Global ESG commodities leader Xpansiv, Ltd. has announced the acquisition of SRECTrade, Inc., a rapidly expanding environmental commodity management and transaction platform.
SRECTrade (Solar Renewable Energy Certificates)
SRECTrade currently has more than 50,000 commercial, institutional, and retail customers. They are the leading aggregator of Solar Renewable Energy Certificates (RECs), focusing on clean transportation and Low Carbon Fuel Standard (LCFS) markets.
“Together, SRECTrade and Xpansiv will continue to scale our REC trading and platform businesses, which will deliver tremendous value and technological benefits to customers and markets alike,” said Nathan Rockliff, Chief Strategy Officer at Xpansiv.
John Melby, Xpansiv President, and COO said that he believes this partnership will position Xpansiv to “bring our core benefits—same-day settlement, no contracting, no counterparty risk, and price transparency—to new markets, including clean transportation. This transaction is a key element of our plan to expand operations through both acquisitions and organic growth.”
This year, trading on Xpansiv’s platform surpassed $100 million. They acquired HVB Markets and Iguanadata, and even raised $100 million in pre-IPO capital.
SRECTrade CEO Steven Eisenberg said, “Through this combination, we will further accelerate growth across our existing markets and apply our expertise to Xpansiv’s innovative ESG-inclusive commodity platform.”
“We are excited to join Xpansiv’s impressive team to service our clients during this critical period of growth. Merging our people, platforms, and purpose-driven approaches will advance our joint mission to promote the adoption of clean energy and move toward a net-zero future.”
There are many reasons why the carbon credit industry has grown, including the need to meet new regulations by offsetting carbon and a desire to boost socio-economic development. Right now, the voluntary carbon marketplace is expected to reach $100 billion by 2030. Experts believe it will be valued at $22 trillion by 2050.
According to Trove Research, 5% of all carbon credits purchased this year were used to offset fossil fuel shipments – an increase from years past.
Trove found a “surge in the use of carbon credits for hydrocarbon products,” often marketed as being “carbon neutral.” 4.6 million units were used to offset hydrocarbon shipments in 2021, compared with 1.2 million in 2020.
Companies using offsets include Royal Dutch Shell, BP, and Total.
The carbon credit industry has expanded this past year. In 2018 it was valued at $300 million. It is now on track to reach $100 billion by 2030. Some experts believe it could even reach $22 trillion by 2050.
If you aren’t familiar with carbon credits, the premise is quite simple. Every carbon credit represents one metric ton of carbon. That metric ton of carbon is then “offset” through an environmental project that will remove one ton of carbon from the atmosphere through an environmental project, such as reforestation.
Some critics feel that while the carbon credit industry makes many promises, it fails to deliver.
Jonathan Crook of Carbon Market Watch said that offsets are “nothing more than a desperate and shameless attempt by oil and gas majors to keep business-as-usual activities and hoodwink the public.”
While some concerns are fair – such as the need for better oversight and verification – the offset industry is improving. High-quality offsets are being generated, and the tools used to measure them are advancing. Governments and companies alike recognize their value, which is a significant reason behind the industry’s growth.
When used in conjunction with technological advances and increased regulation, carbon offsets play an important role in the fight against climate change.
Currently, the volume of Liquified Natural Gas (LNG) shipped with a carbon-neutral claim is about 0.4% worldwide.
This week, a war was brewing along the riverfront in Glasgow, Scotland.
That’s nothing new. The Scottish are no strangers to a brawl, and the River Clyde has seen more than a few fights in its day.
But this fight is just a bit different.
On one side – you have Greta Thunberg, the Rainbow Warrior, Greenpeace, and a host of environmental activists.
On the other side – you’ll find Mark Carney (former head of the Bank of England), his Taskforce on Scaling Voluntary Carbon Markets (TSVCM), and the Glasgow Financial Alliance for Net Zero (GFANZ), among others.
It’s big business versus plucky activists – Or is it?
Disagree to agree
Both sides are only in Glasgow in the first place because they know there’s a problem. The ongoing COP 26 (Conference of the Parties) is the agreed-upon follow-up to the Paris Agreements.
Most of the nations of the world are gathered there to discuss current progress in cutting CO2 emissions, national limits, and next steps.
Everyone agrees that more must be done to fight climate change. But when it comes to actually DOING something, the disagreements start.
Greta Thunberg and Jennifer Morgan, of Greenpeace, have called the emphasis on carbon offsets at COP 26 “greenwashing.” Any company that doesn’t immediately stop using fossil fuels – no matter what impact that has on the company – risks being branded as a climate change denier.
Mark Carney emphasized that the business approach of buying carbon offsets holds the potential to fuel a greener approach, harvesting billions of dollars that could go towards green investments.
The GFANZ group alone could generate up to $1 trillion towards net-zero goals, at least in part by purchasing carbon offsets.
The bickering has increased over the past few days as the stakes have grown even higher.
The Article 6 guidelines that (may) be drawn up in Glasgow will need to address a number of issues, including:
Double-counting offsets
Pre-Paris offsets
Net-zero and fossil fuels
The stakes are big enough that everyone wants to be involved.
Russia wants the conference to declare nuclear power as a form of green energy, and to set clear guidelines for forestation offsets (they have about 20% of the world’s forests, after all).
Greenpeace wants the group to downplay offsets and ban new fossil fuel investment entirely.
The UK announced a carbon-to-clean energy pathway that would put them in a leading position among industrialized countries.
Everyone wants a piece of the Voluntary Carbon Markets pie.
Meanwhile, the world leaders took over 400 private jets to Scotland for the conference – which became a massive PR nightmare.
The CO2 emissions for that type of travel is not the best image you want going into a climate conference.
Their total emissions exceeded 300 tonnes for air travel alone – underscoring the pressing need for clear measures.
Time for Action – but what kind of action?
Both sides acknowledge the need for action, but what kind?
The activist side – see fossil fuel dependence as the primary issue of the day. Until that’s solved, why bother with offsets? That’s only greenwashing, through and through.
The investor side – acknowledges the fossil fuel issue but recognizes that offsets provide a vector for immediate action.
COP 26 can address the activists’ criticisms while also setting out a market framework to harness the power of offsets.
UN Secretary-General Antonio Guterres used an opening statement to announce an expert panel to help assess the quality of carbon offsets. That’s a key first step, especially if followed by a clear framework for international offset trading.
The battle lines have been drawn.
The stakes are high and there is a lot of money on the table.
The GFANZ group has up to $130 Trillion of private capital committed to net zero.
And with nearly ⅓ of the world’s investment capital in the GFANZ group, now is the time to harness the power of the Voluntary Carbon Market.
Prelude Ventures and TPG’s The Rise Fund have raised a $101 million Series B investment for Persefoni.
It is the most significant investment round ever made for a Climate Tech SaaS company.
Persefoni’s is a leader in Software as a Service (Saas) for climate management and accounting. This approach enables companies worldwide to calculate and disclose their global carbon footprint at a fraction of the cost.
Some of the world’s largest private equity funds, banks, insurance companies, pensions, and endowment funds use Persefoni to calculate and disclose their emissions. Persefoni also works across the manufacturing, agriculture, energy, apparel, retail, software, and business services industries.
While there may be other data and software solutions out there – Persefoni’s methodology is consumer-friendly. Their expertise within global standards and regulations has made them a global leader.
“Persefoni is very much mission-aligned with Prelude, where our focus is on enabling a net-zero carbon emissions future,” says Victoria Beasley, Prelude General Partner, and Persefoni board member.
“Ever since our founding in 2013, we have been looking for a solution that meets the needs of enterprises that want to take ownership of their carbon footprint. I’ve evaluated more than two-dozen startups aimed at this problem, but none of them could match the Persefoni team’s conviction, market strategy, and long-term vision.”
Additional funding was raised through Clearvision Ventures, Parkway Ventures, Bain & Co., EDF Group through its corporate venture arm EDF Pulse Holding, Sumitomo Mitsui Banking Corporation (SMBC), The Ferrante Group, Alumni Ventures Group, and New Valley Ventures. Existing investors include NGP Energy Technology Partners, Sallyport Investments, and strategic angels.
“As a global, low-carbon energy leader, our clients rely on us to point them to the best carbon management solutions in the market. The first step to being able to reduce a carbon footprint is to continuously measure and understand it, and there is no better technology than Persefoni’s platform for this purpose in the enterprise segment,” said Julien Villeret, Chief Innovation Officer at EDF Group.
More companies are looking for ways to measure their carbon footprint. In fact, the carbon credit industry has boomed this past year as businesses work to offset their emissions. Many believe this is due to standards set by the Paris Agreement and new COP26 objectives. So, Persefoni’s commitment to transparency can help achieve net-zero goals.
Persefoni plans to expand across 18 states in the US and eight countries.
The US and EU have announced a global partnership to cut methane emissions by 30% by 2030. Methane is responsible for one-third of global warming from human activity, which is why over 100 countries have joined in.
Though many environmentalists feel that focusing on CO2 is best (since CO2 stays in the atmosphere longer), methane impacts the atmosphere more intensely. In fact, it is 28-34 times as warming as CO2. And, over 20 years, methane is about 84 times as powerful per unit as carbon dioxide.
US President Joe Biden referred to methane gas as “one of the most potent greenhouse gases there is.”
EU Commission Chief Ursula von der Leyen told summit participants, “We cannot wait for 2050. We have to cut emissions fast.” She went on to say that removing methane is “one of the most effective things we can do to reduce near-term global warming.”
The Paris Agreement’s goals are to keep the global temperature from rising more than 1.5 degrees Celsius. Last August, the Intergovernmental Panel on Climate Change (IPCC) reported that methane was behind a 1-degree Celsius increase in the earth’s temperature already.
Most methane comes from natural resources, such as wetlands. However, a large percentage comes from human activity – including cattle and rice production, garbage dumps, and natural gas production and transport. Many believe fracking practices have a large part to play too.
Though this pledge covers countries that emit half of all methane emissions – some significant emitters are not a part of the ledge. These include Russia and China.
It is important to know that joining the pledge is voluntary, with no real repercussions if failing to meet guidelines. Regardless, many view this partnership as a step in the right direction.
Governments, and companies alike, have shown at COP26 a genuine desire to partner together to lower emissions. The boom within the carbon credit industry has shown this as well. Advances in technology increased regulations, and the offset industry all have a role in the fight against climate change.
If methane is cut by 30%, scientists believe it could prevent the earth’s temperature from increasing by .3 degrees Celsius by 2040.
At COP26, UK Prime Minister Boris Johnson announced The Glasgow Breakthrough – a plan to deliver clean technology across the globe. The goal is to make clean tech affordable and accessible by 2030 through government and company partnerships. Over 40 world leaders have joined in, representing 70% of the world’s economy.
“By making clean technology the most affordable, accessible, and attractive choice, the default go-to in what are currently the most polluting sectors, we can cut emissions right around the world,” said Johnson.
The first five goals to reach by 2030 could create 20 million new jobs and add $16 trillion to the global economy. They include:
Renewable power to communities across the globe.
Improved food systems through climate-smart agriculture.
Creating clean technologies across aviation, aluminum, chemicals, concrete, direct air capture, shipping, steel, and trucking.
Support for clean energy transitions.
Funds to lower the cost of clean technology, maximize green hydrogen and direct capture markets, and increase sustainable aviation fuels.
Other areas of focus are zero-emission vehicles, near-zero steel, and renewable and low-carbon hydrogen.
According to Gonzalo Munoz and Nigel Topping – UN High-Level Climate Champions, “This is what the future of COP is all about – catalyzing an innovative ambition loop between political leadership and the dynamism of the private sector to drive towards a resilient, prosperous zero-carbon future.”
It isn’t surprising that world leaders and companies are joining forces. Their desire to lower emissions is the main reason behind the carbon credit industry boom. The carbon credit industry was valued at $300 million in 2018. It is now on track to reach $100 billion by 2030.
These partnerships are what is needed to reduce carbon emissions. And, with the world at ‘Code-Red’ levels, it is important that leaders act quickly.
Climate change impacts every one of us. But, as governments and private industry join to offset emissions, create new technologies, and increase regulation, net-zero goals feel within reach.
Johnson went on to say, ““The Glasgow Breakthroughs will turbocharge this forward so that by 2030 clean technologies can be enjoyed everywhere, not only reducing emissions but also creating more jobs and greater prosperity.”
If successful, The Glasgow Breakthrough has the potential to improve the environment and spark economic growth, globally – benefiting all.
US Congress may expand tax credits for carbon capture and sequestration projects. the goal is to help increase the use of green technology. However, some environmentalists are concerned that doing so will not stop industries from reducing their carbon emissions.
The proposal is currently listed within the Biden administration’s $1.75 trillion package. For every metric ton of carbon captured and stored, an $85 credit would be provided. Right now, industries are only offered $50 per credit.
President Joe Biden has said that his goal is to decarbonize the US by 2050. Carbon capture sequestration (CCS) is a way that the US can accomplish that. The process involves capturing carbon that is produced, then placing it deep underground so that it isn’t released into the air.
Right now, several CCS facilities in the US are no longer in service. According to the Global CCS Institute, only a dozen or so are operational. Though many groups see the value of carbon capture and storage, some environmentalists aren’t so sure. They feel that the proposal, which requires 50%-75% of carbon to be captured, is far too low.
The Clean Air Task Force feels the credit hike would be beneficial since it can increase carbon capture 13 times over throughout the 2030s. According to CATF spokeswoman Lee Beck, “These provisions will not only enable decarbonization of domestic industries but can also multiply emissions reductions abroad.”
As leaders work to combat climate change, increased incentives for carbon capture and sequestration could serve as part of the solution. The voluntary carbon marketplace also has a role to play, as companies use credits to offset emissions.
Combine carbon capture and sequestration, offsetting, increased regulation, and advances in technology, and net-zero goals are within reach.
Taranis and Albo Climate have partnered together to create a new, satellite-based carbon verification. The AI-powered remote sensing technology will verify soil carbon in row crops. Though its initial launch will be in the US, they hope to launch globally soon.
“We are excited to be partnering with Albo Climate. The high costs of measuring and verifying soil carbon credits have prevented more farmers from participating in carbon programs. Automatic and remote sensing of soil carbon would eliminate the farmer’s need to take cumbersome soil sampling, allowing farmers to enter the carbon credit market and increase their ROI seamlessly,” said Taranis President and Co-Founder Ofir Schlam.
Carbon verification is essential to the carbon credit industry – which has grown this past year exponentially. Experts expect it to reach $22 trillion by 2050. It is now valued at $100 billion, up from $300 million in 2018. Many feel this growth is due to COP26 and the Paris Agreement, as companies and governments look to find ways to offset their emissions.
Still, critics feel that the carbon credit industry doesn’t have the oversight it needs. But, if this verification process proves successful, environmental projects used to offset carbon can be measured more accurately. This will help the farmers completing these projects and the industry as a whole. Projects include crop rotation, planned grazing, and the reduction of synthetic fertilizers and pesticides.
“We are putting farmers first on our new platform. To have a true impact on climate change, we need scalable execution and to have as many people on board in the effort as possible,” says Ariella Charny, CMO of Albo Climate.
Carbon credits can offset emissions, improve the atmosphere, and support economic growth. And, as advances in technology strengthen the verification process, the industry will only continue to get better.
The UN’s plans for a global offset market, and what might – and might not – happen at COP 26.
It’s all about Article 6.
That’s Article 6 of the Paris Agreement – approved on the final day of that meeting back in 2015 – which lays out, broadly, the goal of the UN-administered international carbon trading scheme.
Everyone agrees on the need for a rulebook that lays everything out in black-and-white. But nations tend to prefer grey areas, and a carbon market would cover a lot of those.
Setting the table
The broad outline of the discussion runs like this:
Every nation has NDCs – Nationally-Determined Contributions – that outline exactly how much each one is able and willing to reduce their CO2 emissions.
Each NDC is broadly determined by the goals of the Paris Agreement.
Given that those NDCs are different, there’s room for some countries to cut emissions faster. That opens the door for a system in line with a traditional cap-and-trade system.
Entities that cut emissions quickly come in under the cap; they can trade their excess credits to other entities that need a bit more wiggle room.
That’s all well and good in practice. But governments aren’t your normal entities.
First off, those NDCs aren’t created equal – some countries are doing more to cut emissions than others.
How are those efforts graded and measured?
What should each country be doing?
Should some offsets count for more than others, since some countries can meet their reductions targets more easily?
All of those are thorny questions for the leaders gathered in Glasgow to consider. But the problem goes even deeper.
International markets meet the VCM
What about private efforts within those countries? After all, carbon offset projects, particularly involving nature-based offsets like forestation efforts, are nothing new. They’ve been around for decades.
Do those projects count? Institutions like the Gold Standard have been heavily involved in measuring those early offsets. How much do they carry over?
Do those projects count? Institutions like the Gold Standard have been heavily involved in measuring those early offsets. How much do they carry over?
COP 26 needs to define the guidelines by which an internationally-regulated offset market will operate. In doing so, they’ll have a chance to set the standards for the broader Voluntary Carbon Market (VCM).
The VCM has already seen explosive growth. If the leaders at COP 26 can establish a good framework, that growth rate could skyrocket.
What might happen
We’ve been here before.
Article 6 is nothing new. It was discussed at COP 25, at COP 24 . . . at every major summit since Paris, actually. So far, agreement has been hard to come by.
But there are signs that things are changing for COP 26.
Brazil, a key holdout in the talks, has signaled a willingness to come to the table. Bolonsaro’s government not only has proved to be a reluctant signatory to the Paris agreement but also presides over the management of the Amazon rainforest – a key factor in many nature-based offset programs.
Canada, a hard-liner on the other side, also sees the benefits of coming to an agreement soon. Doing so in a way that leads to concrete environmental benefits still poses a challenge, but COP 26 seems to have a real sense of momentum behind it.
COVID-19, for all the havoc it wreaked on the world economy, also demonstrated that dramatic decreases in CO2 emissions are possible. No one wants to re-create those circumstances, but there might be a path forward that combines significant emissions reductions with increased offsets.
The global community goes to the VCM
There’s one other dramatic difference between previous COP conferences and this one.
That’s the growth of the VCM.
Why are nations like Brazil, India, and over developing countries more willing to compromise?
The Paris agreement set out a fund of up to $100 billion to help developing countries take advantage of the trading schemes and finance their own NDCs.
That’s a lot of money, but unsurprisingly, it hasn’t all been delivered as planned. Disagreements over that fund were part of the reason the Article 6 talks were derailed in Madrid in 2019.
But in the meantime, the VCM is on pace to pass the 100-billion-dollar mark globally by 2030. Developing countries don’t need to wait on the UN.
With a clear Paris rulebook for an international VCM, Brazil and other countries can take advantage of a market-led climate change initiative that puts money in the bank while also contributing to the goals of the Paris Agreement.
That market lies at the heart of the matter. Developing countries have the potential to be on an equal footing with developed countries when it comes to the VCM.
If some of the potential pitfalls can be resolved – offset double-counting, verification, etc. – then developing countries could actually be even more appealing to the VCM.
As experts have pointed out, while CO2 emissions are spread globally, opportunities to counter them are not. An international market could leverage those differences.
Will Glasgow 2021 be the COP that solves the problem?
Will the VCM go global in a whole new way?
And if COP 26 finishes with a Paris Rulebook for an international VCM, then just how quickly will the VCM hit the $100 billion mark?
COP26 is just days away, and in a bold move, Quebec has announced the ban of all fossil fuel extractions and exploration.
Quebec Premier François Legault announced that the province will “definitively renounce the extraction of hydrocarbons on its territory,” a huge victory for environmentalists.
In a statement, Greenpeace Canada Climate Campaigner Patrick Bonin said that “Closing the door on fossil fuel extraction is a huge victory, made possible by the relentless opposition from citizens to both shale gas and conventional oil and gas exploration.”
He believes that now, “In Canada, and around all the world, the pressure to end the expansion of oil and gas production will only continue to grow.”
The ban has not come without challenges. Three oil and gas companies are suing the Quebec government since their leases were previously approved. Other companies are filing a lawsuit over application rejections.
Quebec is currently the second-largest oil refiner in Canada, followed by Alberta. Greenland, Ireland, and Denmark have also banned fossil fuel exploration.
Quebec’s announcement couldn’t have come at a better time.
With COP26 taking place, and Paris Agreement milestones coming due, many governments and corporations are trying to find ways to reduce their carbon emissions.
Their desire to offset carbon while other technologies become available as certainly led to the rise of the carbon offset industry. The carbon credit industry was valued at $300 million in 2018. It is now at $100 billion and is expected to reach $22 trillion by 2050.
Carbon offsets, strong regulations, and advanced technology all have a part to play in helping the world reach their net-zero goals. If more nations step up as the province of Quebec has, we could all be that much closer.
Let’s hope that Quebec’s announcement inspires others to do the same.
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