Howden Pioneers First-of-Its-Kind Carbon Credit Insurance W&I

Jennifer L
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Howden Pioneers First-of-Its-Kind Carbon Credit Insurance W&I

Howden, a London-based insurance intermediary group, has launched the first carbon credits warranty and indemnity (W&I) insurance policy. This policy covers the sale of carbon credits for Mere Plantations’ reafforestation project in Ghana, which rehabilitates degraded forest lands. A leading managing general agent underwrites the policy.

This milestone is pivotal for the voluntary carbon market, as it significantly boosts trust in the quality of carbon credits. It can potentially attract more investors into the market. 

Insurance’s Role in Climate Finance

The insurance sector, one of the largest pools of non-governmental capital globally, is crucial for funding infrastructure projects. In 2017, insurance companies faced $140 billion in climate-related infrastructure losses. 

A climate policy expert, Dr. Leah Stokes projected that the US alone would incur $500 billion in climate disaster costs in 2021. Lloyds of London reported that sea level rise increased Superstorm Sandy’s New York insurance losses by 30%. 

Additionally, over $500 billion of US coastal property could be underwater by 2100. These risks call for sector reform, redirecting trillions towards climate impact reduction. Without a carbon reduction plan, assets may not qualify for insurance coverage.

Additionally, the global economic losses attributed to weather and climate change are exploding. As seen below, it reached almost $1.5 billion between 2010 and 2019 timeline.

climate change cost or losses

The financial world is now recognizing the value of insuring climate-related projects. In 2022, Howden launched the first-ever carbon credit insurance to boost confidence in carbon markets. 

The largest European broker believes the VCM has a vital role in the world’s transition to a low-carbon economy. It just announced its first carbon credits Warranty and Indemnity (W&I) insurance policy for the forestry project of Mere Plantations. The UK-based company manages a teak plantation with 3+ million trees in Ghana, West Africa. 

By employing insurance as a governance tool, the W&I policy enhances the credibility and value of carbon credits. Mere Plantations can now assure buyers that their credits meet stringent environmental, social, and financial standards, supported by an insurance policy that guarantees their authenticity.

Charlie Pool, Head of Carbon Insurance at Howden, emphasized that insurance guarantees the credibility of carbon credits, attracting higher values and encouraging further project development. He further remarked that:

“The carbon markets are the best tool we have for putting a price on emissions. Traditionally held back by poor governance, the voluntary market can now be improved using market-based mechanisms.”

Leveraging Underwriting Expertise for Green Projects

The policy also allows project developers to leverage the underwriting expertise of the M&A insurance market, ensuring confidence in their carbon credit projects’ methodology and implementation. Recognizing this added protection and the high quality of the credits, buyers are willing to pay a premium compared to other reafforestation projects. 

Uniserve, a UK-based logistics company, is the first to purchase these credits.

This development follows other Howden-led initiatives, including the first voluntary carbon credit insurance product in 2022. It has also an insurance product covering carbon dioxide leakage from commercial-scale carbon capture and storage facilities in January 2024.

Mark Hogg, CEO of Mere Plantations, highlighted their mission to make reestablishing degraded forest land a viable commercial enterprise without aid or government intervention. He noted that this insurance offer unlocks the carbon market’s potential, aiding their mission.

Gary Cobbing, Uniserve’s Group Chief Commercial and Operating Officer, expressed confidence in the partnership with Mere Plantations, saying:

“Mere Plantations shares Uniserve’s commitment to sustainability and integrity, making them an ideal source for our investment in carbon credits as part of our ongoing carbon reduction plan.”

The Growing Carbon Credit Insurance Market

Howden isn’t the only big player in the burgeoning carbon credit insurance space. 

A UK-based carbon credit insurance startup Kita Earth offers policies for carbon removal credits. And market experts foresee new players joining soon propelled by the projection that it will become a billion-dollar market. 

According to an industry report, the carbon credit insurance market could reach around $1 billion in annual Gross Written Premium (GWP) by 2030, potentially growing to $10-30 billion by 2050. 

carbon credit insurance market

However, this may underestimate the market’s potential as it focuses only on the VCM and excludes the compliance market. In 2023, global compliance carbon markets were valued at over $900 billion, influenced by policy changes and geopolitical factors. 

The VCM was valued at $2 billion in 2022, but Abatable estimated $10 billion worth of deals that year, suggesting investment was 5x the value of issued carbon credits. A Barclays Special Report predicts the VCM could grow to $250 billion by 2030, although estimates vary widely from $10 billion to $250 billion. 

The report suggests that insurance can offer four key benefits to carbon markets: 

  • Balancing risk and innovation,
  • Boosting confidence,
  • Assessing project risks, and
  • Encouraging risk-taking.

Indeed, the rapidly evolving carbon markets present a complex landscape with unique risks and significant challenges. Introducing insurance mechanisms like that of Howden’s W&I policy can effectively address these risks, enhance investor confidence, and stimulate increased investment. This will enable the markets to scale at the necessary rate to align with global carbon emission reduction targets.

Paladin Energy Offers C$1.14 B to Canada’s Fission Uranium. What does it mean for Uranium Mining?

Saptakee S
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Paladin Energy Offers C$1.14 B to Canada’s Fission Uranium. What does it mean for Uranium Mining?

Australian uranium mining giant Paladin Energy Ltd. has announced a C$1.14 billion ($833 million) all-stock offer to acquire Canadian mining firm Fission Uranium Corp. Using uranium in nuclear power significantly contributes to achieving climate goals by providing reliable energy that reduces the global carbon footprint. Thus, this deal can bring a paradigm shift in uranium mining.

Canada: A Beacon of Nuclear Excellence

The acquisition will grant Paladin control over a top-tier mining project, located in western Canada’s Athabasca Basin, situated in Saskatchewan. This region is rich in high-grade uranium. Fission’s asset is set to begin operations in 2029, with an expected annual production of 9.1 million pounds of uranium over 10 years.

According the Paladin’s press release, the Transaction is targeted to close in the September 2024 quarter on meeting all the conditions under the Agreement. Paladin CEO Ian Purdy, is highly optimistic, noting,

“The rationale is very compelling. We see this as a fantastic asset. Regardless of where the uranium cycle is or how the industry’s doing, the combination of these two companies just makes fundamental sense.”

He further added that Fission is a natural fit for Paladin’s portfolio with the shallow high-grade Patterson Lake South (PLS) project located in Canada’s Athabasca Basin. The addition of PLS creates a leading Canadian development hub alongside Paladin’s Michelin project, with exploration upside across all Canadian properties.

URANIUMsource: Bloomberg

Paladin and Fission Merger Advantages

The merger of Paladin and Fission will establish a leading clean energy company, providing these benefits to shareholders of both companies:

  • Enhanced project development pipeline.
  • Multi-asset production projected by 2029.
  • Diversified presence across top uranium mining regions in Canada, Namibia, and Australia.
  • Increased exposure to favorable long-term uranium market fundamentals.
  • Expanded scale and global profile for Paladin with a TSX listing.

Furthermore, Fission shareholders are poised to benefit directly from the JV. They will get an attractive 30% premium to Fission’s 20-Day Volume-weighted average price (VWAP) and the opportunity to participate in Paladin’s future expansion plans.

Uranium Powerhouse- Paladin’s Path to Global Leadership

Paladin, an ASX 200-listed premier uranium company based in Perth, Western Australia, holds a 75% stake in the Langer Heinrich Mine (LHM) in Namibia. This mine has generated over 43 Mlbs of U3O8 and is poised for a robust return to production. The initial volumes are scheduled to be processed on 30 March 2024. After the Transaction closes, Fission shareholders will hold a 24.0% stake in Paladin. It is expected to have a market value of around US$3.5 billion.

The company boasts a diversified, high-quality uranium exploration and development portfolio in top mining regions, including Canada and Australia.

Paladin is dedicated to reducing carbon emissions and adopting nuclear energy. It supports strong nuclear safeguards for the peaceful use of nuclear materials to generate zero-emissions electricity.

As the Langer Heinrich Mine (LHM) resumes production, it will measure, track and report its emissions. Paladin strongly emphasizes sustainability managing their Scope 1 and Scope 2 carbon emissions.

Notably, Paladin does not face the Scope 3 emissions challenge, as nuclear power plants produce no greenhouse gas emissions during operation. They also predict that LHM’s uranium production will prevent approximately 1.3 BT of CO2 emissions, compared to equivalent coal-fired electricity generation.

Ian Purdy has significantly highlighted that the price of uranium has spiked <3x in the past five years. It surged further following the Russia-Ukraine war, highlighting the urgent need for alternative reactor fuel sources. Thus, he anticipates more uranium deals ahead.

Fission’s Athabasca Basin, a Geographical Bounty

Fission is among several junior mining companies, such as NexGen Energy Ltd. and Denison Mines Corp., developing projects in the Athabasca Basin. This area has become a mining hotspot due to rising supply concerns and increasing global interest in nuclear power as a sustainable alternative to fossil.

Located in Saskatchewan’s Athabasca Basin, PLS is home to the Triple R deposit. It is recognized as the region’s largest high-grade uranium reserve close to the surface. We discovered from the company’s Feasibility Study that Triple R has the potential to become one of the lowest-cost uranium mines globally. It also unveils its unique strategic position along all-weather Highway 955. It traverses the UEX-AREVA Shea Creek deposits and leads to the historical Cluff Lake uranium mine. These advantages make it one of the world’s most productive uranium mining regions.

Fission UraniumSource: Paladin

Due to its shallow nature, the PLS project offers flexibility for development through underground mining, open pit mining, or a hybrid approach. Considering sustainability, , Fission has chosen to pursue an underground-only mining strategy after deep consultation with local communities. This approach allows the company to fully extract the deposit while benefiting from reduced CAPEX and a minimized environmental impact.

Fission CEO Ross McElroy said that while the region holds high concentrations of uranium. Only a few companies have the expertise to explore and develop such projects. Undoubtedly, Paladin is one of them.

He further commented,

“Having worked the majority of my geology career in the Athabasca Basin, I can tell you that it takes a great deal of expertise to properly explore and make discoveries like this one.”

Nvidia Is the World’s Most Valuable Company, Giving Nuclear Power A Big Lift

Jennifer L
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0
Nvidia Is the World’s Most Valuable Company, Giving Nuclear Power A Big Lift

Nvidia, a leading chipmaker, has seen an extraordinary rise in market value, surpassing Microsoft and Apple, driven by its dominance in AI and accelerated computing. As Nvidia’s stock soars, the energy demands of AI have brought one clean energy into focus as a critical solution for sustainable growth: nuclear power.

Nvidia’s Meteoric Rise and Net Zero Game

In May last year, Nvidia, valued at about $750 billion, announced its first fiscal quarter results for 2024. Revenue grew by 19%, and net income rose by 26%, showing positive but not exceptional performance. What stirred excitement was Nvidia’s forecast for the next quarter, predicting a 65% revenue increase. 

CEO Jensen Huang highlighted the company’s leadership in accelerated computing and generative AI, predicting a significant shift in global data center infrastructure towards these technologies. Investors interpreted this as Nvidia seizing a trillion-dollar opportunity, driving its stock price to record highs.

The following day, Nvidia’s market cap surged by nearly $200 billion, marking the start of an unprecedented rally. By June 2023, Nvidia’s market cap surpassed $1 trillion, reaching $2 trillion on March 1, 2024, and surpassing $3 trillion just over three months later. Recently, after a stock split, Nvidia’s market cap at $3.34 trillion, soared past Microsoft and Apple, making it the world’s most valuable company.

Nvidia most valuable company

Nvidia’s standout metrics include its high gross margin of 78.4% in the latest quarter, compared to 46.6% for Apple and 70.1% for Microsoft. Moreover, Nvidia’s revenue growth over the past year was remarkable at 208%, contrasting with Apple’s 1% decline and Microsoft’s 14% growth, according to Statista.

While investors enjoyed this quick ascent, questions remain about whether Nvidia’s current high valuation would be long-term. More so, some environmental critics are questioning the company’s climate commitments and net zero targets. 

In Nvidia’s FY2023 Corporate Responsibility Report, the company outlines its key sustainability goals and metrics:

  • By the end of fiscal year 2025, and annually thereafter, Nvidia aims to achieve and maintain 100% renewable electricity for its offices and data centers under its operational control.
  • Nvidia’s Blackwell GPUs, introduced in March 2024, are reported to be generally 25x more energy-efficient than traditional CPUs for certain AI and high-performance computing (HPC) workloads.
  • Nvidia technologies currently power 23 of the top 30 systems on the latest Green500 list.

Apart from these, however, there’s no clear net zero strategy outlined in the chipmaker’s report, only Nvidia’s greenhouse gas emissions.

The Environmental Footprint of AI and Chips

Some believe Nvidia is poised at the forefront of the AI boom. And as AI capabilities improve and expand, so does its need for energy to fuel its exponential rise.

Notably, the environmental impact of using chips is well-documented. Researchers from Lancaster University estimate that information and communications technologies, including data centers, contribute between 1.8% and 2.8% of global greenhouse gas emissions. 

The International Energy Agency predicts that the sector’s electricity consumption could double from 2022 to 2026, reaching 4% of global demand, equivalent to Japan’s current energy use. This rising demand has slowed the retirement of coal-fired power plants, according to Bloomberg.

Less understood is how to mitigate the energy and environmental impact of manufacturing advanced chips used in data centers and large AI models.

A chip’s carbon footprint spans its entire production chain, from mining essential metals to using 1000-degree Celsius ovens during fabrication, and its energy use throughout its lifespan.

chip carbon emission sources semiconductor environmental footprint

Advanced chips, which feature wires as thin as 10 nanometers (one-thousandth the diameter of a human hair), require high-energy photons with short wavelengths for fabrication. State-of-the-art lithography processes contribute significantly to the carbon footprint of modern computing.

In an analysis by Gage Hills, Assistant Professor of Electrical Engineering at Harvard John A. Paulson School of Engineering and Applied Sciences, the energy needed to manufacture a computer chip can surpass the amount it consumes over its entire 10-year lifespan. 

Great Power Comes Great Energy Demand

The excitement around AI has further intensified, alongside projections that global spending on AI will exceed $300 billion by 2027. This surge has reignited interest in renewable energy sources to address the soaring demand for power while keeping environmental impact in mind.

More remarkably, it thrust nuclear power into the spotlight as a viable, clean energy source capable of meeting the immense energy demands of making chips and AI infrastructure. The U.S. nuclear fleet would play a crucial role in meeting these rising power needs by 2030. 

  • In Texas alone, data centers have requested the equivalent energy output of 41 nuclear power plants to sustain their operations.

Silicon Valley giants such as Microsoft’s Bill Gates, Amazon’s Jeff Bezos, and numerous venture capital firms have invested in nuclear startups to support their data center operations. OpenAI’s CEO, Sam Altman, underscored the urgency, describing a “desperate need for as much energy as we can manufacture.”

Investors eyeing opportunities in AI typically focus on ETFs containing semiconductor, cloud computing, and cybersecurity firms. However, they also have huge interest in utilities operating nuclear power plants and shares linked to nuclear power generation and its fuel uranium.   

Nuclear power’s appeal lies in its ability to provide compact, reliable, weather-independent electricity through fission, making it ideal for powering AI data centers. This demand is boosting uranium prices worldwide as supply struggles to keep pace.

These developments promise to redefine nuclear energy’s role in the global energy landscape, potentially aiding in significant decarbonization efforts.

Nvidia becoming the world’s most valuable company is further lifting nuclear power up to match the energy demand of the chipmaking industry. Yet, the world is also waiting when, or if, Nvidia will share its net zero strategy.

Flying Green: Boeing’s Plan to Propel Aviation Towards Net Zero

Saptakee S
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Flying Green: Boeing’s Plan to Propel Aviation Towards Net Zero

Aviation is one of the most carbon-intensive sectors and is tough to decarbonize. It contributes approximately 2-3% of global CO2 emissions. With the sector projected to grow, addressing its environmental impact is more crucial than ever. Airlines and manufacturers increasingly invest in sustainable aviation fuels, electric and hybrid aircraft technology, and improved operational efficiencies. In this mission, Boeing has immensely supported commercial aviation’s path toward net zero carbon emissions. Notably, initiatives like Boeing’s “Cascade” underscore a collective commitment to a greener, more sustainable future for air travel.

The Latest Advances in Aviation Decarbonization

Global aviation, including passenger and freight flights, emits around 1BT of CO2 annually.

The aviation sector faces significant challenges in reducing emissions due to specific parameters like the weight and size of the aircraft, long innovation cycles, and safety issues. Key technologies like Sustainable Aviation Fuels (SAFs) remain costly and are not yet widely adopted. According to last year’s McKinsey analysis, many stakeholders across the aviation value chain have committed to sustainability goals, including emission reductions, SAF adoption targets, and membership in coalitions. Furthermore, The Science Based Targets initiative (SBTi) has emerged as a leading standard, with 25 airlines and aerospace companies setting science-based targets as of April 2023.

Image: CO2 emissions in aviation in the Net Zero Scenario, 2000-2030

Aviation CO2 emissionssource: IEA

Boeing Takes on Climate Change Challenges

Last year Boeing disclosed its Scope 3 emissions, which arise when customers use their products. This move is in response to investor and climate activist demands for transparency regarding companies’ efforts to minimize their environmental footprint.

Remarkably for the third time in 2022, Boeing achieved net-zero carbon emissions at manufacturing sites and in business travel. David L. Calhoun, CEO of Boeing envisions that in the era of more sustainable aerospace, there is anticipation to achieve it together.

The key highlights from the 2023 Sustainability report are: The strategy for Scope 1 and Scope 2 emissions supports a 1.5 degrees Celsius global warming scenario and global climate goals. Subsequently, aligning with the goals of the Paris Agreement.

Detailed Picture of Boeing’s operational target progress:

Boeingsource: Boeing

Harnessing Sustainable Aviation Fuel

The International Air Transport Association (IATA) projects that Sustainable Aviation Fuel (SAF) could provide approximately 65% of the emissions reduction necessary for aviation to achieve net zero CO2 emissions by 2050.

What is Sustainable Aviation Fuel?

Sustainable Aviation Fuel (SAF) is a liquid fuel used in commercial aviation that reduces CO2 emissions by up to 80%. It is derived from various sources including waste oil, fats, green and municipal waste, and non-food crops. SAF can also be produced synthetically by capturing carbon directly from the air. It uses feedstocks that do not compete with food crops, or water supplies, or contribute to forest degradation.

Unlike fossil fuels that release previously stored carbon into the atmosphere, SAF recycles CO2 absorbed by biomass during its lifecycle, reducing overall emissions.

Renewable energy, including SAF, green hydrogen, and batteries, plays a crucial role in reducing carbon emissions throughout Boeing’s operations and products. Boeing believes SAF is vital for decarbonizing aviation and advocates for a strategy that integrates multiple renewable energy solutions. This approach includes advancing the viability and safe implementation of various renewable energy carriers on aircraft.

  • It is collaborating with suppliers to ensure all commercial airplanes delivered by 2030 are compatible with 100% sustainable aviation fuel (SAF).
  • In 2022, the airliner purchased 5.6 million gallons (21.2 million liters) of blended SAF to support commercial operations.

Strategic Partnerships

Boeing and NASA continued their partnership to test SAF emissions, conducting tests on the 2022 Boeing ecoDemonstrator, which included a 777-200ER with Rolls-Royce Trent 800 engines and a 787-10 with GEnx-1B engines.

It launched the Cascade Climate Impact Model (Cascade) two years back. This web application utilizes global digital technical data to illustrate the environmental impact of different sustainable aviation options. It also offers stakeholders a data-driven tool to navigate decisions towards achieving the industry’s net-zero 2050 goal.

Ted Colbert, president and CEO of Boeing Defense, Space & Security

“We believe that operational effectiveness and sustainability are two sides of the same coin. A more sustainable, lower-cost, energy-efficient defense enterprise is more operationally effective. That’s why we have a history of partnering with our customers to pioneer the use of sustainable aviation fuels and are leveraging digital design and production to reduce our carbon footprint throughout the life cycle of our products.”

The air company aims to achieve 100% renewable energy in operations by 2030, reaching 35% renewable electricity in 2022 through increased usage and the purchase of renewable energy credits.

Is Boeing Facing the Turbulence Right Now?

However, lately, the top-notch airliner has been making news for the infamous, Boeing Scandal. The families of victims in two Boeing 737 Max crashes accused the company of the “deadliest corporate crime in US history”. They have urged the Justice Department to impose the maximum $24 billion fine in a potential criminal trial. As per the latest reports, Prosecutors have not yet finalized the proceedings. The Justice Department may require the aircraft maker to install an independent federal monitor for safety and quality oversight.

2024 is The Golden Era For Europe’s Renewable Energy: Here’s Why

Jennifer L
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2024 is The Golden Era For Europe’s Renewable Energy: Here’s Why

In 2024, Europe’s market for renewable power purchase agreements (PPAs) is poised for substantial growth. Moreover, major mergers and acquisitions (M&A) also happened in the region, targeting energy companies. These key developments indicate renewed investor interest in renewable energy after a slow first quarter. 

The Surge of High-Value European Green Energy Deals 

The year 2023 was the busiest and most dynamic period in Europe’s renewable energy power purchase agreement history. Yet, the market is now entering what experts dubbed its ‘Golden Era’.

Corporate buyers secured 21 TWh/year of green electricity from 10 GW of new projects in the first five months of 2024, maintaining a pace similar to 2023, according to S&P Global Commodity Insights. 

The number of deals increased to 145, compared to 94 in the same period of 2023, indicating more players entering the market. The growth was primarily driven by 10.2 TWh/year of wind PPAs in northern Europe and 7.5 TWh/year of solar PPAs, mainly in Spain.

For the same period, there were three major European M&As targeting energy companies. The largest deal involved US-based Energy Capital Partners acquiring British renewable energy firm Atlantica Sustainable Infrastructure, with a transaction value of €7.25 billion.

Energy Capital will purchase all Atlantica shares with Atlantica’s largest shareholder, Algonquin Power & Utilities, supporting the deal. The transaction is expected to close by early 2025, after which Atlantica will become privately held, delisting from public markets. 

The second-largest deal saw Canadian investor Brookfield Asset Management and co-investor Temasek proposing to acquire a majority stake in Neoen SA, an independent renewable energy producer. Neoen has about 8 GW in operation and under construction, plus 20 GW in development. 

M&A activity in Europe renewable electricity industry

After Brookfield’s Neoen bid announcement, JP Morgan analysts noted that investors appeared to be willing again to invest their money in green energy development pipelines. 

These high-value deals highlight a robust interest in renewable energy, underscoring the sector’s importance not just in Europe but in global energy strategies and investor portfolios.

Market Dynamics, Price Trends, and Regional Challenges

However, deal prices have declined due to lower electricity spot and forward prices, as S&P Global reported. 

Iberian capture prices reached record lows this spring, influenced by bearish fundamentals and increasing solar capacity. In Germany, May’s solar capture price dropped to its lowest since summer 2020, although forward contracts recovered, with the benchmark German year-ahead power contract rising almost 50% from its February lows.

Europe power prices

Spain and Italy face unique challenges. In Spain, despite strong corporate interest, volatile market conditions and high interest rates hindered PPA contracting. 

Insufficient grid capacity also posed challenges, a problem shared with Italy and Germany. In Italy, central permitting delays have slowed down project authorization, and restrictive auction systems further complicate the market.

Germany is expected to compete closely with Spain for PPA leadership in Europe. In the first five months of 2024, Germany signed 21 deals for 2 GW of capacity, focusing on utility-scale solar and offshore wind projects. 

Despite regulatory uncertainties, Germany’s large industrial base and tech sector drive PPA demand. New corporate sustainable reporting rules and mandatory datacenter requirements are additional demand drivers.

In the UK, the government-run contract for difference (CFD) auctions are highly attractive, potentially crowding out private sector deals. However, the ongoing Review of Electricity Market Arrangements (REMA) adds uncertainty, causing some market participants to pause activities.

Sectoral Shifts and New Opportunities

While Brookfield has the financial capacity for large-scale deals, few investors can match such substantial investments. Initially, oil majors were expected to be significant players in the renewable energy sector. 

However, the focus on energy security since Russia’s invasion of Ukraine has shifted their priorities. Recently, Norwegian state-owned power producer Statkraft AS completed a €1.8 billion acquisition of Spanish group Enerfín SA.

Additionally, several privately owned developers are anticipated to enter the market this year.

Market analysts project that this trend will continue as the cost for deploying renewables are falling significantly. As seen below, RMI data shows that costs drop by around 20% for every doubling of deployment.

renewable technology costs

Though tech companies remain the leading buyers of PPAs, but the consumer goods, industrial, chemicals, and utility sectors are also emerging as significant offtakers. The rise of artificial intelligence computing power creates new opportunities, with countries like the Nordics and Iberia seeing increased activity. 

Spain, in particular, is becoming a key hub for data centers due to favorable conditions like low prices, low taxes, and renewables access.

The reform of the EU’s electricity market aims to broaden access to PPAs, with government support crucial to make these PPAs financeable.

Overall, 2024 is shaping up to be a pivotal year for Europe’s green power deals, driven by increased corporate commitment to renewable energy, the same trend happening in the U.S., despite facing significant regional and market-specific challenges. 

Audi and Alfa Romeo Take The Ride to Electrification

Jennifer L
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Audi and Alfa Romeo Take The Ride to Electrification

Amid the rapid adoption of electrification, electric cars are reshaping the automotive industry, promising enhanced performance, efficiency, and a cleaner future. This momentum is seized by yet other big players in the vehicle industry, Audi and Alfa Romeo. Both have revealed their innovative electric car models: the 2025 Audi E-Tron GT and the Alfa Romeo Milano. 

Driving the Electrification Revolution

The electrification movement, driven by advancements in battery technology and supportive policies, underscores a pivotal shift toward sustainable transportation solutions.

According to the International Energy Agency (IEA), global electric car sales surged to nearly 14 million vehicles, with 95% of these sales occurring in China, Europe, and the United States in 2023. This marked a significant increase from previous years, totaling 3.5 million more electric cars sold compared to 2022, representing a remarkable 35% year-on-year growth. 

global EV sales 2016-2023

The total number of electric cars on the roads globally reached 40 million by the end of 2023, closely aligning with forecasts from the Global EV Outlook 2023.

The rapid adoption of electric vehicles (EVs) is underscored by the fact that in 2023, there were over 250,000 new electric car registrations per week, surpassing the entire annual total from a decade earlier in 2013. 

Furthermore, electric cars accounted for about 18% of all cars sold globally in 2023, up from 14% in 2022 and a mere 2% in 2018. This highlights the robust growth and maturation of the electric vehicle market.

This trend underscores the increasing preference for EVs, driven by battery technology advancements, expanding charging infrastructure, and supportive policies. All these aimed at reducing emissions and promoting sustainable transportation solutions.

In another report by RMI, transportation will keep pace with other sectors in electrification by 2050.

electrification in transport

Riding along this electrification trend are Audi and Alfa Romeo, which both revealed their latest EV models. 

Meet The Most Powerful Audi Ever

The 2025 Audi E-Tron GT has received a significant update following its Porsche Taycan counterpart earlier this year. Available in three variants, this electric sedan boasts enhanced power, charging speeds, and range. 

The flagship RS E-Tron GT Performance emerges as Audi’s most powerful production vehicle ever, delivering 912 horsepower and accelerating from 0 to 62 mph in just 2.5 seconds, slightly slower than the Taycan Turbo GT.

All models feature dual-motor all-wheel drive and benefit from an upgraded battery pack, now with 97.0 kWh capacity (up from 84.0 kWh), supporting a 320 kW maximum charging power. Charging from 10% to 80% takes 18 minutes under optimal conditions, providing 174 miles of range in just 10 minutes.

Introducing Alfa Romeo’s First Electric Car 

The Alfa Romeo Milano, a new small SUV under the Stellantis group, marks Alfa Romeo’s debut in electric vehicles (BEV) alongside a hybrid version. It aims to enhance sales within the expansive Stellantis portfolio, which includes Fiat, Jeep, Peugeot, and Vauxhall. 

The Milano showcases Italian design flair with a compact silhouette and distinctive features such as the ‘scudetto’ grille and advanced LED headlights. It stands 4.1m long, 1.5m tall, with short overhangs and a truncated rear reminiscent of the Sixties Giulia TZ. 

Built on the eCMP platform, it offers up to 238bhp from its electric motor and boasts a range of about 250 miles.

Alfa Romeo’s transition to electric power is crucial in reducing carbon emissions from vehicles, aligning with global efforts to mitigate environmental impact and promote sustainable transportation solutions.

How Clean is An EV vs. A Fossil Fuel Car?

A research done by the European Energy Agency suggested that EVs emit up to 30% less carbon than gas- or diesel-powered cars. Moreover, electricity sourced from clean energy or low-carbon sources further lowers the environmental impact of EVs.

Additionally, a Reuters analysis revealed that in worst case scenario (EV is charged from a coal-fired power source), an EV would release 4.1 million grams of CO2 a year. In contrast, a comparable gas car can generate over 4.6 million grams.

carbon emission of electric vehicle vs gas car

Accelerating EV Adoption in the United States

The United States saw robust growth in new electric car registrations last year, totaling 1.4 million vehicles—an increase of over 40% compared to 2022, per IEA data.

Although the year-over-year growth rate was slightly lower than in the preceding years, the demand for EVs remained strong. This is supported by revised qualifications for the Clean Vehicle Tax Credit and price reductions across popular EV models.

The updated criteria under the Inflation Reduction Act (IRA) played a pivotal role in boosting sales. Notably, the Tesla Model Y’s sales surged by 50% in 2023 after it became eligible for the full $7,500 tax credit. 

Despite initial concerns about potential bottlenecks due to stricter domestic content requirements for EV and battery manufacturing, vehicles like the Ford F-150 Lightning were able to navigate these challenges.

Looking ahead, the number of new EV models reaching the market is poised to accelerate. BloombergNEF projects that EVs could reach 45% of global passenger-vehicle sales by 2030 and 73% by 2040. 

global long-term EV sales by market 2040

These trends speak of the continued expansion of electric vehicle adoption in the US and beyond, underscoring the resilience of the EV market despite evolving regulatory landscapes and changing incentives. As the window for reaching net zero emissions in transportation is closing quickly, EVs remain the most cost-effective route to decarbonize the sector.

Is the EV Market’s Momentum Slowing?

Jennifer L
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Is the EV Market’s Momentum Slowing?

Bloomberg Outlook 2024

According to the Bloomberg EV Outlook Report, the global electric vehicle (EV) market in 2024 shows varied progress across different regions and segments. Most notably, while overall EV sales are increasing, some markets are slowing, and many automakers have delayed their EV targets. 

We crunched the report and have the following key takeaways, crucial for everyone interested in the industry to know.

Which Regions Are Charging Ahead in EV Sales?

The EV sales growth slowdown varies globally. China, India, and France continue to see healthy growth, while Germany, Italy, and the US face challenges. Meanwhile, Japan’s market is hampered by a lack of EV commitment from major carmakers and no new mini-car models. 

EV sales YoY Q1 2024 Bloomberg outlook

Despite the slowdown, global growth in 2024 aligns with BNEF’s forecasts. Some automakers have reduced their electrification targets, citing high production costs, while others, like Kia and Volvo, show strong results.

  • Kia aims for 1.6 million EV sales by 2030 and plans to launch an affordable EV3 SUV. Remarkably, Volvo’s EV sales surged 53% in April 2024, driven by the EX30 model.

BNEF projects that global passenger EV sales will grow, though at a slower pace, rising from 13.9 million in 2023 to over 30 million by 2027. The annual growth rate will average 21%, down from 61% between 2020 and 2023. 

By 2027, EVs will comprise 33% of global new passenger vehicle sales, with China and Europe leading at 60% and 41%, respectively. 

global passenger EV sales by market 2027

The Nordics will reach 90%, while Germany, the UK, and France exceed 40%. The US will see 29% EV sales, slowed by election-related uncertainties. Japan lags behind, but emerging economies like Brazil and India will experience rapid growth. 

Overall, the global EV fleet will expand to over 132 million by 2027, up from 41 million in 2023.

  • The long-term market outlook for electric vehicles is positive despite near-term challenges. 

Economic improvements are expected to drive continued growth, with EVs reaching 45% of global passenger vehicle sales by 2030 and 73% by 2040. However, Southeast Asia, India, and Brazil will lag behind the global average and require stronger regulatory support.

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Decarbonizing Commercial Vehicles

When it comes to decarbonizing commercial vehicles, including vans, trucks, and buses, electrification is also accelerating. 

Electric light-duty delivery vans and trucks are quickly gaining market share in China, South Korea, and parts of Europe, while the US still lags. As seen below, the global e-van market will near one-third of sales by 2030, reaching two-thirds by 2040. 

electric and fuel cell commercial vehicles

Electric heavy trucks will become economically viable for most uses by 2030, with initial adoption in urban areas and later expansion to long-haul routes. 

On the other hand, fuel cell trucks will remain viable for some applications, though their future is less certain. Zero-emission trucks will make up 18% of global sales by 2030 and 43% by 2040.

Who Will Drive the Future of Electric Trucks?

New environmental policies in Europe and the US will drive the adoption of electric and fuel-cell trucks. EU CO2 targets suggest high electrification rates by 2030. For instance, municipal buses are rapidly electrifying, expected to exceed 60% of sales by 2030 and 83% by 2040. 

However, global road transport is not yet on a net zero trajectory, and protectionist policies could hinder progress. To achieve zero emissions by 2050, combustion vehicle sales must end by around 2038, with leading markets phasing out earlier, per BNEF analysis. 

The Nordic countries are the only ones projected to fully phase out combustion vehicles before 2038 in the Economic Transition Scenario (ETS). Therefore, governments need to balance industrial strategies with maintaining competition and affordability in the EV market. Stronger regulatory pushes are necessary to bridge the gap between the Economic Transition Scenario and the Net Zero Scenario.

road transport toward net zero scenario

  • Significant spending is required for both scenarios. 

The cumulative value of EV sales across all segments will reach $9 trillion by 2030 and $63 trillion by 2050 in the Economic Transition Scenario. In the Net Zero Scenario, this value jumps to over $98 trillion by 2050. 

Governments are fiercely competing to develop local supply chains, with EVs and batteries remaining central to industrial policies for decades.

How Lithium Batteries Are Revolutionizing the EV Market

Lithium-iron-phosphate (LFP) batteries are dominating the EV market, reducing the need for metals like nickel and manganese. Competitive pricing is driving improvements in LFP technology, including super-fast charging, cold temperature performance, and higher energy densities. 

Lithium iron phosphate taking over the EV market

LFP is projected to capture over 50% of the global passenger EV market within two years, particularly in China, where many LFP cell manufacturers are based. This shift results in lower-than-expected consumption of nickel and manganese, with 2025 estimates for nickel at 517,000 metric tons and manganese at 131,000 metric tons.

lithium ion batteries under Net Zero scenario

Plug-in hybrids (PHEVs) are experiencing a resurgence, driven mainly by China, which became the largest PHEV market in 2022. The average electric range of PHEVs reached 80 km in 2023, with some models in China exceeding 100 km. 

Chinese PHEV battery packs are nearly twice the size of those in the US and Europe, often designed to meet fuel economy regulations. While PHEVs are seen as a bridge to a zero-emission future, their effectiveness is questionable. If they replace BEVs and aren’t fully utilized in electric mode, they could increase oil demand, undermining their environmental benefits.

PHEV is back

Charging into the Future: What Does a Fully Electric Fleet Mean?

A fully electric vehicle global fleet could consume twice the electricity the US did in 2023, per BNEF market outlook. By 2050, in the Net Zero Scenario, an all-electric vehicle fleet will require about 8,313 TWh of electricity, double the US’s 2023 consumption. 

Despite the increase, EVs can support energy system electrification through smart charging and flexible pricing. The EV charging industry must rapidly mature, requiring $1.6 to $2.5 trillion in infrastructure, installation, and maintenance investment by 2050. 

The adoption of EVs and electrification of commercial vehicles are on the rise, driven by new policies and technological advancements in battery technology. However, significant investments in infrastructure and regulatory support are crucial to sustain this momentum and achieve long-term environmental goals.

Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

Jennifer L
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Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

Microsoft has entered into a groundbreaking agreement with BTG Pactual Timberland Investment Group (TIG), committing to provide 8 million carbon removal credits, marking the largest carbon dioxide removal transaction on record. 

In a separate deal, Microsoft also agreed to buy 40,000 agricultural soil carbon credits from Indigo Ag. It’s also the largest-ever purchase of an individual buyer from the ag company.

A Landmark Carbon Offset Agreement

Carbon offsets allow companies to compensate for some of their greenhouse gas emissions by funding projects that reduce emissions elsewhere. Each carbon offset credit corresponds to reducing one tonne of CO2 emissions and can be applied toward reaching corporate climate targets.

Last year, companies retired or used almost 180 million metric tonnes of CO2 equivalent in their climate commitments. 

voluntary carbon credit retired and issued 2023

The agreement between TIG and Microsoft involves the provision of up to 8 million nature-based carbon removal credits by 2043. Data from MSCI Carbon Markets confirms this as the largest transaction of its kind. 

The credits are part of TIG’s extensive reforestation and restoration strategy in Latin America. It involves a $1 billion initiative designed to conserve and restore deforested areas, including the crucial Cerrado biome in Brazil. 

The strategy aims to restore 135,000 hectares of natural forests and develop sustainable commercial tree farms on an additional 135,000 hectares.

TIG has already made significant progress, investing in 37,000 hectares, planting over 7 million seedlings, and beginning the restoration of 2,600 hectares of natural forest. 

Gerrity Lansing, Head of TIG, highlighted the importance of this groundbreaking carbon offset deal, saying:

“Institutional investors have a critical role to play in delivering nature-based solutions at a scale that matters for climate and biodiversity. The scale of the native forest restoration and sustainable timber production that TIG seeks to deliver with our reforestation strategy is what enables a carbon removal credit transaction of this size.”


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Microsoft’s Unwavering Support for Carbon Removal

Dr. M. Sanjayan, Conservation International CEO, emphasized that Microsoft’s commitment demonstrates the possibility of balancing ecological restoration with economic productivity. 

The transaction aligns with Microsoft’s ambitious goal to be carbon-negative by 2030 and to remove all historical emissions by 2050. The tech giant aims to eliminate its Scope 1 and 2 emissions through various means, including:

  • Increasing energy efficiency, 
  • Decarbonizing its operations, and 
  • Achieving 100% renewable energy by 2025. 

The company achieved a 6% reduction in its Scope 1 and 2 emissions from the 2020 baseline year. 

Microsoft 2030 carbon negative goal
Source: Microsoft website

However, the Scope 3 (value chain emissions) sources account for over 96% of Microsoft’s total emissions. The majority of these emissions come from purchased goods and services, capital goods, downstream, and the use of sold products. Reducing value chain emissions involves investing in large-scale, high-quality carbon removal projects. 

Brian Marrs, Senior Director for Energy & Carbon Removal at Microsoft, noted that achieving these goals requires innovative projects that can scale carbon removal swiftly and sustainably. He highlighted that this nature-based project exemplifies how such efforts can deliver significant carbon removal while restoring vital ecosystems.

In a related effort, Microsoft recently purchased 970,000 forest carbon removal credits from Anew Climate, further demonstrating its commitment to large-scale carbon removal projects.

The carbon credits under Anew agreement will come from improved forest management (IFM) projects across forestlands owned by Aurora Sustainable Lands, Acadian Timber Corp., and Baskahegan Company. IFM projects offer benefits such as avoiding net carbon emissions and removing carbon from the atmosphere. 

The Anew projects will create registry-recognized carbon removal credits generated from tree growth within its forestry portfolio.

Additionally, Microsoft, alongside Google, Meta, and Salesforce, has launched a 20-million-ton advance market commitment (AMC) collaboration to support the development and expansion of the nature-based carbon removal market.

Advancing Soil Carbon Removals

Most recently, Microsoft has agreed to purchase 40,000 agricultural soil-based carbon credits from Indigo Ag’s third carbon crop. This transaction marks the largest number of credits ever delivered by Indigo Ag to a single buyer.

These soil-based credits are verified and issued by the Soil Enrichment Protocol of the Climate Action Reserve, one of the world’s most trusted independent carbon registries.

Microsoft has chosen Indigo Ag’s carbon program to introduce soil carbon removals into its climate action portfolio. This agreement highlights the demand for robust, science-backed agriculture soil-based credits and their critical role in climate action, reflecting the increasing maturity of the voluntary carbon market.

Indigo Ag’s Carbon program is supported by the company’s scientifically peer-reviewed measurement, reporting, and verification (MRV) capabilities, ensuring the robustness, integrity, and durability of credits. This enables growers to realize the value of adopting and sustaining new practices that generate these credits.

how Indigo ag carbon farming program works
Indigo Ag Carbon Program

Beyond its carbon program, Indigo Ag deploys its MRV capabilities to help companies in the agri-food value chain reduce their Scope 3 emissions. It can also help them produce low carbon intensity crop feedstocks for biofuels.

To date, Indigo’s Sustainability Solutions have reduced and removed over 340,000 tons of GHG emissions and saved over 19 billion gallons of water used in agriculture.

Dean Banks, CEO of Indigo Ag, remarked:

“Today’s announcement is a major milestone for Indigo’s Carbon program and our increasing range of ag-based sustainability solutions. Microsoft is a leader in corporate climate action, a highly influential player in carbon removals and shares our commitment to support the transition to a more resilient and sustainable agriculture system.”

The landmark transactions between Microsoft and TIG as well as Indigo Ag underscore the potential for significant climate action through nature-based solutions. By advancing carbon removal at scale, Microsoft is paving the way for a more sustainable and low-carbon future.

Adani Group Powers Up USD$100B Boost for Green Energy Revolution

Saptakee S
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Adani Group Powers Up USD$100B Boost for Green Energy Revolution

In a big move, Adani Group’s chairman Mr. Gautam Adani announced an investment of over USD 100B (around Rs 8,340 crore) in green energy transition projects and manufacturing capabilities on June 19th.

Adani Group revealed its ambitious plan at the “Infrastructure – the Catalyst for India’s Future” event hosted by Crisil (an S&P Global Company). The visionary himself unveiled plans to develop solar parks and wind farms. However, constructing cutting-edge infrastructure to manufacture electrolyzers for green hydrogen, wind turbines, and solar panels will be the prime goal of this ambitious project.

Mr. Gautam Adani said,

“The next decade will see us invest more than USD 100 billion in the energy transition space and further expand our integrated renewable energy value chain that today already spans the manufacturing of every major component required for green energy generation,” he said.

Adani’s Vision: Green Hydrogen as the Key to India’s Sustainable Future

Green hydrogen, which is made by splitting hydrogen from water with the help of electrolyzers powered by clean energy is poised to be a game-changer for decarbonizing industry and transportation.

Mr. Adani hails green hydrogen as the ultimate source of dense green energy.

green hydrogen adanisource: Adani

In the fight against climate change, renewable energy production is surging. It’s also becoming cheaper as capacities rise and costs fall. This trend has significant implications for green hydrogen production. Adani is confident in overcoming challenges and envisions a hydrogen-driven revolution that will transform and energize India at lower costs. Most significantly, it aligns with the government’s ‘National Hydrogen Mission,’ a crucial part of India’s alternative energy portfolio.

Image: Adani’s net zero pathway

adani net zerosource: Adani ESG report

From a blog post of the Adani group, we discovered that Mr. Adani described clean hydrogen production as the “key link” that could make India an “exporter of green energy,” a prospect unimaginable just five years ago. He believes staunchly that abundant green power will help India achieve its net zero goals and support economic growth, especially in rural areas. Based on this evaluation, he noted that,

“The integration of renewable energy, green fuels, and technologies like AI will drive India toward becoming a $28 trillion economy by 2050.”

Adani Group aims to produce the world’s least expensive green hydrogen.

It will serve as a feedstock for multiple sectors to achieve sustainability targets. He further unveiled that,

“To make this happen, we are already constructing the world’s largest single-site renewable energy park at Khavda in Gujarat’s Kutch region. This single site will generate 30 GW of power, bringing our total renewable energy capacity to 50 GW by 2030,”

Adanisource: Adani

Some notable environmental impacts of Adani’s historic green hydrogen mission evaluated by the man himself will be:

  • Massive boost to global energy transition market which is expected to grow from $3 trillion in 2023 to $6 trillion by 2030 and double every 10 years until 2050.
  • Achieve India’s target to install 500 GW of renewable energy capacity by 2030. It requires annual investments of over $150 billion.

Mr. Gautam Adani stated that the transition to green energy in India is expected to create millions of new jobs across sectors like solar and wind energy, energy storage, hydrogen, EV charging stations, and grid infrastructure development. This is a bonus to controlling GHG emissions.

Pioneering Green Energy Solutions with Adani New Industries Ltd. (ANIL)

Adani New Industries Ltd. (ANIL), a subsidiary of Adani Enterprise Limited, is spearheading a modern, integrated green energy platform focused on green hydrogen. This ambitious initiative aims to establish a comprehensive ecosystem powered by low-cost renewable energy.

ANIL plans to invest USD 50 billion over the next decade to scale up green hydrogen production.

  • It plans to start with an initial phase targeting 1MMTPA and aiming to lower production costs to less than USD 2/kg.

The company is also developing in-house electrolyzer technology with a projected annual capacity of up to 5 GW, underscoring its commitment to clean energy transition and decarbonization.

Adani integrates green hydrogen across its portfolio, driving initiatives like the production of green ammonia, urea, and methanol.

These efforts include building infrastructure for green hydrogen compression, storage, and synthesizers for downstream products like ammonia-urea-methanol. Adani aims to leverage its proprietary manufacturing capabilities to deliver competitive green hydrogen solutions.

“Data is the New Oil”, says Gautam Adani 

Integrating AI and Renewable Energy

The Adani Group has developed outstanding national assets that contribute significantly to India’s economic growth and create exceptional value for its stakeholders.

He emphasized that data is the “new oil” of digital infrastructure. From his viewpoint, data centers have the most critical infrastructure. They power all computational needs, especially AI workloads such as machine learning algorithms, natural language processing, computer vision, and deep learning. However, this requires massive amounts of energy, making data centers one of the largest energy-consuming industries in the world.

  • Consequently, it also makes the energy transition more complex, raising electricity prices, which are already high due to climate change and demand growth.

He added that the infrastructure for energy transition and digital transformation is now inseparable, with the technology sector becoming the largest consumer of valuable green electrons.

Adani

source: Adani

With a massive investment plan in green hydrogen, one can foresee Adani Group positioning itself as a pivotal player in the global shift towards sustainable energy solutions and a low-carbon future.

EU’s Latest Carbon Border Tax Sparks Concerns for British Green Energy

Saptakee S
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EU’s Latest Carbon Border Tax Sparks Concerns for British Green Energy

The European Union’s (EU) upcoming carbon border tax is causing waves of anxiety among British green energy producers. As per the new directive, “British wind and solar farms exporting power to continental Europe from 2026 could face CO2 fees, despite producing no emissions, unless the UK and EU agree to amend the carbon border tax.”

Thus, industry leaders fear that this new policy could penalize the UK’s green energy sector. They are apprehensive that their efforts to combat climate change could be undermined, potentially disrupting trade relationships.

What is the Carbon Border Tax?

The EU’s carbon border tax, officially known as the Carbon Border Adjustment Mechanism (CBAM), is designed to prevent “carbon leakage”. This happens when companies shift production to countries with weaker climate regulations, thereby undermining global efforts to reduce emissions. The tax aims to level the playing field by imposing fees on imported goods from countries with less stringent climate policies.

Will the EU CBAM Impact British Renewable Exports?

A few days ago, Reuters reported that industry experts revealed how charges outlined in a little-known clause of the CO2 levy law could impact the revenues of renewable energy projects in the UK. This could further add to already-high EU power prices and even lead to higher emissions.

Andy Berman, deputy director of the industry group Energy UK pointed out that it’s a two-way problem. She added,

“(It) disincentivizes clean power in the UK at the moment in which we’re trying to ramp up the provision of clean power, and it’s going to increase (power) prices in northern Europe.”

Catherine Stewart, the UK Treasury’s deputy director for trade policy also expressed her views on EU’s tax policy by stating,

“It is an issue that we are conscious of and one that we have raised, that the UK has raised, with the EU.”

Despite the UK’s commitment to reducing emissions and its robust green energy sector, industry leaders fear that the carbon border tax might negatively impact British companies. The concern is that the tax will be applied to all imports, regardless of the exporting country’s green credentials and carbon footprint.

EUsource: Carbon Border Adjustment Mechanism – European Commission (Europa.eu)

Let’s elaborate on the potential impact on the renewable industry and trade relations at large.

Economic Feasibility at Risk

Analysts warn that the additional costs could render it “uneconomic” to export surplus clean power from Britain to Europe, especially during periods of low demand, high renewable generation, and low power prices.

Aurora Energy Research’s analysis, shared with Reuters, indicates:  

  • Up to 3 GWh of renewable power could be curtailed by 2030 if the fee discourages exports. This capacity is enough to supply 2,000 homes annually.
  • Adding a tax on exports essentially reduces the profit margin every time exports occur. By 2030, the carbon border fee could reduce the revenue British renewable projects earn for their power by 5%.

The research firm highlighted key facts about the renewable capacity buildout based on government policy and market forces.

1. Increasing power demand

Europe aims to decarbonize and achieve Net Zero emissions by 2050, primarily by electrifying its economy and expanding renewable energy to cut emissions. Growing demand for Power Purchase Agreements (PPAs) boosts investment in renewables. Enhanced energy efficiency lowers power demand.

2. Strong policy support and Government ambition

Government ambition pushes deploying renewables and robust policy support fosters investor confidence. Sudden policy changes or lack of support can harm investor confidence in renewables within a country.

3. Rising fuel and carbon prices

High gas prices have led to a switch back to coal generation. New market players have increased speculation and volatility, a trend expected to continue. Independent Commodity Intelligence Services (ICIS) estimates carbon prices will reach €90 per tonne by 2030.

4. Phase-out of thermal capacity

As Europe phases out coal and older, unabated gas assets to meet decarbonization goals, it creates opportunities for low-carbon alternatives to meet rising power demand. The retirement of thermal capacity strains system requirements like frequency and voltage control, which cannot be fully met by renewables alone.

Impact on Wholesale Prices and Emissions

Market Screener has reported two interesting analyses:

Aurora Research: The company analyzed the consequence of the reduction in cheap British electricity exports. It can potentially spike wholesale power prices by up to 4% in markets like Ireland and Northern Ireland which rely heavily on UK imports.

AFRY Services: The research firm indicated that if European countries increase coal and gas power generation to cover the shortfall, CO2 emissions could rise by 13 million tonnes annually. This increase is equivalent to the emissions of 8 million cars.

The figure shows that: Failure to remove renewables barriers leads to 80% higher CO2 price in 2030 significantly raising wholesale electricity prices for European industry & consumers.

EU CBAMsources: Aurora Energy Research, EIKON, S&P

Can Renewable Exports Avoid CO2 Fees?

A European Commission spokesperson stated that renewable power exports could avoid CO2 fees if they meet specific criteria and prove their origin. However, industry experts argue this is challenging. They assume that most electricity traded across interconnectors is anonymous, making it difficult to calculate the carbon content.

They have also voiced concerns, stating the tax penalizes sectors leading the fight against climate change. RenewableUK stressed the need for a system that rewards green energy credentials without unnecessary barriers. They called for policies that consider the actual carbon footprint of imports rather than applying a blanket approach.

Linking Carbon Markets: A Viable Solution

One potential solution is linking the EU and UK carbon markets, which would exempt UK power producers from the tax. 

Alistair McGirr, SSE’s Group Head of Policy and Advocacy noted,  

“Linking the carbon markets could prevent UK exporters from paying a tax to the EU that could otherwise benefit the UK budget.”

Despite this suggestion, neither Brussels nor London has shown enthusiasm for the idea.

Former UK climate change minister Graham Stuart also spoke in favor of linking carbon markets that could be explored under the post-Brexit Trade and Cooperation Agreement. The European Commission spokesperson added that the EU is open to linking its carbon market with others, but it “must stem from a mutual wish from both parties.”

Green Enhancing, Not Green Washing: Bolstering EU’s Carbon Markets

We discovered a significant aspect of tax implication on industry and consumers from the latest press release of the Council of EU.

Notably, the Council adopted its position on the Green Claims Directive to tackle greenwashing and help consumers make informed greener choices. The directive sets minimum requirements for substantiating, communicating, and verifying environmental claims. This move follows a 2020 study revealing that over half of environmental claims are vague, misleading, or unfounded. Thus, reliable, comparable, and verifiable claims are essential for informed consumer decisions.

Alain Maron, Minister of the Government of the Brussels-Capital Region, responsible for climate change, environment, energy, and participatory democracy has commented on this move, 

“Today, we reached an important agreement to fight greenwashing by setting rules on clear, sufficient and evidence-based information on the environmental characteristics of products and services. Our aim is to help European citizens to make well-founded green choices.”

Organizations like Anew Climate, Rubicon Carbon, and others, hailed the EU’s progress on the Green Claims Directive (GCD) but called for further action to ensure it supports transparent and credible green claims, vital for achieving net zero. Key recommendations include:

  • Reliable Green Claims: Ensure claims are reliable, comparable, and verifiable across the EU to prevent greenwashing.
  • Simplified Framework: Avoid unnecessary administrative burdens and support the use of all types of carbon credits, not just EU-originated removal credits.
  • Uniformity in Standards: Align with existing frameworks like the CRCF and ICVCM to avoid overlap and enhance international consistency.

They collectively believe adopting these measures will boost voluntary private-sector investment in climate mitigation. It would also advance the Green Deal and strengthen Europe’s competitive market.

CBAMsource: EU-CBAM

This analysis emphasizes the need for dialogue between UK and EU policymakers to ensure the tax does not sabotage the global fight against climate change. Furthermore, a balanced approach is crucial for British Green Energy to recognize its efforts while minimizing trade disruption. Overall, the future of UK-EU trade and the global climate agenda hinges on achieving this equilibrium.

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