C-Capture’s Innovative Carbon Capture Solution: A Game-Changer for the Cement Industry

Saptakee S
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C-Capture’s Innovative Carbon Capture Solution: A Game-Changer for the Cement Industry

C-Capture, the UK-based pioneer in carbon capture solutions, has initiated testing on a novel technology to reduce carbon emissions from cement production. This is undoubtedly an exciting development for the cement industry marking their ongoing efforts to mitigate its environmental impact and contribute to global decarbonization.

Notably, as part of the XLR8 CCS project, C-Capture, and Wood, a top-tier engineering firm in the UK, have designed and installed a new Carbon Capture solvent compatibility unit (CCSCU). XLR8 CCS project exclusively targets the “hard to abate” industries. Currently, it is operating at the Heidelberg Materials cement plant at Ketton, Lincolnshire, UK.

Unleashing C-Capture’s Next-Gen Carbon Capture Technology for Cement

C-Capture mentions concrete as the second most used material on Earth after water. Three tonnes of concrete are used annually per person worldwide. Cement, made from clinker and gypsum is the main component of all construction works. 

Tom White, CEO of C-Capture said: 

“Decarbonising industry is one of the most pressing global issues. C-Capture’s XLR8 CCS project is a critical step in the race to net zero as we work with our innovative technology and leading industry partners to demonstrate that an affordable carbon capture solution is a reality – even for industries that are difficult to decarbonize.”

  • The cement industry produces 4 Gt of cement annually, generating 1.5-2.2 Gt of CO2 emissions, about 5% of the global total.

It needs to decarbonize because: Clinker manufacturing uses coal or natural gas-fired kilns to heat limestone (CaCO3), emitting large volumes of CO2 to form lime (CaO). 

The World Business Council for Sustainable Development estimates that by 2050, the cement industry must reduce CO2 emissions by 0.5 Gt annually to keep global warming within 2 °C above pre-industrial levels.

cementSubsequently, C-Capture’s hallmark CC technology, now being tested will effectively remove CO2 from the flue gas emissions produced during cement manufacturing. This unit will illustrate the effectiveness and durability of the technology in practical scenarios.

(*Flue gases are the gases released to the atmosphere from exhaust pipes of heavy industries.)

Innovative Chemistry for a Greener Solution

C-Capture’s technology utilizes a fundamentally different chemistry, unlike other commercially available carbon capture methods. It does not rely on amines and is nitrogen-free. This technology offers a lower-cost and environment-friendly solution, the end product can be renewable fuel like biomethane. Additionally, it is extremely robust and capable of withstanding the challenging flue gases produced by the heavy sectors.

XLR8 CCS Project: A Multi-Industry Initiative

The XLR8 CCS project is showcasing the compatibility of C-Capture’s carbon capture technology across three difficult-to-decarbonize industries: energy from waste (EfW), cement, and glass. The project would conduct six carbon capture trials within these sectors.

Wide Deployment Across Industry Partners

CCSCUs are being deployed at sites owned by project partners including Heidelberg Materials, Energy Works Hull, Glass Futures, and Pilkington UK (part of NSG Group). The success of this project will position C-Capture and its partners to deploy commercial-scale carbon capture facilities across these industries by 2030, potentially capturing millions of tonnes of CO2 per year.

Major Funding Injection Supercharges C-Capture’s Carbon Capture Project

The UK Department of Energy Security and Net Zero awarded a £1.7 million grant to XLR8 CCS from its £1 billion Net Zero Innovation Portfolio. Private sector contributions brought the total funding to £2.7 million.

This funding comes from the £20 million Carbon Capture, Usage and Storage (CCUS) Innovation 2.0 program, which aims to accelerate the deployment of next-generation CCUS technology in the UK.

Simon Willis, CEO, of Heidelberg Materials UK has emphasized deeply the urgency to decarbonize the toughest sectors. He noted,

 “Carbon capture is a critical part of our strategy to decarbonize cement production and essential if we are to reach net zero and help our customers achieve their own decarbonization goals.”

He also envisions developing new technologies and partnerships, exemplifying C-Capture’s dedication. The Heidelberg group will roll out this technology at other sites if the first run becomes successful. 

Roadmap to 2030: Strategies for Curbing Cement Emissions

Reducing CO2 emissions while meeting cement demand will be challenging. Since 2015, the emissions from cement production surged to ~ 10%, primarily due to the high clinker-to-cement ratio within China. Therefore, curbing emissions approximately by 20% by 2030 will significantly depend on: 

  • Adopting CCUS technologies
  • Using environment-friendly raw materials
  • Improving energy and material efficiency 
  • Using low-emissions fuels 

cement

cement

source: IEA

Direct emissions intensity of cement production in the Net Zero Scenario, 2015-2030

cementSources: IEA calculations, including inputs from GCCA Statistics and other sources.

Like C-Capture, many industries are also revolutionizing their cement production techniques. It distinctly shows a gradual decline in CO2 emissions from the cement industry in the coming years (2030), thus enhancing the net zero transition. 

Google, Meta, Microsoft, and Salesforce Launch “Symbiosis”, Pledging for 20M Tons of Nature-Based CDR Credits

Jennifer L
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Google, Meta, Microsoft, and Salesforce Launch “Symbiosis”, Pledging for 20M Tons of Nature-Based CDR Credits

Tech giants including Google, Meta, Microsoft, and Salesforce have announced the formation of the Symbiosis Coalition, a significant advance market commitment (AMC) aimed at purchasing nature-based carbon removal credits in the voluntary carbon market. 

Collectively, these companies plan to contract up to 20 million tons of high-certainty impact nature-based carbon removal credits by 2030. This commitment emphasizes equitable outcomes for the communities involved in these projects.

Nature Restoration: A New Standard for Carbon Removal

Nature restoration is essential for meeting climate goals but is complex and costly. Effective projects need advanced technology, equitable community engagement, and balanced environmental benefits. 

Moreover, the market for nature-based carbon removal struggles due to perceived quality issues and uncertain investor willingness, affecting public trust. 

The Symbiosis Coalition members aim to address these challenges by signing long-term agreements for high-quality projects that use conservative climate impact assumptions, best practices, and fair compensation for Indigenous Peoples and local communities. By signaling strong demand and willingness to pay, they hope to set clear standards and promote more successful restoration projects.

Julia Strong, Executive Director of Symbiosis, highlighted that: 

“Symbiosis represents a steadfast commitment to the importance of nature to climate action and the role of carbon markets, when done right, to financing critical climate solutions…Symbiosis sends a strong signal to project developers that buyers are willing to pay what it takes for high-quality projects that benefit the environment and local communities.” 

Objectives and Strategy of the Symbiosis Coalition

Google, Meta, Microsoft, and Salesforce, and other Coalition members seek to achieve several key objectives:

  • High-Quality Carbon Removal Projects: By ensuring a strong demand signal and committing to pay the true cost of developing high-quality carbon removal projects, Symbiosis aims to set a standard for effective and equitable restoration projects.
  • Collaborative Partnerships: The coalition intends to work with investors, NGOs, market standard setters, and project developers to define and promote high-quality restoration practices.
  • Market Clarification and Development: By partnering with like-minded entities, Symbiosis aims to clarify what constitutes “good” restoration and enable the implementation of more projects that meet these standards.

Recent research by Carbon Direct, supported by Meta, emphasized that forming a “buyers club” focused on ecological restoration is crucial for ensuring quality and credibility in nature-based projects. Symbiosis has drawn inspiration and lessons from initiatives like Frontier, LEAF, and other AMCs to shape their strategy for the nature-based carbon removals market.

Filling the Investment Gap for Nature-Based Solutions

While acknowledging the necessity to reduce their own emissions, the companies involved in the Symbiosis Coalition recognize the importance of a robust carbon market and nature-based solutions in addressing climate change. The coalition’s approach is aligned with the insights from a recent McKinsey analysis.

The researchers indicated that carbon dioxide removal requires $6 trillion – $16 trillion in investment by 2050 to meet net zero targets.

carbon removal investment requirement for net zero by 2050

Despite the urgent need for significant investment in carbon removals, only about $15 billion has been invested in such initiatives to date, highlighting a substantial under-investment in ecosystem protection and restoration. 

Projections indicate that the gap between the estimated investment and the necessary funding by 2030 to ensure CDR is on track to meet 2050 targets ranges between $400 billion and $1.6 trillion.

The Coalition aims to address this gap by providing the necessary financial support and market incentives to scale up high-integrity nature-based solutions.

Symbiosis will complement other critical, climate-focused advance market commitments (AMCs) that encourage investment in forest protection at the jurisdictional level and aim to scale the market for engineered carbon removals. By doing so, the coalition seeks to foster a more integrated and effective approach to mitigating climate change.

The initiative establishes a strong foundation for specific quality criteria used in the procurement process, initially focusing on forest and mangrove restoration projects. It is guided by these 5 quality pillars:

  • Conservative accounting, 
  • Durability, 
  • Social and economic benefits, 
  • Ecological integrity, and 
  • Transparency. 

These pillars build on existing standards and align with the Integrity Council for the Voluntary Carbon Market (IC-VCM) Core Carbon Principles (CCPs).

Expanding the Coalition’s Impact

Members of the Symbiosis Coalition will have the opportunity to purchase carbon removal credits contributing to their pledges through a joint Request for Proposals (RFP), in addition to their own efforts. The initial RFP will target afforestation, reforestation, and revegetation (ARR) projects, including agroforestry. 

Add image of agroforestry…

With input from independent technical advisors, the Coalition will develop criteria for ARR projects, building on the most conservative standards for measuring real nature-based climate impact. These criteria include: 

  • dynamic baselining to ensure additionality, 
  • robust approaches to prevent leakage, and 
  • a focus on creating long-lasting projects. 

Furthermore, projects will be prioritized based on financial transparency, biodiversity benefits, and equitable engagement with Indigenous Peoples and local communities.

Finally, the Coalition seeks to expand its membership to include other companies and collaborate with the broader restoration and carbon market ecosystem, encompassing investors, NGOs, standards bodies, project developers, researchers, and other stakeholders.

In conclusion, the Symbiosis Coalition represents a forward-thinking approach to voluntary carbon markets, emphasizing high-quality, nature-based carbon removal credits. It aims to create a robust market for nature-based solutions that significantly contribute to global climate goals.

Are SMRs The Future of Nuclear Energy? Oklo Leads the Charge

Jennifer L
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Are SMRs The Future of Nuclear Energy? Oklo Leads the Charge

Small Modular Reactors (SMRs) are emerging as a pivotal technology in the clean energy transition. These compact, scalable nuclear reactors offer a promising solution to meet growing energy demands while reducing greenhouse gas emissions. And this is what Sam Altman’s nuclear power startup company, Oklo, is developing. It recently debuted on the U.S. stock market alongside Nano Nuclear Energy. 

Oklo has gone public through a special-purpose acquisition company. The startup merged with AltC Acquisition Corp., Altman’s SPAC, and trades on the New York Stock Exchange under “OKLO.” The nuclear startup focuses on developing SMRs.

SMRs and Why They’re Important for Energy Transition

Small modular reactors (SMRs) are advanced nuclear reactors with up to 300 MW(e) capacity per unit, roughly one-third of traditional reactors’ capacity. These reactors are significantly smaller than those from competitors like NuScale and TerraPower, which have higher capacities. 

They offer numerous advantages due to their small size and modular nature. SMRs can be factory-assembled and transported to sites unsuitable for larger reactors, making them more affordable and quicker to construct. This modularity allows incremental deployment to match energy demand.

SMRs address energy access challenges, particularly in areas with limited grid coverage. They can be integrated into existing grids or operate off-grid, providing low-carbon power for industries and communities. Microreactors, a subset of SMRs producing up to 10 MW(e), are ideal for remote regions and as emergency backup power, replacing diesel generators.

SMRs also have reduced fuel requirements, needing refueling every 3 to 7 years, compared to 1 to 2 years for conventional reactors. Some designs can operate up to 30 years without refueling.

  • Per market projection, SMRs will be worth around $8.06 billion by 2032.

small modular reactors market size 2030

Advanced SMRs are central to the Department of Energy’s (DOE) strategy for safe, clean, and affordable nuclear power. These reactors, ranging from tens to hundreds of megawatts, are versatile for power generation, industrial processes, and desalination. 

The DOE supports the development of light water-cooled SMRs, which are under Nuclear Regulatory Commission review and expected to deploy in the late 2020s to early 2030s. The Advanced SMR R&D program, started in 2019, aims to accelerate SMR technology availability by partnering with NuScale Power and UAMPS to demonstrate new reactor technology at Idaho National Laboratory. 

Additionally, a 2018 funding opportunity supports innovative nuclear concepts to improve the economic viability of nuclear power, fostering U.S. energy independence and grid resilience.

Global Advancements in SMR Technology

Public and private institutions globally are actively advancing small modular reactor technology with the goal of deployment within this decade. Notably, Russia’s Akademik Lomonosov, the world’s first floating nuclear power plant, commenced commercial operation in May 2020, utilizing two 35 MW(e) SMRs.

  • Additionally, SMRs are under construction or in the licensing stage in various countries including Japan, Canada, China, Russia, UK, and the United States.

Over 80 commercial SMR designs worldwide target diverse outputs and applications such as electricity, hybrid energy systems, heating, water desalination, and industrial steam. While SMRs boast lower upfront capital costs per unit, their economic competitiveness remains to be proven upon deployment.

Oklo focuses on liquid-metal-cooled, metal-fueled fast reactors, which have over 400 reactor-years of operating experience and inherent safety features. The first power plant to produce electrical power from fission, EBR-I, and its successor, EBR-II, demonstrated the safety and efficacy of this technology. 

EBR-II operated for decades, proving it could safely shut down without damage during severe challenges, such as those similar to the Fukushima accident. Notably, fast reactors can use nuclear waste as fuel, a capability demonstrated by EBR-II.

  • EBR-II produced about 20 MW of electric power for 30 years, showcasing inherent safety, fuel recycling, and superior operational characteristics compared to commercial reactors.

Meet Oklo’s Nuclear Powerhouse: Aurora

Oklo collaborates with Idaho National Laboratory to use EBR-II’s waste fuel for its Aurora Powerhouse. Aurora is a liquid-metal-cooled, metal-fueled fast reactor using recycled waste fuel, providing 15 MW of power, scalable to 50 MWe, and operating up to 10 years without refueling.


Oklo received a site use permit from the U.S. Department of Energy in 2019, secured fuel from Idaho National Laboratory, and submitted a license application to build its first plant. Oklo aims to bring its first plant online before the decade’s end.

While Oklo is focusing on building its Aurora Powerhouse, Nano Nuclear Energy is developing two microreactors, Zeus and Odin. Each reactor is producing 1 to 2 MW of electricity and inspired by naval reactors. 

They plan to use IPO proceeds for further development and focus on nuclear fuel transportation and domestic production of High-Assay Low-Enriched Uranium (HALEU).

Nano aims to build a HALEU facility at Idaho National Laboratory, joining efforts to create a reliable U.S. HALEU source after Congress banned Russian uranium imports. 

Oklo has agreements to supply power to Equinix Data Centers and Diamondback Energy. Nano’s shares rose to $4.51, a 13% increase from its IPO price, while Oklo’s shares dropped to $8.45 from $15.50.

Unlike traditional large-scale nuclear plants, SMRs are designed for flexibility, safety, and cost-efficiency, making them an attractive option for integrating into modern energy grids. As the world seeks sustainable and reliable energy sources, SMRs stand out as a key component in achieving a low-carbon future.

Climate Damages Tax to Raise $720B from Fossil Fuel Giants

Saptakee S
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Climate Damages Tax to Raise $720B from Fossil Fuel Giants

With the urgent need to mitigate climate change, the role of fossil fuel giants in exacerbating this crisis cannot be overstated. Concrete actions must be taken to address the environmental and social impacts caused by these entities. One such measure gaining traction is imposing taxes on fossil fuel companies. 

This month, a groundbreaking report, titled “Climate Damages Tax” revealed a proposed tax on fossil fuel extraction capable of mobilizing nearly $720 billion by 2030. This tax offers a substantial financial boost to the world’s most vulnerable nations facing severe climate crisis.

Let’s deep dive into this new taxation rule and its impact on fossil fuel giants and the economy at large. 

Decoding the Case for Taxing the Fossil Fuel Giants 

David Hillman, director of Stamp Out Poverty and co-author of the report, emphasized the report’s call to action.

“The richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income”. 

He elaborated that this robust approach could significantly augment the funds for the recently established “Loss and Damage Fund”, a key outcome of the COP28 summit in Dubai.

Stamp Out Poverty: Advocating for Global Finance Solutions

Stamp Out Poverty, founded in 2006, advocates for new finance sources to combat poverty and climate change globally. It established the Make Polluters Pay coalition in 2021, collaborating with international partners to secure an agreement for setting up a Loss and Damage Fund at COP27.

Emergence of the Loss and Damage Fund 

The Loss and Damage Fund emerged from pressure from low-income countries seeking assistance in mitigating climate threats. Many developing nations lacking resources to address climate challenges or boost renewable energy capacities also supported this move.

The fund’s purpose is to aid countries globally in combating climate change. Representatives from 24 nations now need to determine the fund’s structure, contributor countries, and allocation criteria.

Abu Dhabi hosted the first board meeting of the Global Climate Fund for Loss and Damage on May 9, 2024.

The meeting focused on financing innovative solutions from COP28, held in Dubai’s Expo City in late 2023, and the agreements outlined in the “UAE Consensus.”

Abdullah Balalaa, Assistant Minister of Foreign Affairs for Energy and Sustainability emphasized the board’s crucial role in ambitiously implementing this commitment, reflecting the UAE’s resolute to creating a sustainable future for all.

Stamp Out Poverty’s new Climate Damages Tax report

The Climate Damages Tax (CDT) is a fee on the extraction of each tonne of coal, a barrel of oil, or cubic meter of gas, calculated at a consistent rate based on how much CO2e is embedded within the fossil fuel.

Thus, the tax report proposes

  • Taxing major fossil fuel companies based in some of the world’s wealthiest countries could raise billions of dollars to address climate change.
  • It would further promote renewable energy projects in low-income nations worldwide. 

Furthermore, The Paris Agreement assigns greater responsibility to wealthier nations for addressing climate change due to record high carbon emissions. Rich countries made commitments at COP summits but took limited action afterward. 

Media reports state that they haven’t raised enough funds or started new projects to aid low-income nations in fighting climate change. Introducing a tax on oil and gas producers in affluent countries such as the U.S., the U.K., Japan, Spain, and Canada could finance developing nations and attract more investment to the Fund.

Revenue Potential 

  1. As already mentioned, the wealthiest Organisation for Economic Co-operation and Development (OECD) countries could yield up to $720 billion in climate funding by 2030.
  2. A rate of $5 per tonne of CO2 starting this year in OECD countries and increasing by $5 a tonne each year would provide $900 billion in funding by 2030. 

In an optimist’s opinion, taxing fossil fuel giants could boost climate finance by $900 billion by the end of the decade. The authors of the report propose allocating $720 billion of this to the Loss and Damage Fund, aiding countries most affected by climate change. The remaining funds could support the rich nations transitioning to the green revolution. 

Several media reports say that recent profit levels for companies like ExxonMobil, Chevron, BP, and Shell have seen exponential growth. The industry, with its substantial resources, can afford higher taxation. Given the companies’ historical responsibility and financial capacity, imposing greater taxes on the fossil fuel sector should be a priority.

Investment Opportunities 

The funds generated from taxing fossil fuel companies could be allocated strategically to address the most pressing climate-related challenges. Priority areas for investment include:

Infrastructure Resilience

Building infrastructure to withstand the impacts of extreme weather events such as floods, hurricanes, and wildfires is crucial. Investments in resilient infrastructure can help communities bounce back quicker from climate-related disasters.

Natural Resource Management

Protecting and restoring ecosystems such as forests, wetlands, and coastal areas sequesters carbon and enhances resilience to climate change. Funds can be directed towards conservation efforts and sustainable land management practices.

Community Resilience

Vulnerable communities disproportionately bear the brunt of climate change impacts. Thus, investing in community-based adaptation projects, such as early warning systems, heatwave preparedness, and social safety nets, can enhance resilience and reduce vulnerability.

Research and Innovation

Continued research and innovation are essential for developing cutting-edge technologies and solutions to address climate challenges. Funding research initiatives focused on renewable energy, CCS, and climate-smart agriculture can accelerate the transition to a low-carbon future.

Carbon Pricing Revenues Hit Record $104B in 2023, World Bank

Jennifer L
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Carbon Pricing Revenues Hit Record $104B in 2023, World Bank

A World Bank report reveals that countries with carbon pricing mechanisms generated a record $104 billion in revenues last year. Over half of the funds were directed towards climate and nature-related programs. 

Carbon pricing, implemented through carbon taxes or emissions trading systems (ETS), is critical for reducing emissions and fostering low-emission growth.

Despite this achievement, the report emphasizes that current carbon taxes and emissions trading schemes remain insufficient to meet the Paris Agreement’s climate goals. Although 24% of global emissions are covered by some form of carbon pricing, less than 1% are subject to prices high enough to limit temperature increases to below 2°C.

The High-Level Commission on Carbon Prices recommended carbon prices be in the $50-100 per ton range by 2030. Adjusted for inflation, this range is now $63-127 per ton.

The World Bank stresses the need for increased coverage and higher pricing to drive significant reductions in global emissions and support the transition to a low-carbon economy. Here are the key takeaways from the WB’s “State and Trends of Carbon Pricing 2024.”

Increasing Uptake of Middle-Income Countries But Carbon Prices Remain Insufficient

Over the past year, the adoption of carbon pricing has been limited, but there are promising signs of uptake in middle-income nations. 

carbon taxes and ETS map

Currently, there are 75 carbon taxes and emissions trading schemes in operation worldwide, reflecting a net gain of two carbon pricing instruments over the past 12 months. Notably, middle-income countries such as Brazil, India, and Turkey have made significant progress towards implementing carbon pricing mechanisms.

Progress has also been seen at the subnational level, despite some setbacks. Additionally, sector-specific multilateral initiatives for international aviation and shipping have advanced. 

These developments indicate a growing global commitment to addressing climate change through economic incentives. 

Despite a decade of strong growth, carbon prices remain insufficient. There exists a notable implementation gap between countries’ commitments and the policies they have put into place. 

Currently, carbon pricing instruments cover around 24% of global emissions. While the consideration of new carbon taxes and emissions trading systems (ETSs) could potentially increase this coverage to almost 30%, achieving this will require strong political commitment. 

Over the past year, carbon tax rates have seen slight increases; however, price changes within ETSs have been mixed, with 10 systems experiencing price decreases, including long-standing ETSs in the European Union, New Zealand, and the Republic of Korea. As a result, current price levels continue to fall short of the ambition needed to achieve the goals of the Paris Agreement. 

carbon price across ETS and carbon taxes

Carbon Pricing Hit New Highs 

In 2023, carbon pricing revenues reached new highs, exceeding USD 100 billion for the first time. This milestone was driven by high prices in the EU and a temporary shift in some German ETS revenues from 2022 to 2023. 

ETS continued to account for the majority of these revenues. Notably, over half of the collected revenue was allocated to funding climate- and nature-related programs. Despite this record-breaking revenue, the overall contribution of carbon pricing to national budgets remains low. 

revenue per type of carbon pricing 2017 to 2023

On a positive note, emerging flexible designs and approaches reflect the adaptability of carbon pricing to national circumstances. 

Governments are increasingly employing multiple carbon pricing instruments in parallel to expand both coverage and price levels. While carbon pricing has traditionally been applied in the power and industrial sectors, it is now being increasingly considered for other sectors such as maritime transport and waste management. 

Additionally, governments continue to permit regulated entities to use carbon credits to offset carbon pricing liabilities, enhancing flexibility, reducing compliance costs, and extending the carbon price signal to uncovered sectors. Beyond mitigation, carbon pricing also provides significant fiscal benefits, further demonstrating its multifaceted advantages.

carbon credit use in ETS and carbon taxes

Carbon Credit Markets Saw Mixed Movements: ET vs. OTC

Governments, particularly in middle-income countries, are increasingly incorporating crediting frameworks into their policy to support both compliance and voluntary carbon markets. Despite this, credit issuances fell for the second consecutive year, and retirements remained substantially below issuances, resulting in a growing pool of non-retired credits in the market. 

While compliance demand is building, voluntary demand continues to dominate. Prices declined across most project categories, with the exception of carbon removal projects, which saw increased interest. 

Prices also proved more resilient in over-the-counter transactions, where buyers can pursue specific purchasing strategies. Credits with specific attributes—such as co-benefits, corresponding adjustments, or recent vintages—traded at a premium, highlighting the additional value these characteristics offer to buyers.

carbon prices, OTC and ET comparison April 2022 to 2024

Restoring the Integrity of Carbon Credits

The subdued market and reduced confidence underscore the importance of initiatives aimed at rebuilding the integrity and credibility of carbon credits. The integrity of these credits remains a critical concern for the market. 

To address this, the Integrity Council for the Voluntary Carbon Market has established a benchmark for credit quality, with the first tranche of approved credits anticipated in 2024. On the demand side, efforts have been directed towards emphasizing the reduction of operational and value chain emissions and exploring the potential role of carbon credits in addressing residual emissions. 

Additionally, the development and implementation of Paris Agreement Article 6 continues, despite facing setbacks and delays. These efforts are essential to restoring confidence and ensuring the effectiveness of carbon credit markets.

Microsoft and Stockholm Exergi Strike Historic Deal for 3.33 MTs of Carbon Removal

Saptakee S
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0
Microsoft and Stockholm Exergi Strike Historic Deal for 3.33 MTs of Carbon Removal

Microsoft and the Swedish energy company Stockholm Exergi have announced a 10-year offtake agreement on May 6, 2024. Under this deal, Stockholm Exergi will provide Microsoft with over 3.3 MT of carbon removal certificates from its planned bio-energy with carbon capture and storage (BECCS) project at Värtan in Stockholm.

This historic agreement is believed to be the world’s largest permanent removal deal to date. Let’s deep dive into this significant announcement in this upcoming content.

Microsoft Commits to 10-Year Partnership with Stockholm Exergi

This collaboration aligns with Microsoft’s goal to be carbon-negative by 2030 and its commitment to climate change. The deal also supports its strategy of prioritizing emissions reductions while building a portfolio of carbon removal projects. In recent months, Microsoft has announced several CDR projects using various technologies and methods. Some include reforestation, direct air capture (DAC), ocean-based carbon removal, and biochar projects.

Microsoft reports new additions to its carbon removal portfolio. They are: 

  1. Low-durability solutions: five forestry projects (>1.8 million mtCO2), one soil carbon project (200,000 mtCO2), and a mangrove blue carbon project (100,000 mtCO2). These solutions sequester carbon for less than 100 years, with forestry and soil approaches at the center. Although some forestry projects in the portfolio have contracted durability of 100 years or more, Microsoft categorizes them as low durability due to inherent reversal risks.
  2. Medium-durability solutions: three biochar projects (>81,000 mtCO2) and one kelp-sinking project (12,000 mtCO2). These solutions lock away carbon for 100-1,000 years. Biochar stands as the primary, established medium-durability method.
  3. High-durability solutions: one BECCS project (>2.67 million mtCO2), one CO2 mineralization project (25,000 mtCO2), three DAC projects (~12,000 mtCO2), and two ERW projects (>5,000 mtCO2). These solutions sequester carbon for thousands of years. The best-known methods include biomass with geologic storage, direct air capture, and mineralization.

Supporting this move, Brian Marrs, Microsoft’s senior director of energy and carbon removal has commented,

“Leveraging existing biomass power plants is a crucial first step to building worldwide carbon removal capacity.”

Notably, the tech giant is investing $1 billion inclusively into a new Climate Innovation Fund to accelerate CDR technologies, aiming to achieve global carbon negativity.

Stockholm Exergi’s Ambitious Carbon Capture Project

The Swedish company, which supplies power to Stockholm’s residents, plans to build a carbon capture and storage facility that will permanently remove 800,000 metric tons of CO2 annually. 

Stockholm Exergi will begin construction in 2025 and will deliver the carbon removal certificates to Microsoft in 2028, continuing for a decade. The company further plans to seek complementary state aid and additional private carbon removal deals. It’s essential for reaching the financial closure.

Anders Egelrud, the CEO of Stockholm Exergi noted,

“The agreement with Microsoft is a huge step forward for our BECCS project, Stockholm Exergi as a company and the climate. It will inspire corporations with ambitious climate objectives, and we target to announce more deals with other pioneering companies over the coming months.”

Stockholm exergisource: Stockholm Exergi

Europe’s Largest BECCS (Bio-Energy and Carbon Capture Storage) Plant 

Stockholm Exergi reports that the company obtained the environmental permit for the project in Stockholm on March 28th this year. The new carbon capture project will be integrated into Stockholm Exergi’s biomass and heat power plant, operational since 2016.

The Stockholm Exergi KVV8 facility is Europe’s largest biomass-based Combined Heat and Power plant. This plant burns waste from the forestry industry and paper mills to generate heat and electricity.

The significant features of this project are: 

  • It will safeguard the biomass feedstock to ensure sustainable forest management and protect sensitive areas.
  • It will maintain stable carbon stocks and ensure that feedstock is not sourced from Roundwood for long-lived wood products.
  • Permanent geological storage will occur in the Nordic region.

Carbon Capture and Storage Process

The plant will capture the carbon dioxide released during incineration, liquefy it for transport, and permanently store it underground. The project will adhere to stringent quality standards, including sustainable biomass sourcing and comprehensive monitoring, reporting, and verification (MVR) protocols.

Milestone for Climate Change Mitigation

The contract marks a significant step toward climate change mitigation. While reducing emissions remains a top priority, permanent carbon removals are integral to limiting global warming to 1.5°C or well below 2°C.

By committing to ambitious, voluntary corporate climate objectives, Microsoft and Stockholm Exergi aim to foster the growth of the carbon removal industry. The deal would set an example to help companies globally meet net-zero targets and achieve the Paris Agreement goals.

Australia Has A US$400B Carbon Capture Opportunity, Wood Mackenzie Says

Jennifer L
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Australia Has A US$400B Carbon Capture Opportunity, Wood Mackenzie Says

According to Wood Mackenzie, Australia has an AU$600 billion (around US$400B) opportunity to become a leader in carbon capture and storage (CCS) in the Asia-Pacific region. 

The country’s geological CO2 storage capacity far exceeds its domestic needs, creating an opportunity to store emissions from key trading partners like Japan and South Korea, which lack sufficient storage options. This could generate significant revenue by charging fees for transporting and storing CO2.

CCS is Pivotal For Australia’s Net Zero Goal

Earlier this year, Wood Mackenzie reported that 2024 will be a strong year for CCS or  CCUS. The research company estimated that global CCUS capacity will grow from 80 metric ton per annum (Mtpa) to more than 500 Mtpa.

CCUS project by region and project type

CCS can support countries in their energy transition by tackling emissions in hard-to-abate sectors. In Australia, industries like steel, cement, aviation, and agriculture contribute up to one fifth of greenhouse gas emissions.

To meet our net zero targets, advanced modelling suggests that Australia needs to be capturing and storing at least 80 million tonnes of CO2 each year by 2035. There are between 18 and 27 CCS projects currently in development or operation in Australia.

Earlier this year, work began on a major CCS hub off the coast off Darwin, while another set to be capturing and storing carbon from industry in the Gippsland Basin soon. Most notable is the Gorgon Project in Western Australia. With a projected lifetime storage capacity of 120 million tonnes, it is the largest operational CCS project on the planet.

In their recent report, Stephanie Chiang, a research analyst at Wood Mackenzie, estimates that opening Australia’s excess storage capacity to regional emitters could generate US$325–385 billion in revenue, assuming a transport and storage fee of US$33–39 per ton of CO2. 

CCS offers the dual benefit of reducing emissions and creating new jobs and industries. The Australian Energy Producers Conference highlights CCS as pivotal for Australia’s net zero ambitions. 

Samantha McCulloch, Chief Executive of Australian Energy Producers, highlights the significant economic and emissions reduction opportunities presented by CCS, calling for a national CCS roadmap. She noted that:

“Australia knows how to be a resources and energy powerhouse and has built a gas industry that is the envy of the world. Now it can become a decarbonization powerhouse.”

The 2024 Australian Energy Producers Conference & Exhibition in Perth will feature the release of the Australian Energy Producers Journal. This includes insights from Wood Mackenzie about Australia’s potential AU$600 billion CCS industry. 

According to Wood Mackenzie, Australia’s vast CO2 storage capacity can serve regional emitters like Japan and South Korea, which lack sufficient storage. This could generate substantial revenue by charging for CO2 transport and storage.

Policy and Industry Support for CCS in Australia 

The Energy News Bulletin (ENB) CCS Report 2024 highlights CCS as a critical solution for Australia’s decarbonization efforts, noting that policymakers in advanced economies, including Australia, are committed to achieving net zero emissions.

However, ENB criticizes the Australian government for not prioritizing CCS implementation as urgently as Northern America and Western Europe. The report examines CCS’s status and potential in Australia, comparing it with other regions.

Energy companies like Woodside Energy and Santos face criticism from climate activists. However, ENB emphasizes that significant progress is being made to reduce emissions intensity. And CCS could be pivotal in achieving net zero goals while continuing hydrocarbon production.

However, Australia needs to develop comprehensive regulations for CCS and provide stronger government support and a clear industry roadmap. This would attract investors and solidify Australia’s position as a carbon storage hub.

An example of a hub cluster project for CCS
Sample illustration of CCS hub cluster project Source: ABB

Recent Australian laws permit international CO2 transport and offshore storage, and the 2024-25 Federal Budget allocated AU$32.6 million to support regional cooperation and establish necessary regulations.

Pilot Energy and International Collaboration in CCS

In related news, Pilot Energy, an Australian company, will host a Korean delegation on May 23 at its Mid West Clean Energy Project (MWCEP) near Geraldton, Western Australia, with support from Austrade. 

The visit coincides with the Australia-Korea CCUS Industry Seminar in Perth and reflects strong Korean interest in CCS. This carbon removal technology will help achieve South Korea’s net zero goals. 

This visit follows significant policy advancements in Australia’s CCS industry. Recently, Northern Australia’s Resources Minister Madeleine King announced that more greenhouse gas acreage would be available for CCS as part of the Albanese government’s Future Gas Strategy. Additionally, the government committed AU$566 million to new offshore mapping programs to identify CCS and clean hydrogen project sites.

Pilot Energy’s MWCEP plans to repurpose the depleted Cliff Head offshore oil field into a permanent CO2 storage facility. The initiative will start in 2026, with a capacity to store over 1 million tonnes of CO2 annually. 

As Australia advances its CCS capabilities, it can leverage its resource expertise to become a decarbonization powerhouse, becoming a leader within the Asia-Pacific region.

CORSIA Carbon Credit Demand To Be 14x Larger Than Supply

Jennifer L
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CORSIA Carbon Credit Demand To Be 14x Larger Than Supply

The surplus of CORSIA-eligible carbon credits is projected to turn negative by 2030 unless new supplies become available, according to an analysis by Abatable.

Currently, the aviation sector contributes about 3% of global emissions. As a sector that’s difficult to decarbonize, it’s exploring direct low-carbon technological solutions like sustainable aviation fuel (SAF) and electrification. However, these solutions face cost and technological hurdles and will take time to become widespread.

The Challenge of Decarbonizing Aviation

To mitigate emissions in the meantime, the International Civil Aviation Organization (ICAO) launched the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) in 2016. CORSIA aims to offset any growth in aviation emissions above 85% of 2019 levels.

CORSIA entered its first phase in January this year, after a pilot period from 2021 to 2023. Phase 1, which runs from 2024 to 2026, is voluntary for participating states, while Phase 2 will be mandatory starting in 2027.

  • To comply, airlines can purchase SAF, enhance fleet efficiency, or buy CORSIA-eligible carbon credits.

However, the rollout has been challenging. In March, major carbon credit issuers Verra, Gold Standard, and Climate Action Reserve (CAR) were only conditionally approved by ICAO’s Technical Advisory Body. This status will be reconsidered in September following a resubmission process completed in April 2024.

Currently, CORSIA Phase 1 credits can only be acquired through the American Carbon Registry (ACR) and ART TREES standards. Additionally, CORSIA credits require Letters of Authorization from host countries, further limiting the supply.

As of now, the only recent issuance eligible for the scheme is 7.1 million Guyana ART credits. The ICAO Technical Advisory Body’s decision suggests that this limited supply situation may persist throughout 2024.

Demand to Outpace Supply by 2030

Abatable’s analysis indicates that, under current market conditions and without new supplies, demand for CORSIA credits will exceed supply by 2030. In Phase 2 of the scheme, demand is projected to outpace supply between 2029 and 2030.

In a conservative scenario, CORSIA demand does not exceed 100 million credits until after 2034. However, supply peaks in 2025 and can only meet demand until 2029. Without new projects, demand in Phase 2 could be 14x  larger than supply.

CORSIA carbon credit demand, supply, conservative scenario

In an optimistic scenario, aviation emissions return to 85% of 2019 levels this year, with CORSIA demand surpassing 100 million carbon credits in 2027. Supply, bolstered by projects likely to receive corresponding adjustments, meets demand until 2030. Without new projects, demand in Phase 2 could be 7x larger than supply.

CORSIA demand, supply, optimistic scenario

Abatable’s projections include existing projects expected to meet the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles and likely to receive corresponding adjustments. Supply from Verra, Gold Standard, and CAR is expected from 2025.

CORSIA’s design interfaces with the Paris Agreement’s Article 6, allowing countries to trade emissions reductions to meet Nationally Determined Contributions (NDCs). Corresponding adjustments ensure accurate progress toward NDCs and prevent double counting. These adjustments are required for CORSIA credits, allowing them to be transferred internationally.

However, delays in implementing Article 6 mechanisms could affect CORSIA. While details are being developed, projects receiving Letters of Authorization can list on voluntary market registries as Article 6 compliant. Biennial UN reports will confirm national accounting and the application of corresponding adjustments.

A significant challenge is the liability for the revocation of authorized credits. ICAO’s Technical Advisory Body suggests that standards or project proponents should assume liability, while standards argue it should lie with the revoking country. COP29 decisions may influence this issue, potentially causing even more delays.

Market Response and Developments

The market is reacting to these developments. New commercial structures and carbon insurance products are under conception to mitigate risks and encourage trading activity. These products aim to provide confidence to market participants and enhance liquidity, especially given the current market uncertainties.

So, what’s next for this development in CORSIA carbon credits?

Verra, Gold Standard, and CAR have re-submitted their applications, and the Technical Advisory Board will reassess these in September 2024. If they fail, new supply sources will be delayed until 2025, extending beyond current projections.

To mitigate supply issues, standards should work toward approval while also building capacity to help countries develop market infrastructure and governance for authorizing credits with corresponding adjustments. Large CORSIA participants might invest in upstream projects, although this would require market understanding and time to generate a credit stream and gain necessary adjustments.

Airlines are not required to purchase credits until Phase 1 concludes in January 2028. However, some may buy and retire credits in advance, based on projected obligations from historical emissions data. Final emissions reports and audits will be completed in 2027, indicating that the total credits needed, leading to an increase in credit retirements.

The availability of credits post-2027 will depend on decisions by ICAO, Article 6 negotiators, and governments, as well as the emergence of new supply sources. The actions taken in the interim will be crucial for ensuring there are enough carbon credits to meet future demand.

The future of the CORSIA carbon credit market hinges on increasing the supply of eligible credits. Abatable’s analysis underscores the need for new projects and corresponding adjustments to meet the rising demand by 2030. While pursuing low-carbon technologies, the aviation sector must rely on carbon offsets in the interim. 

Wired for Change: AI, Energy, and the Decarbonization Dilemma

Saptakee S
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Wired for Change: AI, Energy, and the Decarbonization Dilemma

AI is a powerful force driving innovation across industries in today’s rapidly evolving technological landscape. However, as AI capabilities expand, so does its appetite for energy. This phenomenon has brought the intersection of AI and energy into sharp focus, particularly in the context of global decarbonization efforts.

The Interplay of AI and Renewable Energy

The rise of AI has spurred an unprecedented demand for computing power, much of which is supplied by data centers. 

These data giants consume vast amounts of electricity, prompting concerns about their environmental impact and contribution to carbon emissions. Some argue that these companies have the resources and the motivation to invest in cleaner energy technologies. They can also advocate for policy changes to support decarbonization efforts. However, others raise concerns about the environmental impact and the need for greater transparency and accountability in their sustainability initiatives.

Amidst the urgency to transition to renewable energy sources, the energy consumed by AI presents a significant challenge to decarbonization efforts.

On one side, the influx of demand from tech giants could provide a financial boost to investments in renewables, potentially accelerating the transition to cleaner energy sources. However, there remains a tangible risk that the energy demands of AI will be met using conventional, fossil fuel-based methods, such as natural gas or coal. This scenario would undermine progress toward decarbonization goals and perpetuate reliance on non-renewable resources.

Thus, navigating this decarbonization dilemma requires balancing the transformative potential of AI and mitigating its environmental impact. 

  • It calls for strategic investments in renewable energy infrastructure with AI technology innovation to optimize energy efficiency. 
  • Collaborative efforts between tech companies, energy providers, policymakers, and environmental advocates are essential to charting a sustainable path forward.

A Bloomberg analysis reported, that traditional energy corporations like PPL Corp., Alliant Energy Corp., WEC Energy Group Inc., Entergy Corp., Duke Energy Corp., NextEra Energy Inc., DTE Energy Co., CenterPoint Energy Inc., and Vistra Corp., are also deeply involved in navigating the challenges and opportunities presented by AI and data centers.

These companies face pressure to optimize their operations for efficiency, reliability, and sustainability. AI technologies offer opportunities to enhance grid management, predict demand more accurately, optimize energy distribution, and improve maintenance scheduling. Moreover, these corporations will likely explore AI-driven solutions to meet regulatory requirements and customer demands for cleaner energy sources.

As AI becomes increasingly integral to various industries, including energy, investors will evaluate companies based on their AI capabilities and ability to adapt to technological advancements.

The automation era in the energy sector

This futuristic vision is swiftly materializing – the AI in energy and power market is forecasted to surge at a CAGR of 24.68%, from a value of US$3.103 billion in 2021 to US$14.527 billion by 2028.

AI energy

AI-Growth Drivers Transforming the Energy Companies

From predictive maintenance to demand forecast, AI-powered solutions are revolutionizing traditional practices and reshaping the industry.

1. Predictive Maintenance: Preventing Downtime, Maximizing Efficiency

By analyzing vast amounts of data from sensors and equipment, AI algorithms can detect anomalies and predict potential failures before they occur. This approach not only minimizes downtime but also maximizes the lifespan of critical assets. It further leads to substantial cost savings for energy companies.

2. Optimized Asset Management: Maximizing Returns on Investments

AI-driven asset management solutions enable energy companies to optimize the performance of their infrastructure. Through real-time monitoring and analysis, AI algorithms can identify opportunities for efficiency improvements and asset optimization. AI empowers companies to make data-driven decisions that enhance profitability and sustainability.

3. Dynamic Demand Forecasting: Balancing Supply and Demand

Accurate demand forecasting is essential for energy companies to manage supply and avoid costly overproduction or shortages. AI-powered demand forecasting models leverage historical data, weather patterns, market trends, and other variables to predict future demand with precision. By optimizing resource allocation and scheduling, energy companies can minimize waste and maximize revenue, ultimately improving cost efficiency.

4. Enhanced Customer Engagement: Personalized Services and Solutions

AI technologies also enable energy companies to enhance customer engagement by offering personalized services and solutions. Data analytics and machine learning empower companies to customize offerings based on individual customer preferences and behavior.

AI energy

source: Data Dynamics

Moving on, we can see the top energy giants using AI in their operations  

Top Energy Giants using AI in their Operations  

These energy companies exemplify the strategic adoption of AI to enhance their operational capabilities, driving efficiency gains and ultimately contributing to their bottom line.

Exxon Mobil

Exxon Mobil integrates AI to enhance operational efficiency and reliability across its operations. It collaborates with IBM to use quantum computing in advancing AI-driven simulations. Additionally, they use AI for critical calculations to optimize CCS methods. 

  • Enhances its operational efficiency, minimizes downtime, and reduces maintenance costs with AI-driven predictive maintenance and process optimization. 
  • The AI-powered analytics enable the company to optimize supply chain management.
  • Subsequently, it ensures timely delivery of products to customers while minimizing transportation costs and environmental impact.

ABB

The Swiss technology leader in electrification and automation is a pioneer in AI usage. The company

  • Utilizes AI to identify faults like pipeline and machinery cracks through image analysis. 
  • Manages distributed energy resources for reliable green power.
  • Employs AI to analyze seismic data for optimizing oil extraction.

Schneider Electric

It uses Microsoft’s machine learning to remotely monitor and configure pumps in oil and gas fields. AI can detect pump failures, prevent weeks of downtime, and repair costs of up to $1 million.

BP

The London-based gas and oil giant leverages AI to enhance decision-making processes, optimize resource allocation, and improve safety standards. AI boosts the oil extraction and recovery process with high-end sensors. It further lowers the cost/ barrel, reduces risk, and ensures compliance. 

Notably, BP is one of Amazon’s most trusted cloud computing clients.  It has used its technology to enhance the performance of its lubricants ERP system with 40% faster response times.

Royal Dutch Shell

Shell implements AI technologies to streamline operations, drive innovation, and enhance overall performance. It utilizes Microsoft’s cloud-centric platform, Azure. By leveraging AI technologies, Shell aims to boost revenue, cut costs, and enhance operational safety, such as monitoring data from drill sensors deep underground.

Gretchen Watkins, President of Shell Oil Company, revealed at the CERAWeek energy conference that,

Shell employs AI algorithms for drilling in wells in the Permian Basin. These algorithms, driven by machine learning, facilitate safe, reliable, and cost-effective operations.

The Top 10 AI-powered solutions in the Energy and Power Sector and their Stocks to Watch Out

AI

The U.S. Department of Energy established the Artificial Intelligence and Technology Office (AITO) to elevate it into a global leader in AI

AITO is responsible for reliable AI governance and capabilities in energy infrastructure, advising on trustworthy AI/ML strategies. It fosters partnerships, policies, and innovations in AI and energy across public, private, and international sectors. AITO further supports Department of Energy program offices to implement AI/ML strategies. 

Overall, the relationship between AI, energy, and decarbonization efforts is complex and multifaceted, and addressing the challenges will require collaboration across industries and disciplines.

U.S. Raises Tariffs on $8B China Imports: EVs, Batteries, and Solar Cells Included

Jennifer L
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0
U.S. Raises Tariffs on $8B China Imports: EVs, Batteries, and Solar Cells Included

The Biden-Harris Administration’s Investing in America agenda has successfully spurred more than $860 billion in business investments. In line with this, the White House has officially announced its intent to increase tariffs on Chinese imports. 

President Biden has emphasized that American workers and businesses can outcompete their global counterparts if they have fair competition. However, China’s government has been criticized for engaging in unfair, non-market practices such as forced technology transfers and intellectual property theft.

According to the White House, these practices have enabled China to dominate the global production of essential inputs for various technologies, infrastructure, energy, and healthcare, posing substantial risks to American supply chains and economic security. 

The Biden Administration’s policies aim to counter these challenges by fostering fair competition, reducing dependence on foreign supply chains, and strengthening domestic production capabilities.

To address issues related to technology transfer, intellectual property, and innovation, the President is directing an increase in tariffs on $18 billion worth of imports from China. These sectors include steel and aluminum, semiconductors, electric vehicles (EVs) and batteries, critical minerals, solar cells, and medical products. 

Below, we focus on the key takeaways from three crucial sectors of US clean energy manufacturing:

Boosting the Domestic EV Industry

The Biden administration is significantly increasing tariffs on EVs from China to protect and promote American manufacturing. Here are the key details and implications:

  • Tariff Increase: The tariff rate on electric vehicles under Section 301 will increase from 25% to 100% in 2024.
  • Rationale: This dramatic increase responds to extensive subsidies and non-market practices in China, which have led to a 70% growth in Chinese EV exports from 2022 to 2023. This surge threatens productive investments in other regions.

Chinese EV exports 2023

  • Objective: By imposing a 100% tariff, the administration aims to shield American manufacturers from these unfair trade practices, fostering a domestic EV industry built by American workers.
  • Supportive Measures: the administration is incentivizing the development of a robust EV market through:
    • Business tax credits for battery manufacturing and critical minerals production.
    • Consumer tax credits for EV adoption.
    • Federal investments in EV charging infrastructure.
    • Grants supporting EV and battery manufacturing.

The U.S. isn’t alone in expressing concerns over China’s strides in “new energy vehicles.” The European Commission had initiated an inquiry into subsidized electric cars from China, probing whether Chinese battery EV value chains benefit from “illegal subsidization,” potentially harming EU BEV producers.

EU trade commissioner Valdis Dombrovskis recently noted that the investigation is progressing, hinting at possible tariffs before the summer break.

China has risen as the globe’s largest electric car market, buoyed by government policies and incentives to spur EV adoption. These include subsidies, tax incentives, and a credit system mandating car manufacturers to meet specified quotas, resembling a carbon credit trading scheme.

Strengthening the Battery Supply Chain

The administration is also increasing tariffs on various battery-related products and critical minerals to strengthen the domestic supply chain:

  • Tariff Increases:
    • Lithium-ion EV batteries: From 7.5% to 25% in 2024.
    • Lithium-ion non-EV batteries: From 7.5% to 25% in 2026.
    • Battery parts: From 7.5% to 25% in 2024.
    • Natural graphite and permanent magnets: From 0% to 25% in 2026.
    • Certain other critical minerals: From 0% to 25% in 2024.
  • Rationale: China controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes like critical minerals mining, processing, and refining. This concentration poses risks to U.S. supply chains, national security, and clean energy goals.
China dominates EV battery supply chain, US clean energy
Source: Bloomberg
  • Supportive Measures:
    • Nearly $20 billion invested in grants and loans to expand domestic production capacity for advanced batteries and battery materials.
    • Manufacturing tax credits under the Inflation Reduction Act to incentivize investment in U.S. battery production.
    • The American Battery Materials Initiative mobilizes government resources to secure a robust supply chain for batteries and their inputs.

RELEVANT: US Imports of Lithium and Critical Minerals Drop Amidst Shifting EV Market

Energizing the U.S. Solar Industry

Tariffs on solar cells will also be increased, with the following changes:

  • Tariff Increase: The tariff rate on solar cells (whether or not assembled into modules) will increase from 25% to 50% in 2024.
  • Rationale: China’s policy-driven overcapacity depresses prices and inhibits solar capacity development outside China. The country dominates 80-90% of certain parts of the global solar supply chain through nonmarket practices.
  • Objective: The tariff increase aims to protect and foster the U.S. solar industry, encouraging investment in solar manufacturing and reducing dependency on Chinese imports.
  • Supportive Measures:
    • Supply-side tax incentives for solar components, such as polysilicon, wafers, cells, modules, and backsheet material.
    • Tax credits, grants, and loan programs to support utility-scale and residential solar energy projects.
    • Nearly $17 billion in planned investment in the U.S. solar supply chain announced under the Biden administration, an eight-fold increase in U.S. manufacturing capacity.

The US government’s strategic investments and policy measures aim to revolutionize the American manufacturing landscape, particularly in clean energy technologies. All these measures are designed to promote fair competition, protect American industries, and ensure a secure and resilient supply chain for critical technologies and clean energy.

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