Lithium, a crucial element in energy storage, holds immense significance in powering various industries. With metal prices soaring, the demand for lithium has surged over recent years.
This article delves into the intricate world of lithium dynamics, exploring the factors influencing lithium prices, recent trends, and future projections.
Global production of lithium has seen a remarkable increase. In 2020, the total demand for lithium worldwide was 292 thousand metric tons of lithium carbonate equivalent.
Forecasts indicate a substantial rise to over 2.1 million metric tons by 2030, highlighting the industry’s exponential growth. This surge is primarily due to the rising battery demand for electric vehicles, which is expected to reach 3.8 million tons by 2035.
Source: The World Economic Forum
Data from the US Geological Survey shows that global lithium production reached 180,000 metric tons in 2021, with about 90% coming from just three countries.
Market Demand
Despite robust demand for lithium, growth experienced a decline year-on-year in 2023 due to economic slowdowns, particularly affecting the electric vehicle market in China. Additionally, accelerated capacity expansions led to an oversupply situation. These fluctuations underscore the delicate balance between supply and demand that significantly impacts lithium prices globally.
Economic Factors
Economic factors such as inflation rates and currency fluctuations also influence lithium prices considerably. These macroeconomic indicators directly impact production costs and subsequently affect pricing strategies within the lithium market.
Lithium prices have recently experienced a notable downward trajectory. As of December 18, prices plummeted by 80% within a year, and as of May 7, CIF North Asia price at $14,600/t. This decline has sparked discussions about the sustainability of this trend.
Expert insights suggest that low prices may lead to reduced supply and hesitant new investments amidst strong demand and cautious predictions.
Effect on the EV Sector
The lithium price drop has a significant impact on the EV sector. Reduced input costs present opportunities for manufacturers to recalibrate pricing strategies, potentially driving down EV costs and increasing consumer adoption rates. This shift highlights the interconnected nature of commodity pricing and its far-reaching consequences on diverse industries.
What’s the Future of Lithium Prices?
As the lithium market navigates significant fluctuations, industry experts provide valuable insights into future price trajectories. By examining expert predictions and analyzing market opportunities and challenges, stakeholders can comprehensively understand the dynamic landscape ahead.
In a recent interview, industry analyst Joe Lowry predicts that the lithium chemical supply is nearing equilibrium, with prices expected to rise by mid-2024 as inventories rebuild in key markets like China. Similarly, Andy Leyland emphasizes that the lithium market’s balance is delicate and that a projected surplus of 24,000 tonnes LCE in 2024 could quickly change due to market dynamics.
Staying informed about lithium carbonate and hydroxide prices is crucial for industry participants to capitalize on opportunities and navigate challenges. Monitoring real-time lithium prices and commodity trends provides invaluable insights for strategic positioning amidst market uncertainty.
On May 17th, Japan’s House of Councillors passed a new law to bolster the business environment for carbon capture and storage (CCS) technology which is crucial for achieving a decarbonized society. The legislation received majority support in the plenary session.
Key Provisions of Japan’s New CCS Law
The law mandates that the government introduce a permit system for businesses to facilitate CO2 capture from industries operating at variable scales and their underground storage. This measure is part of Japan’s broader strategy to achieve net-zero carbon emissions by 2050.
Role of Japan’s Ministry of Economy, Trade, and Industry (METI)
To foster a conducive business environment for CCS projects, theMinistry of Economy, Trade, and Industry (METI) of Japan will establish a licensing system. It will cover storage and exploration drilling rights, and develop business and safety regulations for storage companies and CO2 pipeline transportation businesses. Test drilling permits at potential CCS sites will initially be valid for four years. METI will designate suitable geological storage areas as “specified areas” and solicit operators, granting licensed operators prospecting and storage rights.
Notably, this is the first time the CCS bill defines operators’ rights and regulatory requirements. The main highlights of the newly introduced bill are:
CCS Sites and Business permits
Designate Suitable Areas: Identify specific regions where carbon dioxide (CO2) can be safely stored underground.
Grant CCS Business Permits: Select businesses through a public offering process and grant them permits to operate CCS projects.
Licensed operators will be given
Exploratory Drilling Rights: These rights allow businesses to drill and confirm if geological formations are suitable for CO2 storage.
Storage Rights: These rights permit the actual storage of captured CO2 underground.
Obligations and Liabilities
The law imposes several obligations on businesses:
Monitoring: Businesses must continuously monitor for any CO2 leaks.
Liability for Accidents: Businesses are liable for compensation regardless the leak was due to negligence or an intentional act.
CCS project operators must have their implementation plans approved by the Minister for Economy, Trade, and Industry. Once the stored CO2 is stabilized, theJapan Organization for Metals and Energy Security (JOGMEC) will take over the management. Operators will be liable for compensation during accidents, regardless of intent or negligence.
Subsidy System for Hydrogen
In addition to the CCS law, the House of Councillors also passed a law to establish a subsidy system. This system aims to narrow the price gap between hydrogen and natural gas, promoting hydrogen as a viable next-generation energy source.
This comprehensive approach strengthens Japan’s efforts to reduce carbon emissions through CCS and supports the broader adoption of hydrogen energy, aligning with the country’s long-term environmental goals.
Japan Advances Carbon Capture under Green Transformation (GX) Policy
Japan’s newly approved law is crucial to achieving a decarbonized economy. It’s an extension of the Green Transformation (GX) Policy that existed since last year.
Unveiled in February 2023 and approved in July 2023, Japan’s GX policy integrates fiscal and policy measures, potentially amounting to a $1 trillion (150 trillion yen) budget. This policy provides a roadmap for the next decade, balancing economic growth with environmental sustainability.
Japan’s Prime Minister Fumio Kishida said,
“First of all, green transformation, or GX in short, does not just mean the departure from fossil energy. It involves the implementation of major reforms of energy, all industries, and our economy and society, toward achieving the goal of carbon neutrality by 2050. To this end, Japan has made a highly challenging international pledge of a 46 percent reduction in greenhouse gas emissions by fiscal 2030.”
Image: The Tomakomai CCS Demonstration Project- Japan’s first full-chain CCS project, captured and stored CO2 from a coastal oil refinery on Hokkaido Island in Japan from 2016 to 2019.
source: IEA
Based on International Energy Agency (IEA) calculations,
Japan’s estimated annual storage capacity for CCS could range from 120 to 240 MTs by 2050. The goal is to have the first commercial CCS project operational by 2030.
By advancing these legislative measures, Japan aims to create a robust framework for CCS and low-carbon hydrogen, supporting its long-term decarbonization and economic growth objectives.
By enacting these laws, Japan is taking significant steps toward a sustainable and decarbonized future, leveraging both CCS technology and hydrogen energy to mitigate climate change.
Electricity use in the United States was around 4,085 terawatt hours in 2022, per Statista data. Projections indicate that U.S. electricity consumption will rise to 5,178 terawatt hours by 2050. That’s an increase of about 27% from 2022 levels.
In December 2023, grid regulators warned of potential power demand surpassing supply in the coming decade. Notably, consulting firm Grid Strategies noted that the “era of flat power demand is over.”
According to some experts, long-term investments in natural gas infrastructure pose a threat to the nation’s commitment to halving economy-wide greenhouse gas emissions by 2030, which could result in stranded assets.
For instance, Lauren Shwisberg, a principal in the carbon-free electricity practice at RMI, emphasized the need for a significant reduction in gas generation and emissions in the power sector by 2035. However, current utility plans suggest otherwise.
RMI’s latest forecast, based on data from 121 utility resource plans, projects an 18% increase in US natural gas-fueled power generation between 2024 and 2035.
This trend raises concerns about aligning energy development with climate goals, highlighting the challenges of transitioning to a cleaner grid.
Balancing Climate Goals with Gas Infrastructure
Limiting global warming to 1.5°C above preindustrial levels calls for states to cut emissions across sectors by nearly 50% by 2030. However, US CO2 emissions from gas plants were 39% higher in 2023 than in 2017, as per the US Energy Information Administration. Notably, 2023 saw CO2 emissions from gas plants surpass those from coal for the first time.
More remarkably, the surge in energy use by data centers, driven by the rise of AI, has placed the energy industry in a challenging position.
Estimates show that power demand from data centers will explode. The International Energy Agency forecasts that energy use in data centers will rise to around 1,050 TWh in 2026, from 200 terawatt-hours (TWh) in 2022. Putting this in context, this is equivalent to the energy demand of Germany.
Ernest Moniz, head of the nonprofit energy research group EFI Foundation, addressed this power concern during a recent interview.
“There’s some battery storage, there’s some renewables, but the inability to [quickly] build electricity transmission infrastructure is a huge impediment. So we need the gas capacity.”
Monitz emphasized that natural gas still has a role in a decarbonized world. Despite this, US utilities continue to advance new natural gas projects. And while ratepayer advocates, environmental groups and climate-conscious corporate customers closely scrutinize their plans.
Regional Developments and Controversies
Wisconsin Electric Power Co., part of WEC Energy Group, seeks state approval for $2.1 billion in rate increases to fund 2 new natural gas-fired plants, an LNG storage facility, and 33 miles of pipelines. This infrastructure will replace 4 coal units shutting down by 2025.
In Arizona, the Salt River Project (SRP) plans to add 2 GW of gas-fired generation by 2035 to integrate 9.5 GW of renewables and storage and replace over 1.3 GW of retiring coal capacity. SRP cites a 40% rise in demand over the next decade.
Critics, including the Sierra Club, argue this plan will exacerbate water issues, raise costs, and worsen the climate crisis. SRP’s analysis showed no-gas options would not be reliable or affordable.
In Texas and the Southeast, utilities are pushing for more natural gas generation. Duke Energy’s updated plans for the Carolinas include 10 new gas-fired units, adding nearly 9 GW by 2033. These “hydrogen-capable” plants aim to help Duke reach carbon neutrality by 2050, despite public concerns over rising renewables costs.
Georgia Power Co.’s proposal for over 1.4 GW of new gas and oil-fired power by 2027 was approved, despite Microsoft’s claims of over-forecasting demand. The Southern Environmental Law Center estimates these investments will cost customers about $3 billion.
Critics argue that regulators in states without emissions reduction laws focus solely on costs, ignoring climate benefits. For a watchdog utility group’s leader, David Pomerantz, utilities’ attempts to balance decarbonization goals with building new gas plants are contradictory.
As the US faces growing power demands and strives to meet climate goals, new fossil fuel plants raise significant concerns. The projected increase in natural gas infrastructure may conflict with the nation’s emissions reduction commitments, highlighting the challenges of balancing energy needs with environmental responsibilities.
With almost every nation endorsing the Paris Agreement, the goal is to limit global warming to below 2°C by reducing greenhouse gas (GHG) emissions. However, a significant amount of carbon dioxide has already been accumulated in the atmosphere since the Industrial Revolution. Merely halting emissions would not be enough to reverse climate change.
Climate scientists suggest to remove 10 gigatons of CO2 annually by 2050 and 20 gigatons thereafter to meet the climate target.
In response, professionals and researchers worldwide are actively exploring carbon removal technologies to mitigate the impact of accelerating climate change. Research institutions, in particular, are focusing on curbing their GHG emissions and developing technologies for carbon capture and storage (CCS).
Negative emissions solutions like CCS or carbon capture utilization and storage (CCUS) are gaining importance. Top universities worldwide are actively contributing to this effort, each with specialized research groups focusing on various aspects of carbon capture and utilization. These ranges from capturing CO2 from smokestacks to developing innovative products that use atmospheric CO2 in beneficial ways.
Other top universities are implementing ways on how to directly curb their own carbon emissions and footprint to reach Net Zero goals. Here are the top six universities in the United States and what they’re doing to help in this fight.
Harvard University and Its Zero Goal
Faculty and students from across the Harvard community are working on ways to address climate change and its effects. The university has implemented various sustainability and climate initiatives. Here are some of them:
Salata Institute for Climate and Sustainability: Established in fall 2022 with a generous $200 million gift from Melanie and Jean Salata, the institute serves as a hub for interdisciplinary collaboration, research, and engagement aimed at addressing the climate crisis.
Sustainability Management Council (SMC): Senior leaders in operations, facilities, and administration convene regularly to facilitate the sharing of best practices and achieve the University’s sustainability and energy management objectives.
Council of Student Sustainability Leaders (CSSL): Comprising graduate and undergraduate students involved in sustainability-related groups, the CSSL fosters collaboration, networking, and feedback on Harvard’s sustainability initiatives.
Climate Solutions Living Lab: This initiative combines pedagogy and applied research to advance climate goals through interdisciplinary student projects focused on solutions for the building and energy sectors.
Harvard Green Office Program: This program guides staff in creating sustainable workspaces, promoting environmental stewardship across the University.
Resource Efficiency Program (REPs): Founded in 2002, REPs promotes sustainability within undergraduate housing through peer-driven educational initiatives.
Harvard’s Sustainability Action Plan underscored the university’s unwavering commitment to environmental stewardship and its relentless pursuit of sustainability initiatives both on campus and in broader contexts.
Central to Harvard’s agenda is the acceleration of clean energy adoption and the complete transition away from fossil fuels. Through these efforts, Harvard aims to establish a blueprint for a decarbonized world as shown by its decreasing carbon footprint.
Harvard University Carbon Emissions, 2006-2022
Goal Zero: A Fossil Fuel-Free Harvard
Harvard has set a bold objective to achieve fossil fuel-free status by 2050, surpassing the benchmark of merely attaining “carbon neutrality.”
While carbon neutrality typically involves offsetting emissions through initiatives like renewable energy procurement and tree planting, Goal Zero, as embraced by Harvard, aims for the complete elimination of fossil fuel usage. This approach acknowledges the comprehensive spectrum of harms stemming from fossil fuel consumption, going beyond carbon emissions alone.
Recognizing the manifold negative impacts of fossil fuels, which extend to their role as key components in plastics and toxic chemicals, Harvard also endeavors to curb these dependencies. This multifaceted approach aligns with the university’s broader mission to mitigate waste and foster a healthier, more sustainable value chain.
As an interim measure to progress towards Goal Zero, Harvard has established a short-term target to achieve fossil fuel neutrality by 2026. This entails eliminating campus emissions (both Scope 1 and Scope 2) and investing in initiatives that not only neutralize GHG emissions but also mitigate the adverse health effects of fossil fuel usage, such as air pollution.
The university is intensifying efforts to reduce Scope 3 emissions, focusing on emissions generated throughout its value chain. This includes various areas such as construction, food production, air travel, commuting, and procurement of goods and services.
Its value chain (Scope 3) emissions goals and priorities are as follows:
25% reduction in food-related emissions by 2030
20% lower embodied carbon in new construction
In 2023, the Harvard Kennedy School took a significant step toward mitigating its environmental impact by purchasing its inaugural portfolio of high-quality carbon offsets. These offsets were to compensate for the climate and health-related damages stemming from Harvard Kennedy School (HKS) travel activities throughout the year, as well as to offset the institution’s broader global emissions footprint.
Harvard carbon footprint ecosystem
By prioritizing human health, social equity, and slashing carbon footprint, Harvard aims to generate positive impacts through its transition to fossil fuel neutrality.
MIT’s Plan for Action on Climate Change
Since the announcement of Massachusetts Institute of Technology’s Plan for Action on Climate Change in October 2015, MIT Energy Initiative (MITEI) has made significant strides in research, education, outreach, and engagement efforts aimed at combating climate change and advancing clean energy solutions.
MITEI established its Carbon Capture, Utilization, and Storage (CCUS) Center in 2006 as part of its commitment to addressing climate change through innovative energy solutions. The center brings together faculty members focused on research in 3 key areas: capture, utilization, and geologic storage of CO2.
Within the CCUS Center, researchers explore a range of technologies and methods, including molecular simulation, materials design, catalytic processes, fluid mechanics, and advanced imaging techniques. They are developing emerging technologies for gas storage and separation.
Geologic storage research investigates the behavior of CO2 in underground reservoirs, including its interactions with pore fluids, and employs advanced imaging techniques to better understand the opportunities and risks associated with storing carbon dioxide underground.
Through these efforts, MIT is contributing to the development of innovative solutions for carbon capture and storage, essential for mitigating climate change. Here are the other key achievements of the university in various aspects of its efforts in cutting carbon emissions:
Research:
MITEI’s research portfolio focuses on deep decarbonization across four major energy sectors—power, transportation, industry, and buildings—to address climate change and expand access to clean energy.
The establishment of Low-Carbon Energy Centers has facilitated collaborative research efforts with industry partners to tackle pressing energy challenges. These centers help in advancing projects related to mobility systems, energy storage, carbon capture, and more.
Major studies and reports, such as “Insights into Future Mobility” and “The Future of Nuclear Energy in a Carbon-Constrained World,” have provided comprehensive analyses of key technologies and sectors, informing policy and business decisions.
Education and Outreach:
MITEI has been actively involved in educating students and the public about climate change and clean energy solutions through various initiatives, including workshops, seminars, and educational programs.
The Mobility Systems Center, established as part of MITEI’s research efforts, has contributed to the understanding of individual travel decisions and the importance of sustainable mobility.
Engagement and Collaboration:
Collaboration with industry partners, including global engineering and energy companies like IHI, Iberdrola, Eni S.p.A., and ExxonMobil, has led to significant advancements in clean energy technologies and policies.
A new study [by Joel Jean, a former MIT postdoc, MITEI Energy Fellow, and CEO of startup company Swift Solar; Vladimir Bulović (Electrical Engineering and Computer Science; MIT.nano); and Michael Woodhouse (NREL)] shows that replacing new solar panels after just 10 or 15 years, using the existing mountings and control systems, can make economic sense, contrary to industry expectations that a 25-year lifetime is necessary. Credit: MIT
Membership agreements and collaborations with companies have resulted in substantial financial support for research projects, professorships, and technology development initiatives.
MIT is also joining the race to zero by aiming to eliminate direct emissions by 2050, with a near term milestone of net zero carbon campus emissions by 2026.
The university takes a multifaceted approach to achieve such climate goal. In general, the school will focus on:
Decarbonizing its on-campus energy systems,
Enabling large-scale clean energy generation on- and off-campus, and
Embracing new decarbonization solutions.
These efforts underscore MIT’s commitment to addressing climate change and accelerating the transition to a sustainable energy future.
Yale University’s Center for Natural CO2 Capture
Founded with a transformative donation from FedEx and as a part of Yale’s Planetary Solutions Project, the Yale Center for Natural Carbon Capture is dedicated to exploring the science of natural carbon capture. Its mission is to develop solutions that contribute to addressing some of the most pressing challenges of our time.
The Center introduces fresh and innovative research and researchers to the Yale community, forging connections with relevant research laboratories both on and off-campus. Through funding research projects, workshops, and fellowships, the Center supports initiatives at the University and invests in training the next generation of scientists and practitioners. These efforts revolve around three primary Focus Areas:
Over the past year, the Center has achieved several notable milestones. Among these, two standout initiatives have emerged: the Yale Applied Science Synthesis Program (YASSP) and significant advancements in enhanced rock weathering (ERW).
YASSP connects academic researchers, policymakers, and those managing lands to answer applied questions about how land management decisions affect the services provided by forests, croplands, wetlands, rangelands, and grasslands.
Yale’s Net Zero Goal
Yale University is dedicated to achieving zero actual carbon emissions by 2050, with an interim objective of reaching net zero emissions by 2035. This goal will primarily be accomplished by reducing campus emissions by 65% below 2015 levels and, if needed, utilizing high-quality, verifiable carbon offsets.
The ultimate aim of zero actual carbon emissions will involve minimizing campus emissions entirely and implementing clean energy technology. The university managed to cut emissions by 28% since 2015, as seen below, despite a huge increase in campus size.
The university’s approach to climate action is comprehensive and encompasses all aspects of its operations. Yale is expanding its educational offerings to address the complexity and magnitude of global climate challenges.
Additionally, investments are being made in campus infrastructure and emerging technologies to mitigate the university’s environmental impact. Yale has also adopted fossil fuel investment principles to facilitate a transition towards a decarbonized energy future.
Responsible energy use through conservation, efficiency upgrades, and innovative approaches to campus operations.
Ensuring that energy generation on campus is efficient and environmentally friendly.
Implementing a greenhouse gas emissions reduction strategy to steadily progress towards zero emissions targets.
Purchasing and retiring high-quality, verified carbon offsets when necessary to meet emissions goals.
Stanford University Center For Carbon Storage
Stanford University leads global research on carbon sequestration, tackling critical questions on flow physics, monitoring, geochemistry, and more. They study CO2 storage in depleted oil and gas fields, saline reservoirs, and explore policies and techno-economics.
Stanford also focuses on capturing CO2 with engineered and natural applications, and combines bioenergy production with carbon capture to achieve net-negative emissions. Additionally, they research the impact of carbon taxes and cap-and-trade systems on CO2 capture and storage implementation.
The Stanford Center for Carbon Storage (SCCS)
The Stanford Center for Carbon Storage is focused on advancing crucial Carbon Capture and Storage (CCS) technologies aimed at capturing greenhouse gas emissions from smokestacks and securely storing them. Their research efforts are directed towards developing cost-effective methods for permanent storage on an industrial scale.
Visit this link to get to know more about the university’s CCS research highlights.
The center is actively addressing fundamental questions related to flow physics, monitoring techniques, geochemistry, and simulation of CO2 transport and behavior once stored underground. Their storage research encompasses a variety of geological formations, including fully-depleted oil fields, saline aquifers, and other unconventional reservoirs.
After completing the full year of 100% renewable electricity, Stanford University revealed new goals to get rid of construction and food-related emissions by 2030.
The university is currently monitoring Scope 3 emissions across eight categories, including business and student travel, fuel and energy activities, waste, employee commute, construction, purchased goods and services, leases, and food purchases.
There’s still much work to be done to decrease Stanford’s scope 3 emissions. But with the two emission reduction goals revealed last year, they represent significant progress in the university’s understanding of and ability to reduce these emissions.
These goals underscore climate action as a fundamental value for the departments involved and showcase close collaboration on sustainability initiatives across the university.
Arizona State University: The Center For Negative Carbon Emissions
Their goal is to demonstrate a system that enhances the efficiency and scalability of DAC while reducing costs. Currently, they are testing a prototype technology utilizing “mechanical trees” to extract CO2 from the air. These 10-meter-high structures employ a sorbent, an anionic exchange resin, which absorbs CO2 when dry and releases it when exposed to moisture.
ASU “mechanical tree”
Within just 20 minutes, these “mechanical trees” can capture greenhouse gases brought by the wind. The collected CO2 is then converted into a liquid that can be used to produce carbon-neutral fuel, other products, or sequestered for permanent disposal.
The research on mechanical trees has been ongoing for two decades and was pioneered by Dr. Klaus Lackner, the director of the Center for Negative Carbon Emissions. These trees are remarkably efficient, being a thousand times more effective than natural trees at removing CO2 from the atmosphere.
In addition to technological advancements, the center also examines the economic, political, and social implications of widespread implementation of affordable DAC technology, aiming to lead the way in the field of direct air capture.
ASU Climate Positive Pledge
Since fiscal year 2019, the university has been carbon neutral for scope 1 and 2 emissions through energy efficiency measures, green construction, offsetting, and renewable energy acquisition. The university is working toward achieving the same for its Scope 3 emissions by 2035.
ASU emphasizes energy efficiency and conservation through various initiatives. The university also promotes low-carbon energy sources, with 43% of energy in 2022 coming from such sources.
The school further aims for carbon-neutral transportation by 2035, achieving a milestone with single-occupancy vehicle travel reduced to 59% in 2022. Initiatives include bike parking expansion, ride-sharing incentives, electrification of fleet vehicles, and free intercampus shuttles. ASU also imposes a carbon price on air travel to mitigate emissions.
1. Scope 1 emissions result primarily from combusting natural gas to generate heat and electricity for university buildings and from university vehicles. Scope 2 emissions come from external utility providers that supply ASU with electricity and chilled water. 2. Scope 3 emissions primarily occur in third-party commuting and air travel associated with ASU operations.
Hydrogen technology startups have secured over $1 billion in venture investment in the past four months, according to Crunchbase data. This already surpasses two-thirds of last year’s total, and the surge includes several significant early-stage rounds, including:
Hysata: Last week, the Australian electrolyzer developer raised $110 million in a Series B co-led by BP Ventures and Templewater.
Koloma: Denver-based Koloma, focused on geologic hydrogen resources, secured $246 million in a Series B led by Khosla Ventures earlier this year.
Hydrogen energy startup investment didn’t peak in 2021. Instead, funding reached its highest in 2022 and is on track to surpass that this year.
Notable Hydrogen Startups and Funding
Crunchbase data lists 13 well-funded hydrogen startups that raised significant capital recently. Collectively, they have secured $3.66 billion in equity funding, plus additional grant and debt financing.
Key examples include:
HysetCo: Based in France, HysetCo operates hydrogen distribution stations and mobility services. It raised $216 million in April, managing a fleet of over 500 hydrogen vehicles and distributing nearly 30 tons of hydrogen monthly.
Ohmium: The Nevada-based company is manufacturing proton exchange membrane systems to produce pressurized, high-purity hydrogen. It secured $295 million in Series C in April last year.
Tree Energy Solutions: This Brussels-based company closed a $150 million Series C in April to use renewable energy for generating green hydrogen, which it combines with recycled CO₂ to create e-NG.
ZeroAvia: The California-based developer of hydrogen-electric engines for zero-emission flight raised $116 million in a Series C in September. Airbus is the lead investor, along with United Airlines and Alaska Air Group.
Electric Hydrogen: This Massachusetts company raised $380 million in a Series C last October. It manufactures electrolyzers to produce hydrogen at the lowest cost and is the green hydrogen industry’s first unicorn.
A week ago, the US Department of Energy revealed its R&D priorities to cut clean hydrogen cost production, potentially at $1 per kilo by 2031.
Investors’ increasing interest in green hydrogen is driven by government incentives, technological advancements reducing costs, and favorable market conditions. This combination of factors suggests a promising future for low-emission hydrogen technologies, potentially marking a pivotal moment for the industry.
Data from Mckinsey & Company below shows that the hydrogen production capacity announced increased by 2030 (over 40%). This capacity is about 50% the volume necessary to be on track to net zero emissions.
Source: McKinsey & Company
In April, the EU Commission approved a $380 million German scheme to enhance renewable hydrogen production. This groundbreaking initiative will be administered exclusively through the European Hydrogen Bank’s “Auctions-as-a-Service” tool.
The scheme supports the objectives of REPowerEU and The European Green Deal. It outlines a comprehensive strategy to reduce reliance on fossil fuels and transition to a net zero economy.
By fostering renewable hydrogen production, the scheme aims to decrease dependence on Russian fossil fuels and contribute to the EU’s green energy future.
India, the world’s 3rd largest polluter plans to be the largest producer and exporter of green hydrogen by setting ambitious milestones. According to the Indian Ministry of New and Renewable Energy, the key goals include:
Production Capacity: Establishing a capacity to produce at least 5 Million Metric Tonnes (MMT) of green hydrogen annually by 2030.
Global Demand: Aiming to drive global demand for green hydrogen and its derivatives, such as green ammonia, to nearly 100 MMT by 2030. India targets capturing 10% of the global market, with an annual export demand of about 10 MMT of green hydrogen/green ammonia.
Decarbonization: Mitigating 50 MMT of CO2 emissions annually through the implementation of green hydrogen initiatives.
In the Gulf region, Oman Energy Development’s subsidiary, Hydrom, hosted a second-round public auction for green hydrogen development in the Dhofar Governorate. Hydrom offers three prime blocks ranging from 340km² to 400km² in the Dhofar Governorate for green hydrogen production. The auction will leverage the region’s abundant renewable energy resources to build a robust green hydrogen industry in the sultanate.
The surge in venture investments in hydrogen technology startups highlights the sector’s growing momentum. With significant early-stage funding rounds and robust global initiatives, the future of green hydrogen looks promising.
C-Capture, the UK-based pioneer in carbon capture solutions, has initiated testing on a novel technology to reduce carbon emissions from cement production. This is undoubtedly an exciting development for the cement industry marking their ongoing efforts to mitigate its environmental impact and contribute to global decarbonization.
Notably, as part of the XLR8 CCS project, C-Capture, and Wood, a top-tier engineering firm in the UK, have designed and installed a new Carbon Capture solvent compatibility unit (CCSCU). XLR8 CCS project exclusively targets the “hard to abate” industries. Currently, it is operating at the Heidelberg Materials cement plant at Ketton, Lincolnshire, UK.
Unleashing C-Capture’s Next-Gen Carbon Capture Technology for Cement
C-Capture mentions concrete as the second most used material on Earth after water. Three tonnes of concrete are used annually per person worldwide. Cement, made from clinker and gypsum is the main component of all construction works.
Tom White, CEO ofC-Capture said:
“Decarbonising industry is one of the most pressing global issues. C-Capture’s XLR8 CCS project is a critical step in the race to net zero as we work with our innovative technology and leading industry partners to demonstrate that an affordable carbon capture solution is a reality – even for industries that are difficult to decarbonize.”
The cement industry produces 4 Gt of cement annually, generating 1.5-2.2 Gt of CO2 emissions, about 5% of the global total.
It needs to decarbonize because: Clinker manufacturing uses coal or natural gas-fired kilns to heat limestone (CaCO3), emitting large volumes of CO2 to form lime (CaO).
The World Business Council for Sustainable Development estimates that by 2050, the cement industry must reduce CO2 emissions by 0.5 Gt annually to keep global warming within 2 °C above pre-industrial levels.
Subsequently, C-Capture’s hallmark CC technology, now being tested will effectively remove CO2 from the flue gas emissions produced during cement manufacturing. This unit will illustrate the effectiveness and durability of the technology in practical scenarios.
(*Flue gases are the gases released to the atmosphere from exhaust pipes of heavy industries.)
Innovative Chemistry for a Greener Solution
C-Capture’s technology utilizes a fundamentally different chemistry, unlike other commercially available carbon capture methods. It does not rely on amines and is nitrogen-free. This technology offers a lower-cost and environment-friendly solution, the end product can be renewable fuel like biomethane. Additionally, it is extremely robust andcapable of withstanding the challenging flue gases produced by the heavy sectors.
XLR8 CCS Project: A Multi-Industry Initiative
The XLR8 CCS project is showcasing the compatibility of C-Capture’s carbon capture technology across three difficult-to-decarbonize industries: energy from waste (EfW), cement, and glass. The project would conduct six carbon capture trials within these sectors.
Wide Deployment Across Industry Partners
CCSCUs are being deployed at sites owned by project partners including Heidelberg Materials, Energy Works Hull, Glass Futures, and Pilkington UK (part of NSG Group). The success of this project will position C-Capture and its partners to deploy commercial-scale carbon capture facilities across these industries by 2030, potentially capturing millions of tonnes of CO2 per year.
Major Funding Injection Supercharges C-Capture’s Carbon Capture Project
The UK Department of Energy Security and Net Zero awarded a £1.7 million grant to XLR8 CCS from its £1 billion Net Zero Innovation Portfolio. Private sector contributions brought the total funding to £2.7 million.
This funding comes from the £20 million Carbon Capture, Usage and Storage (CCUS) Innovation 2.0 program, which aims to accelerate the deployment of next-generation CCUS technology in the UK.
Simon Willis, CEO, ofHeidelberg Materials UK has emphasized deeply the urgency to decarbonize the toughest sectors. He noted,
“Carbon capture is a critical part of our strategy to decarbonize cement production and essential if we are to reach net zero and help our customers achieve their own decarbonization goals.”
He also envisions developing new technologies and partnerships, exemplifying C-Capture’s dedication. The Heidelberg group will roll out this technology at other sites if the first run becomes successful.
Roadmap to 2030: Strategies for Curbing Cement Emissions
Reducing CO2 emissions while meeting cement demand will be challenging. Since 2015, the emissions from cement production surged to ~ 10%, primarily due to the high clinker-to-cement ratio within China. Therefore, curbing emissions approximately by 20% by 2030 will significantly depend on:
Direct emissions intensity of cement production in the Net Zero Scenario, 2015-2030
Sources: IEA calculations, including inputs from GCCA Statistics and other sources.
Like C-Capture, many industries are also revolutionizing their cement production techniques. It distinctly shows a gradual decline in CO2 emissions from the cement industry in the coming years (2030), thus enhancing the net zero transition.
Tech giants including Google, Meta, Microsoft, and Salesforce have announced the formation of the Symbiosis Coalition, a significant advance market commitment (AMC) aimed at purchasing nature-based carbon removal credits in the voluntary carbon market.
Collectively, these companies plan to contract up to 20 million tons of high-certainty impact nature-based carbon removal credits by 2030. This commitment emphasizes equitable outcomes for the communities involved in these projects.
Nature Restoration: A New Standard for Carbon Removal
Nature restoration is essential for meeting climate goals but is complex and costly. Effective projects need advanced technology, equitable community engagement, and balanced environmental benefits.
Moreover, the market for nature-based carbon removal struggles due to perceived quality issues and uncertain investor willingness, affecting public trust.
The Symbiosis Coalition members aim to address these challenges by signing long-term agreements for high-quality projects that use conservative climate impact assumptions, best practices, and fair compensation for Indigenous Peoples and local communities. By signaling strong demand and willingness to pay, they hope to set clear standards and promote more successful restoration projects.
Julia Strong, Executive Director of Symbiosis, highlighted that:
“Symbiosis represents a steadfast commitment to the importance of nature to climate action and the role of carbon markets, when done right, to financing critical climate solutions…Symbiosis sends a strong signal to project developers that buyers are willing to pay what it takes for high-quality projects that benefit the environment and local communities.”
Objectives and Strategy of the Symbiosis Coalition
High-Quality Carbon Removal Projects: By ensuring a strong demand signal and committing to pay the true cost of developing high-quality carbon removal projects, Symbiosis aims to set a standard for effective and equitable restoration projects.
Collaborative Partnerships: The coalition intends to work with investors, NGOs, market standard setters, and project developers to define and promote high-quality restoration practices.
Market Clarification and Development: By partnering with like-minded entities, Symbiosis aims to clarify what constitutes “good” restoration and enable the implementation of more projects that meet these standards.
Recent research by Carbon Direct, supported by Meta, emphasized that forming a “buyers club” focused on ecological restoration is crucial for ensuring quality and credibility in nature-based projects. Symbiosis has drawn inspiration and lessons from initiatives like Frontier, LEAF, and other AMCs to shape their strategy for the nature-based carbon removals market.
Filling the Investment Gap for Nature-Based Solutions
While acknowledging the necessity to reduce their own emissions, the companies involved in the Symbiosis Coalition recognize the importance of a robust carbon market and nature-based solutions in addressing climate change. The coalition’s approach is aligned with the insights from a recent McKinsey analysis.
The researchers indicated that carbon dioxide removal requires $6 trillion – $16 trillion in investment by 2050 to meet net zero targets.
Despite the urgent need for significant investment in carbon removals, only about $15 billion has been invested in such initiatives to date, highlighting a substantial under-investment in ecosystem protection and restoration.
Projections indicate that the gap between the estimated investment and the necessary funding by 2030 to ensure CDR is on track to meet 2050 targets ranges between $400 billion and $1.6 trillion.
The Coalition aims to address this gap by providing the necessary financial support and market incentives to scale up high-integrity nature-based solutions.
Symbiosis will complement other critical, climate-focused advance market commitments (AMCs) that encourage investment in forest protection at the jurisdictional level and aim to scale the market for engineered carbon removals. By doing so, the coalition seeks to foster a more integrated and effective approach to mitigating climate change.
The initiative establishes a strong foundation for specific quality criteria used in the procurement process, initially focusing on forest and mangrove restoration projects. It is guided by these 5 quality pillars:
Conservative accounting,
Durability,
Social and economic benefits,
Ecological integrity, and
Transparency.
These pillars build on existing standards and align with the Integrity Council for the Voluntary Carbon Market (IC-VCM) Core Carbon Principles (CCPs).
Expanding the Coalition’s Impact
Members of the Symbiosis Coalition will have the opportunity to purchase carbon removal credits contributing to their pledges through a joint Request for Proposals (RFP), in addition to their own efforts. The initial RFP will target afforestation, reforestation, and revegetation (ARR) projects, including agroforestry.
Add image of agroforestry…
With input from independent technical advisors, the Coalition will develop criteria for ARR projects, building on the most conservative standards for measuring real nature-based climate impact. These criteria include:
dynamic baselining to ensure additionality,
robust approaches to prevent leakage, and
a focus on creating long-lasting projects.
Furthermore, projects will be prioritized based on financial transparency, biodiversity benefits, and equitable engagement with Indigenous Peoples and local communities.
Finally, the Coalition seeks to expand its membership to include other companies and collaborate with the broader restoration and carbon market ecosystem, encompassing investors, NGOs, standards bodies, project developers, researchers, and other stakeholders.
In conclusion, the Symbiosis Coalition represents a forward-thinking approach to voluntary carbon markets, emphasizing high-quality, nature-based carbon removal credits. It aims to create a robust market for nature-based solutions that significantly contribute to global climate goals.
Small Modular Reactors (SMRs) are emerging as a pivotal technology in the clean energy transition. These compact, scalable nuclear reactors offer a promising solution to meet growing energy demands while reducing greenhouse gas emissions. And this is what Sam Altman’s nuclear power startup company, Oklo, is developing. It recently debuted on the U.S. stock market alongside Nano Nuclear Energy.
Oklo has gone public through a special-purpose acquisition company. The startup merged with AltC Acquisition Corp., Altman’s SPAC, and trades on the New York Stock Exchange under “OKLO.” The nuclear startup focuses on developing SMRs.
SMRs and Why They’re Important for Energy Transition
Small modular reactors (SMRs) are advanced nuclear reactors with up to 300 MW(e) capacity per unit, roughly one-third of traditional reactors’ capacity. These reactors are significantly smaller than those from competitors like NuScale and TerraPower, which have higher capacities.
They offer numerous advantages due to their small size and modular nature. SMRs can be factory-assembled and transported to sites unsuitable for larger reactors, making them more affordable and quicker to construct. This modularity allows incremental deployment to match energy demand.
SMRs address energy access challenges, particularly in areas with limited grid coverage. They can be integrated into existing grids or operate off-grid, providing low-carbon power for industries and communities. Microreactors, a subset of SMRs producing up to 10 MW(e), are ideal for remote regions and as emergency backup power, replacing diesel generators.
SMRs also have reduced fuel requirements, needing refueling every 3 to 7 years, compared to 1 to 2 years for conventional reactors. Some designs can operate up to 30 years without refueling.
Per market projection, SMRs will be worth around $8.06 billion by 2032.
Advanced SMRs are central to the Department of Energy’s (DOE) strategy for safe, clean, and affordable nuclear power. These reactors, ranging from tens to hundreds of megawatts, are versatile for power generation, industrial processes, and desalination.
The DOE supports the development of light water-cooled SMRs, which are under Nuclear Regulatory Commission review and expected to deploy in the late 2020s to early 2030s. The Advanced SMR R&D program, started in 2019, aims to accelerate SMR technology availability by partnering with NuScale Power and UAMPS to demonstrate new reactor technology at Idaho National Laboratory.
Additionally, a 2018 funding opportunity supports innovative nuclear concepts to improve the economic viability of nuclear power, fostering U.S. energy independence and grid resilience.
Public and private institutions globally are actively advancing small modular reactor technology with the goal of deployment within this decade. Notably, Russia’s Akademik Lomonosov, the world’s first floating nuclear power plant, commenced commercial operation in May 2020, utilizing two 35 MW(e) SMRs.
Additionally, SMRs are under construction or in the licensing stage in various countries including Japan, Canada, China, Russia, UK, and the United States.
Over 80 commercial SMR designs worldwide target diverse outputs and applications such as electricity, hybrid energy systems, heating, water desalination, and industrial steam. While SMRs boast lower upfront capital costs per unit, their economic competitiveness remains to be proven upon deployment.
Oklo focuses on liquid-metal-cooled, metal-fueled fast reactors, which have over 400 reactor-years of operating experience and inherent safety features. The first power plant to produce electrical power from fission, EBR-I, and its successor, EBR-II, demonstrated the safety and efficacy of this technology.
EBR-II operated for decades, proving it could safely shut down without damage during severe challenges, such as those similar to the Fukushima accident. Notably, fast reactors can use nuclear waste as fuel, a capability demonstrated by EBR-II.
EBR-II produced about 20 MW of electric power for 30 years, showcasing inherent safety, fuel recycling, and superior operational characteristics compared to commercial reactors.
Meet Oklo’s Nuclear Powerhouse: Aurora
Oklo collaborates with Idaho National Laboratory to use EBR-II’s waste fuel for its Aurora Powerhouse. Aurora is a liquid-metal-cooled, metal-fueled fast reactor using recycled waste fuel, providing 15 MW of power, scalable to 50 MWe, and operating up to 10 years without refueling.
Oklo received a site use permit from the U.S. Department of Energy in 2019, secured fuel from Idaho National Laboratory, and submitted a license application to build its first plant. Oklo aims to bring its first plant online before the decade’s end.
While Oklo is focusing on building its Aurora Powerhouse, Nano Nuclear Energy is developing two microreactors, Zeus and Odin. Each reactor is producing 1 to 2 MW of electricity and inspired by naval reactors.
They plan to use IPO proceeds for further development and focus on nuclear fuel transportation and domestic production of High-Assay Low-Enriched Uranium (HALEU).
Nano aims to build a HALEU facility at Idaho National Laboratory, joining efforts to create a reliable U.S. HALEU source after Congress banned Russian uranium imports.
Oklo has agreements to supply power to Equinix Data Centers and Diamondback Energy. Nano’s shares rose to $4.51, a 13% increase from its IPO price, while Oklo’s shares dropped to $8.45 from $15.50.
Unlike traditional large-scale nuclear plants, SMRs are designed for flexibility, safety, and cost-efficiency, making them an attractive option for integrating into modern energy grids. As the world seeks sustainable and reliable energy sources, SMRs stand out as a key component in achieving a low-carbon future.
With the urgent need to mitigate climate change, the role of fossil fuel giants in exacerbating this crisis cannot be overstated. Concrete actions must be taken to address the environmental and social impacts caused by these entities. One such measure gaining traction is imposingtaxes on fossil fuel companies.
This month, a groundbreaking report,titled “Climate Damages Tax” revealed a proposed tax on fossil fuel extraction capable of mobilizing nearly $720 billion by 2030. This tax offers a substantial financial boost to the world’s most vulnerable nations facing severe climate crisis.
Let’s deep dive into this new taxation rule and its impact on fossil fuel giants and the economy at large.
Decoding the Case for Taxing the Fossil Fuel Giants
David Hillman, director of Stamp Out Poverty and co-author of the report, emphasized the report’s call to action.
“The richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income”.
He elaborated that this robust approach could significantly augment the funds for the recently established “Loss and Damage Fund”, a key outcome of the COP28 summit in Dubai.
Stamp Out Poverty: Advocating for Global Finance Solutions
Stamp Out Poverty, founded in 2006, advocates for new finance sources to combat poverty and climate change globally. It established the Make Polluters Pay coalition in 2021, collaborating with international partners to secure an agreement for setting up a Loss and Damage Fund at COP27.
Emergence of the Loss and Damage Fund
The Loss and Damage Fund emerged from pressure from low-income countries seeking assistance in mitigating climate threats. Many developing nations lacking resources to address climate challenges or boost renewable energy capacities also supported this move.
The fund’s purpose is to aid countries globally in combating climate change. Representatives from 24 nations now need to determine the fund’s structure, contributor countries, and allocation criteria.
Abu Dhabi hosted the first board meeting of the Global Climate Fund for Loss and Damage on May 9, 2024.
The meeting focused on financing innovative solutions from COP28, held in Dubai’s Expo City in late 2023, and the agreements outlined in the “UAE Consensus.”
Abdullah Balalaa, Assistant Minister of Foreign Affairs for Energy and Sustainability emphasized the board’s crucial role in ambitiously implementing this commitment, reflecting the UAE’s resolute to creating a sustainable future for all.
Stamp Out Poverty’s new Climate Damages Tax report
The Climate Damages Tax (CDT) is a fee on the extraction of each tonne of coal, a barrel of oil, or cubic meter of gas, calculated at a consistent rate based on how much CO2e is embedded within the fossil fuel.
Taxing major fossil fuel companies based in some of the world’s wealthiest countries could raise billions of dollars to address climate change.
It would further promote renewable energy projects in low-income nations worldwide.
Furthermore, The Paris Agreement assigns greater responsibility to wealthier nations for addressing climate change due to record high carbon emissions. Rich countries made commitments at COP summits but took limited action afterward.
Media reports state that they haven’t raised enough funds or started new projects to aid low-income nations in fighting climate change. Introducing a tax on oil and gas producers in affluent countries such as the U.S., the U.K., Japan, Spain, and Canada could finance developing nations and attract more investment to the Fund.
As already mentioned, the wealthiest Organisation for Economic Co-operation and Development (OECD) countries could yield up to $720 billion in climate funding by 2030.
A rate of $5 per tonne of CO2 starting this year in OECD countries and increasing by $5 a tonne each year would provide $900 billion in funding by 2030.
In an optimist’s opinion, taxing fossil fuel giants could boost climate finance by $900 billion by the end of the decade. The authors of the report propose allocating $720 billion of this to the Loss and Damage Fund, aiding countries most affected by climate change. The remaining funds could support the rich nations transitioning to the green revolution.
Several media reports say that recent profit levels for companies like ExxonMobil, Chevron, BP, and Shell have seen exponential growth. The industry, with its substantial resources, can afford higher taxation. Given the companies’ historical responsibility and financial capacity, imposing greater taxes on the fossil fuel sector should be a priority.
Investment Opportunities
The funds generated from taxing fossil fuel companies could be allocated strategically to address the most pressing climate-related challenges. Priority areas for investment include:
Infrastructure Resilience
Building infrastructure to withstand the impacts of extreme weather events such as floods, hurricanes, and wildfires is crucial. Investments in resilient infrastructure can help communities bounce back quicker from climate-related disasters.
Natural Resource Management
Protecting and restoring ecosystems such as forests, wetlands, and coastal areas sequesters carbon and enhances resilience to climate change.Funds can be directed towards conservation efforts and sustainable land management practices.
Community Resilience
Vulnerable communities disproportionately bear the brunt of climate change impacts. Thus, investing in community-based adaptation projects, such as early warning systems, heatwave preparedness, and social safety nets, can enhance resilience and reduce vulnerability.
Research and Innovation
Continued research and innovation are essential for developing cutting-edge technologies and solutions to address climate challenges. Funding research initiatives focused on renewable energy, CCS, and climate-smart agriculture can accelerate the transition to a low-carbon future.
A World Bank report reveals that countries with carbon pricing mechanisms generated a record $104 billion in revenues last year. Over half of the funds were directed towards climate and nature-related programs.
Carbon pricing, implemented through carbon taxes or emissions trading systems (ETS), is critical for reducing emissions and fostering low-emission growth.
Despite this achievement, the report emphasizes that current carbon taxes and emissions trading schemes remain insufficient to meet the Paris Agreement’s climate goals. Although 24% of global emissions are covered by some form of carbon pricing, less than 1% are subject to prices high enough to limit temperature increases to below 2°C.
The High-Level Commission on Carbon Prices recommended carbon prices be in the $50-100 per ton range by 2030. Adjusted for inflation, this range is now $63-127 per ton.
The World Bank stresses the need for increased coverage and higher pricing to drive significant reductions in global emissions and support the transition to a low-carbon economy. Here are the key takeaways from the WB’s “State and Trends of Carbon Pricing 2024.”
Increasing Uptake of Middle-Income Countries But Carbon Prices Remain Insufficient
Over the past year, the adoption of carbon pricing has been limited, but there are promising signs of uptake in middle-income nations.
Currently, there are 75 carbon taxes and emissions trading schemes in operation worldwide, reflecting a net gain of two carbon pricing instruments over the past 12 months. Notably, middle-income countries such as Brazil, India, and Turkey have made significant progress towards implementing carbon pricing mechanisms.
Progress has also been seen at the subnational level, despite some setbacks. Additionally, sector-specific multilateral initiatives for international aviation and shipping have advanced.
These developments indicate a growing global commitment to addressing climate change through economic incentives.
Despite a decade of strong growth, carbon prices remain insufficient. There exists a notable implementation gap between countries’ commitments and the policies they have put into place.
Currently, carbon pricing instruments cover around 24% of global emissions. While the consideration of new carbon taxes and emissions trading systems (ETSs) could potentially increase this coverage to almost 30%, achieving this will require strong political commitment.
Over the past year, carbon tax rates have seen slight increases; however, price changes within ETSs have been mixed, with 10 systems experiencing price decreases, including long-standing ETSs in the European Union, New Zealand, and the Republic of Korea. As a result, current price levels continue to fall short of the ambition needed to achieve the goals of the Paris Agreement.
Carbon Pricing Hit New Highs
In 2023, carbon pricing revenues reached new highs, exceeding USD 100 billion for the first time. This milestone was driven by high prices in the EU and a temporary shift in some German ETS revenues from 2022 to 2023.
ETS continued to account for the majority of these revenues. Notably, over half of the collected revenue was allocated to funding climate- and nature-related programs. Despite this record-breaking revenue, the overall contribution of carbon pricing to national budgets remains low.
On a positive note, emerging flexible designs and approaches reflect the adaptability of carbon pricing to national circumstances.
Governments are increasingly employing multiple carbon pricing instruments in parallel to expand both coverage and price levels. While carbon pricing has traditionally been applied in the power and industrial sectors, it is now being increasingly considered for other sectors such as maritime transport and waste management.
Additionally, governments continue to permit regulated entities to use carbon credits to offset carbon pricing liabilities, enhancing flexibility, reducing compliance costs, and extending the carbon price signal to uncovered sectors. Beyond mitigation, carbon pricing also provides significant fiscal benefits, further demonstrating its multifaceted advantages.
Carbon Credit Markets Saw Mixed Movements: ET vs. OTC
Governments, particularly in middle-income countries, are increasingly incorporating crediting frameworks into their policy to support both compliance and voluntary carbon markets. Despite this, credit issuances fell for the second consecutive year, and retirements remained substantially below issuances, resulting in a growing pool of non-retired credits in the market.
While compliance demand is building, voluntary demand continues to dominate. Prices declined across most project categories, with the exception of carbon removal projects, which saw increased interest.
Prices also proved more resilient in over-the-counter transactions, where buyers can pursue specific purchasing strategies. Credits with specific attributes—such as co-benefits, corresponding adjustments, or recent vintages—traded at a premium, highlighting the additional value these characteristics offer to buyers.
Restoring the Integrity of Carbon Credits
The subdued market and reduced confidence underscore the importance of initiatives aimed at rebuilding the integrity and credibility of carbon credits. The integrity of these credits remains a critical concern for the market.
To address this, the Integrity Council for the Voluntary Carbon Market has established a benchmark for credit quality, with the first tranche of approved credits anticipated in 2024. On the demand side, efforts have been directed towards emphasizing the reduction of operational and value chain emissions and exploring the potential role of carbon credits in addressing residual emissions.
Additionally, the development and implementation of Paris Agreement Article 6 continues, despite facing setbacks and delays. These efforts are essential to restoring confidence and ensuring the effectiveness of carbon credit markets.
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