmental package that funds programs to tackle droughts, clean energy, and climate change. $1.5 billion of that fund is for wildfire prevention.
This comes after California’s devastating wildfire season which seems to get worse with each passing year.
The state has a huge forest carbon offsets program that credits carbon stored in forests. These carbon credits are open for those who seek to offset their emissions.
The bulk of these credits is in California’s cap-and-trade credit scheme. It’s also known as the emissions trading system (ETS).
ETS is a regulated carbon credit market wherein government sets the full emissions limit and affects the credit prices. Emitters buy or sell (trade) credits based on their emissions and in relation to their limit (cap).
California is one of the world’s major ETS, along with EU ETS and China ETS. But the state is also home to the biggest and deadliest wildfires in the U.S.
And so, the state created its so-called buffer pool.
California’s Forest Carbon Buffer Pool
Though forests can store big amounts of CO2, their storage capacity is not durable. This is because they’re subject to risks that can re-emit the stored CO2 into the atmosphere.
The concept of the permanence of the forest carbon offsets program is very important.
CO2 emissions have significant impacts on the environment. They could last for hundreds to thousands of years but CO2 captured and stored in carbon pools like forests may be temporary.
To address this, California developed a self-insurance program called buffer pool. It’s created to offer a 100-year guarantee on forest carbon claims made by offset projects.
When projects are registered, the relevant registry performs an analysis of the reversal risks. Then the project has to set a certain percentage contribution into the buffer. The amount will balance the reversals of registered offsets that may happen.
California’s buffer pool consists of these four key components:
Wildfire
Disease and insects
Drought
Financial and management risks
Funding for California’s forest carbon buffer pool is from offset credits issued by the CARB.
Since the program started until January 5, 2022, there’s a total of 31.0 million credits given to the buffer pool. This represents 13.4% of the total 231.5 million issued credits.
The 31.0 million credits ensure a total of 200.5 million credits portfolio against the risks of reversal.
The number of credits contributed to the buffer pool depends on certain risk factors. But their composition is from those four main components.
For instance, projects must give around 2% to 4% of their credits to account for wildfire risks. While for projects that apply wildfire management practices, the credit share is lower.
Moreover, projects must also allot a fixed 3% of gross credits for disease- and insect-related risks. Plus, there’s another 3% for natural disasters like floods, wind, and ice.
Lastly, offset projects must also provide around 1% – 9% of gross credits for various financial and management risks. These include bankruptcy, land-use conversion, and excess timber harvesting.
The figure below illustrates California’s total buffer pool and each component’s credit shares.
Credits in the buffer pool are retired to cover carbon losses due to events like drought or wildfire.
So long as the buffer pool stays solvent, the permanence of carbon offsets remains intact.
But a study suggested that California’s buffer pool severely lacks capital.
It’s also unlikely to insure the integrity of the program’s forest offsets for a century.
The analysts used 6 projects affected by wildfires in California from 2015 to 2021. Two of them have already reported verified reversals that resulted in credit retirements. While four projects weren’t verified yet and so researchers use proxy fires instead.
They base the calculation of the expected carbon reversals of the projects on the offsets program’s accounting rules.
The table below shows the 6 carbon offsets projects studied.
Researchers found that wildfires in California had depleted almost 1/5 of its forest carbon buffer pool in less than a decade. This is equal to 95% of the total contribution set for fire risks for over 100 years.
In fact, the Lionshead Fire in 2020 affected only a single forest offset project. Yet, it accounted for about 10% of the total forest buffer pool for that year.
The wildfire burned all 24,000 acres of the Confederated Tribes of Warm Springs’ forest offset project. The offset reversal caused by the fire was equal to 2.6 million credits withdrawn from the forest buffer.
This and other big carbon losses by record-breaking 2020 and 2021 wildfires showed the vital role of California’s buffer pool.
Forecasts also show that wildfires will continue to grow in intensity and size. And that’s due to the growing climate risks and increasing temperature levels.
But the buffer pool didn’t account for the increase in fire risks.
Failure to factor in such a growing risk of wildfires means that the forest fire-prone state will likely face high offset reversals.
The researchers noted that,
“California’s forest buffer pool is likely to experience mounting losses that far exceed its design criteria in the decades to come.”
They also showed that potential carbon losses from a single forest disease or a sudden oak death can take up all credits set for these risks.
Hence, California’s forest buffer pool is very short of capital as per their analysis. As such, they conclude that the program will be unlikely to guarantee the integrity of California’s forest offsets program for 100 years.
With this, many are wondering if it will lead to changes to the way the CARB and offset registries manage their buffer pool for forest carbon credits.
Whether they will or not, the fire season is coming and the risk is rising.
Intercontinental Exchange, Inc. or ICE has launched new nature-based solutions carbon credit futures contract.
ICE is a Fortune 500 company that offers financial technology, data, and market infrastructure services. It operates exchanges, like the NYSE, and clearing houses to help people invest, raise capital and manage risk across asset classes.
ICE created its first nature-based futures contract called NBS future. It trades under the contract code NBT, which delivers verified carbon unit (VCU) credits.
ICE NBT futures have several certifications. These include Verra VCS Agriculture, and Forestry and Other Land Use (AFOLU) Projects. It also has certifications from the Climate Community and Biodiversity (CCB) Standard.
ICE Nature-Based Solutions Futures Contract
An entity can produce NBS carbon credits through various schemes like planting trees or protecting forests.
Each ICE NBS futures contract equals 1,000 carbon credits. And each credit equals one metric ton of emissions removed or reduced by projects that preserve natural ecosystems.
It has vintages covering January 1, 2016, to December 31, 2020.
ICE has listed NBS futures expiries in December 2022, December 2023, and December 2024.
They traded at $11.25 per tonne by 1109 GMT, according to data from the ICE website.
As per Gordon Bennett, Managing Director of Utility Markets at ICE,
“The NBS future is our first contract specifically designed to measure the carbon sequestration and storage capabilities of nature… we hope it to be an important valuation tool to conserve and grow the world’s natural capital base.”
The decision to launch this contract will help bring price signals to the carbon market. The firm also believes that it will incentivize efficient capital allocation to balance the world’s carbon budget and hit net zero goals.
ICE has worked with environmental markets for about 20 years now. Over this period, it has traded over 100 billion tons of carbon allowances and over 250 million renewable energy certificates.
Moreover, ICE traded about 3 billion carbon credits, which is equal to over 1.4 billion Renewable Identification Numbers.
In 2021 alone, ICE traded around $1 trillion in the notional value of carbon allowances. This is equal to more than half the estimated global annual energy-related emissions.
ICE Futures Contract Supporters
A lot of large companies are supporting the futures contract. These are Shell, Chevron, Vitol, Trafigura, EDF Trading, Elbow River Marketing Ltd. (a fully owned Parkland Fuel subsidiary), the Macquarie Group, and Vertree Partners.
For instance, according to Bill McGrath from Shell,
“The launch of ICE NBS futures is a crucial milestone to scale the voluntary carbon market… In particular, it will help boost the flow of capital for developing nature-based projects.”
Last year, Shell partnered with PetroChina to supply it with carbon-neutral LNG cargos. Their goal is to offset CO2 emissions generated across the LNG value chain with carbon credits from nature-based projects.
For Vitol, quality assurance and transparency of carbon credits are also vital. Michael Curran from Vitol said that the launch will grow investment in verified carbon mitigating projects. Plus, it will raise standards and price transparency across the carbon credit industry.
Whereas Hannah Hauman from Trafigura finds the launch of ICE nature-based solutions futures a crucial development in global carbon markets. And that it will help deliver transparency and liquidity for quality nature-based solutions.
In August last year, CME Group launched its CBL Nature-based Global Emissions Offset (N-GEO) futures contract. It’s also one of the top nature-based solutions (NBS) contracts available in the market.
CME’s CBL N-GEO contracts consist of offsets from agriculture, forestry, and other land-use projects. They’re verified to have additional climate, community, and biodiversity accreditation.
CBL N-GEO futures contract has the same rigorous certifications as ICE NBS futures. They are also both created to help create a more transparent and efficient voluntary carbon market.
All the money flowing into the carbon credits market has been a windfall for brokers.
Carbon credit schemes are an integral part of the Paris Agreement serving a vital role in cutting emissions.
In fact, carbon credits have blasted in the past year as companies seek to offset their emissions. Billions of dollars are pumped into this space to mitigate the climate crisis.
Investing in Offset Project that Brokers Carbon Credits
A carbon offset project refers to any undertaking that removes or avoids emissions. Common ones are renewable energy, energy efficiency, reforestation, and other nature protection efforts.
Those projects undergo verification processes to ensure the quality of carbon credits issued.
There are a couple of carbon project certification and verification standards. The most popular one is the Verra or Verified Carbon Standard. While others are the Gold Standard, the American Carbon Registry, and the Climate Action Reserve.
Carbon credits generated by the projects represent a certain amount of emissions reduction or removal. Each credit equals one ton of CO2 avoided or removed from the air.
Money from sales of the credits allows developers and brokers to pay for project verification and monitoring. This is to make sure that projects bring the climate impacts they promise through the offset.
More importantly, they help grow the market by enabling the flow of funds to more carbon projects. They also play a crucial role in reaching climate goals of halving emissions by 2030 and net zero by 2050.
Brokers’ Role in Generating Carbon Credits
Investments in this market had soared as prices rise fast which led to more CO2 reduction or removal. And brokers play an essential role in connecting buyers and sellers in this space.
Brokers help get carbon offset projects off the ground by providing financing and marketing expertise. Those projects can be very costly and take a lengthy process to verify. This is where brokers come in and offer help to project developers.
As one forest project developer puts it,
“Brokers are important, particularly in the early days when demand was limited and prices were low… It was about trying to attract a reseller that could make your project attractive.”
Also, brokers of carbon credits are also taking risks in the projects. For instance, they agree to take upfront or fixed prices for the carbon credits.
One broker group also said that 80% of the revenues from the sales of carbon credits was for buying offsets and developing more projects. Other portions were for paying marketing, admin, and contingency costs.
Other costs include long-term monitoring, reporting, and verification (MRV) of the project. Some retailers are covering these costs if they’re also the ones creating the project.
Other brokers are also directing profits from carbon credits to back new projects like South Pole. They said that it’s better to fund projects than draw investors who may ask for higher returns. They’re retaining around 10%-20% of the carbon credit sale price.
Apparently, carbon credit brokers face several challenges and risks that project developers undergo.
The Need for Brokers’ Transparency in Pricing Carbon Credits
As one carbon project developer said,
“Transparency is enormously important for carbon finance to work effectively.”
This pertains to showing costs by brokers who resell carbon credits to developers.
Transparent transactions involving carbon credits are critical same as other crediting schemes.
Typically, developers get a percentage of the price the broker sells the credits for. Or they receive a fixed amount per credit regardless of the sale price.
But some developers question whether brokers offer value for money.
One developer claimed that some credit retailers are having big mark-ups for “not a lot of value”. They also said that the amount of money that went to them was “completely non-standardized” while noting that,
“Difficult to get information on where the cash went. . . there’s a need for increased transparency”.
While transparency is critical, suggesting that brokers get large and unfair profits at the expense of developers is false.
As mentioned, there are several factors affecting the final price of carbon credits. These include the costs of setting up the project, verification, and monitoring.
Other major price considerations are market dynamics (supply and demand) and services provided by the broker.
Conduct enhanced due diligence and ensure the quality of carbon credits,
Consult with clients to build portfolios that deliver business value to secure private sector finance,
Run processes and systems that fulfill carbon credit purchases and retirement,
Ensure corporate claims based on offsetting are robust, and
Research and innovate to improve operations.
Ultimately, the recent price increases in carbon credits can help fund new projects that were not possible before. A lot of investments were made in innovative carbon removal projects. They offer technological solutions to draw CO2 from the air.
This trend makes business cases valid both for developers and brokers alike.
Best of all, it allows for more carbon credit investments to flow where they’re needed. And that’s to carbon offset projects that contribute to reaching climate goals.
Nature-based carbon credit platform Pachama raised $55 million in its latest funding round.
The venture capital firm Future Positive led Pachama’s Series B round. It’s also backed by several investors including the talk-show host Ellen Degeneres.
Pachama is focusing on saving and expanding forests across the world. It uses remote sensing and artificial intelligence to capture carbon and verify carbon credits.
Pachama’s Funding for Carbon Credit
The $55 million that Pachama raised will be for hiring new staff and driving research and development. It will also be for launching more projects.
This Series B round brings its total funds to $79 million. This funding will help speed up Pachama’s platform in bringing integrity and transparency to carbon credit markets.
Corporations are seeking to buy carbon credits to help offset their emissions. This is largely due to the urgent need for the world to decarbonize.
But critics said that it’s tough to assess with accuracy the amount of CO2 that forestry projects are sequestering. They believe that forest carbon capture is not scalable due to the absence of reliable data.
This is where Pachama comes in and offers a solution. For instance, its technology provides more accurate data that are credible and transparent.
Moreover, Pachama’s AI gives more assurance to buyers of carbon credits to reach their net zero goals.
The platform has been serving over 800 customers worldwide. And among them are the major companies like Salesforce, Microsoft, Airbnb, Netflix, and Shopify.
For three years, Pachama has been working with 46 project developers in 14 countries. It has also reviewed over 150 forest projects around the globe.
Currently, carbon offset projects involving forests are the most popular in reducing emissions.
They’re recognized under the REDD+ framework. It guides activities in the forest sector that avoid emissions from deforestation/degradation. It also helps enhance forest carbon stocks.
Within the voluntary carbon market, these projects get the highest prices and represent the biggest market share.
Major Investors of Pachama
Pachama’s Series B funding round was led by Future Positive. Its founder, Fred Blackford, said that scaling carbon credit markets have a vital role in the collective action to decarbonize.
He added that,
“Pachama is building the infrastructure to support functioning carbon markets… Plus, it provides transparency and accountability around how carbon credits are issued and transacted.”
Pachama’s previous investors are Bill Gates’ Breakthrough Energy Ventures and LowerCarbon Capital. While the new ones apart from Degeneres include:
actress Portia De Rossi,
PLUS Capital,
Reddit co-founder Alexis Ohanian,
ReGen Ventures, and
20VC
Forests are a proven and cost-effective means of removing carbon from the atmosphere. But the present afforestation market is costly and fragmented.
Pachama’s technology addresses this concern by making carbon removal accessible for firms of any size. And so, the carbon credit platform enables afforestation to scale.
As per Carmichael Roberts of Breakthrough Energy Ventures,
“It would be key to documenting carbon removal and accelerating carbon neutrality and negativity”.
The recent report from climate scientists is crystal clear: the world must act now. That means limiting global warming to 2 or 1.5 degrees Celsius.
But what does this entail?
Cutting a lot of emissions and reaching net zero. And this is urgent.
Embracing the urgency of this matter, more and more entities are pledging their net zero targets. There are now over 80 nations and hundreds of businesses that laid out their net zero roadmaps. These include the world’s supper emitters – China, the United States, the European Union, and India.
But what does achieving net zero emissions really mean?
This guide will explain the key facts and insights about this world-saving concept.
What Does Hitting Net Zero Emissions Mean?
Being at net zero emissions refers to a point where the GHG emissions released by humans into the air are balanced by the emissions removed from the air.
Think of it as a weighing scale. Emitting carbon and other GHG tips the scale and the net zero aim is to get the scale back into balance.
Reaching this balance requires two things.
Reducing the emissions released from human activities closest to zero.
Removing the emissions that are hard to reduce.
Getting to net zero means we can still generate some emissions. But as long as they are offset by initiatives that reduce GHG already in the atmosphere.
So, emission reductions and removals go together in the world’s race to net zero.
When Must The World Get to Net Zero?
Every new ton of carbon emitted into the atmosphere is heating the planet more. The sooner the world stops adding CO2 and other GHG to the air, the better. But what’s the timeline for this?
As per IPCC’s latest report, to honor the Paris Agreement and limit temperature rise at 1.5°C, global emissions should be at net zero by 2050.
Still, hitting net zero in 2050 is too far distant away. Short-term emissions reduction targets are necessary. The Paris accord requires countries to reduce emissions by 7% each year this decade (from 2020 to 2030).
Climate science suggests a global timeline to be at net zero under two scenarios: limiting warming to 1.5°C and to 2°C.
The figure below shows this timeline. It separates two significant emissions – carbon dioxide and total GHG.
What the picture depicts is that achieving net zero CO2 emissions must be by 2050 (1.5°C) or by 2070 (2°C) at the latest. Whereas for non-CO2 emissions, it means by 2060 and by the end of the century.
The sooner emissions peak, the more realistic hitting net zero becomes.
This scenario results in less dependence on removing carbon beyond 2050.
But this timeline doesn’t say that all countries need to be at net zero at the same time. There are a lot of factors to consider here including:
Responsibility for past GHG emissions
Per-capita emissions
Capacity to act
This suggests that the deadline for the wealthier, higher emitters could be earlier. The opposite holds true for poorer emitters.
Whereas the US, EU, UK, and Japan have all committed to hitting it by 2050.
But it’s crucial not just for countries but also for companies to have net zero targets. More so, their near-term emissions reduction goals must align with their net zero pledges.
Why It’s Vital to Align Interim CO2 Reduction Targets with Net Zero Plans?
Entities often set their net zero targets by 2050.
But to ensure that they’re on track toward their net zero pledge, their long-term goals must inform their interim targets.
This is critical to prevent locking in carbon-intensive and non-resilient infrastructure and technologies. It can also help them align the costs by investing in projects that can cut emissions now and still do so years later.
This is more vital for countries to design consistent policies that support reduction efforts in the long run. Also, countries party to Paris Agreement and COP26 agreed to submit their climate plans.
Such plans form part of their NDCs or nationally determined contributions. The NDCs outline interim emissions targets by 2030 and align governments’ climate plans with their near-term goals.
Most countries with net zero targets are starting to incorporate them into their interim NDCs. Here’s the current global map of countries that have net zero ambitions and their status.
Source: ClimateWatch Net Zero Tracker
More importantly, the corporate world had also paved its path toward net zero emissions.
World’s Heaviest Emitting Companies With Net Zero Targets And Strategies
According to BloombergNEF (BNEF) analysis, 2/3 of the world’s heaviest emitters set their net zero goals. These focus companies (100+) represent over 80% of global industrial GHG emissions.
BNEF estimates that the net zero targets of those companies will cut emissions by 3.7 billion metric tons of CO2 equivalents in 2030. And by 2050, reductions will become 9.8 billion Mt. This is equal to over a quarter of global GHG emissions today.
The chart below shows the emission reductions for those companies per sector.
The oil and gas sector accounts for over a third (3.4 GtCO2e) of targeted reductions, more than any other sector.
European oil majors have set net zero emissions targets by 2050 last year like Shell and Total. They already made some progress by investing in low-carbon initiatives.
The same goes with some US oil majors ExxonMobil, Occidental Petroleum, and Chevron.
In particular, Exxon pledges to reach net zero global operations by 2050. Part of this climate goal is a couple of key promises such as:
$15 billion towards reducing GHG emissions over the next six years
Better processes to reduce methane gas leakage
To reach net zero within the U.S. Permian Basin shale field by 2030
Exxon also bid the highest to get offshore properties to use for carbon sequestration.
Half of that budget will be for reducing emissions from fossil fuel initiatives. The remaining half will be for hydrogen energy and renewable fuels.
Specifically, Chevron will increase:
Renewable fuels production to 100,000 barrels per day
Renewable natural gas output to 40 billion British thermal units (BTUs) per day.
Hydrogen production to 150,000 tonnes per year
Carbon capture and offsets to 25 million tonnes per year.
Meanwhile,Occidental Petroleum has also set its net-zero ambition by 2050. Like other oil majors, Occidental also invests in direct air capture (DAC) technology as one of its net zero strategies.
The firm expects to pull as much as 1 million metric tons/year of CO2 emissions via DAC.
The second heaviest emitting sector is the utilities with 2.3GtCO2e.
Italy-based Enel, one of the world’s biggest utility firms, has an initial net-zero emissions target by 2050 but moved it to 2040 instead. The firm also expressed to exit coal generation by 2027 and gas by 2040.
Enel plans to invest $160 billion to fund its net zero strategies to reach its ambitious goal. Part of that is to install around 154GW of renewable capacity by 2030.
Duke Energy also set ambitious climate goals. That’s to have at least a 50% reduction in CO2 emissions from electricity generation in 2030 on its way to net zero by 2050. They’re also targeting net zero methane emissions for their natural gas distribution by 2030.
The third sector with high emissions is manufacturing (1.4GtCO2e) which includes automakers.
While the utility companies are turning to renewables, car manufacturers are becoming electric.
Tesla led the way in its all-electric lineup and amassed hugecarbon credit sales for it. It also produces green products that further add to its credit generation. Yet, it still hasn’t revealed its net zero goals.
Stellantis, on the other hand, has pledged to hit net zero emissions the soonest time by 2038.
While it used to rely on Tesla to meet its regulatory emissions, the European carmaker managed to cut down its emissions.
It was through its electrification ramp-up and technical improvements. This includes its battery electric vehicles (BEVs) and low-emission vehicles (LEVs) production.
To become carbon net zero in 2038, the carmaker focuses on these main levers:
Energy-efficient projects and energy management in all plants
Site compression and improvement of industrial footprint
Use and production of renewable energies
Technical innovations (e.g. Hydrogen, Power to gas)
CO2 capture and storage
Other manufacturers also made significant strides in their way toward decarbonization. Take for example the case of Del Monte Foods.
Del Monte Foods has invested significantly in renewable energy and reduced food waste. It also doubled capital investment in energy-efficient production operations.
The company’s strategy to reach net zero emissions by 2050 is to invest more in:
Renewable energy,
Automation,
Transportation efficiency,
Regenerative agricultural practices, and
Eco-friendly packaging innovation
Though they’re not directly specified as a sector in the chart above, the airlines are also one of the big emitters.
In fact, the global aviation industry generates around2.1% of all CO2 emitted by humans. Within the transport sector, it accounts for 12% of emissions compared to 75% from road transport.
Here’s how themajor US airlines are dealing with their net zero targets.
The Way to Net Zero
It is certain that the world needs to take action and treatclimate change as an emergency.
And the only means to face this emergency heads on is for countries and companies to hit their net zero emissions.
There’s no single approach to how the world reaches net zero by 2050 or earlier. It requires a combination ofvarious initiatives or strategies as to how different companies are doing it.
Another major element of that is setting near-term climate targets that align with long-term goals.
This will help investors assess the climate ambitions of theirportfolio companies. It will also help corporations to have a good benchmark as they go on their journey to net zero.
The gift makes the Doerrs the lead donors of climate change research and scholarship. It also places Stanford at the center of public and private efforts to end fossil fuel reliance.
The Stanford New Climate School
The billionaire said the study of climate change and sustainability would be the “new computer science”.
Stanford’s new climate school will hold traditional academic departments on climate and sustainability. Related topics would be planetary science, energy technology, and food and water security.
It will also have several interdisciplinary institutes and a center on creating climate policy and technology solutions.
As per Stanford president Marc Tessier-Lavigne,
“The new school will focus on climate policy issues… And on asking what would it take to move the world toward more sustainable practices and better behaviors.”
Other big universities are also developing interdisciplinary schools focused on climate change. The Columbia climate school is an example. But the Doerr School of Sustainability will be among the biggest and best-funded.
It will launch with 90 faculty members on board already and will add 60 more over the next 10 years. It’s Stanford’s first climate school and new institute in 70 years.
Alongside Doerrs’ gift is another $590 million Stanford had raised to fund the construction of two new buildings.
The inspiration behind the Doerrs’ philanthropic act
The first inspiration for Mr. Doerr’s plight to address climate change was in 2006. It was after his family watched Al Gore’s film “An Inconvenient Truth”.
He said that after dinner, his daughter told him that it was his generation who created the climate crisis and that they better fix it. It all started there and Mr. Doerr, with his wife, give gifts to help fight climate change.
Kleiner Perkins, a venture capital firm owned by Mr. Doerr, made several investments in clean energy companies. Speaking of his family’s philanthropic acts, Mr. Doerr said,
“Climate and sustainability are the most important of our causes… We hope that the gift would inspire other wealthy individuals to spend their fortunes combating climate change.”
Mr. Doerr is part of a growing number of ultra-rich men donating huge sums of their fortune to tackle global warming.
Amazon founder Jeff Bezos said he was committing $10 billion of his own money to a new climate initiative. It’s called the Bezos Earth Fund.
Also, Mr. Bloomberg said he would spend $500 million to help close coal-fired power plants. Whereas Bill Gates had put billions to tackle climate-related issues through various means. These include the Breakthrough Energy and the Bill and Melinda Gates Foundation.
Stanford’s new climate school open for more gifts
The new climate school’s inaugural dean is Arun Majumdar. He’s the advisor for the Obama and Biden administrations on energy issues.
He said that the school will offer context and analysis around climate change issues. But it will not go into the political arena. He added that,
“We will work with and accept donations from fossil fuel companies… Those that want to diversify and be part of the solutions, and they want to engage with us, we are open to that.”
Prometheus Fuels has made deals to deliver millions of gallons of carbon neutral fuel despite missed targets and skeptics.
Prometheus aims to remove CO2 from the air and turns it into zero net carbon fuel at a price as cheap as dirty gas. This fuel is “carbon neutral” because producing it uses only renewable energy sources.
This $1.5 billion startup develops direct air capture methods that filter CO2 to create commercially viable fuels.
The firm’s carbon capture method offers a great promise to replace oil and gas with zero net carbon fuels.
But many are skeptical if the energy startup can achieve its ambitious mission.
The Technology Behind Prometheus Carbon Neutral Fuel
The company calls its CO2 capture technology the Titan Fuel Forge. It’s a prototype that combines direct air capture and a novel nanotube membrane with a device that sucks CO2 from the air.
In a year, a single Titan Fuel Forge can turn 900 tons of CO2 into 100,000 gallons of gas, diesel, and jet fuel. These fuels have identical molecules to the ones used in cars and planes.
Prometheus calls its final fuel electric fuels (e-fuels) with no agricultural inputs and no waste products. With this technology, the startup aims to reduce CO2 emissions by over 20 gigatons a year.
The image below shows the key processes involved in producing the firm’s e-fuels
Prometheus Titan Fuel Forge
A commercial-scale version of Prometheus carbon neutral fuel will use power from solar and wind energies.
Investors have poured money into the company. The firm says it has raised more than $50 million from various financing partners. The major ones are BMW’s investment arm, shipping giant Maersk, and Y Combinator.
Prometheus earned its Unicorn status with a $1.5 billion value after completing its venture round last year.
Yet, there are still many skeptics.
Prometheus Dubious Claims and Failed Promises
Last April, Prometheus said that it expects to have 500 carbon capture plants working by 2030. Together they can produce around 50 billion e-fuels a year and capture about 7 billion of CO2 by 2030.
If Prometheus carbon neutral fuels will be produced at the scale and cost ($3 a gallon) promised, it will indeed help address the climate crisis.
It will provide a cheap means to decarbonize the automobile and aviation industries. It can also help limit fossil fuel extractions and end oil refineries.
But a review from a team of experts is dubious of the company’s claims. Here’s a quick rundown of the major skeptical points of the company’s e-fuel claims.
Missed own targets.
Prometheus initially targeted to sell its carbon neutral fuels by 2020. But up until now, this hasn’t happened yet. And the firm still has to work on its device to produce fuels that can power cars today.
High costs of running the technology.
The unique carbon capture technology developed by Prometheus is straightforward chemistry. But the problem is that DAC equipment and electrolyzers are both expensive to make and run.
It needs considerable heat to separate the captured CO2 from the sorbents and concentrate the gas. Plus, it also takes a lot of electricity to power the electrolyzers.
A study on electrofuels found that with standard technologies, a gasoline equivalent would cost about $16.80 a gallon. And that’s even at a full commercial scale.
Such costs may fall to around $6.40 in the next decade and $3.60 by 2050. But this happens only with significant cost reductions in electricity and equipment used.
Solar and other clean energy costs.
Prometheus banks on its solar cost estimates: 2 cents per kilowatt-hour. This is due to the Los Angeles plan to buy renewable power for the said amount.
According to some, the unsubsidized cost of building and drawing power from a big solar project is around 3 cents/kWh.
Plus, relying fully on solar and wind power, which is the promise of Prometheus carbon neutral fuel, requires a couple of things.
The plants have to be very cheap, automated, and flexible to ramp up and down as electricity generation fluctuates.
Very aggressive process.
Lastly, the firm didn’t allow big venture capital firms with reputable carbon removal rigor to vet its scientific claims.
Experts in this field said that the costs and technical claims of Prometheus seem so unlikely. Making it a commercial reality will also take several years.
And most important, the firm has to be open in its processes and work under clear oversight and verification. This is to ensure that its fuels are carbon neutral indeed.
Investors Still Confident in Prometheus Carbon Neutral Fuel
Despite all those doubts and questions, Prometheus’ CEO and founder, McGinnis said that they’re all doing good. Delays are due to the pandemic and supply chain issues.
He further added that they’re not facing scientific challenges and responded that,
“There’s nothing between us and shipping fuel other than scaling… Skeptics that weren’t otherwise conflicted would be convinced if they had access to our data, models, and methods.”
The firm has also begun speaking with regulators about the steps they need to take to sell the fuel directly.
It will also use an impartial means of carbon neutral certification when it’s available. And that there will be more ways to verify how Prometheus carbon neutral fuels are produced, including a thorough analysis of the carbon.
Now that the firm has raised its Series B funding round, the CEO plans to hire quickly and move forward much faster. And Prometheus’ investors remain optimistic, too.
The chief executive at BMW i Ventures said that,
“If he (McGinnis) is successful, this is going to be a really big game-changer—and the odds aren’t against him.”
They’re confident that the firm is on track and that Prometheus carbon neutral fuel is “right around the corner.”
The firm plans to show its fuels later this year and may begin shipping them commercially in 2023.
Many other carbon removal startups are also in the same stage of perfecting and scaling up their carbon capture technologies.
Most of the world’s largest banks and asset managers are failing to put into action their climate goals.
Three major banks recently rejected shareholders’ proposals to align lending practices with climate targets while three more will do the same.
Shareholders of Citigroup, Wells Fargo, and Bank of America passed resolutions to end support for fossil fuels. A specific resolution from Citigroup shareholders proposed that the bank,
“…adopt proactive measures to ensure that the company’s lending and underwriting do not contribute to new fossil fuel supplies.”
It was denied the same with similar resolutions from the two other banks.
Banks’ Climate Goals Versus Actions
Banks have been pumping about $4.1 trillion of financing to the oil, gas, and coal sector via loans and bond sales since the Paris Agreement in 2015. $656 billion of that was for last year only.
Worse is that Wells Fargo has the biggest fossil fuel funding increase from 2020 to 2021 ($20B more).
The chart below shows the banks supporting fossil fuels, with JP Morgan topping the list.
Shareholders of those banks demanded that they act according to their climate goals. This means taking actions in line with the banking sector’s net zero commitments.
Also, all these financiers have signed up to the Glasgow Financial Alliance for Net Zero, or GFANZ. This alliance works to align banks, insurers, and asset managers with the goal of hitting net zero by 2050.
GFANZ covers two important net zero alliances in the financing sector.
The Net Zero Asset Managers alliance
The Net-Zero Banking Alliance.
Both commit to aligning lending and investment portfolios with net zero emissions.
But what occurred during the banks’ Annual General Meetings tells a different story.
Banks Denied Shareholders’ Desire to Embrace Climate Goals
Only 12.3% voted for Citi to adopt lending practices that are consistent with climate goals.
The same pattern emerged in Wells Fargo and Bank of America, with about 11% of votes for each bank.
Research from InfluenceMap also revealed similar climate change responses from the financial sector. Only 11 out of 30 largest traded financiers and banks even have reliable climate goals to cut emissions.
“There is a stark disconnect between what they [financing firms] say about climate change and what they’re actually doing.”
Climate advocates in the sector contended that it’s not enough to set a net zero target. What’s needed is a credible plan for achieving those targets as emphasized in the resolutions.
And the sure-fire way to that is to stop new fossil fuel expansion and new supply, immediately.
Yet, management from the three banks rejected such proposals focusing on climate goals.
Citi CEO Jane Fraser, for instance, opposed the resolution saying that,
“It’s not feasible for the global economy, for human health or livelihoods to shut down the fossil fuel economy overnight.”
Big Asset Managers and Bankers Are Not Supportive, Too
Blackrock, State Street, and Vanguard have also most likely voted quietly against the proposal. These big three asset managers are top shareholders in Citi, Wells Fargo, and Bank of America.
They also own about 20% of America’s 6 largest banks and 20% of the average company listed on the S&P 500 index.
JP Morgan Chase, Morgan Stanley, and Goldman Sachs are also expecting to face similar resolutions in the coming weeks. But speculations indicate that most shareholders are likely to reject them as well.
These giant financiers even lobbied the Securities and Exchange Commission to toss out the resolution. They argued that it will set inflexible and heavy restraints on their daily business.
While those biggest banks decide not to vote for climate goals, a few others have been pursuing measures that cut emissions.
And the votes for the resolutions calling on banks to pursue climate goals urgently say one clear thing.
That there’s a small yet notable number of Wall Street investors who want to do away with fossil fuels. In a figure, it’s accounted for $65 billion in capitalization.
Scientists made a new enzyme to break down plastics very fast, which can boost plastic credits.
Plastic credits are eyed as the next big thing to deal with sustainability, next to carbon credits.
Plastic is one of the major pollutions damaging the environment, especially the oceans. About 80% of all debris polluting the seas is plastic waste.
Companies have been working to find solutions to deal with the plastic crisis.
Luckily, scientists recently created an enzyme that breaks down plastic waste very fast. This new enzyme reduces the time it takes to decompose plastics to hours, not decades.
The New Discovery That Can Boost Plastic Credits
A team of scientists from the University of Texas at Austin discovered the new enzyme. They called it the FAST-PETase – functional, active, stable, and tolerant PETase.
PET refers to polymer polyethylene terephthalate, one kind of plastic material.
FAST-PETase involved the study of 51 different plastic containers, 5 polyester fibers, and water bottles made from PET.
The team used a natural PETase that is capable of degrading PET plastic while modifying it using machine learning.
Their technology discovers mutations that degrade the plastic faster under different environmental conditions. It can break down PET within a week or as fast as 24 hours, which took decades to centuries to happen before.
More interesting is that the scientists also showed that decomposed plastic can become a new plastic product.
The team said that they can use the new enzyme to clean up areas polluted by plastics. Also, their technology can work in environments with ambient temperatures.
There are endless possibilities for various industries to leverage this novel plastic solution. According to one of the chemical engineers,
“Beyond the obvious waste management industry, this provides corporations from every sector the opportunity to take a lead in recycling their products.”
Currently, the most common way to dispose of plastics is to throw them in landfills where they rot at a very slow rate. Others are even burning them which further pollutes the air.
Thus, there’s a need for alternative strategies to resolve plastic pollution. And the discovery of FAST-PETase can be a solution that’s cheap, portable, and not too difficult to scale up.
Better yet, it’s a great aid to the emerging rise of plastic offset or credit schemes.
How Do Plastic Credits Work
The plastic credit industry works like how the carbon credit industry does.
In the carbon credit market, entities buy carbon credits. Each credit equals one metric ton of carbon, which is then “offset” through carbon projects. These often involve renewable energy and nature-based projects.
The carbon credit market has been growing rapidly over the last few years. Verification of carbon credit projects becomes stricter to ensure the quality of carbon credits.
Both countries and companies are thriving to reduce their carbon emissions as part of their climate goals in line with the Paris Accord. And so, the carbon credit industry is booming as the world races to net zero by 2050.
Essentially, the plastic credit industry works the same way. The only difference is that companies claim credits for projects that tackle plastics.
Each plastic credit is equal to one ton of plastic waste that would otherwise have not been collected or recycled.
Plastic credits also have to meet certain quality assurance criteria or principles. Confirmation of quality is done via the project’s validation and verification process.
And like carbon credits, companies also have to retire plastic credits to offset their plastic waste footprint.
Plastic credits can help enhance technologies and systems that collect and recycle plastics. It’s very much the same as how carbon credits can help reduce carbon emissions.
Companies can use plastic credits to address the plastic wastes that they can’t get rid of yet. And like establishing a robust carbon footprint, a company needs to assess its plastic footprint to engage well in plastic offsets.
Here are some activities companies can do to mitigate their plastic footprint:
From Verra Registry
Plastic credits are issued to registry account holders listed on the Verra Registry. Under its Plastic Program, the issuance of plastic credits involves two parts.
One is the Waste Collection Credits (WCCs) for projects involving plastic collections. The other one is the Waste Recycling Credits (WRCs) for plastic recycling projects.
The discovery of the new plastic decomposing enzyme opens a new door for those who want to offset their plastic footprint.
Companies can leverage plastic credits with this enzyme along with carbon credits to address sustainability concerns.
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