Revolutionizing the nuclear fuel landscape, a breakthrough innovation known as ANEEL (Advanced Nuclear Energy for Enriched Life) is gaining attention. Developed and patented by Mehul Shah, Founder and CEO of Clean Core Thorium Energy (CCTE), this fuel combines Thorium and High Assay Low Enriched Uranium (HALEU).
The United States Department of Energy (DOE), Idaho National Laboratory (INL), and the Nuclear Engineering & Science Center at Texas A&M worked with CCTE to develop ANEEL.
The Chicago-based company’s invention has the potential to reshape India’s green energy trajectory by facilitating the use of Thorium in nuclear reactors.
Thorium’s Role in Green Energy Solutions
India boasts the world’s largest thorium reserves, estimated at 1.07 million tonnes, sufficient for over a century. However, thorium, a fertile material, requires pairing with fissile materials like Uranium-235 or Plutonium-239 for reactor fuel.
Kailash Agarwal, Fuel Cycle Facilities Specialist at IAEA emphasized the importance of thorium in providing solutions to energy transition. He noted that:
“Because of its abundance and its fissile material breeding capability, thorium could potentially offer a long-term solution to humanity’s energy needs.”
The challenge lies in minimizing the use of precious uranium for this purpose. Clean Core’s ANEEL fuel addresses this issue by introducing a mix of Thorium and HALEU, enriching the Uranium content.
HALEU is a crucial material needed for many advanced reactor designs. A 20-kg HALEU was first produced by the Centrus Energy Corporation, the first of its kind in over 70 years.
The U.S. Department of Energy is investigating HALEU through its demonstration project in Piketon, Ohio in partnership with Centrus.
ANEEL can be integrated into existing Pressurized Heavy-Water Reactors (PHWRs), the backbone of India’s nuclear fleet. With 18 PHWR reactors already in operation and ten more under construction, ANEEL holds the potential to be a game-changer.
Unlike conventional reactors using uranium fuel enriched up to 5%, HALEU, enriched between 5% and 20%, is crucial for advanced nuclear reactor designs.
Currently, commercial HALEU production is limited. Only Russia and China are capable of producing HALEU at this scale. Given the risk at the demand side, suppliers aren’t all out in scaling up the production.
This is where Clean Core’s ANEEL innovation comes in. It offers a near-term path to commercialization, boosting confidence among suppliers.
Igniting India’s Nuclear Revolution
India’s thorium strategy involves creating a thorium blanket around uranium or plutonium reactors to convert thorium into uranium-233 as energy is produced.
ANEEL offers a more straightforward and quicker alternative, leveraging imported HALEU for thorium deployment. If adopted, ANEEL could accelerate India’s green energy transition, using its abundant thorium resources to achieve net zero by 2070.
Innovating the landscape of nuclear fuel, ANEEL not just offers an alternative for thorium but also brings about substantial benefits in terms of nuclear waste reduction and operational efficiency.
One of the major advantages of ANEEL is its ability to dramatically reduce nuclear waste volume and operating costs. The fuel bundle lasts much longer and burns more efficiently, with a burn-up of 60,000 MW-days per tonne. That’s much more efficient compared to the 7,000 MW-days per tonne of conventional natural uranium fuel in PHWRs.
This higher burn-up significantly impacts waste volumes and economic aspects of reactor operations.
When it comes to waste reduction, the comparison is also striking. Using natural uranium fuel in an existing 220 MW Indian PHWR, an average of 8 bundles would need daily replacement over the reactor’s 60-year lifespan. This totals about 175,000 bundles used.
With ANEEL fuel, only 1 bundle would need daily replacement, resulting in 22,000 bundles used over the reactor’s lifetime. All these lead to significant waste reduction and cost savings.
Capturing the Global Nuclear Power Landscape
ANEEL’s unique composition of HALEU and Thorium provides inherent benefits, making the spent fuel unsuitable for weapons use. This gives reassurance to foreign uranium suppliers and reactor operators.
The technology has garnered international interest, with Canadian Nuclear Laboratories signing a Memorandum of Understanding (MoU) with Clean Core to support the development and deployment of ANEEL fuel.
This innovation could play a pivotal role in meeting the growing global demand for clean, baseload energy production. It strongly aligns with the goals outlined by countries at COP28 to triple nuclear capacity.
ANEEL fuel stands out in the nuclear power landscape with its proprietary combination of thorium and uranium, notably with HALEU. This distinctive fuel addresses multiple challenges associated with nuclear power, including cost, proliferation concerns, and waste management. Remarkably, being a product of American innovation, ANEEL fuel holds the potential for export to emerging nuclear markets.
Spot uranium prices recently reached a peak not witnessed since 2007, standing strong at $101 per pound, per Numerico data.
This upswing signifies a constrained nuclear fuel market, growing expectations for future demand, and the imperative for additional mine restarts and new constructions, according to experts in the uranium industry.
Uranium is Powering Up the Future
The surge in uranium prices aligns with an increased focus on nuclear energy in global climate change mitigation efforts. Furthermore, rising uranium prices have spurred the revival of uranium mining operations previously scaled back following the 2011 Fukushima disaster.
Analysts and industry players anticipate more mine restarts in 2024. Plus, new builds are getting more attractive due to rising prices and anticipated supply deficits over the coming years.
The spot price of uranium surging $100/pound was more than a 100% increase from the 2023 low. It is also a whopping >300% rise from the 2020 low.
The 16-year high uranium price, cracking at $101/pound since 2007, is driven by several factors.
For one, shortage in uranium supplies since the Fukushima incident drove prices upward.
Moreover, a U.S. bill seeking to ban nuclear fuel imports from Russia further contributes to the prices’ upward trajectory. The bill was called “NO RUSSIA” – National Opportunity to Restore Uranium Supply Services In America Act of 2022. Put simply, Russia will be out of the U.S. uranium market.
Once the bill passes the Senate, near-term demand for uranium will further surge upward.
What Causes the Unprecedented Rise of Uranium?
But what are the market experts saying about this price breakthrough?
According to a uranium market analyst, Marin Katusa, the 16-year high uranium price reflects the “real” cost of bringing on previously built and permitted facilities to replace uranium exported from Russia and Niger.
Marin also noted that with the US banning Russian imports, the logical investment is exposure to permitted, built out production in the US. The banned imports include Kazakh production owing to Russian enrichment.
Uranium prices have to increase more, Marin further noted, to incentivize new projects like the case with the Athabasca Basin. Building a new mine in North America would need even higher prices than $100.
Highlighting the growing demands for clean energy from data centers, which require more power for new technologies, SMR technologies offer a promising solution.
Small modular reactor development, with under 300 MWe capacity, is taking place in Western countries with increasing private investment. North America, in particular, would be the epicenter of this rapidly growing nuclear resurgence.
Marin also highlighted Japan’s decision to bring on the world’s largest nuclear power plant and its pro-nuclear stance since Fukushima. This and the positive outlook for nuclear technology globally coming out of the recent COP28 climate summit will create new demand for long term supply of uranium in politically stable jurisdictions. After all, Marin said that:
“…no nation wants to experience what France is experiencing in Niger with their uranium supply being completely cut off.”
For Miss America 2023, Grace Stanke, who happens to be a student of nuclear engineering, nuclear energy already plays a big role in the lives of many Americans. As a nuclear champion, Grace particularly noted that:
“From curing my dad’s cancer twice, to powering 20% of America, to helping with agriculture which is so important in my home state of Wisconsin… it really does feel like nuclear does it all.”
Beyond the Price: Uranium’s Ascent and Nuclear Energy Resurgence
As the world strives to reduce carbon emissions, zero-carbon nuclear energy is crucial. This is expected to make the demand for uranium explode much more.
In effect, escalating spot uranium prices may also exert upward pressure on contract prices as sellers seek higher returns. While higher prices may not dissuade utilities for short-term needs, climbing contract prices, covering larger quantities of uranium, could have a more substantial impact.
Some utilities are already experiencing “sticker shock”, as seen below in the S&P Global presentation. Experts also anticipate a widespread increase in nuclear fuel costs in the coming years due to rising market prices.
Notably, higher uranium prices would also drive further restarts in the near term, with industry giants like NAZ Kazatomprom JSC and Cameco restarting idle capacity. Canada-based Cameco will add capacity as needed under long-term contract pricing.
Meanwhile, Kazakhstan-based Kazatomprom, the largest uranium producer, plans to return to full production capacity by 2025. However, given the challenges that the company faces related to the availability of sulphuric acid (a critical operating material), they expect adjustments to their 2024 production plans. They also anticipate delays in finishing construction works at their newly developed deposits. These may affect Kazatomprom’s 2025 production plan, subject to considerable supply chain risks.
The surge in uranium prices signifies a resurgence in the nuclear energy sector. Driven by geopolitical shifts, legislative actions, and a growing demand for clean energy, the uranium market is poised for unprecedented growth.
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The European Commission has granted approval for Germany to provide €902 million ($987mn) in state aid to Swedish battery manufacturer Northvolt AB. This approval marks the inaugural application of a new rule allowing European Union nations to match foreign subsidies to prevent investments from diverting outside the bloc.
Battery startups are drawing in record-breaking investments, reflecting the growing potential of the sector. Last year’s global venture funding is about to exceed the records set in the last 2 years.
2023 marked by a global drop in venture investments, but the figures in the battery sector are defying the trend. This underscores the urgency highlighted by recent climate change projections, emphasizing the critical role of advanced battery technology and sustainable production in addressing environmental challenges.
Northvolt’s plan involves constructing an electric vehicle battery production plant in Heide, Germany, with an annual capacity of 60 GWh. The state aid approval ensures the project moves forward in Germany instead of the US. The battery-maker had considered establishing a lithium-ion facility in Canada under the Inflation Reduction Act (IRA).
The state aid initiative, known as the Temporary Crisis and Transition Framework, is part of an effort to fortify European manufacturing in strategic sectors, such as batteries, wind turbines, and solar panels, amid intense global competition. It allows national governments to match subsidies if there’s a risk that a project is likely to be taken elsewhere.
Margrethe Vestager, the EU’s competition commissioner, highlighted the importance of enabling states to match aid to secure investments within Europe.
Likewise, German Economy Minister Robert Habeck clarified that the German state aid doesn’t entirely match the subsidies offered by the IRA. Still, it is sufficient to encourage Northvolt to pursue the new plant in Germany.
The aid comes in the form of a €700 million grant and a €202 million guarantee.
Habeck rejected the notion that the matching aid mechanism primarily benefits wealthier EU nations only. He further emphasized the importance of European solidarity and acknowledged the escalating global competition, particularly from China and the US. He specifically noted that:
“We need a more robust industry for the new sectors — semiconductors, batteries, electrolysers, hydrogen. But this means that climate action and industrial production fit very, very well together.”
The EC has also approved a €2.9 billion French scheme supporting the production of devices needed for the transition. These include batteries, solar panels, wind turbines and heat pumps.
EU’s Strategic Move in Battery Tech
The demand for battery power would grow to 2,035GWh by 2030 from 185GWh in 2020 , a whopping 11x increase. About 90% of that comes from transportation alone.
In terms of size, the global battery market was estimated at over $107 billion in 2022 and can potentially hit around $475 billion by 2032, according to a market research.
Northvolt’s plans for the Heide plant include the production of 800,000 to 1 million EV batteries annually starting in 2026. The battery manufacturer also aims for full production capacity achieved by 2029.
The Stockholm-based manufacturer is the first European company to produce a battery cell from a gigafactory. This term is used to refer to large-scale manufacturing facilities dedicated to electrification.
In a 2023 industry report, three remarkable financings exceeded $1 billion and Northvolt is one of them. The company secured $1.2 billion from investors in 2023 to support its expansion in Europe and North America.
The battery titan has a factory in Northern Sweden, the largest factory in the country’s history. This plant can generate 60GWh of batteries a year when operating at full capacity. The company also has a facility in Poland.
Anders Thor, Northvolt’s vice president of communications and public affairs, hailed the European Commission’s positive decision.
He highlighted its significance not only for Northvolt’s planned battery production but also for the broader European battery industry. He anticipates final voting procedures from local communities.
As Northvolt gets the green light in state aid from Germany, the battery giant is set to revolutionize the energy landscape. The approval underscores the EU’s commitment to fostering strategic sectors, driving sustainable production, and combating global competition. Amidst heightened climate concerns, this landmark decision propels Europe toward a resilient and competitive future in advanced battery technology.
Xpansiv, a global energy transition market infrastructure provider, has entered into an agreement with Evident Group Limited (Evident), a prominent clean economy registry provider and certification body. The deal gives Xpansiv a minority interest in Evident.
Evident is globally acknowledged as an authority in certifying the clean economy, renowned for its expertise, stringent standards, cutting-edge registry technology, and collaborative approach.
Serving consumers in 140+ countries, Evident has played a leading role in shaping sustainability certification for more than two decades. Notably, the company has pioneered the I-REC electricity certification service and market, extending its reach from China to Chile.
Ed Everson, CEO of Evident, remarked on their agreement, saying that:
“We believe expanding our partnership with Xpansiv will enable the market to scale more rapidly and will support our strategy to pioneer new products and services as well as invest in supporting and developing our wider network of partners and innovators around the world.”
Scaling Clean Energy Markets: Xpansiv and Evident’s REC Revolution
The investment solidifies the existing partnership between Xpansiv and Evident. This strongly aligns with their shared objective of facilitating the energy transition and certifying the world’s clean economy through independent certification and dynamic markets.
In collaboration with the I-REC Standard Foundation, Xpansiv previously launched the trading of International Renewable Energy Certificates (I-RECs) on its CBL spot exchange in conjunction with Evident.
The partnership expands the range of RECs and carbon credits trading on the CBL platform. This will improve RECs’ price discovery and liquidity formation.
The I-REC launch on Xpansiv’s market ecosystem also widens options for developers and traders in various regions. These particularly include Latin America, Asia, Africa, and the Middle East. The spot exchange is trading 100 voluntary and compliance RECs.
In 2021, CBL REC volumes increased by 28% because of broader market participation and rapid growth in solar REC traded. And with the projected growing demand for renewable energy, there’s also rising interests in trading of RECs worldwide.
According to estimates, the global REC market value will grow to more than $111 billion.
Xpansiv’s investment facilitated trading of I-RECs issued under the Evident Code for I-REC, spanning 50+ countries and various project types. Since the launch, over 120,000 I-RECs from projects in 10 countries have traded on CBL.
I-RECs Powering Global Clean Economy Goals
Xpansiv’s investment will support Evident’s expansion into new regions and products. These specifically include Sustainable Aviation Fuel (SAF), green hydrogen, biomethane, and carbon removals.
The I-REC market has experienced substantial growth, with nearly 300 million certificates issued on the Evident registry in 2023. That’s a massive increase from 198 million in 2022 and 71 million in 2021.
Redemption figures have also surged, reaching 176.5 million certificates in the previous year. That amount is almost double the 2022 total of 97 million and nearly quadruple the volume in 2021.
I-RECs serve as a direct market mechanism for multinational corporations, their supply chain collaborators, and general energy consumers. The certificates enable them to fulfill global renewable energy and sustainability goals.
I-RECs offer transparent, independent evidence certifying the production of renewable electricity, enabling consumers to actively support the transition to cleaner energy sources, even in the absence of a dedicated supply of renewable energy.
John Melby, CEO of Xpansiv, noted that their clients are increasingly integrating I-RECs and carbon removals into their sustainability initiatives. Thus, their recent deal with Evident is “a natural next step”.
Presently, Xpansiv’s infrastructure supports 12 carbon and renewable energy registries, responsible for issuing over 60% of North American RECs and 85% of global carbon credits in 2022. I-RECs trade alongside numerous voluntary and compliance products on Xpansiv’s CBL market platform.
The alliance between Xpansiv and Evident marks a significant step in fortifying the certification landscape for the clean economy, particularly renewable energy. With a shared vision of driving the energy transition, their partnership fuels the trade of Renewable Energy Certificates globally, bolstering the adoption of cleaner energy sources. This collaboration opens doors for diverse sustainable products and reinforces a commitment to shaping a greener future.
A Thai electric bus operator announced the sale of the initial carbon offsets under a new system established by the Paris Agreement to a Swiss fossil fuel group. Their deal marks a significant milestone in the implementation of the 8-year-old United Nations climate accord.
The Paris Agreement, formulated in 2015, permits governments and corporations to offset a portion of their greenhouse gas emissions by funding initiatives that mitigate climate pollutants elsewhere.
These offsets are converted into carbon credits, each representing the reduction of one metric ton of carbon dioxide (CO2) emissions.
Unlocking Carbon Offsets with Thailand’s Electric Bus
In December, Switzerland’s KliK Foundation, representing fuel importers, finalized the inaugural purchase of 1,916 carbon credits from Thailand’s Energy Absolute. This groundbreaking transaction demonstrates the potential of a nascent market for carbon credits.
Switzerland stands out as an avid supporter of bilateral credit trading as stipulated in article 6 of the Paris Agreement. The recent transaction is part of a broader pact inked between Switzerland and Thailand in the first months of 2023.
Although the credits obtained will eventually be used in government strategies, private entities are responsible for executing the project. South Pole, a prominent Swiss firm recognized as one of the global leaders in trading carbon credits, coordinated the project. The seller has encountered controversy in the past year, stirring discussions and debate within the industry.
Energy Absolute is responsible for generating the credits by deploying a fleet of 4,000 electric buses in Bangkok. The electric units replace the conventional petrol-fueled vehicles, avoiding the release of CO2 which produces the offsets.
Image from Nation Thailand
Though the exact value of the credits sold wasn’t disclosed, the Thai firm said that the credit price exceeded $30. Their partnership is shaping the Paris Agreement market, pending finalization of the UN rules at COP28 in Dubai last year.
The evolving nature of these regulations means that both Energy Absolute and KliK, along with regulators in their respective countries, can influence this burgeoning market. However, it also presents the risk of needing to revise their agreement once the final UN rules are out.
Switzerland’s Emission Trading Strategy
KliK’s managing director, Marco Berg, emphasized the complexities involved in being pioneers in this area, citing substantial effort and costs.
The Swiss government mandated fuel importers to offset a progressively increasing percentage of their emissions. They can do that either domestically or through Paris Agreement-compliant credits, leading KliK to engage in this transaction.
KliK has committed to purchasing offsets for up to 1.5 million metric tons of carbon dioxide emissions until 2030 from Energy Absolute. That’s only a fraction of the 20 million credits it expects to purchase by the decade’s close.
In comparison, Switzerland aims to offset roughly 40 million Mt of CO2 abroad through 2030 to fulfill its climate objectives.
Despite their utility, some environmental advocates criticize carbon offsets, contending that they promote pollution instead of focusing on its eradication.
They doubted the integrity of the credits, claiming they’re not additional, meaning the project would still pursue without the offsets.
But an independent carbon market consultant, Mischa Classen, disputed the claim. Classen noted that Thailand lacks a specific policy directive that supports private bus operators in transitioning to electric vehicles.
Moreover, a spokesperson representing the Klik Foundation said that the additionality issue is purely speculation. They further noted that Energy Absolute relies on the financial backing provided through the purchase of credits to ensure the project’s viability.
Additionally, a spokesperson from the Swiss Federal Office of the Environment (FOEN) emphasized that only offsets leading to additional emissions reductions would receive approval. They highlighted that thorough verifications are conducted in collaboration with the environmental authority of the host country.
Overcoming Paris Agreement Roadblocks
Despite ongoing uncertainties regarding the regulatory framework governing this mechanism, Switzerland persists in advancing these agreements.
Discussions about article 6.2 of the Paris Agreement faced a deadlock during COP28 due to a contentious disagreement over carbon offset integrity. The European Union advocated for stringent regulations, while the USA pushed for greater flexibility.
Although negotiators aim to broker an agreement during COP29 in November, countries have the liberty to proceed with their agreements under the initial rulebook formulated in Glasgow.
Classen underscores that Switzerland’s inaugural transaction contributes positively to the growing consensus among nations with genuine interest in Article 6. He added:
“It is the final result of a long, hard process and it is not a decision you can just switch on or off. You need well-designed bilateral agreements setting minimum standards and a lot of political labor to establish carbon market regulations. The case of Thailand shows that it’s possible.”
Anticipating a substantial portion of its emission reductions by 2030 to be achieved through overseas projects, the Swiss government continues its efforts in this direction.
Public Service Enterprise Group (PSEG) Inc. has raised its 5-year regulated capital spending plan to potentially reach $21 billion as it focuses on investing in solar, energy efficiency, and grid projects. These investments aim to ensure reliability while striving to achieve the corporation’s net zero goals.
PSEG’s Trailblazing Net Zero Commitment
PSEG’s vision for climate action sets an ambitious net zero goal by 2030. This positions the company as a trailblazer among major utility and power generator firms. This goal comprises three core pillars:
Net Zero Emissions for PSEG Operations: This encompasses the company’s utility arm, Public Service Electric & Gas, PSE&G’s utility operations (scopes 1 and 2), aiming to achieve net zero greenhouse gas (GHG) emissions by 2030.
100% GHG, Carbon-Free Power Generation: PSEG commits to transitioning its power generation to be entirely GHG and carbon-free.
Contributions to Regional Economy-Wide Decarbonization: PSEG aims to make substantial contributions to broader decarbonization efforts within the regional economy.
PSE&G has already made significant strides in reducing GHG emissions by over 50% from 2005 levels. The group now aims to achieve net zero GHG emissions (scopes 1 and 2) by 2030.
This aim focuses not just on reducing emissions from operations but also addressing GHG emissions associated with natural gas use. It serves about 2 million customers across New Jersey for various crucial needs like space and water heating.
As seen above, the group plans to use carbon offsets to address their 2030 GHG emissions. Carbon offsets are from projects that reduce or remove carbon somewhere else. Each offset equals a tonne of carbon emissions.
New Jersey’s Accelerated Decarbonization Initiatives
In an investor update, PSEG detailed its regulated spending plans for 2024-2028, primarily tied to its utility subsidiary, PSE&G. The company highlighted that these investments are driven by the need for system modernization and align with New Jersey’s decarbonization and energy policy objectives.
In February 2023, New Jersey Governor Phil Murphy announced the state’s ambition to achieve 100% clean electricity by 2035. This goal is accelerated from the initial target of 2050. The state also aimed to electrify 10% of commercial and residential buildings by the end of 2030.
Gov. Murphy further highlighted that:
“These bold targets and carefully crafted initiatives signal our unequivocal commitment to swift and concrete climate action today.”
The current Energy Master Plan (EMP) aimed at achieving the 100% benchmark by 2050, including a goal of 7,500 MW of offshore wind generation by 2035. By July 2022, the state had already exceeded its target of 3.75 GW of new solar generation by 2026. This secures 4 GW of solar power.
The state projects significant savings of $355 million annually and a reduction of 5.5 million metric tons of GHG emissions per year by 2030 through these endeavors and leveraging federal benefits provided by the Inflation Reduction Act.
Additionally, Executive Order No. 317 mandates the New Jersey Board of Public Utilities (BPU) to devise plans for the future of gas utilities in the state. This will align their emissions with the goal of reducing statewide GHG emissions by 50% below 2006 levels by 2030.
Moreover, New Jersey announced initiatives to support the transition to electric vehicles (EVs). The state adopts the Advanced Clean Cars II program and allocates $70 million from its Regional Greenhouse Gas Initiative funds to establish an incentive program for consumers switching to zero-emission vehicles.
As per their 2023 Sustainability Report, PSE&G has installed over 8,000 chargers through their EV Charging Program. The company has invested over $22 million in developing a smart charging infrastructure.
PSEG’s Expanded Clean Energy Capital Plan
Considering these goals and the increased demand for clean energy, electric reliability, and electrification, PSEG’s regulated capital plan saw a rise of over $2 billion, expanding from the earlier $16 billion to $18.5 billion plan for 2023-2027.
The updated plan encompasses a transmission project awarded to PSEG in December 2023 as part of PJM Interconnection’s grid upgrades. The goal is to accommodate data center growth and facilitate power plant retirements.
With that, PSEG’s total capital plan for 2024-2028 now ranges from $19 billion to $22.5 billion. This includes its power supply subsidiary PSEG Power LLC and other investments. The company affirmed that no new equity is needed to support this capital plan.
Moreover, PSEG sustained its 5% to 7% long-term annual earnings growth rate for 2024-2028, coming from its 2024 earnings guidance.
The projected 5-year EPS growth is underpinned by rate base expansion at PSE&G and the production tax credit for its unregulated nuclear fleet. The Inflation Reduction Act’s nuclear production tax credit offers up to $15/MWh for electricity generated by nuclear plants in service in 2024. PSEG Power holds interests in three nuclear plants in the PJM market.
Overall, PSEG’s $21 billion investment for net zero 2030 climate vision stands as a significant and comprehensive step forward in the energy industry. It shows its commitment to combating climate change and fostering a greener and more sustainable industry.
Debate surrounds the challenge of mitigating emissions from hard-to-abate sectors to achieve net zero by 2050. Critics argue the short-term cost of such measures might be high, preferring more effective decarbonization routes.
Carbon removal startup Parallel Carbon claims its pioneering technology addresses both challenges by capturing CO2 directly from the air while generating low-cost green hydrogen.
The company aims to launch a kilowatt-scale demonstration project by 2025, with carbon removal credits (CDR) already pre-sold. The credits sold covered the startup’s first year of operations, helping them get off the ground and build the project.
How Parallel Carbon’s Dual Technology Work
Parallel Carbon’s technology employs hyper-reactive minerals and achieves both carbon removal for under $100 per ton of CO2 and clean hydrogen production for $1 per kilogram. Their approach combines Direct Air Capture (DAC) and Water Electrolysis processes, powered by solar and wind energy.
Beyond providing durable carbon storage, this approach generates high-quality CDR credits and green hydrogen to facilitate industrial decarbonization. Here’s the company’s technology in an overview.
Their electrolyzer produces hydrogen by splitting a neutral-salt electrolyte into an acid and an alkali without generating chlorine gas. This system works similarly with the chlor-alkali process, minus the chlorine gas.
Simultaneously, a mineral sorbent in DAC extracts CO2 from the atmosphere, releasing it by dissolving in the acid. This captured CO2 can either be stored geologically or used in industrial processes. The sorbent is then regenerated with the alkali for subsequent CO2 capture.
Notably, though the electrolyzer may operate intermittently, surplus acids and alkalis sustain the mineral sorbent’s recycling. This ensures continuous direct air capture even during renewable power unavailability.
Addressing DAC Efficiency and Cost Challenges
Parallel Carbon’s CEO Ryan Anderson highlights their technology’s flexibility, designed as a flexible industrial load operating on intermittent power. This aligns with clean hydrogen production tax credit requirements, ensuring minimal marginal electricity emissions for direct air capture’s carbon accounting.
Though this technology demands more energy input than conventional electrolyzers due to the simultaneous DAC, its reliance on low power prices potentially poses a challenge.
Estimated energy costs for this process, with renewable electricity at $30/MWh, amount to $1.50 per kg of H2 and $50 per tonne of CO2. Anderson foresees flexibility in cost allocation between hydrogen production and CO2 capture due to the dual product nature. He further noted that:
“For most direct air capture, operating with clean power is a necessity — I think that’s very challenging for other direct air capture technologies…over 90% of the energy for the process goes into the electrolyzer.”
They target a cost of $400/tonne of CO2 captured and $2/kg of H2 produced by the late 2020s. They also intend to further lower costs to $100 and $1, respectively, by the early 2030s.
The startup, having secured $3.6 million in seed funding led by Aramco Ventures, aims to field-test a scaled stack producing 50 kg of hydrogen and capturing one tonne of CO2 daily by early 2025.
Parallel Carbon has pre-sold its carbon dioxide removal credits for operations beginning in 2025. As corporations eye 2030 climate targets, the voluntary carbon market has gained traction, although scrutiny surrounds carbon removal effectiveness.
Driving Costs Down and Ambitions Up
Apart from the growing carbon credit market, DAC also largely benefits from highly lucrative government support in the United States.
Anderson emphasizes the measurable CO2 removal capability of direct air capture, ensuring high-quality climate action. However, he doubts industries’ preference for carbon removal over other decarbonization methods. Anderson had formerly worked as an analyst on carbon capture and storage for research firm BloombergNEF.
This skepticism is fueled partly by the expectation that the market will have a relatively limited quantity of high-quality credits available over the next 10-15 years.
Moreover, government subsidies like the 45Q tax credit incentivize carbon capture. Despite complexities in claiming multiple credits, Anderson sees potential for separate companies to leverage distinct tax credits.
The 45Q tax credit offers incentives of $85 per tonne of CO2 for point-source carbon capture that’s permanently stored. It would be $60 if the gas is used in industry or for enhanced oil recovery.
Then the credit increases significantly to $180 (or $130) if the capture is from direct air capture. But for DAC to qualify for these incentives, it needs to capture a minimum of 1,000 tonnes of CO2 annually.
Anderson also estimates that even without subsidies, carbon credits from DAC are currently sold for over $600/tonne of CO2.
Looking ahead, Parallel Carbon eyes a commercial pilot in 2026 capable of 100 tonnes hydrogen production and 1,000-2,000 tonnes of CO2 capture a year. The DAC company is also planning a Series A fundraising round to propel its vision forward.
Parallel Carbon pioneers technology that captures CO2 from the air, generating low-cost green hydrogen while directly addressing emissions challenges. Their innovative approach offers durable carbon storage and facilitates industrial decarbonization. With promising advancements and investments, they aim to revolutionize carbon removal and hydrogen production, positioning themselves at the forefront of sustainable innovation.
The US and Canadian lithium sector are poised for potential growth in 2024 despite challenges in pricing and demand that impacted the global industry in recent times. Market experts noted that the long-term outlook for lithium remains robust while rapid transformative changes may face expected issues.
Lithium has become the new oil, at least for the production of electric vehicles (EVs). And the race to secure this critical resource has already started since last year.
The growing demand for lithium-ion batteries in the U.S reached a record high in 2023, showing rising interests on EVs and the clean energy transition.
Canada’s Lithium Vision: Electrifying the Future
Canada, particularly Quebec, demonstrates a bullish sentiment towards the lithium and battery sectors. The Canadian province focuses on establishing a comprehensive supply chain from mining to electric vehicle production.
Jean-François Béland, Vice President of Ressources Québec, emphasized the necessity to electrify cars. He particularly emphasized this in an interview, noting that:
“The demand will be there, whatever happens, because we need to electrify our cars. Lithium and critical minerals are, in the 21st century, what coal was in the 19th century and what oil was in the 20th century.”
As per the S&P Global Commodity report, lithium-ion battery capacity would reach 6.5 TWh in 2030. Lithium is the key element in creating EVs and is hailed as the beating heart of net zero.
The demand for lithium-powered EV batteries would grow annually at over 22% rate, with the EV transport segment getting 93% of the market share in 2030.
Amid the fallout from the pandemic and geopolitical tensions, companies are revisiting undeveloped lithium assets, accelerating projects, and exploring new opportunities. National government policies promoting energy transition and regional battery supply chains helped propel this development.
Thus, construction activities are anticipated this 2024, including various projects in Quebec, Arkansas, California, Texas, Nevada, Tennessee, and South Carolina.
Construction Surge and Lithium Price Outlook
For instance, Standard Lithium is considering starting construction on a commercial-scale plant for its Phase 1A lithium project in Arkansas this year. As per the company’s CEO, Robert Mintak, the completion of the project’s feasibility study was a major achievement in 2023.
Now, their goal is “to have project finance completed with a final investment decision in the first half of 2024 and a 20-month to 24-month build time,” Mintak noted.
Meanwhile, existing lithium companies like American Lithium (AMLI) continue to sharpen their focus on primary lithium projects. Similarly, other entities like EnergySource Minerals are also aiming to advance construction activities for their lithium projects in California.
Despite a dip in lithium prices due to reduced demand from the battery and EV sectors in 2023, industry forecasts anticipate growth in global passenger plug-in electric vehicle sales by 2027. Industry experts emphasize the anticipated increase in demand for EVs and their associated components.
S&P Global reported that EV sales would hit over 30 million units in 2027.
The same market report highlighted the significant drop in lithium prices in 2023 from record highs in 2022, over $70,000/tonne. This is largely driven by the decrease in demand from the battery and EV sectors.
Still, the analysts anticipate that prices will stabilize in the range of $20,000/t to $25,000/t from 2024 to 2027. Despite the decline, this pricing level is still attractive for investments, particularly supported by government policies encouraging the EV sector.
It is also important to note that battery startups are drawing in huge investments. In the recent surge of venture capital, these emerging companies are making waves with some substantial financing rounds.
The lithium industry is indeed cyclical and the current pricing environment still indicates a strong appeal for investment. This can be attributed to supportive government regulations pushing for the death of combustion engine sales.
The lithium sector in the US and Canada is experiencing a transformative period marked by rapid demand escalation, construction surges, and market volatility. While lithium prices witnessed fluctuations due to reduced demand, a resurgence is expected with the accelerating EV market. Canada, particularly Quebec, emphasizes a holistic approach to foster the lithium supply chain, echoing the mineral’s pivotal role in the clean energy transition.
Retiring carbon credits can be a powerful tool for individuals and businesses to offset their carbon emissions and contribute to a greener future. By retiring these credits, we can ensure that the emissions reduction achieved is permanent and not double-counted, creating a more transparent and effective carbon market.
This approach not only helps combat climate change but also encourages the development of sustainable practices and technologies.
If you’re into knowing about how the process works, this article will explain everything you need to know about carbon credit retirement. Let’s begin by explaining how these credits work.
Understanding How Carbon Credits Work
Carbon credits are tradable certificates that give entities the right to emit a tonne of CO2 or its equivalent. They are generated by projects that reduce or remove CO2 from the atmosphere like planting trees.
The credits serve as a permit, allowing the holder to neutralize their emissions. In that way, they work like renewable energy certificates (RECs) which are also a market-based instrument that certifies the holder owns a megawatt-hour of electricity from a clean energy source.
Essentially, RECs are a type of carbon credit alongside many others. These credits come in two major categories: compliance and voluntary markets.
In the voluntary carbon markets, carbon credits are also called offsets. Emitters voluntarily bought them to offset their greenhouse gas emissions.
In the compliance markets, businesses’ emissions are ‘capped’. If they go beyond that cap or limit, they’re fined or they can buy carbon credits corresponding to the amount of their excess emissions.
The Lifecycle of a Carbon Credit
Retiring carbon credits involves a series of stages. But let’s focus on the last three crucial steps that ensure the integrity of the credits, the process of trading them, and what it means to retire them.
The verification process is critical for ensuring the accuracy, transparency, and integrity of reported project data. Verifiers have to confirm a project’s compliance with the carbon program’s eligibility criteria. They validate the collection of project monitoring data as per program requirements and verify the accuracy of emissions reduction calculations based on approved methodologies.
After a project has undergone the verification processes, it becomes eligible for registration within the program. In other words, the credits they generate are now available for trading.
Carbon credit trading has become very popular today among individuals and organizations and various carbon exchanges began to emerge. This is happening for a simple reason: Reducing GHG emissions is a global initiative and the carbon market offers great opportunities for entities seeking to cut their emissions.
You can buy or trade carbon credits for retirement purposes through various platforms. There are a couple of online carbon credit marketplaces and spot exchanges to choose from.
Lastly, let’s move toward the end goal of carbon credit trading – retirement.
The Retirement Process Explained
Carbon credit retirement also means their death.
A carbon credit is retired once its benefit has taken place. That means it has been used and the carbon benefit it represents has been claimed by the entity that bought it.
Retiring your carbon credits requires you to ensure that they are removed from the marketplace and labeled as ‘retired’ in any records or registry. The retired credits must serve their emission reduction purpose only once to prevent double counting.
Take note that retirement only occurs once the impact has happened. This means retiring your carbon credits depends on what type of credit you purchase.
If you’ve bought ex-post carbon credits, you can retire them right after your purchase. You can then instantly get the proof of retirement.
For ex-ante and pre-purchase carbon credits, retiring them won’t happen immediately after you bought them. That’s because their impact hasn’t yet occurred and their retirement should be in the future. You should know when the timeline would be from the seller or the marketplace where you purchase the credits. It may take months or even years, depending on the specific project you invest in.
Impact and Benefits of Retiring Carbon Credits
By buying carbon credits, entities help fund efforts that support decarbonization elsewhere. These initiatives often yield positive benefits to the environment and local communities. More importantly, each credit retired helps quantify the actual environmental impact of those projects.
When it comes to the impact of retiring carbon credits on investors, be it individuals or companies, it has two major effects.
First, it preserves the integrity and effectiveness of emission reduction projects. It prevents double counting or reusing of the credits by multiple entities. This further guarantees transparency and accountability in the carbon markets.
In effect, carbon credit retirement instills confidence among companies regarding the impact of their purchases or investments.
Thus, secondly, retiring carbon credits helps build a good reputation and enhance brand value of your company. Take for instance the case of large businesses supporting various carbon reduction projects.
Giant technology companies like Microsoft and Apple have been investing millions in carbon offsets from projects that either reduce or sequester carbon from the atmosphere.
As they do that, they’re not only addressing their emissions but also dealing with their corporate sustainability.
The Role of Carbon Credits in Corporate Sustainability
So, how do carbon credits become the new currency of ESG investing to meet environmental obligations and corporate sustainability?
In the U.S., the coin of the realm is dollars while in the EU, it’s Euro. In the ESG world, it’s the carbon credit. Carbon credits are taking a small space on the ESG goals of businesses.
But as more companies are pledging to reach net zero, these credits are also gaining more momentum in ESG investing to ramp up carbon emission reductions. And slashing emissions has now become a critical element of corporate and environmental responsibility to help fight climate change.
Corporations use carbon credits to reach their net zero, carbon neutrality, or carbon negative goals. As such, research firms estimated that the carbon market will grow as much as 30x more by 2030. If that happens, the market will be as huge as the NASDAQ stock market by the decade’s end.
According to the independent firm Katusa Research, the overall carbon market (compliance and voluntary) could be on equal footing as the oil market.
Source: Katusa Research
The burning of fossil fuels emits carbon dioxide, contributing to climate change. Different corporate climate goals mean different things.
Achieving carbon neutrality means balancing emitted and removed CO2. Daily actions like driving emit CO2, but walking or using renewables can reduce it. Carbon credit offsets fund CO2 removal projects.
Carbon negative goes beyond neutrality, removing more CO2 than emitted. For instance, Microsoft aims for carbon negativity by 2030, promising to remove all emissions since its founding. H&M and Ikea also strive for “climate positive,” akin to carbon negativity efforts. Their strategies involve sustainability investments and reduced emissions.
Best Practices in Carbon Credit Retirement
Now, that you know how carbon credits work, the importance of retiring them, and the processes involved, there’s one more thing left to keep in mind. What are the best practices to follow when retiring carbon credits?
We summarize them in two essential points: selecting the right carbon credit projects and transparent reporting of the retirement.
As mentioned earlier, there are plenty of projects generating carbon credits. There are 170+ of them as per the Ecosystem Marketplace report.
So, you must choose the ones that suit your purpose very well. If you’re into nature-based initiatives, you may pick from the different forestry and land use projects, i.e. REDD+. But if you’re operating in the power sector, you may want to go for renewable energy such as supporting solar or wind projects.
Regardless of your choice, be sure to be informed of the existing standards and methodologies for that project. This is crucial so that your carbon credit investment would count by actually reducing emissions. That entails being transparent in reporting your retirement.
Transparency is one of the biggest concerns plaguing the carbon market right now. Questions were raised as to the effectiveness of carbon projects in delivering their emission reduction promises. This caused a rapid decline in voluntary carbon credit prices, particularly the nature-based offsets.
Yet, current and future innovations in carbon credit markets show that they are here to stay and will continue to play a significant role in curbing GHG emissions.
The Future of Carbon Credits
Recent innovations such as the launch of insurance products that protect carbon credits indicate that the market is heading in the right direction. Application integration like the case between Alcove and Shopify is another important market development that tackles transparency in credit retirement.
The use of blockchain technology is also considered a solution to make carbon credit retirement easier to track. Add to this the big players entering the market to further address transparency in tracking the lifecycle of each credit. For example, the NASDAQ exchange launched an innovative technology to revolutionize the industry.
Nasdaq’s new approach uses smart contracts for secure transactions and promises to bring much-needed standardization to attract investors.
Moreover, announcements by countries to integrate carbon markets into national registries also suggest that trading and retiring carbon credits would become the standard in curbing emissions and fighting the climate crisis.
Retiring carbon credits offers a potent solution for emission offsetting, ensuring permanence and market transparency. Understanding their lifecycle—from generation through retirement—underscores their pivotal role in emissions reduction.
This practice not only bolsters project integrity but also fosters trust and transparency. Beyond emissions reduction, it fuels environmental initiatives, fortifies sustainability, and enhances brand value. They are also the cornerstone of achieving net zero goals.
By knowing these important things about carbon credits and their retirement, you can now start your own journey in contributing to the climate change fight. Our education dashboard is packed with diverse resources you can use as a guide, from understanding deeper about carbon credits to companies you can consider.
The Saudi Power Procurement Co. (SPPC) has put out bids for four separate power plant projects, totalling 7,200 megawatts in capacity. Two of these projects, Rumah1 and Rumah2, are slated for the central region, while Nairyah1 and Nairyah2 will be in the eastern region of Saudi Arabia.
Each of these projects is designed to produce 1,800MW of power, using natural gas combined-cycle technology and incorporating carbon capture methods.
Carbon capture involves the use of various technologies that draw in CO2 from the atmosphere and store it away or use it for other purposes.
Powering Tomorrow Sustainably
The Saudi Arabian Government took charge of SPPC in 2021. The government licensed it to be the single buyer of electrical energy and capacity from generators within the Kingdom.
SPPC’s primary focus is to align the projects with the Saudi Green Initiative (SGI), aiming to achieve net zero greenhouse gas emissions by 2060. Their approach employs a circular carbon economy while the timeline depends on technology advancements.
Moreover, these initiatives are in line with the Kingdom’s Vision 2030. It is Saudi Arabia’s plan to enhance energy generation efficiency and cut costs by diversifying power production. The Vision also aims for a balanced electricity generation split of 50-50 between renewable sources and gas, reducing reliance on liquid fuel in the power sector.
This will help the nation reach the optimal energy mix for its electricity production. The Kingdom is actively leading the energy transition in the Middle East region. Their leadership is driven by various initiatives such as the SGI and the broader Middle East Green Initiative.
The SGI is driving a comprehensive and enduring plan to address climate concerns sustainably. Three main goals direct the efforts of SGI: reducing emissions, expanding forestation, and safeguarding land and sea areas.
Since its inception in 2021, SGI has set in motion more than 80 initiatives. The initiative commits to continuing this progress in its third year and beyond, aiming for more advancements.
Diversifying Energy Landscapes
In an interview, Muneef Al-Muneef, the general director of renewable energy policies at the Saudi Ministry of Energy, highlighted the Kingdom’s progress in advancing 22.8 gigawatts of renewable energy projects.
Al-Muneef emphasized Kingdom’s openness to diverse technologies such as hydro-storage and geothermal, evaluating their potential applicability in meeting energy targets. He specifically said that:
“We don’t really tie ourselves to one. We’re consistently monitoring the potential of these technologies and their level of applicability in the Kingdom and whether these technologies can help us achieve our targets.”
In October 2023, Saudi utility firm ACWA Power achieved a commercial operation certificate for the 2nd phase of the Sudair solar power project. This reinforces the Kingdom’s commitment to renewable energy pursuits.
Saudi Arabia’s Minister of Industry and Mineral Resources, Bandar Alkhorayef, affirmed the Kingdom’s dedication to accessing competitively priced green energy at the annual ceremony of the National Industrial Development and Logistics Program in December last year.
This ultimately showcased the country’s steadfast momentum in the field of sustainable energy.
In July 2023, Saudi Arabia placed a $2.6 billion bet on the global mining industry for clean energy transition. The strategic move brought in a 10% stake in Vale SA’s base metals division.
Carbon credits work as permits allowing entities to release a specific quantity of CO2 or other gasses into the atmosphere. Each credit corresponds to a tonne of emissions. These credits operate within a system meant to curb carbon emissions by establishing a marketplace where entities can trade their emission permits.
Investments in diverse power projects, aligning with the Saudi Green Initiative, signal Saudi Arabia’s commitment to a sustainable energy future. With ambitious targets and technological openness, the nation paves the way for renewable energy dominance in the region.
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