January 2024 has witnessed more retirements compared to the same month last year, and it is projected to exceed 2022 retirements, according to Viridios AI report, a voluntary carbon credit market pricing and data provider.
Viridios is a climate tech platform providing carbon credit prices, valuations and project data to boost voluntary carbon market transparency.
Renewable energy credits (RECs), particularly from India, have experienced price increases, leading to a shift in demand from Chinese to Indian credits. In the native species removals market, activity is slow, but a premium is emerging for projects in this category.
However, the REDD+ segment is facing minimal activity, both in the market and over-the-counter, indicating subdued interest in this nature-based category.
Some sources indicate that political risks may not immediately impact pricing due to low credit supply. In contrast, others report current impacts on the Corresponding Adjustment market, with fluctuating premiums for cookstove credits.
For instance, the Rwandan Cookstove project saw a significant jump from $5.85 to $14 for vintage 2021. Cambodia released its Article 6 operations manual, though not yet published, for a water purifier project and an improved cookstoves project.
Riding the Wave: January Retirements Soar
The projects in Viridios analysis come under three major categories: Pre-registration (Development, Review), Registered (Registered, Operational, Verified, Completed, Renewal, Paused), and Issuing.
As seen below, India has the most new projects in the pipeline while household devices got the most count.
Per category, the REDD/REDD+ projects include efforts that avoid both planned and unplanned deforestation and degradation. Meanwhile, the ARR projects, which has the most count, involve various activities, including Afforestation, Reforestation, and Revegetation initiatives.
REDD+ Projects
ARR Projects
Most REDD+ projects, priced highest at $16.17, are in Brazil while ARR, with a $24.66 highest price, are most dominant in China.
Technology projects (TECH) are related to Renewable Energy which include Biomass, Biofuels, Hydro, Solar, Wind, and Geothermal. While it has the largest number of projects, >7,500, its highest price at $7.11 is much lower than nature-based.
The report also provides insights on credit issuances and retirements in metric tonnes per month. The chart below shows a comprehensive view of cumulative credits issued by month over the past 3 years. Highest issuances are in December, both for 2022 and 2023.
The same trend can be observed in terms of credit retirements. Most credits are retired in December for both years, with more than 150 metric tonnes.
When it comes to issuances by recognized standards, Verra has the biggest share, followed by Gold Standard (GS). The same is true for the number of credits retired by standard.
Revealing a Dynamic Carbon Credit Market
For market activity, the majority of the credit volume based on quotations ranges from 0-50,000 credits. This trend applies to all weeks covered from November 2023 to January 2024 as shown below.
Breaking down the market volume per category, Nature-Based versus Technology, the latter has the largest share. This could perhaps be due to the intensifying scrutiny over nature-based carbon credit offsets, which faced high-profile investigations last year.
On the other hand, carbon removal technologies (direct air capture) received great interest from investors and government support globally.
Additionally, Viridios report also looked at the VCM activity by major registries, including Verra’s VCS, GS, ACR, CAR, and CDM. ACR refers to American Carbon Registry, CAR means Climate Action Reserve, and CDM stands for Clean Development Mechanism.
Weekly data reveal that VCS and ACR almost have the same footing when it comes to carbon credit volume.
Lastly, the report presents a geographical analysis on volume by continental regions. The North American region snags the largest market volume per week, followed by Asia. Notably, in the recent week, the Asian region got the most volume with Africa coming second.
In the opening month of 2024, Viridios AI’s insightful report reveals a dynamic carbon credit landscape marked by a significant upswing in retirements and a distinct shift towards Indian RECs. The analysis delves into various project categories, painting a vivid picture of the evolving trends shaping the voluntary carbon market.
The recent dynamics in the carbon credit markets have witnessed a slowdown in market momentum, following a period of acceleration during Q4 and into mid-January, according to Xpansiv’s market update.
Xpansiv is a global energy transition market infrastructure provider, trading ESG commodities, including carbon, RECs, digital fuels, and water rights.
Last week, both the CBL spot exchange and CME Group’s CBL GEO emissions futures complex experienced light volumes in carbon credit trading. Despite this, there has been sustained high interest from companies, particularly those facing fiscal year-end reporting deadlines on March 31.
The VCM Brake Amidst Busy Period
Companies focused on pragmatic purchases of currently available credits, irrespective of their eligibility for compliance and best-practice regimes scheduled for implementation later in 2024.
Amidst this backdrop, various companies, including airlines, are actively assessing the potential impact of unresolved Article 6 issues on CORSIA. This refers to the Carbon Offsetting and Reduction Scheme for International Aviation.
The concerns primarily surround regulatory and legal uncertainties regarding credit certification under the current compliance phase of the UN scheme. These are particularly linked with the finality of corresponding adjustments.
Spot prices remained stable week over week, per Xpansiv data. Notably, the N-GEO saw small trades at $0.43 and $0.50 but closed at the same $0.37 assessed price as the previous week.
Conversely, the CBL N-GEO December futures experienced a $0.56 decline on light volume, essentially erasing the previous week’s $0.70 gain. Similarly, the CBL GEO December futures decreased by $0.20. It closed at $0.66 and gave back a portion of the prior week’s $0.25 gain. The spot GEO slipped by $0.05, closing at $0.54.
In November last year, spot GEO jumped by 52% while N-GEO futures increased by 40%.
CBL’s spot carbon credit volume totaled 72,232 tons, with 57,225 nature credits and 11,307 technology credits. Additionally, trades in Australian Carbon Credit Units (ACCUs) contributed 3,700 tons.
Last week, CBL traded 3,000 HIR ACCUs at $36.40 and 700 generic ACCUs at $33.75.
The N-GEO Trailing instrument on CBL emerged as the most active spot contract, indicating continued appeal for the 2016-2017 vintage credits delivered through this contract. In contrast, CME Group’s CBL emissions futures saw a total volume of 2,695,000 tons. Its open interest reached 10,387,000 tons by the end of the week.
Pricing Trends for RECs in North American Market
Massachusetts solar markets took the lead in NEPOOL trading as the 3rd Qtr generation trading period commenced on Monday. NEPOOL stands for New England Power Pool. It’s a system for registering and tracking renewable energy generation and compliance with state and regional renewable energy regulations.
Notably, over 29,000 2023 solar carve-out II credits were matched on-screen, initiating at $260 and settling at $258.50.
In the same market, NEPOOL quad and dual qualified class I credits were initially traded at $39.75. However, subsequent offers saw a decline, resulting in quad-qualified credits settling at $39.20 and dual-qualified credits at $39.05.
Shifting to PJM markets, 6,730 2023 Virginia solar credits were successfully matched at $31.25. The PJM Market procures electricity to meet consumers’ demands both in real time and in the near term.
In Pennsylvania tier I markets, a few transactions occurred, with 2024 credits trading at $31.75. Their 2023 counterparts were priced at a $0.25 discount.
Additionally, 2,000 Maryland tier II credits were matched on-screen at $14.
These trading activities provide insights into the dynamic landscape of regional solar markets, showcasing fluctuations in credit values and volumes. The data reflects the ongoing developments and pricing trends for renewable energy credit markets in Massachusetts, Virginia, Pennsylvania, and Maryland.
The table below shows the best bid and offer for select RECs with markets closing on Friday January 19.
Below is Xpansiv’s CBL standardized contracts key and the corresponding definition.
More information on the Xpansiv’s spot standardized contracts is in the Standard Instruments Program document on their website. Information on the CBL GEO futures contracts are available on the CME Group website.
Existing Participants may log in here to take a closer look or list orders.
In 2025, nuclear power generation is poised to reach an all-time high next year, says the International Energy Agency (IEA), due to increased investments in reactors to facilitate the transition to a low-carbon global economy. This forecast marks a resurgence of nuclear, bolstering efforts to reduce global carbon emissions.
This surge in nuclear power aligns with the shift towards a low-carbon economy, where electricity demand is projected to rise. The transition is fuelled by the adoption of electric vehicles, heat pumps, and various low-carbon industrial processes that rely on electricity rather than traditional oil and gas sources.
Concurrently, renewable energy is projected to surpass coal as a primary power source in the early months of the upcoming year, according to IEA data.
Nuclear Renaissance: Reaching Historic Peaks in 2025
Nuclear power plant output is projected to increase by around 3% in both the current year and the next. It would reach 2,915TWh and surpass the previous peak of 2,809TWh in 2021, according to the report.
The IEA also anticipates an additional 1.5% growth in 2026, driven by the commissioning of new reactors in China and India.
The report further highlights the collective impact of expanding nuclear power and the rapid growth of renewable sources. Wind, solar, and other clean energy sources are expected to contribute significantly, with renewables accounting for about a third of global electricity generation by early next year.
This projection would displace fossil fuels from the electricity system. The agency also expects low-emission sources to meet the growing power demand over the next few years. This would lead to a record low share of global supply delivered by fossil fuel generators, at 54% in 2026.
IEA’s Executive Director, Fatih Birol, underscored the significance of these trends in reducing carbon dioxide emissions from the power sector. The sector is currently the largest emitter globally.
Birol attributed the positive developments to the substantial momentum behind renewables. This particularly involves the increasingly cost-effective solar energy and the resurgence of nuclear power, which is on track to reach historic highs by 2025. He said that:
“This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power. While more progress is needed, and fast, these are very promising trends.”
Global Nuclear Expansion: 29 GW by 2026
Between 2024 and 2026, an additional 29 GW of new nuclear capacity would come online globally. Over half of them would be in China and India.
There’s also anticipations on the commencement of commercial operations in new nuclear plants across various regions. Add to this the recovery of the French nuclear sector and anticipated restarts in Japan. Overall, the outlook for global nuclear generation foresees a nearly 10% increase in 2026 compared to 2023.
In 2022 and 2023, numerous countries strategically prioritized the introduction or expansion of nuclear power as a central component of their climate policy objectives, igniting a substantial resurgence of global interest in nuclear energy.
The IEA’s updated Net Zero Roadmap indicates a more than 2x increase in nuclear energy by 2050. This serves as a complement to the deployment of renewables and alleviating the strain on critical mineral supplies.
While a minority of European countries are contemplating phasing out nuclear energy, several emerging economies and some advanced nations are actively planning to introduce or expand nuclear energy generation. The current growth in nuclear power generation is predominantly concentrated in Asia.
During COP28, a significant development occurred as more than 20 countries joined forces to sign a collective declaration aiming to triple nuclear power capacity by 2050. If globally implemented, this commitment would involve adding 740 GW of nuclear capacity to the existing stock of 370 GW.
As of November 2023, the World Nuclear Association reported that 68 GW was actively under construction. Moreover, an additional 109 GW is in the planning stage and a substantial 353 GW proposed.
While these figures indicate substantial growth potential, achieving the declared objective by 2050 would need an extra 210 GW. That’s even when all the planned and proposed projects are successfully realized.
Leaders of Nuclear Growth: 50% of New Capacity
China and India jointly represent more than half of the anticipated 29 gigawatts of new nuclear capacity.
China, in particular, has experienced rapid growth in nuclear technology, elevating its generation share from 5% in 2014 to 16%. The country is aspiring to increase its installed nuclear capacity from approximately 56 GW to 70 GW by 2025.
Furthermore, the IEA notes that both China and Russia are expanding their influence in the nuclear sector. These two nations provide the technology for 70% of the reactors currently under construction.
The IEA has further observed a renewed interest in nuclear energy in Europe and Americas, but nuclear projects in China are experiencing fewer delays compared to those in the former regions. Overall, here’s how nuclear energy fits into the policy agenda of selected countries.
The International Energy Agency’s projections signal a notable resurgence in nuclear power generation, reaching an unprecedented high in 2025. With a 3% increase in output, nuclear energy is set to play a crucial role in the global transition to a low-carbon economy, complementing the growth of renewables. This forecast underlines nuclear power’s integral position in shaping the future energy landscape.
Climate finance for the African continent witnessed a significant stride with the launch of the African Carbon Markets Initiative (ACMI), unlocking the region’s carbon credit potential. The initiative seeks to make climate finance available for African nations, fostering increased access to clean energy and sustainable development.
The recent Memorandum of Understanding (MoU) that the Jospong Group of Companies (JGC) has with EKI Energy Services signals a joint effort to accelerate carbon credit development in the region, specifically in Ghana. The collaboration aims to secure an impressive $1 billion in carbon credit financing in the West African nation.
Other countries in the region are also ramping up their efforts in developing their carbon credit markets, with Kenya and Nigeria taking the lead.
Africa’s Carbon Quest: 300M Credits Annually by 2030
Championed by a 13-member steering committee comprising African leaders, chief executives, and industry specialists, ACMI aims to broaden the continent’s involvement in voluntary carbon markets. These markets serve as trading platforms, enabling individuals, businesses, and governments to finance projects that contribute to emission reduction.
ACMI aims to mobilize up to $100 billion carbon credits per year by 2050.
According to estimates, the African carbon markets are growing steadily as shown in the chart below, reaching almost 54 million tonnes of credits issued.
Chart from The Rockefeller Foundation
Several African countries, including Kenya and Nigeria have already expressed their intention to collaborate with the market.
The range of climate projects under consideration includes reforestation, renewable energy, carbon-removing agricultural practices, and the implementation of direct air capture technologies. Investors supporting these projects receive carbon credits—certificates enabling them to offset or compensate for their carbon emissions.
The African Carbon Markets Initiative sets an ambitious target of generating 300 million new carbon credits annually by 2030. This goal is equivalent to the total number of credits issued globally in voluntary carbon markets in 2021.
Jospong and EKI Energy’s carbon credit deal is a major development in scaling carbon markets in Ghana. EKI will play a crucial role by providing essential technical assistance for the successful implementation of the project. The partnership covers a 5-year period.
The JGC is a diversified holdings company operating across 14 sectors of the economy, including banking, automobile and equipment. The company’s operations extend to other African countries and Asia.
Jospong’s Chairman, Dr. Joseph Siaw Agyepong, expressed confidence in EKI Energy’s expertise in climate change, saying they’re the ideal partner for the venture. He further noted that:
“We are partnering with EKI Energy because of their experience, so they can hand-hold us and propel strong development in the sector.”
Mr. Manish Dabkara, EKI’s CEO, assured strong support from them in attracting carbon investments for Jospong. The Indian-based carbon credits developer and supplier has an impressive track record of supplying over 200 million carbon offsets.
EKI Energy aims to create 1 billion carbon credits by 2027 and reach net zero by 2030. The Bombay Stock Exchange-listed company brings over 15 years of experience to the collaboration. Operating in 16 countries, EKI is a market leader in climate change, carbon offset solutions, and carbon asset management.
Below is the company’s project portfolio, covering various areas.
Nigeria’s $2.5 Billion Carbon Credit Opportunity
The West African country has been keen in positioning itself in the international carbon market. At COP27 climate summit in 2022, Ghana inked the first-ever voluntary cooperation involving ITMOs (Internationally Transferred Mitigation Outcomes) with Switzerland.
ITMOs, also known as Article 6.2 credits, allow countries to buy or sell carbon credits with other countries.
The ITMO project will help thousands of rice farmers in Ghana to practice sustainable agriculture to reduce methane emissions. Apart from Ghana, other countries in the continent are also committed to develop carbon markets to help mitigate climate change.
Nigeria, for instance, has been acknowledged for its gradual progress in establishing a carbon market framework. President Bola Tinubo announced at the COP28 climate conference that they’re to establish a special committee that will draft a national carbon market strategy. He highlighted the substantial $2.5 billion opportunity for the country within the ACMI.
The draft regulation would include an emissions trading scheme, a carbon registry, and a framework for high-integrity carbon credits. All these would contribute to the broader voluntary carbon market.
Nigeria, committed to achieving net zero carbon emissions by 2060, faces a significant funding challenge to advance its climate strategy.
The recent initiative of the Western African nation will have a pivotal role in addressing the country’s extensive carbon credit potential. Nigeria needs a staggering amount of almost $2 billion to meet its net zero ambition.
Kenya also has taken bold step in its carbon market regulations, particularly amending the country’s Climate Change Act in 2023. The Act introduces a framework for regulating carbon markets and establishes a Designated National Authority responsible for authorizing participants. This authority is also entrusted with maintaining a National Carbon Registry, containing information on carbon credits issued or transferred by Kenya and on carbon credit projects implemented to reduce greenhouse gas emissions.
The Act marks a positive step in creating, participating in, and regulating carbon markets in Kenya. As international investors already engage in various sectors in the country, the Act lays the foundation for future regulations that will provide finer details.
In a bid to tackle climate change challenges, the African nations are actively collaborating and supporting innovative financing. From Ghana’s $1 billion carbon credit deal with EKI Energy to Kenya and Nigeria’s supportive policies, the continent is on its way to drive climate action.
Are you looking for high-quality carbon offsets to address your harmful emissions? This guide will help you understand what’s offsetting all about, its benefits, and know what would be the best place to source the offsets.
High quality carbon offsets not only help individuals and businesses reduce their carbon footprint, but they can also have a positive impact on local communities and biodiversity. By supporting projects that focus on renewable energy, reforestation, and sustainable agriculture, carbon offsets can contribute to the development of clean technologies and create employment opportunities.
Additionally, investing in high-quality offsets provides a transparent and credible way to offset emissions, ensuring that the generated funds are effectively used for environmental conservation and social benefits.
Understanding Carbon Offsets
Carbon offsets are a way for your or your company or organization to voluntarily compensate for your carbon emissions. They allow you to invest in projects that reduce or remove an equivalent amount of CO2 from the air.
The main goal of this voluntary carbon market (VCM) mechanism is to balance out the emissions produced in one place by supporting carbon reduction or removal activities somewhere else. They’re often used as complementary strategy to address emissions that are challenging to eliminate completely.
When the reductions are verified, you then receive carbon offset credits. Each credit represents one metric ton of CO2 that has been either avoided or removed from the atmosphere.
By using these offsets, you can essentially cancel out your emissions. The idea is that the positive environmental impact of the offset project counterbalances the negative impact of the entity’s own carbon footprint.
Projections show that the VCM has to increase 15x and reach $50 billion by 2030 to achieve the Paris climate goals.
It’s important to note that while carbon offsets can be a valuable tool in the fight against climate change, they’re not a substitute for directly reducing emissions at the source. The primary goal should always be to minimize carbon footprints through sustainable practices and technologies.
Choosing high-quality carbon offsets is crucial for several reasons, as it ensures the effectiveness and integrity of offsetting efforts. And as the number of these credits issued to increase massively, you have to be more vigilant about the quality of the offsets you buy.
Choosing reputable projects with rigorous verification processes ensures that the claimed reductions are genuine. The high-quality offsets they produce make sure that the reductions are not counted more than once.
Moreover, the best carbon offsets go beyond just reducing emissions; they also bring about environmental and social benefits.
For example, reforestation projects can enhance biodiversity and provide livelihoods for local communities. Choosing high-quality offsets from these initiatives allows you or your company to contribute to broader sustainability goals beyond just carbon mitigation.
There’s a catch though: you need to assure that the seller or provider of the offsets is credible.
Assessing the Credibility of Carbon Offset Providers
Weighing credibility involves looking at various factors such as the provider’s track record, transparency, adherence to standards, and the quality of their offset projects.
There are various standards and certifications that can guide you to the best place to buy high quality carbon offsets. These primarily include the Gold Standard, the Verified Carbon Standard (VCS) of Verra, American Carbon Registry, Climate Action Reserve, and Plan Vivo.
Verra’s VCS – focuses on GHG reduction attributes and doesn’t require projects to have additional environmental or social benefits.
Gold Standard (GS) – created by the WWF, focuses on projects that provide lasting social, economic, and environmental benefits.
Climate Action Reserve (CAR) – a certification body or registry for the North American carbon credit market.
American Carbon Registry (ACR) – the regulatory body of the California cap-and-trade offset credit market.
Plan Vivo – focuses on projects that support local communities and smallholders in developing nations.
Choosing offsets from projects that adhere to these recognized standards provides assurance of their quality.
Remember that the ultimate goal of carbon offset credits is to reduce the amount of carbon emitted into the atmosphere. Each carbon credit certification gives the owner the right to emit one ton of CO2 or other greenhouse gasses.
A carbon offset credit becomes certified only by going through the specified processes or procedures set by the certifying standards. This is what separates a high-quality and real carbon credit from other credits swarming the market.
An example of a carbon credit certification process by Verra’s VCS program is shown below.
Another thing to keep in mind is the provider’s project documentation practice. This refers to the detailed information and documentation associated with carbon offset projects. This includes project plans, methodologies, emission reduction calculations, and other relevant documentation.
Transparent and comprehensive project documentation is vital for assessing the integrity of offset projects. It allows you and other stakeholders, including third-party verifiers, to understand how emissions reductions are achieved, measured, and verified.
Reputable carbon offset projects undergo third-party verification by independent organizations. This process adds an extra layer of credibility and transparency, assuring you that the claimed emissions reductions are accurate. It confirms that providers are delivering on their promises to help mitigate climate change.
Finding the right carbon project for your offsetting needs involves a range of factors, including project types, geographic considerations, project longevity, and other relevant aspects. It may not be that easy and quick given the plethora of projects available today. But, here’s how you can find the right offsetting partner.
Different projects may have varying impacts based on their geographic location. For example, reforestation projects in one region may have different ecological and social implications compared to a renewable energy project in another. Considering the geographic context is important for understanding the broader environmental and social implications of offset projects.
BlueSource, now Anew, is widely known for providing offset credits from improved forest management practices, carbon capture, and other projects. It covers the U.S. Canada and Europe, with an environmental commodities portfolio across five continents.
Under its core project development expertise, forestry, Anew follows these steps for a project to be eligible for offset crediting:
Finite Carbon is another big name in the field of forest improvement projects. With the developer’s wide coverage, their projects cover major forest type from the Appalachians to coastal Alaska.
Another provider, C-Quest Capital (CQC), creates high impact carbon offsets through three platforms: cleaner cooking, efficient lighting, and sustainable energy. It aims to transform the lives of families in poorer communities worldwide.
You also have to consider project longevity, which refers to the sustainability and durability of carbon offset projects over time. This involves assessing how well a project can maintain its emissions reductions or removals over an extended period.
Longevity is crucial to ensuring that the offsetting efforts have a lasting impact on reducing carbon emissions. Factors such as ongoing maintenance, community engagement, and adaptability to changing conditions contribute to the overall project longevity.
But before you pick a carbon offset provider, there are some things you have to keep in mind first. You need to calculate and verify your carbon footprint and learn the things to avoid so you’ll emerge successfully.
Calculating and Verifying Carbon Footprint
Quantifying your carbon footprint involves assessing emissions from various sources, such as energy consumption, transportation, and manufacturing. The role of the verification process is to ensure the accuracy and reliability of your calculated emissions data.
Measuring emissions is a critical step in calculating your carbon footprint. This involves quantifying the amount of greenhouse gasses such as CO2 released into the atmosphere by certain activities.
Different methodologies and tools are used for measuring emissions from different sources, and accuracy is critical for reliable calculation. This step often involves using emission factors, direct measurements, or modeling techniques.
The more complex your organization or company’s activities are, the harder it is to identify the sources of emissions. But most often, it involves the following three emissions scopes.
Here are also the common types of emissions sources under each scope that can help guide you identify them.
After calculating your carbon footprint, the next step is to choose appropriate offsets to compensate for the identified emissions. This is when you can now select carbon offset projects that align with your values and goals.
Go here if you want to know more about how to comprehensively calculate your carbon emissions, with specific examples provided.
Apart from considering the major things when assessing providers of high-quality carbon offsets, you also have to watch for the common pitfalls. Identifying and understanding these pitfalls is crucial for making informed decisions and ensuring that your offsetting efforts are effective.
Common Pitfalls to Avoid
First red flag is lack of transparency. It refers to situations where carbon offset projects don’t provide clear and comprehensive information about their activities.
Without sufficient information, it becomes challenging to verify the legitimacy of emissions reductions, project methodologies, and the overall impact of the offsets. Transparency, especially among intermediaries in the VCM, is critical.
Next, pay attention to additionality – it’s a key concept defining a high quality carbon offset. It ensures that the emissions reductions achieved by a project are additional to what would have occurred without the funding.
Concerns about additionality arise when there’s doubt about whether the supported project is genuinely making a positive environmental impact. Forest carbon offsets have been the target of scrutiny over additionality since last year.
Lastly, you should be aware of double counting. It happens when the same emissions reductions are claimed by multiple entities, leading to an overestimation of the overall impact.
This could arise where there’s insufficient oversight in the carbon offset market. For instance, you could have bought high-quality carbon offsets from a reforestation project but the developer sold them to another buyer. Those same offsets are double-counted.
Thus, robust accounting and adherence to established standards are crucial to avoid double counting. Addressing this and the other pitfalls is essential for you to be confident that the carbon offsets you support are of high quality.
Conclusion
In the realm of climate action, the quest for high-quality carbon offsets takes center stage. They offer you and other climate conscious entities a powerful tool to mitigate your carbon footprint. And as the demand for these offsets continues to surge, it becomes important to understand their role in fostering environmental and social benefits.
By choosing reputable projects and assessing the credibility of offset providers through recognized standards, you can ensure the quality of the offset credits. Ultimately, the journey towards high-quality carbon offsets propels us together closer to achieving the ambitious Paris Agreement climate goals.
Carbon-intensive practices likely come from manufacturing, where both mass-produced goods and the associated production processes contribute significantly to CO₂ emissions. As such, there has been a growing interest among founders and venture capitalists in greener manufacturing solutions.
Despite a more subdued funding environment, the space gained traction. It witnessed over $10 billion in global investments across substantial funding rounds, as per Crunchbase analysis.
Crunchbase’s close examination of the data reveals prominent sectors and investment themes within greener manufacturing. Some key areas that stand out include battery recycling and the development of green steel.
The following list highlights significant financings that showcase the diverse range of investments within this burgeoning sector. Three areas particularly stood out:
Battery Startups Sparking a Sustainable Revolution
Battery funding has experienced significant growth in recent quarters, primarily fueled by the increasing adoption of electric vehicles (EVs). The interest in funding startups developing technologies for longer-lasting, more affordable, and environmentally friendly batteries has surged.
Europe has emerged as a hub for battery-related funding, with notable investments going to Verkor. This French startup specializes in low-carbon battery manufacturing. Another company based in Stockholm and known for its lithium-ion batteries, Northwolt, got massive funding.
Just recently, the European Commission has approved Germany to provide €902 million ($987mn) in state aid to Northvolt. This marks the first-ever application of a landmark rule allowing EU nations to be competitive with foreign subsidies to prevent investments from diverting outside the region.
Battery recycling has also become a prominent focus, with substantial funding rounds for companies like the Nevada-based Redwood Materials. Ascend Elements, based in Massachusetts, specializing in sustainable materials recovered from discarded lithium-ion batteries, also got a substantial investment.
According to market research, the demand for battery power will rise to 2,035 GWh by 2030, an 11-fold increase from the 2020 level. The majority of this demand comes from the transportation sector alone. When it comes to size, the global battery market is projected to go over $475 billion by 2032.
Transportation Startups Redefining Mobility
Several funded startups are directing their efforts toward developing more environmentally friendly transportation modes and components.
For instance, Infinitum, based in Texas, has secured over $350 million in funding to develop engines that claim to be 50% lighter and smaller than traditional iron-core motors. The company envisions applications in mobility and has garnered significant interest for its innovative approach.
San Francisco-based Glydways focuses on creating small, autonomous EVs for public transport. The startup has secured over $90 million in funding by contributing to the evolution of sustainable and efficient transportation solutions.
Electrification of the global transportation sector has been ramping up as national governments push for supporting policies.
The United States government has shown its commitment to reshaping the transportation landscape in the country by providing a $623 million grant to propel the growth of EVs.
Another activity that’s widely recognized as one of the most carbon-polluting is construction. The building industry is responsible for around 39% of the global greenhouse gas emissions.
Investors are more willing to support environmentally conscious startups addressing various aspects of construction materials.
Oakland-based Mighty Buildings has secured over $150 million in funding for its innovative 3D-printed panels and materials. The company claimed it the design can facilitate faster construction with a reduced carbon footprint.
In the realm of glass technology, California-based Halio is developing dynamic glass that allows windows to change tint. This innovation would result in energy savings in heating and cooling costs.
Some startups are also focusing on manufacturing sustainable building materials to build carbon-negative houses. They’re changing how the world builds by introducing alternative materials that reduce or eliminate the use of carbon-intensive concrete.
As substantial investments flow into green manufacturing startups, it’s evident that these ventures are capital-intensive, infrastructure-heavy, and carry some risks.
The biggest challenge is to develop manufacturing processes that minimize environmental impact and carbon pollution. Addressing this concern presents an opportunity for substantial rewards. The positive outcomes in sustainability and reduced environmental harm will far outweigh the risks and investments associated with manufacturing startups.
Albemarle Corp., a major player in the lithium market, has altered its investment strategy due to evolving market dynamics. The company has deferred spending on its ambitious lithium conversion facility project in South Carolina. Instead, it redirected efforts towards permitting activities for the Kings Mountain lithium-spodumene mine resource in North Carolina.
This strategic shift responds to the softer conditions in the lithium market, prompting Albemarle to optimize its cost structure and re-evaluate growth investments.
Navigating Market Challenges and Reallocation of Funds
The world’s largest provider of lithium for electric vehicle batteries expects its 2024 capital expenditures to range from $1.6 billion to $1.8 billion, down from about $2.1 billion in 2023.
The proposed lithium production facility in South Carolina, with an initial capacity of 50,000 metric tons per year, was originally scheduled for construction starting in late 2024. It was designed to process both spodumene concentrate and recycled batteries. It has a potential capacity expansion to 100,000 t/y in a subsequent phase.
Funds reallocation will now prioritize the development of spodumene concentrate production at the Kings Mountain mine. The mine has a potential production capacity of 350,000 t/y of spodumene concentrate.
Kings Mountain is supported by grants of nearly $150 million from the U.S. Department of Energy in 2022 and $90 million from the US Defense Department in 2023. It could eventually supply the proposed lithium conversion facility in South Carolina.
Albemarle didn’t disclose whether the spending cuts would affect the capacity expansion project at its Nevada Silver Peak lithium operations. The company aims to increase its lithium carbonate production from 5,000 t/y – 10,000 t/y by 2025.
This decision is part of Albemarle’s proactive measures to re-phase organic growth investments and optimize its cost structure in response to changing market conditions. Remarkable changes are particularly happening in the lithium value chain.
Despite the deferral, the company remains committed to advancing its Meishan lithium conversion facility in China and the Kemerton lithium conversion facility in Australia in 2024. Albemarle also plans to reduce costs related to sales, general, and administrative expenses.
Market Dynamics Impacting Lithium Prices
Stalling spending on its lithium conversion facility project in South Carolina is largely due to a softer market in 2024. The global lithium market experienced a correction in 2023, witnessing a significant decline in lithium prices from the record levels in 2022.
Interestingly, despite weaker demand, Mercedes-Benz reported a new record for both volume and share of its all-electric cars in 2023. The company is directly sourcing lithium to scale up its fully EV production.
The German luxury car saw a 73% year-over-year growth rate in its all-electric car brand in 2023, selling over 240,000 units. This accounted for about 11% of the carmaker’s total sales volume.
For the same period, Mercedes-Benz also sold around 22,700 all-electric vans, accounting for over 5% of its total sales. The figure is up 51% year-over-year.
In the U.S., the automaker’s battery electric vehicle (BEV) sales totalled to over 13,000 units, representing a 139% increase. Electric vehicles in the country are getting a stronger policy support.
The Electric Vehicle Boom and the Lithium Race
Just recently, the U.S. government revealed a $623 million grant to drive the growth of EVs. The financial support aims to make EV chargers more accessible and convenient for EV drivers.
Globally, the EV market, including both BEV and plug-in hybrid, would reach a whopping $623 billion in sales. This huge growth potential would lead to a global EV units sold at 17 million by 2028.
What all these mean is the more intense race for securing lithium, the white gold that fuels the EV revolution. One of the companies positioned to take advantage of this lithium opportunity is Li-FT Power (LIFT; LIFFF). It is the fastest developing North American lithium junior, owning five various projects in Canada.
The electrification of transportation and the quest for sustainable energy solutions are poised to reshape the global resource landscape. The path forward is brimming with potential, driven by the dual forces of electric and lithium-powered advancements.
Albemarle’s move to prioritize cost and efficiency improvements aligns with market conditions and aims to navigate the challenges posed by the evolving lithium industry.
Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: LIFT.
Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.
Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital.
The football governing body in Europe, Union of European Football Associations (UEFA), plans to allocate funding competitively through a newly established ‘climate fund,’ to address the sports’ significant carbon footprint.
The climate fund was established in part of UEFA EURO 2024 in Germany following the slogan ‘United by Football – Together for Nature’. The event will kick off in Munich on June 14 and ends with the final in Berlin on July 14.
Football’s Scoring Big on Carbon Footprint
Being the most popular sport globally, football or soccer in American terms, may not be considered a major carbon emitter compared to certain industries. However, the global football industry contributes to over 30 million tons of carbon dioxide annually. That’s roughly equal to the emissions of a small country like Denmark.
Leveraging its popularity and influence, the football industry can have a pivotal role in educating fans about climate change. With a market value of ~$1.9 trillion in 2019, it can help promote innovative solutions to address environmental challenges.
A study conducted a calculation of greenhouse has (GHG) emissions related to transportation for tire 3 football games during the 2012/13 season. The estimated emissions for transport to and from stadiums amounted to 56,237 tons of CO2e. Notably, the carbon footprint tends to increase for more significant games, as supporters and players often travel greater distances for crucial matches.
The chart shows the distance travelled by participating teams during the EURO 2020 event.
Spectators and teams are using various means of transportation to attend the tournament. Each mode emits a certain amount of CO2 as shown below, with flying releasing the most pollution.
To accurately assess their emissions, football clubs must consider not only the transport to and from games. They also have to account for all materials purchased for players, business travel, and even the emissions associated with the production of merchandise sold to fans. This requires a comprehensive mapping of the club’s activities, purchases, and sales.
The football league in the U.S. opted to purchase carbon credits to offset a portion of its carbon emissions.
Kicking Off Change: UEFA’s €7 Million Climate Fund
For the Euro 2024 tournament this summer, UEFA will contribute €25 ($27) to the fund for every ‘unavoidable’ tonne of CO2e emissions. The estimated total of the fund stands at around €7 million ($7.6M) based on pre-event emissions projections.
Amateur football clubs in Germany, where the tournament takes place, have until June 30 to apply for financial support for their sustainability projects.
Eligible projects, focusing on the energy transition, water stewardship, waste management, or smart mobility, must be new initiatives. Clubs can seek up to 250,000 euros, and a streamlined application process is available for requests under 25,000 euros.
The objective is for UEFA’s financing to contribute to long-term emissions reduction, involving fans and local communities in the process.
Bernd Neuendorf, president of Germany’s football association (DFB), emphasized that the UEFA climate fund signifies the importance of amateur football in the country. He also noted that it provides clubs with an opportunity to enhance their commitment to environmental and climate protection.
Neuendorf further highlighted the collaborative efforts between the DFB, Germany’s federal government, UEFA, and other stakeholders to initially reduce the projected carbon footprint of the tournament, minimizing the necessity for offsetting.
Major sporting events, such as this, face challenges in decarbonization. Transportation accounts for a significant portion (60% – 70%) of football’s carbon footprint according to some estimates.
Addressing Scope 3 emissions, where transport footprint fall, is the most challenging task for professional sporting events. For instance, the 2022 FIFA World Cup in Qatar generated an estimated 3.6 million tonnes of CO2e. Over half of these emissions came from spectator transportation, highlighting the substantial impact of travel.
UEFA’s Unique Approach: Local Goals, Global Impact
UEFA’s approach to offsetting stands out for its emphasis on community engagement rather than tracking of individual emissions in tonnes.
A notable distinction is the investment in small-scale local projects, deviating from the trend among many corporations that favor large-scale global initiatives. While most of these projects are nature-based, there’s a growing interest in supporting early-stage man-made carbon capture and removal technologies.
The year 2023 posed challenges for advocates of large international nature-based carbon offsetting schemes within voluntary carbon markets (VCM). These markets exceeded $1 billion in value collectively in 2021, with projections indicating a potential 160-fold increase by 2050.
Amid the integrity issues surrounding the VCM, initiatives like the Voluntary Carbon Market Integrity Initiative (VCMI) launched the Claims Code of Practice. The Code serves as a rulebook for companies in project selection, offsetting claims, and decarbonization-offsetting strategies. Collaborating with the Integrity Council for the Voluntary Carbon Markets (ICVCM), VCMI aims to enhance confidence in the market.
As UEFA takes a leap towards a sustainable football future, the climate fund becomes a symbol of the sport’s commitment to environmental responsibility. With an innovative offsetting approach and community-centric projects, UEFA aims to drive lasting change in football’s carbon footprint.
Pop sensation Taylor Swift, owner of a $40 million private jet, is making headlines as she turns to carbon offsets to address her substantial carbon footprint. Despite being the world’s most carbon polluting celebrity in 2022, Swift aims to offset her emissions.
However, questions arise about the transparency and legitimacy of these carbon offsets, raising concerns within the climate-conscious community.
Carbon offsets are mechanisms used by companies and individuals to compensate for their carbon emissions by investing in projects that reduce or remove an equivalent amount of greenhouse gasses (GHG). Each offset equals one tonne of carbon emissions.
Private Jets and Celebrity Carbon Footprints
The aviation industry contributes about 2.5% of global emissions. Despite airplanes emitting around 100x more carbon dioxide per hour than other transportation modes, celebrities like Taylor Swift seldom opt for public transport.
The pop star’s reliance on a private jet significantly amplifies her carbon footprint compared to an average individual.
Private jets are considered the most polluting form of transport, posing challenges in global decarbonization efforts.
In the UK, each of the wealthy fliers onboarding largest private jets release as much as 20-30x more pollution than those flying in economy class on ordinary commercial flights. These flights are several times more polluting than transit.
Celebrities and politicians, in particular, receive criticisms from environmentalists regarding their carbon footprints, which are higher than that of the average person.
Putting that in perspective, a flight from London to Dubai makes a private jet 11x more polluting than a regular commercial aircraft, 35x more than a train, and a whopping 52x more than a bus.
According to a digital sustainability consultancy, Yard, Taylor Swift is the world’s most carbon polluting celebrity due to her footprint in 2022. She is followed by Floyd Mayweather and Jay-Z.
The studyrevealed that only 15% of the population takes 70% of the flights annually. It also showed that the average CO2 emissions by the celebrities surveyed, through their private jet flights alone, stands at 3,376.64 tonnes each. In comparison, an average person emits only 7 tonnes of carbon every year.
Of the celebrities studied, the pop princess tops the list for 2022. With a staggering total of 170 flights since January, Swift’s jet has logged an extensive 22,923 minutes in the air. That’s roughly 16 days in total.
This substantial figure is noteworthy, especially considering that she’s not on tour that period. Her jet’s average flight duration is a mere 80 minutes, covering an average distance of over 139 miles per flight.
Swift’s cumulative flight emissions for the year reach 8,293.54 tonnes, representing a staggering >1,100x more than the average person’s total annual emissions. Her shortest recorded flight for 2022 was a brief 36 minutes, covering the distance from Missouri to Nashville.
Swift’s Bid for Environmental Redemption
In the middle of her Eras Tour in March 2023, Swift’s regular flights to see her NFL-playing boyfriend, Travis Kelce, emitted 138 tonnes of CO2 in 3 months. The superstar remains the world’s most carbon emitting celebrity.
In an Instagram post tracking Swift’s private jet flight records, she took 12 flights to see her love interest. These flights by her Desault Falcon 7x and Dessault Falcon 900 emitted a total of 138 tonnes of CO2. That means the popular singer can offset that footprint by growing almost 2,300 trees for a decade.
However, the pop star’s representative said that Taylor’s private jet is also loaned out to others, so it’s incorrect to attribute most or all of the trips to her. The spokesperson further noted that “Taylor purchased more than double the carbon credits needed to offset all tour travel.”
Carbon offsets are generated by projects or initiatives that reduce or capture carbon dioxide from the atmosphere. It could be through natural ecosystems or using carbon removal or carbon capture technologies.
From which project do carbon offsets Taylor Swift purchased come from?
Individuals or corporations are not required to publicly disclose their sources of carbon offsets. But as the carbon credit industry is strengthening its integrity and reliability, regulations are also tightening. Transparency in reporting and disclosing carbon offsets, despite being voluntary, would soon be the standard.
Universal, Swift’s record label, didn’t disclose where the singer had bought the offsets. These offsets, including those bought by corporations, undergo verification by third parties to ensure reliability and effectiveness.
Controversies surround the validity of offsets after an expose last year claimed that 90% of them approved by the leading verification body, Verra, were worthless. Verra disputed that the allegations aren’t valid.
The legitimacy of Taylor Swift’s offsetting her carbon footprint may remain uncertain. Despite this ambiguity, Swift appears determined to shed her climate villain reputation. Whether the pop princess will eventually disclose the details is unclear, but her move brings celebrity carbon accounting to the forefront.
In a groundbreaking leap towards sustainability, Plus Power’s Kapolei Energy Storage (KES) facility in Hawaii has commenced commercial operations. As Hawaii bids farewell to its last coal plant, KES takes center stage, offering an innovative solution to maintain grid reliability amid the transition from fossil fuels to renewable energy.
The plant is considered as the most advanced grid-scale battery energy storage system (BESS) in the world. BESS are rechargeable batteries that can store energy from various sources and discharge it when necessary. The system is composed of one or more batteries often used to balance the traditional grid, provide backup power, and enhance grid stability.
The project, developed and owned by Houston-based Plus Power, began operations before Christmas. It features 158 Tesla Megapacks with a total capacity of 185 megawatts of instantaneous discharge. This capacity matches the power output of the retired coal plant but offers a faster response time of 250 milliseconds.
The state of Hawaii decided to shut down its last coal plant on September 1, 2022. This decision marked a significant step in the state’s commitment to achieving 100% renewable energy for electricity by 2045.
The challenge then arose of ensuring grid reliability with a mix of renewable sources subject to weather fluctuations.
TheKapolei Energy Storage system addresses this challenge by absorbing excess power from the grid during renewable generation peaks and delivering it during high-demand evening hours.
Brandon Keefe, Executive Chairman ofPlus Power, expressed pride in contributing to Hawaii’s renewable energy goals and enabling the transition. Keefe particularly noted that:
“This is a landmark milestone in the transition to clean energy… This project is a postcard from the future — batteries will soon be providing these services, at scale, on the mainland.”
Despite facing construction setbacks, including disruptions caused by the COVID-19 pandemic and the project’s remote location, KES is now operational. It outpaces several otherrenewable energy projects in replacing the retired coal plant’s capacity.
The gigantic battery project aligns with Hawaii’s commitment to becoming a leader in clean energy adoption and grid transformation.
The Kapolei Energy Storage system operates differently from traditional coal plants, requiring a new framework to replicate essential grid functions. While the old coal plant provided energy, capacity, and grid services, the battery directly replaces the latter two aspects.
Kapolei’s 185 megawatts of instantaneous discharge capacity matches the coal plant’s power output. Plus, it offers grid services, such as synthetic inertia and fast frequency response, to stabilize the grid in real time.
Although the battery’s 565 megawatt-hours of storage cannot directly replace the coal plant’s energy production, it collaborates with solar energy sources to enhance clean renewable energy integration into the grid.
KES enables Hawaiian Electric to reduce the curtailment of renewables by an estimated 69% for the first 5 years. This minimizes the waste of surplus clean electricity.
Additionally, the battery provides black-start capability, allowing it to restart the grid in case of a complete outage due to disaster.
According to Keefe, Kapolei is considered the most advanced battery energy storage facility globally because of its multifaceted capabilities. These include capacity, grid services, and black-start functionality. He further added that since the project connects to 3 other power plants, the battery “can be AAA to jump-start those other plants”.
Lithium Powers the Clean Energy Transition
Lithium-ion batteries are seen to be the solution for helping the world to transition to clean, renewable energy sources. This is crucial to meet the critical 1.5 degrees Celsius scenario by 2050, otherwise known as the Net Zero.
Companies and governments are turning to battery energy storage systems (BESS) to achieve their sustainability goals. Research suggests that the market for BESS in the U.S. alone will grow to over $15 billion in 2027.
The surge in the use and future demand for renewable energy will further lead to global grid-scale BESS market growth. As per the International Energy Agency’s projections, renewables will account for over 90% of global electricity capacity expansion from 2022-2027. With that, growth seems to be quicker in locations where renewables are also expanding faster than average.
Hawaii’s Kapolei Energy Storage system represents a groundbreaking model for a reliable clean-energy grid, addressing the challenges of transitioning from fossil-fueled plants to renewable sources.
The KES battery project uses 158 Tesla Megapack 2 XL lithium iron phosphate batteries, each roughly the size of a shipping container.
In comparison to California’s grid battery fleet, which constitutes 7.6% of the state’s grid capacity, Kapolei alone represents about 17% of Oahu’s peak capacity, highlighting its central role in maintaining grid stability.
Looking ahead, Kapolei’s success underscores its significance in achieving U.S. climate goals by phasing out fossil fuels from the electric grid. As one of the first real-world instances of successfully transitioning grid functions, the model established by Kapolei provides valuable insights for scaling similar grid services nationwide, offering a blueprint for the future of sustainable grid solutions.
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