IEA’s 2023 Net Zero Roadmap: Tripling Renewables and Electrifying the Energy Transition

0

The International Energy Agency’s (IEA) latest Net Zero Roadmap suggests that tripling renewables capacity to 11,000 GW by 2030 is one way to reach global climate goals. 

The IEA’s 2023 Net Zero Roadmap outlines a global pathway to be on track with the 1.5 ̊C goal. It was first published in 2021, from which the energy sector has seen pivotal shifts. 

IEA’s Updated Roadmap to Net Zero by 2050

IEA new net zero roadmap 2050

The updated version also calls for unified efforts to help reduce global warming as world leaders coming together at the upcoming COP28 in Dubai in November. 

Ramping Up Renewables Capacity

The agency said that ramping up renewables, alongside improving energy efficiency, reducing methane emissions, and increasing electrification will bring over 80% of emissions reductions needed by 2030. 

The roadmap indicates that tripling global installed renewable energy capacity to 11,000 gigawatts by 2030 will achieve the largest emissions reductions.

renewable capacity in NZE 2022, 2030
Source: IEA. Licence: CC BY 4.0

Under the NZE Scenario, the ramping up of clean energy is the key factor leading to a drop in fossil fuel demand of more than 25% this decade. This, plus supportive policies like repurposing of coal-fired plants are crucial to give more room for clean energy to grow. 

Renewable power sources, such as solar PV and wind, are now widely accessible and cost effective. They are also well understood and deployed rapidly. In fact, policy systems have now placed advanced economies, and China, on track to contribute significantly (85%) to this goal. 

However, developing economies and emerging markets still need more international support and stronger policies.

For all nations, hastening permitting lead time, modernizing the grids, fixing supply chain issues, and adopting variable renewables are essential. 

Earlier this month, the G20 countries heed to support the tripling of renewables. With that, they agreed that a $4 trillion/year needs to accelerate investment in the clean energy transition.

In June, the IEA reported that global additions of renewable power capacity will grow by a third this year. The agency said that it will increase to over 440 GW, the largest growth ever reported. Next year, global renewable electricity capacity is projected to rise to 4,500 GW. 

IEA Executive Director Fatih Birol remarked that despite oil price concerns impacting energy security for countries, this year is more optimistic than 2 years ago. He particularly noted that:

“We see legitimate reasons to be hopeful because a new clean energy economy is emerging. While we see the path to 1.5 C narrowing, a spectacular increase in clean techs is keeping the door open.”

Tripling of renewable energy, plus doubling the annual rate of energy intensity improvement are key to ending new coal plants. Energy improvements stem from three crucial measures: improvement in technical efficiency of equipment, more efficient use of energy and materials, and switch to more efficient fuels, particularly electricity. 

Electricity is the “New Oil” 

Under IEA’s NZE Scenario, rapidly advancing electrification technologies like electric vehicles and heat pumps would be responsible for a fifth of the emissions reductions by 2030. 

In particular, EV sales will account for ⅔ of new car sales by the same year. EV production goals from major automakers indicate that achieving such an ambitious goal is possible. 

Likewise, heat pumps are also growing globally by 11% last year, with China being still the top market. But others are keeping up such as the EU, which is ahead of the annual growth needed to 2030.

The agency said that as electricity is emerging as the “new oil” of the world’s energy system, funding for power networks must ramp up. This entails ensuring massive growth of battery energy storage and other low-emissions technologies. These include carbon capture, utilization and storage (CCUS), hydrogen, and hydrogen-based fuels, the IEA said.

COP28 Action Plan Shares The Same Goal

Those clean energy technologies, particularly renewables and hydrogen production, are among the major agenda at the upcoming COP28

COP28 President-Designate Dr. Sultan Al Jaber lays out an action plan heavily focused on fast-tracking the energy transition.

  • One key aspect of the plan is to “triple renewable energy capacity, double energy efficiency and double hydrogen production to 180 M tons/year by 2030.”

But with rising oil prices and demand hitting record levels, energy security concerns are also heating up in the lead-up to COP28. The tension gets even higher with the UAE, a major oil nation expanding its production, as the climate summit host. 

The energy sector is changing faster than most people expect but much more needs to be done urgently. 

The IEA’s 2023 Net Zero Roadmap emphasizes the critical role of renewable energy in achieving global climate goals, alongside energy efficiency improvements, and increased electrification. As world leaders prepare to converge at COP28 in Dubai, the roadmap sets a clear path for addressing climate change and accelerating the transition to a clean energy future.

Indonesia Launches Carbon Credit Market In A Leap Toward Net Zero

Indonesia launched a carbon credit trading market as part of its goal to reduce carbon emissions and achieve net zero by 2060.

Southeast Asia’s largest emitter selected the Indonesia Stock Exchange (IDX) as the exchange for trading carbon credits. The carbon exchange will also promote energy transition and mitigate the climate impact of the country’s coal-dominated power sector. 

More importantly, the world’s 3rd-largest rainforest nation aims to contribute faster to achieving the global Net Zero goal. 

Carbon Market is Key For Indonesia’s Net Zero Push

President Joko Widodo is confident that Indonesia has a huge potential in advancing nature-based carbon reduction efforts, saying that:

“I am very optimistic that Indonesia can become the world’s carbon (market) axis as long as concrete steps are taken consistently and jointly by all stakeholders.”

The president further noted that their carbon credit market would reach the value of over $194 billion. The country’s leader has been clear about its faith in the carbon market and carbon pricing as “part of the efforts to address climate change”, he said at the COP26 in 2021.

Two years later, the market was launched under the oversight of the Financial Services Authority (OJK). OJK’s Head Mahendra Siregar said that they hope coal power plants will join the carbon trading exchange immediately this year. 

More than 99 coal-fired power plants will participate in trading carbon credits, representing 86% of Indonesia’s total active coal plants. The country has been intensely focusing on finding funds to decarbonize its power sector. It has seen the highest ever growth in coal emissions last year.

Indonesia coal emissions 2022After consistently negotiating the details of the climate finance package inked last year by President Jokowi and U.S. President Joe Biden, a final plan for the nation’s $20 billion climate deal could be up by next month.

A draft of the plan has been circulated to partner groups and will be open for public consultation.

However, the first batch of carbon credits traded during the launch were from carbon offset projects by PT Pertamina Geothermal Energy’s Lahendong power plant in Sulawesi island. They include nearly 460,000 metric tonnes of CO2

Carbon prices started at $4.51/credit.

Buyers included the nation’s largest banks, Bank Central Asia and Bank Mandiri, mining firms, and state energy firm Pertamina. 

Carbon Credit Projects Must Meet Regulations

Users of carbon exchange services include emissions trading companies, non-emission trading companies, project owners, and other entities approved by the OJK. 

The Southeast Asian country has been strict in implementing its rules governing carbon projects. The Indonesian government has suspended the validation of its major carbon projects. These include the following projects:

  • Rimba Raya Biodiversity Reserve: a project in Central Kalimantan that protects 91,215 hectares of rich, tropical peat swamp forests, preserves ecosystem diversity and endangered species.
  • Sebangau National Park: protects 5,500 km2 of tropical peat forest home to >5800 critically endangered Bornean orangutans.
  • Riau Ecosystem Restoration (RER): a private sector-led project that restore and conserve high conservation areas on Kampar Peninsula and Padang Island in Sumatra. 

Validating these projects was suspended in April 2022 but in December, Rimba Raya was validated by Indonesia’s carbon registry, SNR. 

Carbon projects in the country have to meet Presidential Regulation No. 98/2021 and other relevant laws first to start generating carbon credits. The Presidential Decree regulates carbon trading using emissions trading and offsets.

Other Plans to Back Up Carbon Trading

Initially, trading carbon credits in IDX can be voluntary. But the Indonesian government is also working on a plan for another regulation on carbon emissions. A senior government official said at the launch that it would include a carbon tax

The carbon credit market was originally to incentivize the power sector emitters to limit their emissions. Some of the country’s largest coal power plants started trading emissions allowances earlier this year.

But apart from the power sector, the government will also place a cap on carbon emissions for other sectors. These include forestry, agriculture, waste management, and industrial processes and product use. 

The rainforest nation also has plans to apply international standards for carbon trading and be recognized by other markets abroad. This is to bring its carbon credits to foreign buyers looking to offset their emissions at home. 

The new emission trading system is using blockchain technology to record its carbon credit transactions. 

Indonesia’s bold move to launch an emissions trading system is a significant step in its journey towards reaching its 2060 net zero goal. By encouraging emissions reductions across various sectors and promoting nature-based solutions, the country aims to play a pivotal role in the global carbon market.

Your Ticket to the Capitol: Hydrogen Americas 2023 Summit & Exhibition

0

When the U.S. Department of Energy speaks, investors and corporations listen.

As the popularity of the Hydrogen sector continues to attract attention in 2023 and grow, CarbonCredits has been working behind the scenes to bring more value.

One of the largest Hydrogen summits is coming up, and we’ve arranged a VIP ticket for anyone wanting to go. 

Hydrogen Americas October 2-3, 2023 in Washington DC

After the rousing success of the sold-out 2022 summit, the Sustainable Energy Council (SEC) in collaboration with the U.S. Department of Energy (DOE) is thrilled to extend an invitation to our readers for the much-anticipated Hydrogen Americas Summit & Exhibition

It’s all happening on the 2nd and 3rd of October 2023 in the heart of Washington D.C.

The Global Hydrogen Landscape in 2023 

This year is set to reshape the hydrogen sector. With global powerhouses like the EU, Canada, and Australia unveiling their funding plans in response to the U.S.’s Inflation Reduction Act, we’re witnessing the dawn of an unprecedented hydrogen race.

And guess what? You have the chance to be at its epicenter.

Connect, Collaborate & Conquer: Dive into a sea of opportunities, rubbing shoulders with over 3000 industry forerunners

  • U.S. Secretary of Energy: Hon. Jennifer Granholm
  • Brazil’s Minister of Mines and Energy: Hon Alexandre Silveira
  • Director of Hydrogen & Fuel Cell Technologies: Dr. Sunita Satyapal
  • President of Air Liquide: Katie Ellet
  • Chairman, Air Products: Seifi Ghasemi
  • BP VP of Hydrogen, U.S.: Tomeka McLeod
  • Lind VP Clean Energy: David Burns
  • BMW North America: Thiemo Schalk
  • CEO of Powertech Labs: Pierre Poulain
  • Siemens, N.A. President: Richard Voorberg
  • Co-Founder and VP, Svante: Brett Henkel
  • Chevron, VP Hydrogen: Austin Knight

And many, many more high ranking government and corporate attendees are lining up.

Why Should You Attend?

  • Networking: Forge new business partnerships that could redefine the trajectory of your hydrogen projects.
  • Insight: Gain access to unparalleled industry knowledge and intelligence, straight from the world’s leading experts.
  • Exhibition: Marvel at the world’s latest technological innovations and new hydrogen solutions.

The Hydrogen Americas 2022 summit was a sell-out. And we expect nothing less this year.

Secure one of the 100 discount spots using the code “CACR10HAS” – Click Here to Register Now

Deep Sky & Mission Zero Partner to Turn Canada into A Carbon Removal Hub

Deep Sky, a Canadian carbon removal project developer, and Mission Zero Technologies (MZT), a UK-based Direct Air Capture (DAC) company worked together to deploy DAC facilities in Canada. 

The deal marks a significant milestone for the emerging carbon removal industry in Canada. Deep Sky aims to turn the country into a world-leading hub for carbon removal.

First-of-a-Kind DAC Demonstration

The Montreal-based carbon removal company is building the world’s first gigaton-scale carbon capture. They seek to remove billions of tons of CO2 from the atmosphere and permanently store it underground.

Deep Sky’s partnership with Mission Zero starts with a first-of-a-kind (FOAK) demonstration of the latter’s DAC technology that captures 250 tons of CO₂ each year. The ultimate goal is to develop commercial facilities that capture 100,000 to 1 million tons of CO2 annually.

The FOAK facility follows successful demonstrations of Mission Zero’s DAC technology in London. The same tech will also be used later this 2023 to produce synthetic aviation fuels and building materials at 2 sites in the UK. 

The FOAK demonstration plant will tap into Quebec’s massive source of renewable hydroelectric energy. It will be up next year. 

Speaking for their agreement, Deep Sky CEO Damien Steel noted that:

“Mission Zero is a pioneer, establishing a modularized DAC technology that is projected to reduce both energy consumption and cost. With the addition of Mission Zero’s tech,… commercialized carbon removal at scale is within reach.”

Deep Sky will leverage Mission Zero’s DAC system as part of its Alpha Lab test facility. 

DAC is a carbon removal technology recognized globally and identified by the Intergovernmental Panel on Climate Change (IPCC) as critical for meeting global climate targets. By replacing fossil fuels as a source of carbon, it generates both environmental and economic benefits.

How Does Mission Zero’s DAC Tech Work?

Mission Zero Technologies has rapidly grown from lab to pilot by getting support from the world’s renowned climate VC Breakthrough Energy Ventures and the famous XPRIZE Foundation. Other large companies like Stripe and Anglo American, as well as the UK Government, are also backing up the DAC company. 

Mission Zero’s DAC system is also easy to integrate with renewable power sources. It produces high-grade CO2 via its dynamic electrochemical separation technology. 

A study revealed that electrochemical methods are a more efficient way of capturing CO2. They use special liquids that can hold more carbon at once, making it even more efficient.

Mission Zero’s DAC process also leverages existing, scaled and mature technologies, including electrochemical water purification and cooling towers. It also doesn’t need heat, further reducing total energy consumption and uses 3x less energy than other approaches. 

Mission Zero DAC technologyMission Zero’s DAC process is:

Optimized for deployability: it’s compact, modular, electrically-powered, and works under ambient conditions. 

Energy-efficient: the process units consume less than 800 kWh/tCO2.

Off-the-shelf: components are off-the-shelf, made in large volumes already. 

These properties make Mission Zero’s DAC technology an ideal choice for Deep Sky’s Lab test facility. 

By utilizing mature, off-the-shelf units in a heat-free system, the company’s technology eliminates supply chain uncertainties while delivering the necessary energy efficiency to rapidly scale this kind of carbon removal after demonstration. 

  • Mission Zero Technologies believe that permanently locking CO₂ away into rock through mineralization is the gold standard for carbon removal. 

Combining their energy-efficient electrochemical DAC technology with mineralization at scale offers one of the most effective ways to tackle historic carbon emissions. What it needs is to pair it with existing carbon removal systems strategically positioned in the right places. 

Deep Sky fits into that requirement. 

Per Mission Zero CEO Dr. Nicholas Chadwick, their partnership with the Canadian carbon removal company enriches their “own industry’s understanding of operating DAC in diverse climates and geographies.”

It will also help them expand the application of this crucial carbon removal technology to maximize positive climate impact. 

Just last month, Deep Sky announced collaboration with Svante Technologies to study carbon sequestration in Quebec. It’s the company’s first venture to assess carbon capture and storage (CCS) technologies as a technological climate solution. 

Deep Sky’s collaboration with Mission Zero underscores the growing importance of carbon removal technology in combating climate change. Their joint efforts seek to establish Canada as a significant player in carbon removal, showcasing the potential of DAC for a cleaner, more sustainable future.

Behind Closed NYSE Doors at ICE’s Climate & Capital Summit

Last week, ensconced behind the ornate wood trim molding of the New York Stock Exchange’s 7th floor, luminaries in the realm of climate finance convened for the ICE Climate and Capital Conference, which was in partnership by FINTECH.TV, Accenture and Gitterman Asset Management.

The “AIR” We Should Breathe

This year’s agenda was woven around three pillars aptly acronymed “AIR”: Adaptation, Innovation, and Regulation. 

These are the cornerstones that will define the response to the multifaceted challenges ahead: the tangible threats of climate change, impending biodiversity losses, mounting human migrations, and the maelstrom of ever-shifting regulatory edicts.

Jeff Gitterman of Gitterman Asset Management set the stage, unveiling a series of insightful panels and dialogues with leading figures. 

The objective was singular and urgent: furnishing attendees with strategies not only to mitigate risk but also to spur innovations. Innovations geared toward reducing emissions and buttressing the world’s most vulnerable against the advancing climate menace.

From the array of expert speakers, three stood out, each illuminating a facet of the way forward.

Lisa Larroque Alexander of SEMPRA weighed in on the financing aspect.

As one of the most prodigious issuers of sustainable debt, SEMPRA feels the pulse of capital costs. Alexander anticipates methane mitigation to be a cornerstone discussion at the upcoming COP28 conference.

She evocatively quoted Churchill, “We’ve run out of money, now it’s time to think.” This crystallizes the drive to strategize when resources dwindle. 

She also expressed keen interest and foreshadowing in how carbon credits might be used post the Inflation Reduction Act (IRA) – a critical juncture that will mold our financial strategies. 

  • With the International Energy Agency forecasting a staggering $10 trillion for essential grid enhancements in the forthcoming years, the roadmap is unmistakable: innovate or stagnate.

Hanh Nguyen of OCI Global articulated her vision for a recalibrated carbon economy. She envisions the Carbon Model Adjustment Mechanism emerging as a pivotal catalyst, much like the EU’s carbon tax. 

Her firm belief in the hydrogen economy’s potential resonated. 

  • According to OCI, green methanol will surge until 2030, post which e-ammonia, with its pristine zero-emission credentials, will likely reign supreme by 2050.

Lastly, Lesley Biddle, a senior advisor at the U.S. Department of Energy, gave a primer on the tools at the U.S. DoE’s disposal to drive decarbonization.

The Infrastructure Bill, with its potent mix of debt and equity, alongside the Inflation Reduction Act’s provisions of credits and grants, earmarks an impressive $90 billion for deployment by summer 2024. Biddle hinted at a brisker rollout of “Hydrogen Hubs” and underscored the need to augment storage for hydrogen and capture.

The Triad For Fighting Climate Change

As the curtain fell on this year’s ICE Climate and Capital Conference, the takeaway was unequivocal. The triad of Adaptation, Innovation, and Regulation will not only guide but also drive our responses toward encroaching climate adversities. And there is A LOT of money available to companies and entrepreneurs willing to take on and solve these challenges.

It’s not just about grappling with known demons but also about anticipating the unknown, sculpting strategies in real-time, and ensuring a world where vulnerabilities are minimized and resilience is the watchword.

To watch the conference, click here: https://www.ice.com/events/virtual/climate-and-capital-conference-2023

HSBC Commits $1B to Climate Tech Startups Going to Net Zero

HSBC has committed $1 billion to finance climate technologies including carbon dioxide removal globally, helping startups grow and scale their clean solutions. This aligns with the global financier’s pledge to bring its financed portfolio to 2050 net zero emissions.

This funding will support startups focusing on various ranges of climate tech solutions, including electric vehicle (EV) charging, battery storage, sustainable food and agriculture, and carbon removal technologies.

Unlocking Critical Finance for Climate Tech 

The new investment follows two similar programs of HSBC aimed at advancing the cleantech space: HSBC Innovation Banking and HSBC Asset Management’s Climate Tech Venture Capital. The latter seeks to provide financial support to tech startups that address climate change across sectors like energy, transportation, and agriculture.

The UK-based universal bank and financial services group has also invested $100 million in Bill Gates’ Breakthrough Energy Catalyst Fund last year. This fund supports green projects worldwide.

Remarking on the $1B pledge, HSBC’s global commercial banking CEO Barry O’Byrne said: 

“Access to finance is critical for early-stage climate tech companies to create and scale real world solutions… With HSBC’s global reach, in-house climate tech expertise, we can offer these pioneer companies unrivaled support.”

Study shows that venture capital (VC) funding for climate startups declined by 40% in the first half of 2023, HSBC noted. 

climate tech funding down 40% H1 2023Though it sounds depressing, zooming out to the bigger picture will put things into perspective. There is a total of $117B of venture funding raised by around 2,500 climate tech companies since 2020. The slower growth rate in quarterly results indicates a relative slowdown in overall industry growth. It does not suggest an all-out retreat. 

It’s also worth noting that before this year’s dip in climate tech VC funding, it skyrocketed up to last year. According to HolonIQ, climate tech VC funding reached over $70 billion in 2022. 

climate tech VC funding 2022As the bridge to capital markets, VC investors are crucial in helping startups to develop, commercialize, and scale up. While there are various factors at play, supportive policies such as the EU Green Deal Industrial Plan and the U.S. Inflation Reduction Act help ramp up early-stage investments. 

According to CTVC analysis, the most active climate tech investors by stage in 2022 are the following:

top climate tech investors 2022Key strategic investors, such as Microsoft, Aramco Ventures, and SK are frequently participating in Late-stage and Growth funding rounds.

Climate tech startups are in dire need of these investors, especially since the IEA estimated that about 50% of carbon reductions needed to reach 2050 net zero emissions depends on how fast their technologies develop at scale. HSBC’s climate tech VC initiative aims to fast-track the adoption of these crucial technologies.

HSBC’s Climate Action Efforts

The $100M that HSBC allocated will particularly support four major technologies – Direct Air Capture (DAC), clean hydrogen, long-term energy storage, and sustainable aviation fuel.

Earlier this year, the universal bank also joined the World Bank’s Private Sector Investment Lab. It focuses on amplifying financing for renewable energy and infrastructure projects.

Last year, it also supported Hong Kong’s Exchanges and Clearing Ltd (HKEX) in developing a global carbon market. In the same year, the banking giant also declared that it would not support projects involving the development of new oil and gas fields. 

All these efforts are geared towards HSBC’s commitment to the net zero transition. The bank aims to achieve net zero in operations and supply chain by 2030 and in the financing portfolio by 2050. 

To meet these climate targets, HSBC aligns its financed emissions – emissions generated by customers and funded projects – to net zero. And the $1 billion pledge in climate tech startup funding will help make that happen.

HSBC’s financial support for climate tech startups reflects its commitment to tackling climate change. By supporting early-stage businesses and project financing, the bank contributes to developing innovative and clean tech solutions such as carbon removal.

Scaling the Carbon Removal Industry: The Urgent Push for a Greener Future

An analysis by the carbon removal market platform CDR.fyi shows that only 0.5% or 32 companies with Science-based targets have bought durable carbon removal. A separate report by the BCG showed that demand for carbon removal credits must reach 40 to 200 million tonnes of CO2 a year in 2030, or $10 to $40 billion, to meet climate goals.  

CDR.fyi is the largest open data platform dedicated to tracking high-permanence carbon dioxide removal (CDR). Their goal is to provide accurate data on CDR to help guide investment decisions and scale up the industry. 

The Need to Scale Up

Carbon removal is an emerging industry but is an important component of the fight against climate change.

Businesses need some amount of carbon removals to achieve their net zero goals. Yet, only a number of large companies are onboard the CDR sector and charging to help it scale. Out of almost 6,000 companies with Science-based targets, only 32 of them have bought CDR credits. 

Last year, only over 45,000 tonnes of permanent carbon removal credits were delivered, according to the CDR platform. So, to bring it to the level required by 2030, at 40 million tonnes, that figure has to increase by around 1000x.

The growth seems to be lofty to achieve but it’s possible because several companies have existing plans to develop and build facilities that can remove carbon in megatonne level.

Today’s CDR purchases of future tonnes are much higher than deliveries. And these are mostly offtake deals where carbon credit delivery will be for several years. To achieve the 2030 target, CDR credits have to be ordered by 2026 at the latest. 

Forecasting the long-term requirement for carbon removals is not easy but the lowest estimates suggest it would be in billions of tonnes by 2050.

In a separate analysis by BCG, the CDR market will continue to be dominated by voluntary demand from large corporations. 

They estimated that demand for durable CDR is projected at 40 – 200 Mt CO2/yr worth $10 billion to $40 billion in 2030, increasing significantly to 80 – 870 Mt CO2/yr or $20 billion to $135 billion in 2040. But that’s the low scenario projection. 

The high scenario, as seen in the chart below, calls for a demand of 200 – 870 MtCO2/yr in 2030 to 2040. That is equivalent to $40 billion – $135 billion market value.

BCG carbon removal demand projection 2030-2040It is, therefore, apparent that there’s a high need to scale up the CDR industry to meet those projections. The BCG analysis also indicates that while voluntary demand will take up the CDR market, compliance demand will also grow. It will reach around 15% in 2040. 

The Pivotal Role of CDR Buyers 

To achieve the 40 million tonnes of carbon removal capacity by 2030, investment in CDR should be over $100 billion

However, according to CDR.fyi data, only around 4.8 Mt of CO2 have been purchased to date. But if the growth in CDR purchases this year (10x) and beyond is maintained, it would be possible to reach the 40 Mt capacity.  

That means the number of large corporate buyers has to increase significantly. From today’s 6 buyers ordering an average of 100k tonnes, it must grow to 4,000 CDR purchasers. 

In this case, buyers of carbon removal credits play a critical role in helping ramp up market growth as well as spur innovation necessary to build a diversified CDR supply chain. 

As per BCG report, there will be more diverse buyers as the price of carbon credit drops. Currently, early buyers with corporate net zero pledges such as Microsoft and J.P. Morgan primarily drives CDR demand.

But by 2030-2040, the CDR market can expect to see a broader range of industry buyers if average prices decrease. 

CDR demand volume at given price points 2030 projectionsThe same BCG study revealed that the key driver for most CDR buyers is the quality of the credits. From the current 26% share of durable CDR in carbon credit portfolio mix, it will grow to 35% in 2030 and 48% in 2040. 

buyers carbon credit portfolio 2030-2040Moreover, about 70% of them said that they will increase CDR purchases if there’s guidance from scientific or standard setters.

Recognized bodies such as the Science-based Target Initiative (SBTi) and VCMI can impact purchasing behavior by providing guidance on how carbon removals be included in corporate Net Zero targets. The standards can help facilitate faster project lead times and carbon credit issuance. 

There’s also a need for clear incentives to attract more buyers of carbon removal credits. In particular, 80% of the surveyed CDR buyers said that their spending will increase with government incentives. 

The carbon removal industry is vital for climate goals, but only 0.5% of companies with science-based targets invest in it. Scaling the industry needs more corporate support, government incentives, and guidance from leading organizations.

US Saw $213B Investment in Clean Technologies, Paving the Way for Net Zero

0

A new database tracking the progress of the U.S. toward its decarbonization journey showed that a total of $213 billion was invested in clean technologies and infrastructure that lower carbon emissions in the last year. 

Rhodium Group and MIT’s Center for Energy and Environmental Policy Research (CEEPR) developed the database called the Clean Investment Monitor. It tracks real-time all announced private and public investments in the manufacture and deployment of clean energy in the country. 

The developer has released an accompanying report “The Clean Investment Monitor: Tracking Decarbonization Technology in the United States”. Per Brian Deese who led the team and served as the director of the White House National Economic Council: 

“The Clean Investment Monitor is a tool designed to help us understand and assess this growth in a real-time, comprehensive way. Our hope is that the CIM will enhance research and improve public policies designed to accelerate the clean energy transition.”

Clean Investment Trends in the U.S. 

Clean energy is increasingly becoming one of the biggest industries in the U.S. 

clean energy investment in the US 2018-2023Data from the CIM reveals that from July 2022 to June 2023, clean investments amounted to $213 billion. To put that into perspective, the amount is higher than the annual GDPs of 18 states in the U.S.

The data goes back to 2018 to provide a baseline before the enactment of the legislation in 2021 and 2022.

The $213 billion represents a 37% increase from the $155 billion invested in the previous year and a 165% increase from 5 years ago.

The report included investment data from three categories: manufacturing, energy and industry, and retail.

Manufacturing saw the fastest growth where investment increased by 125% year-on-year since 2021, primarily in EV and solar manufacturing. It reached a total of $39 billion, most of which channeled into battery manufacturing.

Retail got the most funding, with $113 billion and EVs also received the biggest share of the investments. Other retail segments reported include zero-emission vehicles (ZEVs) and heat pumps. Specifically, ZEVs has the fastest growth, with an estimated $70 billion investment over the past year.

retail investment by technologyThe CIM report also provided investment data in clean energy production, including solar, wind, and nuclear. Investments in clean hydrogen, carbon management, and sustainable aviation fuels increased to $80 billion over the past 2 years. It’s a 5x growth versus the preceding 2 years. 

Laws Advancing Investment in Clean Energy

In the previous two years, the federal government passed a series of new legislation seeking to advance national investment in clean energy. Three of them, as follows, offer subsidies and tax incentives to spur funding for clean technologies that reduce carbon emissions. 

It does make sense that ZEVs and batteries are getting the spotlight in these investments. The IRA tax incentives, in particular, promote the manufacture of EV batteries (48C) and clean energy storage (45X). 

For instance, in Q2 2023 alone, over $10 billion funded battery technology. 

The effectiveness of these climate-related policies in speeding up the transition to a clean economy will be crucial in assessing how the U.S. progresses toward its net zero emissions goals. In the short term, the country aims to reduce carbon emissions by 50% to 52% below 2005 levels in 2030. 

A previous analysis showed that the IRA will result in a 43% – 48% reduction in economy-wide emissions by 2035. Without the provisions, the reductions would only be between 27% – 35%. 

With that, experts believe that the legislation helps in ramping up the pace of clean investments in the country. Based on the report’s findings, the funding trend will continue to grow upward, with investments increasing in the coming years. 

Rhodium and MIT will update their CIM database quarterly with accompanying reports showing how investment trends are going. Their next report publication will provide insights on the breakdown of public and private investments. They will also provide an initial analysis of how the current pace of funding compares to forecasts when the laws were enforced. 

The U.S. has witnessed a substantial increase in clean energy investments, demonstrating its commitment to decarbonization. With substantial growth in manufacturing, energy, and retail sectors, and the influence of climate-related policies, the nation is on a promising path towards its net zero goal.

BASF’s New Plastic Additives Reduces CO2 Emissions by 60%

0

German chemical giant BASF announced the launch of the first biomass balanced plastic additives that can reduce a product’s carbon footprint by up to 60%.

Manufacturing the new plastic additives uses renewable feedstocks instead of fossil fuel-based feedstocks. As such, these novel product solutions can help companies’ achieve their sustainability targets such as reducing carbon emissions, BASF said.

BASF is the leading innovative global partner for plastic additives, focusing on aligning with customer sustainability goals through its biomass balance approach. As per ISCC Plus (International Sustainability and Carbon Certification), BASF new additives are certified by TÜV Nord for mass balance.

BASF Biomass Balance Approach

This manufacturing approach is a groundbreaking way of using renewable resources in the chemical industry. BASF uses this approach in its integrated production system and applies it to the majority of its products. 

BASF biomass balance approach
BASF Biomass Balance Approach

Under this method, renewable raw materials such as bio-naphtha or biomethane from organic wastes, crops, or vegetable oils are used as feedstock at the very beginning of the Production Verbund. 

The BASF Verbund system creates efficient value chains, extending from basic chemicals right through to high-value-added products such as coatings.

The ISCC PLUS certifies this production process. It’s an international certification program that ensures the chain of custody along the value chain from feedstocks to final product.

The renewable resources used are then allocated to the respective sales products using a 3rd-party verified certification method. The chemical expert markets its biomass balanced products under its BMBcert™ portfolio.

BMBcert™ additives are a part of BASF’s VALERAS™ portfolio to create new value for plastics. The first certified biomass balanced plastic additives include the Irganox 1010 BMBcert and Irganox 1076 FD BMBcert.

This first offering will initially be produced at BASF’s site in Kaisten, Switzerland, with further availability in McIntosh, USA in early 2024. 

These innovative product offerings are identical to the conventional grades in terms of performance, quality, and regulatory. Thus, customers don’t have to reformulate their products or requalify the biomass balanced plastic additives.

Saving on Fossil Resources and Carbon Emissions

With their sustainably sourced renewable feedstocks, the products’ cradle-to-gate carbon emission is significantly lowered by up to 60% versus the global average product CO2 footprint of conventional grades.

The certified biomass balanced plastic additives offer customers unique product solutions, along with the following major benefits.

Saves fossil resources: rather than sourcing virgin fossil fuel feedstocks, the additives use renewable resources, thereby saving on fossil resources. The bio-based amount is then allocated to specific products sold by means of the certified method.

Saves carbon emissions: by replacing fossil fuel-based materials with bio-based resources, biomass balanced plastic additives save on carbon footprint. By applying a closed chain of custody, the carbon savings for each product is quantifiable.  

Independent certification: An independent certification validates that BASF plastic additives have replaced fossil feedstock following the REDcert2 requirements.

Identical product performance: the drop-in solution applies for other BASF products, such as dispersions and superabsorbent. These biomass balanced products have identical formulation and quality but can reduce carbon emissions significantly. 

Highlighting these characteristics and benefits of their sustainable plastic additives, Joerg Bentlage at BASF said:

“By leveraging BASF’s highly integrated global production network of interconnected sites and plants, we are able to produce these industry-first, low carbon footprint, drop-in solutions with the same performance characteristics.” 

The certified additives thus contribute to global sustainable development by saving fossil resources, reducing carbon emissions, and promoting the use of renewable resources. 

BASF’s innovative product solution allows partner companies to meet their sustainability goals without trading off performance and quality, signifying a significant step toward sustainability in the chemical industry. 

Ontario Teachers’ Pension Plan Buys Majority Stake in KKR’s Australian Carbon Project Developer

A Canadian pension fund Ontario Teachers’ Pension Plan (OTPP) has agreed to acquire KKR’s stake in a leading Australian carbon markets platform GreenCollar.

KKR acquired the 49% stake in GreenCollar three years ago for $100M. Greencollar is now worth close to $800 million so KKR pocketed a nice return on their investment with this sale to OTPP.  This investment marks Ontario Teachers’ deepening commitment to GreenCollar, building upon their initial investment in March 2022. 

The pension fund will now hold a significant majority stake in the company, though the financial terms weren’t disclosed. GreenCollar CEO and Co-founder James Schultz will remain as the business leader and a substantial shareholder.

Delivering Positive Environmental Impacts

The OTPP continues to look for positive environmental impacts of their investments. As one of the world’s biggest pension funds, it boasts net assets of C$249.8 billion as at June 30, 2023.

Ontario Teachers Pension Fund latest dataSince their 2050 net zero announcement in 2021, Ontario Teachers’ saw a significant drop in their carbon emissions by shifting to active exposure. Since then, the Canadian pension fund has been investing billions to reach net zero

OTPP’s climate strategy reflects its commitment to lowering the environmental impact of its portfolio. Its strategies also capitalize on investment opportunities that support the transition to a net zero future. And acquiring KKR’s carbon project developer is one of those decarbonizing strategies. 

KKR initially invested in GreenCollar in 2020 as part of its Global Impact strategy, focusing on companies contributing to the United Nations Sustainable Development Goals (SDGs). 

GreenCollar, a certified B corporation, aligns with SDG 13 (Climate Action) and supports other sustainable goals like SDG 15 (Life on Land) and SDG 14 (Life Below Water) through its environmental initiatives.

A notable feature of this deal is that GreenCollar will become the first Global Impact Fund investment to implement a comprehensive employee ownership plan. Under the plan, all GreenCollar workers will join to bolster company strength, financial inclusion, and engagement. 

They also had about 10% of the private equity, meaning they will be dividing around $75 million in cash.

GreenCollar is a profit-for-purpose organization. It’s the leading environmental markets project developer and investor across the Australian climate, water quality, biodiversity, and plastics markets. 

The Australian carbon credit project developer and investor has expanded internationally. The expansion includes forest protection projects in SouthEast Asia, plastic recovery projects in Africa and the Pacific, and cook stove projects in Southern Africa. 

Being the largest project developer in the Australian carbon market, GreenCollar handles 220+ projects covering more than 10 million hectares and generating over 126 million Australian Carbon Credit Units (ACCUs). ACCUs are initiatives that avoid clearing vegetation in Australia. 

Investing in Carbon Credits as Market-Based Solution

In 2021, Ontario Teachers’ has also supported carbon market developer GreenCollar with a $250M investment, apart from last year’s funding. This alongside KKR investment accounted for about 2/3 of the developer’s shares.

The generated carbon credits are sold by GreenCollar to first and secondary markets.

OTPP supports GreenCollar because they see the positive impact of its carbon credit projects which align with their return goals.

In this new transaction, the Ontario Teachers’ Natural Resources group will manage the investment. Operating within the Infrastructure and Natural Resources department, the group boasts extensive experience investing in various environmental sectors, including agriculture, aquaculture, timberland, and natural climate solutions.

Remarking on their new deal, Senior Managing Director Christopher Metrakos said that:

“We are pleased to increase our investment in GreenCollar… a proven leader in delivering positive environmental outcomes with market-based solutions and we are excited to continue supporting the company in its next chapter of growth in Australia and beyond.”

In Australia, KKR has invested across sectors including financial services, healthcare, infrastructure, technology, real estate, consumer goods, etc. since 2007. The global investor has also impact investments in other regions such as in Asia Pacific.

Since 2011, KKR portfolio companies have awarded billions of dollars through broad-based equity programs to 60,000+ non-senior employees. In all these investment programs, a culture of employee ownership is reinforced. 

Ontario Teacher’s transaction with KKR will close in the 4th quarter of 2023, pending customary regulatory approvals.

Interests and investment opportunities in environmental programs are growing, with global carbon markets expected to hit $22T by 2050

Ontario Teachers’ Pension Plan’s expanded investment in GreenCollar demonstrates its commitment to environmentally responsible investments and carbon reduction strategies. If more large pension plans choose to have the same goals as OTPP, the planet will see significant carbon reductions.