Xpansiv Buys Evolution Markets to Drive Global Decarbonization

Jennifer L
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Xpansiv Buys Evolution Markets to Drive Global Decarbonization

Xpansiv, the leading market platform for environmental commodities, announced the deal to acquire Evolution Markets, a major brokerage firm in global carbon, renewable, and energy markets.

The acquisition will be beneficial for both parties. Though Xpansiv is already the dominant player in the carbon market, buying Evolution Markets will help it expand more.

Evolution Markets has a base of 2,000+ customers on six continents. These include the world’s largest energy firms, corporations, utilities, and financial institutions.

The New York-based firm is also a leader in the global carbon, emissions, renewable energy, and other environmental markets.

Growing the Global Environmental & Carbon Markets

Xpansiv has been the go-to marketplace to trade various data-driven, ESG-inclusive commodities. The exchange prices carbon, energy, and water-based transactions. And the firm does this in an intuitive, user-friendly environment based on scientific data.

The company’s main business units include CBL. It’s the largest spot exchange for environmental commodities including carbon, renewable energy certificates, and Digital Natural Gas.

Xpansiv President and COO John Melby said that the agreement with Evolution Markets will further leverage their market infrastructure. He added that,

“Together, we can more effectively execute on our strategy to scale our global platform… Evolution Markets’ proven team will help drive sales and marketing efforts as we work to bring the benefits of our infrastructure – transparency, scale, and confidence – to rapidly growing environmental markets.”

For Evolution Markets, the deal will enable them to deliver the next-generation market infrastructure needed in driving reductions in carbon emissions.

The firm’s Chairman and Co-Founder Andrew Ertel remarked that:

“We’re proud of what we’ve built over the last 20 years… and the powerful combination with Xpansiv will help drive continued innovation in market solutions to address climate change…”

This is echoed by the company’s CEO in his remarks that the acquisition will scale up environmental and energy transition markets.

  • There’s a fast growing demand for carbon-based solutions, in particular. In fact, the carbon offset volume traded on Xpansiv’s CBL platform in 2021 showed a 288% increase from 2020.

Plus, Xpansiv is hosting about 90% of all voluntary carbon credit transactions worldwide in its CBL platform.

And so, Evolution Markets believes that by joining forces with Xpansiv, they can help build its sustainable solutions. This will also better position their clients to compete in carbon-constrained markets.

Leading the path to global decarbonization

The inclusion of Evolution Markets and APX, the leading provider of registry infrastructure for energy and environmental markets, Xpansiv’s platform will be enhanced.

Both parties will work together in providing a clear path towards global decarbonization. They will connect more buyers and sellers of vital carbon offsets, renewables, and low carbon fuels.

The expense of the deal will come from the $400 million investment of the equity giant Blackstone in Xpansiv last month. The funding is via Blackstone Energy Partners, an energy-focused investor with a proven track record in the global energy sector

The acquisition will most likely be completed before the end of this year. After closing the deal, Evolution Markets will become a wholly owned subsidiary of Xpansiv.

Real Voluntary Carbon Market Value is $2 Billion

Jennifer L
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Real Voluntary Carbon Market Value is $2 Billion

The real value of the voluntary carbon market is now around $2 billion, with rising price trends of ~170 types of carbon credits as per a recent Ecosystem Marketplace (EM) report.

EM, a Forest Trends initiative, has been tracking and reporting on the state of the VCM since 2006.

Their latest briefing reveals that the current VCM is almost $2 billion. And about 500 million carbon credits were traded in the same year, surpassing the previous EM report by 66%.

Also, global prices are climbing upwards by 60% more in 2021 ($4.0) than in 2020 ($2.5).

Lastly, EM stated that there are over 170 types of carbon credits falling under 8 categories traded in 2020-2021.

Global Voluntary Carbon Market Value and Prices

The future of voluntary carbon markets (VCM) looked brighter as more interests and investments poured into carbon projects. Plus, global climate and sustainability goals are driving record high demand.

The previous partial year report of EM indicated that VCM value is about $1 billion. But its recent and final brief stated that the real market value is nearly $2 billion.

The chart shows the VCM size by value of traded carbon credits from pre-2005 to year-ended 2021. The market’s total or cumulative value reaches $8 billion.

VCM market value
Chart from EM report

Likewise, global carbon credit prices are also trending upwards.

  • The annual global average price per ton went up from $2.5 in 2020 to $4.0 in 2021. That represents about a 60% increase to a point never seen since 2013.

Among the eight categories of carbon credits, prices for projects with non-carbon benefits are higher.

Non-carbon benefits refer to the co-benefits that a certain project provides. Examples are local community support and biodiversity conservation.

Alongside sustainable development goals, the co-benefits are either integrated from the outset into carbon standards or bolted onto carbon credit projects with validated GHG emission reductions/removals.

In particular, projects under Gold Standard (one of the major carbon standards) saw a 35% increase in price from 2020 ($3.7) to 2021 ($5.0).

Plan Vivo also recorded a higher price increase of 15% for the same period. The bulk of its transaction volume, 79%, was from projects under the category of Forestry and Land Use (Afforestation, Reforestation, and Revegetation or ARR).

The most common co-benefits certification standard in use today is the CCB (Climate, Community, & Biodiversity) Standards. It’s an add-on for Verified Carbon Standard (VCS) carbon credits that also jumped in volume by 277%.

The table below shows the overall VCM transaction volumes, prices, and values by category, comparing 2020 and 2021 results.

voluntary carbon market value and prices
Table from EM report

Types and Categories of Project-Specific Carbon Credits

As the VCM matures, more and more participants – project developers, investors, buyers, regulators, etc. – are shaping how the market works. They give different attributes and definitions to project-specific carbon credits.

As such, EM tried to simplify things by giving an official Project ID for traded carbon credits data. This is important so that those attributes would be verifiable through the carbon standard that issues the credits.

The Forest Trends initiative also updated its Carbon Offset Project Typology in Q1 of 2022. These updates allowed EM to expand its list of project types, covering 170+ projects.

  • All project types are then rolled up into 60 project clusters and narrowed down even further into 8 project categories.

The image illustrates EM’s 8 categories with specific examples of projects.

EM carbon project categories
Source: EM report

Another remarkable result reported by EM is that project specificity in trade reporting goes with higher voluntary carbon market value and prices.

It means carbon credits that were cross-referenced with carbon standards’ registries have higher prices than those that were not. Cross-referencing involves providing project-specific metrics for the credits like project name or ID.

Most interestingly, the report suggested that the VCM prefers to buy and sell carbon credits via bilateral deals between project developers and end buyers the most .

That only shows that there are growing opportunities for project developers to respond to corporate requests for proposals.

But in the past years, intermediaries and digital spot trading exchanges began to re-emerge into the VCM.

Futures exchanges (e.g. CME Group) are working with spot exchanges (e.g. CTX and ACX) to develop standardized contracts pegged to specific project attributes.

As more players and money are flooding the voluntary carbon market, its value seems to grow even more.

India Gets Carbon Market Spotlight with Various Climate Plans

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India Gets Carbon Market Spotlight with Various Climate Plans

India is developing its carbon market by undergoing several climate action plans in just a matter of days.

The world’s 3rd-biggest emitter planned to set up a carbon credit market for the hard-to-abate sectors. These would initially include energy, steel, and cement industries.

An official announcement may come on India’s independence day celebration, Aug. 15.

Such a plan is part of its bigger efforts to hasten the transition to cleaner fuels. The country will order the use of cleaner fuels under its push to net zero emissions by 2070.

Non-fossil fuel alternatives include green hydrogen, ammonia, ethanol, and biomass.

Then finally, India formally approved its climate change commitments to cut emissions intensity of its GDP to 45% by 2030.

The super-emitter reflected this updated pledge in its nationally determined commitments or NDCs submitted to the UN ahead of COP27.

India’s Carbon Credit Market for Heavy Industries

India aimed to start a carbon trading market for its heavy emitters. They particularly involve the energy, steel, and cement industries. This decision is a big part of the country’s efforts to ramp up its transition to cleaner fuels.

One key goal of the plan is to ensure that state-owned energy entities and steel and cement firms benefit from investments in carbon capture projects.

The platform has been in the making since March when consultations between concerned ministries and firms likely began. Prime Minister Narendra Modi will most likely announce it on Aug. 15 when the nation celebrates its independence.

India’s proposed carbon market resembles the one China launched last year. The latter mandated a carbon trading system for all its major power plants.

While China is committed to achieving net zero by 2060, India’s pledge is a decade behind. Yet, the South Asian country seeks to cut 1 billion tons of carbon by 2030 as a big leap in reaching its climate goal.

The carbon credit market will cover hard-to-abate sectors at first. It will allow market players to trade carbon credits generated from cutting emissions.

A detailed plan for this carbon market will be ready in the 4th quarter of this year according to sources.

The Mandate to Use Cleaner Fuels for Net Zero

Besides establishing a carbon market for major emitters, India also wished to mandate consumers to use cleaner fuels. This is in line with the nation’s push to hit net zero emissions.

As per Sambitosh Mohapatra from PwC India (a network of partnership firms),

“The reform is in line with India’s environment and sustainability commitments… It’s achievable and actionable with responsibilities clearly outlined given the progress made on Paris commitments.”

The legislation will support non-fossil fuels such as green hydrogen, ammonia, ethanol, and biomass. Their use in power generation and in manufacturing should meet the set energy consumption standards.

The new law, Energy Conservation (Amendment) Bill, will penalize industrial operations, vehicles, ships, and buildings that won’t abide by the rules. The penalties can go as much as 1 million rupees ($12,660).

The bill focuses on promoting renewable energy use and highlights the nation’s National Hydrogen Mission. It’s a strategy aimed at establishing India as a key global hub for the development of zero-emissions fuel.

It will also allow local state electricity regulatory commissions to make regulations to implement the new policy.

Under the changes, the Indian government will issue energy savings certificates to those who consume less than the allowed levels. For consumers who go beyond the set levels, they can buy certificates from others for compliance.

India’s Bureau of Energy Efficiency is responsible for setting up this carbon trading market.

India’s New Climate Commitment

India officially approved its new climate change commitments to cut emissions intensity of its GDP by 45% from 2005 levels by 2030.

Alongside this goal is the country’s demand for its so-called due share of financial and technological support from developed nations.

  • In COP26 last year, India argued that it’s entitled to $1 trillion in climate funding to meet its targets. In fact, the nation needs over $12 trillion to enable it to keep pace with its net zero emissions goals by 2070.

But many think that such demand is not possible to meet. That’s because rich countries are able to deliver $100 billion only in climate finance to poorer countries in 2023. And that seemed to even fail.

India’s new climate goal forms part of its updated NDCs submitted to the UN. As such, it became one of the last super emitters to meet its Paris Agreement obligation.

There are several policy measures that India implemented since it disclosed its climate goals in COP26. These include:

  • production-linked incentives for manufacturers of electric vehicles and batteries,
  • amendments to energy use laws, and
  • introducing a national hydrogen plan.

India’s decision to update its NDCs came ahead of COP27, the next round of global climate talks happening in Egypt in November.

Verra Opens Consultation on Carbon Credit Tokenization, Urges KYC Checks

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Verra Opens Consultation on Carbon Credit Tokenization, Urges KYC Checks

Verra, the largest voluntary carbon credits registry, launched a public consultation to gather ideas on how the registry should allow for the tokenization of carbon credits. They are also proposing tougher Know Your Customer (KYC) checks on carbon-backed tokens.

Verra’s main goal in having the consultation is to seek views on how to prevent fraud related to the potential association of VCUs (Verified Carbon Units) with carbon-backed tokens.

It’s a critical step that can incorporate crypto into the voluntary carbon market.

In May this year, Verra banned tokenizing retired carbon credits and proposed immobilizing them. That’s to prevent the VCUs from being the subject of other transactions in the registry.

Hence, Verra deems it critical to come up with an approach that ensures transparent mapping of crypto tokens and their underlying VCUs. This will help avoid double-use and double-issuance of those VCUs.

The consultation particularly aims to collect views on these key topics:

  1. Measures to associate Verra instruments with crypto instruments and tokens;
  2. KYC checks

According to Robin Rix, Verra’s chief legal officer, they expect a range of views about the matter. He expects that the nub of the debate would be about trusting the authorities in carbon markets. He further added that:

“The real interest is around KYC… Fundamentally, I think the key point of distinction will be the KYC throughout the chain… At the end of the day, [carbon markets and cryptocurrencies] are two totally different paradigms.”

Verra KYC Checks Proposal

Carbon market stakeholders and crypto-savvy participants both believe that KYC principles are vital to protecting the environmental integrity of carbon credits.

But where opinions may start to diverge is the degree to which KYC transparency is caught up in an on-chain market.

KYC practices help organizations exercise reasonable care and effort when maintaining client accounts. Verra conducts KYC checks on all account holders in its registry. This is to ensure that Verra knows the entity that deals with the instruments it issues and stands behind.

Such KYC checks are also important in the carbon market context. It will help players know who claims the environmental benefits of the VCUs for environmental or other purposes.

Verra will undertake KYC checks on platforms wishing to issue carbon-backed crypto tokens as part of its due diligence.

Traditionally, carbon registries have verified buyers and sellers in every transaction. In this way, a registry captures the full accounting of a credit’s chain of custody from creation to retirement.

  • Retiring a carbon credit singularly means that its environmental benefit has been used to offset an entity’s carbon footprint.

But tokenization platforms have turned KYC checks on its head by introducing anonymity and decentralization into the carbon space. And Verra finds this confusing for the carbon market, indicating that:

  • Tokenizing retired credits is distorting by giving life to a digital ghost of that credit in the form of a token traded as a digital commodity.

But Verra and other registries don’t oppose tokenization. Instead, Verra is exploring ways to “immobilize” credits so that their tokenization happens in a transparent and traceable manner.

In particular, Verra requests views on this topic by answering the following questions:

Verra KYC checks input questions

Immobilization of carbon credits

Verra also seeks views on measures to ensure that live, unretired carbon credits responsibly associate with tokens.

Account holders can immobilize the credits by transferring them to dedicated immobilization subaccounts in the Registry.

Plus, Verra will also request transaction information from tokenization platforms. These include information on the creation and use of carbon-backed crypto tokens.

Information on VCUs transfer between holders on tokenization platforms is also important to know.

In case the account holder wishes to exercise rights over the VCUs instead of the crypto tokens, reactivation of that VCUs could be possible. As such, the crypto tokens have to be destroyed without the use of their environmental benefit.

The details of immobilizing VCUs will also be explored during the public consultation window that will last until 2 Oct. 2022.

Verra will consider public inputs when preparing its policy on 3rd-party crypto instruments and tokens.

DeepMarkit Announces Board and Management Changes

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DeepMarkit Announces Board and Management Changes

DeepMarkit Corp. announced changes in its board and management composition.

Mr. Darold Parken has resigned as President and a Director on the Board of the Company inorder to dedicate more time to his other endeavours. Mr. Steve Vanry has been appointed as Mr. Parken’s replacement as Directory of the company.

Vanry has also replaced Mr. Parken on the Company’s audit committee. He has 25 years of professional experience in senior management positions with public and private companies, providing expertise in capital markets, strategic planning, corporate finance, mergers and acquisitions, regulatory compliance, accounting and financial reporting.

Mr. Vanry’s breadth of experience spans various industries, including mining, oil and gas, renewable energy, high-technology and manufacturing.

He also holds the right to use the Chartered Finance Analyst (CFA) and Canadian Investment Manager (CIM) designations and is a member of the CFA Institute and the Vancouver Society of Financial Analysts.

DeepMarkit will evaluate and appoint a replacement member to its corporate governance, compensation and compliance committee at a later date.

Read the Full News Release Here

 

Amazon Faces Net Zero Challenges – Carbon Footprint is up 40% since 2019

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Amazon Faces Net Zero Challenges – Carbon Footprint is up 40% since 2019

Amazon’s carbon footprint grew 18% in 2021 and up 40% since 2019. The firm’s rapid growth overcame its efforts to cut its emissions and faces four net zero challenges.

The world’s largest online retailer emitted a total of 71 million metric tons of CO2 equivalent last year as revealed in its latest sustainability report.

Despite this, the giant retailer’s carbon intensity was down by 1.9%, a 3rd year in a row as seen in the table below. It represents the amount of the firm’s total emissions over its gross merchandise sales.

Amazon carbon footprint (1)

The falling carbon intensity shows that Amazon is becoming more efficient in its operations. That’s in terms of running its offices, warehouses, data centers, and shipping its products worldwide.

Amazon’s Net Zero Carbon Footprint

Amazon accounts its carbon footprint by including emissions from:

  • its own offices and data centers,
  • purchased electricity,
  • tailpipe emissions from delivery partners, and
  • the manufacturing of Amazon-branded products

The Seattle firm committed to achieve net zero emissions by 2040, 10 years ahead of the Paris Agreement.

The company co-founded The Climate Pledge in 2019 as part of its net zero commitment. The initiative’s main goal is to bring companies together to speed up climate action. It will enable business leaders solve the challenges of decarbonizing the economy.

Leading the 300+ member companies of the pledge, Amazon commits to be the champion in three areas of climate actions:

  1. Regular reporting of emissions
  2. Eliminating carbon via various decarbonization strategies
  3. Using credible carbon offsets

Amazon is implementing different strategies to cut its carbon footprint. These include electric vehicle use, operational innovations, efficiency improvements, and renewable energy.

It also aims to buy carbon credits generated by projects that remove carbon.

While the company is taking big strides in cutting its emissions, its sudden growth presents key challenges towards net zero.

Amazon stated in its report:

“The challenges we collectively face on the path to net-zero carbon are considerable… Many new technologies are showing promise in their ability to reduce carbon emissions, but may still need significant development.”

4 Key Net Zero Challenges of Amazon

100% Renewable Energy by 2025

In 2021, Amazon achieved 85% renewable energy across its operations. With this pace, the firm is confident that it’s on a path to reach 100% by 2025.

Research found that moving on-premises computing workloads to AWS can reduce carbon footprint by about 80%. This is in comparison to the surveyed enterprise data centers. The figure can go up if AWS will work with 100% renewable energy.

  • AWS’ infrastructure is 3.6x more energy efficient than the median of surveyed U.S. enterprise data centers. Plus, it’s 5x more energy efficient than the average European enterprise data center.

More-Sustainable Transportation Infrastructure

Amazon plans to make half of its shipments net zero carbon by 2030 by creating a worldwide fleet of zero-emission vehicles.

Right now, the vehicles and charging infrastructure don’t exist at the scale needed. But the firm ordered over 100,000 EVs from different carmakers.

Amazon is also exploring green hydrogen technologies and invested in hydrogen firms (EH2 and Sunfire). It’s also at the heart of industry initiatives and partnerships including:

  • the Cargo Owners for Zero Emission Vessels network (coZEV),
  • the First Movers Coalition,
  • the Sustainable Aviation Buyers Alliance Aviators Group (SABA), and
  • the Clean Energy Demand Initiative.

More-Sustainable Buildings

Amazon is reducing the carbon footprint of its buildings by using CarbonCure’s systems and Brimstone Energy cement in new constructions. These include Amazon’s second headquarters in Virginia (HQ2) – a model for sustainable construction.

  • HQ2 operations are electrified, eliminating the use of fossil fuels for building systems and food service.

The firm is also innovating construction techniques to power fulfillment centers with solar. As of 2021, 115 of its global fulfillment facilities have rooftop solar installations.

Also, in building its AWS data centers, Amazon requires concrete with a 20% reduction in carbon compared with standard concrete for new U.S. data centers.

Likewise, the company is shifting to steel made in electric-arc furnaces that use scrap steel and renewable energy. In 2021, 6 AWS data centers were built with steel made that way.

Decarbonizing the Supply Chain

Amazon uses an extensive supply chain to deliver goods and services to customers. Its carbon accounting process takes into consideration all three scopes of emissions.

To achieve net zero carbon footprint by 2040, Amazon has to understand, measure, and report emissions data. Transparency is critical in net zero reporting, especially involving Scope 3 or supply chain emissions.

Amazon partners with and supports the We Mean Business Coalition’s Climate Hub. It’s a global initiative that gives small and medium-sized enterprises, like those in Amazon’s supply chain, free tools and resources to measure and report their emissions.

The company will continue to work with partners both in the public and private sectors to advance climate solutions. To the innovators, scientists, builders, and entrepreneurs, Amazon say that:

“Our door is open. We all need to decarbonize. The work may not make the headlines or bring immediate rewards, but a challenge like this will never be resolved overnight. These are the hard steps that need to be taken.”

Net Zero Industry Tracker 2022 is Out: Heavy Industries Watch Out

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Net Zero Industry Tracker 2022 is Out: Heavy Industries Watch Out

The World Economic Forum, together with Accenture, released the 1st edition of its report that tracks the current state of the net zero transition in 6 key industries.

WEF calls it the Net-Zero Industry Tracker 2022. The report highlights the importance to understand the challenge for the heavy industries towards net zero. It also identifies the gaps to fill to achieve net zero goals to limit global warming to 1.5 degrees by 2050.

High energy prices and supply chain concerns drive the urgency of decarbonizing the industries.

Hence, the framework offers a holistic perspective and standard metrics to measure progress of the industrial sector.

Plus, it provides seven cross-sectoral recommendations for industrial firms, consumers, and other stakeholders.

The WEF Net Zero Industry Tracker 2022

Industry accounts for around 40% of global energy consumption and over 30% of global GHG emissions.

industry GHG emissions

As the largest emitter, the industries decarbonization will be critical to tackling climate change.

This is where the WEF’s net zero industry tracker framework comes in. Roberto Bocca from WEF said that:

“Several industrial sectors and individual companies have set up targets with the aim of reaching net zero emissions. We believe that bringing transparency to closing net-zero gaps and reporting on this progress is critical to achieve these ambitious goals…”

The report will track the “net zero performance” of the heavy industries and their “net zero readiness“. The six key industries include:

  • Steel
  • Cement
  • Aluminium
  • Ammonia
  • Oil and
  • Natural gas

Together, these industries account for 80% of industrial emissions as per Accenture analysis. Monitoring their readiness involves measuring 5 major enablers:

technology, infrastructure, policies, demand, and capital.

Here’s the cross-industry findings of the report for net zero readiness of each sector per enabler:

industry net zero readiness

The report also points out that ~$2 trillion is necessary to make low-emission industries a reality. This calls for huge policy incentives to level the playing field for low-emission production.

The chart below shows how much carbon pricing should be for each industry sector compared with the current price.

carbon price for industry low emission production

With that said, investments in low-emission assets can be riskier for firms due to their dependencies on new technologies and infrastructure.

This needs collaboration across the sectors to make the key enablers come together in the same direction to speed up progress towards net zero.

Net Zero Tracker Key Highlights Per Industry

Here are the major findings of the WEF’s net zero tracker report for each industrial sector.

Steel industry

steel industry GHG emissions

  • Steel is the largest emitter, generating 7% of all man-made emissions.
  • Steel demand can increase up to 30% by 2050.
  • Needs over $2 billion investments in low-carbon power, clean hydrogen and CO2 handling infrastructure.
  • Green premium of 25-50% for buyers due to high costs of clean technologies.

There are 3 main pathways to decarbonize steelmaking: carbon capture, hydrogen and electrochemistry.

Cement industry

  • cement industry GHG emissions
  • Cement is the second largest emitter, generating 6% of total emissions.
  • Demand for cement can go up to 45% by 2050.
  • Requires ~$185 billion for CO2 handling infrastructure and clean hydrogen production in cement plants.
  • Green premium above 50% for low-emission cement.

Carbon capture is key to cement’s net zero pathway, but electrification and hydrogen also have roles.

Aluminium industry

  • aluminium GHG emissions
  • Aluminium accounts for 2% of all industry emissions.
  • Aluminium demand will jump by up to 80% by 2050.
  • Calls for ~$510 billion investments to enable clean technologies and production.
  • Green premium up to 40% to wholesale buyers and 1-2% to end consumers.

The major pathway for aluminium production to achieve net zero is a mix of electrification, transition to hydrogen, and inert anodes. Yet, carbon capture is also under exploration.

Ammonia industry

ammonia GHG emissions

  • Ammonia is the chemical sector’s largest emitting product, releasing 1.3% of all emissions.
  • Ammonia demand for fertilizer and industrial use will go up to 37% by 2050.
  • Needs ~ $850 billion investments to enable green and blue hydrogen production.
  • Green premium of up to 100%.

The best way to decarbonize ammonia production is to develop blue or green hydrogen technologies.

Oil industry

oil GHG emissions

  • The oil sector consumes so much fossil fuels and releases methane, producing 6% of total GHG emissions.
  • Demand for oil will increase by 17% by 2050 but should go down by 73% for the world to reach net-zero.
  • 35% of oil sector emissions are methane (70% of which can be abated at zero or minimal costs today).

Decarbonizing the oil sector means cutting methane and flaring emissions. The same goes for energy and process related emissions in refining oil. This requires carbon capture, use and storage, hydrogen, and electrification pathways.

Though substitutes for oil products are available, their availability and affordability remain a concern.

Natural gas industry

natural gas GHG emissions

  • The gas sector also uses a lot of fossil fuels and emits methane, releasing 4% of all GHG emissions.
  • Demand for gas will go up by 30% by 2050 but need to drop by 55% to reach net zero scenario.
  • 65% of the gas sector emissions are methane (70% of which can be abated at zero or minimal costs today).
  • As low as 1-3% as a green premium to end consumers.

Mature technologies exist to abate 80% of gas sector emissions. This will result in a 7% increase in production cost.

For all industrial sectors, they all need stronger demand signals from buyers and policies to incentivize investments.

The net zero industry tracker further suggests that concerted efforts should include lawmakers, financial entities, and consumers.

And of course, the biggest effort must come from the heavy industrial firms themselves.

Carbon Credits End the War Between Indigenous Peoples and Loggers

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Carbon Credits End the War Between Indigenous Peoples and Loggers

Mosaic Forest Management, a logging company, agreed with the Indigenous Peoples (IPs) to preserve forests on two Canadian islands home to 700-year old trees.

Mosaic is one of British Columbia’s largest logging companies. The firm decided to make truce with the indigenous communities in preserving forests in Vancouver Island and Haida Gwaii.

The company promised to defer logging for at least 25 years on 100,000 acres of forest lands.

Doing so will not only make them be at peace with the IPs living in the forests. They can also earn as much as $230 million (CA$300 million) over the life of the project by selling carbon credits.

Indigenous Peoples and Carbon Markets

The emergence of carbon markets created a unique opportunity for indigenous communities to develop an economic sector that can align with their lifestyles and sustainable forest management.

It also opens doors for forming partnerships and developing climate policies with the IPs.

Indigenous peoples are benefiting from two major shifts in the carbon market:

  1. There’s a growing recognition of the rights of IPs in protecting forests
  2. Prices for carbon credits make preservation of forests as profitable as logging

IPs around the world have been fighting to stop logging in the forests they’re preserving. They occupy about ⅓ of the world’s undeveloped forest lands.

In Canada, the IPs have been doing it for about 40 years now and gained double victory.

  • Logging ended on the protected forests in Vancouver Island and Haida Gwaii.
  • At the same time, Mosaic agreed to pay the IPs millions of dollars to protect the centuries old trees.

The agreement sets aside 100,000 acres of old growth trees on the said Canadian islands for over 25 years.

Many project managers believe that IPs play a critical role in fighting climate change. As per Mike Korchinsky from Wildlife Works, he said that:

“I don’t believe there is any way we can achieve our climate goals globally without ensuring the support of indigenous communities to conserve our forests…”

Wildlife Works is a U.S. conservation firm managing forest-based carbon projects in Africa, Asia and Central and South America.

The Canadian IPs

First Nation is one of the Canadian IP groups that were not in unity when Mosaic invited over 2 dozen communities to help design and manage forest conservation plans.

The protected forests are on land controlled by Mosaic under a land grant. But those forests have been home to IPs who now have more say over how to manage the land.

Mosaic’s offer includes an unrevealed share of carbon credits sales for the IPs to protect the forests. The proceeds will pay for the research, forest management training, and other conservation services.

Some members of the indigenous communities initially rejected the offer for various reasons. According to Eli Enns, a First Nation member, many were distrustful due to limited land rights, abuses, and forced assimilation.

He also said that some IP members preferred to earn income from their logging jobs. But now most of the IPs understand the potential for carbon credits to achieve what decades of protests failed to deliver.

Enns stated that:

“Mosaic was not required to include us in the project… Yet they found a way to make meaningful progress to reconcile the First Nation’s management of their forest lands.”

The timber firm stands to earn as much from selling carbon credits as it would selling logs from the protected forests. The overseer of the carbon credit project noted that it was the right time to strike the deal.

The cash from the carbon credits will be shared among the local members of the First Nation. Same with other Canadian IPs, they’re given more rights over these projects by the new federal laws.

Carbon credits from protecting forests

Carbon credits produced by projects involving forests are among the most sought after and pricey. That’s because they protect trees that store large amounts of carbon.

Rainforest protection projects are often found in countries with robust legal safeguards. Popular examples are the cases of Indonesia and Papua New Guinea. Restrictions on forest carbon credits generation were set in both forestry dense countries.

Meanwhile, forest projects in the U.S. were deemed to generate dubious carbon credits. This is quite identical in the case involving the Surui people living in the Amazon.

The Amazon project was banned in 2018 after rogue miners and loggers cleared a large number of trees. This led to warning that carbon credits may erode indigenous peoples rights.

These issues discouraged carbon credit buyers from supporting projects where IPs rights are unclear.

  • But the recent boom in the carbon credit market and improvements in IPs forest rights are drawing more attention.

Logging firms, tribal groups, and governments are now taking advantage of the developments in carbon markets.

Companies buy carbon credits to offset their emissions and achieve their climate goals. The market hit $1 billion in 2021 and will grow more to the tens of billions over the decade.

In 2021, Verra tracked the issuance of ~130 million sales of carbon credits from forest projects. That’s about a 3x increase from 2020 forest carbon credits sale.

US Congress Revives the $369 Billion Climate Change Bill

Jennifer L
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US Congress Revives the $369 Billion Climate Change Bill

U.S. Senators Joe Manchin and Chuck Schumer unveiled a long-awaited reconciliation bill to invest $369 billion to fight climate change and advance clean energy programs.

The new U.S. bill is dubbed the “Inflation Reduction Act of 2022″. It would be the biggest and most aggressive investment ever taken by Congress for climate.

The bill is 725-page long with major provisions to cut down emissions of the U.S. by about 40% by 2030.

The deal came two weeks after Sen. Manchin said he would not support a bill with clean energy and tax provisions while inflation remains high.

But it appears that he kept the door open by reviving the climate bill once more after a year of pained negotiations.

If passed and signed into law, it would be a major victory for President Joe Biden’s climate agenda that he ran on in 2020. That agenda was attacked by the Supreme Court last June.

Taken as a whole, the bill would be a great win for clean energy tax credits as the centerpiece. The deal extends the current renewable credits. Beyond 2025, they will be technology neutral and be based on GHG emissions reductions.

Senate Finance Chair Ron Wyden said that:

“For the first time, the tax code is going to reward emissions reductions… and encourage the development of new clean energy technologies as soon as they come online.”

Lawmakers, environmentalists, and climate advocates who had been hammering Manchin for rejecting the climate measures were ecstatic at the surprise announcement.

The Inflation Reduction Act of 2022: Key Climate Provisions

The Act includes five key climate provisions with the following funding details:

Cutting Consumer Energy Costs. The bill will provide a range of incentives to consumers to relieve the high costs of energy and decrease utility bills. These include buying energy efficient appliances, clean vehicles, and rooftop solar. The specific funding includes:

  • $9 billion in consumer home energy rebate programs
  • $4,000 consumer tax credit to buy used-clean vehicles
  • Up to $7,500 tax credit to buy new clean vehicles
  • $1 billion grant program to make housing more energy efficient

Both tax credits would only be available to lower and middle income consumers.

Energy Security and Domestic Manufacturing. The climate change bill will support manufacturing cleaner energy products through historic investments. That includes ~$60 billion across the full supply chain of on-shore clean energy manufacturing and transportation technologies.

  • $30 billion production tax credits for manufacturing of solar panels, wind turbines, batteries, and critical minerals processing
  • $10 billion tax credit to build clean technology manufacturing facilities
  • Up to $20 billion in loans (with $2 billion in grants) to build new clean vehicle manufacturing facilities
  • $2 billion for National Labs to boost breakthrough energy research

These manufacturing incentives will help ease inflation by bringing down the cost of clean energy and clean vehicles. It will also relieve supply chain bottlenecks.

Decarbonizing the Economy.

Climate investments will cut emissions across all sectors of the economy. The primary sectors include electricity production, transportation, industrial manufacturing, buildings, and agriculture.

  • $30 billion tax credits (for states and electric utilities) for clean sources of electricity and energy storage
  • $6 billion grants and tax credits to reduce emissions from the largest industrial emitters (e.g. chemical, steel and cement plants)
  • $9 billion for the Fed government to buy American-made clean technologies
  • $27 billion clean energy technology accelerator to support deployment of technologies to reduce emissions

The climate change bill also includes unspecified funding for a program to reduce methane emissions from the production and distribution of natural gas. Methane emissions are more than 80x as potent as CO2 in warming the atmosphere.

Environmental Justice Investments. The climate deal includes ~$60 billion in environmental justice investments into disadvantaged communities. It will address the unequal effects of pollution on low-income communities and communities of color.

Agriculture, Forests, and Rural Communities. The funding will ensure that rural communities are at the forefront of climate solutions. Investments that will be made include:

  • Over $20 billion to support climate-smart agriculture practices
  • $5 billion in grants to support forests, forest conservation and urban tree planting
  • $2.6 billion in grants to conserve and restore coastal habitats
  • Tax credits and grants to support domestic production of biofuels

Huge Win for Clean Energy Transition

Obviously, the climate change bill puts clean energy at the forefront – from manufacturing clean energy products to buying clean vehicles and supporting clean electricity sources.

President Joe Biden said the tax credits and investments for clean energy projects in the deal will create thousands of new jobs and help lower energy costs. And so he urged the Senate to move on the legislation the soonest time possible.

President Biden has pledged to curb the country’s emissions by 50% to 52% by 2030 and reach net zero emissions by 2050. But without the bill, that goal won’t be possible as per the analysis of Rhodium Group. The president remarked that:

“This is the action the American people have been waiting for… This addresses the problems of today – high healthcare costs and overall inflation – as well as investments in our energy security for the future.”

The Senate is set to vote on the proposed climate change bill next week. Then it will go to the Democrat-dominant House of Representatives.

Integrity Council Unveils Core Carbon Principles for Consultation

Jennifer L
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Integrity Council Unveils Core Carbon Principles for Consultation

The Integrity Council for the Voluntary Carbon Market set out the draft of its Core Carbon Principles for consultation to govern real, verifiable, and high-integrity carbon credits.

The ICVCM is an independent governance body that was recently-formed from the Taskforce on Scaling Voluntary Carbon Markets (TSVCM).

TSVCM is one of the leading organizations governing the carbon markets. It seeks to establish a global benchmark for carbon credits as efforts at beefing-up standards in carbon offsetting grow.

And one big part of its efforts is what the ICVCM seeks to establish – the Core Carbon Principles (CCPs) for high-quality carbon credits. The Council released its draft for public consultation.

Integrity Council’s Core Carbon Principles for Carbon Credits

The Core Carbon Principles (CCPs) will set new threshold standards for high-quality carbon credits. They will also provide guidance on how to apply the CCPs and define which carbon-crediting programs and methods are CCP-eligible.

The Council’s CCPs are a set of criteria ensuring that carbon credits bought to offset emissions have a real, verifiable climate impact. And that’s based on solid science, not speculations.

For carbon credits to be of high integrity, the ICVCM suggests that all carbon purchases (reductions or removals) meet CCP’s 10 key criteria:

  1. Additionality
  2. Mitigation activity information
  3. No double counting
  4. Permanence
  5. Program governance
  6. Registry
  7. Robust independent 3rd party validation & verification
  8. Robust quantification of emissions reductions & removals
  9. Sustainable development impact and safeguards
  10. Transition towards net-zero emissions

Moreover, mitigation efforts must avoid locking in levels of emissions or practices that are not in line with achieving the net zero emissions by 2050.

As per Carney, the UN Special Envoy on Climate Action and Finance:

“By providing a global threshold standard for credible, transparent, high-integrity carbon credits the Integrity Council’s new Core Carbon Principles will support the net zero transitions of companies… and the reduction of global emissions while providing much-needed financing to projects in emerging and developing economies and to Indigenous Peoples.”

Emissions reduction efforts must also be guided by: “clear guidance, tools and compliance procedures”.

Plus, all carbon credit programs must also be validated and verified by third-party. They also have to be robustly quantified according to: “conservative approaches, completeness and sound scientific methods.”

The Core Carbon Principles draft also suggested that all carbon crediting programs should be available with comprehensive and transparent information. Such information should be accessible to non-specialized audiences and come in electronic format.

They must also have effective governance systems to achieve:

Lastly, they should identify, record and track mitigation activities on a registry.

All these CCP criteria will ensure projects are compatible with sustainable development goals.

Public Consultation for the CCPs

VCM experts hope that growing the carbon markets will hit two birds with one stone in driving a sustainable future:

  1. By providing additional emissions mitigation to speed up the pathway to 1.5C
  2. By channeling resources to where investments are critical for climate adaptation and resilience.

Integrity Council Chair Annette Nazareth noted that the VCM exists to hasten a just transition to 1.5C. She also said that:

“In designing an effective market that can deliver genuine climate impact at speed and scale, we need to start with integrity. It is a precondition for a transparent, deep, liquid, standardized and scalable market that efficiently channels capital to where it is most urgently needed… To make this work, we need everyone from across the VCM to come to the table, share knowledge and expertise, and collaborate to co-create the CCPs…”

Indeed, dealing with the integrity of carbon credits fast is crucial as the debates around ESG and greenwashing continue to swirl.

The public consultation for CCPs will be open to all. It has to attract interest from key stakeholder groups operating in the VCM. These include finance, business, NGOs, scientists, governments, and members of the public.

The British Standards Institute (BSI) will oversee the consultation.

The consultation will seek views on several questions on the scope of the Council’s proposed core carbon principles. These include two crucial questions:

  • Should the VCM levy a share of proceeds to development countries most vulnerable to climate change to meet the costs of adaptation?
  • Should host countries have to authorize voluntary carbon credits bought in their jurisdiction?

Through the consultation, the ICVCM said the CCPs will pave the way for developing the spot and futures markets for carbon credits.

The Integrity Council further states that via CCPs, carbon markets will be liquid, scalable, and create transparent price signals. All these result in better price risk management.

The 60-day consultation will be until 27 September 2022, expecting submissions from all corners of the market. Click here to access the draft report

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