Top 4 Carbon Stocks To Watch In 2024

Jennifer L
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Top 4 Carbon Stocks To Watch In 2024
After a record-breaking price run in the compliance and voluntary markets in 2021, many carbon stocks reached large market caps. With a softening of carbon prices across the board last year, however, some companies have retreated to interesting valuations.Here’s how carbon prices performed last year…carbon prices in 2022

Why Carbon Stocks?

Carbon stocks are an attractive option for investors looking to support the transition to a low-carbon economy and mitigate the effects of climate change. 

Companies from Amazon to Netflix and Xerox – and everyone in between – are releasing plans to disclose and reduce their carbon footprint. Most companies are targeting zero net carbon emissions (“net zero”) by the year 2050. But some have chosen much more aggressive targets.

Tech giants Apple and Microsoft, for instance, are committing to net zero by 2030. For companies like these, carbon credits and offsets as well as sequestration and energy reduction play a key role in their plans. 

Let’s take a look at some carbon stocks in 2023 to put on your radar.

1. Carbon Streaming Corporation (NETZ.NEO and OFSTF.OTC)

carbon streaming stocks 2022

Carbon Streaming was one of the first publicly traded carbon stocks focused on offset credits. Being one of the first has allowed the company to become an early mover in the carbon credit space. It also enabled the firm to secure several sources of extremely high-quality carbon credits. 

Carbon Streaming trades on the NEO exchange in Canada, as well as the OTC market in the U.S. The company intends to list on the NASDAQ in the near future.

The company has been picked up by analysts at TD, Bank of Nova Scotia, BMO, and H.C. Wainwright, among other institutions, with an average price target of around US$4.50.

What are streaming and royalty companies?

  • Streaming and royalty companies are businesses that provide financing for the development of projects.
  • In exchange for providing financing, these companies receive a stream of future cash flows from the project, which is called a “stream” or “royalty.”
  • Streaming and royalty companies can be a good option for investors who want to support the transition to a low-carbon economy without having to bear the full financial risk of developing a project or asset.

These companies often have a portfolio of projects in different stages of development, providing diversification and reducing the risk for investors. 

In total NETZ has a portfolio of 21 projects in 12 different countries around the world.

The Rimba Raya Biodiversity Project in Indonesia is one of NETZ’s flagship projects. It’s one of the world’s largest REDD+ projects and addresses all 17 of the UN Sustainable Development Goals.

Carbon Streaming is a leveraged play on the demand and the value of carbon credits increasing in the voluntary carbon market.

Carbon Streaming Corp.’s Highlights:

  1. Carbon credits expected to be issued from 10 or more carbon projects by the end of 2023E,
  2. Currently trading at a significant discount to net asset value,
  3. Management team has executed >$2 billion of streaming agreements and includes leading experts in the carbon markets,
  4. The company expects moderate and then rapid growth of credits in the coming years, peaking near 20 million credits per year by 2027.

growing carbon credits volume

NETZ is an option for investors with a high-risk tolerance. The company was a the first of its kind in the carbon markets, and its unique business model could help it outperform the competition. 

It’s worth checking the company presentation out for those interested in carbon credit stocks and investments.

2. DevvStream (DESG.NEO)

DevvStream is a new company that provides money for green projects in exchange for carbon credit rights: a potentially lucrative revenue model, as we established before. 

  • In addition to these rights, DevvStream manages the carbon credits generated by using an advanced blockchain-based ESG platform.

The primary business of Devvio, which is DevvStream’s parent company, is its proprietary blockchain-based ESG platform. 

As a B2B service, Devvio provides its corporate clients with a framework for global-scale enterprise management.

DevvESG offers regulatory-compliant transaction management and tracks assets for maintenance. It also has record keeping, automation, and ESG reporting capabilities. All of this is done transparently.

It was built with smart contracts through its proprietary blockchain. And that’s for a fraction of the transaction cost of other blockchain (i.e. 1/1,000,000th the energy cost of Ethereum). 

On top of this, Devvio’s platform is highly scalable. It can allow for over 8 million transactions per second. For reference, Visa only sees around 1,700 transactions per second worldwide.

And as Devvio is the majority owner of DevvStream, the latter is fully ready to make good use of its infrastructure.

Total ESG assets under management have more than tripled in the past decade, and analysts estimate that number will hit $41 trillion by the end of this year.

  • Globally, one in every three dollars of managed money belong to ESG-related assets.

On top of this, carbon markets are set to grow between 15x and 100x by 2030.

Put together, this gives DevvStream access to an extremely high-growth market which it can target thanks to the Devvio technology. Here’s a snapshot from their investor deck:

devvstream investor deck snapshot

DevvStream’s Highlights:

What sets DevvStream apart from its competitors are its partnerships and the ecosystem that they play in both the voluntary and compliance markets.

For instance, through its partnership with its parent company, DevvStream gets direct access to all of the companies in Devvio’s ESG corporate client base who happen to be looking to buy carbon credits.

  • They also get the exclusive right to manage the data used to generate the carbon credits from their streaming agreements on Devvio’s blockchain platform for transparency and recordkeeping purposes. 

This gives them a major advantage over traditional carbon credits.

In addition to having access to all of Devvio’s corporate clients, DevvStream can also choose to sell its carbon credits on its partner Xpansiv’s CBL market.

Xpansiv is the largest voluntary carbon credit marketplace in the world, currently hosting over 90% of all transactions worldwide. Companies with major net-zero commitments like Chevron, Shell, Walmart, and Goldman Sachs – all use Xpansiv’s trading platform. 

Xpansiv and Devvio make the perfect partners for DevvStream. The latter provides both a blockchain platform for credits as well as access to an ESG customer base. And the former offers a secondary market for any of DevvStream’s excess credits.

DevvStream is another good option for investors with a larger appetite for risk. The company can leverage its unique partnerships to differentiate itself from its competitors.

You can learn more about DevvStream at their corporate page here.

3. Base Carbon (BCBN.NEO)

base carbon stocks 2022

Like Carbon Streaming Corp., Base Carbon is also involved in financing carbon projects that generate voluntary carbon credits.

Base has two executed project agreements estimated to generate a total of 34 million carbon credits. This amounts to about 3 million tonnes per year at full production.

base carbon credit projects

The company has committed USD$29.6 million for projects in Rwanda and Vietnam.

Project #1: Vietnam Household Devices

  • 51.4% of Vietnam’s primary household energy is generated from solid fuel combusted within open fires or inefficient cookstoves for cooking or water sanitization.
  • Base Carbon will fund the manufacturing and distribution of 850,000 fuel-efficient cookstoves and 364,000 safe-drinking water purifiers to families in rural areas of Vietnam.

Project #2: Rwanda Cookstoves

  • Households in Rwanda rely nearly entirely on biomass for cooking and related purposes resulting in inefficiencies in fuel use and negative health impacts.
  • Base aims to facilitate 250,000 fuel-efficient cookstoves as part of the Tubeho Neza project, distributed to rural families, reducing consumption of wood by at least 71%

Base Carbon’s Highlights:

The projected growth of the voluntary carbon market will serve as an excellent catalyst for Base, which already has a steady source of carbon credit production locked in for the next decade.

Base has a healthy balance sheet with a strong cash position, and management is continuing to work on sourcing other high-quality carbon credit projects for the company. For instance, Base recently partnered with the Danish Red Cross to develop blue carbon projects in Southeast Asia.

In addition, the company boasts management, advisors and key insider ownership at 36.4% of shares outstanding. And institutional shareholders own another 27.7%. Base is a carbon stock where key players have a high degree of “skin in the game”.

Base is yet another option for investors with high risk tolerance. 

Its small market cap and thin volume could provide a fast-moving tailwind with any rise in carbon credit prices.

4. Brookfield Renewable Partners (BEP)

BEP carbon stocks 2022

Rounding out our list is Brookfield Renewable Partners, one of the world’s largest publicly traded renewable energy companies.

One of the key things that sets Brookfield apart from many similar companies in the space is the fact that BEP is a pure-play renewable company.

What that means is that the entirety of BEP’s portfolio consists solely of renewable sources of power generation. This is unlike many other power companies whose portfolios often also include traditional fossil fuel power plants.

This focus on clean energy has made BEP a world leader in renewable energy and decarbonization technologies. Plus, they have projects all over the world in both Americas, Europe, and Asia.

Currently, BEP owns 24 gigawatts of power generating assets including 229 hydroelectric plants, 105 wind farms, 88 solar power plants and a number of other sustainable & distributed energy solutions.

BEP assets 2022

BEP’s management team isn’t content to sit on their laurels, however. They have an extensive development pipeline in place, with 11 GW of power capacity. And that’s a 46% increase over what they have now – secured over the next three years.

Brookfield Renewable Partners’ Highlights:

Simply put, BEP is a well-established major company with a proven and stable business model, a strong balance sheet and tons of cash flow.

Over the past 5 years, BEP has averaged just over 5% dividend yield. Since their inception over two decades ago, their distributions have grown by an average of 6% each year. At the same time, the stock itself has seen average returns of 16% a year – an outstanding track record.

Plans and capital are already in place for BEP to grow their operating capacity by 46% over the next 3 years. If the company can fully execute their development pipeline, they’ll be able to multiply their power generation portfolio by 5x. It also means offsetting as much carbon each year as the entire country of Sweden produces.

On top of this, many companies right now are looking to reduce their reliance on carbon-emitting sources of electricity to hit their net zero targets. BEP, with their 100% carbon-free renewable energy portfolio, perfectly fits the bill for such companies.

For investors with a lower appetite for risk that still want exposure to the carbon markets, BEP is a great company to keep your eyes on. 

See Similar Article: Top 3 Private Carbon Companies to Watch 

Carbon Stocks Are Grabbing Investors’ Attention in 2024

As more and more public companies declare their net-zero ambitions and disclose their carbon emissions, responsible investing is becoming a hot topic in financial markets. Big money is pouring into renewable energy and offsetting emissions using carbon credits.

Meta, Apple, and Netflix are among the tech giants leading the charge towards net-zero targets by 2030. Meanwhile, major mining companies like Barrick and Newmont, as well as energy giants like Saudi Aramco, Exxon and Shell, are also making similar commitments.

These developments will likely increase investor interest in all things carbon-related in 2024 and beyond. As net zero targets for 2030 draw closer, we can expect this trend to accelerate even further.

Carbon stocks could prove as a valuable addition to an investor’s portfolio as the world heads towards net zero targets.

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

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

Please read our Full RISKS and DISCLOSURE here.

Abu Dhabi National Oil Invests $15B in Decarbonization Projects

Jennifer L
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Abu Dhabi National Oil Invests $15B in Decarbonization Projects

Abu Dhabi National Oil Company (ADNOC) committed a $15 billion investment in low-carbon projects to curb operations emissions and meet decarbonization goals.

The United Arab Emirates oil and gas giant has unveiled its multi-year action plan, allocating $15 billion for various low-carbon projects across its diversified value chain by the end of the decade.

The UAE has committed over $165 billion to transition to clean energy. It’s the first Persian Gulf state to aim for 2050 net zero emissions.

Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, said:

“Cementing our strong track record of responsible and reliable energy production, ADNOC will fast-track significant investments into landmark clean energy, low-carbon and decarbonization technology projects. As we continue to future-proof our business, we invite technology and industry leaders to partner with us, to collectively drive real and meaningful action that embraces the energy transition.”

ADNOC Decarbonization Goals

As part of its sustainability goals, ADNOC plans to cut its carbon emissions intensity by 25% by 2030. This will strengthen its position as one of the least carbon-intensive oil and gas companies in the world.

  • ADNOC ranks in the top 5 lowest emitters in the oil and gas industry. It also has one of the lowest methane intensities (0.01%).

The UAE giant highlighted that its decarbonization goals build on its “strong track record as a leading lower-carbon intensity energy producer”. And that record includes these actions:

  • use of zero-carbon grid power,
  • committed to zero flaring as part of routine operations, and
  • deployed the UAE’s first carbon capture project at scale – Al Reyadah.

ADNOC Al Reyadah CCS project

Middle East oil and gas firms are investing billions of dollars to scale up their hydrocarbon production capacities. But they’re also preparing to invest heavily in energy transition initiatives such as hydrogen and carbon capture and storage (CCS) projects.

The $15 Billion Projects

ADNOC said that throughout 2023, it will reveal a suite of new projects and initiatives to decarbonize operations. The company’s $15 billion investment includes:

  • A first-of-its-kind CCS project
  • Innovative carbon removal technologies
  • New, cleaner energy solutions (hydrogen and renewables)
  • Further electrification of operations
  • Measures to build on its policy of zero routine gas flaring
  • Strengthening international partnerships

The energy firm also said that it will apply “a rigorous commercial and sustainability assessment to ensure that each project delivers lasting, tangible impact”.

In December last year, ADNOC set up a new business called “Low Carbon Solutions & International Growth“. It’s in line with its goal to reach Scope 1 and 2 net zero emissions by 2050.

The new business will focus on CCS, renewables, and clean hydrogen. It will also help the company expand internationally in gas, liquefied natural gas, and chemicals.

UAE’s CCS Expansion Plan

Building on its Al Reyadah facility, which can capture up to 800,000 tonnes of CO2 annually, ADNOC also plans to deploy technologies to capture, store, and absorb CO2.

The company is also working on its next major decarbonization investment to curb emissions from its Habshan gas processing facility.

With ADNOC’s planned expansion of its CCS capacity to 5 million tonnes per annum by 2030, the UAE will be “firmly established as a worldwide hub for carbon capture expertise and innovation,” the firm stated.

  • Such CCS expansion represents an over 500% increase in the company’s carbon capture capacity.

ADNOC added that this plan seeks to support the scale-up of hydrogen and lower-carbon ammonia production in Abu Dhabi. They even plan to scale blue ammonia production capacity to 1 million tonnes per year at its Taziz facility.

UAE’s major energy player also confirmed that it has already delivered test cargoes of low-carbon ammonia to Europe and Asia.

The company’s expansion of its new energy portfolio will be possible via its stake in Masdar, the region’s clean energy powerhouse. ADNOC said Masdar is leading the UAE to develop a global position in green hydrogen.

British Airways Gives Flyers Option to Buy Carbon Credits

Jennifer L
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British Airways Gives Flyers Option to Buy Carbon Credits

British Airways introduced an option to all passengers who want to offset their flight emissions by buying carbon credits from a 3rd-party company.

British Airways added CO2 removal to its menu of carbon offsetting options via its upgraded climate platform, CO2llaborate. It allows passengers to tackle their carbon emissions when flying.

Cutting Carbon Emissions

The major UK airline already offsets the carbon footprint on all its flights within the country. The new initiative is part of the airline’s plan to reduce carbon emissions by 50% by 2050.

Not only does this give flyers a chance to calculate and address their flight emissions, but they can now buy carbon removal credits directly from their onboard aircraft seat.

Director of sustainability, Carrie Harris said:

“In 2019, when we committed to achieving net zero carbon emissions by 2050, we identified that a vital way to meet this goal would be by using carbon removals and we currently expect that these could contribute up to a third of our total action.”

The airline has already made the removal credits available to customers through its website and onboard flights.

British Airways’ move came days after it revealed its plans to buy 10 more aircraft from Boeing and Airbus. But some critics say that taking more flights can only worsen climate change.

Still, the airline company maintains that it’s taking actions to reduce its carbon emissions and cut its reliance on fossil fuels. These include improving operational efficiency, investing in more fuel-efficient aircraft, and scaling up the availability of sustainable aviation fuel (SAF).

Now the airline seeks to help hasten the scale-up of carbon removals solutions. And so, it now allows passengers to choose between a combination of SAF and either carbon offsets or carbon removals as a means of slashing their CO2 footprint.

CO2llaborate: Carbon Offsets & SAF vs. Carbon Removals & SAF

Carbon offsets come from projects that remove, avoid, or reduce emissions. On the other hand, carbon removals refer to projects that remove carbon.

In other words, when flyers choose carbon removals, they’re supporting projects (e.g., nature-based solutions or technologies) that withdraw carbon from the air and then store the carbon for the medium to long term. But if they pick carbon offsetting by buying carbon credits, they may be supporting a project that removes or reduces or avoids carbon.

British Airways’ flight emission calculation tool uses a slider that selects the amount of SAF and carbon removals, or SAF and carbon offsets. Flyers are also given a direct link where to buy carbon credits.

british airways co2llaborate platform

Here’s a quick overview of the airline’s process to show the difference between these two options, with an example of a flight. It’s a round trip between London and India.

A flyer can choose the most common ratio of 10% SAF and 90% carbon removals.

london to india CO2 removal 90%

By comparison, going for more SAF results in a higher price.

london to india CO2 removal 50%

Likewise, flyers can set any desired ratio of SAF to carbon offsets. Again, more SAF ratio will bring the total price higher. But overall, carbon offsets remain cheaper than carbon removals.

carbon offsets 90%

carbon offsets 50%

British Airways’ new carbon removal program will initially be available for flights from London Heathrow Airport to New York, Los Angeles, San Francisco, Chicago, Miami, Hong Kong and Mumbai.

British Airways and Carbon Removal

Flyers can opt for a blend of two independently certified carbon removal projects on the CO2llaborate platform:

  1. The Blue Carbon Mangrove Project – reforestation and revegetation of about 225,000 hectares of degraded tidal wetlands in Pakistan’s Indus Delta.
  2. The Freres Biochar Project – based in Oregon, ensuring that the company’s biomass power production plant produce biochar (charcoal-like material that locks away carbon)

More CO2 removal projects will be added. The carbon offsetting option allows passengers to offset personal emissions by planting trees on their behalf in Brazil’s rainforests.

The new carbon removal program is available to all British Airways customers who fly on a long-haul route. It can be from any airport in Europe to any airport outside the continent.

2023 is the Year for Green Hydrogen, Here’s How

Jennifer L
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2023 is the Year for Green Hydrogen, Here’s How

Government subsidy programs in 2023 will help ensure that the global green hydrogen industry will transform from a hot table topic to a large-scale renewable power source.

Hydrogen is leading the debate on clean energy transitions, offering many uses but more so in providing renewable power. Green hydrogen, in particular, gets a lot of traction and is hailed as the energy of the future.

Meeting such a prediction needs trillions of dollars by 2050 – about $15 trillion or $800 billion of investments a year.

Major oil and power firms aim to bring huge investments to make green H2 a reality. Some of them are Shell, Adani, TotalEnergies, and ACWA Power.

While the private sector has a big role in making green H2 the future energy, the public sector also shares the same footing. A wave of government subsidies, some are already underway while others are still plans, will support the development of green hydrogen projects.

The most significant support program is most likely the U.S. hydrogen tax credits. But similar other programs are also available in the EU, UK, Germany, Canada, and India.

Several large-scale green H2 projects will reach their final investment decisions in 2023 or begin construction by the year’s end. Yet, to date, only 270 MW of green hydrogen projects are operating.

So how do all the green hydrogen subsidy programs stand this 2023?

Biggest Support for Green H2

The Inflation Reduction Act, signed into law in August 2022, offers tax credits of up to $3/kg to clean hydrogen producers for the first 10 years of a project’s lifetime. The amount of credit depends on the carbon emissions lifecycle of the project.

  • The tax credit can make green H2 cheaper to produce than grey hydrogen from unabated fossil fuels.

Though the US government is still revising the final details of the subsidy scheme, they’ll be up for release in the coming months. But complaints against the Act – for alleged violations of international trade rules – from affected nations may cause a bit of delay.

For instance, the EU, Norway, and Australia objected to the Act’s preferential treatment to US-made products.

Still, the US remains to be the biggest market for green hydrogen production in 2023. The tax credits are one reason for that. Plus, the $9.5 billion federal cash subsidy provided in the Infrastructure Investment and Jobs Act for clean H2 development.

The program includes $8 billion to fund at least 4 regional clean hydrogen hubs. The law defines the hubs as:

“networks of clean hydrogen producers, potential clean hydrogen consumers, and connective infrastructure located in close proximity”.

The goal is for those hubs to form a national clean hydrogen economy. It also pushes to cut the cost of green hydrogen to less than $2/kg by 2026 (from more than $5/kg today).

Estimates show that the cost of green H2 made through water electrolysis will decrease by 2050 to even less than blue H2.

Cost of Green Hydrogen by 2050

green hydrogen cost 2050

Global Subsidies for Green Hydrogen

EU’s CCfD

The European Commission revealed its Carbon Contracts for Difference (CCfD) subsidies for green hydrogen through its Innovation Fund. The program supports a complete switch from natural gas to renewables in producing H2.

Under the CCfD scheme, the EU governments will pay end users, not the producers, a certain amount for not emitting carbon. And that includes the money saved from not paying a carbon price and a top-up subsidy to hit the strike price (cost of producing H2) as detailed in the CCfD.

The program aims to help the bloc achieve its goal of producing 10 million tonnes of green H2 by 2030 and importing another 10 MT by the same period.

The final details of this EU’s green hydrogen subsidy were due last year, but disagreement from the EP delayed it. A new draft proposal needs final agreement by all member states and the EP.

UK’s CfD

Same with the EU, the UK has also devised its own Contracts for Difference (CfD) subsidy scheme for clean hydrogen by the end of 2022. It will support up to 1 GW of green hydrogen projects with two rounds in 2023 and 2024. They have to be under construction or operational by 2025.

UK’s CfD also needs finalization, but it will help lower the price of making green H2 and scale it up. The government will shortlist green hydrogen developers showing interest in its subsidy program in early 2023.

Meanwhile, the Scottish government announced in December last year its $112 million Green Hydrogen Fund, calling for H2 project proposals early this year. The goal is to install 5GW of clean H2 by 2030 and 25GW by 2045.

Germany, Canada, and India

Germany’s H2Global green hydrogen subsidy program (for H2 imported into the EU only) is, by far, the most advanced scheme. It is a double-auction scheme: one for green ammonia and the other for green methanol and H2-based sustainable aviation fuels. It’s supported by an initial €900m ($959m) funding.

A special firm owned by the German government, the Hydrogen Intermediary Network Company (HintCo), will buy green hydrogen or its derivatives from international producers. Then HintCo can sell it to European customers.

  • And any cost difference between the purchase agreements and supply contracts will be made up from the government subsidy.

Germany aims to complete the auctions by mid-2023 but won’t launch the supply auctions until 2024-25.

For Canada, the scheme works differently from European models.

The Canadian government will introduce in the Spring a new tax credit of as much as 40% for H2 production. This program mirrors the US H2 tax credit system in which the credit depends on various factors. It will run until 2030 but is up for public consultation to finalize details.

While for the Indian government, it plans to mandate the use of green H2 in industrial sectors such as steel, oil refining, fertilizer, and cement production.

Part of that goal is a $2 billion incentive program that will most likely be officially revealed in April. This will make the country another major green hydrogen player in 2023.

USPS Unveils Plans for Electric Delivery Truck Fleet

Jennifer L
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USPS Unveils Plans for Electric Delivery Truck Fleet

The U.S. Postal Service (USPS) recently announced that it will invest $10 billion for new electric delivery trucks.

USPS is set to buy around 66,000 electric trucks for its mail delivery by 2028. Depending on the success of this deal, the postal agency could potentially make all their delivery trucks electric. This number makes up roughly 25% of its current number of delivery trucks.

At present, USPS has 217,000 vehicles in its fleet. A lot of these are over decades old and contain outdated features. As most of these vehicles will soon need replacement, this would be the ideal time to switch to electric delivery trucks. 

The majority of the electric vehicles it will buy will come from Oshkosh Corp. Oshkosh is a company that specializes in manufacturing access equipment and specialty trucks.

USPS will buy 60,000 vehicles from Oshkosh. 45,000 of that number would be electric trucks. Upon the news of this contract, shares of Oshkosh went up by 2.7%. 

USPS will also buy 46,000 more vehicles from other mainstream companies. 21,000 of that number will be electric. 

The current fleet of trucks is around 30 years old and lack basic features such as air bags and air conditioning. The new mix of electric trucks are set to almost exclusively replace these older trucks.

Postmaster General Louis DeJoy also revealed plans to modify facilities to accept the new electric trucks.

Although it has plans to go all electric in the future, USPS still has to buy some trucks with internal combustion engines at the moment. This is because almost half of its current fleet are on long distance routes, delivering mail between different states. 

  • USPS will spend $9.6 billion on the vehicles and associated infrastructure. This includes $3 billion from the Inflation Reduction Act.

The Biden administration is keen to invest in electrification for state sectors. Earlier this year, the US Senate introduced a new bill to electrify non-tactical vehicles in the US military. 

Global Trend for Electric Delivery Trucks

Other logistics and delivery service companies have also revealed plans to turn delivery vehicles electric.

FedEx, for example, expects to be fully carbon neutral by 2040. It will only buy electric delivery vehicles from 2030 onwards. Its competitor, UPS, has plans to be carbon neutral by 2050. By 2025, it plans for 40% of its fuel consumption to come from alternative fuels. 

Similar net-zero commitments have been made by the UK government for its postal services. Earlier this year, it unveiled its net zero strategy for the Royal Mail to reduce its carbon emissions. Royal Mail plans to be net zero by 2040. 

Royal Mail has plans to increase its fleet of electric vans to 5,500 by the spring of 2023 and invest $15 million for charging infrastructure across the country.

Top 5 Carbon Crypto Companies to Watch in 2024

Jennifer L
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0
Top 5 Carbon Crypto Companies to Watch in 2024
Right now, climate change has become one of the most critical issues the world is facing. It affects everybody living on this planet and could have serious lasting consequences for all of humanity if not addressed. That’s why carbon credits have been on the radar in all sectors – not just the obvious ones like energy, agriculture, and forestry.
And one of those industries is blockchain technology.

The strengths of blockchain technology, such as its transparency, secure record-keeping, and decentralization are advantages for carbon credits.

That’s why many carbon crypto companies are already in the works. There’s a massive opportunity here for two of the biggest current investment trends to develop their synergies.

With that said, let’s take a look at what some of the most promising carbon crypto companies for 2024 are.

1. KlimaDAO

Topping our list is one of the first big movers in the crypto carbon space: KlimaDAO, also known by their coin KLIMA. Its goal is to accelerate the speed at which the price of emitting carbon is going up. And that’s by buying and retiring carbon offsets.

How are they doing this?

First, carbon offset credits are purchased from Verra’s Verified Carbon Standard registry, which ensures their quality. These credits are retired, and then minted as tokens via the Toucan Protocol (more on this later). These tokens are known as Base Carbon Tonnes (BCTs).

  • Each BCT represents one tonne of carbon removed from the atmosphere.

Each KLIMA coin is backed by at least one Base Carbon Tonnes. Owners of KLIMA coins are incentivized to grow their share of the coin through bonding more BCT or staking their holdings for yield.

There’s a lot to unpack when it comes to KlimaDAO, but the impact it’s had so far is undeniable. Last year, KlimaDAO bought up 2% of the entire voluntary carbon market. And as of the time of writing, KlimaDAO has retired 17.3 million tonnes of carbon offsets:

Klimadao carbon removed

That’s as much as a small country like Croatia emits each year.

While KlimaDAO provides a price floor for the voluntary carbon markets, its success will not be decided by how well the voluntary carbon markets do. As with all crypto projects, the most important factor is whether or not people actually want to adopt it.

KlimaDAO is still in a growth phase, so to speak, as it seeks to expand its treasury and provide a more robust supply. The coin’s developers don’t expect a stable price to be reached until mid-century.

Still, KLIMA has been deployed for over a year now and has already made a big splash on the carbon markets. Many other carbon crypto projects are still stuck in the development phase. KlimaDAO may have an ambitious goal, but they’ve shown that their business model has legs to stand on.

2. Toucan Protocol

As mentioned in our discussion about KlimaDAO earlier, the Toucan Protocol isn’t a coin in and of itself. What it is, instead, is the infrastructure that helps crypto carbon projects like KlimaDAO exist.

Simply put, Toucan is a bridging protocol that turns real-life carbon credits into tokens that can actually be used on a blockchain. These tokens, referred to as Tokenized CO2 or TCO2, represent retired but yet unclaimed carbon offsets.

They’re retired from their source registry to prevent double counting, but haven’t actually been claimed against any emissions yet. And so still represent a specific amount of verified carbon offsets.

  • TCO2s are semi-fungible – they’re not all identical, as information about each credit’s origin is directly encoded on-chain. Still, similar credits can be fractionalized and grouped into carbon pools, where they can be traded.

toucan in numbers

The largest and most well-known carbon pool utilizing the Toucan Protocol would be the Base Carbon Tonne (BCT) used by KlimaDAO.

The bulk of carbon credits bridged by Toucan has gone to the BCT pool comprised of Ethereum Request for Comment 20 (ERC-20) tokens.

These ERC-20 tokens can be directly integrated into other DeFi applications.

Toucan was the first platform to allow for the tokenization of carbon credits, and they have several partners besides just KlimaDAO. They have a first-mover advantage in this space and have created their own in-house token, the Nature Carbon Tonne (NCT) for carbon credit buyers.

With a number of other top carbon crypto companies choosing to build on Toucan’s infrastructure instead of developing their own, there’s much potential for future growth here.

3. Moss

Similar to Toucan, Moss is all about the tokenization of carbon related real life assets.

A Brazilian company, Moss has their own token, the MCO2 token, which is created by tokenizing verified carbon credits from sources like Verra. Each MCO2 token represents one tonne of carbon offset, with a particular focus on credits generated from forest preservation projects in the Amazon rainforest.

With its token, Moss is focused on providing a platform for companies and individuals interested in offsetting their carbon emissions to purchase high-quality, fully transparent carbon credits.

Moss impact

  • Moss also has a secondary Amazon Forest NFT project.

Moss first bought up several parcels of land in the Amazon rainforest, split them into 1-hectare lots, and then sold them as NFTs.

The funds from each NFT sale have gone towards a 30-year preservation fund that will cover the costs of activities like patrolling and satellite imagery to protect the area.

The end goal of this project would be to create a “green wall” around part of the Amazon rainforest to block deforestation efforts. Moss has sold out three sets of these NFTs, and more releases are on the way.

With several Brazilian carbon credit contracts locked in for MCO2 token supply in addition to their sold-out NFT series, Moss is another one of the few carbon related cryptos firms that’s actually deployed a successful solution to the markets.

4. Nori

A carbon removal marketplace that focuses on coordinating transactions between small farm-based suppliers and carbon credit buyers, Nori hasn’t actually launched their token yet. Instead, Nori understandably chose to begin by ensuring that their business model was sound and started with a pilot program.

By partnering with U.S. farmers practicing regenerative agriculture, Nori has secured a number of domestic suppliers of high-quality carbon credits. Some of these suppliers are shown below:

Nori carbon credit suppliers

The top layer of soil is actually one of mother nature’s largest natural carbon sinks, containing three times as much carbon as the entire atmosphere.

However, human farming has been causing carbon to be released from the soil much faster than the rate at which it’s being replaced.

This soil carbon loss is what Nori targets, with their focus on regenerative farming projects. The end goal of each project is a form of carbon sequestration known as soil carbon storage, which produces carbon credits.

  • These carbon credits make up Nori’s primary asset, the Nori Carbon Removal Tonne (NRT).

Each NRT represents one tonne of removed CO2, stored for a minimum of ten years and is independently verified and audited to ensure each NRT truly represents one tonne of carbon sequestered properly.

Moving forward, Nori plans not only to expand their supply partnerships to international farms, but also intends to tokenize their NRTs into NORI tokens.

These NORI tokens will be deployed on the sustainable Polygon network. This creates an accessible secondary market for Nori’s NRTs with all the associated benefits of being on a blockchain.

Polygon is a leading Layer 2 Ethereum solution and is currently the 10th largest cryptocurrency by market capitalization.

Polygon partnered with KlimaDAO early last year to go carbon negative by purchasing – these names might be familiar – BCT and MCO2 tokens.

With their business model proven by their pilot program, Nori has partnered with Bayer AG. It’s one of the largest pharmaceutical and agricultural companies in the world, to scale up their NRT supply.

  • The initial tranche of their agreement, valued at $14.4 million, covers 400,000 acres of farmland.

Nori plans to deploy their token later this year. This launch, coupled with their Bayer partnership, made 2023 a very exciting year for Nori.

5. DevvStream

Rounding out our list of crypto carbon companies to watch is one that’s a bit less strongly focused on crypto.

DevvStream, at first glance, is a carbon streaming company that provides capital for carbon credit projects in exchange for a share of production down the road.

DevvStream carbon streaming process

Where the crypto comes in, however, is thanks to DevvStream’s relationship with its parent company, Devvio.

Devvio has a proprietary blockchain-based ESG platform that DevvStream uses to put the carbon credits it gets from its streaming agreements on-chain.

  • Once on the platform, DevvStream’s carbon credits gain many of the benefits that other carbon token projects enjoy.

In addition to this, DevvStream gets priority access to Devvio’s commercial clientele who are already using the latter’s ESG platform. If any of these customers happen to be looking for carbon credits, DevvStream’s will be the first they check.

On top of this, DevvStream has also partnered with the largest voluntary carbon exchange in the world, Xpansiv. The goal is to provide additional liquidity for its carbon credits.

With its access to Devvio’s blockchain ESG platform and clients, as well as Xpansiv’s carbon credit exchange, DevvStream is uniquely positioned among the top carbon crypto companies to make the most of the carbon credits it’s putting on the blockchain.

Are Carbon Offsets a Scam? Key Points to Consider

Jennifer L
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Are Carbon Offsets a Scam? Key Points to Consider

The world’s acceleration to corporate Net Zero has come under fire. Some critics argue that carbon offsets are a scam, but there are several key points to consider in the debate. 

  • Firstly, carbon offsets are a legitimate and effective way for individuals and companies to reduce their carbon footprint and mitigate their contribution to climate change.
  • Secondly, carbon offset programs are regulated by third-party organizations that verify the validity and effectiveness of the offsets purchased. 
  • Lastly, carbon offset projects often provide additional benefits beyond reducing carbon emissions, such as supporting renewable energy development and improving local economies.

By definition, carbon offsets are valuable certificates that are issued when carbon is removed or prevented from entering the atmosphere. That’s done through carbon removal technologies, by pumping CO2 into rocks, or even by planting trees.

In fact, producing and selling carbon offsets is becoming a lucrative business in the U.S., and first movers have a big advantage. Small farmers, ranchers, and landowners can earn extra income by optimizing their operations to produce carbon offsets.

Carbon Offset Market Size

When checking for legitimacy of markets, following capital flows and transactions provides clues. There are two main emissions markets – the compliance carbon market and the voluntary market. 

  • The transaction volume in the compliance market totaled $851 billion in 2021, while the voluntary market grew to $2 billion the same year.

types of carbon markets

Source: Global Carbon Credit Corp, Corporate Presentation August 2022

The Voluntary Carbon Market is one of the fastest growing markets in global capital. It has grown from nearly $300 million in 2019 to an estimated $1.8 billion in 2022.

voluntary carbon market growth

Corporate Footprint: Carbon Offsets and Net Zero Plans

The arguments that carbon offsets are a scam are not shared when looking at corporate net zero pledges. According to Katusa Research, the number of companies that publicly declared net zero targets reached 3,152 in November 2022.

corporate net zero targets

Companies like Netflix, for example, have excellent net zero and emissions reduction plans:

“By the close of 2022, Netflix will achieve net zero greenhouse gas emissions. To reach this goal, we are working towards reducing our internal emissions by 45% below 2019 levels by 2030”

There are many other global companies that disclosed their net zero targets and how to get there. UK’s Royal Mail, Stellantis, Pfizer, Levi’s, Del Monte Foods, among many others, have pledged to hit net zero.

Companies Selling Carbon Offsets

Consider one Tesla’s sources of revenue (and profit) has been the sale of carbon offsets. In Q1-2022 for example, Tesla earned $679 million in carbon credit sales.

A company that emits a certain amount of carbon dioxide through its operations can offset those emissions by buying carbon credits. They come from a project that reduces carbon emissions elsewhere, such as a renewable energy project.

  • Offsetting allows the company to neutralize its carbon emissions and reduce its overall impact on the environment.

Carbon Offset Regulation

A farmer can’t just create thousands of carbon offsets from his or her land by planting trees. There is a stringent carbon verification process and typically performed by one of the larger global services – like Verra and Gold Standard.  

Carbon offset programs are regulated by third-party organizations that verify the validity and effectiveness of the offsets purchased. For example, the Carbon Offset Integrity Standard (COIS) is an international standard that ensures carbon offset projects are real, permanent, and additional. 

  • This means that the offsets purchased represent real, verifiable reductions in carbon emissions, and that the reductions would not have occurred without the offset project.

Verified carbon offsets are definitely not a scam. Let alone the benefits they offer that can be environmental, social, and economic.

Extra Benefits of Offsets

Carbon offset projects often provide additional benefits beyond reducing carbon emissions.

For example, many carbon offset projects support the development of renewable energy, such as wind and solar power. This not only reduces carbon emissions, but also helps to diversify the energy mix and reduce reliance on fossil fuels. 

In addition, carbon offset projects can also provide economic benefits to local communities by creating jobs and supporting economic development. For instance, a carbon offset project may involve planting trees in an area where employment is scarce, providing employment  opportunities and supporting the local economy.

With all these points, can we still say that carbon offsets are a scam? We don’t think so; not all carbon offsets are a scam even if some of them may be. 

Otherwise, the BMO would not be confident in projecting that the market will grow 17.4x by 2050, relative to its 2020 traded volumes. And as more players and money are flooding the voluntary carbon market, its value seems to grow even more.

Flagship Rimba Raya Project Gets Indonesia’s OK

Carbon Credits
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Flagship Rimba Raya Project Gets Indonesia’s OK

The Rimba Raya Biodiversity Reserve has been validated by Indonesia’s carbon registry, the SNR.

This follows the news earlier this year when Indonesia announced it’s suspending validating carbon projects.

The Rimba Raya project is located in the Indonesian province of Central Kalimantan on the island of Borneo.

The area was going to be converted into palm oil plantations before being protected and is home to a rich diversity of plants, animals, and endangered species.

This is the first REDD+ carbon project to get verified by the SRN.

Rimba Raya’s Validation Details

The validation is set to begin in Jan 2023 and will cover an initial timeframe from July 1, 2019, to December 31, 2022, for a total of 9,719,928 credits (before any buffer deductions).

36,331 hectares under the first phase (more land to be validated separately).

Emission reductions extend until 2073
Averaging 2.65 million credits per year

Rimba Raya was the first to get validated under the Sustainable Development Verified Impact Standard (SD VISta) for hitting all of the UN’s 17 Sustainable Development Goals.

Back in August 2021, Carbon Streaming Corp announced a Carbon Credit stream agreement on Rimba Raya with the project founders InfiniteEARTH.

InfiniteEARTH revenue stream from carbon credit sales supports local community development, provincial government infrastructure, and project area protection.

According to InfiniteEARTH’s Managing Director Jim Procanik:

“We are honored to cooperate with the Indonesian government to validate Rimba Raya under Indonesia’s SRN. Working with the SRN team, auditors, and supporting personnel gives us great confidence in the future of Indonesia’s management of its carbon resources.”

The SRN & Reg 21

In October 2022, Indonesia’s Ministry of Environment & Forestry set out a framework for carbon trading – Regulation #21, where:

  • Projects within the country are to be registered, validated, and verified by the SRN.
  • 10-20% of carbon credits issued for international offsets are to be withheld by SRN.
  • 0-5% of carbon credits issued for domestic offsets are to be withheld by SRN.

The withheld credits will go toward Indonesia’s Nationally Determined Contributions (NDC) – as part of the country’s Paris Agreement commitment.

These credits may be released when the applicable sub-sector’s NDC targets are met.

The SRN carbon credit system follows internationally accepted standards (UNFCC guidelines) and is managed by government and non-government stakeholders and auditors.

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

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

Please read our Full RISKS and DISCLOSURE here.

Climate Commitment from Four Major Banks Reach $5.5 Trillion

Jennifer L
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Climate Commitment from Four Major Banks Reach $5.5 Trillion

The banking industry stands out from other sectors in its capacity to help firms transition to a low-carbon economy through the major banks’ $5.5 trillion climate commitment to finance and invest in sustainable projects.

In a report by the International Energy Agency, investments in new coal mines, oil and gas wells had to end immediately for the world to meet its Paris climate goal of limiting warming to 1.5 degrees Celsius.

Yet, fossil fuel financing from the world’s biggest banks amounted to $4.6 trillion U.S. dollars in the 6 years since the 2015 Paris agreement. $742 billion was for fossil fuel financing in 2021 alone.

At the COP27 summit, negotiators estimated that up to $6 trillion has to be invested each year in renewables and decarbonization until 2030 to reach net zero emissions by 2050.

Two major UK banks, Barclays and HSBC, pledged a total of US$2 trillion, with $1 trillion each, by 2030. While another two large US banks, JPMorgan Chase ($2.5 trillion) and Citigroup ($1 trillion), have committed a total of $3.5 trillion last year to sustainable initiatives by the same decade.

Banking on Climate & Sustainable Financing

Banks are not just providing capital to firms that innovate climate change solutions. Other activities include:

  • advising clients on the transition to net zero such as mergers and acquisitions,
  • asset disposal, and
  • financing of green projects.

A UK major bank Barclays revealed that it aims to allot $1 trillion of its funds by the end of 2030 for sustainable financing. It will be primarily to support firms that transition to a low-carbon economy. It will also be to ramp up its debt and equity capital markets to meet its climate goals.

Barclays said that it will focus on providing advisory services and deliver financing to firms to help expand their green technologies.

  • The $1 trillion climate pledge will involve green mortgages, sustainable financing structures, and financing for renewable energy firms.

Part of its climate commitment, the major bank is also ramping up its equity capital investments after seeing success in this space. To date, it has invested £84 million in scaling up startups that innovate renewable energy storage solutions.

Its new investment will center on prominent decarbonization technologies such as hydrogen and carbon capture. These technologies are critical to helping carbon-intensive sectors transition to lower carbon use. Common areas include energy and power, real estate, and transportation.

  • This new climate commitment marks a big increase from the bank’s goal to provide sustainable investments from £175m by 2025 to £500m by 2027. The $1 trillion pledge starts from 2023.
Barclays is not the only financier that’s ramping up its funding to help the world decarbonize.

Other major banks are also updating and increasing their climate commitment to stir up the transition. But some of them are struggling to weather big criticisms that most are still financing new fossil fuel projects. HSBC is one example.

HSBC Climate Policy Update

Europe’s largest bank HSBC updated its climate policy saying it will no longer offer new lending or capital market financing for new oil and gas fields or related projects.

The banking giant has also said it plans to provide up to $1 trillion in sustainable financing and investments by 2030. A responsible investment lobby group welcomed HSBC’s move, remarking:

“HSBC’s announcement sends a strong signal to fossil fuel giants and governments that banks’ appetite for financing new oil and gas fields is diminishing. It sets a new minimum level of ambition for all banks committed to net zero. We urge major banks like Barclays and BNP Paribas to follow suit.”

However, HSBC will still provide financing and advisory services to existing fossil fuel projects. But that should be “in line with current and future declining global oil and gas demand”.

And while it will do the same to energy sector clients, it will assess the firms’ plans in relation to clean energy transition.

Last October, Britain’s largest domestic bank Lloyds Bank also announced the same intention. It will no longer provide direct financing to fossil fuel projects as part of its new climate policy.

More Climate Commitment from US Major Banks

U.S. major banks are also catching up to the trend. JPMorgan Chase & Co. and Citigroup, in particular, are two examples. The chart shows their sustainable finance budget from 2016 to 2020, along with other large financiers.

major banks sustainable financing and climate commitment
Source: Rainforest Action Network (RAN), 2021

JPMorgan Chase announced last year that it will spend $2.5 trillion over 10 years, until 2030. The bank will use its finances for “long-term solutions that address climate change and contribute to sustainable development.”

Likewise, Citi also committed $1 trillion for sustainable finance by 2030. That is an extension of its environmental finance targets from $250 billion by 2025 to $500 billion by 2030. The fund will be for renewable energy and clean technology, green buildings, and sustainable agriculture and land use.

While they have different amounts in climate commitment, all major banks share the same goal – speed up the transition to a sustainable, low carbon economy.

SOCIALCARBON Launches Methodology for Nature Conservation Projects

Jennifer L
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SOCIALCARBON Launches Methodology for Nature Conservation Projects

The Brazilian standard SOCIALCARBON has finally rolled out a new methodology rewarding conservation efforts of areas of biodiversity importance with carbon credits.

The Standard, managed by the Social Carbon Foundation, focuses on nature-based solutions (NBS) with sustainable impacts that go beyond just carbon but with embedded co-benefits.

The SOCIALCARBON Standard

SOCIALCARBON is an international greenhouse gas (GHG) standard that embeds significant social, environmental and economic benefits (co-benefits) into nature-based projects by default, instead of using another co-benefits standard as what other standards do.

SOCIALCARBON was born out of the Bananal Island Carbon Sequestration Project. It’s a pilot sustainable development forestry project in Brazil in the late 90s.

  • Brazil’s Ecologica Institute first developed the standard whose management was later passed down to the Social Carbon Foundation.

What further makes it different from other standards is the flexibility of its criteria and procedures, building in a project by project element. Flexibility is the standard’s basic guideline, which includes the political and social contexts in its approach.

SOCIALCARBON believes that emissions reductions must result from efforts that benefit and improve living conditions for stakeholders involved in climate change projects. And that should be in ways that don’t degrade their resources base.

In other words, projects must embed conservation efforts along with Indigenous peoples and local communities.

All of SOCIALCARBON’s approved NBS methodologies were based on that principle, including its new methodology – SCM0006.

Methodology for the Conservation of Areas of Biodiversity Importance

SCM0006 will issue carbon credits to projects that protect and conserve areas of biodiversity importance. It is focusing on afforestation and reforestation projects under CDM’s Scope 14.

The recently concluded UN Biodiversity Conference (COP15) in Montreal also sought to reverse nature loss and restore biodiversity. And some experts suggested payments for this effort with “biodiversity credits”.

While its pending post-public consultation updates, developers can now carry out projects under SCM0006.

It is using established and reliable sources such as the “VCM methodology VM0015” of Verra and the CDM Tool for the “Estimation of carbon stocks and change in carbon stocks of trees and shrubs in A/R CDM project activities”.

SOCIALCARBON methodology document stated that SCM0006 will:

“…offer a new financing mechanism for conservation efforts worldwide. The methodology quantified net GHG emission removals (NERs) from project activities that conserve terrestrial habitats of significant biodiversity and/or ecosystem value that are threatened by degradation and deforestation.”

Most of NBS carbon projects focus on restoring degraded habitats such as reforestation. But areas that need conservation but with low potential for degradation are not included in carbon markets.

In effect, most nature conservation initiatives get financial support through grants only.

SCM0006 addresses that concern by creating a financing mechanism via carbon credits. It quantifies real carbon removals while embedding biodiversity monitoring and local community cooperation.

  • This new methodology quantifies net removals of CO2 only.

The standard is initially approved by CORSIA for vintage credits prior to 2021 only. That’s because it needs to clarify some more things to the offsetting scheme before SMC0006 receives full eligibility status.

SMC0006 Project Qualification & Eligibility Criteria

For a project to qualify for carbon credits generation under SMC0006, it must meet a number of applicability conditions.

First and foremost, the project must be on registered Indigenous land or it’s located within 1km, in partial or full, of a terrestrial area of biodiversity importance.

Also, the project must embed local communities’ knowledge and cultures into its activities that solely focus on restoration and/or restoration of the area.

  • Projects that convert the area to non-native habitats or land use will not be legible under the methodology. Example is converting forest to agricultural use.

More importantly, if the area is not conserved, it must be considered vulnerable to deforestation and/or degradation. The project should also outline strategies for removing or managing invasive species in the area.

SOCIALCARBON further requires projects to show that at least 60% of existing or historical conservation works in the are not funded or they depend only on grants/donations.

Lastly, the conservation project must ensure that poaching of keystone species, those that are critical to the overall function of an ecosystem, doesn’t go above 5% of the baseline population.

Otherwise, the project can’t get any carbon credits from SOCIALCARBON for that given year.

Same with Verra’s VM0015 methodology, SMC0006 offers a set of tools for establishing the baseline data and monitoring emission reductions.

The following are the carbon pools and emission sources included or excluded from the project boundary. Fossil fuel consumption, livestock management and biomass burning are not included as GHG sources.

SOCIALCARBON methodology for conservation efforts

SOCIALCARBON has also a pending methodology for carbon removals in private conservation areas. It’s under VVB review.

Meanwhile, it has several methodologies under development, including the one for Reduced Emission from Deforestation and Forest Degradation (REDD+). It will support high-quality project-level REDD+.

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