Carbon Credit Program Launched by Phillips 66 Aviation

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Phillips 66 Aviation has partnered with 4AIR to launch a carbon credit program.

Phillips 66 is one of the largest refiners in the U.S. and a major contract jet and fuel supplier to private, commercial, and military aviation.

Through this program, flight operators and airports can offset carbon from jet fuel, gasoline, and diesel emissions. Emissions created by vehicles and operating are also included.

The 4AIR program has 4 different rating levels for clients to chose from:

Requires a 100% carbon dioxide (CO2) offset.
Requires a 300% offset to comprehensively offset emissions.
Requires a 5% direct emission reduction.
Requires a direct contribution to the Aviation Climate Fund.

“4AIR’s rating system is designed specifically for aviation and makes compliance with industry goals and sustainability efforts simple,” said Kennedy Ricci, president of 4AIR.

Lindsey Grant, Manager, Phillips 66 Aviation said, “We’re giving pilots and FBOs the right tools to help them on their carbon journey. We look forward to working alongside the 4AIR team to bring sustainable offerings to our customers.”

Sustainable Aviation Fuel (SAF) emits 80% less carbon than jet fuel. However, SAF is not easy to make. So, it is difficult to make the switch.

Phillips 66 Aviation hopes to change that by converting its San Francisco Refinery into a place to produce SAF. They would like it to be one of the most significant SAF production facilities in the world.

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Carbon Capture Startup Verdox Gets Investment from Bill Gates

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Verdox, a carbon capture start-up in Massachusetts, has raised $80 million from investors, including Bill Gates-backed Breakthrough Energy Ventures.

Increased interest in Verdox is due to a recent breakthrough in their technology.

According to CEO Brian Baynes, it involves a critical material used to trap GHG emissions.

What is carbon capture?

Carbon capture is when carbon is separated from the atmosphere and stored deep within the earth’s surface.

Most technology uses a liquid that attracts carbon like a magnet.

This takes a lot of time, energy, and, quite frankly, money.

Many do not feel it is an efficient or cost-effective way to reach net-zero.

How is Verdox’s technology different?

Verdox has developed a new plastic that can pull carbon from the air when charged with electricity. This could cut the total energy usage for direct air capture by more than 70% – which is a big deal.

Verdox hopes this technology will enable millions of tons of carbon to be captured at $50 per/tonne or less.

It is important to note that Verdox’s technology is still only operable at the lab scale.

What are carbon credits?

Carbon credits are permits that companies can buy to emit more carbon than regulated.

Each carbon credit represents an environmental project that helps offset carbon in the atmosphere.

One carbon credit = one metric ton of carbon.

So, carbon credits are different than carbon capture because carbon capture takes carbon out of the atmosphere (while credits just offset it).

Carbon credits have reached an all-time high of $851 billion. Much of that growth is due to the EU’s Emissions Trading System, now trading over 90 Euros per ton.

Verdox is now competing with Canada’s Carbon Engineering Ltd. and Switzerland’s Climeworks AG – which have raised more than $100 million each.

U.S. based Global Thermostat is another competitor.

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Global Carbon Market Value Soars to $851 Billion in 2021

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According to analysts at Refinitiv, Global Carbon Markets grew 164% in 2021 – reaching $851 billion.

90% of the global value is due to the European Union’s Emissions Trading System (EU ETS) which opened in 2005. It is the world’s most established carbon market.

The EU ETS is currently worth 683 billion euros (approximately $769 billion).

Regional markets in North America have grown by 6% as well.

What are carbon markets?

Carbon markets are tools that are used to limit GHG emissions.

As countries cap emissions, companies can purchase carbon credits beyond the acceptable levels. These credits represent carbon offset through an environmental project (such as reforestation or renewable energy).

This allows companies to continue operating as they develop the technology needed to reduce their carbon output.

How do carbon markets differ from the voluntary carbon market (VCM)?

Simply put, voluntary carbon markets are just that – voluntary. So, individuals or organizations choose to purchase carbon credits to reduce their emissions (but are not regulated to do so).

Last year, the VCM was valued at $1 billion – up from just $300 million in 2018.

Per Refinitiv, “We expect interest in the VCM to keep growing, boosted by an increasing number of companies worldwide taking on carbon neutrality goals and other climate commitments that involve the use of carbon offsets.”

Why does the price of carbon keep increasing?

Because the EU’s goal is to reduce emissions by 55% by 2030, the price of carbon has doubled since the end of 2020.

Ingvild Sørhus, the lead-carbon analyst at Refinitiv, said, “More expensive emission permits hit coal power plants relatively harder than  gas plants, but because of the soaring gas prices in the second half of 2021, coal generation was still more profitable.”

Analysts expect the price will continue to rise.

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China’s Voluntary Carbon Market Set to Relaunch

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China is getting ready to relaunch the China Certified Emission Reduction (CCER) system, the voluntary carbon credit plan that was abandoned 5 years ago.

This coincided with the completion of the first compliance period for China’s new carbon trading market, the national Emissions Trading Scheme (ETS).

The CCER will play a crucial role in attaining carbon cost reductions and renewable energy goals as an important additional mechanism to the ETS.

CCER is projected to play a significant role in attaining carbon cost reductions and renewable energy goals.

CCER is carried out on a voluntary basis by firms and certified by the Chinese government. Projects such as renewable energy generation and waste-to-energy initiatives, as well as forestry projects, are set to benefit.

Carbon emitters must pay CCER owners, such as renewable energy generators, for their credits.

These voluntary CCER credits can be used to offset emissions by companies that are part of the compliance ETS.

The carbon credits can be used to offset China Emissions Allowances (CEAs) shortfalls or credits that companies participating in the national ETS can buy or trade under the program.

The offset rate of CCER credits is limited to 5% of emissions that exceed national ETS targets.

The earlier CCER plan was scrapped in 2017 due to low trading volume and a lack of standards in carbon audits.

Since China introduced its national ETS in July of last year, the concept of reinstating the CCER system has gained traction.

In a January interview, Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange, which manages the national ETS, stated that the government was actively planning for the relaunch of CCER in 2022.

Analyst Lin Yuan for Refinitiv believes the reintroduction of CCER will increase demand for offsets and that the supply volume of CCERs could be over 300 million tonnes.

Domestic and foreign institutions, companies, communities, and individuals are eligible to participate in transactions involving voluntary emissions reductions.

It is expected that in the future, Hong Kong-based and abroad enterprises will be able to participate in the CCER system by including CCERs that meet international criteria into their overall carbon-offsetting plan.

Last August, China’s carbon market saw its first cross-border transaction, with a Hong Kong-based organization and individual purchasing approximately 10,000 tonnes of CCERs from a solar power facility in the Kubuqi Desert.

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