Is Direct Lithium Extraction the Key to Solving the Lithium Shortage Crisis?

Jennifer L
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Is Direct Lithium Extraction the Key to Solving the Lithium Shortage Crisis?

The rise of Direct Lithium Extraction (DLE) technology promises to open up new sources of lithium supply this decade, potentially helping to avert a forecasted shortfall. According to a new Benchmark special report, DLE represents a group of technologies that selectively extract lithium from brines. This novel technology offers a significant shift in the lithium supply landscape.

What is Direct Lithium Extraction?

DLE is a well-established technology with operational projects in China and South America. The process begins with extracting brine from aquifers, which is then transported to a processing unit. Here, lithium is selectively extracted using a resin or adsorption material, while the spent brine is reinjected into the aquifer, ensuring no depletion or environmental damage. 

direct lithium extraction DLE process
Image from Cleantech Lithium website.

The resin captures or adsorbs lithium chloride (LiCl) from the brine. Then the captured lithium is stripped with water, creating a lithium eluate. This eluate undergoes further concentration through reverse osmosis and mechanical evaporation before being processed into battery-grade lithium using industry methods.

One of the key advantages of DLE is its ability to reduce the environmental impact compared to traditional extraction methods. Conventional techniques often lead to soil degradation, water pollution, and destruction of habitats and biodiversity. In contrast, DLE minimizes these issues by avoiding extensive evaporation ponds and using selective extraction methods.

Moreover, DLE technologies help lower the carbon footprint of lithium extraction by reducing energy consumption and greenhouse gas emissions. By employing more efficient and targeted extraction methods, DLE significantly cuts the energy required compared to traditional techniques.

This efficiency contributes to the decarbonization of the energy sector, making DLE a crucial technology for reducing the overall environmental impact of lithium production.

Current and Future DLE Production

Currently, there are 13 operational DLE projects projected to produce about 124,000 tonnes of lithium chemicals in 2024. By 2035, DLE is expected to contribute 14% of the total lithium supply, amounting to around 470,000 tonnes of lithium carbonate equivalent (LCE), as per Benchmark’s Lithium Forecast. 

Direct lithium extraction forecast

While most of this supply will come from continental brines, geothermal and oil fields could contribute 9% and 14% respectively.

The Role of DLE in New Brine Projects

Almost 75% of new brine projects are expected to use some form of DLE. This highlights the growing importance of unconventional lithium sources and the expanding ecosystem of new players in the lithium value chain, especially oil companies that bring substantial capital and expertise.

Despite its potential, DLE’s path to commercialization faces several challenges, including:

  • issues with scalability, 
  • inflationary pressures, and 
  • delays at new brine projects. 

Technical risks also pose hurdles for new investors. Benchmark’s DLE special report outlines various DLE technologies, including adsorption, ion exchange, solvent extraction, and membranes, with adsorption being the most widely adopted and best-established, particularly in China.

Each brine source is unique in terms of impurity levels and lithium concentration, meaning there is no ‘one-size-fits-all solution’. Consequently, each DLE solution must be tailored to the specific environmental and economic conditions of the project.

Unlocking New Sources: Oil-field Brines

DLE technology has the potential to unlock previously undeveloped sources of lithium, such as petro brines and geothermal deposits, by achieving recovery rates of 80-90% compared to the current evaporation yields of 20-50%. This is particularly significant for “unconventional” brine resources in western jurisdictions, aligning with the political priorities in the US and European Union to build localized and diversified streams of critical minerals.

DLE’s potential is attracting significant interest from major players, including oil and gas companies. For example, Standard Lithium’s Stage 1A project in Arkansas could be the first petro brine project to come online in 2026. It has an initial production of 5,000 tonnes per year. 

Additionally, Exxon Mobil has signed a non-binding memorandum of understanding (MOU) with battery producer SK On for the supply of up to 100,000 tonnes from its DLE lithium project in Arkansas.

Despite the enthusiasm, DLE projects face significant capital and operating cost challenges. These projects have seen substantial cost increases as they advance and feasibility studies are updated.

Rising global inflation rates, along with higher equipment, utility, and labor costs, have driven these increases. For example, early-stage DLE projects have an average capital intensity of $37 per kilogram of lithium carbonate equivalent (LCE), while advanced projects average $60 per kilogram of LCE.

Given these challenges, Direct Lithium Extraction is unlikely to be a short-term solution for the lithium industry. Benchmark does not believe that DLE technology alone can bridge the structural deficits in the lithium market. However, it remains a promising avenue for expanding lithium supply in the long run.

Is Apple Leading the Way in Tech and Sustainability? Q3 Results Beat Expectations

Jennifer L
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Is Apple Leading the Way in Tech and Sustainability? Q3 Results Beat Expectations

Apple defies expectations with a stellar third-quarter performance, raking in $85.5 billion in revenue and $1.40 per share in earnings. While iPhone sales dipped, Apple’s China revenue is on the rebound. 

Beyond these financial feats, would Apple succeed in charging ahead with its bold mission to achieve carbon neutrality by 2030? We unveil how far the tech giant is performing so far in this environmental quest. 

Apple Surpasses Q3 Forecasts Despite Drop in iPhone Sales

Apple announced its third-quarter earnings, surpassing analysts’ expectations for both revenue and profit, despite a year-over-year decline in iPhone sales. Apple’s China revenue reached $14.7 billion, below the $15.2 billion anticipated by analysts and down from $15.7 billion the previous year. 

Despite the miss, Apple CFO Luca Maestri noted that sales in China are generally improving, with record upgrades and better performance than in the first half of the year. Overall, iPhone sales were $39.2 billion, just below the $39.6 billion from Q3 2023 but exceeding expectations of $38.9 billion.

For the quarter, Apple reported earnings per share (EPS) of $1.40 on revenue of $85.5 billion, beating analyst forecasts of $1.35 EPS and $84.4 billion in revenue. The iPhone maker’s shares changed a little in Friday’s pre-market trading, down by less than 1%.

Apple’s Ambitious Carbon Neutral Goal

Apple has set a formidable target: to be carbon neutral across its entire carbon footprint by 2030. This commitment involves reducing scope 1, 2, and 3 emissions — encompassing all direct and indirect emissions from its operations and value chain — by 75% before balancing the remaining emissions with high-quality carbon removals. 

Apple 2023 progress on carbon neutrality

Since 2015, Apple has already managed to cut its emissions by more than 55%, despite a 64% increase in revenue over the same period. The focus is on decarbonizing the three largest sources of emissions: materials, electricity, and transportation.

Comprehensive Carbon Footprint 

Apple carbon footprint

In 2023, Apple’s environmental initiatives helped avoid 31 million metric tons of emissions. These efforts include sourcing 100% renewable energy for its facilities, transitioning suppliers to renewable energy, and using low-carbon materials in products. Despite substantial revenue growth since 2015, Apple’s gross emissions have decreased significantly. 

Apple’s commitment to carbon neutrality involves setting science-based targets to reduce emissions by 75% by 2030 and investing in high-quality carbon removal projects for emissions that cannot be mitigated with existing solutions.

Four Pillars of Carbon Emission Reduction

  • Design and Materials: Apple aims to design products and manufacturing processes that are less carbon-intensive. This includes thoughtful material selection, increased material efficiency, greater product energy efficiency, the use of recycled and renewable materials, and enhanced material recovery.
  • Electricity: Increasing energy efficiency and transitioning the entire product value chain to 100% clean electricity by 2030 is a priority. This includes both the electricity used in manufacturing and by customers during product use.
  • Direct Emissions: Apple is working to reduce direct greenhouse gas emissions through process innovation, emissions abatement, and shifting away from fossil fuels.
  • Carbon Removal: In parallel with emissions reduction efforts, Apple is scaling up investments in carbon removal projects, including nature-based solutions that protect and restore ecosystems.

Apple carbon neutral to 2030 pathway

Decarbonizing the Value Chain

Electricity:

Electricity for manufacturing and charging devices is the largest source of Apple’s emissions. To achieve carbon neutrality, Apple has launched the Supplier Clean Energy Program, which encourages suppliers to use 100% renewable electricity for all Apple production by 2030. More than 320 global suppliers have joined the program, representing 95% of Apple’s direct manufacturing spend. 

Additionally, the tech giant is investing in renewable energy to ensure that the electricity associated with customers’ product use is matched by clean energy.

Materials:

Apple aims to use recycled and renewable materials, which typically have a lower carbon footprint than primary materials. By 2025, the company plans to use 100% recycled cobalt in all Apple-designed batteries, 100% recycled tin soldering, 100% recycled gold plating in circuit boards, and 100% recycled rare earth elements in all magnets across new products. 

In 2023, manufacturing accounted for 59% of Apple’s gross carbon footprint. The iPhone maker continues to launch supplier programs targeting emissions from manufacturing operations and facilities.

Transportation:

In 2023, transportation accounted for 9% of Apple’s gross carbon footprint. The company is shifting more product volume to less carbon-intensive shipping modes, such as ocean or rail, which generate significantly fewer emissions than air transport. 

Additionally, Apple is also exploring the use of low-carbon sustainable aviation fuels (SAF) to reduce the carbon footprint of shipment.

Investing in Carbon Removals

While prioritizing emissions reductions is critical, Apple also invests in high-quality carbon credits from nature-based projects to address emissions that cannot be reduced. These projects focus on carbon sequestration, such as planting forests and restoring mangroves, and offer additional benefits that improve climate adaptation and resilience. Apple ensures that the credits from these investments are additional, permanent, measurable, and quantified, with systems in place to avoid double-counting and leakage.

In March 2024, Apple welcomed new investors to the Restore Fund, including Taiwan Semiconductor Manufacturing Company (TSMC) and Murata, with investments of up to $50 million and $30 million respectively. Managed by Climate Asset Management, this brings the total fund to $280 million, building on Apple’s initial $200 million commitment.

Moving forward, Apple aims to achieve carbon neutrality across its entire carbon footprint by 2030 and is committed to a 90% reduction in emissions from its 2015 baseline by 2050. This ambitious target aligns with the Intergovernmental Panel on Climate Change’s (IPCC) recommendation for global carbon neutrality and requires a collective, worldwide effort.

Apple continues to lead in both financial performance and environmental sustainability, demonstrating strong revenue growth and a firm commitment to achieving carbon neutrality by 2030. Through innovative strategies in energy efficiency, renewable energy, and carbon removal, Apple sets a high standard for corporate responsibility and environmental stewardship.

Meta’s Q2 Triumph: Earnings Soar And Carbon Removal Deals Multiply

Jennifer L
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Meta’s Q2 Triumph: Earnings Soar And Carbon Removal Deals Multiply

Meta’s second-quarter earnings exceeded expectations, showcasing robust revenue growth and significant advancements in AI technology. Despite facing challenges from AI-related carbon emissions, Meta continues to lead the tech industry with its ambitious sustainability goals and extensive carbon removal initiatives.

Meta’s Earnings Surge Amid Strong Q2 Results

Meta’s shares surged about 5% in after-hours trading on Wednesday following a robust earnings report that exceeded analysts’ expectations for the second quarter. The company, which owns Facebook, Instagram, and WhatsApp, reported $39.07 billion in revenue and $5.16 earnings per share. Both surpassed market predictions of $38 billion in revenue and $4.7 earnings per share. 

CEO Mark Zuckerberg highlighted the success of Meta AI and the company’s growth across its apps, including advancements in AI technology and Ray-Ban Meta AI glasses. The tech giant indicated that AI investments will be a significant driver of capital expenditure growth in 2025.

Meanwhile, other major tech companies have struggled recently, as their earnings reports didn’t show sufficient returns on their multibillion-dollar AI investments. This led to a decline in shares of Alphabet, Tesla, and Microsoft. But same with its peers, Meta is also faced with the biggest environmental challenge of tackling its growing carbon footprint, mainly due to AI. 

How Does Meta Deal With Its Ambitious Net Zero Goal?

Meta, the world’s fifth-largest tech company, is tackling the challenge of sustainability with ambitious targets and bold actions. Having achieved net zero emissions in global operations by 2020, the company now aims to achieve net zero value chain emissions by 2030. This is a significant challenge, as 99% of Meta’s carbon footprint in 2022 came from Scope 3 emissions, which continue to rise.

Meta 2022 carbon footprint

Rachel Peterson, Vice President of Data Centre Strategy at Meta, acknowledged the difficulty of this task in the company’s 2023 Sustainability Report. She noted that Meta’s Scope 3 emissions are increasing as the company supports the global demand for its services.

Meta is addressing this challenge by focusing on efficiency, circularity, and low-carbon technology. Through its supplier engagement program, the company aims to decarbonize its supply chain and enable at least two-thirds of its suppliers to set Science Based Targets initiative (SBTi)-aligned reduction targets by 2026.

To reach its sustainability goals, Meta reduced operational emissions by 94% from a 2017 baseline, primarily by powering its data centers and offices with 100% renewable energy. These renewable energy commitments have resulted in a reduction of over 12.3 million metric tons of carbon dioxide equivalent (CO2e) since 2018.

Reducing Emissions

Reducing greenhouse gas (GHG) emissions across Meta’s global operations and value chain is a top priority and a critical strategy for reaching net zero. Meta recognizes that failing to reduce emissions today will result in a high-carbon intensity business model in the future.

Meta’s approach to emissions reduction is guided by several core principles:

  • Choosing Better: Incorporating principles of circularity into the supply chain, construction, and purchases.
  • Designing with Less: Reducing the volume of materials in construction and hardware, extending the life of hardware components, and minimizing waste.
  • Embracing Low-Carbon Technology: Finding alternatives such as low-carbon fuels and innovative new materials.

Enabling Renewable Energy

Supporting Meta’s operations with 100% renewable energy is a critical component of the company’s net zero strategy. This task becomes increasingly challenging as the business grows. 

Meta partners with many of the largest utilities in the U.S. to integrate renewable energy into their systems in ways that benefit both Meta and other customers. The tech giant’s portfolio of over 10,000 megawatts (MW) of contracted renewable energy projects positions it as one of the largest corporate buyers of renewable energy worldwide. 

  • In the U.S., Meta boasts the largest operating portfolio, with more than 5,500 MW of renewable energy capacity currently online. Meta’s renewable energy projects represent an estimated $14.2 billion in capital investment for new infrastructure. 

Data Center Emissions

Facebook parent’s company focuses on circularity by designing hardware for efficiency and repairability. Its Design for Circularity guide integrates dematerialization, circular materials, reuse, and end-of-life principles. Key strategies include extending hardware lifespans, reusing components, and recycling end-of-life materials.

Meta partners with downstream firms to responsibly manage and repurpose residual materials, advancing its circular supply chain goals. Still, some emissions from hard-to-abate sectors will be difficult to reduce by the end of the decade. To address these, Meta has turned to carbon removal projects, a key component of its emissions reduction strategy.

Carbon Removal Credits: A Key to Slash Scope 3 Emissions

Meta’s diverse approach to carbon removal includes both nature-based and technological solutions. This strategy involves purchasing carbon credits from projects that align with Meta’s principles, ranging from reforestation to direct air capture technology.

Since 2021, Meta has supported numerous nature-based carbon removal projects worldwide. These include increasing forest carbon stock in community ejido forests in Oaxaca and protecting forests that provide habitat for salmon in California. 

carbon removal projects backed by Meta

Demonstrating its commitment to nature-based solutions, Meta recently signed a major carbon credits deal for 6.75 million carbon credits with Aspiration, a leading provider of sustainable financial services. These credits come from various ecosystem restoration and natural carbon removal approaches, including reforestation, agroforestry, and sustainable agricultural practices.

Meta’s role in the voluntary carbon market extends beyond purchasing credits. The company also supports new project development through financing and encourages the evolution of standards to bring more certainty to the market. 

Additionally, Meta collaborates with the World Resources Institute to develop methods for mapping forest canopy height using Meta AI training models. This initiative aims to provide publicly available data on forest canopy in areas like California and São Paulo, Brazil.

In 2022, Meta joined forces with other major tech companies to accelerate the development of carbon removal technologies by guaranteeing future demand. This effort, known as Frontier, is a $925 million joint commitment between Meta, Stripe, Shopify, McKinsey Sustainability, and Alphabet. 

Meta’s strong financial performance and ambitious net zero goals underscore its commitment to innovation and environmental responsibility. As it continues to invest in AI and renewable energy and carbon removals, Meta is balancing its financial growth and environmental impact.

AMD’s Q2 Revenue Surge: Can Its Climate Strategy Keep Pace with Growth?

Jennifer L
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AMD’s Q2 Revenue Surge: Can Its Climate Strategy Keep Pace with Growth?

Advanced Micro Devices (AMD) surpassed Q2 sales forecasts, reporting a significant revenue boost. While its data center revenue surged, AMD is also striving for ambitious climate goals and carbon footprint reductions. As the company grows, can its sustainability efforts keep up with its technological advancements and market success?

AMD Beats Q2 Sales Estimates, Data Center Revenue Soars

AMD exceeded analysts’ sales expectations for Q2, with revenue hitting $5.8 billion, a 9% increase from the previous year. Despite net income falling short at $265 million or 16 cents per share, adjusted earnings of 69 cents per share surpassed forecasts.

Data center revenue more than doubled to $2.8 billion, driven by surging demand for AI chips. CEO Lisa Su highlighted growth opportunities from advances in generative AI. AMD projects $6.7 billion in Q3 sales and expects strong revenue growth.

The chipmaker’s shares surged over 7% to $138.44 in after-hours trading following the earnings report.

AMD’s Climate Commitment and Strategies for Net Zero

Advanced Micro Devices has set a robust target to achieve net zero by 2050. This ambitious commitment reflects AMD’s dedication to reducing its carbon footprint and addressing climate change through a multifaceted approach that includes improving energy efficiency, sourcing renewable energy, and investing in supply chain emission management.

Reducing Carbon Emissions

In 2021, AMD established a new science-based target aligned with a 1.5°C scenario: a 50% absolute reduction in greenhouse gas (GHG) emissions from its operations (Scope 1 and 2) by 2030, using 2020 as the base year. This target builds on AMD’s previous successes in reducing its emissions and underscores the company’s commitment to further emissions reductions.

Following the acquisition of Xilinx and Pensando in 2022, AMD recalculated its baseline energy use and GHG emissions to include the combined company’s footprint. The revised 2020 baseline for energy use increased from 123 GWh to 199 GWh, and operating emissions rose from 30,009 to 61,754 metric tons of CO2 equivalent.

Despite this adjustment, AMD achieved a 19% reduction in operating emissions compared to the revised baseline in 2022.

AMD carbon (GHG) emissions
Chart from AMD 2022-2023 CR Report

Energy Efficiency and Renewable Energy

Energy efficiency is a cornerstone of AMD’s strategy to slash its carbon footprint. The company has made significant strides in improving the efficiency of its products and operations.

The chipmaker’s goal is to achieve a 30x increase in energy efficiency for AMD processors and accelerators in servers for HPC and AI training from 2020 to 2025. This aims to accelerate industry trends by 2.5x compared to 2015-2020, based on global energy consumption for these segments. By mid-2023, AMD is on track for a 13.5x improvement using four AMD Instinct MI300A APUs.

AMD energy efficiency goal
Chart from AMD 2022-2023 CR Report

Moreover, AMD has increased its sourcing of renewable energy, with 66 GWh sourced in 2022, accounting for about 32% of its total global energy use, compared to 18% in the revised 2020 baseline. This renewable energy is enough to power approximately 9,275 homes in the U.S. for a year.

At its San Jose campus, AMD has implemented on-site solar generation, including a 1.4 MW solar system with 3,600 panels and a 600 kW rooftop solar installation. This setup includes a 1 MWh battery storage system that stores excess energy for later use and can send surplus energy back to the local power grid.

Environmental Impact and Achievements

Progress Towards Goals

AMD’s environmental goals include a 50% reduction in absolute GHG emissions from operations by 2030 and a 30-fold increase in energy efficiency for processors and accelerators used in AI training and high-performance computing by 2025.

As of mid-2023, AMD is on track for a 13.5-fold improvement in energy efficiency for accelerated compute nodes from the 2020 baseline.

Additionally, AMD aims to have 100% of its direct manufacturing suppliers set public emissions reduction goals by 2025. As of 2022, 70% of these suppliers had such goals. AMD also targets having 80% of its direct manufacturing suppliers source renewable energy by 2025, with 68% already meeting this criterion in 2022.

AMD Goals and Progress environmental sustainability
Image from AMD website

Operational Efficiency

AMD operates over 90 locations worldwide, including engineering facilities, sales sites, and corporate offices. The company is committed to applying rigorous environmental standards across its operations. AMD’s Global Environmental, Health, and Safety (EHS) Standards align with ISO 14001, a widely recognized standard for environmental management. Notably, AMD’s San Jose and Singapore sites are ISO 14001 certified.

In 2022, AMD implemented approximately 20 energy conservation projects, including equipment upgrades that saved about 1.4 million kWh of electricity. These efforts reflect AMD’s commitment to reducing energy use and GHG emissions across its operations.

Addressing Supply Chain Carbon Emissions

AMD’s supply chain, particularly silicon wafer manufacturing, is a significant source of its GHG emissions. In 2022, direct foundry suppliers reduced their Scope 1 and 2 emissions by about 9% compared to 2020, though absolute emissions increased due to the higher energy demands of more advanced technology nodes.

AMD aims to double the renewable energy use of its primary foundry manufacturing suppliers from 2020 to 2025. The company is also focused on forecasting and mitigating GHG emissions in its supply chain, particularly in Taiwan, where most AMD wafers are manufactured. AMD is actively participating in the SEMI Climate Consortium to promote renewable energy infrastructure in the region.

AMD’s commitment to net zero is backed by a comprehensive strategy that emphasizes energy efficiency, renewable energy, and robust supply chain management. By setting science-based targets, AMD is making significant strides toward reducing its carbon footprint and supporting global climate goals. 

Shell Powers Europe With A Mega 100MW Green Hydrogen Electrolyzer

Saptakee S
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Shell Powers Europe With A Mega 100MW Green Hydrogen Electrolyzer

In an exciting development in the renewable energy space, Shell is set to install a 100MW renewable hydrogen electrolyzer at its Energy and Chemicals Park Rheinland in Germany. This electrolyzer will generate up to 44,000 kilograms of green hydrogen daily using renewable energy. The project, designed to help reduce the site’s carbon footprint, is expected to start operations in 2027.

Unlocking Shell’s Massive Green Hydrogen Project: The REFHYNE II

The REFHYNE II project is the outcome of the successful execution of the original REFHYNE initiative. The new phase, funded by the European Climate, Infrastructure, and Environment Executive Agency (CINEA), aims to scale up Europe’s largest Proton-Exchange Membrane electrolyzer from 10 megawatts to a massive 100 megawatts. Notably, it aims to produce ~ 15,000 tons of green hydrogen annually.

As mentioned before, it will be installed at Shell’s Rheinland Energy and Chemicals Plant in Germany. The electrolyzer will produce green hydrogen and oxygen from a renewable energy source. This green hydrogen will then be integrated into the existing refinery systems to help reduce emissions from refinery operations.

Shell

source: REFHYNE

REFHYNE II: A Strategic Investment in Green Hydrogen

REFHYNE II benefits from supportive policies, such as the EU’s binding renewable hydrogen targets and Germany’s regulatory framework. Additionally, the project has received backing from the EU’s Horizon 2020 research and innovation program. This investment aligns with Shell’s goal to transform its Energy and Chemicals Parks into lower-carbon product sources.

Shell’s Downstream, Renewables and Energy Solutions Director Huibert Vigeveno noted,

“Today’s announcement marks an important milestone in delivering our strategy of more value with less emissions. Investing in REFHYNE II is a visible demonstration of our commitment to the hydrogen economy, which will play an important role in helping to decarbonise Shell’s operations and customer products.”

Noted in Shell’s press release, the company’s key partners in REFHYNE II include ITM Power (Trading) Ltd, ITM Power Germany GmbH, Linde GmbH, TECNALIA, ETM, SINTEF AS, and CONCAWE. Shell anticipates that the hydrogen produced will meet the EU’s renewable fuels of non-biological origin (RFNBO) standards. It has further elaborated that the REFHYNE II project will fit within Shell’s cash capital expenditure plans and surpass the internal rate of return (IRR) targets for its Renewables & Energy Solutions division. This was highlighted during last year’s Capital Markets Day organized by Shell.

Shell’s Bold Investments in Green Hydrogen

Greg Joiner, Executive Vice President of Shell Energy said,

“Shell’s commitment to renewable generation projects creates a path toward a sustainable future, where innovation and clean energy come together to power a brighter world. Across Europe through these renewable developments and further third-party offtake agreements, Shell Energy is supporting businesses to progress the energy transition by providing expertise and a range of renewable power solutions and bespoke offers.”

Shell Nederland and Shell Overseas Investments, subsidiaries of Shell plc, have decided to build Europe’s largest renewable hydrogen plant, Holland Hydrogen I. It will begin operations next year at the Rotterdam port. The 200 MW electrolyzer will produce up to 60,000 kilograms of renewable hydrogen daily. Additionally, the plant will use power from the offshore wind farm Hollandse Kust which is partially owned by Shell. The green hydrogen will decarbonize the Shell Energy and Chemicals Park Rotterdam, the key manufacturing hubs for petrol, diesel, and jet fuel.

Notably, Shell has always been a trendsetter in the green hydrogen space. In 2022, Shell and Kansai Electric Power collaborated on liquid hydrogen (LH2) supply chains to decarbonize their businesses Their partnership involved producing decarbonized hydrogen, deploying Shell’s liquefaction and storage technology, and using the hydrogen at Kansai, Japan’s thermal power plants.

Manufacturing green hydrogen is playing a pivotal role in Shell’s energy transition strategy supporting it to reach net-zero emissions by 2050. No wonder, this has marked a significant step toward a sustainable future.

Will the EU Meet its 2030 Hydrogen Goals?

In 2022 green hydrogen got a whole new perspective with a wide range of uses. It was being used in steel production, mobility, natural gas blending, e-fuels, and heating.  Thus, 41% of Europe’s clean hydrogen demand, amounting to 8.09 kt, came from these new hydrogen uses.

With Europe witnessing a rise in green hydrogen applications, the demand for it also grew. For instance, the Netherlands, the UK, and Austria rely on these applications for 100%, 90%, and 86% of their hydrogen consumption, respectively. In Estonia, it’s 100%, while in Switzerland, it’s 51%. Moreover, specific industries lead the demand in various countries. Germany’s refining sector accounts for 23%, Spain’s ammonia production makes up 80%, Iceland’s methanol production is at 90%, and Austria’s steel industry dominates at 83%. Check out the detailed report here: The EU hydrogen market landscape

Europe green hydrogensource: EU

Furthermore, the European Roundtable on Climate Change and Sustainable Transition aka ERCST’s latest hydrogen report revealed that Europe has etched a significant mark in the low-carbon hydrogen market. It is fueled by ambitious targets and government incentives.

  • The EU adopted a hydrogen strategy in 2020, aiming to install 6GW of electrolyzers by 2024 and 40GW by 2030.

The REPowerEU plan, introduced in 2022 to reduce reliance on Russian natural gas, set even higher goals. It targets 20 MTs of renewable hydrogen use by 2030, with 50% from domestic production. BloombergNEF estimates that meeting this domestic target requires 125GW of electrolyzer capacity, which is 3x of its 2030 target.

EU Member States have also set their electrolyzer targets separately. It totals to 54.3GW by 2030. These national goals align with the EU’s hydrogen strategy but fall short of the REPowerEU target. However, BloombergNEF forecasts that EU countries will deploy a maximum of 23GW by 2030, based on the ongoing projects and policies. On the downside, this study indicates that most countries may not meet their national electrolyzer goals.

Europe green hydrogen

Overall, with a solid investment backup, the REFHYNE 2 project will push innovation to its peak. Consequently, Shell’s experienced team will manage the major scale-up with precision, thereby advancing green hydrogen significantly to achieve the EU’s target.

How Effective Are Carbon Credits in Corporate Net Zero? SBTi Speaks

Jennifer L
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How Effective Are Carbon Credits in Corporate Net Zero? SBTi Speaks

The Science Based Targets initiative (SBTi), the leading authority on corporate climate goals, has released new research that suggests carbon credits may not be effective for offsetting value chain emissions. This marks a significant shift from earlier plans, which had proposed a broader role for carbon credits.

The SBTi’s review, based on various third-party studies, finds that many carbon credits fall short of delivering the intended environmental benefits. This revelation suggests that reliance on carbon credits might hinder decarbonization efforts and limit the flow of climate finance.

The report’s findings could significantly impact the carbon offset market, which has been scrutinized for its effectiveness in delivering promised emissions reduction. 

SBTi’s New Findings Challenge Carbon Credit Market

Founded in 2015, SBTi’s mission is to establish science-based target setting as a standard for corporate climate action. It provides guidelines and validation for companies aiming to meet net zero targets, initially requiring 90-95% decarbonization by 2050 and neutralizing remaining emissions.

Earlier this year, SBTi proposed revising its Corporate Net-Zero Standard to include carbon credits for managing Scope 3 emissions, which are the most challenging to control and often represent the majority of a company’s emissions. This proposal led to controversy within SBTi, resulting in staff concerns and calls for leadership changes.

The SBTi board later clarified that any changes regarding carbon credits would be evidence-based and that a discussion paper would be published before finalizing the new standard.

Recent research by SBTi indicates that many carbon credits are “ineffective” in achieving meaningful climate impact and could potentially hinder net-zero progress and reduce climate finance. The research acknowledges the limitations of existing studies but calls for more evidence to better assess the effectiveness of carbon credits.

The SBTi report highlights that 84% of evidence submissions argue against treating carbon credits as interchangeable with other emission reduction methods, deeming it illogical or counterproductive to global mitigation goals.

Around half of the submissions support contribution claims over offsetting or compensation claims. The SBTi received 111 unique evidence pieces, including research studies and white papers, which will inform updates to its Corporate Net-Zero Standard—a framework guiding corporate decarbonization.

SBTi’s Game Plan: Revising Corporate Net-Zero Standard

The report’s findings are expected to reinforce SBTi’s credibility within the industry, according to experts. They praised the review’s focus on the science of carbon credits, suggesting it restores the SBTi’s relevance in guiding corporate climate action amidst significant external pressures.

Sue Jenny Ehr, the interim CEO of SBTi, stressed that the findings should be viewed within the context of the reviewed evidence, without making broad generalizations. Ehr also said that:

“Targets are the first step to decarbonization and it is important that the SBTi conducts a comprehensive process to revise the Standard to help companies take the lead on climate action and drive down emissions.”

Interim CEO Sue Jenny Ehr stressed the importance of a thorough revision process to support effective climate action and emission reductions.

Alberto Carrillo Pineda, SBTi’s Chief Technical Officer, stated that the review aims to provide a nuanced understanding of the carbon credits debate, which has become highly polarized. Pineda further remarked that the standard-setter stresses the importance of prioritizing direct decarbonization for climate action. 

The SBTi plans to release a draft of the revised Corporate Net-Zero Standard for public consultation in late 2024. 

A Carbon Credit Market Shake-Up: A Call for Rethinking Emissions Strategies

Ideally, a carbon credit represents a ton of carbon dioxide emissions that have been either removed from or prevented from entering the atmosphere, often through projects like reforestation or renewable energy. It’s also called carbon offsets in voluntary carbon markets.

The carbon credit market, estimated by BloombergNEF to potentially expand from $2 billion to $1 trillion with right rules, is driven by the recognition that companies will struggle to achieve the required emissions reductions to meet the 1.5°C target set by the Paris Agreement.

projected growth of carbon offset demand

These market instruments can be valuable if used correctly and if they incentivize the right outcomes, according to Pineda. 

Efforts are underway to address the risks associated with carbon credit trading. For instance, new US guidelines aim to restore trust in the voluntary carbon market (VCM), with Treasury Secretary Janet Yellen noting its potential as a powerful tool against climate change if properly regulated. The US Commodity Futures Trading Commission is also preparing to finalize its carbon credit guidance by the end of the year.

In conclusion, the SBTi’s report calls for a more stringent evaluation and application of carbon credits. The initiative’s renewed emphasis on science and rigorous standards aims to ensure that carbon credits contribute meaningfully to climate goals and do not undermine broader decarbonization efforts.

Microsoft Reported Q2 Record Earnings, How About Its Carbon Negative Goals?

Jennifer L
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Microsoft Reported Q2 Record Earnings, How About Its Carbon Negative Goals?

Microsoft has reported impressive financial results for Q2 2024, showcasing strong revenue growth and earnings. But how does the tech giant perform when it comes to its environmental and carbon emission reduction commitment?

Microsoft’s Financial Success

For the quarter ended June 2024, Microsoft reported revenue of $64.73 billion, marking a 15.2% increase year-over-year. Earnings per share (EPS) were $2.95, up from $2.69 in the same period last year. This revenue exceeded the Zacks Consensus Estimate of $64.19 billion by 0.84%, while the EPS surpassed the consensus estimate of $2.90 by 1.72%.

The company forecasts Q1 revenue between $63.8 billion and $64.8 billion. The Intelligent Cloud segment, including Azure, generated $28.52 billion, up 19%, but below the $28.68 billion consensus. Azure and other cloud services grew 29%, with AI services contributing 8 percentage points.

Last week, Google parent Alphabet reported that revenue from its cloud business, which includes Workspace productivity software and Google Cloud Platform infrastructure, increased by approximately 29%.

Microsoft’s 2030 Carbon Negative Goal

Microsoft has set an ambitious goal to become carbon negative by 2030, meaning the company aims to remove more carbon dioxide from the atmosphere than it emits. By 2050, Microsoft plans to offset all carbon dioxide emissions since its inception in 1975. Achieving this involves significant innovation and collaboration, particularly in the face of complex emission challenges.

Microsoft carbon emission reduction targets vs progress

Since setting its sustainability targets 4 years ago, Microsoft has been at the forefront of efforts to address climate change. Thousands of other companies have also committed to achieving net zero emissions, driven by advancements in technologies such as AI, which enhance measurement, datacenter efficiency, and energy transmission. 

Amid financial success, the key environmental challenge of reducing Scope 1, 2, and 3 emissions remains substantial. 

In FY23, Microsoft’s total emissions rose by 29.1% compared to the 2020 baseline. This increase is attributed to ongoing investments in technology and infrastructure to support future innovations. 

Microsoft 2030 carbon negative target
Chart from Microsoft 2024 Environmental Sustainability Report

Notably, Scope 3 emissions account for more than 96% of Microsoft’s total emissions. These emissions primarily come from two upstream categories: Purchased Goods and Services (Category 1) and Capital Goods (Category 2), as well as one downstream category: Use of Sold Products (Category 11).

Microsoft scope 3 emissions
Chart from Microsoft 2024 Environmental Sustainability Report

Although Microsoft has reduced Scope 1 and 2 emissions by 6% since 2020 through efforts such as clean energy procurement and green tariff programs, Scope 3 emissions remain the biggest challenge. Addressing these requires extensive collaboration across industries. 

What’s Microsoft Doing About Its Increasing Carbon Footprint?

Microsoft’s goal of becoming carbon-negative is deeply connected to global decarbonization efforts. Essential to this goal is supporting the development of carbon-free electricity infrastructure through procurement and investment. Recognizing the scale of this challenge, Microsoft has adopted a pioneering approach by investing in carbon-free electricity to enhance the grids where it operates. 

The company is also working to diversify and expand the supply of impactful renewable energy and improve access for all.

Scaling Up Clean Energy

Microsoft’s partnership objectives are to meet its own operational needs, accelerate the development of technologies for its customers and partners, and significantly increase the global sustainability market. 

  • By 2023, Microsoft had expanded its renewable energy portfolio to over 19.8 gigawatts (GW) across 21 countries. 

New power purchase agreements (PPAs) were signed with AES in Brazil, Constellation Energy in Virginia, Powerex in Washington, Contact Energy in New Zealand, and Lightsource bp in Poland. 

Notably, Microsoft became the first major commercial entity to use Powerex’s 24×7 Clean Load Service for a datacenter in Washington. This service matches Microsoft’s hourly datacenter energy demand with direct deliveries of carbon-free hydro, solar, and wind power year-round, supporting the company’s 100/100/0 goal. 

Datacenter Efficiency

Microsoft is optimizing datacenter efficiency using Power Usage Effectiveness (PUE) with a current design rating of 1.12, aiming for even lower values. Transitioning servers to low-power states reduced energy use by up to 25%, cutting Scope 2 emissions. 

The company also enhances resource utilization by minimizing peak power needs and improving server density, leading to a 7% reduction in datacenter power infrastructure. Additionally, server utilization improvements resulted in a 1.5% reduction in hardware needs for Azure, significantly reducing embodied carbon.

Fleet Electrification

Microsoft is advancing its fleet electrification efforts across global campuses, aiming to eliminate reliance on fuel-burning vehicles. To achieve a 100% electric fleet by 2030, Microsoft is building an Electric Vehicle Fleet Facility at its Redmond headquarters. This facility, currently in the design phase, will support the electric fleet by providing housing, charging, and maintenance services. 

Boosting Carbon Dioxide Removal (CDR) Solutions

To address its unavoidable emissions, particularly Scope 3, Microsoft is committed to advancing carbon removal technologies. 

In FY23, the company accelerated procurement across various CDR pathways, leveraging a long-term agreement framework to enhance the impact of large-scale projects. These multi-year agreements are designed to help projects secure external financing and ensure the purchase of additional, durable, measurable, and net-negative carbon credits. 

Microsoft’s goal is to build a portfolio of over 5 million metric tons per year starting in 2030, while also exploring novel solutions such as enhanced rock weathering.

In FY23, Microsoft bought 5.015 million metric tons of carbon removal to support its carbon neutral and negative targets.

Microsoft carbon removal targets
Chart from Microsoft 2024 Environmental Sustainability Report

Microsoft contracted 5,015,019 metric tons of carbon removal to be retired over the next 15 years. By December 2023, contracts are expected to contribute 875,000 metric tons towards the 2030 target of over 5 million metric tons. Notable projects signed in 2023 include:

  • Reforestation in the Amazon
  • Landmark bioenergy with carbon capture and storage (BECCS) in partnership with Orsted 

Additionally, Microsoft expanded its renewable energy portfolio to over 19.8 gigawatts, reinforcing its commitment to sustainable energy infrastructure.

And just last month, Microsoft signed two separate CDR deals. One is with BTG Pactual Timberland Investment Group for 8 million carbon removal credits, the biggest CDR transaction on record. The other agreement is with Indigo Ag for 40,000 agricultural soil carbon credits, also the biggest-ever purchase of an individual buyer from the ag company.

With record earnings and significant investments in carbon emission reductions, Microsoft continues to lead in both innovation and sustainability, setting a benchmark for the industry.

McDonald’s Balances Sales Decline with Bold Sustainability Goals

Saptakee S
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McDonald’s Balances Sales Decline with Bold Sustainability Goals

McDonald’s reported a drop in US and global sales in Q2 2024, contrasting sharply with the previous year’s growth. Amid these challenges, the fast-food giant is doubling down on value deals and ambitious sustainability initiatives.

McDonald’s Sales Dip Amid Rising Costs

McDonald’s experienced a decline in US and global sales during the second quarter ending June 30, with decreases of 0.7% and 1.1%, respectively. This contrasts sharply with a 10% increase in US sales and a 12% increase in international sales during the same period last year. 

The Chicago-based fast-food giant reported a net income of $2.02 billion, or $2.80 per share, down 12% from $2.31 billion, or $3.15 per share, in Q2 2023. Revenues remained flat at $6.49 billion, while systemwide sales decreased by 1%.

Higher prices have led consumers to seek value and lower-priced options, reducing traffic to McDonald’s. Despite these challenges, McDonald’s stock rose by more than 4% following the earnings release. 

The increase is attributed to the company’s emphasis on its “$5 Meal Deal,” launched in late June, which targets budget-conscious customers. This strategy aims to attract customers increasingly focused on affordability, especially as prices of popular menu items like the Big Mac and Quarter Pounder have risen by over 20% in recent years.

McDonald’s focuses on value deals to retain and attract customers while addressing its massive carbon footprint at the same time. 

McDonald’s Net Zero Strategy

In 2018, McDonald’s set ambitious targets to cut greenhouse gas (GHG) emissions from its restaurants and offices by 36%, and reduce emissions intensity across its supply chain by 31% by 2030 compared to 2015.

These targets, approved by the Science Based Targets initiative (SBTi), were supported by collaboration with industries, governments, Franchisees, suppliers, consumers, and local communities. In 2021, McDonald’s committed to aligning its climate goals with keeping global temperature rises below 1.5°C and achieving net-zero emissions by 2050.

McDonald's carbon footprint 2021
McDonald’s Carbon Footprint

Last year, McDonald’s set a fresh target for 2030 with 2018 baseline:  

  • Reduce absolute scope 1 and 2 GHG emissions from restaurants and offices by 50.4% 
  • Cut absolute scope 3 GHG emissions related to facility, logistics, and plastic packaging by 50.4%, 
  • Achieve a 16% reduction in scope 3 GHG emissions from beef and chicken farming (forests, land, and agriculture) by 2030

“We believe we have both a privilege and a responsibility to help lead on issues that matter most in communities – and there is no issue more urgent globally and of impact locally than protecting our planet for generations to come,” said Chris Kempczinski, McDonald’s President and Chief Executive Officer. He added that:

“By committing to net zero through the SBTi’s Business Ambition for 1.5°C campaign, we are helping every community we serve mitigate the impacts of climate change and adapt for the future.”

What McDonald’s Does to Cut Its Supersized Carbon Footprint

The fast-food giant’s net zero strategy revolves around transforming its food system, and supply chain and using renewable energy across its operations. All these targets align with SBTi’s 2023 guidance and the Greenhouse Gas Protocol, the global emissions accounting standard. 

McDonald’s emphasizes that evolving climate accounting standards, especially for nature-based solutions like soil carbon sequestration and renewable energy, are crucial for meeting its targets. Balancing climate goals with company performance, including financial growth and innovation in menu offerings and sourcing, remains essential.

Expansion strategies might increase GHG emissions if decarbonization lags business growth. Navigating these challenges will be key to advancing McDonald’s climate targets while driving business forward.

Renewable Energy Impact

The company uses climate tracking data points to measure its energy impact. They have added two major U.S. virtual power purchase agreements (VPPAs) to boost renewable energy on the grid. They expect that their renewable energy projects once 100% operational can cut emissions by 33% from their 2015 baseline. Furthermore, their restaurants are run on renewable energy that meets Global Restaurant Standards (GRS).

Regenerative Agriculture 

McDonald’s began regenerative agriculture with supply chain partners to combat deforestation and advocate for climate-positive policies globally. It had partnered with AgMission™ and FAI Farms, to promote sustainable farming. 

McDonald’s targets key commodities—beef, soy (for chicken feed), palm oil, coffee, and fiber (for guest packaging)—to address deforestation risks. The strategy is reviewed with Proforest and WWF. McDonald’s also seeks to make a positive impact in other priority commodities.

Accelerating Circularity

A packaging and waste strategy aims to reduce waste and emissions throughout operations and the supply chain. more than 85.1% of restaurants in markets with advanced infrastructure offered guests the opportunity to recycle packaging items.

While McDonald’s faces declining sales, its commitment to ambitious carbon footprint reduction and sustainability goals shows its dedication to long-term growth and environmental responsibility.

ASX Debuts Environmental Futures Contracts for Carbon Markets

Jennifer L
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ASX Debuts Environmental Futures Contracts for Carbon Markets

ASX has launched three Environmental Futures contracts, marking a significant development for carbon and renewable energy markets in Australia and New Zealand. These new contracts enable participants to price and hedge emissions reduction risk as the economy transitions to a lower carbon footprint. These contracts are the first carbon futures contracts to debut in Australia and New Zealand. 

Fee-Free Launch Boosts Carbon Market Liquidity

To foster growth, ASX is offering a temporary fee waiver on all Environmental Futures transactions to build liquidity and encourage early engagement from diverse market participants.

The three futures contracts available for trading on the ASX 24 Market include the following physically delivered:

  • Large Generation Certificate (LGC) Futures, 
  • Australian Carbon Credit Unit (ACCU) Futures, and 
  • New Zealand Unit (NZU) Futures. 

These contracts aim to provide a liquid, transparent forward pricing curve on an annual basis for up to five years. Registered participants can make or take delivery of underlying Certificates or Units at settlement. These instruments can then be surrendered to the government to offset emissions or meet compliance obligations. 

Each contract is standardized, with each equaling 1,000 underlying LGCs, ACCUs, or NZUs.

ASX designed its suite of Environmental Futures to meet the growing demand for liquid and transparent carbon credit and renewables trading markets. There has been significant interest in these products from a diverse customer base, including the energy sector, carbon project developers, compliance entities, financial institutions, trade houses, and corporates.

Future-Proofing Australia’s Carbon Market

Daniel Sinclair, ASX Head of Commodities, emphasized the importance of derivatives markets as Australia transitions from a voluntary to compliance carbon market, aligning with other global jurisdictions. 

“The  transition to clean energy, by definition, is uncertain, and ASX-hosted Environmental Futures will be a key  instrument in managing risk and supporting the net zero targets of organisations and policymakers.” 

Australia’s carbon market is set for significant growth and is poised to become one of the world’s largest producers of carbon credits. Carbon credits, or offsets, represent quantities of abated emissions that fund renewable energy projects and decarbonization efforts. Companies can purchase these credits instead of directly reducing their emissions.

Recent data from the Clean Energy Regulator indicates that about 51% of all ACCUs are now in the registry accounts of safeguard or safeguard-related entities, a volume that could benefit from moving onto the exchange.

ACCUs holdings by market participation
Chart from Clean Energy Regulator website

At the end of Q1 2024, the Australian National Registry of Emissions Units (ANREU) reported holdings of 38.6 million ACCUs. This marks an increase of 2.4 million ACCUs over the quarter. In Q1 2024, ANREU issued 3.8 million ACCUs, signaling a strong start towards an anticipated record issuance of at least 20 million ACCUs for the year.

ACCUs issued by method type
Chart from Clean Energy Regulator website

For the same period, the number of Safeguard (excluding Safeguard-related) accounts holding ACCUs increased by 11, reaching a total of 54. ACCUs held in these accounts rose to 12 million, an increase of 4.6 million over the quarter.

The volume held by Safeguard entities is likely higher, as other accounts, such as intermediaries and project proponents, may hold ACCUs on their behalf.

Catalyzing Climate Action and Carbon Market Innovation

Established in 2016, Australia’s Safeguard Mechanism requires regulated emitters to either adopt cleaner technologies or buy carbon credits to offset their emissions. This policy allows pollution caps to tighten over time, giving companies a window to adjust their operations to meet emission reduction targets. Additionally, it enables firms to offset emissions by purchasing credits from other polluters with surplus credits.

Back in 2022, Australia’s climate policy advisory has recommended establishing a fully transparent national carbon market. This development could facilitate global carbon trade and potentially merge voluntary and compliance markets.

The federal government has committed to reducing carbon emissions by 43% below 2005 levels by 2030. This new target underscores a stronger commitment to climate action, which could drive significant changes in regulatory and market landscapes.

ASX’s Environmental Futures becomes a key element to that climate commitment. It is also part of a broader ecosystem of current and planned futures and options contracts across electricity, gas, and environmental markets. The new contracts will support Australia and New Zealand’s net zero efforts and clean energy transition.


Environmental Futures could attract new market participants due to their liquidity, enhanced price discovery, and reduced credit risk through central clearing. These futures will provide a standardized price around which liquidity can concentrate, which is particularly important in supporting the ACCU market where certain methods and co-benefits are valued differently.

The introduction of these futures contracts underscores ASX’s commitment to supporting the net zero ambitions of businesses and policymakers by providing the necessary tools to manage emissions reduction risks effectively.

Uranium Contract Prices Hit 16-Year Highs, Plus Major Market Development

Jennifer L
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Uranium Contract Prices Hit 16-Year Highs, Plus Major Market Development

Long-term uranium contract prices have reached over 16-year highs due to supply uncertainty and increased demand from utilities expanding capacity for AI data centers. Current term prices are around $79 per pound, the highest since 2008, with expectations of further increases.

Cameco, a leading uranium miner, reported securing contract prices with ceilings of $125-130 per pound and floors of $70-75 per pound, the best prices seen in over a decade. Spot uranium prices, which hit a 14-year high in February 2024, are now around $82 per pound.

Uranium Market is Heating Up

Uranium is the primary fuel for nuclear energy. The International Energy Agency predicts that global nuclear generation could double by 2050, calling for a corresponding increase in supply. 

However, Plenisfer Investments estimates that prices must exceed the marginal cost of production, currently $90-$100 per pound, by at least 30% to incentivize new projects. This projection suggests a continued market deficit over the next decade.

global uranium supply deficit
Chart from Reuters

Goldman Sachs estimated that global data center power demand, currently 1-2% of power use, could grow by 160% by 2030. Nuclear energy companies such as Constellation and Vistra are poised to benefit from the US push for Big Tech to invest in climate-friendly energy to meet the growing needs of AI.

Experts said that rising demand from utilities is narrowing the gap between term and spot prices. They further noted that utilities with ample inventory but those with shortages will be compelled to buy. 

Companies like Uranium Energy Corp and Ur-Energy have limited volumes but face high demand. This prompts them to seek higher prices or opt for spot sales, according to Robert Crayfourd, co-fund manager of Geiger Counter.

Major Deals and Mergers Reflect Strong Market Interest

In late June, Australian miner Paladin Energy launched a $1.1-billion bid for Fission Uranium and its high-grade Patterson Lake South project in Saskatchewan. This move aims to address the global nuclear power push amid a decade-long underinvestment in uranium supply. 

Paladin CEO Ian Purdy highlighted the shortage of primary uranium production and the strong demand for their Langer Heinrich product. The merger could make Paladin the third largest listed uranium miner globally. The miner has a production potential of 15 million pounds of uranium oxide (U3O8) annually by the decade’s end.

In another significant market development, Uranium Royalty Corp. (NASDAQ: UROY) has entered into a binding royalty purchase agreement to acquire an additional royalty on the Churchrock uranium project in New Mexico, USA, owned indirectly by Laramide Resources. The Churchrock Project, an advanced In-Situ Recovery (ISR) project, is one of the largest undeveloped uranium projects in the U.S.

Uranium Royalty is the world’s only uranium-focused royalty and streaming company and the only pure-play uranium listed company on NASDAQ. UROY offers investors exposure to uranium prices through strategic acquisitions in uranium interests. These include royalties, streams, debt, and equity in uranium companies, as well as holdings of physical uranium. 

The royalty company aims to support the uranium industry, which requires significant investment to meet the increasing demand for uranium as fuel for carbon-free nuclear energy.

Project Overview and Royalty Details

The Churchrock Project, located in the Grants Mineral Belt of New Mexico, is owned by Laramide’s subsidiary NuFuels. It’s at a development stage with significant ISR uranium resources, which could play a critical role in the U.S. uranium production landscape.

Preproduction wellfield development is expected to take four years, with all other necessary infrastructure already in place. Laramide holds most of the permits and licenses required to start production. The Life of Mine unit operating cost is estimated at US$27.70/lb. U3O8, with a static uranium price assumption of US$75/lb. U3O8.

Boosting U.S. Domestic Uranium Production

The transaction aligns with recent U.S. legislative efforts to eliminate reliance on Russian uranium imports and boost domestic uranium production. These initiatives provide funding to expand uranium, conversion, and enrichment capacity in the U.S., targeting complete phase-out of Russian imports by 2028.

Scott Melbye, CEO of UROY, remarked on this development saying that:

“Our enlarging footprints in the uranium royalty sector in the United States as evidenced by the acquisition of the additional royalty on Churchrock fit squarely in support of those initiatives.”

UROY’s acquisition of an additional royalty on the Churchrock Project is a strategic move to support U.S. uranium production. This is crucial for the country’s energy security and transition to a low-carbon economy. The transaction is subject to customary closing conditions and is expected to close by the end of July 2024.

The surge in uranium contract prices to 16-year highs underscores the increasing demand due to nuclear energy push. Significant market developments like mergers and acquisitions highlight the industry’s response to supply challenges and future growth potential.

According to the World Nuclear Association’s Report, the projected supply of uranium by 2040 is shown below. The chart shows supply into current mine capacity, idled capacity, and mines that are under development, planned, or prospective.

uranium production projection 2040
Source: The Nuclear Fuel Report, World Nuclear Association

To meet the projected demand from the next decade, idled mines need to restart and mines under development and planning must come online. Moreover, new projects will also need to be developed. Significant exploration, innovative techniques, and timely investments are essential to convert these resources into refined uranium for nuclear fuel production within the required timeframe.

As the uranium market evolves, the focus remains on securing high prices and boosting domestic production to meet the rising demand and ensure energy security.

Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: UROY.

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital.

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