Trane Technologies launched its new AI and cloud-based tool that seeks to help building owners and facility managers reduce energy consumption and hasten decarbonization efforts.
Trane Technologies is a global climate innovator that offers efficient and sustainable climate solutions to buildings, homes, and transportation. Its new offering, Trane Autonomous Control Powered by BrainBox AI, uses artificial intelligence to automatically identify and implement optimization actions.
Slashing Building’s Carbon Emissions
The new AI-powered tool is an HVAC optimization solution that connects to existing climate control systems. It sends real-time, optimized control commands that help lower energy use and minimize carbon emissions.
The new technology also features predictive weather data and occupancy trends, improving overall building performance and sustainability.
Buildings are a significant contributor to carbon emissions, representing 15% of global emissions while accounting for about 40% of global energy-related emissions. In the United States, they account for over 30% of all greenhouse gas emissions.
Not to mention that they’re one of the hardest emission sources to replace, simply due to their nature.
According to the Energy Information Administration (EIA), there are around 6 million buildings in the U.S., not including residential. In Canada, there are 500,000 buildings to take into account.
By contributing significantly to carbon pollution, buildings become a prime target for emission reductions, including Trane Technologies.
Donny Simmons at Trane Technologies emphasized the importance of their new offering, saying:
“… the demand for more sustainable building solutions grows each day. Leveraging innovative AI-enabled solutions is one of many ways we are helping customers dramatically reduce their carbon footprints, while meeting business goals and doing the right thing for the planet.”
The company said that it tested the Autonomous Control in multiple sites with a client in the U.S. The results show significant energy performance improvements and substantial CO2 emissions reductions of over 30% across 100+ facilities.
Back In 2019, Trane launched the Gigaton Challenge with the aim to reduce 1 billion metric tons of CO2 from its customers’ footprint by 2030. The company said that the new AI-powered tool will support its Gigaton Challenge as well as its sustainability targets.
Trane Technologies Net Zero Targets
The company committed to reaching net zero emissions by 2050, or a 90% reduction in emissions across its entire operations.
Trane Technologies Net Zero Roadmap
In the near term, the company aims to cut Scope 1 and 2 emissions 50% below 2019 levels by 2030.
Scope 3 – product use and supply chain – represents the vast majority of the company’s total carbon emissions. To address this, Trane pledges to reduce Scope 3 emissions by 55% per cooling ton vs. 2019 baseline by 2030. This target increases to 97% by 2050.
In 2022, Trane reduced Scope 1 and 2 carbon emissions by over 27,000 metric tons of CO2 versus 2021. The company also achieved a 43% reduction in operational emissions intensity and a 25% reduction in location-based emissions from the 2019 level.
The company has been employing various measures to reach its 2050 net zero targets. And focusing on its Gigaton Challenge is the key to it.
Launching the Autonomous Control in collaboration with BrainBox AI will significantly contribute to Trane’s sustainability and net zero efforts. With over 1 million connected devices, the new tool will provide great insights into building emissions.
The technology developer, BrainBox AI, said that it’s expanding the AI tool for commercial real estate to multi-site retail portfolios. The AI firm was also awarded by Canada’s largest financier of sustainable (SMEs) businesses, Sustainable Development Technology Canada, with over $6 million.
In summary, Trane Technologies’ new AI and cloud-based tool is designed to enhance energy efficiency, reduce carbon emissions, and contribute to the company’s sustainability and net zero targets. If more companies in the sector follow the same path, the world will be much closer to decarbonizing buildings and other built environments.
Isometric, a fascinating carbon removals startup, launched its new Isometric Standard that outlines the most stringent set of rules for carbon removals.
The London and New York-based company is building the world’s first independent and transparent registry for durable carbon removal credits. They have pioneered a new, innovative approach that tackles the issues confronting the traditional carbon offset market.
Isometric: Scientific Platform and Registry for CDR
Founded in 2022, Isometric aims to provide the technology necessary to scale up the nascent carbon dioxide removal (CDR) industry. They report data and verification results from a vast network of partners on their science platform and public registry.
The goal is to bring more confidence in the market and propel buyers to make even bigger purchases. This year’s first half reported purchases show that the industry is poised for growth.
Source: CDR.fyi
While Isometric seeks CDR to scale fast, it ensures that the growth is responsible. The company is a team of experts building two products to ensure such growth.
First is the Science Platform: built to help carbon removals scale fast. Here, the scientific experts work together to accelerate alignment with high quality standards.
The platform enables CDR suppliers to host and visualize their removal data and protocols clearly and consistently.
Second is Isometric’s Registry: created to ensure CDR scales responsibly. It allows Isometric to publish verified carbon removal records scientifically, transparently, and in collaboration with the right experts.
The company believes that the CDR industry, though it currently removes only a few kilo tons of CO2, will grow at a pace and rate needed to remove gigatonnes of CO2 each year.
Carbon removals have significant tailwinds. Last year, the Energy Department had pledged $3.7 billion to build the CDR industry in the U.S. Likewise, the UK has plans to amend its Emissions Trading Scheme to welcome engineered or technological carbon removals.
The CDR can be a huge part of the next $1 trillion industry, but with the right rules. This is what the Isometric Standard aims to achieve – providing the right framework for carbon removal credits.
What is The Isometric Standard?
Remarking on the launch of the Standard, Eamon Jubbawy, CEO & Founder of Isometric, said that they’re raising the bar for carbon credits. He further noted that:
“Rebuilding trust in the Voluntary Carbon Market requires both rigorous science and transparency…The Isometric Standard represents an opportunity for the carbon removal industry to rise to meet the urgent challenges we face.”
The Isometric Standard recognizes only carbon credits that can prove that they actually have removed CO2 from the atmosphere. The captured CO2 must also be stored permanently and quantifiable through long-duration timelines, mostly for >1,000 years.
The Standard doesn’t include “avoidance” carbon credits. This type of carbon credit is associated with nature-based climate solutions such as reforestation.
Isometric Standard also does not deal with carbon credits generated by projects that run the risk of temporary CO2 storage. For example, tree-planting initiatives face this risk because of wildfires.
Moreover, the Standard is a product of a collaboration among over 150 expert scientists that follows a trusted approach. The public can investigate fully the calculations behind each carbon removal credit listed on Isometric’s platform.
In other words, the Standard builds on trust and transparency in generating carbon credits.
With scientific rigour and radical transparency, the Isometric Standard offers an opportunity for the fast-growing carbon removal industry to prevent issues plaguing the market, particularly greenwashing.
The Standard guides Isometric Crediting Program in two unique ways. First, it provides guidance and transparent infrastructure fostering high quality climate action in the form of durable removals of CO₂. Second, it issues verified credits as proof of the ownership of removal claims and reporting purposes.
It also lists all the requirements which ensure that delivered tonnes have measurable and verifiable climate impact. It also sets out the duties and obligations of stakeholders in relation to the Isometric Registry.
The credited tonnes of removal must be durable, additional, and measured using the latest scientific methods. All the requirements and rules for crediting are laid out in the Standard, including issuance, retirement, reversals, and buffer pools.
Offering the foundation of trust in CDR credits, the industry can grow to the scale the world needs to stay within the 1.5C warming threshold. When the stakes are high, the standards need to match.
By focusing on transparency, permanence, and rigorous science, Isometric Standard provides a framework that can help the carbon removal industry flourish while ensuring that carbon credits genuinely contribute to a greener future.
The mining industry is emblematic of economic cycles, surging during booms and contracting in busts.
However, it’s important to note that this projection is still significantly below the 2013 peak of $145.7 billion.
Why is this relevant? It illustrates that these giants of industry may yet have considerable runway before reaching their zenith of expansion endeavors.
As the years advance, miners will grapple with mounting inflation, rising interest rates, and decelerating economic activities. This challenging financial landscape might lead to a slight dip in capex, by 1.8% in 2024 and a further 0.7% in 2025.
Global Miners’ Capex and Net Zero Targets
Several pivotal players dominate the scene, including the following mining giants. Each of the miners set their own net zero targets, with increasing commitment to sustainable mining.
BHP Group Ltd.
Earmarking $7.6 billion for 2023, the miner particularly focuses on its Jansen mine in Canada. BHP’s long-term strategy integrates operational decarbonization, allocating a sizable budget of $4 billion towards this cause by 2030.
Just like ArcelorMittal, BHP also doesn’t include Scope 3 emissions in its 30% reduction target by 2030 versus 2020 levels. It only covers operational emissions or Scope 1 and 2, including methane emission reductions. BHP aims to achieve net zero emissions by 2050.
Rio Tinto Group
With a capex guidance of $7.4 billion in 2023, Rio Tinto aims to enhance its projects like the Simandou iron ore deposit in Guinea and the Salar del Rincon lithium project in Argentina. Their longer-term vision is growth-centric, targeting a hefty investment of up to $10 billion for 2024 and 2025.
The mining company aimed for net zero emissions by 2050, in alignment with the Paris Agreement. To achieve this goal, the company sets a 15% reduction in direct and indirect emissions by 2025, and 50% by 2030, based on the 2018 levels.
Vale SA
Vale plans to allocate around $6 billion in 2023, distributing funds across a variety of projects, including the Onca Puma mine’s furnace and the ramp-up of the Serra Sul operation.
The mining firm aims to achieve net zero emissions by 2050, while seeking to slash scope 1 and 2 emissions by 33% by 2030. It also plans to reduce scope net emissions by 15% by 2035. Last year, the miner emitted a total of over 486 million tonnes of CO2e, 98% of which accounted for Scope 3 emissions.
Anglo American PLC
The mining giant adjusts its 2023 capex vision to $6.0 billion, with an emphasis on projects like the Woodsmith polyhalite venture in the UK and the ramp-up related to the Quellaveco copper mine in Peru.
Anglo American aims to reduce net GHGs emissions by 30% against the 2016 baseline by 2030. The miner also has set a lofty goal of becoming carbon neutral, for Scope 1 and 2, across operations by 2040. This climate goal also entails slashing Scope 3 emissions by 50% by the same period.
Glencore PLC
Glencore projects an investment of approximately $4.8 billion in 2023, channeling funds towards diverse projects like the Collahuasi copper joint venture in Chile and the Zhairem zinc project in Kazakhstan.
In the short term, Glencore plans to reduce emissions across all three scopes by 15% by 2026 and 50% by 2035 against its 2019 base year. In the long-term, the mining major aims to reach net zero emissions by 2050 same as most of the others.
Posco Holdings Inc.
This giant miner demonstrates a commitment to sustainability, emphasizing eco-friendly ventures. With a projected capex of approximately $4.8 billion in 2023, Posco’s goals include magnifying its production of cathode, anode, and lithium materials by 2030.
Same with Vale, Posco also committed to reach carbon neutrality or net zero by 2050. Its net zero roadmap says it will cut emissions gradually – 10% by 2030, 50% by 2040, and net zero by 2050. The baseline level is total emissions from 2017-2019. Alongside carbon abatement efforts, the mining firm also set a goal to achieve avoided emissions by 10% by 2030.
ArcelorMittal SA
ArcelorMittal commits between $4.5 billion and $5 billion to capex. Using various levers, ArcelorMittal seeks to achieve a 25% reduction in CO2 emissions by 2030. That includes Scopes 1 and 2 only, excluding Scope 3 emissions.
Plus, the miner is aiming to be the world’s first full-scale zero carbon emissions steel plant in Sestao by 2025, and reach net zero by 2050, too.
CAPEX data from S & P Global
Profit and Planet in One Mine
The cumulative capex of the top ten mining conglomerates is forecasted to comprise a substantial 50.8% of the overall capex of the top 30 miners in 2023. While projections reveal robust financial performance in 2023, there’s an underlying quandary these titans face.
As global demands evolve, the mainstay for miners will pivot towards critical metals, transition to clean energy, and operational decarbonization. The question remains: can these behemoths navigate these treacherous waters successfully, balancing both profit and planet?
As the mining industry accelerates its capital investments, the terrain becomes increasingly multifaceted. As they dig deep, these global giants must strike a harmonious balance, ensuring sustainable growth, adapting to an ever-evolving market, and fostering a commitment to a greener planet. Only time will reveal if these mountains of industry can unearth a golden future.
Carbon credit insurance company Kita Earth has entered the Canadian market, offering companies reliable carbon insurance policies for carbon removal credits.
Canadian investors and buyers can now leverage Kita’s Carbon Purchase Protection Cover to insure their forward-purchased carbon credits. The insurance product doesn’t only insure against delivery risk but also allows for more investment flowing into high-quality carbon projects.
World’s First Carbon Credit Insurer
There’s no doubt that carbon dioxide removal (CDR) is crucial in fighting climate change. The world has to remove billions of tonnes of carbon to achieve net zero emissions by mid-century. And this entails huge investment or financing to scale CO2 removal at the pace the planet needs.
But that financing has a risk – the carbon credits purchased may not be delivered for any unknown or foreseeable reason.
With a lack of supply to meet rapidly growing demand, top buyers of carbon removal credits often prefer pre-purchasing the credits. However, it takes years for carbon projects to generate reliable and verified carbon credits. Thus, there’s a high risk of underdelivery.
The risk brings uncertainty, deterring significant carbon removal innovation and investments. Unfortunately, such risk has been uninsurable until Kita develops a solution.
Kita Earth, a UK-based startup, is the world’s first carbon insurer formed in December 2021. It seeks to ensure CO2 removal credits that are often forward-purchased and carry delivery risks.
The company’s goal is to minimize uncertainties in buying the credits and promote the growth of carbon credit markets.
In cases where the carbon credits fail to deliver the promised results, Kita’s insurance covers the buyer’s loss. This innovative solution offers a critical safeguard for companies and organizations wanting to offset their carbon emissions.
Businesses and governments worldwide must execute their net zero emissions strategies well. Otherwise, the planet will continue to experience the worst effects of climate change.
Alongside massive emission reductions, achieving net zero targets also calls for carbon removal credits. Tech giants have been clear and vocal about their support for removal credits, investing millions of dollars in it.
The same goes with national governments, from the U.S. to the UK, various subsidy programs have funded carbon removal technologies and innovations. These projects are mostly early stage, needing significant capital injection to scale and deliver the much-needed removal capacity.
Corporate net zero pledges are propelling the demand for carbon removal credits, with large companies supporting initiatives that generate them.
In a report published by BCG, they projected that demand for durable CDR will stand between 40 to 200 million tonnes of CO2 a year by 2030. That’s worth around $10 to $40 billion, with the potential to even grow higher up to $135 billion in 2040.
That’s equivalent to a demand of 200 – 870 MtCO2/year from 2030 to 2040 as shown in the chart.
To meet that massive demand for carbon removal credits, investment in CDR must be more than $100 billion by 2030.
There’s a catch, however: carbon removal needs time to scale up, both for natural and technological solutions. Currently, the existing supply can’t meet demand.
So corporations are turning to pre-purchased carbon credit deals to future-proof their net zero targets. They also do it to secure future supply of high-quality CDR.
To safeguard those purchases in case the expected results aren’t delivered, Kita’s Carbon Purchase Protection comes to the rescue.
By managing the risk involved in carbon credit transactions, Kita helps attract more investments into projects with positive climate impact. The company’s insurance policies are underwritten by London-based Lloyds, ensuring the credibility of their insurance coverage for the Canadian market.
The expansion builds on Kita’s current insurance coverage for companies in the UK and the US. With this new market entry, Canadian buyers can peacefully invest in carbon credits knowing that their purchases are protected while contributing to a sustainable and climate-positive future.
A Dubai-based company, Blue Carbon, inked a deal with Zimbabwe to create carbon credits from offsetting projects in the African country involving almost a fifth of its total landmass.
The two parties signed a memorandum of understanding (MoU) worth $1.5 billion to fund forest protection and rehabilitation projects. The carbon sequestered of the forests will generate the corresponding amount of carbon credits.
Carbon credits are a tradable instrument that allows companies and other entities to compensate for their carbon emissions by financing projects that reduce or remove CO2 from the atmosphere. A credit represents a ton of CO2 removed.
Blue Carbon’s Expansive Carbon Credit Deals
Zimbabwe is Blue Carbon’s 4th foray into the African region this 2023. Launched only last year, the nature-based carbon offsets company also has a similar deal with Liberia in March. Their agreement will offset emissions generated from 10% of the West African nation.
A member of Dubai’s royal family, Ahmed Dalmook Al Maktoum, led Blue Carbon. He is leading the company to invest in energy projects across Africa and the Middle East.
Back in February, the Dubai firm also partnered with Zambia and Tanzania to conserve 8 million hectares of forests in each of the African countries. Both agreements are for generating carbon credits that the company will sell on the global carbon markets.
Industry projections show that demand for carbon credits for offsetting purposes will grow exponentially.
The Dubai firm’s latest carbon credit deal with Zimbabwe covers the country’s 150,000 sq. miles landmass. They believe that the partnership will bring the African nation $1.5 billion in climate finance.
With these deals, Blue Carbon earned the right to develop carbon offset projects across 24.5mln hectares of land in Africa.
High-Quality Carbon Credits for Zimbabwe
For Al Maktoum, their carbon credit agreement with Zimbabwe signifies a powerful alliance between Dubai and the African country “in the face of a shared global challenge”.
Their project will cover an area of over 7 million hectares, bringing hundreds of millions of dollars to Zimbabwe. A huge portion of the sale from carbon credits will be for community engagement and the local people.
President Emmerson Mnangagwa said that Blue Carbon will engage in reforestation and forest conservation projects. At the signing ceremony of their carbon credit deal, Mnangagwa said that:
“The project is anticipated to close the Government of Zimbabwe’s financing gap to the tune of $200 million while enabling the country to generate high-quality carbon credits for use on the international carbon market.”
Companies and governments can buy those credits to use toward their climate goals such as net zero emissions.
This agreement with UAE’s firm is a boost for Zimbabwe’s controversial decision in May when it scrapped existing carbon projects. Then it would get 50% of all the revenue from these projects, scaring away investors and worrying developers.
But last month, the government amended its carbon laws, indicating that project developers can keep their total profit share (70%). It will instead keep its 30% share which will go to various stakeholders.
Zimbabwe has close ties with the UAE, the largest destination for the African country’s exports. On the carbon front, the UAE Carbon Alliance has pledged to buy $450 million carbon creditsfrom the African Carbon Markets Initiative (ACMI) by 2030.
The deal happened at the first Africa Climate Summit earlier last month where president and chief executive of the UAE Independent Climate Change Accelerators (UICCA) inked a letter of intent with ACMI.
UAE will host this year’s UN Climate Change Conference, COP28, in November-December.
The partnership between companies like Blue Carbon and nations like Zimbabwe not only contribute significantly to reducing global carbon emissions. It also provides essential funding for climate finance and nature conservation efforts and support for local communities. As demand for carbon credits continues to skyrocket, such collaborations are crucial in the collective efforts to combat climate change.
C-Crete Technologies is creating an innovative way to capture carbon dioxide to make it as an ingredient in its cement-free, carbon-negative concrete, which attracted $2 million support from the U.S. Department of Energy.
C-Crete Technologies is a materials science company that invents, builds, and scales up infrastructure products with very low carbon footprint. By focusing on environmental stewardship and technological innovation, C-Crete aims to help address climate change while delivering superior infrastructure materials at scale.
The Energy Department’s funding will help the company’s climate-friendly products to fully become carbon-negative building materials. With this support, it can help C-Crete’s concrete be the first ever ready-mix, cement-free product in the industry.
Revolutionizing the Construction Industry
The funding that C-Crete receives from the DOE underlines the importance of innovative solutions in reducing CO2 emissions. Highlighting their technology’s role in this fight, C-Crete founder and president Rouzbeh Savary remarked that they’re crafting concrete that:
“..doesn’t just mitigate carbon emissions but actively contributes to reversing climate change. Our aim is nothing short of revolutionizing this hard-to-abate, carbon-heavy sector of the construction industry.”
Buildings account for about 40% of global carbon emissions annually, making construction a major emitting industry.
The embodied carbon or CO2 released in making building materials is responsible for around 50% of emissions from new construction. Of that, about 8% is contributed by producing cement, a key ingredient in making concrete.
Carbon dioxide emissions from producing cement stood at 1.7 billion metric tons in 2021. And it has been growing since the 1960s.
Every 1,000 kg of cement production releases >900 kg of CO2.
Designers consider concrete as one of the most challenging materials in the industry when it comes to sustainability. This is particularly what C-Crete Technologies seeks to address – to slash the footprint of carbon-intensive concrete with its unique carbon removal technology.
The company’s pioneering solution for concrete’s embodied carbon can help avoid over dependence on a single material source.
There’s a consensus among climate experts that the world significantly needs to remove gigatons of CO2, alongside massive emission reductions. There are various means and technologies of removing carbon but C-Crete’s solution is innovative and readily scalable.
C-Crete’s Patented Cement-Free Concrete
C-Crete’s carbon sequestration for cast-in-place (pourable) concrete also offers a huge potential. Around 80 tons of its cement-free concrete was recently poured in a commercial building for its foundations, walls, and floor slab.
The carbon dioxide mixes into the product, whether it’s sucked in from industrial point sources or directly captured from the atmosphere as the concrete cures, don’t need to be separated from other gasses. Therefore, it saves on the cost for secondary processes.
Moreover, the diluted carbon can make the cured concrete stronger and tougher, and thus more durable than conventional mix.
Better still, C-Crete Technologies also boasts their patented high-performance, cement-free binder that uses locally available materials as inputs. Their binder releases almost no emission when manufacturing. Plus, it continues to absorb more CO2 from the air as time goes by.
These properties make the company’s potentially carbon-negative concrete a viable alternative to ordinary Portland cement. Ordinary Portland cement is responsible for about 8% of the total carbon emissions globally.
Every ton of C-Crete’s cement-free binder can prevent around 1 ton of carbon emissions.
A carbon removal company, CarbonCure, has been innovating a similar solution for the industry. It also incorporates captured CO2 into fresh concrete, locking it up permanently.
The Energy Department’s $2M award will enable C-Crete to further advance its innovative technology. Just last month, the DOE also awarded the California-based company almost $1 million.
This previous funding will help C-Crete expand the kinds of materials it can use to make its revolutionary cement-free concrete. It can also avoid the need for long-distance shipping, which further allows the company to reduce CO2 emissions from shipment.
The new funding will enable the company to show that its technology can convert more than 10 kilograms per day of high-performance, carbon-negative concrete. It may outperform Portland concrete while mineralizing the net carbon.
This development aligns perfectly with C-Crete’s mission to address the climate crisis by manufacturing sustainable and greener building materials that meet or even exceed industry standards for concrete applications.
As part of the world’s continued efforts to combat climate change and transition towards net zero, one important piece of the puzzle is new regulations and government policies.
Government regulation covers just about every sector, both public and private, and has been related to some of the most important shifts in industry.
The oldest of the U.S. government’s various consumer protection agencies, for instance, is the Food and Drug Administration, or FDA.
Its origins begin with the U.S. Department of Agriculture’s Division of Chemistry, a research wing with no regulatory powers that existed in the late 19th century.
After a number of food- and drug-related scandals such as Upton Sinclair’s The Jungle exposé on working conditions in animal feeding operations or the diphtheria antitoxin contamination incident in 1901 that resulted in the deaths of a dozen children, new laws were implemented that would lead to President Roosevelt signing the Food and Drug Act in 1906.
Since its inception, the FDA has given rise to countless regulations that benefit the general public. Some examples include:
Banning radioactive drinks and harmful “drugs” like Elixir of Sulfanilamide
Establishing canning and packaging standards
Allowing for the prosecution of responsible officials of a corporation, as well as the corporation itself, for violations
Authorizing the inspection of factories
Regulating drugs before they hit the market
You can thank the FDA for the fact that this isn’t available for sale anymore.
The FDA has by no means exhausted the list of changes it has brought to an industry that state laws previously only protected in a patchwork manner.
Today, it’s very unlikely for someone to go out to a grocery store or restaurant and get sick from something relating to the ingredients. This wasn’t always the case a century ago. And we have the extensive protections put in place by the FDA to thank for that.
In the modern day, the fight against climate change is the next place where government intervention has to force compliance in a timely manner.
After all, oil and gas companies like Exxon already knew about climate change back in the ‘70s. They spent millions on research, hiring top scientists and building their own climate models. All to cover it all up when it turned out that the truth could hurt their bottom line.
(Exxon is famous for being one of the leaders behind the Global Climate Coalition. It was established in 1989 to question the science behind climate change and raise skepticism.)
Climate disclosure rules are merely one small piece required to put the world onto a net zero pathway. Climate disclosure will enable informed investor decisions and compel companies to reveal their true operations, similar to FDA-imposed nutrition labels.
What is Climate Disclosure?
Simply put, climate disclosure standards are legislation put in place to make it mandatory for companies to disclose how much their business operations impact climate change – and even how climate change impacts them.
Currently, corporations already adhere to a number of different reporting standards. Financial reporting is one of the most well-known, as quarterly earnings reports and such often impact share prices and market valuations.
Non-financial reporting metrics such as ESG (Environmental, Social and Governance)-related reporting have risen greatly in the past few years. Simply because investors have started viewing corporate responsibility as a key component of an attractive investment.
Climate disclosure certainly falls under the “E” in ESG. Many major companies are already voluntarily disclosing their emissions and other related information. But many use different metrics for reporting, while others may straight up leave out important details.
Proper climate disclosure regulation would require a standard framework that companies would be forced to follow when reporting their emissions and other climate-change-related details of their operations. It would work similarly to how the U.S. SEC mandates annual 10-K and quarterly 10-Q reports to be filed by listed companies according to U.S. GAAP accounting standards.
As an aside, something often used in emissions reporting are the terms “Scope 1”, “Scope 2”, and “Scope 3” emissions, also known as S1, S2, and S3.
These terms come from the Greenhouse Gas Protocol, a third-party emissions reporting standard that many companies use for calculating their emissions.
S1 emissions covers the emissions directly resulting from a company’s operations. It’s from sources they own and control, such as any buildings they occupy or vehicles they have.
S2 emissions are indirect emissions that include the emissions produced from the energy the company uses. Examples of this would be the emissions generated by the electricity used to power the company’s offices. Or it can be the emissions produced when extracting the oil used by their employees to drive to said offices.
Lastly, S3 emissions are indirect emissions that cover the entire rest of a company’s value chain, both upwards and downwards. What this means is that all emissions from any products or services used or produced by the company would be covered.
This would include the emissions required to produce any parts or supplies the company uses in its business operations. The emissions the company’s products would produce down the line are also part of S3.
Let’s take an auto manufacturer as an example here. Their S1 emissions would include the emissions produced by the company’s offices, manufacturing plants, and fleet of delivery/service vehicles. Their S2 emissions would include the emissions generated by the electricity required to power said plants, and the oil to run their fleet of vehicles.
Finally, their S3 emissions would include the emissions involved in mining and producing all the materials and parts the company needs to actually make their cars, as well as all of the emissions produced by their cars in the future when their customers drive them.
As you can see, S3 emissions can be a big deal when compared to a company’s “operational” S1+S2 emissions! This is part of the reason why proper climate disclosure regulations are needed.
Why is Climate Disclosure Important?
Right now, in the U.S. and many other countries, there’s no single unifying standard for climate disclosure. Again, while many companies voluntarily do so, some may be trying to report their emissions in such a way as to make themselves look better.
One example of this comes from the oil and gas industry, where all of the biggest companies like Shell, Chevron, Exxon, and even Saudi Aramco only report S1+S2 emissions in their disclosures.
After all, it hardly matters how cleanly a company can extract oil and gas from the ground. What really matters is how all that oil and gas ends up getting burned as fuel, releasing significant carbon emissions that would fall under the company’s S3 emissions… which simply go unreported.
Currently, it’s estimated that S3 emissions account for 80-95% of the total carbon emissions from oil and gas companies, as shown above. So, by ignoring them, oil and gas companies can make themselves look better.
Another potentially surprising example comes in the form of Tesla, the electric vehicle (EV) company.
Prior to 2023, Tesla also refused to report its S3 emissions related to the various suppliers and vendors who produce parts for its cars.
In its most recent impact report, however, Tesla finally reported its S3 emissions alongside its operational S1+S2 emissions. To no surprise: its S3 emissions accounted for 98% of the company’s total emissions footprint.
One thing you might not know is that currently, the process of making an EV is actually more carbon intensive than making a gas-powered vehicle. This is due to a number of factors, such as the complicated process of making an EV battery as well as the relative lack of economies of scale when comparing EV manufacturing with traditional car manufacturing.
Of course, the lifetime emissions of an EV still wind up being significantly lower than that of a gas car. That’s because a gas car will continue to produce carbon while in use over its lifespan.
Still, Tesla may have wanted to hide the fact that right now, making an EV produces more emissions than making a regular car by hiding their S3 emissions.
You can think of proper climate disclosure like the nutrition labels on food packaging. It provides additional information regarding each product and allows extra transparency and metrics for the consumer to choose based on their preferences.
For instance, when grocery shopping, some people always choose the cheapest option, whereas others are happy to pay the premium for locally sourced organic produce. Some might prioritize fresher products, while others may have a preferred brand they go for.
Climate disclosure will allow for investors to do the same thing with companies they choose to invest their money in.
Let’s say you do your research on two different companies offering similar products or services. If the pros and cons of each respective company balance each other out, the fact that one company emits twice as much greenhouse gas (GHG) as the other might just be the factor that tips the scales in the other company’s favor.
This extra climate data transparency will also allow for governments to better meet their country-level climate change targets. Also known as their Nationally Determined Contributions (NDCs) as per the Paris Agreement.
And on the subject of GHG emissions, don’t forget – we’re already entering an era where climate disclosure may actually have significant material impact on a company’s operations.
In Europe, for example, the Emissions Trading System (ETS) covers roughly 40% of total GHG emissions in its member states. This includes a number of important sectors such as power generation, transportation, and the manufacturing industry.
Companies covered under the ETS have their emissions capped. Any excess emissions over a company’s annual limit must be offset through the purchase of allowances from other operators in the ETS who are under their own limits. If companies can’t come up with enough allowances to fully offset their own emissions, they face heavy fines.
Since the emissions of these companies can directly impact their financial results, emissions reporting is very important for companies that operate under the EU’s ETS framework.
While not every country and sector in the world has an emissions regulation framework like the ETS, it’s only a matter of time before governments serious about climate change adopt similar strategies.
Even without taking such considerations into account, climate disclosure already has the potential to seriously impact corporate valuations. More and more investors decide they would rather put their money into climate-friendly businesses.
ESG funds have grown significantly over the past five years. Despite last year’s hit with global markets, ESG investing remains highly popular.
Many investors seek ESG-friendly deals; it’s time to implement climate disclosure rules.
Now, while we’ve mostly discussed the emissions reporting aspect of climate disclosure, there are other parts to it as well. In particular, how a business’s operations might be impacted by the effects of climate change.
In recent years, extreme weather events have become far more commonplace. And they can have significant adverse effects on both individuals and corporations alike.
Climate change can negatively impact agriculture and crop yield, for instance. Extreme weather events can also cause widespread damage from flooding, storms, and the like. Sustained periods of high temperatures can stress electrical grids and equipment, and even cause health issues and force business closures.
Some businesses are naturally more impacted by climate change than others. Whether it’s due to their physical location or the nature of their operations. Risks related to these factors would be very handy for investors to know as they do their due diligence.
Climate Disclosure Around the World
Right now, the EU and the UK are largely driving the push for more stringent climate regulation.
Every year, operators covered by the EU ETS must submit an emissions report that complies with the EU’s Monitoring and Reporting Regulation, subject for verification by a third-party verifier by March 31st of the following year.
The U.K. implemented their Climate-related Financial Disclosure Regulations in 2022. It became one of the first to make it mandatory for listed companies to report climate disclosures.
The EU and UK have definitely led the way in this area. Yet, many other countries have proposals in place to make climate disclosures mandatory for companies, including:
Brazil,
Canada,
Hong Kong,
New Zealand,
Singapore,
Switzerland, and
The U.S.
The U.S. SEC, in particular, is currently in the process of finalizing their climate disclosure rules for public companies.
What Are the New SEC Climate Disclosure Requirements?
In March of 2022, the SEC proposed a set of climate disclosure requirements that would potentially apply to all SEC-registered domestic and foreign public companies.
The proposal would require companies to, in their registration statements and period reports (such as 10-K annual reports):
Discuss the potential material impacts of climate-related risks on their business and how they’re being addressed. These include governance structure, strategy, risk management, metrics, and outlook.
Disclose S1 and S2 emissions (for certain filers), eventually with “reasonable” independent third-party assurance same with financial statements. Certain companies, but not all, would also need to disclose their S3 emissions.
Incorporate climate-related financial metrics and disclosures into their audited financial statements.
Discuss any climate-change-related targets as well as transition plans, if applicable.
The authorities planned to finalize these proposed changes in April of 2023, but controversy surrounding the new rules delayed them to fall of the same year.
Many have pushed back against what they perceive as an overreach by the SEC with its new climate disclosure requirements.
Some question whether or not the SEC actually has the authority to force businesses to comply with this proposal that would significantly affect management processes for many businesses.
Predictably, many Republican lawmakers and business groups aren’t happy with these aggressive new rules. They believe it will add administrative burdens and costs to companies without providing comparable tangible benefits.
The U.S. Chamber of Commerce, for instance, has threatened to file a lawsuit if the rules are finalized. And Republican House Representatives like Ann Wagner of Missouri and Bill Huizenga of Michigan have expressed their concern about the legal authority of the SEC’s “radical regulatory agenda”.
Just recently, SEC Chair Gary Gensler highlighted the grave concern regarding Scope 3 emissions. He said that “Scope 3 disclosure is not as well developed, there’s not as many companies putting it out, and its frankly not yet as reliable“.
If the SEC enacts the proposed rules, they could require U.S. public companies to start reporting climate disclosures by 2025.
While no current guarantee exists that the SEC’s SEC’s proposal will pass in its current form – and it will almost certainly face legal challenges even if it does – other parts of the country have decided to act independently.
For instance, in California, Governor Newsom will soon sign Senate Bills 253 and 261 into law. Not only that, but these bills also have even more stringent requirements than what’s in the SEC’s proposal.
Combined, these rules – the first of their kind in the U.S. – would make climate disclosure mandatory for all businesses with over $1 billion in annual revenue operating in the state of California. Affecting both public and private corporations, these bills would apply to an estimated 5,344 companies. In addition, the bills would also require not only S1+S2 emissions reporting by 2026, but also S3 reporting by 2027.
Companies with an annual revenue over $500 million must start disclosing climate-related financial risks by the end of 2024.
Over in New York, Senate Bill 2023-S897A would roughly do the same thing as California’s SB253. It applies to U.S.-based companies doing business in New York with annual revenues exceeding $1 billion.
S897A is currently sitting with New York’s Senate Finance Committee. So it won’t come into effect until well after California’s SB253 does.
At the end of the day, other arms of the government will simply enact the same requirements. Companies operating in Europe already have to comply with climate disclosure regulations. And those who want to operate in California will soon have to follow suit.
New York and other blue states are likely to enforce climate disclosure reporting soon, forcing companies to either comply or risk losing access to large potential markets across the U.S. and the rest of the world.
As a partner at U.S. law firm Ropes & Gray LLP, one of the largest law firms in the world, put it:
“The horse has already left the barn on climate risk disclosure.”
And despite the best efforts of business lobbyists and attorneys, there’ll be no getting the horse back in.
Zimbabwe has amended its new carbon law governing carbon credit projects, dropping the initial plan to give 25% of the revenue to local communities to allow developers to keep a greater share of the profits.
Project developers no longer have to give up a quarter of their 70% share of profit as previously mandated. But the Southern African nation will still keep its 30% share and hand it over to state stakeholders.
Attracting the Right Investors
Explaining the big amendment, the environment and climate minister Mangaliso Ndlovu said:
“We are doing this to be competitive in attracting the right investors, as every project is an investment in communities. They will still benefit from the 30% that goes to the government.”
In May, Zimbabwe announced that it will take 50% of total revenue from carbon credit projects operating in the country. This leaves foreign investors limited to 30% while the remaining 20% will go to host communities.
Zimbabwe is the 12th largest carbon offsets producer in the world. It delivered over 4 million carbon credits from various projects in 2022. The nation’s largest project is managed by the South Pole, involving hundreds of thousands hectares of forest in Kariba.
While on the African continent, the country ranks top 3 among carbon credit producers, representing about ⅛ of total production.
Just last month, Zimbabwe said that at least 25% of the developer’s 70% share will go to local authorities. But this time around, the South African government announced that it will let developers take all its profit share.
The 30% Environmental Levy includes various lines: climate change adaptation and low carbon initiatives, loss and damage relief, local authority levies, admin costs, and the Treasury.
The most recent amendment was welcomed by project developers wanting to take a bigger share of the $2 billion global voluntary carbon credit market. The Zimbabwe Carbon Association, in particular, remarked that the change removes the burden from developers, enabling them to focus on project activities.
With Market-Based Climate Action
However, for some consultants, the amendment represents the failure of the government to have control over its own resources.
One consultant remarked that “the world is moving towards market-based climate action”, and this made Zimbabwe a part of that scenario.
Zimbabwe improved its climate ambition by setting a 40% emissions reduction target by 2030, up from the 33% initial target.
Source: UNDP.org
The country has since then adopted the voluntary carbon market scheme rather than opt for a compliance market. Overall, the global carbon market, including both voluntary and compliance, could reach $22 trillion by 2050.
Each credit represents one tonne of CO2 avoided or removed from the atmosphere. The credits are bought and used by companies and other entities looking to offset their carbon emissions.
Under the voluntary mechanism, the government doesn’t have full control of the carbon market. Still, it’s gaining momentum in Africa.
Zambia, the 5th biggest producer of carbon credits in the continent, also has plans to follow Zimbabwe’s scheme.
In July this year, Tanzania revealed that it will be a recipient of more than $20bln carbon credit investment. Meanwhile, Kenya, the region’s largest supplier of carbon credits, is currently regulating its own carbon market.
African governments are taking actions to position themselves strategically in the growing carbon market. They’re developing schemes and making changes to ensure that their carbon projects are catching investors’ eyes for developing climate solutions.
Zimbabwe’s decision to amend its carbon law reflects a shifting landscape in carbon markets. The move underscores the importance of balancing economic interests with environmental and community benefits.
One of the few carbon-negative countries, Suriname, aims to be the first nation to sell carbon credits created by the Paris Agreement also known as the “Internationally Transferable Mitigation Outcomes” or ITMOs.
Suriname’s carbon credits use a baseline of carbon stock its rainforest stores as it registers with the United Nations. Any increase in the carbon stock represents corresponding emission reductions, which generates the equivalent carbon credits.
The Paris Agreement suggests that nations can sell those emission reductions in the form of ITMOs to other entities seeking to use them toward their own climate targets.
Government-Backed Carbon Credits
Forests cover around 95% of the South American nation, serving as significant carbon sinks benefiting the entire planet. The deforestation rate in the country stands at only 0.05% to 0.07%, making the country carbon-negative. Its forests capture carbon more than the nation emits.
As per the U.N. REDD+ program, Suriname has registered an emission reduction of 4.8 million metric tons of CO2 for 2021. This gives the country the same amount of carbon credits, 4.8 million because each tonne equals one credit.
These credits, also called ITMOs, are integral to Suriname’s economic and environmental policies, said President Chan Santokhi. He further noted that it will be the “beginning of the long-awaited access to climate finance.”
Suriname can use the ITMOs toward its Paris Agreement targets, but companies can also buy them to offset their own climate goals. The heavily forested nation can issue the ITMO credits within weeks.
According to the country’s advisor for the sale, thirty companies were evaluating if they were going to buy the ITMO credits. But there’s no mention of the credit price and the volume of the issuance.
The planned sale is a bid to draw in investors with government-supported carbon credits that adhere to the UN guidelines. Some market players find this relevant as businesses relying on voluntary carbon markets for offsets grow wary of some private projects found to fail in delivering their promised emission reductions.
ITMOs for Net Zero
At COP27, Ghana presented the landmark bilateral authorized project under a ITMO deal with Switzerland. Governments can use ITMOs for their net zero targets.
If Suriname’s first ITMO credits sale proves to be a success, it will snowball, attracting other countries to follow suit.
Honduras and Belize will take Suriname’s lead and will issue their own ITMOs, too. They will issue 10 million credits each by 2024. If that happens, it can help increase demand signals for ITMOs.
This could have never been more timely as nations attending this year’s global climate summit, COP28, in Dubai in November to December are required to report on the progress of their climate targets.
Governments have set their carbon emissions caps. Those that go beyond the limit can sell the credits to those that weren’t able to do so. As the cap decreases, carbon levels also fall.
It works the same as how companies use carbon offsets toward their net zero targets. And while developed nations also have to prioritize intensive carbon reduction efforts, chances are they will still need carbon credits.
For instance, the United States aims to achieve reductions of 25% by 2025 versus 2005 CO2 emissions levels. But experts believe that a realistic goal would be 17%. Any emissions left unabated can be compensated by buying ITMOs from carbon-negative nations like Suriname.
The System is Still Lacking, But Sales are Good to Go
A lead policy analyst at Carbon Market Watch, Giles Dufrasne, warned that the REDD+ emissions reductions backing the ITMOs didn’t go through robust verification standards. It will be up to the buyer to assess the credits and request for further information as needed.
Dufrasne further noted that there are still some technical details being worked at, but current rules are enough to facilitate the sales. This is supported by another carbon market negotiator saying that though the system wasn’t fully established, the sale can push through and be registered later when the system is up and running.
Commenting on this, a REDD+ expert Gustavo Silva-Chavez, said:
“It may not be a perfect system, but it’s better than nothing… By the time it gets perfect, it’s going to be in 20 years and the forests are gone.”
Prior to Suriname’s news, Gabon had announced that it would issue ITMO credits back in 2022. However, the African nation faced criticisms that its forests actually didn’t reduce emissions. The country held up the plan until a military coup further caused problems, making the plan unclear.
Suriname’s President Santokhi recently led a ground-breaking ceremony for the country’s mangrove carbon credit and agroforestry projects. This is in partnership with Klimat X, a provider of high-quality carbon credits from afforestation and reforestation projects.
Klimat X had signed an agreement with Suriname’s national government to develop mangrove and agroforestry carbon credit projects. The company has built a presence in the country and actively conducts fieldwork to establish project size and feasibility.
Leveraging its extensive rainforests as carbon sinks, Suriname stands to generate revenue from internationally transferable mitigation outcomes (ITMOs) while contributing to global climate goals. This initiative could set a precedent and provide a lifeline for countries struggling to meet their net zero targets.
Battery Boom: Discover how battery startups are securing record-breaking investments, reflecting the burgeoning potential of the sector.
A Lithium Gamechanger: Delve into American Lithium Corp’s groundbreaking lithium discovery near Quelcaya, positioning the region as a potential lithium hub.
In the recent surge of venture capital, battery startups are making waves with some substantial financing rounds.
According to data from Crunchbase in just the past month, three notable financings exceeded $1 billion:
Verkor, a French endeavor concentrating on eco-friendly battery production, secured $2.1 billion, including a whopping $900 million in its Series C. They’re gearing up to launch their first gigafactory by 2025.
Redwood Materials, a Nevada brainchild of ex-Tesla CTO JB Straubel, specialized in battery recycling, amassed $1 billion in its Series D, propelling their total financing past $3.8 billion. They’ve also recently integrated Redux Recycling, a German counterpart.
Northvolt, championing environmentally-conscious lithium-ion batteries, procured a substantial $1.2 billion convertible note. The Stockholm-based titan is amidst expanding its Polish manufacturing operations.
While 2023’s global venture funding threatens to surpass the records set in the last two years, the US market inches close to its 2021 peak.
Given the global venture drop this year, these numbers in the battery sector are a significant anomaly. The urgency couldn’t be clearer with recent climate change projections painting a bleak picture, emphasizing the importance of advanced battery technology and sustainable production.
Charging Up: 3 Pillars of Investor Focus
Investor focus appears to revolve around three axes:
Highlighting the sustainability angle, prominent investments in battery recycling are evident.
Redwood Materials isn’t alone; Ascend Elements from Massachusetts, crafting sustainable battery materials from discarded counterparts, landed a hefty $460 million Series D. Meanwhile, China’s Zhejiang Tianneng New Material, centered on lithium-ion battery recycling, received a fresh $137 million boost.
Such investments are critical for an eco-friendlier EV supply chain, which reduces dependency on scarce mineral mining.
Grid energy storage is also in the limelight. Our Next Energy from Michigan, focusing on storage for EVs and grids, has accumulated $390 million so far. Germany’s Stabl Energy recently secured $16 million for its energy storage solutions.
The EV boom is undoubtedly a primary force propelling these investments. Key players like Verkor and Northvolt have automotive giants backing them, emphasizing the industry’s battery dependency. Moreover, innovations in electric bikes and motorcycles are gaining traction, evidenced by India’s Battery Smart raising $33 million recently for battery-swapping solutions.
Lithium-ion Battery Demand
The demand for lithium-powered EV batteries is also projected to grow annually between 2022 and 2030 at over 22% rate. The EV transport segment will also snag a market share of 93% in 2030, standing at 3.7 TWh.
Despite the substantial funds funneled into battery startups, the journey to a comprehensive shift to EVs might require more capital. What’s clear, though, is that investment momentum is building, setting the stage for the next era of scalable battery innovation.
Amid this trend, a breakthrough has emerged on the lithium front.
American Lithium’s Fresh Find Bolsters the Market
American Lithium Corp recently unveiled a significant lithium discovery near Quelcaya, 6km west of Falchani, revealing assays up to 2,668 ppm lithium over an impressive 222 meters of mineralization.
This positions the region as an emerging lithium district.
Located near the village of Quelcaya in Puno, southeastern Peru, the Quelcaya exploration project showcases three lithium mineralization areas situated 5.5 to 11 kilometers west of the company’s Falchani deposit. The discovery, characterized by different mineralization from Falchani, holds promise for pre-concentration, as evidenced by initial metallurgical analyses.
Simon Clarke, CEO of American Lithium, enthusiastically shared,
“This discovery underscores our belief that the Macusani Plateau, beyond just housing the Falchani lithium deposit, has the makings of a significant lithium district under our control.”
Furthermore, the inaugural drill hole in Quelcaya’s area intersected lithium mineralization in certain granitic rocks beneath weakly mineralized cover rocks. These findings point towards the possibility of enhancing lithium concentrations through pre-concentration techniques, with ongoing lab trials exploring this avenue.
The core of the report underscores the crystalline nature of the new lithium-rich granitoid, indicating the potential to separate non-lithium-bearing phases. Leaching test work has been initiated on whole rock samples to gauge compatibility with Falchani’s existing processes.
The program features rigorous analytical quality assurance, including systematic insertion of company standards, blanks, and duplicate samples.
Investments in battery startups and the breakthroughs in lithium discovery signal a dynamic shift in the green energy space. With ventures like American Lithium pushing the envelope, the future seems electrifying.
Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: AMLI.
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.
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