Lithium Prices Crash Below $10K, Hitting a 4-Year Low: Will the Market Rebound?

Jennifer L
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Lithium Prices Crash Below $10K, Hitting a 4-Year Low: Will the Market Rebound?

The lithium market is experiencing a major price decline due to rising supply and weaker demand. In February 2025, the lithium carbonate CIF North Asia price fell below $10,000 per metric ton, dropping 4.5% to $9,550/t. This is the lowest level since February 2021. Analysts expect further cuts in production throughout 2025 to balance the market.

The price drop is mainly due to strong production in Chile and a post-holiday demand slowdown in China. Also, new lithium projects in Mali and Argentina boost global supply. This adds to the downward pressure on prices.

Why Are Lithium Prices Falling?

Several key factors contribute to the ongoing decline in lithium prices, ranging from oversupply to shifting market dynamics and policy changes.

Oversupply Floods the Market

Lithium production has been growing rapidly. In January 2025, Chile’s lithium exports increased by 22.8% month over month, flooding the market with additional supply.

Mali’s new lithium mines, Bougouni and Goulamina, will boost lithium output to 40,528 metric tons of lithium carbonate equivalent (LCE) in 2025. This accounts for 2.7% of the global supply.

Additionally, Argentina’s Ganfeng Lithium Group has started production at the Mariana brine project, adding another 17,420 metric tons of LCE annually. Argentina is now the top producer in the Lithium Triangle. This area includes Bolivia and Chile, which hold some of the richest lithium reserves in the world.

Benchmark Mineral Intelligence shows that the global weighted average price for lithium is dropping, as seen in the chart. This change reflects the increase in supply.

Lithium prices global weighted average
Source: Benchmark Mineral Intelligence

China’s Demand Woes

China, the world’s biggest buyer of lithium, saw a sharp decline in demand in early 2025. The Lunar New Year holidays slowed down industrial work. Many battery makers also postponed their purchases. This contributed to a 1.6% price drop for lithium carbonate in China, bringing it down to 76,100 yuan per metric ton by mid-February.

Additionally, the shift to lithium iron phosphate (LFP) batteries—which require less lithium than traditional nickel-based batteries—is reducing lithium demand. Companies such as Tianqi Lithium and IGO Ltd. have already halted expansion at their lithium hydroxide refineries due to weaker market conditions.

Benchmark Mineral Intelligence said lithium prices soared to $81,375 per tonne in China by December 2022. This spike pushed consumers to look for alternatives, such as LFP batteries.

Policy Uncertainty in the U.S.

The future of North America’s lithium supply chain is unclear, adding to the market pressure. The US Inflation Reduction Act (IRA) of 2022 gave tax credits for lithium from Canada and other allied countries.

Now, it is being reconsidered. The Trump administration also suggested a 10% tariff on energy exports from Canada, like lithium. If enacted, these tariffs could make lithium imports more expensive, limiting investment in the sector.

Currently, only 44.7% of US lithium demand is met by domestic production, rising to 76.4% when including Canadian supply. Any policy changes could significantly impact lithium prices and availability in North America.

Cheaper Lithium Sparks a New EV Price War

The decline in lithium prices has had a notable impact on battery manufacturing costs. The falling prices are closely linked to trends in the plug-in electric vehicle (PEV) and battery electric vehicle (BEV) markets.

Slower-than-expected EV adoption in key regions, driven by reduced government incentives and economic uncertainty, has weakened lithium demand. Automakers are adjusting production forecasts, leading to fluctuations in battery material purchases.

Benchmark Mineral Intelligence reports that cell prices have dropped 73% since 2014. This decline comes from higher production volumes, new technology, and lower raw material costs. These factors let battery makers cut prices.

However, lower costs have made EVs cheaper. This could increase demand over time as forecasted below. Yet, the current oversupply of lithium makes it hard for producers to stay profitable.

global lithium carbonate equivalent demand 2017-2027

How the Industry Is Reacting to the Lithium Slump

The prolonged decline in lithium prices has led to significant industry reactions. The industry is responding to the ongoing slump with various strategies aimed at stabilizing the market. Big producers like Albemarle and SQM plan to cut back production. This move aims to stop further price drops. 

Some mining companies are delaying new projects, while others are cutting costs to remain profitable in the face of lower revenues. Smaller lithium miners are having a tough time. Those without strong financial support are struggling the most. Some have had to stop operations or look for mergers to survive.

In December 2024, Rio Tinto acquired Arcadium Lithium for €6.2 billion, consolidating its position in the global lithium market. This acquisition occurred amid an excess supply and significantly lower prices since their peak in 2022.

Despite these challenges, major mining companies expect lithium demand to rise in the next decade. This growth will be fueled by the shift toward electric transportation and renewable energy storage.

However, the oversupply is causing problems for smaller companies. Some have cut back or stopped their operations. Cutting subsidies in key countries has slowed EV sales growth. This means that only a production cut may raise lithium prices in the medium term.

Looking Ahead – When Will Lithium Prices Recover?

Despite the current challenges, there is optimism about the future of the lithium market. Industry analysts foresee a future increase in lithium demand, potentially leading to a market shift by the early 2030s, driven by infrastructure projects and the growth of green technology. Notable investments include Exxon Mobil and Tesla, seeking to capitalize on future lithium needs.

Goldman Sachs Research estimates the overall increase in data center power consumption from AI to be 200 terawatt-hours per year between 2023 and 2030. As AI use and high-performance computing grow, the need for lithium-ion batteries will rise. These batteries are key for backup power in big computing facilities.

The lithium market is facing oversupply and falling prices. This is due to higher global production, reduced demand from key markets like China, and uncertainties in major economies.

While these factors present challenges in the short term, the anticipated growth in electric vehicle adoption and renewable energy storage solutions offers a positive outlook for lithium demand in the long run. Industry stakeholders must navigate these complexities carefully, balancing current market realities with future opportunities.

Amazon Expands Renewable Energy with 17 New Projects in Spain & First in Portugal

Saptakee S
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0
Amazon Expands Renewable Energy with 17 New Projects in Spain & First in Portugal

Amazon is ramping up its renewable energy push in Spain with 17 new solar and wind projects. This brings its total investment in the country to 94 renewable projects, generating over 3.7 gigawatts (GW) of clean energy—enough to power more than 2.3 million Spanish homes annually.

A major part of this effort includes 63 large-scale wind and solar farms, which play a key role in reducing Spain’s reliance on fossil fuels. At the same time, Amazon took a big step toward its clean energy goals by launching its first renewable project in Portugal.

These efforts reinforce Amazon’s sustainability commitment and net-zero emissions by 2040—ten years ahead of the Paris Agreement’s deadline.

Mega Solar and Wind Farms Boost Spain’s Clean Energy Goals

Lindsay McQuade, Amazon’s Chief Energy Officer in EMEA said,

“At Amazon, we are committed to providing the necessary infrastructure and services to our customers, while continuing to work to power our operations more sustainably. We are aware that the electrification of our society, together with digitalization, requires investment in energy sources and networks on which we depend, if we want to take advantage of the full potential of new technologies. For this reason, at Amazon we have promoted more than 230 solar and wind projects in Europe, which has made us the largest corporate buyer of renewable energy in Europe and the world in 2024.”

Spain’s latest projects include solar and wind farms in five regions: Aragon, Andalusia, Castilla y León, Catalonia, and Extremadura.

  • These initiatives will add over 870 megawatts (MW) of clean energy to the grid.

One major project is a solar farm in Ciudad Rodrigo (Salamanca). It will be one of Amazon’s largest renewable projects in Spain. Set to finish in 2025, this plant will have a capacity of 212 MW.

Iberdrola is leading the project and has invested nearly €200 million. It could create 800 jobs and boost the local economy.

Last May, Amazon announced 12 new off-site renewable energy projects in Spain, adding 596 MW of capacity. This included 49 off-site installations: 9 wind farms, 40 solar plants, and 30 solar rooftops. These agreements raised Amazon’s total renewable capacity in Spain to over 2.9 GW.

amazon solar
Source: Amazon

Environmental Benefits of Amazon’s Renewable Energy Projects in Spain

  • Lower Carbon Emissions: Amazon’s 3.7 GW of clean energy cuts greenhouse gas emissions, creating a healthier environment.
  • Increased Renewable Energy Supply: These projects add capacity to Spain’s energy grid, helping the country reduce its dependence on fossil fuel.
  • Job Creation: Building and running these solar and wind farms creates thousands of jobs, boosting local employment.
  • Technological Innovation: Amazon applies AI and cloud computing to improve energy production and storage efficiency.
  • Better Air Quality: These projects lower fossil fuel use, resulting in cleaner air for people and wildlife.

Share of electricity generation from renewable sources in Spain in 2023, by type

Spain renewable

Amazon’s First Renewable Energy Deal in Portugal Set to Make History

Amazon is all set to transform Portugal’s renewable energy market with the Tâmega Wind Complex. This project will be the biggest wind farm in the country, aiming to blend wind and hydro energy for better storage and supply. It will be located near the Tâmega hydroelectric complex.

Explaining further, the wind farm will pump water into the Tâmega reservoir. Later, this water can generate electricity when demand is high. Once again, Iberdrola leads this €350 million investment, adding 219 MW of clean energy. They expect more than 700 jobs from this project and a significant employment boost for the locals.

Amazon Achieved 100% Renewable Energy Goal Years Ahead of Schedule

Amazon has met its global goal of using 100% renewable energy. This achievement came seven years early. Their clean energy projects can now power around 24.3 million homes in Europe.

These projects help Amazon run smoothly and provide clean energy to local grids. They create jobs, strengthen local economies, and contribute to sustainability efforts globally.

Globally, it has launched over 500 solar and wind projects in 19 countries. These projects produce over 77,000 gigawatt-hours (GWh) each year.

In Europe, Amazon has invested in more than 230 renewable projects. This makes it the largest corporate buyer of clean energy there. These projects reduce carbon emissions and support local economies by creating jobs and helping businesses.

amazon renewable energy
Source: Amazon

The Climate Pledge: A Decarbonization Commitment

Amazon’s Climate Pledge aims for net-zero carbon emissions by 2040. It has over 375 signatories worldwide, including major Spanish companies like Telefónica and Glovo.

The company has committed $2 billion through the Climate Pledge Fund to boost decarbonization and develop innovative sustainability solutions.

Commitment to Carbon Neutrality

Amazon remains focused on sustainability. Its sustainability report revealed that in 2023, the company cut its carbon emissions by 3%. It cut its carbon footprint to 68.82 MMT CO2e from 70.74 MMT CO2e in 2022. This change came from an 11% drop in Scope 2 emissions and a 5% decrease in Scope 3 emissions. However, Scope 1 emissions rose by 7% due to increased transportation fuel use.

amazon carbon emissions
Source: Amazon

Amazon also reduced its carbon intensity for the fifth year in a row, reflecting a 13% drop from 2022 levels. This progress shows its commitment to minimizing environmental impact.

Amazon’s recent investments in solar and wind in Spain and Portugal reaffirm its commitment to sustainability. Once fully operational, these projects will significantly impact both countries’ economies and environments.

Can Verra’s New Carbon Standard Make Rice Farming More Sustainable?

Saptakee S
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0
Can Verra’s New Carbon Standard Make Rice Farming More Sustainable?

Verra recently introduced the Verified Carbon Standard (VCS) Methodology VM0051 to reduce greenhouse gas emissions from rice farming. Under this guideline, farmers will practice improved water and crop management practices in flooded rice systems.

Verra began developing this methodology in late 2023. They held a public consultation in 2024 with ATOA Carbon and external reviewers to refine VM0051. The new standard, “Improved Management in Rice Production Systems, v1.0, replaces the old Clean Development Mechanism (CDM) method AMS-III.AU. The previous method ended in March 2023.

Verra’s VM0051: A New Approach to Reducing Rice Emissions

Rice is a staple for over half the world’s population. Rice fields cover around 168 million hectares. But they also release a lot of methane, which is a potent environmental pollutant.

As mentioned before, VM0051 promotes sustainable farming techniques. These methods reduce methane emissions from rice farming and improve water and fertilizer use. The standard also provides social benefits by raising farmers’ income and helping women get training and financial services in agriculture.

Generate High-Quality Credits 

Verra’s VM0051 also aims to measure or quantify emission reductions more accurately. This method promotes actions such as enhancing rice varieties and using methanotrophic bacteria to cut down methane. By using VM0051, project developers can earn high-quality Verified Carbon Units (VCUs).

Subsequently, buyers or stakeholders will want these credits to help improve rice farming, boost food security, and meet their climate goals.

rice emissions
Sourced from ricenewstoday.com

Key Features 

Verra highlighted that farming practices must reduce emissions by at least 5% to qualify as a significant change. Projects must show additionality. They can achieve this by proving a regulatory surplus, overcoming barriers, or showing that these practices are uncommon in the area.

This new standard targets agricultural land management (ALM) projects. However, VM0051 prohibits practices that significantly reduce soil organic carbon. So, projects that want to increase or decrease SOC storage must use the VCS Method VM0042 instead.

Some major improvements over the previous CDM methodology include:

  • Stronger Additionality Criteria: The methodology introduces stricter guidelines for proving additionality, including the use of remote sensing data.
  • Expanded Project Eligibility: Eligible activities now include using methanotrophic bacteria, shortening cultivation periods, avoiding residue burning, planting low-emission rice varieties, and optimizing nitrogen fertilizer use.
  • Soil Protection Measures: Safeguards prevent soil organic carbon (SOC) loss due to new farming methods.
  • Comprehensive Emission Tracking: Monitor and quantify nitrous oxide (N2O) emissions, along with CO2 from fossil fuels and energy use.
  • Dynamic Baseline Setting: The methodology adjusts baseline emissions based on actual weather conditions.
  • Improved Guidance: It provides clear instructions for project area classification and emission reduction calculations.
  • Flexible Measurement Methods: Project developers can choose from different quantification approaches, including biogeochemical models.
  • Digital Monitoring and Verification: Promotes advanced tools like remote sensing, artificial intelligence, and machine learning to streamline project validation and verification.

Quantifying Emission Reductions

VM0051 provides three methods for measuring emissions:

  1. Biogeochemical Process-Based Models: These simulate how farming practices impact emissions.

  2. Direct Measurement: Field studies gather data on actual methane emissions.

  3. Default Equations and Emission Factors: Use standard emission factors for easy calculations. These are available for projects that emit less than 60,000 t CO2e per year.

How VCS Projects Can Transition

To switch from the discontinued AMS-III.AU method to VM0051, one can follow these steps. First, use the VCS Methodology Change and Requantification Procedure for past verification periods. Next, update the methodology through a Project Description Deviation for future monitoring.

Finally, ensure the project description aligns with VM0051 before applying for a new project registration.

Each project selects a method based on its size and emission sources. Table 4 in the methodology document lists all eligible quantification options.

Future Developments

Verra is creating a digital version of VM0051. You can find it on the Verra Project Hub. This tool will streamline project submissions with structured templates for data collection. Verra is also looking to integrate VM0051 into its upcoming Scope 3 Standard Program.

In conclusion, we can say that Verra’s new VM0051 helps cut greenhouse gas emissions from rice farming. As a result, it makes the industry more sustainable and, ultimately, supports climate goals.

U.S. Data Centers’ Power Demand Surges to 46,000 MW: What’s Driving the Growth?

Jennifer L
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0
U.S. Data Centers’ Power Demand Surges to 46,000 MW: What’s Driving the Growth?

United States data centers are consuming more electricity than ever before. In the third quarter of 2024, their power demand reached 46,000 megawatts. This is a huge increase driven by artificial intelligence (AI) and cryptocurrency mining.

According to forecasts, this demand will grow more by 2029. Digital services, cloud computing, and AI apps make data centers grow quickly.

Texas leads in data center power consumption, supplying nearly 8,000 MW to these facilities. Virginia follows closely with almost 7,000 MW, mainly powering cloud providers like Amazon, Microsoft, and Google. These states host the biggest hyperscale data centers. They need a lot of energy to run servers and cooling systems.

The Power-Hungry Digital Boom: What Fuels the Surge?

Three main culprits drive the energy demand of data centers in the U.S.

AI’s Insatiable Energy Appetite

The rapid development of AI is a major factor behind the increasing energy use. AI models require vast computing power for training and operations. OpenAI, Meta, and Google use powerful GPUs and servers, which require constant electricity. AI’s energy use will likely rise as more companies embrace machine learning and automation.

Training large AI models like GPT-4 requires thousands of GPUs, consuming up to 1 gigawatt-hour (GWh) per model. AI chatbots, image generators, and automation tools are increasing electricity demand.

Goldman Sachs Research projects that AI-driven data centers will consume an additional 200 terawatt-hours of electricity annually from 2023 to 2030.

data center power demand by GS

  • By 2030, AI-driven data centers could account for 30% of all global data center power consumption.

RELATED: The Carbon Countdown: AI and Its 10 Billion Rise in Power Use

Cryptocurrency Mining’s Energy Drain 

Bitcoin and other cryptocurrencies require massive computational power to validate transactions through mining. In Texas alone, crypto miners contribute heavily to electricity demand. Despite price fluctuations, mining operations continue to expand, pushing energy grids to their limits.

Bitcoin mining uses over 120 terawatt-hours (TWh) of electricity each year. This amount is more than what entire countries, like Argentina, consume.

cryptocurrency environmental cost and energy consumption
Image from GREENMATCH

The U.S. accounts for 37% of the world’s Bitcoin mining operations. Texas is emerging as a key hub due to its deregulated electricity market and lower energy costs.

Also, as crypto mining hardware gets better, miners are using liquid-cooled servers. This needs an extra cooling setup, which raises energy use even more. While some mining operations are adopting renewable energy, the majority still rely on traditional electricity sources.

Cloud Computing’s Growing Footprint

Businesses and individuals store massive amounts of data online. Cloud computing providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud operate huge data centers that run 24/7. The rising demand for remote storage, streaming services, and real-time apps means these facilities must use more power.

By 2026, cloud computing workloads are expected to triple. This growth comes from enterprise applications, video streaming, and online gaming. 5G networks and edge computing are increasing the number of smaller data centers. These distributed centers add to the overall electricity demand.

Streaming platforms alone—such as Netflix, YouTube, and Disney+—consume over 200 TWh annually, with a large portion of this electricity coming from data centers. As demand for high-resolution video content, including 8K streaming, grows, the energy needs of these platforms will continue to rise.

Can the Grid Keep Up?

With data center energy needs skyrocketing, utility companies are adjusting their infrastructure and investments. Dominion Energy Virginia, for example, has 40.2 gigawatts (GW) of contracted capacity waiting for connection to the grid—almost double its 21.4 GW in July 2024. This reflects the growing interest in expanding data center operations in key states.

Southern Co., a major utility provider, raised its five-year capital plan by $14 billion. The new total is $63 billion. This increase will help enhance electricity generation and transmission. The company expects over 50,000 MW of additional power demand by the mid-2030s, with data centers accounting for 80% of this increase.

While energy companies prepare for rising demand, some experts warn of potential grid instability. The PJM Interconnection is the biggest electricity market in the US, serving 65 million customers. It expects data center power demand to rise to 26.7 GW by 2029. That’s a fourfold increase. Meeting this demand will require major infrastructure upgrades.

Despite concerns, industry leaders do not see an immediate energy crisis. Some experts argue that increased efficiency in AI and computing could balance demand. However, if data center growth continues at this pace, power shortages could become a real challenge in the coming years.

The Renewable Energy Race

To meet sustainability goals, many tech companies are investing in renewable energy sources. Microsoft and Google have committed to operating 100% carbon-free data centers by 2030. However, the speed at which renewables can replace traditional power sources remains uncertain.

Energy providers are also stepping up. Exelon Corp. plans to invest $38 billion over four years in grid enhancements, including renewable energy projects. However, some experts believe renewables alone cannot sustain the rapid growth of data center power needs.

Hyperscale data centers are increasingly signing long-term power purchase agreements (PPAs) with wind and solar farms. Google, for example, signed a 1.6-gigawatt PPA in 2023 to power its new AI-driven cloud regions. Amazon and Microsoft are also investing heavily in wind and solar projects to offset their growing data center footprints.

The surge in U.S. data center power demand is driven by AI, cloud computing, and cryptocurrency mining. AI training models, high-res video streaming, and global Bitcoin mining are stressing the power grid like never before. Utility companies are spending a lot on expanding the grid. However, it’s unclear if this growth will be sustainable in the long run.

Renewable energy solutions are in development. However, it’s unclear if they can fully meet the growing demand. In the next few years, we’ll see if upgrades to infrastructure and clean energy can meet the rising demand for digital services. If not, power shortages and environmental concerns could reshape the future of data center expansion in the U.S.

Philippines’ Nickel Export Ban and U.S. Tariffs: What’s Happening in the Nickel Market Now?

Saptakee S
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0
Philippines’ Nickel Export Ban and U.S. Tariffs: What’s Happening in the Nickel Market Now?

As demand for nickel rises, the Philippines can strengthen its role in the EV supply chain. However, a proposed ban on raw mineral exports could reshape its industry. At the same time, global trade tensions are adding uncertainty. New US tariffs on nickel imports, combined with an ongoing supply surplus, are keeping prices volatile.

While some experts predict that the long-term nickel price might increase as demand outpaces supply, near-term challenges remain. Can the Philippines capitalize on this shift, or will market instability hinder progress?

Nickel and Copper Demand Soars – Can the Philippines Capitalize?

The Philippines is the world’s second-largest producer of mined nickel. Copper and nickel both are essential for lithium-ion batteries used in electric vehicles (EVs). With the demand for these metals rising, the Philippines has a unique opportunity to become a key supplier in the EV supply chain.

But on February 3, Senate President Francis Chiz G. Escudero approved the measure to ban the export of raw minerals. 

He said,

“What we are looking at is to shift our policy from merely exporting raw minerals that will be utilized by other countries to produce higher value products, to developing our processing capabilities. This will result in added value for our minerals-related exports, provide a much-needed boost to our economy and generate employment for our people.”

Boosting Domestic Nickel Refining

If enacted, the ban will take effect in five years, giving mining companies time to establish processing plants. This policy shift is especially significant for key energy metals like nickel, which play a crucial role in the global battery and renewable energy sectors.

Escudero highlighted Indonesia’s 2020 ban on nickel ore exports as a successful example. He hopes that by processing nickel and copper within the country, the Philippines can become a major supplier of battery materials and a key player in the global EV industry.

He also believes that building a strong refining industry will create jobs, reduce dependence on raw material exports, and boost the economy. In the future, this could even help the Philippines manufacture its electric vehicles.

Challenges in Implementation

Mining groups are against a proposed export ban on ore, saying it will hurt the country’s mineral sector.

The Chamber of Mines of the Philippines (COMP) and the Philippine Nickel Industry Association (PNIA) support Senate Bill (SB) 2826 but disagree with the ban. The bill introduces a new tax system based on profits, but the groups believe stopping ore exports will cause problems.

They argue that mining companies cannot build processing plants within five years because of high power costs, poor transport systems, and conflicting local rules. The Philippines also has some of the highest electricity prices in Asia, making local processing too expensive.

They said, “Unless these issues are fixed, processing minerals locally will remain just a dream. There are no shortcuts.”

To make this plan work, the government must improve infrastructure, cut energy costs, and help mining companies build processing plants. Without these steps, the export ban could hurt the industries it aims to support.

Supply Surplus and Investment Risks

Even though the Philippines wants to boost its nickel industry, the global market already has too much supply. Big companies have secured their nickel resources, and experts at the Shanghai Metals Market (SMM) predict this surplus will grow even more in 2025 and beyond.

As this decision takes shape, the Philippines may face challenges in developing a strong local processing industry. With too much nickel already available, demand may not be high enough to make processing profitable. This could make it hard to attract big investors, slowing down the country’s plans to move from raw ore exports to processed nickel products.

Impact on China’s Nickel Supply

According to SMM, the Philippines exported 54 million metric tons of nickel ore in 2024. Out of this, 43.5 million mt went to China, while 10.35 million mt was sent to Indonesia.

If the Philippines decides to ban ore exports, China could face serious supply disruptions. The country relies heavily on Philippine nickel, especially after Indonesia tightened its mining quotas in 2024. A ban would likely create shortages, pushing China to look for other suppliers or invest in processing facilities within the Philippines to secure its supply.

A Short-Lived Rally for Nickel Prices

So, what happened to nickel prices after the Philippine government’s announcement of considering banning nickel ore exports? Well, as reported by S&P Global, this news sparked optimism in the nickel market, helping prices climb back to $15,811 per ton on February 6. 

However, further gains were limited. Between February 7 and February 21, prices remained within the $15,400 to $15,800 range, and fears of worsening trade tensions loomed large.

lme nickel

The Larger Picture: How the U.S Tariff War is Shaping Nickel Prices?

S&P Global has provided deeper insights into how U.S. tariffs could affect nickel prices and the broader American nickel market. In January, the White House announced new tariffs on imports from Canada, Mexico, and China. Following this, nickel prices tumbled to a one-month low of $15,210 per ton.

In early February, President Trump signed executive orders imposing a 10% tariff on imports from China and an even higher 25% tariff on goods from Canada and Mexico. These tariffs took effect on February 4, keeping nickel prices on the London Metal Exchange (LME) below $16,000 per ton throughout the month. As trade tensions escalated, market uncertainty overshadowed concerns about a possible nickel ore export ban in the Philippines.

Canada quickly responded. Trudeau announced a 25% tariff on $155 billion worth of US goods, set to take effect the same day. But just before the deadline, the US government delayed tariffs on Canada and Mexico by 30 days, temporarily easing market concerns.

Will it Backfire on the US EV Industry?

If the US moves forward with a 10% tariff on nickel imports from Canada after the 30-day delay, it could drive up costs for American industries. Canada supplied nearly one-third of the US’s primary nickel imports in 2024, making it the country’s largest source.

The bigger challenge? The US produces very little nickel. The only nickel-producing mine is Lundin Mining’s Eagle Mine in Michigan. It contributed just 0.21% of global output in 2024 and is set to close before the decade ends. On top of that, the US lacks refining capacity for class 1 nickel, a key material for EV batteries.

If tariffs on Canadian nickel remain in place, it could become harder for US manufacturers to access affordable supplies, especially for the EV and stainless-steel industries. The US had expected to depend on Canada to meet its rising demand for battery-grade nickel.

However, trade restrictions might create challenges for this plan. It can also affect the competitiveness of domestic EV companies in the global market.

The Bottom Line

At present, the global nickel market remains volatile, affected by trade tensions, excessive supply, and evolving policies. All these factors are driving prices down. However, this dim nickel environment is expected to shift in the future.

nickel price

With a declining market balance and reduced oversupply, nickel prices are forecasted to rise. By 2030 and beyond, demand is projected to exceed supply, leading to a further price increase.

BP Rolls Back on Net Zero Goals, Bets $10B on Fossil Fuels: A Smart Move or a Climate Setback?

Jennifer L
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0
BP Rolls Back on Net Zero Goals, Bets $10B on Fossil Fuels: A Smart Move or a Climate Setback?

BP has announced a major shift in its strategy, cutting back on renewable energy investments and increasing its focus on oil and gas. The company plans to invest $10 billion annually in fossil fuels while slashing more than $5 billion per year from its energy transition spending.

This move marks a sharp reversal from its previous commitment to cut emissions and transition toward greener energy. So, what prompted the energy giant to go back on its climate goals?

Why Is BP Changing Its Strategy?

BP’s leadership cited slower-than-expected progress in the energy transition as a key reason for the shift. CEO Murray Auchincloss said the Ukraine war, the pandemic, and unstable energy markets have slowed the shift to renewables.

He acknowledged that BP was too optimistic in its early climate targets, saying,

“Our optimism for a fast transition was misplaced, and we went too far, too fast…We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value.”

The company also pointed to strong demand for oil and gas, which remains higher than expected.

As a result, BP now aims to increase oil and gas production to between 2.3 million and 2.5 million barrels of oil equivalent per day (boepd) by 2030—up from its current 2.36 million boepd.

BP’s New Investment Plans

BP plans to spend between $13 billion and $15 billion each year until 2027. Most of this money will now go toward traditional fossil fuels. The company has also announced that it will:

  • Cut energy transition spending to $1.5 billion to $2 billion per year, down from previous forecasts of $8 billion in 2025 and $9 billion in 2030. BP’s big cut shows it expects slower returns on renewables. So, fossil fuel projects are now its main focus.
  • Increase its dividend by 4% each year to draw in investors. This shows confidence in profits, even as green investments decline.
  • Reduce operating costs and divest $20 billion worth of assets by 2027, including parts of its renewables business. BP says these divestments will simplify operations and bring in cash quickly.
  • Sell a 50% stake in Lightsource BP, its solar business, and shift to a capital-light renewable energy model. BP will not fully develop its green energy projects. Instead, it will depend on outside capital and partnerships. This approach cuts its financial risk but keeps BP involved in renewables.

Dialing Down Climate Commitments

The energy major’s combined Scope 1 and 2 emissions were 32.1 MtCO2e in 2023. This is a decrease of 41% from its 2019 baseline. This means they’ve already surpassed their 2025 target of 20% emission reductions against the baseline. 

BP ghg emissions 2023
Source: BP Sustainability Report

BP has changed its strategy. It has lowered its climate goals and moved away from its earlier decarbonization plans. The company’s revised targets include:

  • Cutting Scope 1 and 2 emissions (from its own operations) by 45%-50% by 2030, down from the original 50% goal. This slight reduction reflects BP’s decision to keep oil and gas production at higher levels than originally planned.
  • Reducing the carbon intensity of its products by 8%-10% by 2030, compared to the previous 15%-20% target. This weaker target shows that BP is focusing on short-term profits instead of making bigger cuts in emissions from its fuel products.
  • Eliminating its absolute Scope 3 emissions reduction target, which previously aimed for a 20%-30% cut by 2030. Scope 3 emissions make up most of an oil company’s total carbon footprint. They arise from how people use its products, not from the company’s direct operations. Critics say BP’s decision to remove this target signals a major retreat from its climate commitments and a lack of accountability for downstream emissions.
BP net zero pathway
Note: This chart is intended to be illustrative of a range of contributions that individual aspects of our plans may make relative to others. They should not be taken to represent specific expectations of actual impacts of actions driving delivery.
  • BP’s aim 1 means to be net zero across its entire operations on an absolute basis by 2050 or sooner.

The energy giant’s new climate goals show a shift seen in many big oil companies. Many of them are slowing down their green efforts due to economic uncertainty. By abandoning absolute Scope 3 targets, BP avoids binding commitments to reduce emissions from its gasoline and diesel sales, which make up the bulk of its carbon footprint.

Investor Pressure: Chasing Profits Over Sustainability?

BP is reducing its focus on renewable energy. This change follows pressure from Elliott Investment Management. They want BP to boost its financial returns.

BP has also underperformed compared to competitors like Shell, Exxon, and Chevron, leading to dissatisfaction among investors.

oil majors annual profit
Image from Reuters

Following the announcement, BP’s share price fell by 1.8%, reflecting mixed reactions from the market. Some investors like the new focus on profits. But others think BP is giving up on long-term sustainability.

BP’s move could also have regulatory implications as governments worldwide tighten emissions standards. With climate policies evolving, companies that fail to adapt may face higher compliance costs in the future.

Environmental Groups Call Out BP’s ‘Climate U-Turn

BP’s return to fossil fuels has angered environmental groups. It has also worried investors who care about sustainability. Greenpeace UK called the decision “proof that fossil fuel companies can’t or won’t be part of climate crisis solutions.”

Meanwhile, Global Witness criticized BP. They claimed the company cares more about quick profits for shareholders than protecting the environment in the long run. The group held a protest in London. They used mobile billboards to call out BP’s leaders for their “flip-flop” climate policy decisions.

BP’s move also raises concerns about its alignment with global climate goals. The International Energy Agency (IEA) states that new fossil fuel projects can’t help limit global warming to 1.5°C. By increasing oil and gas production, BP may stray from the global net-zero goal.

What This Means for BP’s Future

BP’s shift signals a clear return to traditional fossil fuel business models, with a reduced emphasis on clean and renewable energy. While this move may generate higher short-term profits, it raises concerns about BP’s ability to adapt to a decarbonizing world.

Many experts believe that, over time, stricter climate regulations and changing energy markets will force oil companies to prioritize renewables once again.

BP’s shift in priorities could also affect its reputation among environmentally conscious investors and consumers. Companies that continue investing in fossil fuels at the expense of renewables may struggle to attract younger, sustainability-focused investors who prioritize long-term climate goals over immediate financial returns.

For now, BP is betting on oil and gas—but whether this strategy pays off in the long run remains uncertain. As the world moves toward net-zero goals, its decision to step back from renewables could impact its standing in the energy sector in the years ahead.

The question remains: Will BP’s return to fossil fuels prove to be a wise financial move, or will it leave the company behind in an increasingly green-focused world?

NVIDIA Breaks Revenue Records as AI Demand Skyrockets, Targets 100% Renewable Energy in 2025

Saptakee S
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NVIDIA Breaks Revenue Records as AI Demand Skyrockets, Targets 100% Renewable Energy in 2025

NVIDIA posted record earnings for the fourth quarter of the fiscal year 2025. The company reported $39.3 billion in revenue. This is a 12% rise from last quarter and a 78% increase from last year. For the full year, the company made $130.5 billion, more than 2X its revenue from the previous year. The AI giant is committed to sustainability, aiming for 100% renewable energy by this year.

Data Centers Fuel NVIDIA’s Explosive Growth

Jensen Huang, founder and CEO of NVIDIA, expressed excitement, noting,

“Demand for Blackwell is amazing as reasoning AI adds another scaling law — increasing compute for training makes models smarter and increasing compute for long thinking makes the answer smarter. We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter. AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.”

NVIDIA’s Data Center division was its biggest revenue source. It generated $35.6 billion in Q4, a 16% rise from last quarter and a 93% increase from a year ago. The data center revenue soared 142% for the year, reaching $115.2 billion, driven by strong AI demand.

Last month, NVIDIA saw the largest single-day market value loss in stock market history after the launch of DeepSeek AI. However, with strong earnings and ongoing AI demand, the company is recovering well.

NVIDIA will join the $500 billion Stargate Project as the main tech partner. This project aims to advance computing and boost NVIDIA’s AI leadership.

NVIDIA earnings
Source: NVIDIA

Mixed Performance in Gaming and Automotive

While NVIDIA’s AI business thrived, its gaming division faced challenges. Q4 gaming revenue fell to $2.5 billion, down 22% from last quarter and 11% from a year ago. However, gaming had a solid year overall, with full-year revenue climbing 9% to $11.4 billion.

In contrast, the automotive and robotics segment excelled. Q4 automotive revenue reached $570 million, up 27% from the last quarter and doubling (103%) from last year. The full-year total also showed strong growth, rising 55% to $1.7 billion.

NVIDIA also shared exciting partnerships and product launches:

  • Toyota will use NVIDIA DRIVE in its next-gen vehicles, boosting NVIDIA’s role in self-driving tech.

  • NVIDIA Cosmos™, a new AI platform for robotics, is gaining traction with companies like Uber, Waabi, Agile Robots, and 1X.

  • The company launched the Jetson Orin Nano™ Super, promising 1.7x better performance in AI applications.

With all these performance data, NVIDIA’s profits also surged. GAAP earnings per share (EPS) hit $0.89, a 14% jump from last quarter and an 82% rise from last year. On a non-GAAP basis, EPS remained at $0.89, up 10% from the previous quarter and 71% year-over-year.

What’s Next for NVIDIA?

NVIDIA is optimistic about another strong quarter with projected revenue of $43 billion for the Q1 fiscal year 2026. It anticipates gross margins of around 71%, showing continued profitability.

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NVIDIA’s Commitment to Energy Efficiency and Sustainability

NVIDIA is focused on making its technology faster and more energy-efficient. From research to design, every step aims to improve performance while lowering power use. This helps customers work more efficiently and reduces their carbon footprint.

Blackwell GPUs: Faster AI with Lower Energy Costs

AI is growing fast and needs powerful computing systems. NVIDIA’s Blackwell GPUs are 20 times more energy-efficient than traditional CPUs for AI tasks. Meanwhile, NVIDIA’s DPUs cut power use by 25% by handling specific jobs better than CPUs.

The U.S. Department of Energy tested power use for AI applications on a supercomputer called Perlmutter. Systems with GPUs were five times more energy-efficient than those using only CPUs. This could save millions and prevent 588 megawatt hours of electricity use monthly.

NVIDIA
Source: NVIDIA

Reducing Emissions with Clean Energy

NVIDIA plans to run all its offices and data centers on 100% renewable electricity by early 2025. This will eliminate its market-based Scope 2 emissions. It’s also working with key suppliers to help them set targets for reducing Scope 3 emissions.

  • In 2024, NVIDIA’s total emissions were 3.69 million metric tons of CO2 equivalent.
  • It continues to expand its renewable energy use, reaching 76% in FY24, with a goal of 100% this year
NVIDIA EMISSIONS
Source: NVIDIA

Green Buildings and Solar Energy

NVIDIA is upgrading its buildings for energy efficiency. Two headquarters buildings in Santa Clara, CA, and the campus in Hyderabad, India, earned LEED Gold certifications for sustainability.

In Santa Clara, a three-acre park links the headquarters. It has trellises with solar panels that produce 390 kW of power. Overall, NVIDIA’s headquarters’ solar capacity is now 846 kW. The Hyderabad campus also added solar panels.

NVIDIA’s performance signals a promising future. With soaring AI demand and strategic partnerships, the company is optimistic about maintaining its leadership in the industry. At the same time, its commitment to sustainability also remains strong.

Can the EU’s €100 Billion Clean Industrial Deal Make Europe the Green Tech Leader?

Jennifer L
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Can the EU’s €100 Billion Clean Industrial Deal Make Europe the Green Tech Leader?

The European Union has launched the €100 billion Clean Industrial Deal. It is a bold initiative aimed at accelerating decarbonization while strengthening the continent’s industrial competitiveness.

The deal aims to make clean energy and sustainable industries key to Europe’s future. It ensures that economic growth matches climate goals. This initiative is expected to play a pivotal role in achieving the EU’s net-zero targets by 2050.

President Ursula von der Leyen remarked on the announcement, saying,

“Europe is not only a continent of industrial innovation, but also a continent of industrial production. However, the demand for clean products has slowed down, and some investments have moved to other regions. We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden. The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”

A Business Plan for Green Growth

The Clean Industrial Deal is designed to support two key sectors:

  1. energy-intensive industries, and
  2. clean tech.

These industries are key to economic growth. However, they also release a lot of carbon emissions. The deal sets up a plan to help them transform. It focuses on electrification, improving energy efficiency, and growing renewable energy sources.

The EU aims to reach these goals by introducing new policies. They will reduce red tape, simplify financing, and provide clear rules for clean energy investments. The initiative shows the EU’s promise to create a sustainable economy. It also aims to keep a competitive edge in the global industrial sector.

More remarkably, it will help the region move closer to its 2050 net-zero trajectory:

EU net-zero pathway
Source: European Commission

Key Pillars of the Clean Industrial Deal

Powering Industry with Clean, Affordable Energy

Affordable energy is essential for a strong, competitive economy. Under the Clean Industrial Deal, the EU has introduced an Action Plan on Affordable Energy, which aims to lower industrial energy bills by expanding clean energy infrastructure, accelerating electrification, and reducing reliance on fossil fuel imports. The initiative will boost renewable energy use. It will help industries access clean and affordable power quickly.

Making ‘Made in Europe’ the Gold Standard for Green Products

A key part of the Clean Industrial Deal is the Industrial Decarbonization Accelerator Act. This act will boost demand for clean products made in the EU. It will introduce sustainability and “Made in Europe” criteria into both public and private procurement processes.

By 2025, steel products will be the first to carry a voluntary carbon intensity label, followed by cement and other materials. These measures will encourage industries to use cleaner production methods. They will also provide consumers with clearer information when making purchasing decisions.

Where Will the €100 Billion Come From?

The Clean Industrial Deal will mobilize over €100 billion to support decarbonization efforts. The funding will come from various sources, including:

  • A new State Aid Framework, simplifying and expediting approval for clean energy projects.

  • Strengthening the Innovation Fund to drive green technology advancements.

  • Setting up an Industrial Decarbonization Bank. Use available funds and emissions trading revenues to support industrial change.

  • Amending the InvestEU Regulation to boost investment in clean tech, mobility, and waste reduction. The goal is to raise up to €50 billion in both private and public funds.

  • The European Investment Bank (EIB) will launch new financing tools. These will help clean energy projects. They include counter-guarantees for SMEs and high-energy industries.

These financial mechanisms will help industries transition to greener operations without compromising their competitiveness.

Recycling, Resources, and Resilience

Securing a stable supply of critical raw materials is vital for Europe’s clean energy transition. To reduce dependency on unreliable foreign suppliers, the EU will:

  • Establish an EU Critical Raw Material Centre to aggregate and manage the bloc’s raw material needs.

  • Enable European companies to jointly purchase critical materials, creating economies of scale and improving bargaining power.

  • Adopt a Circular Economy Act by 2026, ensuring that 24% of materials in the EU economy come from circular sources by 2030.

The EU focuses on resource efficiency. This helps minimize waste, strengthen supply chains, and reduce imports, supporting a sustainable economy.

Building Global Alliances for a Sustainable Economy

The Clean Industrial Deal goes beyond Europe. It promotes global clean trade and investment partnerships. These agreements aim to diversify supply chains, secure raw materials, and promote clean technologies worldwide.

To fight unfair competition, the EU will boost trade defense measures. This will help European companies compete fairly.

The EU will also simplify and strengthen the Carbon Border Adjustment Mechanism (CBAM). The mechanism adds tariffs on imports that have high emissions.

EU CBAM reporting rules
EU CBAM

This will help foreign manufacturers meet Europe’s carbon reduction standards. It will also protect EU industries from unfair competition.

Why the Clean Industrial Deal is Crucial for EU’s Net Zero Goals

The Clean Industrial Deal is more than just an industrial policy—it is a critical component of the EU’s climate strategy. By 2050, Europe aims to be the first climate-neutral continent, and this deal provides the foundation to achieve that target.

Decarbonizing industrial production and energy use is key. Over 75% of EU greenhouse gas emissions come from these areas, as seen in the chart. The EU is setting a clear path toward sustainability by integrating clean energy, electrification, circular economy principles, and industrial innovation.

EU GHG emissions by sector 2023
Source: European Commission

The initiative boosts Europe’s role in clean tech and green innovation. It helps the continent stay competitive and cut its environmental impact.

The €100 billion Clean Industrial Deal is a landmark initiative that will reshape Europe’s industrial landscape. The EU is committed to reaching its net-zero goals. It is doing this by lowering energy costs, funding clean industries, increasing demand for sustainable products, and securing essential materials.

As industries shift to cleaner production, both businesses and workers will gain from a stronger, greener, and more competitive economy in Europe. The Clean Industrial Deal is not just an investment in sustainability—it is a strategic move toward long-term prosperity and global leadership in the green economy.

Zefiro Methane Revolutionizes Well Sealing: Uses AI & Blockchain to Stop Methane Leaks

Saptakee S
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Zefiro Methane Revolutionizes Well Sealing: Uses AI & Blockchain to Stop Methane Leaks

Zefiro Methane Corp. is teaming up with tech firms Geolabe and Keynum to find and repair old, leaking oil and gas wells. This effort will cut methane emissions using artificial intelligence. The partnership also aims to cut costs, speed up repairs, and share carbon credits better.

Zefiro Founder and Chief Executive Officer Dr. Talal Debs commented,

“With millions of orphaned and abandoned oil and gas wells spread throughout twenty-six different states, utilizing advanced solutions to locate and permanently plug more of these sites is essential. Both the Lifecycle Solution developed with CarbonAi and our partnerships with Geolabe and Keynum bring innovative technologies into this important endeavor, and our heightened ability to increase our project portfolio, reduce costs, and promote efficiencies throughout our operations solidifies Zefiro’s position as a market leader.”

Zefiro Invests in Smarter Methane Detection with AI

Satellites and AI are transforming how methane emissions are tracked. With real-time monitoring, companies can quickly detect and address leaks. Drones with infrared cameras further enhance detection at oil and gas sites, while automated systems improve data accuracy, reducing errors and increasing transparency. These tools make methane reduction efforts more effective and help strengthen carbon credit programs.

The press release mentions that Zefiro is betting on the advantage of these innovations by partnering with Geolabe and Keynum. On January 10, 2025, Zefiro signed an agreement with Geolabe to use its AI-powered satellite imaging system—the first fully automated tool for detecting methane emissions. This technology analyzes satellite images with unprecedented accuracy, and Zefiro will contribute real-world well data to further refine its capabilities.

Since December, Zefiro has also been working with Keynum, a firm specializing in AI and data science, to develop a dashboard that maps orphaned wells across multiple states. Keynum’s predictive modeling identifies wells with significant methane leaks, helping Zefiro prioritize repairs and accelerate carbon credit certification. These partnerships are positioning Zefiro as a leader in methane abatement, making the cleanup process faster, smarter, and more impactful

Turning Data into Climate Action

Zefiro already uses advanced monitoring and data analysis tools to detect and verify methane leaks. These technologies have been successfully used in multiple projects to improve detection and mitigation.

However, this time, it is taking a big step forward by launching Zefiro Lifecycle Solution. Developed with CarbonAi Inc., this new platform will simplify data collection and workflow management, making it easier and more cost-effective to seal abandoned wells. It will also speed up the certification of carbon offset credits by the American Carbon Registry, helping Zefiro maximize its impact in the fight against methane emissions.

Chief Technology Officer Richard Walker of Zefiro said,

“By harnessing the unique powers of artificial intelligence to process satellite imagery and the blockchain, Zefiro continues to find new ways to help stem the proliferation of orphaned and abandoned oil and gas wells. These innovative solutions will expand our operational footprint, enable best-in-class economics for our carbon credit initiatives, promote certainty in our methodologies, and ensure the integrity of our plugging measurements to help more communities reclaim critical air, water, and land resources.”

Methane Leaks from Oil and Gas Wells Are a Major Climate Threat

Old, abandoned oil and gas wells can leak methane. Methane is a greenhouse gas. It traps heat 25 times better than carbon dioxide. It has caused 30% of the global temperature rise since the industrial revolution. This impact worsens climate change. It also pollutes water and harms human health.

A study from the Environmental and Energy Study Institute (EESI) found that in 2018, the EPA estimated abandoned wells released 290 kilotons of methane. This equals burning over 16 million barrels of oil.

These unplugged wells leak methane and other harmful pollutants. This worsens the climate crisis and threatens public health. Sealing these wells quickly is vital for reducing emissions and protecting communities.

Zefiro Capitalizes on Growing Demand for Carbon Credits

Millions of abandoned oil and gas wells across 26 U.S. states leak methane, worsening climate change.

According to Zefiro, each well releases about 78 cubic meters of methane yearly. This adds up to nearly 23 million tons of CO2 equivalent. However, sealing them would cost over $600 billion.

So, how does Zefiro tackle this challenge? The company has created a toolkit to stop methane leaks, protecting land, air, and water. It offers top-notch methane offset credits from the U.S. It partners with businesses, government, and environmental groups. This strategy reduces emissions and attracts more investment to address the orphaned well crisis.

zefiro methane
Source: Zefiro

Methane Offset Credits in High Demand

  • Methane reductions have an immediate climate impact due to methane’s potency.
  • Carbon credits from methane abatement projects are valued for their strong environmental benefits.
  • Unlike other carbon offsets, methane projects also improve local air quality.

A report by Climate Wells shows that since 2004, methane credits have cut just 19 million tons of CO2e. That’s less than 1% of the 4 billion tons reduced in voluntary carbon markets (VCM).

methane carbon credits

Demand is rising. Over the past year, methane credit retirements grew by more than 70%. This makes them one of the fastest-growing credit types on the market.

Last year in November, Zefiro’s subsidiary, Plants & Goodwin, Inc. (P&G), successfully sealed its first gas well in Custer County, Oklahoma. This deep gas well reached 15,000 feet underground. To seal it permanently, we removed 5,000 feet of casing. The project will create carbon offset credits approved by the American Carbon Registry.

In conclusion, Zefiro’s partnership with Geolabe and Keynum is a game-changer. By using AI to pinpoint major methane leaks, the company can tackle emissions more effectively. These advancements are expected to cut costs and boost methane capture by 50%.

Woodside Almost Double Carbon Credit Use: Can Offsets Deliver Net Zero for Australia’s Energy Giant?

Jennifer L
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0
Woodside Almost Double Carbon Credit Use: Can Offsets Deliver Net Zero for Australia’s Energy Giant?

As Australia’s largest oil and natural gas producer, Woodside Energy faces growing pressure to reduce greenhouse gas (GHG) emissions while maintaining energy production. The company uses a carbon credit strategy to offset emissions. This supports its goals for decarbonization and reaching net zero.

In 2024, Woodside retired 1.3 million carbon credits. This was nearly double the amount from the year before. They also managed a portfolio of over 20 million credits. These credits came from several programs, like the Australian Carbon Credit Unit (ACCU) scheme, Gold Standard, and Verra.

Carbon Credits in Emission Reduction: A Shortcut or a Necessity?

Woodside uses carbon credits as a key component of its strategy to address Scope 1 and 2 emissions.

According to its 2024 Annual Report, the company offsets emissions that exceed its net reduction targets. Due to the high costs of big technologies like carbon capture and storage (CCS) or electrifying LNG facilities, carbon credits remain a good choice.

The company stated in the report that:

“The use of carbon credits as offsets remains an important part of Woodside’s approach to Scope 1 and 2 GHG emissions, due to the high potential cost of large scale abatement options. We both originate (i.e. invest in our own carbon projects) and acquire carbon credits, to maintain a diverse portfolio differentiated by underlying abatement method, geography and vintage.”

Some investors want Woodside to cut back on carbon offsets. However, Woodside believes carbon credits are essential for tackling hard-to-reduce emissions.

Woodside emissions and offsets retired
Source: Bloomberg

The company prioritizes direct emission reductions first, then uses credits for remaining emissions. Executive pay ties to gross Scope 1 and 2 reductions. Offsets don’t count. This approach ensures that abatement measures come first.

Net Zero Roadmap: Cutting Emissions While Powering Australia

Woodside’s net zero strategy focuses on three main areas:

  • Decarbonizing assets,
  • Improving energy efficiency, and
  • Investing in lower-carbon solutions.
Woodside net zero by 2050 roadmap
Source: Woodside

The oil company has set the following emission reduction targets:

Scope 1 and 2 Emissions: Reduce net equity emissions through direct abatement and offsets. The Australian oil giant aims to cut net equity Scope 1 and 2 emissions by 15% by 2025 and 30% by 2030, using 2016-2020 as a baseline. Woodside aims to do this by using carbon capture and storage (CCS) at key sites. They will boost efficiency and use more renewable energy in their operations.

Scope 3 Emissions: Invest $5 billion in new energy products and lower-carbon services by 2030. This will help reduce 5 million metric tons per year (Mtpa) of CO2 equivalent. The company is focusing on hydrogen, ammonia, and renewable energy projects. These efforts aim to help customers decarbonize their supply chains.

Operational Efficiency: Launch emissions reduction projects to achieve a 15% efficiency gain in LNG operations by 2030. This involves electrifying some processes, cutting methane leaks, and improving fuel use.

Woodside reported Scope 1 and 2 gross equity emissions of approximately 6.78 million tons of CO2 equivalent (mt CO2e) in 2024, up from 6.19 million tons in 2023. The increase was largely attributed to the start of production at the Sangomar oil and gas field in Senegal.

Yet, its net equity Scope 1 and 2 emissions have fallen from 5.53 to 5.44 mt CO2e as seen below. 

Woodside energy net equity GHG emissions

The company is working hard to cut emissions. It aims to improve equipment efficiency and optimize processes at its LNG facilities. Additionally, Woodside is evaluating partnerships to develop large-scale CCS projects that could store millions of tons of CO2 annually. It is also working more with renewable energy providers. This will help add clean energy to its supply chain and support its net-zero goals.

Woodside Scope 3 emissions

Carbon Offset Initiatives and Reforestation Projects

In addition to purchasing credits, Woodside develops its own carbon offset projects. The company has implemented several large-scale reforestation and conservation initiatives.

  • Australia: Planted 3.2 million biodiverse seedlings on 4,800 hectares in Western Australia. This brings the total to 8.9 million seedlings across 13,000 hectares.
  • Paraguay: Funding the reforestation of 7,400 hectares in the Chaco region. This project aims to generate about 2.4 million carbon credits over 40 years.
  • Senegal: They support mangrove restoration on 7,000 hectares in the Sine Saloum and Casamance regions. This project is expected to produce 1.8 million carbon credits over 40 years.

These projects boost biodiversity and store carbon for the long term. They also align with Woodside’s sustainability goals. The company estimates that its existing offset projects will generate around 10 million carbon credits by 2035, helping to balance emissions from fossil fuel production.

Challenges and the Future of Carbon Credits in Oil and Gas

While carbon credits offer a near-term solution for offsetting emissions, the long-term sustainability of this approach is debated. Some corporations have scaled back on offsets, citing concerns over credibility and effectiveness.

Voluntary carbon credit issuance declined by 4% in 2024 due to weaker demand. Woodside is still committed to its offset strategy. This is especially true for emissions that current technologies can’t yet eliminate.

The company sees the risks of offsets. And so, it wants to balance using them with cutting direct emissions. Technologies like post-combustion carbon capture, hydrogen fueling, and electrification are being studied. Their costs range from $200 to $500 per ton of CO2, making it hard to deploy them on a large scale right now.

Woodside has committed $500 million toward research and development of these technologies over the next decade.

Woodside has teamed up with industry and government groups to create a carbon storage hub. The goal is to capture up to 10 million tons of CO2 each year by 2040. This initiative aligns with broader national efforts to transition toward a lower-carbon economy while maintaining Australia’s energy security.

Industry and Investor Reactions to Woodside’s Carbon Strategy

Investor response to Woodside’s climate strategy has been mixed. Some shareholders want less reliance on carbon credits. They also urge a stronger focus on cutting emissions directly.

At Woodside’s 2023 annual meeting, almost 49% of shareholders rejected the company’s climate plan. This shows worries about its heavy reliance on offsets. However, others support the approach, provided it is complemented by clear abatement initiatives and cost-effective offset sourcing.

Regulatory bodies are also increasing scrutiny of carbon credit strategies. The Australian government is creating new rules for carbon credits. These rules will make sure that companies follow strict transparency and additionality standards. This may change how Woodside buys and uses offsets in the future.

Woodside Energy is weaving carbon credits into its sustainability strategy. They use offsets and also invest in emission reduction technologies. With 1.3 million credits retired in 2024 and over 20 million in its portfolio, the company remains committed to managing its carbon footprint.

However, as industry standards evolve and scrutiny on offsets increases, Woodside’s long-term success will depend on its ability to scale direct abatement efforts alongside its reliance on carbon credits.

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