Russia Power Plays: Deploys Military Might Over Africa’s Critical Minerals

Saptakee S
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Russia Power Plays: Deploys Military Might Over Africa’s Critical Minerals

Russia’s increasing influence in African countries and its focus on critical minerals pose significant challenges for the West. In a historic announcement on March 16 this year, Niger declared the immediate termination of its military cooperation with the US. The country nullified a military agreement that permitted US bases on its territory.

Critics argue that Russia’s resource-driven approach may exacerbate existing governance challenges, including corruption, environmental degradation, and social unrest.

As reported by Oregon News, Niger’s military junta and US officials, had a crucial meeting during which the latter conveyed apprehensions regarding Russia’s growing military involvement in the nation. Niger made the “announcement” immediately after the meeting. Additionally, concerns were raised about attempts by the junta to renegotiate mining contracts with potential implications for energy leverage against Western interests. 

Let’s learn how Russia’s pursuits for Africa’s critical minerals can impact the country and its global resource acquisition efforts.  

Russia’s Quest for African Mineral Resources

One of the focal points of Russia’s interest lies in rare earth elements (REEs), essential components in various high-tech applications, including electronics, renewable energy technologies, and defense systems.

Africa boasts 30% of the world’s mineral reserves, making it an attractive target for resource-hungry nations like Russia.

The Democratic Republic of Congo (DRC) emerges as a prime target in Russia’s mineral quest, given its abundant cobalt reserves, a crucial element in lithium-ion batteries powering EVs and smartphones. Russia’s interest in cobalt aligns with its ambitions to establish a stronger foothold in the rapidly expanding electric vehicle market.

In addition to cobalt, Russia has set its sights on other critical minerals such as lithium, vanadium, and platinum group metals. All these REEs are indispensable to modern industries involved in energy storage, battery and catalytic converters, etc.

Furthermore, Russia had always weighed minerals as a currency. They have intervened in Africa to bolster their control through paramilitary means. By providing security and employing intimidation tactics, Russia grabbed lucrative mining agreements. Furthermore, it offers military support to sustain the weaker regimes.

Russian tactics are in absolute contrast to the Western nations. The country operates ruthlessly without considering human rights, democracy, or legal frameworks.

Russia Intensifies Use of Private Military Companies (PMCs) in Africa

According to media reports, in recent years Russia has increased deployment of private military contractors (PMCs) to put a tight foothold on the continent. PMCs are for-profit organizations that provide combat, security, and logistical services for hire.

Russian PMCs first arrived in Africa under a contract with the Libyan Cement Company in 2017.

One notable example of Russia’s use of PMCs in Africa is its involvement in the Central African Republic (CAR). In 2018, the Russian government signed a military cooperation agreement with the CAR, leading to the deployment of the Wagner Group, the most famous Russian PMC.

Subsequently, the PMCs have swiftly extended their presence into Sub-Saharan Africa. They operate in Sudan, the Central African Republic (CAR), Madagascar, Mozambique, and Libya.

The group trains local armed forces to use Russian-supplied arms, protects Russian-operated gold, uranium, and diamond mines, and acts as bodyguard and advisor to the Central African president.

Africa’s Share of Critical Mineral Wealth

A few years back the World Bank projected that a ~ 500% rise in the production of key minerals and metals like lithium, graphite, and cobalt by 2050 is needed to meet global demand for REEs.

With a focus on revenue within Africa, the McKinsey Group has conducted an evaluation. It states:

  • Africa could generate between US $200 million and US $2 billion of additional annual revenue by 2030 and create up to 3.8 million jobs by building a competitive, low-carbon manufacturing sector.
  • Additionally, minerals could play a crucial role in meeting African citizens’ huge housing and transport needs by driving the sustainable development of these sectors. 

Africa holds 40% of the world’s gold and up to 90% of its chromium and platinum reserves. The continent also possesses the largest cobalt, diamonds, platinum, and uranium globally. Zimbabwe has huge lithium potential while Zambia’s copper reserves are capable of substantial revenue generation.

Despite owning 30% of the world’s mineral reserves, Africa accounts for less than 10% of global mining exploration spending. For instance, untapped raw mineral deposits in the DRC are estimated to be worth more than US$24 trillion.

Therefore, accessing Africa’s abundant resources is imperative to achieve these ambitious goals.

Image: Distribution of Africa’s shares of global production of selected critical minerals.

critical mineral

Russia’s Engagement in Africa: Understanding Strategic Motivations

1. Bypassing sanctions: Gold and diamonds provide Russia with a means to circumvent economic sanctions enforced since the invasion of Ukraine. Africa, boasting 40% of the world’s gold reserves and the largest diamond reserves, serves as a key resource hub.

2. Geopolitical influence: As already explained, Russia has established fresh military and political alliances to reduce Western influence in African nations. Specifically, Russia offers “regime survival packages” in exchange for natural resource extraction rights, bolstering its geopolitical standing. This serves as a huge vantage point for native Africans. 

Moreover, Russia’s engagement in African mineral extraction extends beyond traditional mining operations. The Kremlin has forged strategic partnerships and investment deals with African nations, leveraging its resource extraction and infrastructure development. These partnerships often come bundled with political and military agreements, bolstering Russia’s influence in Africa.

A stark example is the Blood Gold Report’s Findings that stated, 

“The Kremlin has earned more than US$2.5 billion from trade in African gold since Vladimir Putin launched his full-scale invasion of Ukraine in February 2022.”

Is Russia’s Intervention Loosening the West’s Grip on Africa? 

The intensification of Russia’s mineral scramble in Africa has raised concerns among Western powers and regional stakeholders. They anticipate worse implications from the geopolitical dynamics and local governance. Critics argue that Russia’s resource-driven approach may exacerbate existing governance challenges, including corruption, environmental degradation, and social unrest.

Furthermore, Russia’s expanding presence in African mineral extraction poses a potential challenge to Western dominance in resource markets. It prompts calls for increased vigilance and strategic engagement from Western policymakers.

Niger’s Recent Decision: A Threat to the West

Niger, the world’s seventh-largest producer of uranium, supplies France this vital resource for nuclear power generation. Apart from uranium, Niger has abundant natural resources of coal, gold, iron ore, and phosphates.

However, Niger’s recent decision to temporarily halt the issuance of new mining licenses highlights the challenges faced in maintaining stable supply chains.

Niger’s situation exemplifies the broader concern regarding Russia’s increasing influence in African nations.

It poses a looming threat to the West in securing its critical mineral supply chains. The withdrawal of US troops from neighboring Chad is another testament to the burgeoning geopolitical tensions.

Jack Watling, land warfare specialist at the Royal United Services Institute (Rusi) has examined the situation and commented,

“While lithium and gold mines are clearly important, in Niger the Russians are endeavoring to gain a similar set of concessions that would strip French access to the uranium mines in the country.”

Image: Share of Africa’s critical minerals and their global demand projections 

Africa critical mineral

As Russia continues to deepen its involvement in Africa’s mineral sector, the geopolitical implications will likely reverberate far beyond its borders. Balancing the economic opportunities with the geopolitical risks inherent in this mineral scramble will be paramount for both African nations and the broader international community.

Tesla Can Trade Carbon Credits in South Korea, Valued at $145M

Jennifer L
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Tesla Can Trade Carbon Credits in South Korea, Valued at $145M

In a significant development, Tesla has received approval from South Korea’s Ministry of Environment to sell regulatory automotive emission credits, also called carbon credits domestically, marking a pivotal moment for the electric vehicle giant. This move creates new revenue opportunities for Tesla while demonstrating a deeper integration of EVs into the South Korean market.

As reported by Korea Economy TV, Tesla currently possesses around 4 million grams/km of carbon credits in South Korea. Based on current penalty rates, the credits are valued at up to 200 billion won (around $145 million). The carmaker can sell these credits to its peers and earn starting this year. 

Driving Towards Net Zero: South Korea’s Green Mobility Goals

Korea’s ambitious push toward achieving 2050 net zero carbon emissions hinges on transitioning from internal combustion engines to eco-friendly vehicles.

The country aims to bolster its fleet with an accumulated 2.8 million eco-friendly vehicles by 2025, encompassing battery-powered electric vehicles (BEVs), fuel-cell EVs, and hybrids. Looking ahead to 2030, the government targets a significant expansion, aiming for 7.85 million eco-friendly vehicles. 

This would mean that 30% of all vehicles in Korea will draw power from electricity. Additionally, a staggering 83% of newly sold cars in 2030 would need to be eco-friendly models.

Such ambitious goals are not merely symbolic; the government anticipates a 24% reduction in GHG emissions over the next decade. This is crucial for the overarching aim of achieving net zero emissions by 2050.

green car initiative Korea

In South Korea, regulations mandate that automakers maintain average greenhouse gas (GHG) emissions below a specified standard. There are penalties for non-compliance, 50,000 won per g/km, or the option to purchase credits from other companies. 

The Ministry of Environment is responsible for implementing emission regulations for engines and vehicles in the country, with the National Institute of Environmental Research serving as an advisory body.

Korea adopts emission standards from either European or US sources depending on the application:

  • Light-duty gasoline vehicles adhere to US/California standards.
  • Light-duty diesel vehicles follow European standards.
  • Heavy-duty trucks and bus engines comply with European regulations.
  • Mobile nonroad diesel engines adhere to US standards.

Tesla’s Path to Carbon Credit Approval

Tesla’s entry into the carbon credit market in South Korea adds a new dimension to the country’s efforts to tackle automotive emissions.

However, Tesla faced challenges in establishing itself in South Korea’s emission credit market. The EV leader’s efforts were initially hindered by regulatory limitations that restricted participation to automakers selling over 4,500 vehicles annually as of 2009. 

But through persistent advocacy efforts, Tesla Korea successfully lobbied for regulatory amendments in 2021 to enable its participation.

The final hurdle was obtaining approval from the Ministry of Environment, which was granted earlier this year. This clears the way for Tesla to engage in carbon credit trading in South Korea. The Ministry highlighted the collaborative process involved, including consultations with other governmental bodies like the Ministry of Trade, Industry, and Energy.

The sale of carbon credits has proven to be a lucrative revenue stream for Tesla, with the opportunity to enter the Korean market poised to bolster the company’s position even further. 

Tesla’s Carbon Credit Success

In 2023 alone, Tesla raked in $1.79 billion from the sale of carbon credits. Since 2009, the total revenue generated from this source has amounted to nearly $9 billion for Tesla.

Tesla annual carbon credit sales 2023 record high

In its first-quarter 2024 filings, Tesla disclosed a $442 million income from the sale of carbon credits. This amount reflects a modest 2% uptick from the preceding quarter of Q4 2023, which stood at $433 million.

Notably, this revenue from credits constitutes a significant portion of the company’s Q1 2024 net income, amounting to a staggering 38.6% of $1,144 million.

Tesla’s success in South Korea extends beyond emission credits, with the Model Y’s popularity propelling Tesla to become the country’s second-largest vehicle importer as of March 2024, surpassing established brands like Mercedes-Benz. With 6,025 vehicle registrations in March 2024, Tesla has firmly entrenched itself in the South Korean automotive market.

In summary, Tesla’s entry into South Korea’s carbon credit market represents a significant milestone in the company’s expansion and sustainability efforts. Overcoming regulatory hurdles and securing approval positions Tesla to play a crucial role in shaping the future of automotive emissions in South Korea.

EU Takes Action Against 20 Airlines for Greenwashing Claims

Jennifer L
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EU Takes Action Against 20 Airlines for Greenwashing Claims

The European Commission’s move to address greenwashing practices among airlines is significant. Greenwashing, especially in industries as impactful as aviation, undermines consumer trust and misleads individuals about the environmental consequences of their choices. 

Air France, its Dutch subsidiary KLM, and Lufthansa’s Brussels Airlines are among the 20 airlines under investigation by the European Union for potential greenwashing practices. It’s unclear which other airlines have received a letter from the EC.

Eco-Friendly Flight or Marketing Mirage?

The Consumer Protection Cooperation (CPC) works with the European Commission to enforce EU consumer protection laws. They address cross-border issues, triggered in this case by a BEUC alert about misleading green claims by airlines.

The European Green Deal and the New Consumer Agenda prioritize sustainability and combatting greenwashing. Directives like the one on unfair commercial practices prohibit misleading actions. 

Additionally, the proposed Green Claims Directive aims to enhance consumer protection by requiring traders to substantiate explicit environmental claims and be transparent about offsetting claims, specifying the portion that relies on buying carbon offsets. The Directive ensures that traders adhere to requirements when making claims about the environmental performance of products. 

EU Green Claims DirectiveThe involvement of the CPC emphasizes the collaborative effort to enforce EU consumer laws and hold airlines accountable for their practices. This approach sends a clear message to the industry that greenwashing will not be tolerated.

BEUC’s advocacy and the support of consumer organizations further highlight the growing awareness and demand for genuine sustainability efforts. Consumers deserve accurate information to make informed choices, and actions like this help protect their rights.

Legal Eagles vs. Misleading Claims: Aviation Edition

The recent legal rulings against KLM and Austrian Airlines demonstrate the consequences of misleading advertising in the aviation sector. Such rulings set precedents and serve as deterrents for other airlines engaging in similar practices.

The EC, along with EU consumer authorities, is targeting misleading claims regarding the environmental impact of flying. They particularly focus on airlines’ assertions that carbon emissions can be offset through additional fees or the use of sustainable aviation fuel (SAF).

SAF is from renewable and sustainable resources, offering a way to reduce emissions when combined with fossil-based jet fuel. It’s a “drop-in” fuel, meaning airlines can use it without modifying their existing infrastructure. SAF is viewed by experts as a highly promising solution for accelerating the aviation sector’s transition to a low-carbon future.

The identified misleading practices include:

  • Creating the incorrect impression that additional fees can fully counterbalance CO2 emissions.
  • Using the term “sustainable aviation fuel” without adequately justifying its environmental impact.
  • Using terms like “green,” “sustainable,” or “responsible” without clear justification.
  • Claiming to move towards environmental performance like net zero emissions without verifiable commitments, targets, and monitoring systems.
  • Presenting flight emissions calculators without scientific proof of reliability.
  • Comparing flight emissions without providing sufficient information on the methodology.

These actions follow the EU Commission’s legislative proposals aimed at protecting consumers from greenwashing. These include updates to directives like the unfair commercial practices directive (UCPD) and the consumer rights directive (CRD). These updates aim to include green transition aspects and introduce rules banning unverified environmental claims and requiring independent verification of green claims.

Věra Jourová, EC Vice-President for Values and Transparency, emphasized the importance of providing consumers with accurate and scientific information, saying:

“More and more travelers care about their environmental footprint and choose products and services with better environmental performance. They deserve accurate and scientific answers, not vague or false claims. The Commission is fully committed to empowering consumers in the green transition and fighting greenwashing.” 

EU’s Greenwashing Battle Plan

The European Commission and CPC authorities have taken proactive steps to address concerns regarding environmental marketing claims made by airlines under EU consumer law. By inviting companies to provide responses within a specific timeframe and organizing meetings to discuss proposed solutions, the Commission is fostering dialogue and collaboration to ensure alignment with consumer legislation.

The process involves:

  • Invitation for Response: Companies have 30 days to outline proposed measures to address concerns raised about their environmental marketing claims.
  • Dialogue and Discussion: Following receipt of replies, the Commission will organize meetings with the CPC network and the airlines to discuss proposed solutions.
  • Monitoring Implementation: The Commission will monitor the implementation of agreed-upon changes to ensure compliance with EU consumer law.
  • Enforcement Actions: If airlines fail to take necessary steps to address concerns, CPC authorities have the authority to take further enforcement actions, including sanctions.

Overall, these legislative measures and directives aim to promote transparency and combat greenwashing, particularly involving airlines’ use of carbon offsets. By targeting airlines that make misleading claims about use of carbon offsets or the sustainability of flying, the Commission is taking a proactive step toward ensuring transparency and accountability in the sector.

Nickel 28 Capital Ousts CEO Anthony Milewski and President Justin Cochrane in Leadership Purge Over Misconduct

Carbon Publisher
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Nickel 28 Capital Ousts CEO Anthony Milewski and President Justin Cochrane in Leadership Purge Over Misconduct

In a dramatic overhaul at Nickel 28 Capital Corp., the board has ousted three top executives following a rigorous internal investigation. 

The shake-up at the nickel-cobalt producer saw CEO Anthony Milewski, President Justin Cochrane, and CFO Conor Kearns dismissed for serious breaches of conduct and policy non-compliance, sending shockwaves through the corporate ranks.

Nickel 28 shares soared 18% on the news of the termination in early trading on May 6th.

  • Cochrane and Milewski are founders of a research and consulting group
  • Milewski was a founding member of Carbon Streaming Corp alongside Cochrane, who became the CEO in late 2020
  • Kearns is the current CFO of Carbon Streaming Corp under CEO Justin Cocrhane
  • Maurice Swan, Board Member of Nickel 28, is also the Chairman of Carbon Streaming Corp.

The firings, effective after the close of business on May 3, 2024, were announced following findings from an independent special committee formed in early December 2023. This committee was tasked with examining the executives’ adherence to insider-trading, expense policies, and the code of business conduct and ethics. 

Their investigation revealed misconduct including breaches of duty, poor judgment, and various violations of Nickel 28’s internal policies. None of the company’s findings have been proven in court.

Dismissed Executives Justin Cochrane, Conor Kearns and Board Member Maurice Swan’s ties to Carbon Streaming Corp.

Amid the upheavals at Nickel 28, the connections between ousted executives and other industry entities have come under scrutiny. 

Notably, Conor Kearns, the former CFO, along with Justin Cochrane, the ousted president, and Nickel 28 board member Maurice Swan, are all known to have ties with Carbon Streaming Corp., a firm specializing in carbon credits and streams. 

This involvement raises questions about potential conflicts of interest and the integrity of their professional judgments in their roles at Nickel 28, and now, potentially Carbon Streaming. 

The overlap in executive roles between different corporations is a common practice but invites a closer examination of governance and ethical standards, especially in light of the recent findings of misconduct at Nickel 28. Maurice Swan is Director of Nickel 28, and current Chairman of Carbon Streaming. Swan was the former Chair of the Compensation Committee at Carbon Streaming until he stepped down late in 2023.

Such relationships are particularly relevant as they could influence decision-making processes and strategic directions not only at Nickel 28 but across the broader business spectrum where these individuals hold influence.

  • Carbon Streaming has come under fire recently from activist shareholder groups for executive compensation and G&A spending. 
  • The company promoted a new CEO in June 2023, before he resigned after only 3 weeks on the job – and Cochrane retook the position.

Investigation and Findings

The special committee’s investigation at Nickel 28 delved into historical compensation arrangements and the compliance of these senior figures with the company’s insider-trading, expense policy, and code of business conduct and ethics. It also examined potential conflicts of interest and related party transactions involving company insiders and key employees.

Their thorough review culminated in an unanimous recommendation to the board to terminate the implicated executives for cause. The board, accepting these recommendations, has also reserved all rights to initiate legal proceedings to recover losses and gains obtained through the executives’ alleged misconduct. However, they noted that these findings are not expected to materially impact the company’s prior financial statements.

Immediate and Future Leadership Changes

In response to the leadership vacuum, the board acted swiftly to appoint Christopher S. Wallace as the interim CEO. Wallace, a current board member known for his extensive experience in leadership and finance within the critical-minerals industry, is expected to steer the company through this turbulent period.

Additionally, Brett Richards, another board member with over 37 years in the mining and metals industry, will provide consultancy services to assist with the transition.

Martin Vydra, Executive Vice-President of Strategy, and Craig Lennon, Head of Asia-Pacific, will continue in their roles, ensuring operational continuity.

Company Outlook and Strategic Vision

Despite these significant upper-management upheavals, Nickel 28 reassures stakeholders that its core strategic vision and objectives remain steadfast. The board and the continuing leadership team are committed to upholding the highest standards of integrity, transparency, and accountability in all operations.

Nickel 28 Capital, known for its 8.56-percent joint venture interest in the producing, long-life, and world-class Ramu nickel-cobalt operation located in Papua New Guinea, continues to be a pivotal player in the nickel and cobalt markets. These metals are critical for the burgeoning electric vehicle sector, underscoring the company’s strategic importance.

In addition to Ramu, Nickel 28 manages a portfolio of 10 nickel and cobalt royalties on development, prefeasibility, and exploration projects across Canada, Australia, and Papua New Guinea.

Implications for Stakeholders

The abrupt leadership changes and the circumstances leading to them could stir investor concerns regarding governance and oversight within Nickel 28. However, the board’s proactive stance in addressing these issues and setting a course for robust oversight and transparent management practices might help in stabilizing trust among investors and partners.

As the company navigates through these changes, the outcomes of any legal actions and future disclosures related to the termination of the senior executives will be closely watched by shareholders and industry analysts alike. 

The full details of the impact of these terminations will be disclosed in the company’s future continuous disclosure filings, including its 2025 management information circular, ensuring that stakeholders are kept fully informed.

The coming months will be critical for Nickel 28 as it seeks to maintain its operational integrity and market position amidst these internal challenges. With a renewed leadership team at the helm, the company aims to navigate through these turbulent waters, reaffirming its commitment to best practices and shareholder value.

Multi-Billion Dollar U.S. Clean Energy Tax Credits Are Here

Jennifer L
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Multi-Billion Dollar U.S. Clean Energy Tax Credits Are Here

President Joe Biden’s signature climate legislation, the Inflation Reduction Act (IRA), has sparked a multibillion-dollar market for clean energy tax credits within a short span of time. This surge in activity is driven by a provision in the IRA that allows project developers and manufacturers to directly sell their credits for cash, thereby facilitating the “transferability” of tax breaks. 

Guidance from the US Treasury Department and Internal Revenue Service confirmed that this provision covers 11 types of tax credits.

Revolutionizing Clean Energy Financing

Previously, developers had to navigate more restrictive and complex tax equity deals, which limited their access to capital from a relatively small pool of investors, mainly large financial institutions. The IRA has changed this landscape, freeing up capital for deployment at a faster pace.

Frank Burkhartsmeyer, CFO of battery storage developer GridStor LLC, noted that the IRA has accelerated the energy storage industry’s ability to deliver cost-competitive zero-emission capacity. This is particularly true in areas where renewables have outpaced capacity market growth.

GridStor recently announced its first tax credit sale to JPMorgan Chase & Co. to support its California Goleta Battery Storage Project. The transaction exemplifies a broader trend of record solar PV and battery storage installations in the US. This is driven by the IRA’s impact on clean power financing.

The IRA has particularly boosted the battery storage business by providing new investment tax incentives and offering an alternative to traditional tax equity financing structures. Now, developers have the option to sell tax credits for cash, attracting more corporate taxpayers to support various projects.

Market participants and analysts emphasize that the IRA has diversified the pool of potential investors. This leads to more competitive pricing and attractive financing structures for financial giants like JPMorgan Chase and Bank of America. 

Arevon Energy Inc. President and CEO Kevin Smith highlighted the importance of a robust tax credit transferability market to meet the needs of the renewable energy industry, noting that:

“There’s no question that in order for the financial markets to meet the requirements of the growing renewable energy industry, it’s going to take a robust tax credit transferability market…That means we need other players entering into the market, and we are seeing other players entering in.”

Arevon recently secured financing for its Condor Battery Storage Project in California with $350 million. This comes along with commitments from Stifel Financial Corp. to purchase investment tax credits. 

Unleashing the Potential of Clean Energy Tax Credits

The tax credit transfer market saw a significant surge in activity in 2023, reaching an estimated $7 billion to $9 billion, according to Crux Climate Inc. This momentum is expected to continue, with Crux CEO Alfred Johnson anticipating the market to double in size in 2024. 

clean energy tax credit transfers bids Q1 2024

Crux has witnessed substantial interest, with nearly $9 billion in tax credits available for sale on its platform. Buyers are submitting around $1.5 billion in bids in the first quarter of 2024, primarily targeting renewable energy and battery storage projects.

The surging renewables and battery storage markets will fuel the growth of the clean energy tax credits market. Some analysts believe that this financial mechanism is more effective than carbon pricing. 

That’s because a carbon price, though generating revenue for the government, results in the highest electricity prices. In contrast, energy costs are lesser in clean energy tax credits market. 

For instance, a study conducted on a clean energy tax revealed that its benefits are 4x higher than its costs. The chart shows the cost and benefits of the “Build Back Better” policy. 

clean energy tax credits cost and benefit

Moreover, the authors found that on a cost per tonne of CO2, the tax incentives tend to bring higher emission reductions than other climate policies available. 

Scaling Up for the Clean Energy Future

Johnson from Crux emphasized the need for the clean energy tax credit market to scale up considerably to meet future demand, aiming for a $50 billion market by the end of the decade. This expansion requires increased participation, efficiency, and standardization across the market.

Diversifying the pool of tax credit buyers, including large banks, smaller financial services firms, and companies from various industries such as industrial, energy, retail, and technology, can help mitigate economic uncertainties and regulatory challenges. By broadening the participation base, the market becomes more resilient to shocks affecting specific sectors.

Reunion Infrastructure Inc., another marketplace for tax credit transfers, has also experienced significant growth, with over $6 billion in credits available for sale on its platform. CEO Andy Moon projected the market to exceed $80 billion by 2030, indicating robust long-term growth potential.

The market’s rapid expansion is evident from various industry estimates, with projections ranging from $4 billion – $9 billion in 2023. S&P Global Commodity Insights executive emphasized the market’s extraordinary growth rate, despite being fundamentally unproven. 

This growth trajectory underscores the market’s potential to become a significant player in clean energy financing. As more deals are completed and more buyers enter the market, the transfer credit market would become increasingly robust and will play a pivotal role in accelerating the transition to a sustainable energy future.

Data Centers Power Demand Fuel U.S. Utility Q1 Earnings Discussions

Jennifer L
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Data Centers Power Demand Fuel U.S. Utility Q1 Earnings Discussions

US utility analysts anticipate that discussions on first-quarter 2024 earnings calls will continue to be driven by artificial intelligence (AI) and data center power demand. Analysts highlighted data centers as a key theme, expecting talks on various aspects surrounding it. 

Data Centers Powering Up Utility Investor Excitement

Data centers are power-hungry and their exploding energy needs create ripple effects on the power sector. The International Energy Agency estimates that power use in data centers will increase from 200 terawatt-hours (TWh) in 2022 to 1,050 TWh in 2026, the same energy demand as Germany.

US datacenter electricity consumption 2022-2026

The company serving the largest data center market in the world, Dominion Energy Inc., currently focuses on building the Coastal Virginia Offshore Wind project, the nation’s largest once operational. The company has proposed delaying fossil fuel retirements and adding gas capacity due to anticipated growth in its service areas. 

Dominion has also outlined a $43.2 billion capital plan for 2025–2029 following a 16-month business review.

Another analyst at Scotia Capital (USA), Andrew Weisel, noted that data centers’ robust demand for continuous power generates excitement among utility investors. However, questions remain about how customers will pay for increased capital expenditure (capex) and how companies will raise capital. These concerns arise from stubbornly high interest rates. 

While Scotia Capital lowered target prices across the US utility sector due to rising interest rates, analysts expect companies to stick to their 2024 and long-term financial forecasts. Moreover, experts emphasized that utilities are generally in a good financial position and are likely to reaffirm their growth plans.

NextEra Energy Inc., the largest electric utility based on market cap, reported first-quarter 2024 adjusted earnings that surpassed expectations and reaffirmed its 6% to 8% long-term earnings per share (EPS) growth rate. The company expects adjusted EPS of $3.23 to $3.43 for 2024, followed by adjusted earnings of $3.45 to $3.70 per share for 2025 and $3.63 to $4.00 for 2026.

revenue for electric utilities Q1 2024 EPS

Analysts at BMO Capital Markets noted that the improvement in forward power prices has outpaced the movement in regional gas hub pricing. This indicates tightening conditions in the power market and validating investors’ optimistic outlook on the sector. 

BMO expects Constellation, NRG Energy, and Vistra Corp. to experience a 33% increase in EPS compared to the previous year. Additionally, NextEra Energy, with nearly 60 GW of renewable generation capacity, could benefit from the increasing electricity needs of data centers.

Capitalizing on AI Boom and Surging Energy Demand

Among independent power producers, analysts anticipate a significant focus on strategies to capitalize on the growing demand for AI. This follows Talen Energy Corp.’s affiliate Cumulus Growth Holdings LLC’s sale of a hyperscale data center campus in Pennsylvania to Amazon Web Services Inc. for $650 million.

The facility boasts a capacity of up to 960 MW for data centers and will be powered by Talen’s 2,494-MW Susquehanna Nuclear power plant in Luzerne County, Pennsylvania. 

Recent reports from Morgan Stanley suggest that similar deals could emerge, highlighting the potential for merchant nuclear power plants to provide on-site generation for tech companies constructing data centers in the US. The reports identify generation assets totaling nearly 22 gigawatts (GW) as well-positioned to take advantage of this trend.

The reports also projected that AI power demand causing massive growth of data centers will rise to an annual average of 70% through 2027. Thus, electric utilities, particularly the regulated ones would invest in renewable energy and storage initiatives to cope with the demand. 

In fact, renewable energy developers secured contracts for at least 4,012.6 MW of capacity in the 12 months. Tech companies will use them to power US data centers partially or entirely, per S&P Global Commodity Insights data.

Lagging Behind the Quick Pace 

While some utilities are racing to power data centers, some may not be quick enough to keep pace. 

Rudy Garza, CEO of CPS Energy, highlights the urgency of meeting the massive power demands of these facilities, which often require hundreds of megawatts of electricity in short timeframes, unlike traditional industrial plants with longer lead times. 

This immediate need for power presents a formidable challenge for utilities striving to keep pace with the relentless growth of data-driven industries.

Philip Nevels of AES Corp. echoes this sentiment, emphasizing the monumental task of accommodating the anticipated surge in capacity needs driven by AI and data centers. Nevels further acknowledges the inherent limitations in scaling up renewables fast enough to meet the escalating demand. 

Meanwhile, Kevin Chandra of Austin Energy underscores the importance of collaborative planning to address the spatial distribution of data center loads effectively. Shaun Hoyte of Consolidated Edison Inc. emphasizes the critical role of redundancy and resiliency in grid planning to mitigate potential disruptions caused by the increasing concentration of data centers. 

Sunny Elebua of Exelon Corp. acknowledges the benefits of load growth in advancing decarbonization efforts and optimizing grid utilization. However, Elebua also highlights the challenges posed by the retirement of baseload generation and the evolving supply stack, emphasizing the importance of ensuring resource adequacy amidst these transitions.

In navigating these complexities, utilities recognize the need for state-level support to streamline regulatory processes and facilitate the rapid deployment of energy infrastructure to meet data center demands. 

In summary, the proliferation of AI and data centers is reshaping the energy landscape, presenting both opportunities and challenges for utilities worldwide. As the demand for data-driven services continues to escalate, proactive collaboration, strategic planning, and innovative solutions are essential to ensure a resilient and sustainable energy future.

Green Star Royalties Invests $5.6M In NativState LLC for Carbon Offset Portfolio

Saptakee S
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Green Star Royalties Invests $5.6M In NativState LLC for Carbon Offset Portfolio

Green Star Royalties, the world’s first carbon credit royalty and streaming company boasts funding top-notch North American nature-based climate solutions. It’s a joint venture between Star Royalties Ltd. Agnico Eagle Mines Limited, and Cenovus Energy Inc. 

In a recent announcement, Star Royalties, via its partner Green Star, signed a “definitive royalty agreement” with NativState LLC to acquire several gross revenue royalties on a carbon offset-issuing portfolio of Improved Forest Management (IFM) projects in the southeastern United States. 

NativState, an Arkansas-based forest carbon project developer, offers small to medium landowners an opportunity to realize the full carbon potential of their forests. They aggregate them into IFM projects registered under the American Carbon Registry (ACR).

Green Star’s Royalty Portfolio: Unlocking the Investment Plan

Green Star expects the royalties to generate high-quality voluntary carbon offsets over 20 years. The total payment of $5.6 million will be made in several installments in U.S. dollars unless specified otherwise. 

The key strategies of the investment plan defined by Green Star are:

1. Expanding Green Star’s North American nature-based portfolio:

Acquiring the Royalties on NativState’s IFM projects enhances and broadens Green Star’s existing portfolio of North American nature-based carbon offset solutions.

2. First carbon offset-issuing royalty for Green Star

Green Star’s first carbon offset-issuing investment, Project ACR 783 in Arkansas, is projected to deliver around 180,000 carbon offsets in 2024. It includes approximately 120,000 carbon offsets upon closing. Green Star anticipates that about 75% of its share of carbon offsets from the Royalties will occur within the first five years.

3. Aligned and defensive royalty structure

Green Star and NativState have established defensive mechanisms, including minimum carbon credit volumes to be delivered throughout the 20-year royalty term.

4. Multiple Royalties with strong investment metrics

The Royalties encompass a 20% Royalty on Project ACR 783 and a 10% Royalty on an additional 60,000 acres across Arkansas, Louisiana, Mississippi, and Missouri, slated for development by NativState and registration as future ACR projects. At prevailing carbon offset prices, the Royalties are anticipated to yield significant net present value accretion and offer an attractive payback period.

5. Stable and rising demand for premium North American carbon offsets

Premium North American nature-based carbon offsets are witnessing increasing demand amidst limited supply. Current market pricing for these premium avoidance and removal carbon offsets are approximately $13-15/t CO2e and over $20/t CO2e, respectively.

6. Partnership with a rapidly growing carbon developer

NativState, managing over 300,000 acres, aims to become the largest U.S. aggregator of small-to-medium forest landowners. Green Star is pleased to forge a long-term partnership with NativState, financing American forest landowners eager to engage in both IFM practices and voluntary carbon markets.

Transaction Terms and Impact on Green Star’s Carbon Offset and Revenue Profiles

The transaction immediately provides Green Star with carbon offsets that can be monetized. Over the next 20 years, they’ll keep getting more offsets, with about 75% of them coming in the first five years. 

Green star

source: Green Star Royalties

However, the transaction terms and conditions are significant for the financial gains of both parties. They include: 

  • Green Star will acquire the Royalties for $5.6 million, with payments made in installments tied to ACR registration milestones.
  • In return for its investment, Green Star will receive a 20% Royalty on Project ACR 783 and a 10% Royalty on an additional 60,000 acres, slated for enrollment by NativState as ACR projects.
  • Each Royalty will span a 20-year term starting from the first carbon offset issuance date of the ACR project.
  • Carbon offsets will serve as the direct payment method for the Royalties.
  • Green Star and NativState have agreed to defensive mechanisms, including minimum carbon offset delivery requirements over the 20-year royalty period.

Enhancing Carbon Sequestration through Improved Forest Management (IFM)

Improved forest management encompasses methods that either reduce emissions from forests or enhance carbon removal and storage. Techniques such as decreasing harvest volumes, extending forest rotations, etc. lower emissions from forests. They generate credits for the curbed emissions. 

The conservation plans also elevate carbon storage above the baseline, guaranteeing excellent carbon sequestration.

From an economic perspective, 

  • These projects achieve increased net carbon stocks by either sequestering carbon through photosynthesis from expanded or maintained forest cover compared to the baseline or by curbing greenhouse gas emissions through reduced timber harvesting.
  • Acceptable IFM practices, like extending rotations, implementing thinning, adopting fire prevention methods, and altering harvesting techniques, must comply with the selected carbon registry methodology.

CarbonDirect reports,

“Improved forest management has the potential to increase total stored carbon annually by 200 million to 2.1 billion tonnes without compromising the wood product and ecosystem benefits that come with managed forestlands.”

 In the United States, timber harvesting is the most widespread disruption across forested areas, with most of the harvested timber sourced from private lands. Therefore, significant decisions about forest and land management can profoundly impact the capacity of forests to sequester carbon.

Presently, “premium avoidance carbon offsets” in the U.S. market are valued at about $13 to $15 per metric ton of carbon dioxide equivalent (t CO2e), while removal carbon offsets fetch over $20 per t CO2e.

Carbon Offsets and Habitat Protection: The Mission of Project ACR 783

Project ACR 783, also known as the S&J Taylor Forest Carbon Project spreads across 18,000 acres of sustainably managed forestland in Southcentral Arkansas. 

Forest project: work in progress

NativState

source: NativState

  • Green Star holding a 20% Royalty stake in Project ACR 783, is anticipating to produce ~ 1.5 million carbon offsets over the next two decades. 

Notably, Project ACR 783 focuses on maintaining forest carbon stocks through certified and sustainable management practices to achieve significant carbon sequestration in the designated areas. 

With its partner NativState, they are aiming to generate sustainable revenue streams through forest management and voluntary carbon markets (VCMs). The latter dedicates itself to conserving valuable hardwoods such as oak, gum, cypress, hickory, and pine forests within the Gulf Coastal Plain eco-region.

Besides carbon revenues, Project ACR 783 will also promote:

  • Landscape stability
  • Increased biodiversity, and 
  • Enhanced habitat protection for critical species

Alex Pernin, CEO of Star Royalties, has highly applauded NativState’s approach to the sustainable business model and its carbon offset issuance profile. He noted, 

“We are proud to announce this multi-royalty investment in NativState’s portfolio of high-integrity IFM projects in the southeastern United States. This thoughtful transaction transitions Green Star into free cash flow generation and provides desirable economic returns while expanding and diversifying our existing premium North American portfolio.”

Mercedes-Benz Reveals First-Ever Electric G-Wagon

Jennifer L
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Mercedes-Benz Reveals First-Ever Electric G-Wagon

As automakers and suppliers invest heavily in electric vehicle (EV) capacity and technology development, the actual demand for EVs has yet to catch up, leading carmakers to adjust their production plans accordingly. The luxury carmaker, Mercedes-Benz, just revealed its first-ever electric truck, the G Wagon, or the G580 with EQ Technology. 

This development is anticipated as the German automaker announced in 2021 that it would make all-electric vehicles by 2030. However, the carmaker had undergone a recalibration in this commitment. 

Mercedes-Benz Adjusts its Roadmap to 2030

Mercedes-Benz is adjusting its electrification strategy, slowing down its timeline to go fully electric by 2030.

Initially, the German luxury automaker had set ambitious plans in motion, committing €40 billion ($43 billion) in 2021 to phase out combustion engines and focus solely on electric vehicles (EVs) by the end of the decade. This strategy aligned with EU regulations aiming to ban new gas and diesel vehicle sales by 2035. 

In detail, here are the company’s original climate targets and progress.

Mercedes-Benz climate targets

However, recent developments indicate a shift in gears.

The company’s blueprint outlined a goal for half of its vehicle sales to be electrified (EVs or hybrids) by 2025. Now, this target has been postponed to 2030. This adjustment reflects the current reality where fully battery-powered vehicles constituted only 11% of Mercedes’ sales in 2023, rising to 19% when including hybrids.

This shift underscores the company’s pragmatic approach amidst evolving market dynamics.

Mercedes-Benz’s recalibration aligns with industry trends, as other automakers like Ford and General Motors have also revised their electrification strategies in response to changing consumer demand for EVs in the U.S. and Europe.

Even the EV giant, Tesla, reported a dip in profits with lower EV sales for this year’s first quarter.

Other factors in the changing EV landscape include reduced government subsidies, rising electricity costs, and insufficient public charging infrastructure. These factors contribute to a deceleration in customer demand for EVs.

Moreover, governments are reevaluating their timelines for banning the sale of combustion-powered cars. The EU settled on a 2035 cutoff but pledged to explore synthetic fuels as an alternative. Similarly, the UK shifted its ban from 2030 to 2035 last year.

Charging Ahead: Mercedes-Benz’s Electric G580

The company now emphasizes that the pace of the transition to electric will be dictated by customer demand and market conditions. Investors have responded positively to Mercedes’s announcement, coupled with news of a $3.2 billion share buyback, resulting in a more than 5% increase in the company’s stock price.

The carmaker’s current plans for updates suggest a significant evolution. Still, Mercedes-Benz reaffirms its commitment to electrification by continuing to innovate and make high-tech EVs like the electric G-Class Wagon. 

Mercedes-Benz G-Class electric vehicle

Here are the key features and specifications of the company’s new fully-electric truck:

  • Design and Development: The electric G-Class, known as the G580 with EQ Technology, maintains the iconic G-Class design while being powered by a battery. It retains the ruggedness and off-road capability of its combustion engine counterpart.
  • Electric Powertrain: Has 4 electric motors, one for each wheel, delivering a total output of 579bhp and 859lb ft of torque. The motors are paired with a two-speed gearbox for each, developed specifically for the G580.
  • Performance: Boasts impressive off-road performance, matching or exceeding the capabilities of the petrol-powered G-Class. It features a shiftable low-range transmission and offers up to 100% gradeability on certain surfaces.
  • Battery and Range: Comes with a 116kWh battery, shared with the EQS, offering a claimed range of 292 miles. The batteries are integrated into the frame, serving as a structural component. The battery pack is protected by an underride guard that acts as a skid plate when off-roading.
  • Charging: Can be fast-charged at speeds of up to 200kW, allowing for quick charging times.
  • Sound Experience: Offers a “G-Roar” function providing an emotive sound experience in the cabin, enhancing the driving experience.

Overall, the Mercedes-Benz G580 with EQ Technology combines the legendary off-road capabilities of the G-Class with electric power, contributing to clean transportation and reducing emissions.

Joining Forces for Climate

The luxury carmaker has joined the climate protection initiative “Transform to Net Zero” (TONZ). Led by Microsoft, TONZ brings together nine renowned companies from various industries and countries to promote the conditions necessary for the broad decarbonization of the economy and society.

Moreover, through initiatives like Ambition 2039, Mercedes-Benz aims to achieve a “net zero CO2” new car fleet within less than 20 years, extending beyond driving operations to include the entire value chain. 

The commitment to climate protection aligns well with Mercedes-Benz’s new strategic focus on high-margin luxury cars. Today’s luxury car customers prioritize climate protection, seeking solutions that combine fascination with responsibility.

Mercedes-Benz aims to maintain its technological leadership role in electric drives and digitalization as exemplified in G580 with EQ Technology, reflecting its dedication to providing innovative and sustainable mobility solutions.

Verra’s VCS Program Update: Navigating CORSIA and ICVCM Alignment

Saptakee S
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0
Verra’s VCS Program Update: Navigating CORSIA and ICVCM Alignment

Verra, a leading non-profit VCM registry in the US has recently released updates to its Verified Carbon Standard (VCS) Program. The latest release, VCS Standard v4.7, introduces enhancements to the existing framework.

The VCM program aims to bolster the credibility and effectiveness of carbon offset projects certified under the VCS Program. However, the Integrity Council for the Voluntary Carbon Market (ICVCM) is currently in the final stages of approving it, and they expect to receive the results either later this month or possibly in May.

VCS Program Updates: Alignment with CORSIA and ICVCM

Verra’s 4.7 updates aim to ensure full compliance with CORSIA’s first phase (2024–2026 compliance period) requirements, established by the International Civil Aviation Organization (ICAO)

  • Verra will submit these updates to ICAO for further assessment by the ICAO Technical Advisory Body.
  • The deadline for submission of the Material Changes form is on or before April 30, 2024

Furthermore, the VCS Program updates incorporate several amendments to its rules aimed at clarifying its alignment with the Core Carbon Principles set by the Carbon Market (ICVCM). As mentioned, the final review and approval process would take at least a month.

The provisions would prevent the double claiming of emission reductions and removals represented by VCUs used for CORSIA compliance. They would also enhance the host country’s Nationally Determined Contribution (NDC) under the Paris Agreement.

Verra’s Diverse Sustainability Initiatives

One of Verra’s most notable contributions is the development and oversight of the VCS program, which provides guidelines and protocols for certifying carbon offset projects.

These projects, ranging from renewable energy installations to reforestation efforts, undergo rigorous assessment to ensure they meet specific criteria for additionality, permanence, and emissions reductions.

In addition to the VCS program,

  • Verra manages other standards and programs aimed at promoting environmental sustainability and social responsibility. These include the Climate, Community & Biodiversity (CCB) Standards.
  • They further assess projects for their impacts on local communities and ecosystems, and the Sustainable Development Verified Impact Standard (SD VISta). It evaluates projects based on their contributions to sustainable development goals.

verra

source: Verra annual report 2022

Overview of VCS Program Updates (new version v4.7)

The Overview of VCS Program Updates and Effective Dates (PDF) provides a comprehensive list of changes, along with their effective dates and grace periods.

The updated documents mainly highlight the VCS Standard, VCS Program Definitions, the Verra Registry Terms of Use (ToU), and VCS Safeguard.

1. Updates Related to the VCS Safeguard

  • Mandate thorough risk assessments by project proponents, ensuring mitigation measures are proportionate to identified risks.
  • Mandates project proponents to identify, minimize, and mitigate impacts, including those stemming from chemical pesticides and fertilizers.
  • Clarifies that project proponents must also safeguard staff and contracted workers employed by third parties.
  • Specifies that demonstrating no adverse impact extends to areas crucial for habitat connectivity.

The revision is effective for all project requests submitted to the Verra Registry on or after January 1, 2025.

2. Updates Related to Registration under the GHG Program

  • Requires providing evidence of the project’s inactivity date, where applicable.
  • Stipulates that projects registered under another GHG program can only join the VCS Program after becoming inactive in the other program.

The revision is effective for all projects requesting registration or crediting period renewal under the VCS Program on or after January 1, 2025

3. Updates Related to Double Selling of VCUs

This section of the update references VCS Program rules on double selling of Verified Carbon Units (VCUs), which are covered in the Registry Terms of Use. Updates to the VCS Program Definitions will be effective immediately.

4. Updates Related to Methodology Development and Review Process

It clarifies that Verra selects a shortlist of eligible validation/verification bodies that meet all requests for proposal and VCS Program criteria. Updates to the VCS Program Definitions will be effective immediately.

5. Updates Related to VCS Standard and Registration and Issuance Process

Verra has updated all project templates to align with the revised requirements in the VCS Standard and Registration and Issuance Process. It’s effective for all project requests submitted to the Verra Registry on or after January 1, 2025.

Disclaimer: We have fetched a revised VCS program update from Verra’s April 2024 program update release.

Image: Verra’s VCM program issues billions of carbon credits.

Verra

source: Verra’s annual report 2022

Governments, businesses, and organizations worldwide widely recognize and utilize Verra’s standards as benchmarks for credible and transparent carbon credit exchanges.

In 2022, Verra’s VCS Program significantly issued its 1 billion carbon credit. Verra remains deeply committed to maintaining a high-integrity VCM that contributes to achieving the Paris Agreement goals. This commitment has been assured by Judith Simon, Verra President and Interim CEO, she noted,

“I feel the urgency and importance of all we must do—not just as an organization, but also in support of environmental and social markets. We have an enormous responsibility, and we take it seriously.”

Coal Power is Accelerating Despite the Energy Transition

Jennifer L
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0
Coal Power is Accelerating Despite the Energy Transition

In a significant development for the global energy landscape, China has led a surge in coal-power capacity, driving the world’s total to a record high in 2020, according to a new report from Global Energy Monitor. This increase was primarily fueled by new plants in China, which accounted for about two-thirds of the expansion, with Indonesia and India following closely behind.

The Current State of Coal Consumption

The coal fleet expanded by 2% to 2,130 gigawatts, a remarkable increase driven by a decrease in retirements worldwide. This trend was particularly prominent in China, where the country initiated the construction of 70 gigawatts of new coal plants in 2020. That’s nearly 20x more than the rest of the world combined.

China leads new coal power

The report, titled “Global Coal Plant Tracker 2021: The World’s 1000 Largest Coal Plants,” highlights the significant role China plays in the global coal market. 

The country’s aggressive expansion of coal-power capacity is a stark contrast to the trend of retiring coal plants in many developed countries, such as the United States and the European Union.

The increase in coal-power capacity has significant implications for global energy markets and climate policy initiatives. 

According to Global Energy Monitor, about as many countries opened new coal plant units as shut units down in 2023. Yet overall, more capacity is added than retired.

new coal power capacity added versus retired

Here are 8 key points from the coal report:

  • Global operating coal capacity grew by 2% in 2023, with China driving two-thirds of new additions. However, this accelerated growth in coal capacity may be short-lived, as low retirement rates in 2023 that contributed to coal’s rise are expected to pick up speed in the U.S. and Europe, offsetting the blip.
  • Heightened capacity additions will also be tempered if China takes immediate action to ensure it meets its target of shutting down 30 gigawatts (GW) of coal capacity by 2025. Countries with coal plants to retire need to do so more quickly, and countries with plans for new coal plants must ensure these are never built. 
  • Otherwise, meeting the goals of the Paris Agreement and reaping the benefits of a swift transition to clean energy will be difficult. Coal’s fortunes this year are an anomaly, as all signs point to reversing course from this accelerated expansion. 

RELEVANT: Global Team Develops World’s First “Coal-to-Clean” Carbon Credit Program

  • The data for the report comes from GEM’s Global Coal Plant Tracker, an online database updated biannually that identifies and maps every known coal-fired generating unit and every new unit proposed since January 1, 2010 (30 MW and larger). This data serves as a vital international reference point used by organizations including the IPCC, IEA, and the UN.
  • According to the IEA, global coal demand is predicted to decline by 2.3% in 2026 compared to 2023 levels. And that’s even without stronger clean energy and climate policies. This decline is driven by the major expansion of renewable energy capacity coming online in the three years to 2026. 
  • More than half of the global renewable capacity expansion is set to occur in China, which currently accounts for over half of the world’s demand for coal. As a result, Chinese coal demand is expected to fall in 2024 and plateau through 2026. 
  • The shift in coal demand and production to Asia is accelerating, with China, India, and Southeast Asia set to account for three-quarters of global consumption in 2023, up from only about one-quarter in 1990. Consumption in Southeast Asia is expected to exceed that of the U.S. and the EU in 2023. 
  • The three largest coal producers globally – Indonesia, China, and India – are expected to break production records in 2023, pushing global output to a new high. However, to decrease emissions at a rate keeping with Paris Agreement goals, relentless coal use would need to fall much more quickly. 

China’s Pivotal Role and the Shift in Coal’s Global Leadership

China’s growth in coal capacity highlights its focus on fulfilling energy needs for economic and industrial expansion, despite global efforts to cut greenhouse gas emissions. The interplay between increasing coal capacity and the shift toward cleaner energy will significantly influence the worldwide energy scenario.

The role of China and other key players in this process will be crucial in determining the pace and scope of the shift towards a more sustainable energy future. 

The report further highlights a significant shift in global leadership regarding coal policies, particularly within the G7 and G20 nations. The G7 countries, which accounted for 23% of the world’s operating coal capacity in 2015, have reduced their share to 15% in 2023. 

The reduction is underscored by the completion of new units in Japan. This marks the end of coal construction within the G7, although proposals still exist in Japan and the U.S. 

Meanwhile, the G20 nations hold 92% of the world’s operating coal capacity, with Brazil, the current G20 chair, witnessing a decrease in pre-construction capacity, leaving only two projects remaining in Latin America. 

This geographical shift in coal policies and projects underscores a broader global trend toward reducing reliance on coal. Moreover, it will have significant implications for international energy markets and climate policy initiatives.

Coal Plant Proposals and Retirements

The dynamics of coal plant proposals and retirements provide a nuanced view of the global coal industry’s future. In 2023, while 69.5 GW of coal power capacity was added, only 21.1 GW was retired, leading to a net increase in global coal capacity. 

coal power capacity retirements at lowest level

This trend is particularly pronounced outside of China, where new proposals totaled 20.9 GW, led by countries like India, Kazakhstan, and Indonesia. 

Despite a general trend toward decommissioning, these developments indicate a complex global landscape where certain regions continue to explore new coal projects. 

This ongoing activity suggests that while the global momentum is towards reducing coal dependency, achieving this goal requires concerted efforts across all nations, particularly those with significant new proposals.

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