Why US States Must Take Charge of Their Own Carbon Sequestration Regulation

Jennifer L
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Why US States Must Take Charge of Their Own Carbon Sequestration Regulation

The U.S. Environmental Protection Agency (EPA) is urging states to establish their own regulatory frameworks for carbon sequestration. This ensued when lawmakers intensely questioned the agency’s limited permit issuances. 

In a congressional hearing, an EPA official expressed strong support for state efforts to acquire primary regulatory authority for Class VI wells used for underground carbon injection. 

What Are Class VI Wells and Their Role in Carbon Capture and Sequestration?

Class VI wells are used to inject carbon dioxide (CO2) into deep rock formations as illustrated below. This long-term underground carbon storage is called geologic sequestration (GS). 

Class VI injection wellsGS is a type of carbon capture and storage (CCS), a technology used to reduce carbon dioxide emissions to address climate change.

Common sources of CO2 for geologic sequestration include carbon captured from point sources like from steel and cement production facilities. It can also be from energy production such as power plants or directly from the atmosphere. 

The potential for these wells to manage and safely sequester captured carbon is immense. For instance, the Colorado Geological Survey estimated 720 billion tons of CO2 could be safely stored in the state’s deep underground formations.

However, widespread development of CCS projects at scale has been slow, partly because of Class VI well permitting challenges. 

Despite reviewing over 150 permit applications from over 50 carbon sequestration projects, the EPA has only granted approval for 2 wells in Illinois thus far. A third project in Indiana is pending approval, which would mark the first permit issued under the current administration.

Recent legislation, including the bipartisan infrastructure law of 2021 and the Inflation Reduction Act of 2022, has allocated substantial funds for carbon capture and direct air capture (DAC) initiatives. 

2021 Infrastructure Investment and Jobs Act:

  • Allocated $5 million/year through 2026 to EPA to permit Class VI wells and another $50 million for the agency to distribute to states with their own Class VI permitting.
  • Allocated $2.25 billion investment for commercial large-scale carbon sequestration projects (storing 50 million metric tons of CO2) and associated pipeline infrastructure.

2022 Inflation Reduction Act (Changes to the Section 45Q tax credit scheme):

  • Amended the baseline credit to $17/ton of CO2 captured and stored, with the potential to increase to $85/ton.
  • Introduced a new 45Q credit for DAC and carbon sequestration – $36/ton and up to $180/ton.

Moreover, under the Clean Air Act, the EPA may mandate power plants to incorporate carbon capture technology to ensure compliance.

Bruno Pigott, principal deputy assistant administrator at the EPA’s Office of Water, emphasized the role of the Class VI well application process in the success of these projects during the hearing. 

The EPA also initiated the application process for $48 million in grants funded by the bipartisan infrastructure law. The funding aims to expedite the deployment of technologies reliant on Class VI wells.

US states control over underground carbon sequestration regulation

Amid discussions, an executive director of Carbon180, expressed optimism about the potential to reduce the costs associated with DAC. However, Burns underscored concerns regarding the need for a robust and efficient infrastructure, stating that:

“We’re going to need to store billions of tons of CO2, and we need a robust and well-functioning Class VI permitting process.”

Fixing Delays to Fast-Track Carbon Capture Efforts

The EPA has already given Class VI well primacy upon North Dakota and Wyoming, with Louisiana’s final approval still pending. Meanwhile, West Virginia, Arizona, and Texas have applications currently under consideration.

However, lawmakers have expressed frustration with the EPA’s protracted review period for states’ primacy applications, citing Wyoming’s nearly 3-year-long process. 

During the hearing, Pigott was questioned on the substantial delays of the permitting process, highlighting Louisiana’s role as a model for various elements of the application. The state received conditional approval in May this year after submitting an application in 2019. 

Over half the carbon sequestration projects awaiting permits for Class VI wells are in the Gulf Coast region. This includes Chevron’s carbon capture project Bayou Bend, covering 40,000-acre expanse on the region.

The EPA acknowledged the concern and said that the agency is currently sifting through tens of thousands of comments on the proposal to grant primacy to Louisiana.

The federal agency noted that states must meet the agency’s minimum standards and establish necessary administrative and enforcement programs to qualify for Class VI well primacy.

The EPA’s encouragement for states to establish their own regulatory frameworks for carbon sequestration reflects a concerted effort to fast-track the deployment of Class VI wells. While recent legislation has allocated significant funds for carbon capture initiatives, challenges in the permit issuance process underscore the need for a streamlined approach to bolster carbon sequestration projects nationwide.

Toyota’s Hydrogen Fuel Cell Vehicle Sales Saw 166% Increase

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Toyota’s Hydrogen Fuel Cell Vehicle Sales Saw 166% Increase

It’s no secret that Toyota’s hydrogen fuel cell Mirai has not been successful in sales as the carmaker itself admitted. But that didn’t discourage the Japanese automaker from planning to accelerate the adoption of hydrogen fuel cell (FCEV) technology.

In its latest sales and production report, Toyota has shown year-on-year growth in both performance results globally. 

Total sales of electrified vehicles, both inside and outside Japan as well as per region (North America, Europe, Asia, China, and other) have increased significantly. It’s also true across the board for reporting coverage – for September 2023, total from January-September 2023 and from April-September 2023. 

Toyota’s FCEV Sales Performance 

Toyota’s worldwide electric vehicle (EV) sales were up about 52% for the month of September. The same positive performance was achieved for 2023 (31%), and for the first half of fiscal year, April-September, (38%). 

For FCEV sales, positive results are also observed for global sales but not for the outcome for Toyota’s home country. Hydrogen fuel cell EVs are also using an electric motor like a battery EV but it sources power from a fuel stack where hydrogen is stored.

Worldwide sales for FCEV increased for September, last nine months, and last six months by 166%, 22%, and 77%, respectively. 

The remarkable results are all thanks to the carmaker’s sales outside Japan, with a whopping 289% increase for September. For the last 6 months and 9 months, figures were both up about 94% and 47%, respectively. 

Looking at the yearly achievements, FCEV sales peaked in 2021 and painted a good picture overall. 2023 data is through September only, which the company believes to also increase YoY. 

As Toyota aims to sell more by 2030, the company plans to tap into this technology that’s been touted as the future of mobility. 

Toyota annual hydrogen fuel cell EV sales

The Fight for Hydrogen Vehicle Goes On

The largest carmaker by sales has long placed a huge bet on FCEV as an alternative to fossil fuels. But the company’s sales of hydrogen vehicles weren’t that significant. It has only sold fewer than 22,000 hydrogen fuel cell Mirai since 2014. 

The average annual number of FCEV sold was so insignificant compared to Toyota’s total vehicle sales. Expensive cost of the fuel and lack of hydrogen fueling stations are the two largest bottlenecks hindering sales growth.

Yet, this didn’t dissuade the car company to continue investing in and developing its hydrogen fuel cell technology. 

In October, Isuzu and Toyota joined forces to mass produce a light hydrogen fuel cell truck. The truck is based on Isuzu’s light-duty truck platform and will be powered by Toyota’s hydrogen fuel cell system.

Toyota’s FCEV technology is also facing close rivalry from its peers, including Hyundai, Honda, Nissan, and Daimler. Hyundai has had fuel cell vehicles on the market for several years already. Meanwhile, Honda has also been experimenting with FCEV and improving it for some time.

Nonetheless, Toyota made headlines last July when it revealed plans to roll-out 200,000 hydrogen-powered vehicles, targeting Europe and China. 

Such revelation is a major shift in Toyota’s focus, which announced intent to commercialize its game-changing solid-state battery by 2027. These next-gen batteries can potentially cut carbon emissions of EV batteries by 39%. 

Reducing planet-warming emissions is one of the key drivers prompting Toyota, as well as other automakers, to invest in fossil fuel alternatives like FCEV. The ultimate goal is to bring the world to net zero emissions by 2050. 

Toyota’s Net Zero Targets

For the Japanese car marker, that means achieving zero carbon emissions in three areas: lifecycle, new vehicle, and production at plants.

Life Cycle Zero CO2 Emission Target

The company aims to reduce GHG emissions by 30% throughout a vehicle’s life cycle by 2030 versus 2019 levels. As seen below, life cycle includes emissions from making materials and parts to vehicle manufacturing, logistics/delivery, driving, and recycling. 

Toyota life cycle zero emissions targetGHG emissions cover energy consumption in Toyota Motor Corporation and financially consolidation subsidiary corporate activities (Scopes 1 and 2). It also includes GHG emissions from suppliers and customers in relation to vehicles under the company and its subsidiaries (Scope 3). 

New Vehicle Zero CO2 Emissions Target

In making new vehicles, Toyota aims to achieve carbon neutrality for average emissions (emissions from production of fuel and electricity and during vehicle operation) by 2050.

Reaching that goal means achieving its near-term targets for new vehicle average GHG emissions by 2030 and 2035 as follows:

  • 2030: 33.3% GHG reduction from new vehicles vs. 2019 levels for passenger light duty vehicles and light commercial vehicles. For medium and heavy freight trucks, that’s 11.6% emissions reduction.
  • 2035: over 50% GHG emissions reduction from new vehicles compared to the 2019 baseline. 

Plant Zero CO2 Emissions Target

Finally, Toyota plans to achieve zero CO2 emissions from production at plants by midcentury. This includes CO2 emissions from energy use in Toyota and its subsidiary plants, as well as CO2 emissions from producing other Toyota brands, involving Scope 1 and 2 emissions).

Under this target, the Japanese automaker plans to tackle the environmental challenge at its factories with the following strategy. 

Toyota carbon neutrality target production at plantsPart of the plan is to purchase carbon credits from other companies to neutralize CO2 emissions. However, Toyota didn’t disclose how much of that emissions would be addressed using the credits. 

Toyota’s pursuit of hydrogen fuel cell technology continues, showcasing global sales growth despite challenges in its home country. With a focus on reducing planet-warming emissions and achieving net zero targets, the company remains committed to advancing its FCEV technology.

1PointFive Sold 27,500 Carbon Removal Credits to TD Bank Group

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1PointFive Sold 27,500 Carbon Removal Credits to TD Bank Group

1PointFive, Occidental Petroleum’s subsidiary that’s developing the world’s largest direct air capture (DAC) plant, and TD Bank Group (TD), 6th largest bank in North America, entered into one of the finance industry’s biggest purchase deals of carbon removal credits. 

The credits will come from STRATOS, 1PointFive’s DAC plant currently under construction in Texas. The facility has already sold several advance purchases of carbon removal credits (CDR) to other major companies seeking to offset their emissions. 

Under their agreement, TD Securities agreed to buy 27,500 metric tons of carbon dioxide removal credits over 4 years. The amount of the CDR credits is one of the largest bought so far by a financial institution.

TD has over 16 million active online and mobile customers, with $1.9 trillion in assets on July 31, 2023.

First Large-Scale DAC Technology Deployment 

Direct air capture, popularly known as DAC, is one of the emerging carbon removal technologies. The U.S. Department of Energy believes that it’s a game-changing technology that has the potential to help the economy head toward net zero.

1PointFive’s STRATOS can capture and remove up to 500,000 metric tons of carbon dioxide from the atmosphere annually. It’s also designed to be the world’s first large-scale commercial deployment of DAC technology for secure and durable storage in geologic formations. 

This DAC project is one of the DOE’s $1.2 billion grant awardees, alongside Climeworks’ Project Cypress.

The CDR credits from 1PointFive’s DAC plant will provide a high-integrity solution for companies to reach their net zero targets. The facility can remove up to 1 million tons of CO2, which is scalable up to 30 million tons a year. Thus, if that happens, it would be one of the world’s biggest experiments in DAC.

STRATOS will use DAC technology from Carbon Engineering’s (CE), a company acquired by Occidental for $1.1 billion. The technology uses giant fans to suck in CO2 that would be pumped underground or utilized to make valuable products. 

The image illustrates how CE DAC technology works in capturing CO2. 

Carbon Engineering DAC techAs per 1PointFive’s President and Michael Avery, the credits from DAC will be “measurable, transparent and durable, with the goal of providing a solution for organizations to address their emissions.”

Amazon and Houston sport franchises the Texans and Astros have also bought CDR credits from 1PointFive. It’s Amazon’s first big investment in carbon removal credits. 

The captured carbon underlying the removal credits sold to TD Securities will be particularly stored underground in geologic formations. 

Carbon Offsets for TD’s 2050 Net Zero Target 

By buying CDR credits from 1PointFive, TD Securities plans to add to its portfolio of carbon offsets as it seeks to build its trading capabilities both in the voluntary and compliance carbon markets.  

Ernst & Young (EY) projected the volume and contribution of carbon removal credits by 2050. In particular, their outlook includes nature-based and technology-enabled, where DAC belongs, net zero scenarios with removal-based credits.

removals carbon credits outlookRemarking on their deal, Global Head of ESG Solutions Amy West said:

“As the need to move from climate commitments to action intensifies, corporations across all sectors are looking for tangible ways to achieve their net zero goals… We’re incredibly proud to partner with 1PointFive to support innovative, technology-based solutions that are intended to advance both our clients’ and our own decarbonization goals.

The move complements TD Securities’ wider ESG Solutions platform focusing on giving clients short, medium and long-term solutions for transitioning to a lower carbon economy. Moreover, the carbon removal credits from the transaction will also be for offsetting TD’s own operational emissions. 

TD unveiled its Climate Action Plan to reach net zero emissions associated with its operating and financing activities by 2050. 

This ambitious plan also includes the creation of a new TD Finance and Corporate Transitions Group to provide clients with advisory services and essential sustainability-focused financing globally. These sustainable finance activities include the following:

  • Listed on the Dow Jones Sustainability World Index for 9 consecutive years
  • Currently the top-ranked North American-based bank on the World Index
  • An active member of the International Emissions Trading Association (IETA)
  • Formed a Carbon Markets Advisory team, focusing on the compliance and voluntary markets
  • Invested $10 million in the Boreal Wildlands Carbon Project, the largest private land conservation effort in Canadian history

Bringing Confidence and Scale to Carbon Markets 

Moreover, last year, TD Securities became part of Rubicon Carbon’s coalition of corporate sustainability lenders. Their goal is to help scale up the carbon market and bring confidence and innovation across its segments. 

This year, the financier revealed its new Sustainable and Decarbonization Finance Target for the next decade. With this initiative, they aim to generate CAD$500 billion through various financial activities, including financing, lending, insurance, and investments.

Transitioning to a low-carbon economy is not easy and it requires revolutionary approaches across industries and adoption of innovative technologies. A senior vice president at TD believes that direct air capture is a promising tool that can help advance progress in this sector.  

The groundbreaking purchase deal between 1PointFive and TD Bank Group signifies a pivotal step in bolstering carbon removal efforts. It could help drive a wave of confidence and scale in the emerging carbon removal market.

Carbon Credits to Take Center Stage at UN COP28 Climate Talks

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Carbon Credits to Take Center Stage at UN COP28 Climate Talks

At the upcoming UN climate talks, COP28, in Dubai next month, carbon credits will take center stage. These credits, bought by companies to offset their carbon emissions, allow them to consider consumed goods and services ‘carbon neutral’.  

Carbon credits are from various projects that suck in or store carbon. These include anti-deforestation efforts, replacement of coal-fired power plants with renewables, and energy-efficient cookstoves. 

Each credit signifies the reduction or removal of one tonne of CO2, allowing businesses to offset their CO2 footprint.

Carbon credits have grown since their integration into the 1997 Kyoto Protocol. However, their credibility faced substantial questioning this year following several scientific studies and investigative reports casted doubts on the voluntary carbon market (VCM), which operates independently of the UN process.

At the COP27 climate summit last year, the UN Secretary General expressed concerns about the lack of standards, regulations, and rigor in the VCM.  

At this year’s COP28, talks will seek to clarify the complexities surrounding the participation of nations in carbon offset markets.

Renewing Credibility in Carbon Credit Market

The United Arab Emirates, COP28 host, expressed hopes for advancements during the Dubai summit to bolster credibility in carbon credit markets.

In a study focusing on averted deforestation, researchers concluded that emission reductions and project benefits were exaggerated. They also raised concerns about the lack of independence among project inspectors and the lenient practices of carbon credit certifiers such as Verra.

The research also highlighted the overflow of carbon offsets with minimal actual reductions achieved. While this study focuses on nature-based projects, many other carbon reduction initiatives exist as mentioned earlier.

At the 2023 Carbon Markets Summit in July, research firm Sylvera along with Pachama assembled a group of global leaders to delve into the present complexities and future potential of carbon markets. They produced a comprehensive report detailing the current state and future trajectory of this critical sector. 

One of the findings revealed that carbon credits, through a last resort, do not mean later. The mitigation hierarchy does encourage reductions first over offsetting using carbon credits. But companies can buy them throughout their net zero journeys, so long that they don’t replace actual reductions.

More notably, corporations are moving upstream and become more involved earlier in projects, focusing on the ‘contribution’ approach over offsetting. It means they’re in a flight to quality to secure future supplies of high-quality credits. This trend will persist this year and beyond. 

Declining Prices, Growing Market 

Amid quality criticisms, the pricing of carbon credits for nature conservation projects witnessed a sharp decline. It plummeted from $18 dollars/tonne in January 2022 to $6 in January 2023, eventually dipping below $2 by mid-October.

Despite the dip in carbon prices, credit retirements remained strong in 2022 and on track to break records in 2023. As per report by Bloomberg with support from Carbon Growth Partners, there was an astounding 350% increase in annual retirements since 2016. 

carbon credit retirements by project type 2023Carbon credit issuance peaked in >350 million in 2021 and slightly decreased in 2022 and 2023. Bloomberg projections indicate that the carbon credit market could go up to $8 billion by 2050. 

More importantly, corporations are not the only entities relying on carbon credits to hit carbon neutral goals. 

Article 6 of the Paris Agreement permits countries to collaborate in meeting emission reductions goals, including transferring carbon credits. This is also known as the “Internationally Transferable Mitigation Outcomes” or ITMOs.

This opens avenues for significant state investments in carbon credits, with developing nations relying on them for critical climate funding.

Oil-producing countries view them as a cost-effective means to achieve net zero emissions. Saudi Arabia is already unveiling a national offset scheme for corporations aligning with Article 6 of the Paris Agreement.

This matter is important in the lead up to COP28 when the Paris Agreement mandated the climate conference to deliver the first ever Global Stocktake – a comprehensive evaluation of the world’s progress against climate goals.  

Keeping 1.5°C Within Reach 

COP28 UAE will open a great opportunity for the world to come together and drive progress to keep 1.5C within reach. 

During this critical event, the UAE will lead a process for all parties to come up with a clear roadmap. This pathway will fast-track progress toward global energy transition through inclusive climate action. 

Taking place at Expo City in Dubai from November 30 to December 12, COP28 conference will convene >70,000 participants. They include heads of state, government officials, industry leaders, private sector, academics, experts, youth, and non-state actors. 

And while the climate agenda involves several topics, talks about carbon credit markets will definitely be one of them.

The upcoming COP28 summit is poised to tackle critical concerns surrounding the fight against climate change. As discussions around carbon credit markets intensifies, the push for greater transparency and regulatory standards gains prominence. The convergence of global leaders and stakeholders at COP28 offers a good opportunity to discuss carbon credit concerns at the highest level.

Oman’s Mangrove Restoration Could Generate $150 Million in Carbon Credits

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Oman’s Mangrove Restoration Could Generate $150 Million in Carbon Credits

The government of Oman has been restoring mangroves quickly, a valuable natural resource, not just for their essential role in the global environmental ecosystem but also for their integral part in absorbing carbon. The goal is to eliminate planet-warming emissions while generating $150 million economic benefits through carbon credits. 

6,000 years ago, mangroves were widespread in Oman but only one species remains today because of climate change. So the country aims to restore the coastal forest of these carbon-busting trees. 

The Richest Carbon Sink in the World

Mangroves are highly effective carbon sinks, playing a crucial role in sequestering and storing atmospheric carbon dioxide. They possess several mechanisms that contribute to their carbon sequestration ability, including photosynthesis, sediment trapping, slow decomposition, and peat formation. 

Moreover, mangrove habitats can remove CO2 from the atmosphere faster than forests and store it in the soil and sediment for longer periods.

A study by the University of Bonn revealed that climatic changes account for the collapse of coastal ecosystems in Oman.

The Arab nation is home to only a single species of mangrove tree, the Avicennia Marina, found along the coastline stretching from North al Batinah to Dhofar. This area covered by mangroves expands around 1,000 hectares. 

  • Oman has then become the Gulf’s center for mangrove restoration and preservation. 

The Middle East country, through its Environment Authority (EA), inked a deal with MSA Green Projects last month to launch the Oman Blue Carbon. Their project seeks to cultivate 100 million mangrove trees in the country. 

The initiative aligns with the Sultanate’s National Zero Carbon Strategy 2050, outlining its goal to reach net zero emissions. 

Oman’s Projected Decarbonization Efforts to 2050

Oman net zero pathway 2021-2050Badr bin Saif Al Busaidi, the EA representative, said that their restoration efforts were a success. She further noted that up to 80 tons of CO2 per hectare can be sequestered by above-ground biomass in Al-Qurm. 

An environmental scientist said that “mangroves are the richest carbon sink in the world.” They’re known as one of the nature-based solutions that corporations support to combat climate change.

The $150 Million Carbon Credit Benefits

The Oman Blue Carbon project marks the first initiative aiming to produce carbon credits through growing mangroves. 

So far, the Gulf nation has planted more than 3.5 million seeds of mangroves over the past 2 years. This includes a record 2 million trees this year.  

Twenty years ago, there wasn’t a single mangrove standing in Al-Sawadi creek. But now it’s a forest stretching over 4 kilometers with 88 hectares of hangover cover.

The mangrove restoration project has developed gradually, inspired by the late ruler Sultan Qaboos bin Said, a renowned conservationist. 

The conservationists initially relied on nurseries where they grow seedlings for transfer to coastal areas. They’re using a direct, targeted planting approach in restoring the coastal habitat.

Oman’s contract with MSA Green Projects to grow 100 million trees over 4 years would remove 14 million metric tons of CO2. This, in turn, would give the country the chance to earn $150 million in carbon credit benefits. 

  • Each carbon credit represents one metric ton of reduced or removed CO2 from the atmosphere.

As part of their agreement, the Al Wusta governorate will transform 20,000 hectares of coastal land into mangrove habitats. 

The corresponding carbon credits the initiative generates can be used by companies seeking to offset their carbon emissions. The amount of carbon offset credits the project produces would be measured against Oman’s baseline emissions – 90 metric tons in 2021. 

Winning the War with Nature 

The minor oil producer, compared with its neighbours Saudi Arabia and United Arab Emirates, is moving fast in this mangrove restoration project. Highlighting the importance of their swift move, one of the conservationists involved in the project said:

“We are living what we can call a war with nature because of climate change. If we don’t take action, we will lose these natural resources.”

The Sultanate is also developing its green hydrogen production via Hydrom, aiming to produce 1 million tonnes by 2030. That target moves up to over 8 million tons by 2050. This ambitious goal is also part of Oman’s clean energy transition and net zero strategies.    

Oman’s ambitious mangrove restoration project not only signifies a critical step in combating climate change but also presents a lucrative opportunity, positioning the country as a key player in the global carbon credit market.

South Pole Cuts Ties with Zimbabwe Carbon Offset Project Kariba

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South Pole Cuts Ties with Zimbabwe Carbon Offset Project Kariba

Doubts loom over the credibility of the carbon market’s major credit source as the partnership supporting Zimbabwe’s Kariba mega-project crumbles. The project was previously supported by the leading global carbon offset seller, South Pole, raising concerns about the credits’ integrity.

South Pole has ended its participation in the main forest conservation project in Zimbabwe due to recent claims of exaggerated claims. The move may result in job losses for around 20% of the company’s workforce, according to reports. The company employs around 1,200 workers across 30 countries.

Carbon Offsets and Their Role in Reducing Emissions

Carbon offsets enable businesses and individuals to balance their carbon emissions by paying for removing carbon elsewhere. They evolved into a billion dollar global market that’s projected to grow even more up to $50 billion by 2030. 

projected growth of carbon offset demandSouth Pole’s decision was prompted by concerns about the Kariba REDD+ project’s compliance with their partnership standards. REDD means “Reducing emissions from deforestation and forest degradation in developing countries”.

Owned and developed by Carbon Green Investments (CGI), the Kariba REDD+ project, one of the world’s largest forest conservation initiatives the size of Puerto Rico, has issued about 36 million credits since 2011. These credits represent the removal or prevention of a ton of carbon dioxide from the atmosphere. 

According to the Swiss carbon developer’s statement: 

“All activities related to carbon certification and carbon credits from the Kariba REDD+ project will now be the responsibility of CGI, and South Pole’s role as the carbon asset developer has ended.”

Despite ending its collaboration with CGI, South Pole emphasized that the existing carbon credits remain valid. The termination of the partnership comes amid increasing scrutiny and challenges to the project’s integrity and the associated carbon credits. 

The New Yorker’s report and an ongoing investigation by Verra have added to the controversy, casting doubt on the effectiveness of the sold carbon reductions. South Pole said it would cooperate with the investigation and reassess its involvement in Kariba based on the findings.

The Kariba Project

Kariba REDD+, started in 2011, is designed to conserve 785,000 hectares or almost 2 million acres of forest in northern Zimbabwe. It has been a major recipient of funding through carbon credits as corporations support projects that remove carbon from the atmosphere.

Many multinationals such as L’Oreal, Gucci, Nestlé, McKinsey and Volkswagen have voluntarily bought credits from Kariba to offset their emissions. Below is the volume of credits delivered by the project since 2013 until 2022, peaking at over 6 million in 2021. 

carbon credits volume from Kariba project
Source: South Pole website

The Kariba project led to significant growth for South Pole. But recent months have seen increased scrutiny and challenges for the project and carbon offset initiatives at large.

Publications from different sources revealed that South Pole, alongside Verra, were associated with forest protection credits that claimed to fail to deliver the promised carbon reductions.

Further investigations into the Kariba project argued that only a fraction of the pledged investments in Zimbabwe are verifiable on-site. The African nation is the 12th largest carbon offsets producer worldwide. It recently amended its carbon law to allow developers to keep more profits from carbon credits.

Following those publications, some companies have withdrawn from the Kariba project, such as Gucci. In a broader context, similar studies suggested that carbon offset projects like Kariba overestimate the levels of deforestation they prevent. 

Robust Methodology and Safeguards Are Crucial

“Carbon offset methodology is ‘not perfect’,” South Pole CEO Renat Heuberger says in defense of the company’s practices. He further noted that they’re consistently adhering to the approved methodology for the Kariba project.

Heuberger also emphasized the uncertainties involved in deforestation projects, remarking that predicting rates 10 years in advance is challenging. 

Verra, the leading carbon credit certifier overseeing about 75% of voluntary carbon credits globally, acknowledged the importance of a critical evaluation of the market. The nonprofit also noted the imperfections in the system, emphasizing their commitment to continuously improve their methodologies to reflect evolving best practices and the latest scientific insights.

The use of safeguards in carbon offset programs to maintain climate integrity has never been more crucial. These programs usually allocate 10-20% of nature-based project credits for insurance purposes – also called a buffer pool.

  • Kariba, for instance, has set aside 5 million credits into the Verra-administered buffer pool.

Still, experts suggest that the buffer may not be enough to cover the unavoidable risks caused by climate change. In particular, concerns have been raised regarding the undercapitalization of the buffer pool in California’s carbon market. This is due to the vulnerability of forest offset projects to natural phenomena like wildfires.

Nevertheless, buyers of carbon credits need certainty. This is where insurance can help by providing a creditworthy wrapper around their investments, increasing confidence in the market. 

The works of Kita Earth, a carbon credit insurance company, aim to reduce this kind of risk to help drive finance to scale high-quality carbon projects.

Given the case of Kariba, carbon insurance will play a significant role and will soon become a market standard. It will provide extra due diligence and quality assessment, safeguards when things don’t go as planned, and help build trust to scale this essential market that help combat the climate crisis.

Jess Roberts, Vice President of Ratings at Sylvera, asserted the importance of robust calculations and advocated for a more cautious approach to safeguarding credits.

Amid heightened scrutiny, the Kariba REDD+ project’s legitimacy as a key carbon offset source has faced questioning, prompting South Pole to severe its ties with the initiative. The controversy calls for a re-evaluation of existing methodologies and safeguarding practices to bring credibility to carbon markets.

Carbon Removal Startups Are Finding More Places and Funds to Store CO2

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Carbon Removal Startups Are Finding More Places and Funds to Store CO2

The urgency to do something with the surplus of carbon in the atmosphere led to a surge in innovative approaches aimed at securing stable and contained storage solutions. 

Notably, a number of startups in the carbon removal sector have drawn substantial investor interest, attracting hundreds of millions in funding over the course of this year, according to Crunchbase data. From underground storage to concrete mix and ocean sequestration, their strategies have gone beyond concepts to viable carbon removal solutions. 

Recent funding trends reveal a notable increase in financing activities related to carbon removal initiatives. This surge in investment signifies a growing recognition to explore alternative solutions, considering the slow uptake of clean energy sources. 

It further highlights the pressing need to fast-track the deployment of effective carbon reduction measures alongside existing clean energy efforts. Here are the startups with interesting carbon removal technologies, broken down by the places where they store the carbon. 

Stowing Carbon in Soil

One common place to store carbon is in the soil. While capturing carbon through soil won’t be enough to remove what’s already in the air, it does help reduce emissions. 

However, this would not be an easy task for most farmers, especially in cropping systems. This is where Loam Bio’s solution comes in to help farmers adopt farming practices that sequester more carbon. 

The Australian startup aims to improve the quality and quantity of soil carbon capture via its unique microbial technology. Loam Bio, which closed a $73 million Series B round in February, said that its carbon sucking technology can turn croplands into giant carbon sinks. 

Plants or crops do absorb CO2, but a San Francisco-based carbon removal startup, Charm Industrial, offers a different solution. It takes waste biomass, transforms it into bio-oil (stable, carbon-rich liquid), and then pumps it deep underground for permanent storage. 

The company bagged $100 million in Series B funding for the goal of putting oil back underground. Here’s how its carbon removal technology works:

Charm Industrial carbon removal process

Sucking-in Carbon Through the Ocean

Recently, a trending way to store carbon is through the ocean. A couple of startups are developing technologies to capture and store carbon in this body of water. 

On the list are two names that capture investors’ eyes – Ebb Carbon and Captura.

California-based Ebb Carbon, founded by former executives of Google X and Tesla, secured a $20 million Series A funding. The ocean-based carbon removal company claims to offer a solution to remove carbon at the gigaton scale. 

Ebb is using an electrochemical ocean alkalinity enhancement technology, which speeds up the natural process of ocean alkalization that restores ocean chemistry while safely sucking in CO2 from the atmosphere. 

Another startup that believes in the power of the ocean is Captura, also based in California. The carbon removal company is developing direct ocean capture (DOC) technology that filters CO2 out of seawater, enabling oceans to remove more carbon. 

Captura’s process uses only renewable electricity and seawater to remove CO2 from the air, with no by-products and no absorbents. Their technology attracted $12 million from investors.

Captura direct ocean capture process

Locking Away Carbon in Concrete

Buildings, particularly those made from concrete, are considered as one of the major contributors to greenhouse gas emissions. That’s mainly because traditional Portland cement is responsible for emitting huge amounts of CO2 (about 8% of global GHG emissions).  

Thus, several startups are creating ways to make low-carbon concrete and even carbon-negative. CarbonCure Technologies, a Nova Scotia-based company that’s backed by Amazon and Microsoft, is a leader in carbon removal for the concrete industry and a provider of high-quality carbon credits. Each ton of removed CO2 generates a credit.

The startup injects captured carbon into fresh concrete, locking it up so it doesn’t return back to the atmosphere. Its innovative technology attracted $80 million in a new equity round led by Blue Earth Capital in July. 

Another significant player in this field is C-Crete Technologies, a startup innovating carbon sequestration for its patented cast-in-place (pourable) concrete. Its technology captures CO2 and makes it as an ingredient for a cement-free, carbon-negative concrete. 

Each ton of C-Crete’s cement-free binder can prevent 1 ton of carbon emissions. Its technology attracted two separate funding support from the U.S. Department of Energy – almost $1 million and $2 million. 

While some of these startups have demonstrated that their technologies work in capturing and removing carbon from the atmosphere, scaling them up remains unproven and carries a major risk as climate experts noted. 

Yet, the massive investments poured into their innovative models and technologies speak of confidence in technology deployment and scalability.

In summary, here are the carbon removal-focused funded startups rounded on the list. 

carbon removal funded startupsThe surge of innovative startups in the carbon removal sector reflects a growing commitment to combat climate change by deploying practical solutions to store carbon across diverse environments. While the scalability of these technologies remains a concern, the significant investments flowing into these ventures underscore a growing confidence in their pivotal role in mitigating the effects of too much carbon in the air.

3 Important Things Happening in Hydrogen Right Now

Jennifer L
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3 Important Things Happening in Hydrogen Right Now

The potential of hydrogen as a clean source of energy is gaining momentum with major companies investing heavily in it and working to bring it to mainstream. Here are the three important things unfolding in the industry right now that’s worth knowing.

Duke Energy Corp. has unveiled plans to construct and operate a groundbreaking green hydrogen system at its DeBary Solar Power Plant in Florida, whereas First Hydrogen will showcase the unrivalled potential of hydrogen in powering vehicles. 

Meanwhile, the US Department of Energy’s laboratory cautioned that hydrogen blending in natural gas pipelines has limits due to leakage. They then suggested fixes to help pipeline operators determine which transmission line segments need modification or replacement.

Duke Unveils First-of-its-Kind Green Hydrogen System 

The energy giant said that this initiative will be the “nation’s first system capable of producing, storing and combusting 100% green hydrogen in a combustion turbine”. With construction commencing later this year, the system is expected to be fully operational by 2024.

The project will integrate solar energy to power two 1-MW electrolyzer units, producing oxygen and green hydrogen for safe storage and subsequent use in a combustion turbine. This system will be retrofitted to run on a natural gas/hydrogen blend or pure hydrogen using GE Vernova technology. 

This innovative endeavour reflects Duke Energy’s anticipation of hydrogen’s significant potential in achieving decarbonization across sectors of the US economy. It will also help the energy company in ensuring grid reliability amid the increasing integration of renewable energy sources. 

The initiative is a collaboration between Duke, GE Vernova, and Sargent & Lundy LLC, and is part of Duke’s comprehensive “Vision Florida” program. It comprises several cutting-edge projects such as microgrids, battery storage, and solar-plus-storage installations, with a project budget of $100 million. 

As the industry anticipates the economic viability of green hydrogen-fuelled power plants, the International Energy Agency’s recent reports emphasize the need for robust policy support and investment efforts. This is crucial to accelerate the adoption of low-carbon hydrogen production worldwide, with green hydrogen production playing a pivotal role.

The agency estimated that low-carbon hydrogen production could grow significantly by 2030, reaching 38 million metric tons per year. As for market size, estimates show global hydrogen generation could reach over $230 billion. 

Global Hydrogen Generation MarketOne particular company that’s making the first move to leverage such immense growth in hydrogen production is First Hydrogen Corp. 

Showcasing Hydrogen’s Unmatched Potential 

First Hydrogen (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) sells and leases next-generation hydrogen fuel cell powered commercial vehicles. They’re the exact type the Department of Energy is predicting to explode. 

The company’s demonstration vehicle, FCEV, became road legal, boasting a range of 500 km or more. And trial results beat that range with their FCEV clearing 630 km range in a test with SSE Plc.

Rivus, with 120,000 vehicles in their fleet, has also praised the unparalleled results in their analysis. First Hydrogen’s light and medium-sized hydrogen commercial vehicles can refuel in minutes, just like a gas-powered car.

With that, First Hydrogen had announced recently that it will host first-ever track event for its FCEV at the end of October on the track at HORIBA MIRA, UK. Invited participants will get hands-on access to the first-of-their-kind FCEV and the chance to drive them.

But the company is more than just delivering hydrogen-powered vehicles; it’s also planning to build its own hydrogen production.

First Hydrogen is among the many believing that hydrogen is becoming a star player in the transition to cleaner energy. Other companies also recognize this transformative shift and pioneer hydrogen blending projects in the U.S.

However, a DOE laboratory warned about one particular challenge that hydrogen blending faces. 

The Key Limitation of Hydrogen Blending

A study by the Argonne National Laboratory revealed that hydrogen’s tendency to worsen pipeline leakage could hinder the industry’s efforts to blend the clean fuel in natural gas transmission lines.  

  • Their modeling showed that introducing a 30% hydrogen blend in gas pipelines resulted in a 6% reduction in lifecycle GHG emissions. 

However, the research highlighted that blending could potentially increase the leakage from transmission lines, negating the upstream and downstream benefits. This is due to the differences in energy density between methane and hydrogen – H2 has ⅓ of CH4’s energy density.

That means increasing flow rates and pressure to carry hydrogen in pipes also increases methane leak rates.

hydrogen blending into natural gas pipeline
Source: DOE website

Senior scientist Amgad Elgowainy emphasized the challenges posed by increased flow rate and pressure during the October webinar hosted by the Energy Department to showcase the initial findings of its HyBlend initiative.

The National Renewable Energy Laboratory (NREL), contributing to the HyBlend program, devised a tool to help operators identify pipeline assets suitable for blending, pinpoint segments needing modifications, and estimate associated costs. 

To address the mismatches between maximum allowable operating pressure (MAOP) across pipeline segments, NREL proposed three solutions:

  1. Replace segments with appropriate material grade and wall thickness;
  2. Pipeline looping: installing pipes that operate parallel to existing segments that don’t align with H2 piping standard; and
  3. Add compressor stations between segments that don’t match the standard.

In a case study involving the Alliance Pipeline LP, NREL found that pipeline looping emerged as the most cost-effective method. Most remarkably, they also discovered that the capital and operating costs associated with modifying gas pipelines to transport hydrogen has a minimal impact on the delivered cost of energy.  

Duke Energy’s pioneering green hydrogen system and First Hydrogen’s unmatched hydrogen fuel cell vehicle solution signify a significant leap forward in the journey toward sustainability. However, the Department of Energy’s analysis underlines critical limitations and proposes vital solutions for effectively integrating hydrogen into existing natural gas infrastructure.

As the energy industry embraces the transformative power of clean hydrogen, strategic measures are crucial to ensure a smooth and efficient transition, balancing environmental benefits with infrastructure requirements.

First Hydrogen Track Day with Europe and UK’s Largest Companies

Jennifer L
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First Hydrogen Track Day with Europe and UK’s Largest Companies

First Hydrogen Corp. (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) announced further to its previous news that its first-ever track day will be held on October 31st at the HORIBA MIRA, UK. 

First Hydrogen is a Vancouver and London UK-based company focused on zero-emission vehicles, green hydrogen production and distribution. The company’s hydrogen-fuel-cell powered vehicles (FCEV) boasted a range of >630 km (400 miles), which is far more than the minimum range requirement for zero emission vehicle (ZEV) at 193 km only.

The vehicles have been trialed with energy company SSE Plc. and fleet management company Rivus. 

All attendees will get the chance to test drive the company’s FCEV and see its under-the-hood technology. Fortune Business Insights projected that the global EV market will grow from $500 billion in 2023 to nearly $1.8 billion by 2030. 

Attendees will include some of Europe’s and UK’s largest companies from various sectors, including parcel delivery, supermarkets, healthcare, leasing, utilities, and mining. 

As the company’s CEO said: “With the UK Government’s recent recognition of FCEV within its definition of ZEV, sales of the FCEVs will be included in production targets for ZEV.”

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

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UK Carbon Credit Scheme, ETS, Under Fire for Profitable Plant Closures

Jennifer L
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UK Carbon Credit Scheme, ETS, Under Fire for Profitable Plant Closures

A loophole in the UK Emissions Trading System (ETS), designed to reduce planet-warming emissions, allows companies to profit millions of dollars from unused carbon credits after closing factories, leading to concerns about the misuse of the government scheme. 

Notably, the closure of a fertilizer plant by US firm CF Industries in Cheshire resulted in a windfall of £32 million (over US$39M) from the sale of carbon credits. Several other companies, including Mitsubishi Chemical and Cemex, have also benefited from the said “loophole”, triggering calls for immediate regulatory changes.

The Controversy Surrounding UK ETS

Under the UK government carbon trading scheme, firms in the heavy industry are given a free allocation of emissions. This is to prevent UK businesses from being disadvantaged compared to their foreign peers operating in nations with weak climate policies. 

Same as the EU ETS, companies in the UK must buy credits if their carbon emissions surpass their allocation. If they have unused or excess credits, they can sell those in carbon markets at the end of the year. The scheme is considered as fundamental to the UK’s net zero strategy. 

Greenpeace’s Unearthed investigated the UK ETS. Their investigation found that the scheme allocated free carbon credits to companies that closed plants, thereby reducing their emissions. 

There’s no time limit as to when the companies can sell the credits. That means they can wait when carbon prices are high to sell the credits and earn profits from it. The price surged to £100/tonne last year.    

Unearthed particularly discovered that US fertilizer giant CF Industries received 630,000 carbon credits from shutting down two UK factories. The company first closed its plant in Ince last year, causing 350 job losses. 

  • The unused carbon credits gave CF Industries an income of £32 million by selling those credits under the UK ETS. The total worth of the credits stand at £49M, using the average UK carbon price from 2022 of £78/tonne.

Another company, Mitsubishi Chemical, has also shut down one of its plants in Billingham, Teesside this 2023. This caused over 200 people to lose their jobs. 

Production at one of the world’s biggest chemical plants stopped, causing a significant drop in the company’s emissions. The chemical plant emitted 182,000 tonnes of carbon in 2021, which dropped to only 6,000 in 2022 due to the closure. This leaves Mitsubishi with 155,000 free carbon allowances, which is worth about £12 million. 

The investigation also found that the UK Government has no way to recall the credits once they have been allocated.  

The issue has raised concerns among environmental campaigners about the prioritization of financial gains over environmental and social responsibilities. 

Calls for Regulatory Changes

With the growing outcry, policymakers called for an urgent solution to close the loophole in the UK carbon scheme. This loophole gives companies that reduce emissions by closing plants the opportunity to earn millions from trading carbon credits.

Labour MP Alex Cunningham, in particular, emphasized the need to prevent companies from capitalizing on emissions reductions at the expense of local jobs and communities. 

  • The questionable practice has sparked debates about the effectiveness of market-based mechanisms in curbing emissions. 

According to a carbon market expert at Carbon Market Watch, under the current UK ETS rules, a factory that shuts down on January 2nd will get free emissions allowances for the entire year. The government can’t get those credits back in any way. 

Remarking on this scheme, the expert further noted that allocating carbon credits to ghost plants “doesn’t serve climate goals or any economic purpose.”

As per Unearthed, the UK government is currently reviewing its free carbon allowance rules. However, any proposed changes to the rules will be accommodated by 2026. 

Whenever a firm stops operations or leaves the country, their carbon allowances won’t be distributed in the next year.  

For the proponents of the carbon trading scheme, they argued that it helps the country in meeting its ambitious climate goals. It was able to cut emissions by over 48% since 1990, quicker than any other G7 nation. 

A spokesman for the Department for Energy Security and Net Zero commented that:

“As previously announced, we are reviewing free allocation rules to make the system as robust as it can be while continuing to support UK businesses through the transition to net zero.”

In theory, carbon credit markets are designed to incentivize initiatives that reduce harmful emissions. Each credit represents a tonne of removed or avoided emissions. 

While there are some issues surrounding the validity and quality of the credits in carbon markets, studies have shown that they helped major companies cut emissions. High quality credits meet a set of criteria, validating their emission reduction claims. 

The UK’s emissions trading system has come under scrutiny as companies profit from the closure of factories and the resulting unused carbon credits. The controversy has led to demands for immediate regulatory amendments to prevent the misuse of the government carbon credit scheme meant to help achieve net zero emissions.

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