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

Jennifer L
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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.

Yara Clean Ammonia Signs Historic Deal with India’s Greenko ZeroC to Ramp Up Green Ammonia Supply

Saptakee S
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Yara Clean Ammonia Signs Historic Deal with India’s Greenko ZeroC to Ramp Up Green Ammonia Supply

Yara Clean Ammonia, the world’s largest trader and distributor of ammonia, has forged a long-term deal with India-based Greenko ZeroC, the green ammonia production arm of AM Green.

This historic deal majorly boosts the green ammonia industry and propels the net zero goals of both economies.

Unlocking the Key Features of the Green Ammonia Deal

The agreement and the term sheet ensure the supply of 50% renewable ammonia from Phase 1 of AM Green’s ammonia production plant located in Kakinada, Andhra Pradesh.

The document further states that Greenko’s plant will produce, and export renewable ammonia derived from round-the-clock carbon-free energy by 2027.

The press release from Yara Ammonia highlights two important aspects of this deal:

  • AM Green’s platform will ensure compliance with EU RFNBO and Renewable Energy Directive requirements for renewable ammonia and other sustainable fuels.
  • Yara Clean Ammonia will utilize the renewable ammonia supply to manufacture low-emission fertilizer and to decarbonize industries such as shipping, power, and energy-intensive sectors.

Mr. Mahesh Kolli, President of AM Green has expressed himself with a note,

“We are delighted to partner with Yara Clean Ammonia to propel the transformation of various industries and several OECD economies. Continuous focus on innovation combined with execution reinforces AM Green’s leadership position as a global clean energy transition solutions platform for low-cost green molecules such as hydrogen, ammonia, fuels, and other chemicals.”

Clean Ammonia: Fuelling the Future  

Ammonia, with no CO2 emissions upon combustion, is poised to be a key fuel in the future, aligning well with the hydrogen economy. Unlike liquid hydrogen, ammonia doesn’t require extreme cooling and boasts superior energy density. This renders it more practical for transportation and storage.

Moreover, ammonia production utilizing renewable energy sources leads to negligible or zero GHG emissions.

Scaling Up: AM Green’s Bold Plan for a Mega-Scale Green Ammonia Platform

Founded by the creators of Greenko Group, the company is building production capacity for green molecules, including:

  • green hydrogen
  • ammonia,
  • biofuels and e-methanol
  • sustainable aviation fuels,
  • high-value downstream chemicals

Its main goal is to decarbonize the tough industries. Additionally, Greenko plans to establish an international renewables and storage business by collaborating with John Cockerill of Belgium. Together they would manufacture electrolyzers to produce green ammonia.

Uniper and Greenko signed exclusivity for Green Ammonia offtake to the EU from India’s first Green Ammonia Project in Kakinada. Their press release states that they have collaborated to negotiate innovative pricing and supply. Together they would “build a tenure structure for a unique supply and purchase agreement for 250,000 T per annum of Green Ammonia (GASPA) based on the Heads of Terms.” 

Greenko’s Kakinada project is a multi-phase green ammonia production and export facility. It would be one of the world’s largest green ammonia platforms.

Furthermore, the company’s annual report reveals that:

  • Greenko is building a 2 GW per year Alkaline Electrolyser manufacturing capacity. It can produce 1 Lakh TPA Green Ammonia that will be operational by 2024.
  • Further, 1 MTPA Green Ammonia manufacturing capacity will be supplemented in the next two consecutive years summing up to 3.1 MTPA capacity by the end of 2026.
  • Additionally, there are plans to increase the capacity to 5 MT per annum by 2030.

Greenko’s Green H2 and Energy Carrier Architecture

Greenkosource: Greenko

Yara’s Ambitious Decarbonization Goals for its Ammonia Plant

Yara Clean Ammonia headquartered in Oslo, Norway operates the largest global ammonia network with 15 ships. Through Yara, it has access to 18 ammonia terminals and multiple ammonia production and consumption sites worldwide.

In 2021, Yara received NOK 283.25 million from Enova to develop a green ammonia initiative. It marked the first step towards fully decarbonizing the Herøya ammonia plant in Porsgrunn, Norway.

The Herøya fertilizer factory ranks among Norway’s top CO2 emitters outside the oil and gas sector, releasing 800,000 tonnes of CO2 annually. Hydrogen, vital in fertilizer production, is currently derived from liquefied fossil gas, but Yara aims to shift to renewable energy sources, enabling emission-free ammonia production.

CEO Svein Tore Holsether emphasizes Norway’s unique opportunity to lead the green transition. He highlighted green ammonia’s versatility and its role in reducing emissions in global food production and long-distance shipping. Yara’s corporate board commits to investing in a 24 MW demonstration plant, making it one of the world’s largest green ammonia production projects.

Yara reports that this shift to renewable energy will cut CO2 emissions by about 41,000 tons yearly. It would also produce enough hydrogen to yield 60,000 – 80,000 tonnes of green, fossil-free mineral fertilizer annually.

Another landmark deal is the Yara Clean Ammonia and Cepsa partnership. This initiative aims to decarbonize the European industry and maritime transport by creating a secure and cost-effective supply chain for low-emission ammonia and hydrogen.

Strategy scorecard of Yara Ammonia

Yara Ammoniasource: Yara’s report

Considering the AM Green collaboration, Hans Olav Raen, CEO, of Yara Clean Ammonia commented,

“The AM Green Kakinada project expands our portfolio of ammonia produced with renewable energy and consolidates Yara Clean Ammonia’s position as a reliable supplier of low-emission ammonia to established and emerging markets like fertilizer production, cracking of clean ammonia to hydrogen, shipping fuel, power generation, and other industrial applications.”

We can conclude from this report that the Yara Ammonia-Greenko deal could revolutionize sustainable energy architecture by ambitiously ramping up green ammonia production and supply. Notably, it indicates a substantial potential!

Nikola Unveils HYLA Refueling Station in California Amid China’s Hydrogen Breakthrough

Jennifer L
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0
Nikola Unveils HYLA Refueling Station in California Amid China’s Hydrogen Breakthrough

Nikola Corporation proudly announces the opening of its latest HYLA high-pressure modular refueling station and facility in Southern California. Located near the Port of Long Beach at 2267 W. Gaylord St., this new station commenced operations on May 4, 2024. 

This launch is a pivotal milestone in Nikola’s strategic plan, aiming to establish a network of up to 9 refueling solutions by mid-2024. It has also a total of 14 operational sites slated for completion by year-end. These include a combination of HYLA modular fuelers and partner stations such as FirstElement Fuels’ in the Port of Oakland.

Nikola Corporation is driven by a clear mission: pioneering solutions for a zero-emissions world. As an integrated truck and energy company, Nikola is leading the transformation of commercial transportation. The company’s Class 8 vehicles, which include battery-electric and hydrogen fuel cell electric trucks, along with its energy brand, HYLA, are driving the advancement of the complete hydrogen refueling ecosystem.

Headquartered in Phoenix, Arizona, Nikola operates from its manufacturing facility in Coolidge, Arizona. With a focus on innovation and sustainability, Nikola is committed to shaping the future of transportation and energy.

Fueling the Future in Southern California

Nikola focuses on providing an exceptional customer experience, offering round-the-clock assistance, ensuring seamless and efficient fueling.

Unlike battery-powered trucks, hydrogen fueling stations require more complex infrastructure and logistics. To address this, the HYLA refueling station is designed as a temporary setup, featuring large liquid hydrogen tanks on trailers capable of storing over 800 kilograms of hydrogen each.

Nikola’s refueling concept aims to facilitate the rapid deployment of hydrogen refueling stations to meet the rising demand for zero-emission trucks. This approach is especially crucial in areas experiencing a significant uptick in the use of hydrogen fuel cell vehicles (FCEVs).

Below is the projection for hydrogen deployment globally by 2030. FCEVs got the biggest market share for hydrogen.

hydrogen fuel cell EV (FCEV) 2030 outlook

President of Energy Ole Hoefelmann expressed excitement about inaugurating the second HYLA hydrogen refueling station in Southern California. This marks a significant stride toward sustainable transportation. 

He extended appreciation to the City of Long Beach and the Long Beach Fire Department for their instrumental role in realizing this vision, saying:

“With multiple stations in the pipeline this year, we are steadfast in our mission to pioneer zero-emission trucking solutions and drive positive environmental impact.”

Nikola is actively securing its hydrogen supply chain and expanding its HYLA refueling infrastructure to support increased demand. This ongoing development underscores Nikola’s commitment to accelerating the adoption of hydrogen fuel cell trucks and advancing transportation’s decarbonization agenda.

As shown below, the United States stands fifth in terms of the number of hydrogen fuel stations in 2022. But as demand for FCEVs continue to rise, so is Nikola’s HYLA deployment.

hydrogen fuel station by country 2022

The HYLA network will offer a diverse portfolio of refueling solutions to Nikola’s hydrogen FCEVs and other Class 8 customers. These include modular and permanent HYLA stations, “behind-the-fence,” and partnerships with public truck stops. 

Revolutionizing Hydrogen Fuel Systems

In related news, the Chinese state-owned company China Aerospace and Technology Corporation (CASC) has introduced a breakthrough liquid-hydrogen fueling system for trucks, featuring a 100kg fuel tank.

This development follows German automaker Daimler’s successful road test of a fully-loaded truck with 80kg of liquid hydrogen stored onboard. This hydrogen innovation covers a distance of 1,047km without refueling.

Known as Track 1000, this domestically produced system is a core component of liquid hydrogen heavy trucks. Moreover, it’s designed to extend the range of hydrogen-powered vehicles to over 1,000km with a single charge.

China Track 1000 liquid hydrogen system

The new Track 1000 system maintains the same overall dimensions as its predecessor while offering a 20% increase in hydrogen volume and reducing costs by over 30%. CASC emphasized that the system meets international standards in terms of quality, hydrogen storage density, and refueling time.

Liquid hydrogen storage presents challenges due to its requirement of extremely low temperatures. Daimler’s Gen H2 truck, equipped with 40kg fuel tanks, demonstrates effective insulation to maintain hydrogen temperature without active cooling for an extended period. These advancements mark significant progress in making liquid hydrogen a viable and efficient fuel option for heavy trucks.

Nikola’s latest HYLA high-pressure modular refueling station in Southern California and China’s groundbreaking liquid hydrogen system are a crucial step in advancing zero-emission trucking solutions. Committed on expanding their hydrogen refueling infrastructure, Nikola is driving positive environmental impact and accelerating the adoption of hydrogen fuel cell electric trucks.

Xpansiv’s CBL VCM Saw Significant Block Trades, Xpansiv Connect™ Launched

Jennifer L
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Xpansiv’s CBL VCM Saw Significant Block Trades, Xpansiv Connect™ Launched

Xpansiv’s CBL voluntary carbon market (VCM) activity saw significant block trades at both the beginning and end of the week. The week started with a block trade of 175,000 N-GEO Trailing contracts settling at $0.35, marking the largest trade of the week at the lowest unit price. 

The data presented in the report is from the Xpansiv Data and Analytics database. It offers a comprehensive collection of spot firm, indicative bids/offers, and transaction data.

Xpansiv provides extensive market data sourced from CBL, recognized as the world’s largest spot environmental commodity exchange. This includes daily and historical information on bids, offers, and transactions for various environmental assets:

  • Voluntary carbon credits,
  • Compliance carbon, and
  • Voluntary renewable energy certificates. 

On Friday, block trades of 1.2 million metric tons of CBL N-GEO and CBL GEO December futures occurred at $0.99 and $0.44, respectively, driving weekly price gains of 7% and 16% in the contracts.

Trades and Trends from the CBL’s VCM Report

Xpansiv CBL GEO VCM and Futures Contracts

Blocks of N-GEO-eligible carbon credits were settled at prices up to $5.50. This is consistent with the $5.40 monthly average for recent-vintage, spot AFOLU credit transactions on the exchange. Pilot-phase CORSIA GEO-eligible credit blocks traded up to $1.35, slightly below CBL’s $1.98 monthly average price for technology credits. Additionally, 111 OTC-matched ACCU credits were settled via the trading platform.

On-screen matched trades included 500-ton lots of GS 11134 vintage 2022 Rwandan energy efficiency credits traded at $6.50. And VCS 1477 vintage 2016 Cambodian Mai Ndombe AFOLU credits traded at $1.25.

  • A total of 275,167 tons were traded via the CBL spot exchange. Plus, an additional 1,810,000 tons were traded via CME Group’s CBL GEO Emissions futures complex.

New offers in the voluntary carbon trading platform included VCS REDD, ARR, and cookstove carbon credits at prices up to $11.00. A request-for-quote (RFQ) seeking bids for 30,000 MWh of South African solar I-RECs generated in 1H 2024 was also circulated at an indicated offer price of $1.00/MWh.

In the North American Compliance Market, there was significant activity with over 70,000 PJM credits exchanged via CBL. This activity was primarily due to counterparties settling bilateral transactions through CBL’s post-trade infrastructure. 

Specifically, 25,000 vintage 2023 Virginia credits were settled, along with 3,574 vintage 2024 DC solar credits and 14,643 vintage 2023 Maryland solar credits.

Screen trading was concentrated in tier 1 PJM markets, where Pennsylvania vintage 2024 credits saw a rise to $35.00 on 9,551 credits traded. Similarly, vintage 2023 Maryland credits experienced a $0.25 increase to $28.00. Finally, there were 6,851 vintage 2024 Virginia credits traded on the CBL at $35.00.

Xpansiv Connect™ to Revolutionize Market Infrastructure

Following their report, Xpansiv® has introduced Xpansiv Connect™, an open-access infrastructure designed to facilitate the scaling of the global energy transition. This initiative includes integration with leading multi-registry environmental asset management and automated settlement systems.

Xpansiv Connect for voluntary carbon credit market

Xpansiv Connect™ offers all stakeholders seamless access to the company’s sophisticated trading, post-trade settlement, meta-registry, and portfolio management platforms. These include end users, brokers, banks, exchanges, and other service and platform providers. 

The platform comes fully integrated with 13 leading global registries. Moreover, Xpansiv Connect™ supports 5 voluntary carbon credit marketplaces and a vast network of hundreds of direct market participants.

Xpansiv is collaborating with prominent market participants globally to develop and enhance solutions and services using the platform. These collaborators include Trafigura, MSCI Carbon Markets, GoNetZero™, and Patch.

John Melby, Chief Executive Officer of Xpansiv®, emphasized the importance of launching this new system, saying that: 

“We believe opening access to our proven, institutional-grade technology infrastructure will best support the ecosystem of interoperable technology and market solutions needed to achieve a timely and equitable global energy transition.” 

Partnerships and Collaborations for a Sustainable Energy Transition

The launch of Xpansiv Connect marks a significant milestone as it opens up Xpansiv’s automated settlement and multi-asset, multi-registry portfolio management system to external trading platforms and exchanges for the first time.

  • This move extends the accessibility of Xpansiv’s advanced infrastructure, which processes over 1 billion asset transfers annually, to a broader ecosystem of stakeholders.

Among the partners exploring opportunities to leverage Xpansiv Connect are the Mercantile Exchange of Vietnam and insurers Oka and Kita. Additionally, existing partners such as BeZero Carbon, Sylvera, and the Commonwealth Bank of Australia are also supporting Xpansiv Connect.

Remarkably, the carbon marketplace developed by the Regional Voluntary Carbon Market Company (RVCMC) in the Kingdom of Saudi Arabia will implement Xpansiv Connect comprehensively. 

Leveraging this infrastructure, RVCMC aims to integrate its independent exchange matching engine with post-trade settlement and portfolio management system capabilities. The voluntary carbon credit market aims to become operational by the final quarter of 2024, facilitated by the implementation of Xpansiv Connect.

Lithium Priced at Over $20,000 Per Ton Signals Market Optimism

Jennifer L
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0
Lithium Priced at Over $20,000 Per Ton Signals Market Optimism

Arcadium Lithium PLC announced impressive first-quarter earnings, revealing an average realized pricing of over $20,000 per metric ton for its global lithium carbonate and hydroxide sales. 

CEO Paul Graves noted this exceeded seaborne lithium prices for the period, indicating positive market trends. Platts assessed the lithium carbonate CIF North Asia price at $14,600/t on May 7, the highest level since January 11. 

The company remains optimistic, with Graves highlighting encouraging signs in the lithium market and strong underlying demand fundamentals. He specifically noted that:

“Prices have increased from the cycle bottom and appear to have stabilized at levels that are notably higher than what we saw in the last downturn.”

lithium prices april 2024

Lithium Lift-Off: Arcadium’s Record-Breaking 1st Qtr

Arcadium’s performance is particularly noteworthy given its recent formation from the merger of Livent Corp. and Allkem Ltd. in January. However, it saw a decline in sales volumes due to production cuts at the Mt Cattline mine in Western Australia. 

Still, the company reported a net income of almost $20 million on sales of over $261 million in the first quarter, compared to $115 million income on sales of $253 million in the same period last year.

Arcadium is poised for significant expansion, with plans to complete new capacity constructions and expansions by 2025 and 2026. This effort aims to achieve a total production capacity of 170,000 metric tons annually across its global operations by 2026. 

Arcadium Lithium global operation
Arcadium Lithium global operations

The expansions will increase nameplate production capability by around 95,000 metric tons per year on a lithium carbonate equivalent basis. This includes additions in Argentina, with 25,000 metric tons across the Fénix and Sal de Vida projects, and in Canada, with 70,000 metric tons across the Nemaska and James Bay projects. 

Recent milestones include commissioning a 10,000-metric-ton carbonate expansion at Fénix and a 25,000-metric-ton carbonate expansion at Salar de Olaroz in Argentina. 

Additionally, expansions are underway for hydroxide production. The company has a 5,000-metric-ton expansion at the Bessemer City plant in the US and a 15,000-metric-ton unit at the Zhejiang plant in China undergoing qualification. 

CEO Paul Graves expressed confidence in the company’s growth trajectory, emphasizing their strategic investments in attractive assets across market cycles.

Arcadium’s enthusiasm for lithium, which experts project more expansion in this electric metal’s production, is mirrored broadly in the industry. Statista report estimates the global lithium supply will rise to over 2 million metric tons by 2030. 

Resolving Rifts, Reviving Production

In Australia, mining company Leo Lithium has finalized the sale of its remaining stake in the Goulamina lithium property in Mali to China’s Ganfeng Lithium Group, resolving a prolonged dispute with the local government and paving the way for the project to resume production this year. 

This agreement marks the second instance in May of an Australian miner resolving disputes with African governments. It resolved AVZ Minerals’ imminent delisting due to a property ownership dispute with the Democratic Republic of the Congo.

Under the deal, Ganfeng will acquire Leo Lithium’s 40% stake in the Goulamina project for US$342.7 million, pending approval from Leo Lithium shareholders and Chinese regulators. This equates to 43 Australian cents per Leo Lithium share. The company’s shares were suspended at 51 Australian cents in September 2023 amid the dispute. 

Additionally, Leo Lithium reached a US$60 million settlement with Mali’s junta government. This gives away its offtake right but securing a 1.5% gross revenue fee over 20 years from Ganfeng.

With the Goulamina project set to begin spodumene concentrate production in the 3rd quarter, Leo Lithium emphasizes adherence to Mali’s new mining code. This increases potential government project interest to 30%.

Optimism Amidst Market Challenges

While acknowledging shareholder concerns, industry analysts see the deal as the best outcome amid challenging sovereign and security risks. 

For instance, they suggest that despite current caution, the allure of potential returns may eventually prompt investors to reconsider African investments, especially if assets are priced attractively relative to cash flow.  

They also underscore the value for Leo Lithium shareholders and Ganfeng’s strategic investment in securing a substantial resource base for future industry growth. More remarkably, they remain optimistic about Australia’s position in lithium asset development, expecting renewed interest as lithium prices recover in the coming quarters and years ahead.

lithium prices outlook by S&P Global

As Arcadium Lithium celebrates unprecedented earnings and Leo Lithium resolves disputes, the lithium market shows signs of robust growth. Analysts remain optimistic, foreseeing a positive trajectory for both lithium companies amidst evolving market conditions.

BP Grabs The Opportunity to Take Over Tesla’s Supercharging Sites

Jennifer L
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0
BP Grabs The Opportunity to Take Over Tesla’s Supercharging Sites

BP’s electric vehicle (EV) charging arm is seizing the opportunity presented by Tesla’s scaling back of its Supercharger team, pledging to invest US$1 billion to expand its network across the US.

With plans to install over 3,000 charging points, including large-scale hubs termed Gigahubs, BP aims to address the growing demand for EV charging infrastructure.

BP’s Billion-Dollar Investment in EV Charging

Sujay Sharma, CEO of bp pulse Americas, emphasizes the company’s readiness to acquire real estate and talent, inviting stranded partners to reach out for collaboration opportunities. Tesla’s recent downsizing of its Supercharger team has created an opening for competitors to bolster their presence in the market. The company said that it:

“is aggressively looking to acquire real estate to scale our network, which is a heightened focus following the recent Tesla announcement.”

Last year, the company entered into an agreement to procure around $100 million worth of Tesla Supercharger hardware, with deployment set to commence later this year and in early 2025.

BP has downsized its electric vehicle charging business by more than 10% and exited several markets due to unsuccessful growth expectations in commercial EV fleets. The 250-kilowatt chargers under the BP Pulse brand will be adaptable to both Tesla’s North American Charging Standard (NACS) and Combined Charging System (CCS) connectors, facilitating the charging of EVs from various manufacturers.

As automakers increasingly adopt Tesla’s NACS, it poses a challenge to the rival CCS, potentially positioning Tesla’s superchargers as the industry standard.

BP pulse is a crucial part of bp’s strategy to become a net zero company by 2050 or sooner.

Filling the Gap Left by Tesla’s Downsizing

Elon Musk recently made the decision to reduce Tesla’s Supercharger team, signaling a slower pace of growth for the EV charging network. This move raises concerns about the progress of charging infrastructure and EV adoption in North America. 

BloombergNEF estimates that the region will require 400,000 ultra-fast chargers by 2030 to accommodate 40 million EVs. Presently, Tesla holds a significant share, accounting for 74% of all high-speed chargers in North America.

Tesla supercharger downsizing Bloomberg

Two years ago, Musk said that Tesla aimed for a 10% profit margin from its network. Recently, BNEF estimated that the company could potentially reach $740 million in annual earnings from charging by 2030, representing around 8% of the company’s overall profit last year.

Despite Tesla’s dominance in the high-speed charging sector, competitors like BP see an opportunity to fill the gap and gain market share. BP’s proactive approach includes procuring Tesla supercharger hardware and seeking to onboard former Tesla employees to support its expansion plans.

Other companies, such as EVgo, also view Tesla’s slowdown as a chance to increase their market footprint. CEO Badar Khan sees this shift in the competitive landscape as favorable for companies like EVgo to step up and fulfill the growing demand for EV charging infrastructure.

Bp’s move aligns with the broader industry plan of the Biden administration. 

Accelerating EV Infrastructure in the US

The United States government is allocating an impressive $623 million to accelerate the expansion of EVs as part of its efforts to transform the transportation sector. These grants, made available through the 2021 Bipartisan Infrastructure Law, are intended to facilitate the widespread adoption of EVs across the country.

Despite there being over 4 million electric vehicles currently on American roads, progress in developing the EV charging infrastructure has been sluggish. Only New York and Ohio have operational charging stations, with Pennsylvania and Maine expected to launch their own stations this year.

Globally, around 11 million EV units were sold last year, and the EV market is projected to reach a remarkable $623 billion in sales in 2024, encompassing both battery electric vehicles and plug-in hybrids. This growth trajectory is expected to continue, with the market volume reaching $906 billion by 2028, accommodating 17 million vehicle units.

The grant aims to enhance the accessibility, reliability, and convenience of EV chargers for American drivers, while also fostering job creation in charger manufacturing, installation, and maintenance sectors.

With Tesla’s Supercharger downsizing creating an opening in the market, BP is stepping up its EV charging expansion efforts in the US, backed by a substantial investment. The move aims to address the growing demand for EV charging infrastructure. And it also aligns with broader government initiatives to accelerate EV adoption and infrastructure development.

Why Copper Prices are Surging and What to Expect

Jennifer L
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0
Why Copper Prices are Surging and What to Expect

The surge in copper demand is driven by its pivotal role in renewable energy generation, electric vehicles, and grid infrastructure crucial for achieving net zero emissions. Market dynamics and global supply concerns have propelled copper prices upward, with top companies witnessing significant growth.

Copper Surge and Market Dynamics

One key event that influenced copper market dynamics was the closure of the Cobre Panama mine, a substantial global copper source. This closure shifted market expectations from surplus to deficit, contributing to the upward trajectory of copper prices. 

Additionally, in March, Chinese smelters decided to reduce output amid a concentrate shortage, further boosting prices.

copper price

Market analysts attribute this trend to a combination of speculative buying and genuine supply constraints, suggesting the potential for a sustained bullish market for copper. Many copper-focused equities are currently trading at or near their 52-week highs, indicating investor confidence in the sector’s future prospects.

While the rally in copper prices is encouraging for investors, analysts caution that the market needs to validate this trend beyond short-term momentum. The sector’s performance could significantly impact earnings, particularly if copper maintains its price above $4 per pound.

Copper’s significance in the transition to net zero emissions cannot be overstated. Its indispensable properties, including high electrical conductivity, thermal efficiency, and recyclability, make it vital for renewable energy systems, electric vehicles, and infrastructure development.

Renewable energy technologies, such as solar photovoltaics and wind turbines, require significant amounts of copper for efficient transmission and distribution of electricity. Electric vehicles also rely heavily on copper for components like motors, inverters, and electrical wiring.

Despite its critical role, the demand for copper is projected to outpace supply growth, leading to concerns about potential shortages. Addressing these challenges requires strategic investments in copper production and recycling to support the global shift toward sustainable energy sources and achieve net zero emissions goals.

copper supply and demand 2035

Driving Decarbonization Efforts

Despite the availability of more cost-effective alternatives like aluminum, copper remains unparalleled in its efficiency and effectiveness for various applications critical for decarbonization efforts.

From household appliances to EVs and renewable energy infrastructure, copper is everywhere. The average car contains about 65 pounds (29 kilograms) of copper, while a typical household boasts over 400 pounds. 

However, it’s in the construction of advanced grid systems capable of managing electricity from decentralized renewable sources where copper truly shines. Solar and wind farms, covering vast areas, require more copper per unit of power generated compared to traditional power stations.

copper-in-renewable-energy

To meet ambitious net zero targets by 2035, annual copper demand may need to double to 50 million metric tons, according to industry estimates. Even conservative projections anticipate a one-third increase in demand over the next decade, driven by substantial investments in decarbonization initiatives by both public and private sectors.

However, meeting this escalating demand poses significant challenges. While copper recycling is increasing, it’s unlikely to suffice, leaving primary mining as the primary source. Yet, expanding copper mining faces obstacles. 

Ore grades are declining, necessitating more extensive mining operations to yield the same output. Moreover, environmental concerns surrounding mining activities dampen investment enthusiasm.

Still, the surge in copper prices has heightened speculation about a potential supply crunch. Addressing an expected annual supply shortfall of 8 million tons over the next decade could require a staggering $150 billion investment, according to estimates. However, reaching such investment levels would likely necessitate copper prices to reach record highs.

Market experts further observed that while global demand for copper will rise, growth rates vary significantly across different regions. They underscored that regional macroeconomic conditions typically influence copper demand, as shown in the map below. 

trends shaping global copper use

Factors Affecting Copper Prices in 2024 and Beyond

The uncertainties surrounding China’s economic recovery, particularly the challenges in the property sector evidenced by the liquidation order against China Evergrande Group, pose a significant headwind for copper prices in 2024. 

Despite expectations for additional stimulus, the Chinese government opted for a growth target of 5%, emphasizing “high-quality development.” The International Monetary Fund (IMF) projects China’s economic growth to slow to 4.6% in 2024.

Chinese copper smelters have initiated production cuts to address raw material shortages, indicating potential supply constraints. Meanwhile, the US Federal Reserve’s monetary policy decisions are closely monitored, with expectations of rate cuts potentially impacting copper prices.

Analysts forecast an upward trajectory for copper prices in 2024 and beyond, driven by supply-demand imbalances, the US rate-cutting cycle, and increasing demand from the green energy sector.

  • BMI projects copper to average $8,800 per ton in 2024, while ANZ Research expects $8,950 per ton.

Looking ahead to 2025, analysts anticipate continued price growth, with BMI projecting $9,300 per ton, while ING forecasts around $9,050 per ton. Long-term copper price forecasts are uncertain but are expected to remain high due to increasing demand driven by the energy transition, particularly in EVs and renewable power.

As copper increasingly shapes global economic dynamics, nations are vying for access to limited future supplies, particularly considering that a significant portion of copper ore is mined in Latin America and Africa. This underscores the strategic importance of securing domestic or friendly sourcing and refining capabilities for essential metals like copper.

As renewable energy infrastructure and electric vehicle adoption continues to expand, strategic investments in copper production and recycling are crucial to meet growing demand and achieve net zero emissions goals.

Constellation Energy to Pursue New Nuclear Power for Data Centers

Jennifer L
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Constellation Energy to Pursue New Nuclear Power for Data Centers

Constellation Energy Corporation, the biggest nuclear power operator in the United States, is exploring the possibility of constructing new nuclear capacity at its existing reactor sites to meet the growing demand from data center customers. 

Power Surge: Meeting Data Centers’ Demand

Amid the generative artificial intelligence (AI) gold rush, renewed discussions about longstanding power sources for data centers have emerged. 

McKinsey’s recent forecast predicts a significant surge in data center power consumption in the U.S., from 17 gigawatts (GW) in 2022 to 35 GW in 2030. This growth is attributed in part to the increasing use of higher-power chips for demanding workloads such as AI. 

US data center demand 2030

The rise in power consumption per rack, from 10 kilowatts to over 60 kilowatts, has led to a doubling of overall campus capacity from 50 megawatts to over 100 megawatts over the past 5 years.

Notably, certain data center hubs like Ashburn in Northern Virginia have reached their power capacity limits. They are no longer able to accommodate requests for additional capacity. Market experts highlighted that power is the industry’s biggest challenge. 

Data centers are notorious energy consumers, with a single hyperscaler’s data center consuming as much power as 80,000 households. This has put huge pressure on the industry to adopt sustainable practices, leading to the imposition of sustainability standards by regulators and governments on newly constructed data centers. 

For investors, this presents opportunities to support data centers in securing low-carbon energy supplies. And this is where nuclear power could play a role. 

Constellation Energy CEO Joseph Dominguez mentioned considering small modular reactors (SMRs) or other technologies and expressed interest in a multi-tiered structure with tech companies like Microsoft and Google to fund site development and construction.

The partnership aims to accelerate the development of various projects by developing new commercial structures. These include advanced nuclear, next-generation geothermal, clean hydrogen, and long-duration energy storage.

Tech Giants and Nuclear Solutions

The S&P 500 company plans to perform due diligence and achieve regulatory milestones before the electricity supply is needed. Dominguez said that they have potential projects ramping up by 2026-2028. He further added that: 

“We’re in advanced conversations with multiple clients, large — well-known companies that you all know — about powering their needs… While we’re not done yet, I do expect that we will finalize agreements that will have long-term and transformational value.”

They have customers interested in behind-the-meter capacity and are exploring options with existing assets like the Calvert Cliffs, Salem, LaSalle, Limerick, and Peach Bottom plants. 

Top hyperscalers, including Amazon‘s AWS, Microsoft, Meta, and Alphabet, continue to expand their data center presence. In March, Talen Energy sold a 960-megawatt data center campus to AWS for $650 million on its Pennsylvania nuclear facility.

Constellation Energy’s CEO remarks coincide with the company’s remarkable Q1 earnings, which surged by 858% to $2.78 per share. Despite a revenue decline of 18% to $6.16 billion, adjusted earnings grew by 133% to $1.82 per share. This beat analysts’ expected earnings per share of $1.30 and total sales of $6.62 billion.

The company’s stock is up over 80% in 2024. This year, it’s one of the best-performing stocks in the S&P 500 index, right next to Nvidia and Super Micro Computer.

The U.S.’ largest nuclear power plant operator also reiterated its full-year adjusted earnings guidance of $7.23 to $8.03 per share. The company holds a significant stake, owning 25% of U.S. nuclear power reactors.

Additionally, it serves as an energy provider to over 20% of the major commercial and industrial customers nationwide.

Nuclear’s Role in Data Center Sustainability

To meet their carbon-free energy targets, data center operators increasingly enter into power purchase agreements (PPAs) with renewable energy suppliers. Meanwhile, major cloud providers are taking proactive steps to finance the construction of renewable energy facilities due to rising prices caused by supply constraints. 

  • For instance, Amazon has backed Scottish Power’s wind farm in the UK and committed to purchasing its entire 50-megawatt output.

However, relying solely on renewables presents challenges. Solar and wind power are intermittent, often requiring fossil fuel backups. Some companies explore “24/7” PPAs, combining carbon-free sources with stored renewable energy, but at a higher cost due to expensive storage technologies. 

While lithium-ion batteries are a developed backup solution, they can be costly over time. Emerging long-duration storage options like hydrogen and green ammonia energy could reduce costs but are still in the early stages.

Nuclear power offers a solution, providing reliable baseload power traditionally supplied by fossil fuels. As the sector commits to carbon neutrality, onsite nuclear power emerges as an ideal choice, meeting the energy needs of data centers efficiently and sustainably.

According to S&P Global Commodity Insights data, the following are the best nuclear plants that could provide power for data centers.

nuclear power plants to serve datacenters demand

As data center power demands soar, Constellation Energy’s nuclear ambitions highlight the need for innovative energy solutions to support the digital revolution sustainably.

Harnessing Carbon Capture: CapturePoint and Glencore’s Groundbreaking CCS Initiatives

Jennifer L
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Harnessing Carbon Capture: CapturePoint and Glencore’s Groundbreaking CCS Initiatives

CapturePoint LLC has forged a strategic alliance with Energy Transfer LP to embark on a groundbreaking initiative to capture carbon dioxide (CO2) emissions from Energy Transfer’s gas processing facilities in Louisiana. 

Under the terms of the agreement, CO2 emissions from Energy Transfer’s Haynesville facilities will be directed to CapturePoint’s regional carbon storage project, known as the Central Louisiana Regional Carbon Storage Hub (CENLA Hub).

Capturing Emissions in A Game-Changing Alliance

According to Wood Mackenzie’s analysis last year, the current rate of carbon removal efforts is projected to sequester only 2 billion tonnes of CO2 by 2050, based on the base case scenario. This capacity for carbon capture corresponds with the trajectory outlined in the 2.5°C global warming scenario.

carbon capture and removal scenario by Wood Mackenzie

To meet the crucial 1.5°C warming threshold by midcentury, it’s estimated that 7 billion tonnes of carbon capture and removal are necessary. 

The partnership between CapturePoint and Energy Transfer is more than just the offtake agreement. The companies have also revised a letter of intent outlining a potential joint venture, stating that it,

“…reflect Energy Transfer’s recognition of the CENLA Hub as one of the most promising deep underground CO2 storage sites in the nation.”

In preparation for this ambitious endeavor, CapturePoint is in the process of securing state permits to drill 12 Class VI storage wells in Rapides and Vernon parishes. These wells will serve as the primary infrastructure for injecting CO2 deep underground, contributing to the mitigation of greenhouse gas emissions.

US proposed, operational CCS storage sites

  • This venture would entail Energy Transfer co-owning and operating the CENLA Hub, signifying a significant commitment to advancing carbon capture and storage initiatives.

CapturePoint holds immense promise as a premier CO2 storage site. It can sequester up to two million tons of CO2 annually. Based on data from test wells, CapturePoint estimates that the hub’s total storage capacity could reach several hundred million tons, positioning it as a pivotal asset in the nation’s efforts to combat climate change.

The costs associated with carbon capture, transportation, and storage vary across different industrial applications. According to a 2023 study by the Energy Futures Initiative, natural gas processing ranks among the most financially viable applications, with a levelized cost of less than $40 per metric ton, further offset by federal tax credits.

Tracy Evans, CEO of CapturePoint, expressed confidence in the project’s potential, emphasizing Energy Transfer’s recognition of the CENLA Hub as a cornerstone of deep underground CO2 storage solutions. 

CapturePoint CENLA hub

Laying the Groundwork for CCS in Australia

Over in Australia, Glencore is awaiting approval from Queensland for a significant carbon capture and storage (CCS) project. It aims to bury liquefied carbon dioxide deep underground. 

The proposal, valued at A$210 million (almost US$140), would pump CO2 from a coal-fired power plant into an aquifer, a move essential for achieving net zero goals, according to governments. However, farm groups oppose Glencore’s plan, citing potential risks to water supplies.

The Swiss commodities giant intends to conduct a three-year CCS pilot project, aiming to sequester 330,000 metric tons of CO2 from a local coal-fired power plant deep underground.

According to Glencore spokesperson Francis De Rosa, this initiative serves as a crucial test case for onshore CCS in Australia. He further added that it’s supported by robust data and analysis, with multiple government agencies endorsing the plan.

However, farm groups express concerns about potential groundwater contamination within the Great Artesian Basin, a vital water source for agriculture and communities. They fear that the injected CO2 could interact with the rock, releasing toxic substances like lead and arsenic.

Michael Guerin, representing AgForce farm association, deems the project “unthinkable” and initiated legal action to prompt federal review. Despite Glencore’s insistence on scientific merit, Queensland Premier Steven Miles voices skepticism, raising doubts about compliance with environmental regulations.

Environmental Innovations Down Under

The Queensland government is set to decide on Glencore’s environmental impact assessment by the end of May. If approved, the project would mark a significant step in Australia’s CCS landscape. 

Glencore asserts that its plan could eventually capture up to 90% of emissions from the Millmerran power plant, albeit currently targeting only 2%.

Managed by Glencore subsidiary Carbon Transport and Storage Corporation (CTSCo), the project has garnered investment from Japanese firms Marubeni Corp and J-POWER, indicating international interest and financial backing.

Australia’s CCS endeavors have been limited, with Chevron’s Gorgon LNG project being the sole active operation. However, with two more projects underway and 14 in development, CCS initiatives are gaining momentum. While aquifer storage for CO2 is increasingly adopted, stringent regulatory scrutiny ensures that only suitable sites are chosen.

Ultimately, the partnership between CapturePoint and Energy Transfer represents a significant step forward in pursuing sustainable carbon management strategies.

The World Needs $9T Annually by 2030 to Close Climate Finance Gap

Jennifer L
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0
The World Needs $9T Annually by 2030 to Close Climate Finance Gap

The importance of climate finance in driving green investments has never been more pronounced as highlighted by Avangrid’s True North solar project in Falls County, Texas. The project, benefiting from subsidies under the Inflation Reduction Act, reflects a growing trend towards climate-friendly initiatives supported by government incentives.

However, meeting global climate goals requires significant scaling up of investments in renewable energy, energy efficiency, and ecosystem restoration. The International Renewable Energy Agency estimates that an average of 11,000 gigawatts of renewable power capacity needs to be built annually until 2030, calling for substantial financial commitments.

Bridging the Climate Funding Gap

According to the Climate Policy Initiative, global climate finance needs to increase to about $9 trillion annually by 2030 to limit average global temperature rises in line with the Paris Agreement. Europe alone requires €800 billion in energy infrastructure investment to meet its 2030 climate targets. The region needs a total of €2.5 trillion needed for the green transition by 2050.

$9 trillion climate finance by 2030

In 2021-22, climate financing reached almost $1.3 trillion, a significant increase from $364 billion in 2011-12. Most of this growth is attributed to mitigation finance, particularly in renewable energy and transport sectors. Notable increases are in clean energy investments in China, the United States, Europe, Brazil, Japan, and India. 

However, adaptation finance lags behind, reaching only $63 billion in 2021-22. This is far from the estimated $212 billion needed by developing countries alone by 2030. Adaptation finance aims to enhance communities’ resilience to climate hazards, but funding falls short. 

Analysts estimate that the $9 trillion has to rise to over $10 trillion annually from 2031 to 2050.

climate financing gap 2030 - 2050

To address this financing gap, governments are exploring various mechanisms, including wealth taxes, levies on shipping, and corporate taxes. For instance, the US plans to raise $300 billion over a decade through a minimum tax on corporate profits and a stock buyback tax to fund climate initiatives.

Ramping Up Climate Finance

The urgency of climate finance has been underscored by international commitments to phase out fossil fuels and triple renewable energy capacity by 2030. 

The upcoming COP29 conference in Baku, Azerbaijan, is expected to focus extensively on climate finance, particularly establishing global goals to support developing nations’ transition efforts.

The private sector has a significant role in financing the green transition (70%), but the public sector must also contribute. The International Energy Agency suggests that public finance will need to cover about 30% of global climate finance. Public funds should primarily focus on critical infrastructure and adaptation measures.

Governments are exploring various revenue-raising options, including carbon pricing mechanisms and taxes on fossil fuel extraction. Ireland’s carbon tax, for example, allocates increased revenues to climate-related investments and fuel poverty prevention.

Other countries are considering innovative financing approaches, such as windfall taxes on oil and gas companies and tourism taxes. Additionally, efforts are underway to phase out fossil fuel subsidies, redirecting funds towards climate action initiatives.

Navigating the Climate Financing Maze

Despite the financing challenges, energy strategist Kingsmill Bond argues that capital is available but must be deployed effectively. Intelligent regulation and incentives like the EU’s REPowerEU strategy can mobilize private investments in renewables and drive sustainable growth.

In developing countries, where financial constraints are more pronounced, international cooperation and concessional financing are crucial. Sovereign green bonds and climate finance frameworks aim to mobilize private sector investment and support green projects in emerging economies.

The authors of the CPI’s Global Landscape of Climate Finance 2023 report suggest that closing the funding gap is theoretically feasible, particularly given global spending trends. They point out that while global military spending reached $2.2 trillion in 2022 (SIPRI, 2023), emergency fiscal measures totaling $11.7 trillion were announced globally in response to the COVID-19 pandemic in 2020, according to the International Monetary Fund.

CPI climate finance in context
Source: CPI report

Moving forward, the CPI recommends addressing inequalities in current climate finance distribution. Despite agriculture and industry being significant emission sources, they received disproportionately low funding in 2021-22 relative to their mitigation potential. The report also emphasizes the importance of investing in emerging technologies like battery storage and hydrogen, highlighting untapped investment opportunities.

Ultimately, achieving a sustainable and resilient future requires concerted efforts from governments, businesses, and financial institutions. By shifting financial resources towards climate-friendly investments, the global community can accelerate the transition to a greener economy and mitigate the impacts of climate change.

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