The 3 Best Carbon Stocks of 2022

Key Points:

These “carbon stocks” are doing their part to achieve a net-zero world. And catching investors’ attention.
KRBN, NETZ, OFSTF and BEP are stocks in focus in rising carbon markets.

An infographic version of this post can be found here or by clicking the image below.

As most of you are probably aware, 2021 was a banner year for carbon investments around the world.

And 2022 is setting up to attract a lot of investor attention in the carbon markets. Especially as it relates to carbon stocks.

Carbon prices went on a tear in the wake of rising awareness of the dangers of climate change thanks to the many extreme weather events that took place last year.

Not to mention other events like the highly publicized COP26 United Nations climate change conference in Glasgow.

Future Carbon Prices

By the end of the year, European carbon allowances were up over 150%. Their Californian equivalents saw a more modest, but still impressive, 80% gain:

Note: For live Carbon Market Pricing and charts you can click here

While these were impressive performances that might make you think you’ve already missed the boat, nothing could be further from the truth.

Carbon Markets Set to Soar In 2022

The carbon markets are still in their infancy and will need to see continued growth if the world is to meet the climate change target set out during the Paris Agreement.

This is the international accord to limit global warming to below 2 degrees Celsius, signed and ratified by all but four countries in the world.

Though the rough framework for a fully regulated global carbon market has already been laid out by the Article 6 agreement at COP26 last year, it could still be years before such a market actually comes into existence.

And when it does, it’s uncertain how it’ll interact with the current compliance and voluntary carbon markets. Will it merge with currently existing marketplaces or exist alongside them?

That’s why it’s the Wild West in the carbon markets right now. There are tons of unexplored territory with very little oversight. But opportunities abound, and there’s plenty of money to be made if you look in the right places.

So that brings us to the most important question of them all: where should we be investing right now?

3 Carbon Stocks You Should be Keeping Eyes On in 2022

Here are the carbon stocks with potential we’re focusing on:

KraneShares Global Carbon Strategy ETF (KRBN.NYSE)

Currently the largest carbon ETF in terms of net assets, the KraneShares Global Carbon Strategy ETF, KRBN, holds a mix of carbon allowance futures from each of the major compliance markets.

That includes European Union Allowances (EUAs), California Carbon Allowances (CCAs), Regional Greenhouse Gas Initiative allowances (RGGIs) and U.K. Allowances (UKAs).

Though its holdings are slightly weighted in favor of the European EUAs at the moment, KRBN provides broad exposure to the performance of compliance market carbon credits.

These are currently one of the best ways for not only retail investors, but also corporations, banks and other financial institutions to invest in the carbon markets.

By matching the price performance of these compliance market carbon credits through its holdings, KRBN allows the average investor to add exposure to carbon prices to their portfolio without having to purchase futures, which are complicated and risky to invest in.

Investors who held KRBN at the beginning of 2021 would’ve seen their investment more than double by the end of the year, mimicking the price performance of European and Californian carbon credits.

Those of you who think carbon allowance prices are going to continue their strong performance in 2022 will definitely want to keep KRBN on your watchlists.

Click here to learn more about KRBN.

Carbon Streaming Corporation (NETZ.NEO and OFSTF.OTC)

As the carbon markets are still in their early stages, so too are the investment opportunities – most of the listed entities you’ll find are exchange-traded products of some sort.

Index funds and ETFs do an excellent job of tracking their underlying assets. However, those who are both able and willing to stomach greater risk will also see greater potential for return on their investments.

NETZ is just one such opportunity. It trades in Canada on the NEO exchange and in the S. markets under the symbol OFSTF for now.

The company has secured an early-mover advantage by not just being the first streaming/royalty deal in the carbon credit space, but also by being among the first carbon-credit-focused businesses to go public.

For those of you who aren’t in the know, the streaming/royalty business model is an extremely lucrative one whose roots lie outside of the financial markets.

Here’s how they work:

Find an asset with upside and pay an upfront fee
Get a share of the future output for set period of time

Music royalties, for example, are one of the oldest and most well-known examples. Artists can sell their catalog and rights upfront for $, the owners of the ‘royalties’ get a share in the profits in the future.

In the 1980’s Michael Jackson thought the Beatles catalog had upside paid over $50 million to secure the rights in the future (actually outbidding the actual Beatles).

Those assets grew over time and the value of the overall catalog grew alongside it.

The business model has since made its way into many different types of commodities, with gold and precious metals streaming and royalty companies being another prominent example.

And just like how Sony bought up the Beatles music catalog at a $1.5 billion valuation in 2016. NETZ is betting big to lock in agreements with some of the highest-quality carbon credit projects out there.

These include the Rimba Raya Biodiversity Project in Indonesia, one of the world’s largest REDD+ projects that’s expected to offset 130 million tonnes of CO2e over the next 30 years.

Those of you with a higher risk tolerance for your investment portfolios will want to check out NETZ. Its business model, in addition to it being the first of its kind in the carbon markets, could potentially allow NETZ to outperform relative to the rest of the carbon credit market.

Click here to learn more about NETZ.

Brookfield Renewable Partners (BEP.NYSE)

It should be clear to everyone at this point that the surge of interest and capital into green investing isn’t going away anytime soon.

However, if you’re still not totally sold on the idea of carbon credits or have a lower appetite for risk in your portfolio, there are more conservative ways to play the green investment boom.

One such example would be with a company like BEP which trades on the NYSE. It’s one of the largest pure-play renewable energy companies in the world.

BEP has extremely diversified holdings, with nearly $60 billion in power assets located in over a dozen countries across four continents, split across hydro, wind, solar and energy transition projects.

Source: Brookfield Renewables website

The company has managed consistent growth over the past decade, with distributions to unitholders growing at an average annual rate of 6%. They have a strong balance sheet with a healthy capital pool, and no need to go back to the markets for equity.

In other words, BEP is an extremely well-run clean energy company with a great business model and a long history of solid performance – all before carbon credits even enter the picture.

To be fair, BEP is likely not a company that will benefit significantly from the growth of the carbon credit marketplace. Renewable energy projects are generally considered “low-quality” carbon credit projects due to their lack of additionality.

Simply put, many renewable energy projects are already profitable even before taking carbon credits into account. This makes any credits they could generate less worthwhile, because many of these projects would have happened even without the presence of carbon credits.

With all that said, as previously mentioned, BEP was already a great company even before carbon credits came along; the coming wave of decarbonization can maybe help lift it higher.

So, if you would still like a little bit of exposure to the carbon market in your portfolio, but you’re not very gung-ho about the future of carbon credits or would prefer a lower risk play, BEP is one company you might want to keep your radar.

Click here to learn more about BEP.

The Best Carbon Stocks Should Generate a Lot of Interest from Investors

With a large number of public companies declaring their Net-Zero ambitions and disclosing carbon emissions, socially responsible investing is becoming a major theme in financial markets. There are trillions of dollars of investment going into renewable energy and the offsetting emissions.

Facebook (Now Meta Platforms), Apple and Netflix are among the major tech companies leading this charge to net-zero targets for 2030. And major mining (Barrick, Newmont) and energy companies (Exxon, Shell) are doing the same.

These factors will drive increasing investor interest in all things carbon related in 2022 and beyond. Expect things to accelerate as net zero targets for 2030 draw closer.

Rising tides can lift all boats, and the best carbon stocks should generate some of the best returns for investors. These carbon companies have shown themselves to be steady value drivers with the financial acumen to capture many opportunities for solid returns in the past, and should be on the top of any green investor’s watchlist for 2022.

Please read our full DISCLOSURE here.

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Infographic: 3 Carbon Stocks You Should be Keeping Eyes On in 2022

Click on the image to expand the view.

Please read our full DISCLOSURE here.

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Carbon Prices to reach $360 by 2030

According to a report by Getting to Zero Coalition, carbon prices might reach $360 per tonne by the 2030s.

The Getting to Zero Coalition is a collaboration of the Global Maritime Forum, Friends of Ocean Action, and the World Economic Forum.

Carbon dioxide currently accounts for 98 % of shipping GHG emissions.

The addition of LNG-powered tankers may cause carbon credit prices to soar even further.

LNG produces methane gas which has 25 times the emissions as carbon dioxide.  So one metric ton of Methane is equivalent to 25 carbon credits.

The 25x is conservative and based on a 20-year time frame. Over a 100-year timeline, methane can have over 80 times the equivalent emissions as CO2.

The report analyzes two scenarios in which emissions are lowered by 50% or 100% by 2050.

In each case, a carbon price is implemented beginning in 2025, with GHG emissions peaking in 2030.

To achieve a 50% decrease in GHG emissions by 2050, the carbon price level should average $173/tonne CO2.

In the event of complete decarbonization, the average carbon price would be roughly $191/tonne CO2.

In both scenarios, the price level begins at $11/tonne CO2 when introduced in 2025 and ramps up to around $100/tonne CO2 in the early 2030s, at which point emissions begin to decline.

The carbon price subsequently rises to $264/tonne CO2 in the -50% scenario and $360/tonne CO2 in the -100% scenario.

Last year, the Intergovernmental Panel on Climate Change, a body of scientists and others from 195 countries, warned that methane was a crucial component of LNG and that it needed to be reduced if the Paris targets of keeping global warming to 1.5 degrees Celsius or less were to be fulfilled.


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Climate Activists Target 30 Global Corps

Environmental group, Friends of the Earth, which won a landmark court case against Royal Dutch Shell last year, is targeting 30 other firms with operations based in the Netherlands.

Last May, they won a landmark victory over Shell and forced then to decrease its environmental impact.

This time around they want significant reductions in greenhouse gas emissions in these large organizations.

Letters were addressed to the CEOs of some of the largest banks, retailers, oil, energy giants, builders, and industrial manufacturers.

The letter requested the firms present plans describing how they will reduce carbon emissions by 45% from 2019 levels by 2030.

Failing to do so may result in legal action and they have set a 3-month deadline for the corporations to present a climate plan, which is due on April 15.

Firms include:

Insurer: Aegon, Atradius, NN Group, ING Group,

Industrials: AkzoNobel (Paint maker), BAM Group (Builder), Boskalis Westminster (Dredger), Vopak (Storage), Stellantis (automotive), Tata (Steel)

Oil firms: BP, ExxonMobil, Shell,

Chemical manufacturers: Dow Chemical, Yara chemical, LyondellBasell

Dairy, & Agriculture & Nutrition: Friesland, Campina, Vion, DSM

Aviation: KLM, Schiphol airport,

Banks & Pension funds: Rabobank, ABP, PfZW,

Conglomerates: Unilever

Energy & Trading: Uniper, RWE, Vitol energy,

“We have made it plain that, if necessary, we are willing to go to court. But, of course, we hope that these businesses will go on their own ” spokesperson for Friends of Earth stated

They will be used to establish an emissions baseline against which progress in reducing climate-heating gases can be monitored, according to the group.

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SpaceX to Explore Carbon Capture

Through carbon capture, SpaceX CEO Elon Musk announced a program to create rocket fuel. He is even offering a $100 million Carbon Removal X-Prize for new carbon capture technologies to help make it happen.

Elon Musk is the founder and CEO of SpaceX and Tesla.

Is there another reason behind SpaceX’s carbon capture program?

Many have criticized Musk for his space missions, saying these missions do little to benefit the Earth.

In fact, in 2021, SpaceX had 31 launches.

It is important to note that just one rocket launch emits over 300 tons of carbon into the atmosphere — staying there for years. Some flights are just six minutes long!

Musk believes that CO2 capture to use as fuel is the solution to:

1.) Improving the climate here on Earth; and
2.) Making a settlement on Mars possible (which is Musk’s ultimate goal).

Why is SpaceX offering a $100M prize for new carbon capture technology?

Believe it or not, making rocket fuel with carbon isn’t the tricky part. Capturing CO2 is, which is the reason behind the prize.

Direct air capture is so expensive that it can cost between $600 and $800 per ton.

To win, “teams must demonstrate a working solution at a scale of at least 1000 tons removed per year; model their costs at a scale of 1 million tons per year; and show a pathway to achieving a scale of gigatons per year in future.”

Does Carbon Capture work?

Not everyone is on board with carbon capture. Even Senator Bernie Sanders of Vermont, a strong supporter of green initiatives, is skeptical. Others are less focused on carbon capture technologies and more interested in the carbon credit industry, which is booming.

But Musk disagrees.

If capturing  CO2 becomes more accessible and affordable, we can help life here on Earth while exploring space.

Musk is currently Time Magazine’s Person of the year.

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How to Make Money Producing and Selling Carbon Offsets

Governments across the globe are working to reduce the amount of greenhouse gases (GHGs) released into the atmosphere by implementing stricter regulations and eco-friendly policies. One of the ways this is taking place is through the creation of a “carbon offset” ecosystem.

Carbon offsets are valuable certificates that are issued when carbon dioxide is removed from the atmosphere—or prevented from being emitted in the first place. That can be accomplished through advanced extraction technology, through pumping it into rocks, or even just through planting trees.

The help of every farmer, rancher, and private landowner is necessary to produce enough carbon offsets to achieve the vision of global carbon neutrality—or at least come close. The good news is that anyone who owns or operates land can use the production and sale of carbon offsets to increase their profit margin while helping the environment.

Here are a few key takeaways from this article:

Producing and selling carbon offsets is finally becoming a lucrative business in the United States, and first movers will have a huge advantage.
S. farmers, ranchers, and landowners can earn additional revenue by optimizing their operations to produce carbon offsets.
Carbon offsets are transacted on the rapidly-growing but still complex voluntary carbon market.
How much a farmer, rancher, or landowner can earn per credit / per acre depends significantly on the location and the carbon offset project.

What Exactly Is a Carbon Offset?

Numerous programs will now measure and pay for every ton of carbon removed from the atmosphere through carbon offsets. Carbon offsets are essentially a tradeable certificate that proves that one ton of CO2 or the equivalent amount of one ton of another GHG has been removed from (or not emitted into) the atmosphere.

One carbon offset = one ton of carbon or other greenhouse gas (GHG).

If it’s difficult for you to gauge just how much a ton of carbon is, rest assured, you are not alone. After all, when most people think of a “ton,” they think of something physical, like a Volkswagen Beetle. But that is hard to do for a gas like CO2.

Think of a good ol’ fashioned fire extinguisher, like the one hanging on the wall in your office building or apartment. Put 500 of those together, and you’ve got one tonne of CO2.

Since it’s difficult to understand just how much a ton of carbon is, the term “carbon offset” gives emissions a manageable metric.

The concept of using carbon credits to measure emissions started in the early twentieth century. The decision to market them, however, didn’t begin until the 1997 UN Kyoto Protocol, the first international agreement to cut CO2 emissions. Since then, carbon credits and their cousins, carbon offsets, have become a popular revenue generation tool for farmers, ranchers, and landowners.

Carbon Offsets Are a Brand New Financial Market

Carbon offsets have proven to be a robust and financially lucrative market across Europe, Australia, and Canada. The EU, for instance, is aiming to reduce emissions by over 55% by 2030, with zero emissions by 2050—and that can only be achieved with the help of massive carbon offset purchases.

The EU price on carbon allowances is more than €80/ton. And yet, high-quality carbon offsets can be purchased for less than $10/ton. For corporations that need to decrease the impact of their emissions, buying verified carbon offsets is a no-brainer. And that means huge income potential in the EU for people who quickly understand the market and how to use their land to produce carbon offsets.

The good news for U.S.-based landowners is that the entire spectrum of participants in the carbon offset market is also finally starting to mature in the United States. The federal government and state governments are passing stricter regulations that raise the cost of carbon emissions, and individual citizens are searching for ways to reduce their own carbon footprint.

Right now, the most significant carbon market in the U.S. is located in California, which has stricter environmental protection regulations than any other state. Most carbon offsets are also sourced from California through various land-use-related sequestration projects.

You may have heard it said that “California is the United States in ten years.” It could not be truer than in the case of carbon offsets. Right on schedule, states have begun following in California’s footsteps, implementing additional ecological compliance standards, carbon emissions limits, and taxes on carbon.

This new U.S. market comes with new financial incentives for landowners across the country to adopt more efficient agricultural operations and preserve their forested acreage. How much of an incentive? In 2016, $190 million in carbon offsets was transacted, representing 63 million tonnes of CO2. By 2019, offset transactions had almost doubled, accounting for 104 million metric tons of CO2—and worth $282 million. This market size would almost quadruple by 2021.

Take a look at the volume, prices, and value of the market through August 2021 yourself:

The “Forestry and Land Use” line is the one landowners should take note of. It’s an over half-billion-dollar opportunity that will have become even bigger by the time you read this. But what does the future look like for this market? According to experts surveyed by the Taskforce for Scaling Voluntary Carbon Markets (TSVCM):

“Based on stated demand for carbon credits, demand projections from experts… and the volume of negative emissions needed to reduce emissions in line with the 1.5-degree warming goal… the market size [for carbon offsets] in 2030 could be between $5 billion and $30 billion at the low end and more than $50 billion at the high end.”

That means something between 20x growth and 200x growth for the carbon offset market in under a decade. If you own any amount of acreage—even if not all of it qualifies—this is something you want to learn about before it’s too late.

A Tale of Two Carbon Marketplaces

Before you learn how to make money by using your land to produce carbon offsets, it’s important to understand why a market for carbon offsets even exists. And to get there, you have to start with carbon credits. Carbon credits are traded on the compliance carbon market. Here’s how it works…

Many countries and some states have passed “cap-and-trade” regulations, which limit the number of tons of CO2 a business can emit in a year. These tons are allotted as carbon credits.

Even companies that work as hard as possible to shrink their carbon footprint might find that the allocated emissions “cap” is not enough for their operations. They might be years away from substantial and compliant reductions in emissions, and they still have to keep operations going to make a profit in the interim. As such, they need to find a way to be able to emit more carbon than their cap without breaking the law.

When companies hit their emissions cap, they look to the compliance market to “trade”—they’re trading money in exchange for another company’s credits.

Here’s a quick example. The Hoover Company is only allowed to emit 300 tons of carbon per year, but they know their operations will result in 400 tons of CO2 emissions. To avoid a financial penalty, the Hoover Company can make up for the extra 100 tons by purchasing credits from another company that will only emit 200 tons of carbon this year.

The voluntary carbon market works much differently. As suggested by the name, participation in the VCM is optional. It’s a place where companies and individuals can, at their choosing, buy carbon offsets to offset their carbon emissions.

This market is mostly made up of entities that are environmentally conscious and work to offset their carbon emissions because they want to. It could be a company that wants to demonstrate to its clients that it is doing its part to protect the environment. Or it could be a person who wants to offset the carbon emission from their flight travel.

Take the Hoover Company example. Suppose they announced their operations would be net zero by a certain date, but they’re still emitting 200 tons of CO2 on that date. They can easily purchase 200 tons worth of carbon offsets to meet their net zero guarantee.

Regardless of who is purchasing or the reason they’re purchasing offsets, they are looking for a way to reduce their emissions footprint—and by producing carbon offsets, landowners can provide an excellent way to do that. As a farmer, rancher, or landowner, you can sell offsets on the voluntary carbon market, creating an additional (and sometimes substantial) source of income.

How Landowners Can Produce Carbon Offsets

Farmers, ranchers, and landowners can produce and sell carbon offsets by capturing and storing emissions. They do this using carbon farming and carbon sequestration processes, which involve implementing practices that remove CO2 from the atmosphere by converting the gas into organic matter within the soil and eventually into plants. Once absorbed, the CO2 helps restore the soil’s natural qualities—simultaneously enhancing crop production and reducing pollution.

Farmers, ranchers, and landowners can offset carbon emissions in countless ways. Though not a comprehensive list, here are a few practices that typically qualify as offset-producing projects.

Returning biomass to the soil as mulch after harvest instead of removing or burning. This practice reduces evaporation from the soil surface, which helps to preserve water. The biomass also helps feed soil microbes and earthworms, allowing nutrients to cycle and strengthen soil structure.
Using conservation tillage or no-tillage practices that improve the quality of water and the air by increasing nutrients, soil structure, porosity, and tilth.
Using nutrient management and precision farming to maintain plant and soil health instead of chemicals or pesticides .
Planting cover crops during the off-season to ready the land for cash crops by improving the soil quality.
Replacing surface irrigation systems with flood irrigation systems so that runoff water can be recycled to improve efficiency.
Promoting forest regrowth to remove, store, and re-purpose carbon within trees and plants.
Returning degraded soils to their natural state, converting acreage into grasslands, or planting trees or seeds to change open land into forest or woodlands.
Rotating crops to ensure soil nutrients remain plentiful.
Switching to alternate fuel types, such as lower-carbon biofuels like corn and biomass-derived ethanol and biodiesel.
Altering manure management and changing feeding schedules.

After reading this list, you might be wondering how the volume and value of carbon offsets produced via each of these methods are determined. To be clear, it’s not an easy task. Monitoring and evaluating emissions and reductions can be a challenge for even the most experienced agricultural professional.

Fortunately, when it’s time to list offsets on the VCM, a third-party verification expert can collect, analyze, and verify data from your property, possible even conducting a site visit, to determine how many offsets you are eligible for. New technology being developed can also remotely track the amount of carbon sequestered by your land, eliminating the need for any guesswork.

What Are Carbon Credits Worth?

In 2019, more than $280 million in carbon offsets were traded on the VCM. Total carbon offset volume was 104 MtCO2e. Simple math says the average price paid for a tonne of carbon removed from the atmosphere in this manner was $4. There is a wide variance, however, in the price paid for carbon offsets, depending on project quality, issuance year, verifiability, additional benefits created by the carbon offset, and other factors. For live VCM pricing, please click here.

One major factor in pricing is the type of project. Different projects include forestry and conservation, waste-to-energy projects, and renewable energy projects. Some of these projects can be worth less than $1 per carbon ton offset, while others can be worth more than $50.

For example, imagine you planted a forest of shade trees. The chart below estimates that a typical urban shade tree will store approximately five tonnes of CO2 forty years, generating $12,500 in revenue at $10/tonne carbon. If the value of carbon rises to $50/tonne, that single tree could be worth more than $1,000 a year.

# of Trees Planted
Average Annual Carbon Credits Generated
Total Carbon Credits Generated Over 40 Years
Total Value of 40-Year Contract @ $5/tonne
Total Value of 40-Year Contract @ $50/tonne
31.25 VERs
1250 VERs
62.5 VERs
2,500 VERs
125 VERs
5,000 VERs

Alternatively, imagine you are producing carbon offsets using your wheat farm, and you are paid $15 per tonne of carbon removed. Depending on how you sequester the carbon, you might earn anywhere from .25 to 2 offsets per acre. If your 1,000-acre wheat farm removes 1 tonne per acre, that is 1,000 carbon credits—and $15,000 profit annually.

Sounds pretty good when it’s theoretical, right? Here’s what that actually looks like in real life. Indigo Agriculture, a Boston-based for-profit carbon sequestration startup, guarantees farmers who signed up in 2019 $15 per tonne of CO2 that they sequester. Farmer Trey Hill received a payment of $115,000 for 8,000 tonnes of carbon—a little over $14/tonne—last year and has continued to receive payments since.

How to Sell and Get Paid for Carbon Offsets

There are numerous online carbon exchange programs located both within the United States and internationally that enable sellers to get cash for the carbon offsets they’ve produced. The exchanges work the same way as various stock and commodity exchanges.

The three largest voluntary carbon registries in the United States have created standards for producing carbon offsets. In addition, , use strict protocols that both scientists and stakeholders have implemented.

To enroll, you need to have land maps available that document your ownership of the land, as well as the legal description of the land. You also need have to document your management practices and obtain a signed contract between yourself and those purchasing/paying for the carbon credits. All fees should be listed.

Before signing a contract, it’s important to thoroughly research the company, understand what’s required of you, and ensure the amount you’re paid is appropriate. If the contract you sign is overly optimistic on the amount of carbon sequestered, you could later be charged the shortfall amount. On the other hand, if the contract you sign lowballs the amount, you could miss out on income.

The Future of Carbon Markets

Former President Barack Obama said:

When Americans are called on to innovate, that’s what we do… once we have a clear target to meet, we typically meet it. And we find the best ways to do it.

The world is aware that much is at stake, with the climate change crisis at the forefront of everything we do. As nations, companies, and individuals work together to address GHG emissions, far more ambitious neutrality goals will be set.

Both the regulatory and voluntary carbon markets are set to expand dramatically in the next decade. Recall that according to the TSVCM, the demand for carbon credits could increase by 15x or more by 2030 and by a factor of up to 100x by 2050.

The momentum behind those figures is that carbon marketplaces provide companies and individuals the power to experiment, innovate, and reach more people—strengthening environmental initiatives for generations to come.

When the United States and the world moves forward collectively to combat the climate crisis, change will happen, and a lot of money will be made. As a farmer, rancher, or landowner, now is the time to begin producing carbon offsets using your land.

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China to Limit Carbon Allowances

To reduce carbon emissions, China looks to limit carbon allowances and raise the cost of pollution.

Under China’s current policy, carbon allowances are lenient. In fact, this past year, China gave allowances for 4.5 billion tons of carbon to 2,200 power firms.

These allowances accounted for 40% of China’s total carbon emissions.

Is it possible for China to limit carbon allowances?

Some analysts are skeptical and believe that lowering it to anything beyond -0.5% won’t easily be accepted by the power sector.

So, for China to meet current climate goals, regulators will have to find a way to balance climate objectives and power-industry interests. The carbon market may play a bit of a role here.

China’s national carbon trading market.

To reduce emissions, UBS Group AG thinks that carbon trading will help China decarbonize. They predict it could be worth 500-billion yuan, which is $79 billion.

And, if carbon prices continue to increase, that figure could quadruple, rising to two trillion yuan, or $316 billion.

China’s official national carbon trading market launched in July of 2021. It is called the National Emissions Trading Scheme (ETS). Right now, ETS’ focus is on the power sector.

China’s climate goals.

At COP26, China agreed to work with the United States on an ambitious climate action plan. Both acknowledged that they needed to do more to reduce carbon emissions, but details were not provided.

In a joint statement, China and the United States said that they will “recall their firm commitment to work together” and close the “significant gap” that remains to reach environmental targets.

It is important to note that China is the largest carbon emitter globally, followed by the US and India. So, if China were to cut carbon allowances for the power industry, it would be a huge victory.

China hopes to peak carbon emissions by 2030 and achieve net-zero emissions by 2060.

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India Reaches Renewable Energy Target 9 Years Early

In 2015, India said that 40% of its installed energy would be from renewable energy by 2030.

In late 2021, they achieved that goal and now over 40% of India’s electricity capacity now comes from non-fossil fuels.

How did India meet its renewable energy goal so fast?

Believe it or not, India has seen the fastest growth in renewable energy across all large economies over the last 7 years.

This growth is likely due to private and foreign investments. In India, foreign investors can enter joint ventures with Indian partners to set up energy generation projects. These joint ventures can be financial, technical, or both.

To put these investments into perspective, from 2014-2019, renewable energy projects received $64.4 billion.

And, in 2019 alone, investments in renewable energy totaled $11.2 billion.

What are additional climate goals for India and other countries?

At COP26, India said its new goal is to reach net-zero emissions by 2070.

Other world leaders have promised to:

Reverse and end deforestation.
Slash methane emissions by 30%.
Phase-out coal by investing in more renewable energy sources.
Make new cars and vans zero-emission.
Boost cooperation to fight climate change.
Help countries that are experiencing loss due to climate change.
Set a global standard for the carbon marketplace.

In addition to world leader commitments, over 450 banks, insurers, pension funds, and other firms agreed to use their funds to help.

As countries and companies continue to make and fulfill these promises, the future is looking bright.


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S&P Global Acquires – The Climate Service


The Climate Service’s tech platform quantifies climate risk. It creates a physical climate risk analytics tool for businesses, investors, and governments.

The platform simulates physical risk, such as severe temperatures, drought, wildfire, coastal flooding, cyclones, and water stress.

It also provides clients with intelligence on transition risks, such as shifting legal, regulatory, and market situations.

The outputs include modeled transition risk and physical risk analysis expressed in financial terms. These are consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

More than ever, investors and companies seek evidence-based insights, high-quality data, and advanced analytics to support the decisions driving their strategies linking sustainability and business performance.” says Dr. Richard Mattison, President, S&P Global Sustainable.

The transaction expands S&P Global’s portfolio of essential ESG data, scores, benchmarks, and insights.

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