Indian Government Announces Massive New Green Hydrogen Project

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Indian Government Announces Massive New Green Hydrogen Project

A massive new green hydrogen project was announced by the Indian Government. India’s National Green Hydrogen Mission is another decarbonization strategy to become energy-independent by 2047 and achieve net zero by 2070.

The mission was approved by the Union Cabinet on 4th January 2023, with a budget allocation of ₹ 19,744 crore. The ultimate objective of the Mission is to make India the Global Hub for the production, usage, and export of Green Hydrogen and its derivatives.

Before moving on to the current scenario of monetary investments and the use of green hydrogen in transport pilot projects, we will examine what this comprehensive plan looks like for the coming years.

India’s Plan to Take a Quantum Leap in the Green Hydrogen Race

To become the world’s largest producer and exporter of green hydrogen in the world, India has set forth a series of milestones. As per data from Govt. of India’s Ministry of New and Renewable Energy they include:

  • The Mission aims to establish capacities to produce at least 5 Million Metric Tonne (MMT) of Green Hydrogen annually by 2030, with the potential to reach 10 MMT per annum through expansion of export markets and international partnerships.
  • The initial budget for the mission will be Rs 19,744 crore. From this Rs 17,490 crore will be allocated for the SIGHT program, Rs 1,466 crore for pilot projects, Rs 400 crore for R&D, and Rs 388 crore for other mission components.
  • Kick-off global demand to nearly 100 million metric tonnes (MMT) for Green Hydrogen and its derivatives, like green ammonia by 2030. The target is to capture 10% of the global market with an annual export demand of about 10 MMT of Green Hydrogen/Green Ammonia.
  • The decarbonization target is to mitigate 50 MMT per annum of CO2 emissions with the implementation of the Green Hydrogen initiatives charted under the Mission.
  • Replace fossil fuel with green hydrogen and its derivates to reduce f ₹1 lakh crore in fossil fuel imports by the year 2030 and enhance India’s energy security.

An examination of the industrial sectors that would drive demand for green hydrogen in the future are shown in the growth graph below.

green hydrogen indiaRevving Up Sustainability: Transport Sector Emerges as the Prime Hub for the Green Hydrogen Revolution

The Ministry of New & Renewable Energy (MNRE) recently released guidelines for a program aimed at backing pilot projects centered on utilizing green hydrogen as a fuel for four-wheelers, buses, long-haul trucks, and heavy-duty vehicles. The technology uses fuel cell-based and internal combustion engine-based propulsion techniques.

The iron and steel sector and the shipping sector would be bolstered under the Green Hydrogen Mission to undertake the pilot projects. The important features of this project are:

  • Pilot Projects through the Ministry of Ports, Shipping and Waterways (MoPSW) to drive green hydrogen innovation with Rs. 115 Crore Budget by 2025-26.
  • Inaugurating green hydrogen in maritime for use in piloting maritime propulsion, passenger ferries, boats and cruising, and refueling of ships. Testing technical feasibility, economic viability, and effectiveness in real-world operations.
  • The Ministry of Steel and designated Implementing Agencies will oversee pilot projects in the Steel and Iron Sector, aiming to substitute fossil fuels and feedstock with green hydrogen and its derivatives.
  • The program will also fund projects exploring innovative hydrogen applications to cut carbon emissions during the iron and steel manufacturing process.

As stated by the MNRE, the initiative will be executed with a total budget allocation of Rs 496 crore until the fiscal year 2025-26. Such a huge budget means primary focus on pilot projects in the transport sector and building hi-tech infrastructure to manufacture green hydrogen and installing hydrogen refueling stations wherever required.

green hydrogen india

India’s Strategic Edge: Powering the Global Energy Shift with Distinct Advantages

Currently, China is the largest producer and consumer of green hydrogen followed by the US. But India’s ambitious green hydrogen goals would certainly make it a strong player in the race for more production.

More insight into the distinct advantages India has over other hydrogen superpowers give weight to these goals:

  • That the government foresees a substantial decrease in the costs of renewable energy and electrolyzers paves the way for highly cost-effective use of green hydrogen in passenger and commercial vehicles in the coming years

This could enable India to achieve the world’s lowest green hydrogen production costs, potentially hitting USD 0.75 per kilogram by 2050. This further adds an edge to India’s green hydrogen export market.

India holds rich and vast sources of renewable energy with global giants like Reliance Industries (RIL), GAIL India Ltd., Adani Group, NTPC (National Thermal Power Corporation Limited), Indian Oil Corporation (Indian Oil), and Larsen and Toubro (L&T) owning most if not nearly all of the assets and resources to firmly lead the green hydrogen revolution.

Green Hydrogen is likely to play a critical role in India’s energy transition. Moreover, shifting to green hydrogen aligns India with global climate leaders such as the US and EU. India’s 2030 pledge under the terms of the Paris Agreement to reduce greenhouse gas emissions will eventually empower the country to make it a global hub for production, usage and export of Green Hydrogen and its derivatives.

To Read More About India’s National Green Hydrogen Mission Click Here

Canada’s $5 Billion Carbon Pricing Revenue Sparks Debate

Jennifer L
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Canada’s $5 Billion Carbon Pricing Revenue Sparks Debate

Canada’s federal carbon pricing policy is a pivotal component of the nation’s efforts to combat climate change. The Parliamentary Budget Officer’s latest estimates show that it will yield over $5 billion in revenue from federal sales tax over the next 7 years. 

However, concerns are raised as to why there are no specific plans to channel the revenue to climate programs. The federal government also scaled back carbon tax rebates for small businesses. 

The estimated figures come from a private member’s bill put forward last fall by Conservative MP Alex Ruff, aiming to entirely remove the sales tax from carbon pricing.

Canada’s Carbon Tax Revenue and Redistribution Framework

In an era increasingly characterized by environmental responsibility, Canada’s carbon pricing policy was initially hailed as a bold stride toward fostering a sustainable future. However, the revelation that the revenue from the tax lacks specific earmarks for environmental initiatives has sparked widespread concern. 

Critics argue that without a targeted focus on climate action represents a missed opportunity in the fight against global warming. 

According to law, revenue generated from the carbon price must be redistributed to households and businesses through rebates and granting programs. 

The PBO projected that the redistribution will amount to about $600 million in 2024-25, growing to $1 billion annually by 2030-31, alongside the increase in the carbon price itself. Over the period from April 2022 to March 2031, this could accumulate to $5.7 billion.

These projections include revenue from the 8 provinces and 2 territories subject to the federal carbon pricing system. They also include British Columbia, Quebec, and Northwest Territories, which have their own systems. Thus, the federal carbon pricing system do not apply in those 3 jurisdictions.

Canada carbon pricing system
Source: Environment and Climate Change Canada (ECCC)

Directing these funds towards climate action can help the country achieve its 2030 greenhouse gas emissions targets.

The carbon pricing framework was structured with the intention that 90% of the funds collected from consumers and smaller businesses would be allocated to individual households in the form of rebates. 

The remainder of the funds was designated for Indigenous communities, municipalities, hospitals, and schools. The ultimate goal is to facilitate energy efficiency upgrades through a range of programs.

To date, over $100 million has been disbursed through these programs. Approximately $35 million was allocated to small businesses, $60 million to schools, and around $6 million to Indigenous communities.

Scrutiny Over Carbon Tax Rebates for Small Businesses

But the scrutiny over the $5 billion income from the carbon price continues to intensify. It is further compounded by recent developments, particularly the reduction of carbon tax rebate percentages for small and medium-sized enterprises (SMEs). It sparked strong reactions from business communities nationwide. 

The Canadian Federation of Independent Business (CFIB) has been particularly vocal in its opposition, launching a petition against these alterations and advocating for immediate measures to support affected businesses.

The CFIB estimates that small businesses contribute up to 40% of the government’s total carbon price revenues. However, Clean Prosperity, an economic and climate change think tank, suggests a lower estimate, placing it closer to 25%.

Small businesses were never slated to receive more than 7% of the carbon price revenues back. Moreover, this allocation is now diminishing further, dropping to 5%.

The incentives were intended to assist businesses in covering a portion of the expenses associated with acquiring energy-efficient equipment. They also cover initiatives on upgrading buildings and operations to reduce fuel consumption. The targeted businesses are in emissions-intensive and trade-exposed sectors, but these haven’t yet been defined. 

Clean Prosperity’s executive director, Michael Bernstein, commented on the issue:

“Even two years ago, we calculated that there was enough money within the HST [Harmonized Sales Tax] on the carbon tax to fund a one-percentage-point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein further noted that SME businesses contribute around one-quarter of Canada’s carbon price revenue, according to their estimates. Since 2019, the government has yet to disburse about $2.5 billion from this income owed to small businesses. 

Perspectives and Proposed Solutions

Dan Kelly, CFIB President and CEO, argued that businesses require assistance to mitigate the financial impact of carbon pricing. He particularly remarked that:

“The whole principle of a carbon tax is you tax carbon-based activities and you give the money back so that then people make decisions to use those dollars in lower-carbon activities.”

Conservative spokesperson Sebastian Skamski affirmed the party’s commitment to eliminating carbon pricing. While Conservative MP Alex Ruff’s proposal to remove the sales tax from carbon pricing serves as an interim measure, the party advocates for broader exemptions and reductions to alleviate the burden on businesses.

However, Minister of Finance Chrystia Freeland’s office didn’t express openness to utilizing GST and HST revenues to bolster rebates. Katherine Cuplinskas, a spokesperson for Freeland, said that the government promises a portion of carbon price revenues to be returned to businesses. However, no specific details were provided. 

Canada’s carbon pricing policy generates significant revenue but lacks specific allocations for climate programs. Reductions in rebates for small businesses raise concerns. Balancing revenue generation, fair redistribution, and business support is crucial. Transparent communication and flexible policy frameworks are needed for effective climate action and economic stability.

The Implications of Technology-Neutral Tax Credits in U.S. Power Sector

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The Implications of Technology-Neutral Tax Credits in U.S. Power Sector

Clean energy projects completed after 2024 in the U.S. could access innovative, technology-neutral tax credits under the Inflation Reduction Act (IRA). These credits, similar to existing incentives, target facilities achieving net zero carbon emissions. Guidance from the Treasury Department will clarify eligibility. 

The credits, effective from January 1, 2025, will replace existing production and investment tax credits for wind and solar projects. They will also extend to qualified energy storage facilities and rapidly evolving clean energy technologies. 

More notably, they phase out by 2032 or when U.S. electricity production emissions reach 25% of 2022 levels or lower.

A Shift Towards Sustainable Finance

The U.S. power sector’s greenhouse gas emissions have significantly decreased in 2023 compared to 2022, according to the Environmental Protection Agency. The drop in emissions is mainly due to shifts in the mix of fossil fuel-based electricity generation.

The agency’s report revealed a 7% decrease in CO2 emissions from the sector, the largest annual drop since 2020.   

The technology-neutral approach emerged from House and Senate committees’ negotiations on the IRA, enacted in August 2022. House Democrats aimed to extend traditional renewable incentives, while Senate leaders favoured emissions-based credits. Ultimately, the IRA extended existing incentives until the tech-neutral credits kicked in. 

technology-neutral clean electricity credits

The IRA has instituted highly specific phaseout schedules for the new technology-neutral tax credits. These credits will remain in effect either until 2032 or until CO2 emissions from the country’s electricity sector reach or fall below 25% of 2022 levels, whichever comes later. 

Once this threshold is met, a three-year phaseout period will commence, featuring defined annual reductions in the value of the tax credits. Wood Mackenzie’s analysis suggests that the United States will likely surpass the 25% of 2022 threshold after the year 2032.

In addition to extending the Production Tax Credit (PTC) and Investment Tax Credit (ITC), the IRA has introduced PTCs for existing nuclear plants and clean hydrogen, along with enhanced incentives for carbon capture and storage (CCS). Unlike the technology-neutral PTC and ITC, these specific credits are set to expire at the end of 2032.

Pioneering Tax Credit Phasing and Potential Impact

Based on the language in the IRA, Wood Mackenzie views that these tax credits will extend for longer than 2032. Absent IRA repeal means that instead of several hundred billion dollars in tax credits for new renewables and storage, the real money on the table is on the order of trillions of dollars over multiple decades.

Estimated IRA-enabled PTC credits wood mackenzie

The American Council on Renewable Energy (ACORE) supports the approach for simplifying the tax code and advancing climate goals. By encompassing all carbon-free resources, these credits promote diverse technologies without requiring frequent legislative extensions, fostering innovation and investment.

Alongside renewable energy projects, the new technology-neutral tax credits could also benefit coal and natural gas plants adopting carbon capture and sequestration (CCS) technology. However, only a small number of coal and gas plants are actively pursuing CCS due to their high costs and operational challenges. 

Among those that do, some may choose to use the enhanced CCS production tax credit offered by the IRA. However, this credit cannot be combined with the technology-neutral clean power PTC. 

Nevertheless, as utilities seek additional sources of zero-emission electricity to meet their climate objectives, the technology-neutral system might ultimately prove to be a more effective solution.

Anticipated Guidance and Project Projections

The Treasury Department will provide guidance on technology-neutral credits in the coming months, offering clarity to developers. Although a Treasury spokesperson didn’t provide an update on timing, they suggested it’s likely to be in the second quarter. 

This guidance could offer clarity regarding how specific projects can demonstrate eligibility. Treasury’s Assistant Secretary for Tax Policy Lily Batchelder noted that:

“Our guidance on these credits will create a framework that allows future innovation in clean energy technologies — supporting American ingenuity, jobs, and energy security for the long haul.”

According to data from S&P Global Market Intelligence, the U.S. would incorporate nearly 220,000 MW of fresh solar capacity between 2024 and 2030.

US planned renewable capacity by 2030

Within the same timeframe, the nation would also integrate 85,615 MW of combined capacity from onshore and offshore wind projects. Plus, another 110,687 MW of standalone and co-located energy storage.

Despite potential regulatory and potential risks, developers of clean energy are pressing ahead with their project plans. 

Although the precise timing remains uncertain, it’s evident that the core provisions of the IRA, particularly the technology-neutral tax credits, will endure for decades to come. The interest in these credits will only grow further, as industry experts believe to be. 

India Revises Its Carbon Credit Trading Scheme for Voluntary Players

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India Revises Its Carbon Credit Trading Scheme for Voluntary Players

India made a bold move in 2024 by revamping its Carbon Credit Trading Scheme (CCTS), allowing non-obligated entities to participate in the tradable carbon credits market. That means companies and individuals can voluntarily use carbon credits to address their planet-warming emissions. 

This significant revision introduces an offset mechanism, enabling these entities to register projects and obtain tradable carbon credit certificates (CCCs). Each credit represents one tonne of carbon dioxide equivalent (tCO2e). The aim is to efficiently price emissions through CCC trading and expand the voluntary carbon market.

India Opens Doors for Voluntary Carbon Credit Buyers 

In 2023, India introduced the 2023 Carbon Credit Trading Scheme (CCTS), encompassing both compliance and voluntary sectors. However, while the compliance segment is scheduled to commence in 2025-26, there is no set timeline for the launch of the voluntary carbon market. 

Under India’s revised carbon market scheme, obligated entities have the flexibility to purchase additional credits or sell surplus ones. Meanwhile, businesses can trade CCCs to offset their emissions. 

However, sectors facing challenges in meeting reduction targets, particularly those with hard-to-abate emissions, are exploring the possibility of trading energy-saving certificates (ESCerts) and renewable energy certificates (RECs) as offsets.

India emerged as a favorable destination for energy transition investments after successfully hosting the G20 Summit last year. During the same year, the country added about 17 GW of capacity, with non-fossil additions accounting for 13.8 GW. 

As seen below, renewable energy has the largest growth in terms of electricity supply capacity in the South Asian country. 

India renewable energy capacity supply 2022
Chart from Reuters

Moreover, India increased its financial support to propel the green hydrogen ecosystem and initiated preparations for its domestic carbon markets.

Key decisions regarding international participation in the carbon credit market are expected in 2024, setting the trajectory for India’s engagement. Additionally, discussions on the scope, design, and procedures of the scheme, including linkages with international standards and registries, are anticipated to be addressed.

India’s Energy Transition Priorities to Drive Climate Action

India’s move reflects its commitment to combating climate change and aligning with global efforts towards decarbonization. This year, the super-emitter is anticipated to intensify its efforts in implementing its energy transition strategy while navigating challenges related to energy security and affordability. 

India’s strategy will prioritize various aspects in power and renewables market, including:

Clean energy transition advancing; coal reliance to remain high:

  • Electricity demand to grow with GDP growth, driven by local activity due to elections and El-nino impact.
  • Total capacity addition to grow by 60% YoY; coal share in generation to decrease marginally to 73.2% in 2024.

Improving domestic fuel supply (Coal and Gas) remains top priority:

  • India expected to surpass 1 billion metric tons of domestic coal production in 2024.
  • Boost in domestic gas production due to new gas pricing reforms.

Focus on green hydrogen/ammonia:

  • Shift towards creating local demand and supporting excess costs.
  • Launch of new schemes to aggregate demand from public sector units and large consumers.

Renewables at the forefront of India’s climate policy:

  • Highest renewable capacity addition (>20 GW) expected in 2024.
  • Falling module costs and tender backlog driving record capacity addition.
  • Increasing prominence of hybrid renewable tenders and stand-alone storage tenders.
India power generation by source
Chart from Reuters

Bridging the Gap: Integrity Measures and Global Carbon Markets

The strategy also underscores the importance of integrity measures in bridging the emissions reduction gap and achieving climate goals.

In a recent report by the Carbon Market Institute, global carbon pricing mechanisms have raised an impressive $100 billion in 2022 and now covered 23% of global greenhouse gas emissions. 

Despite these achievements, current government pledges are projected to result in a temperature rise between 2.1°C and 2.8°C. Carbon markets hold considerable potential to bridge the emissions reduction gap necessary to approach a 1.5°C trajectory. 

However, there is still work to be done to bolster integrity measures and accelerate international cooperation in this regard.

In 2023, the global carbon trading markets experienced robust growth, reaching a record value of over $947 billion, representing a 2% increase from the previous year. This growth was primarily driven by higher prices in key markets such as Europe and North America, despite similar permit trading volumes.

The EU’s Emissions Trading System (ETS) maintained its position as the most valuable market, accounting for 87% of the global total. However, weakening demand from industrial buyers and the power sector towards the end of 2023 led to a bearish trend that has persisted into 2024. 

Conversely, North American prices reached record highs, and China’s national ETS also saw unprecedented price levels in 2023.

India’s revised Carbon Credit Trading Scheme (CCTS) presents a significant step forward in the global effort towards decarbonization. This, combined with the strong growth observed in the global carbon trading market, underscores a promising trajectory towards reducing greenhouse gas emissions. 

Lululemon and Samsara Eco Reveal World’s First Recycled Textile Using Enzymes

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Lululemon and Samsara Eco Reveal World’s First Recycled Textile Using Enzymes

Australian environmental technology startup Samsara Eco, in collaboration with athletic apparel giant Lululemon, has unveiled the world’s first enzymatically recycled nylon 6,6 product. Their initiative represents a significant milestone, advancing the fashion industry closer to establishing a circular, sustainable ecosystem.

Launched in 2020, Samsara Eco specializes in infinite recycling to end plastic pollution. They believe that the planet can’t solve the climate crisis without solving the plastics crisis. The company’s patented process that breaks plastic down to its core molecules is carbon-neutral and can re-create brand-new plastic infinitely. 

A Step Towards Sustainable Fashion

The fashion industry currently contributes about 10% of annual global carbon emissions, poised to increase by 50% by 2030. Additionally, the industry heavily relies on plastic-derived textiles sourced from petroleum, equivalent to 342 million barrels of petroleum.

Alarmingly, the industry produces 2 million tonnes of textile waste every year, while around 10% of microplastics found in the ocean come from this waste.

However, a small portion of these materials undergo recycling. According to the U.S. Environmental Protection Agency, merely 15% of plastic-derived textiles are recycled.

Nylon 6,6 is one of the most widely used plastics in the textile sector, with nearly 4 million tonnes of it manufactured annually. The material serves as a fundamental fiber in many of Lululemon’s top-selling products, particularly its popular Swiftly Tech long-sleeve top. 

Using the recycled nylon 6,6 produced through Samsara Eco’s recycling technology, the clothing giant has developed samples of the said top, marking the world’s first instance of this nylon recycled in such a manner. 

Due to its robust, heavy-duty properties, nylon 6,6 has traditionally posed challenges for recycling. Yet, it has found applications across various industries, including fashion, automotive, and electronics.

But with Samsara Eco’s pioneering technology (patent pending), nylon 6,6 can now be recovered and extracted from end-of-life textiles. This offers the potential to create a fully circular ecosystem for the apparel industry. 

Enzymatic Recycling: Revolutionizing the Textile Industry

Currently, fashion companies like Lululemon have two primary methods for recycling textiles: mechanical and chemical processes involving solvents. However, both approaches pose challenges. Mechanical recycling limits the number of times recovered plastics can be recycled, while chemical methods often consume excessive energy.

Samsara Eco, which secured a $56 million Series A in 2022, addresses both of those concerns through its innovative enzymatic infinite textile recycling. The Australian startup’s manufacturing process operates swiftly and at low temperatures, producing a more sustainable recycled and new product. 

Paul Riley, the company’s CEO and Founder, highlighted their commitment to keeping a low carbon footprint during their recycling process. Riley also noted that their enzymatic recycling process reduces emissions and can save millions of tonnes of carbon compared to producing virgin nylon 6,6. He further said that:

“We’ve started with nylon 6,6, but this sets the trajectory of what’s possible for recycling across a range of industries as we continue expanding our library of plastic-eating enzymes. This is one giant leap for the future of sustainable fashion and circularity.” 

The company employs enzymes capable of targeting complex plastics, known as polymers, and converting them back to their original chemical composition, referred to as monomers. This unique capability is what renders the startup’s recycling technology infinite.

Here’s how the recycling process looks like and its major benefits:  

Samsara Eco infinite textile recycling processOver 90% of the nylon used in each of the Lululemon Swiftly top samples is from Samsara’s enzymatic recycling process.

In June 2023, Samsara Eco unveiled its partnership with Lululemon as its inaugural textile collaborator. The Swiftly recycled nylon marks the subsequent phase of their collaboration, fostering lower-impact alternative textiles within the apparel industry.

Collaboration and Innovation in Sustainability

For decades, scientists have dedicated extensive research efforts to discovering the most cost-effective methods for breaking down plastics, with a particular focus on polyethylene terephthalate (PET). Through collaborative initiatives and the integration of artificial intelligence (AI), practical applications of plastic-eating enzymes have been accelerated.

Other startups are also innovating in the field to help address the plastic crisis. For instance, Circ has pioneered a distinctive hydrothermal processing technology tailored for recycling blended textiles, such as polyester-cotton blends. The Circ system utilizes hot water, pressure, and chemical solvents to recycle both materials.

These innovative ventures may qualify for plastic credits or carbon credits. Each plastic credit represents the diversion or recycling of one ton of plastic waste that would otherwise have been left uncollected or unrecycled.

By incorporating plastic credits alongside carbon credits, companies can effectively address their sustainability objectives. Many organizations view reducing plastic waste as an integral component of their broader commitments to achieving net-zero emissions.

The partnership between Lululemon and Samsara Eco goes beyond mere material innovation. They embody the exciting potential and influence that can be realized through collaboration and inter-industry partnerships. This breakthrough not only heralds a pivotal moment for sustainable innovation in apparel but also for all sectors aiming to transition towards more circular models. 

Kyoto Network and TXP Launch Pioneering Carbon Credit Rewards Program

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Kyoto Network and TXP Launch Pioneering Carbon Credit Rewards Program

TrustXPay (TXP) and Kyoto Network have joined forces to introduce an innovative carbon credit rewards program, marking a significant milestone in sustainable finance. TXP users can now earn verified carbon credits from Kyoto Network, converting cashback into discounted carbon credits. 

Each carbon credit corresponds to one metric ton of carbon dioxide reduced or removed from the atmosphere.

TXP is a soon-to-be-launched digital finance platform for carbon trading. Kyoto Network is a global leader specializing in environmental management and sustainability (EMS) solutions.

Empowering Users to Offset Carbon Footprint

The carbon credit rewards initiative allows users to contribute to carbon offsetting efforts while benefiting from the platform. Shahid Munir, TXP’s Founder, emphasizes the partnership’s commitment to environmental responsibility and driving positive change. He particularly noted that:

“Collaborating with the Kyoto Network is not just about offering a rewards program; it’s about making a meaningful impact on our environment and society, and we are committed to driving positive change.”

The TXP carbon trading platform enables businesses to purchase verified carbon credits seamlessly, incentivizing environmentally conscious practices. Similar to airline miles programs, TXP customers can benefit from selling earned carbon credits.

This collaboration represents a bold step towards integrating sustainability into everyday financial transactions, empowering users to make a meaningful impact on the environment.

Sheraz Malik, Founder & CEO of the Kyoto Network, expressed enthusiasm for the partnership. He specifically emphasized their commitment to helping TXP customers offset their carbon footprint. 

By sourcing high-quality carbon credits globally, verified by leading carbon registries, the Kyoto Network aims to accelerate the planet’s climate goals. 

Kyoto Network leads in ESG solutions, offering expertise in EMS, sustainability reporting, and market advisory services. They tailored solutions to aid organizations in meeting regulatory requirements, achieving sustainability objectives, and creating long-term value. They have tools such as the KyoGreen carbon calculator that empowers individuals to calculate and offset their carbon footprint with ease.

KyoGreen carbon calculator for individual use
KyoGreen platform snapshot

The platform empowers both individuals and enterprises to effortlessly assess their carbon footprint, invest in carbon offsets, and nurture a harmonious bond with the environment. Through its advanced features and user-friendly interface, KyoGreen provides users with the tools to enact meaningful change and participate in initiatives that support environmental preservation.

Transforming Loyalty Rewards into Environmental Impact

The collaboration between TXP and the Kyoto Network pioneers offering carbon credits through a loyalty rewards program. Generally, loyalty rewards programs aim to foster a sense of connection and value between the company and its customers. The program encourages repeat business and rewards customer loyalty over time. 

As such, the partnership sets a precedent for future sustainability solutions through Fintech, financial technologies, particularly in carbon markets. These markets are fragmented and complex and their real-world climate benefits are challenging to verify.

Fintech can help simplify the carbon market by offering actionable data and enhancing transparency.

Amro Zakaria, Director of Middle East & Africa for the Kyoto Network, sees the partnership as a milestone in addressing financial inclusion and climate change. By integrating KyoGreen into TXP’s reward system, they demonstrate a commitment to innovation and responsible banking practices. This initiative not only transforms financial transactions but also leads the way towards a more sustainable market.

The collaboration comes at the heels of a recent report that carbon credits could be the next billion-dollar insurance market. It estimates that insurance premiums from these credits may hit over $1 billion by 2030 and $30 billion by 2050. 

Providing financial assurance to carbon credit transactions is critical to boost buyers and investors’ confidence in the market. Tie this up to Fintech solutions and the market would be getting the help it needs from the financial sector to further scale and soar.  

In an era where environmental sustainability is crucial, Fintech plays a vital role in driving tangible impact. 

The partnership between TXP and Kyoto Network represents a significant leap forward in the intersection of finance and sustainability. By offering carbon credits through a loyalty rewards program, they not only incentivize environmentally conscious behavior but also pave the way for future innovations in Fintech-driven sustainable solutions.

US Power Sector Sees Largest CO2 Emission Drop Since 2020

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US Power Sector Sees Largest CO2 Emission Drop Since 2020

The US Environmental Protection Agency (EPA) has released a report highlighting a significant milestone: a 7% decrease in carbon dioxide emissions from the country’s power sector in 2023, marking the most substantial annual drop since 2020. This achievement reflects shifts in fossil fuel-based electricity generation and underscores ongoing efforts to mitigate climate impact.

The agency’s data showed that all four quarters of 2023 saw significant reductions in measured pollutants compared to 2022. The decline in emissions is mainly due to shifts in the mix of fossil fuel-based electricity generation.   

Key Driver of Emission Reductions

Power plants, including coal, natural gas, and oil facilities, significantly contribute to CO2 emissions, demanding urgent action for environmental preservation. The United States, a major emitter, has been implementing various measures to address these planet-warming emissions to mitigate climate impact. 

The EPA publishes quarterly and annual updates on power plant emissions data, including sulfur dioxide (SO2), nitrogen oxides (NOx), carbon dioxide (CO2), and mercury (Hg). The following is the breakdown of the change in annual emissions, 2023 versus 2022, per pollutant:  

  • 15% decrease for NOX
  • 24% decrease for SO2
  • 17% decrease for Hg
  • 7% decrease for CO2

US power sector CO2 emissions, 2017-2023

In the long-term, between 1990 and 2023, power plant emissions also saw significant reductions: SO2 emissions dropped by 96%, NOx emissions by 90%. In 2023, Cross-State Air Pollution Rule and Acid Rain Program sources emitted 0.65 million tons of SO2, down by 11.2 million tons from 1995. 

Similarly, NOx emissions were reduced by 5.2 million tons. Additionally, power plants cut CO2 emissions by 28% from 1995 to 2023 while complying with emission reduction programs.

Natural Gas Role and Future Regulations

Coal generation dropped by 18%, leading to notable emission reductions compared to the previous year. Meanwhile, power production from natural gas plants increased by 8%. 

Despite the rise in natural gas plant output, carbon pollution from these facilities rose by 6.4% in 2023. The agency discovered that the country’s 2,000+ natural gas-powered plants emitted 697 million metric tons of CO2 last year, up from 655 million metric tons in the previous year. 

However, because natural gas-fired plants emit less CO2 than coal-fired ones, they have contributed to an overall reduction in US greenhouse gas emissions. 

Nevertheless, efforts to expand natural gas-fired fleets have faced opposition in some communities concerned about environmental impact. Currently, natural gas-fired power plants account for about 35% of the sector’s emissions, per the US Energy Information Administration report.

The Edison Electric Institute (EEI), a trade group representing US investor-owned utilities, has consistently advocated for the importance of natural gas-fired power plants in facilitating the integration of renewables into the electric grid. They emphasized the evolving US energy mix, noting that 40% of electricity now comes from clean, carbon-free resources. 

US electricity generation mix 2022

In May 2023, the Biden administration proposed new rules aimed at reducing climate-warming emissions from large gas-fired power plants. 

These rules would mandate that such plants co-fire with 96% clean hydrogen by 2038. Additionally, the proposed regulations would require nearly all coal-fired plants lacking carbon capture and sequestration technology to cease operations by 2035.

EPA’s Call for Continued Action

The EPA further reported that overall fossil fuel generation decreased by 2% in 2023 compared to 2022. Total CO2 emissions from the power sector decreased from about 1.5 billion metric tons in 2022 to 1.4 billion metric tons in 2023.

Furthermore, the retirement of coal-fired power plants in 2023 led to significant reductions in other pollutants detrimental to public health. Joseph Goffman, Assistant Administrator for EPA’s Office of Air and Radiation acknowledged the progress made but emphasized the need for further advancements. He particularly noted that:

“This snapshot of progress over the past year shows we are moving in the right direction, but more progress is needed… President Biden is committed to building a clean energy future, and EPA will continue to work with state, Tribal and local leaders, in addition to major players in the power sector, to build on our progress and protect public health.”

The substantial decrease in CO2 emissions from the US power sector in 2023 is a positive development. But it also signals the need for continued action and innovation.

The shift away from coal and towards natural gas generation presents both opportunities and challenges, particularly in balancing energy needs with environmental concerns. With ongoing regulatory proposals and advocacy for clean energy solutions, stakeholders must collaborate to further reduce emissions and safeguard public health and the environment.

New Monthly EV Sales Record to Kickstart 2024

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New Monthly EV Sales Record to Kickstart 2024

There’s been a lot of doom-and-gloom forecasting in the electric vehicle (EV) markets.

High inflation, combined with a tough market for new vehicles and the still-unresolved issue of charging network coverage have all been cited as leading reasons as to why buyers are hitting the brakes on new EV purchases.

Major automakers like Ford and Audi announced late last year that EV sales weren’t meeting expectations. And they would be cutting production targets by as much as 50% for 2024.

And while it’s true that growth has been slowing down in the EV markets, it’s important to keep the frame of reference in mind: EV sales more than doubled in 2021, growing by nearly 120%. That kind of growth is simply unsustainable no matter how hot or important a market is.

global EV sales 2016-2023In 2022, EV sales grew by almost 60%. While this pace certainly slowed in 2023, last year still saw an astounding 35% increase in global electric car sales – growth strong enough to make Warren Buffett blush.

Simply put, this supposed slowdown in the EV markets has less to do with actual demand, and more to do with expectations having been set too high from previous years.

Pedal to the Metal for January EV Sales

This growth trend has been sustained well into the beginning of this year.

  • This January, over 1.1 million EVs were sold worldwide versus 660,000 sold in the same period last year, a new monthly global sales record.

That’s 69% year-over-year growth – significantly higher than the average for last year.

Here’s a breakdown of what growth looked like in each region:

regional EV sales 2024 January sales growthAs you can see, EV growth is still being predominantly led by China, which almost doubled its sales from the year previous. In 2023, China represented nearly 60% of all global electric vehicle sales. 

Thanks to a strong history of government subsidies and other financial incentives for their EV industry, EVs in China enjoy the highest market penetration rate of anywhere in the world.

By the end of last year, EVs accounted for an estimated one-sixth of the entire Chinese vehicle market.

On top of this, with a healthy marketplace filled with domestic manufacturers, the plethora of available options for EV buyers means that no single model of electric vehicle has a market share greater than 10%.

Compare that to the U.S., where Tesla’s Model Y accounted for just over one-third of all EVs sold last year, and the Model 3 another 20%.

  • Speaking of the U.S: in 2023, EV sales in the States grew by over 50%, and the domestic market saw 41% YoY growth in January.

This figure is slightly down from 2022’s EV sales growth rate of 65%. But it shows that even if growth is slowing down from the previous breakneck pace, it’s still very robust.

The Outlook for 2024 is Green

Global sales growth for EVs this year is forecast to end up roughly between the 25-30% mark. According to research firm Bloomberg NEF, EV sales in North America are projected to grow by 32%.

As for the other pain point of growing the domestic EV market, the charging network, growth is also looking solid.

Last month, the Biden Administration announced that funding had been secured for $623 million in grants to build more public chargers around urban and rural communities alike, as well as major travel corridors. This program is part of the Bipartisan Infrastructure Law, which has a total of $7.5 billion budgeted towards building out the nation’s network of EV chargers.

Since President Biden took office, the U.S. public charging network has grown by 75% to nearly 170,000 total public chargers. Additionally, the White House has committed to increasing that number to at least 500,000 chargers by 2030.

With nearly every aspect of the EV markets firing on all cylinders, 2024 should be another banner year for growth – even if it won’t be quite as high as it was back during 2021-2023.

Lithium Producers Adapt to Price Plummet, Cut Costs and Delay Investments

Jennifer L
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Lithium Producers Adapt to Price Plummet, Cut Costs and Delay Investments

Lithium producers are facing challenges due to the low prices of lithium, prompting them to take measures to cut costs and protect profits. The drop in lithium prices has been significant, driven by increased supply and a slowdown in electric vehicle (EV) sales. 

lithium carbonate price Feb 2024
Source: Trading Economics

In response to these market conditions, lithium producers are reducing production, scaling back expansion plans, and focusing on cost-saving initiatives. The world’s biggest provider of lithium for EV batteries, Albemarle, announced additional cost-saving measures, reducing capex by delaying planned lithium investments. 

Albemarle’s Cost-Cutting Measures 

Albemarle outlined plans to cut capital expenditures for 2024 by $300 million to $500 million compared to 2023. 

Moreover, the company aims to slash costs by about $100 million, with over $50 million targeted for the current year. They’ll be implementing measures such as reducing headcount and decreasing spending on contracted services.

The leading lithium producer’s Q4 2023 financial report showed a significant decline in adjusted EBITDA. It has a net loss of $315 million, representing a 125.3% decrease year-over-year. Net sales totalled $2.36 billion, down 10.1% compared to the previous year.

Looking ahead to 2024, Albemarle has identified strategic investments and projects for slow down in response to current market dynamics. 

Albemarle’s Chairman and CEO Jerry Masters noted that new greenfield projects, particularly in the West, are not economically feasible at current lithium lithium prices. 

Construction and engineering work at the Richburg, SC, MegaFlex conversion facility has been halted until prices improve. But permitting activities will continue at the company’s Kings Mountain site in North Carolina.

In terms of future initiatives, Albemarle will prioritize large, high-return projects that are nearing completion or in startup stages. Meanwhile, they’ll be limiting mergers and acquisitions activity.

Projects that will continue development include the commissioning of the Maison lithium conversion facility and the expansion of the Kemerton lithium conversion facility in Western Australia.

The Rise and Fall of Lithium: From EV Boom to Market Downturn

During 2020 and 2021, the electric vehicle (EV) market experienced significant growth, leading to a surge in demand for lithium, a key component in EV batteries. EV sales saw remarkable increases, with a 45.9% jump in 2020 and a further 100% increase in 2021. This led to a total of EVs sold at 9.78 million units. 

This surge in demand created a deficit in lithium supplies in 2021, quickly turning into a surplus of 40,000 metric tons of lithium carbonate equivalent by 2022. Despite the surplus, market expectations continued to drive lithium prices upwards.

However, the boom in the lithium market was short-lived as the global economy weakened and EV sales slowed down, particularly in Mainland China, due to the repeal of EV subsidies. This led to a significant downturn in the lithium market in 2023. 

  • As more lithium production capacity comes online, the surplus of lithium is expected to widen further, reaching 100,000 Mt of LCE in 2024.

Australia remains the largest producer of lithium, followed by Chile and China. The U.S. lagged far behind, at the 8th spot after Canada.

lithium production by country, 2022 2023

Production of lithium is forecasted to increase by 35.7% in 2024 compared to the previous year. Analysts anticipate that lithium prices will stabilize and reach a cyclical bottom in 2024 as inventory build ups are relieved.

The current market conditions are particularly challenging for lower-grade spodumene concentrate and lepidolite producers. These producers are feeling the brunt of the downturn, as they are more susceptible to price changes and are typically the first to reduce output when prices drop too low. 

For instance, Pilbara Minerals, an Australian spodumene producer, announced that it’s unlikely to pay an interim dividend for the first half of fiscal year 2024 to preserve its balance sheet. 

Similarly, some spodumene producers have been considering changes to pricing settlement terms to prevent buyers from relying on inventories. For example, IGO Ltd. modified the offtake pricing model for spodumene from the Greenbushes deposit, the world’s largest lithium spodumene deposit. The company also announced a reduction in production for the second half of 2024. 

Core Lithium Ltd., another Australian producer, halted mining operations at the Grants open pit to slow output and alleviate oversupply. Analysts anticipate that Australian lithium miners will continue to curtail supply in the near term due to uncertain prices. 

What Lithium Producers and Investors Can Expect

As some lithium miners reduce production, investors in lithium projects are grappling with whether to proceed or postpone project development. Analysts anticipate that projects may face delays, with a particular impact on unfunded greenfield projects. They also foresee more higher-cost and pure-play lithium producers exiting the market or postponing their projects due to the current challenging conditions. 

With lithium projects facing financial challenges, analysts also expect an increase in merger and acquisition (M&A) activity. Major producers with positive cash flow may seek deals in the market, while junior companies may attempt to sell projects, especially given the scarcity of private capital compared to previous years. But this isn’t the case with Li-FT Power (LIFT; LIFFF), the fastest developing North American lithium junior. 

Li-FT Power‘s strategy centers on consolidating and advancing hard rock lithium pegmatite projects in Canada, focusing on established lithium districts. The company is well-financed to advance its projects, underscoring its dedication to exploring and developing top-tier lithium assets in Canada.

The tumultuous journey of lithium producers reflects the cyclical nature of commodity markets, where booms are often followed by busts. As Albemarle and other key players in the industry adapt to the challenges posed by plummeting lithium prices, their resilience and strategic responses will shape the future landscape of the lithium market.

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

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.

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

Please read our Full RISKS and DISCLOSURE here.

World’s Largest EV Battery Maker, CATL, Enters Carbon Credit Market

Jennifer L
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0
World’s Largest EV Battery Maker, CATL, Enters Carbon Credit Market

The carbon asset management market sees the entry of a significant player, Chinese battery technology giant CATL’s (Contemporary Amperex Technology) subsidiary, Contemporary Green Energy (CGE).

CGE specializes in investments, construction, and operations within the new energy sector, particularly in wind and solar energy. It particularly focuses on storage and trading of green power. Additionally, the company provides decarbonization services, including consulting and other carbon reduction solutions to businesses.

Bolstering CATL’s Carbon Reduction Matrix

The creation of a carbon asset management company appears to complement and strengthen CATL‘s existing carbon reduction tool matrix.

The term “carbon assets” refers to new assets generated by China’s national emissions trading scheme. These include various carbon emission quotas, also known as carbon credits, issued by the government and eligible carbon reduction projects, as defined by the China Securities Regulatory Commission (CSRC) industry standards.

The growing interest in carbon asset management is evident in the increasing number of players entering the market. Data shows over 4,800 carbon asset management-related companies in China, with more than 1,100 established in 2023 alone.

Industry experts believe that companies with significant carbon emissions and those engaged in the development or procurement of carbon assets handle substantial capital. Thus, the standardization, systematization, and optimization of carbon asset management become essential.

CATL reported Scope 1 and Scope 2 carbon emissions of 3.24 million tons in 2022, according to its environmental, social, and governance (ESG) report.

To meet Science Based Targets initiative (SBTi) requirements, CATL aims to reduce its carbon emissions by at least 90%. The leading lithium battery company will offset the remaining 10% by purchasing carbon credits to achieve operational carbon neutrality. 

CATL announced plans last year to achieve carbon neutrality in its core operations by 2025 and across the value chain by 2035. This suggests significant challenges ahead in meeting carbon reduction targets over the next few years. The battery maker identified what it called 5 key links in its value chain where emissions will be cut:

  • Mining
  • Bulk raw materials
  • Battery materials
  • Cell manufacturing
  • Battery systems

CATL net zero carbon battery solutionGiven CATL’s scale, the annual expense on carbon credits for this purpose is expected to be substantial.

CATL’s EV Battery Dominance Amidst Challenges

The global leader in lithium battery production said that 2023 profit reaches $6.3 billion on strong battery sales. 

CATL continues to maintain a significant lead in battery manufacturing both globally and within China, the largest electric vehicle (EV) market in the world. 

top 10 EV battery manufacturers

As of November 2023, CATL’s share of the global EV battery market increased to 37.4%, up from 36.9% in October, according to data from SNE Research Inc. BYD Co. held the second position with a market share of 15.7%, taking over LG’s 2nd place in 2022.

Despite its leading position, CATL faces headwinds as the momentum in EV sales begins to slow down. 

Elon Musk’s Tesla reported Q4 2023 earnings that failed to meet expectations and cautioned about weaker sales growth in 2024. Additionally, both Volkswagen AG and Renault SA have scaled back their plans to sell shares in their EV businesses.

Similarly, EV production was down in China because of no more state subsidies, causing downward pressure on lithium prices. Lithium is the key element that powers up EV batteries.

Still, CATL remains hopeful on the market’s long-term forecasts, knowing that EV is essential for decarbonization efforts globally. 

The same optimism is shared by battery-related companies abroad such as the junior Canadian lithium company, Li-FT Power (LIFT: LIFFF). The company focuses on advancing the exploration and development of high-quality lithium assets in North America. 

CATL’s Carbon Asset Strategy

Due to current limitations in decarbonization technology, CATL must offset remaining carbon emissions by buying carbon credits. Establishing a dedicated carbon asset management company aims to rejuvenate carbon credits as assets and enhance their value preservation and appreciation.

Moving towards carbon asset management signifies more than just buying and selling; it involves actively reducing emissions to lower compliance costs, utilizing financial tools effectively, and optimizing resource allocation based on current carbon asset status.

For CATL, establishing a carbon asset management company is likely aimed at fulfilling its own needs. This is especially considering the pressure to reduce emissions following the European Union’s new battery regulation.

At CATL’s home, the carbon market in China has been rapidly expanding and upgrading, with the official restart of CCER in January after nearly 7 years. This expansion resulted in increased activity in carbon credit markets, creating opportunities for development within the carbon asset management sector.

CGE, with 54 subsidiaries, mostly involved in offshore wind power development, serves as a stable source of green power for CATL, presenting a crucial avenue for carbon emissions reduction.

Despite not belonging to the 8 major energy-consuming industries, CATL’s early engagement in carbon trading and its substantial resources position it as a formidable player in the carbon asset management market.

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

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.

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

Please read our Full RISKS and DISCLOSURE here.

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