ESG Investing with Carbon Credits – What Investors Need To Know

Reducing carbon emissions is one of the most critical issues facing individuals and governments today. This is evident through a focus on ESG investing while governments create a cost through carbon credits to account for climate impact.

ESG stands for Environmental, Social and Governance. Within investing, it refers to investors considering these factors in companies they invest in.

Many ESG investors place significant focus on the environmental component and opt to get rid of environmental polluters from their portfolio.

Instead, they choose to invest in businesses working to cut dependence on fossil fuels.

In the meantime, governments limit carbon emissions of firms through carbon credits. But these credits can also be used as a source of revenue.

So, what are carbon credits and how do they become the new currency of ESG investing to meet environmental regulation?

This article will answer this question by explaining ESG investing and what role carbon credits have in this investment realm.

The Changing Environment of ESG Investing

It’s now widely recognized that non-financial factors can inform investors about business performance. And so, there’s growing interest in the significance of ESG topics in the investment world.

Also, businesses today are impacted by climate change, disrupting operations and supply chains. More notably, climate change also affects markets and demands.

As a result, markets are adapting to climate change and every business has to respond to it. Otherwise, it becomes both an operational and commercial risk.

So investors have a role to play in ensuring that companies manage climate risks responsibly.

This change is impacting investment strategy as investors shift from risk aware investments to opportunity aware investments.

More and more of them are looking to invest in sectors that benefit from climate change. And most notably, the majority of them show an interest in putting their money in sustainability-focused strategies.

The sustainability boom resulted in trillions of dollars through ESG funds.

Businesses can leverage this changing trend by showing a robust climate strategy through their ESG reports.

This change is quite new, but it becomes mainstream so quickly. This could be due to evidence that climate-aware investing strategies like ESG produce good results.

The evolution of ESG mirrors the change in how people perceive climate change, too.

In recent years, ESG policies moved from a simple principle of doing no harm to having a positive impact on the company’s bottom line.

Add to this the increasing need for transparent and robust ESG reporting. This is driven by regulation such as the case of the Green Deal as the EU’s reporting directive.

Firms that adhere to reporting requirements tend to gain good sustainability ratings. In turn, their investment results tend to be also higher than companies with weak reporting standards and poor ratings.

But policy aside, stakeholders are also putting greater pressure on companies to get more information on their ESG performance.

This further prompts firms to have more robust ESG strategies. They communicate these to their employees, investors, and customers.

Finally, securing sustainable funding is another key factor that drives companies to differentiate themselves via ESG investing.

Investors are now favoring ESG performance as a proxy for good management.

In fact, the big four firms – PwC, Deloitte, EY, and KPMG – hope that ESG is key to rebuilding consumer trust after many scandals and multi-million-dollar payouts.

Hence, companies that can demonstrate strength on ESG may secure better financial support and results.

And this changing landscape in ESG investing will increase as ESG becomes more integral to businesses. But what role do carbon credits have in the space of ESG investing?

What Do Carbon Credits Mean in ESG Investing

The Carbon Credit Standard

In the U.S., the coin of the realm is US dollars, in the EU, it’s euro. In the ESG world, it’s the carbon credit – a unit representing 1 tonne of CO2 removed/avoided.

A carbon credit is a permit that allows its owner to emit a certain amount of CO2 or other GHG. In the voluntary carbon markets, carbon credits are known as carbon offsets.

Carbon offsets occupy a relatively small space on the ESG realm. But as more countries and companies pledge to reach net zero, carbon credits are gaining more attention in ESG investing to hasten carbon reductions.

In fact, growing demand has fueled record-high prices in some markets.

But why should investors care? Because the carbon credit market is growing exponentially.

Carbon credits grew by a whopping 164% in 2021 with a notional value of $851 billion. And market projections are even more eye-popping.

Research firms forecast ranges that the market will grow as much as 30X more by 2030 and 100X more by 2050.

If these estimates are correct, the carbon credit market will be equal in size to the NASDAQ stock market by 2030.

According to the independent firm Katusa Research, the total carbon market (compliance and voluntary) could be as big as the oil market…

Source: Katusa Research

Entities have been relying on carbon credits to avoid or reduce their emissions.

Companies regulated under the “cap-and-trade” program (compliance carbon market) have no choice but to buy credits if they go beyond their emissions limit (cap).

For those who’re offsetting their emissions voluntarily, they can buy carbon credits from various projects. The most popular ones are nature-based projects like afforestation and tree-planting.

Markets and rules are beginning to blend

Carbon credits are still evolving as a distinct asset class. But carbon markets are starting to take better form as regulators and industry groups help codify rules around them.

In fact, various initiatives and regulations emerge to guide ESG investors in their investment decisions. The same goes for carbon standards and verification bodies.

They’re becoming more stringent to ensure the quality and integrity of the credits buyers and investors pick.

Guidelines and growing investor awareness are helping carbon credits gain traction.

In the US, proposed SEC disclosure rules around climate change impacts mandates carbon credits accounting and reporting. This is a big step to promote transparency in the space.

Investors more aware of credits role in ESG

As the emphasis on corporate climate pledges grows, investors’ interest in carbon credits also intensifies.

Activism around ESG will grow even more in the next few years as the world fights global warming.

In the “E” factor, more investors are now becoming aware of how carbon credits can directly impact a company’s cash flow, reputation, and other standing.

So, when reports showed that 100 global companies are accountable for 71% of total emissions, ESG investors have greater reason to push for carbon reduction measures.

As such, we can expect that trading carbon offsets to rise even more.

Here are the reasons why carbon credits matter a lot in ESG investing.

Evaluating carbon credits: Some key factors to consider

Projects that produce carbon credits vary. So, ESG investors have to assess them well to know which ones to choose.

Local stakeholders will more likely favor carbon reduction projects with local co-benefits like job creation and biodiversity. However, these credits tend to cost more but they carry less risk and may offer more permanence.

There are certain metrics to consider to select quality offsets. These include additionality, permanence, measurability, and scalability.

It may take some time before carbon credits to become key asset allocation options for the average investor. But more transparency, better pricing, and market standards gave the offsets some spotlight they deserve.

When implemented correctly, offsets play an important supporting role in the fight against global warming. This is especially true when reducing carbon emissions is a battle of increments, not an overnight fix.

We believe they’re worth actively exploring within a broader ESG-investing context. Their global abundance can especially encourage flows of capital to stakeholders in developing countries and help facilitate broader attainment of SDGs.

How Companies Can Benefit from ESG Investing with Carbon Credits?

The strong emphasis on the “E” factor in ESG investing has never been greater. The world has been experiencing extreme weather conditions such as floods, drought, and heat waves.

Climate change has also been impacting every sector of the economy. Every business has to bear the environmental impacts associated with their operations.

So to limit the speed of global warming, companies are pledging to cut down their carbon emissions. More firms commit to reaching net zero emissions by 2050 or earlier.

This is where leveraging carbon credits as the currency of ESG investing puts a company at an advantaged position.

By investing in projects that reduce GHG emissions or avoiding reliance on fossil fuels, carbon credits are created. Firms with excess credits can sell them to other companies that fail to meet their carbon reduction targets.

This will bring in more measurable incentive for companies to make contributions in fighting climate change.

And more remarkably, ESG investors prefer to place their money on greener business models.

Carbon credits represent a certain amount of GHG emissions reduced or avoided.

That means where carbon credits are linked to, investors are also more likely to follow with their money. Popular examples include using renewables, adopting cleaner technologies, and energy-efficient investments.

Carbon credits are now commonly traded and they’re not only by businesses. Some investors are trading carbon credits in a similar way to physical commodities.

But ESG investors need to ensure that carbon credits are indeed reducing emissions as they claim to be. Once this is verified, companies will realize that ESG investing with carbon credits is all worth it.

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Crypto Carbon Credits Exchange 1GCX Closes $2B Record Deal

Crypto carbon credits exchange 1GCX partnered with T3 Trading, raising $2 billion in assets under management (AUM) and setting up a $100 million liquidity pool to ease carbon credit transactions.

1GCX is a digital asset exchange offering cryptocurrency, commodity, and carbon offset trading.

T3 Trading is a proprietary trading firm that invests in cryptocurrency and carbon offsets.

With their partnership, carbon credits or carbon offsets meet crypto. It will marry digital assets and carbon credits to capitalize on the growing interest of investors in both sectors.

Promoting Liquidity on Carbon Credit Exchanges

With ~$2 billion in AUM and $100 million in liquidity dedicated to carbon credits, the T3 fund seeks to improve liquidity on the 1GCX carbon credits exchange.

The funding will help pump revenue for the growing carbon credits market. It will also ramp up 1GCX aim to establish a standard for buying and selling carbon credits.

As for the exchange’s President and COO, Michael Wilson, he stated that:

“Carbon credits have the potential to scale to a multi-trillion dollar market over the next several years, but the market opportunity is still relatively untapped as the sector continues to mature…”

He further said that with T3 Research as its third-party liquidity provider, 1GCX will drive price discovery and trade volume in the voluntary carbon market.

More importantly, the platform will help normalize the supply and demand for carbon credits on chain.

The raised fund for tokenized carbon credits made the deal possible. It’s also driven by the rising interest of institutional investors such as pension plans in the securities.

But there are a couple of risks associated with carbon credits as an asset class.

One is the volatility of this financial instrument. There are also criticisms on how good those credits are in abating global warming.

Add to this another issue on liquidity: carbon credits are illiquid products as digital assets.

This is where 1GCX comes in to offer a solution – tokenizing carbon credits for liquidity.

Marrying Carbon Credits and Cryptocurrencies

Both 1GCX and T3 Trading have tried some related trading pairs marrying equity commodities and cryptocurrencies.

Their main idea is to attract institutions into both markets, including those who are familiar with carbon assets but new to digital assets. They will do this by creating a series of liquidity pools to trim down market transactions.

Both firms believe there’s a strong case for tokenization of carbon credits to build the right marketplace. 

The partnership will also provide investors on the 1GCX platform with these new offerings:

Live spot trading of carbon offsets
Aiding in the development of automatic over-the-counter quoting

This first-of-its-kind trading platform will improve the transparency of price discovery and real-world utility (fighting climate change) of credits. These are the two difficulties that discourage institutional investors from entering the space.

1GCX tokenizing carbon credits aims to help investors deal with liquidity concerns and murky prices.

1GCX is also in its early stages of developing its own blockchain. The system features a token with elements of Proof-of-Stake (PoS) consensus mechanisms.

This staking method is often featured in private, centralized blockchains as opposed to public permissionless systems.

Recently, Ethereum has shifted from an energy-intensive Proof-of-Work system to PoS. The crypto firm claimed that PoS reduced their energy use and carbon footprint by a whopping 99.99%.

Traders using 1GCX have access to ether and other digital assets, such as bitcoin, AVAX and SOL. Its $2 billion deal with T3 Trading, which is the largest so far, has this main goal:

“Creating a digital assets-based market inspired by the green web mixed with the internet of energy.”

In their quest to reach net zero emissions, companies are in dire need for carbon credits. And their growing demand will explode more as the world must decarbonize by 2050.

By adding crypto to the mix of solutions, 1GCX’s new carbon credit trading platform seeks to boost transparency, fair pricing, and liquidity. All the while preventing scams.

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Ethereum’s Stealth Move to Wipe Out Its Carbon Footprint

Ethereum won the spotlight with the Merge, which cut the crypto’s energy use and carbon footprint more than expected by 99.99%.

The second-largest cryptocurrency – Ethereum – recently eliminated its energy consumption overnight by shifting to a new “proof of stake” blockchain system called the Merge.

Designed to drastically cut down the network’s overall energy use, the upgrade has indeed done just that.

Initial estimates of energy consumption reduction is about 99.95%. But the Merge was able to go beyond that with 99.99% less energy use than estimated.

The software upgrade also cut Ether’s carbon footprint by the same figure.

Ethereum Energy Use Before Merge

The so-called “Merge” was executed as the energy intensity of cryptocurrency protocols such as Bitcoin and Ethereum is a hot issue in the U.S.

In fact, the White House published a report detailing the energy impacts of crypto mining operations.

Crypto miners, including Bitcoin and Ethereum, use an energy-intensive consensus mechanism called “proof of work” (PoW).

Proof of Work is estimated to account for about 0.9% to 1.7% of all U.S. electricity use in 2021.

Earlier, the PoW mechanism required miners to work with high-powered computers to solve complex puzzles to earn tokens or Ether.

Ethereum used to run on the same unsustainable PoW mechanism as Bitcoin. This consensus system is so inefficient as shown below.

Ethereum Footprint Before Merge

Prior to the Merge, a single Ethereum transaction consumed about 264 kWh of energy according to Digiconomist data.

That’s equal to the consumption of an average U.S. household over 9 days.

What’s worse is its carbon footprint; the same single Ethereum transaction emits 125 kgCO2.

This emission is the same as watching YouTube for 20,900 hours! That’s equal to over 2 years of watching.

At the same time, the total annual Ethereum footprint is almost 54 Mt CO2. That’s equal to the emissions of the entire country of Singapore.

In fact, if Bitcoin and Ethereum were one country, estimates put their combined power use at 12th in the world with over 300 TWh per year.

These footprints were slashed after Ethereum shifted to the “Proof of Stake”(PoS) crypto model of mining.

Ethereum Footprint After the Merge

PoS doesn’t need computers and offers a greener, more energy-efficient way for crypto users to deposit their Ether. They call this process “staking”.

With PoS after the merge, there’s no longer a network of energy-intensive mining devices that compete with each other to make the next block for the underlying blockchain. Rather, wealth plays a major role in the block creation process with PoS.

Instead of using expensive GPUs and high specs, users need only a basic laptop and a stable internet connection.

The result is a massive reduction in power use by Ethereum.

To compare Ethereum’s PoS with PoW and Bitcoin’s power use, here’s a good illustration from the crypto firm itself.

Source: Ethereum blog

When it comes to emissions, the crypto’s footprint for a single transaction also dropped to only 0.01 kg CO2. That corresponds to only 2 hours of watching YouTube.

For its annual total carbon footprint, it went down from 54 Mt CO2 to only 0.01 Mt CO2.

Ethereum Footprint After Merge

For some industry experts like the ConsenSys, it remarked that the Ethereum’s Merge is the “biggest decarbonization in the history of tech”.

If the company seeks to get carbon credits from such a massive reduction in its emissions, that would be a huge amount. One carbon credit is equal to one ton of carbon avoided from getting emitted.

Also, carbon-backed crypto tokens have been gaining more traction recently.

And though other blockchain networks like Bitcoin, Ravencoin, and Ergo have seen growing hash rates after the Merge, their massive energy use is not tied to Ethereum anymore.

As such, Ethereum manages to shed the environmental issues that continue to shake the world of cryptocurrency.

One board member of the Enterprise Ethereum Alliance said about the new PoS mechanism:

“This upgrade is very significant and I believe it will allow enterprises to consider public Ethereum blockchain approaches where they did not prior.”

Looking ahead, many predicted a continued push to green crypto mining operations in the U.S. as the world races to net zero emissions.

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DeepMarkit Recaps Successful Climate Week 2022 in New York City

DeepMarkit Corp. provided a recap of its successful attendance of Climate Week in New York City from September 20-23, 2022. The company co-hosted Flowcarbon and dClimate’s Climate Week Blockchain Summit.

The Climate Week 2022 is the biggest climate event in the world that took place from September 19-25 across NYC. Its partners and sponsors included the Climate Group, Estee Lauder Companies, Johnson and Johnson, Google and FedEx, and more.

The CW Blockchain Summit was a one-day event featuring exclusive leadership sessions and keynote speakers from blockchain and carbon offset industries.

Also, DeepMarkit attended the North America Climate Summit organized by the International Emissions Trading Association and International Carbon Action Partnership.

During Climate Week 2022, DeepMarkit established itself as a market leader in
carbon offset-based NFTs by:

Sourcing more carbon offsets;
Offering insights into the world of on-chain offsets and how they are expected to impact the industry in the future;
Continuing to build relationships with some of the industry’s leading project developers and marketplaces;
Attending industry leading round-table discussions on the future of the offset market;
Strategizing with other technology organizations to enhance the DeepMarkit NFT experience; and
Increasing understanding of how to uniquely position DeepMarkit’s market offering.

Read full news release here.

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Iron and Steel Industry Will Buy $250B Carbon Credits for Net Zero

Bringing the iron and steel industry to net zero by 2050 requires $1.4 trillion of investment, $250 billion of which is for carbon credits, according to Wood Mackenzie.

Currently, iron and steel production together release a total of 3.4 billion tonnes of carbon each year. This represents 7% of total global emissions.

To meet the global demand for steel by 2050, the industry must produce 2.2 billion tonnes of steel.

The industry emits a lot of carbon and is one of the most difficult one to decarbonize.

Wood Mackenzie analyzed in its latest report, “Pedal to the Metal: Iron and steel’s $1.4 trillion shot at decarbonisation”, the what, when, and how of reaching net zero pathway.

Remarking on the report, lead author Malan Wu said that:

“Decarbonising the steel industry is a big task. To meet Wood Mackenzie’s 1.5°C accelerated energy transition scenario by 2050, steel emissions must reduce by 90% from current levels. There is an urgent need to act now to decarbonise the iron and steel sectors. Business as usual is no longer sustainable.”

Footing the Bill to Reach Net Zero

The 1.5°C pathway requires 2050 steel emissions to decline by over 90% from current levels. But the analysis assumes only a 33% decline in steel emissions from current levels.

The report shows the urgency to act now to bring the industry to net zero emissions. It also presents an investment opportunity for the operators as the sector decarbonizes.

The largest factor for the industry to be successful in its climate goal is to switch to Electric Arc Furnaces (EAFs).

But that’s only one part of the $1.4 trillion investment opportunity for industry players.

Other measures needed include:

Exploring new high-grade iron ore mines
Greening current steelmaking routes,
Adopting new technologies (EAF, DRI, etc.)
Developing a hydrogen ecosystem for steel, and
Buying carbon credits

Mining companies will have to cut their operational emissions and invest in new green steel technologies. These include high-grade mines and DR pellet capacities.

Decarbonizing the industry also calls for shifting to clean energy use. This is equal to about 2,000 GW of renewable energy generation capacity (that’s ⅔ of current global capacity).

Now add developing the hydrogen technology to this…

The net zero goal needs about 50 million tonnes of green hydrogen per year.

Here’s the breakdown of the trillion investment.

Carbon Credits (Offsets) are a Must for Iron and Steel

As upgrades and green technologies are still not enough, the iron and steel industry needs to buy up to $250 billion in carbon offsets, also called carbon credits. They’re necessary to tackle emissions that can’t yet be reduced.

Carbon credits represent certain amounts of carbon reduced or removed from the air, either through nature or technology.

In the case of iron and steel, CCUS (Carbon Capture, Use, and Storage) is a technological option to curb emissions.

The present supply of CCUS is limited and is in its nascent stage. The current global CCUS pipeline is 14x the amount currently being captured of 63 million tonnes per year (Mtpa).

But emission reduction efforts from other industries are also calling for this measure.

The industry must capture and store 470 Mt of carbon to reach its emission target in 2050. And that calls for a $200 – $250 billion investment in CCUS.

Forged Blueprint: What Miners and Steelmakers Can Do

SO, what should iron ore miners and steelmakers do to solve the industry’s net zero equation?

The following images provide some clarity…

Achieving net zero will entail a revolutionary transformation of iron and steel, and its value chain. But a collaboration among key industry players will help drive green action.

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From Wild Seaweed to High-Value Products and Carbon Credits

A wave of seaweed is covering the Caribbean coasts, killing wildlife while harming humans and tourism, but an innovative company is turning it into a revenue stream including carbon credits.

More than 24 million tonnes of sargassum blanketed the Atlantic in June, up by 20% from 18.8 million tonnes in May. This is a new historical record according to the report by the University of South Florida’s Optical Oceanography Lab.

The same amount of the “golden tide” was seen in July. Its concentration became so heavy in some parts of the eastern Caribbean shores that the island of Guadeloupe issued a health alert in late July.

Scientists said more research is necessary to know why sargassum levels in the Caribbean are reaching new highs. But the UN’s Caribbean Environment Program suggested that there are three major culprits for it:

Rising water temperatures due to climate change,
Fertilizers full of nitrogen running off from farms, and
Sewage waste.

Seaweeds are, in fact, one of the greatest carbon sinks that capture and sequester carbon. But large masses of them can pose risks to human health and have a severe environmental impact.

Sargassum, in particular, sequesters carbon but it also releases it during decay in the form of a more potent and dangerous GHG – methane.

Carbonwave saw a business opportunity in this. The startup turns seaweed into sustainable, high-value, and innovative products. At the same time, producing carbon credits.

Turning Seaweeds into Carbon Credits

Sargassum is a wild seaweed that provides key habitat for wildlife in the ocean such as sea turtles, fish, crabs, and more.

But with its ability to double in size every 11 days, sargassum has the potential to become a monster. It chokes coral reefs and fish and riddles beaches with a smell of rotten organic material as it decays.

This sea of brown algae also alters water temperatures and pH balance while invisibly releasing CO2 and methane back into the atmosphere.

About 20 – 30 million tonnes of sargassum are piling up on the Caribbean’s coastlines.

This hit the tourism industry very hard as hotels and beaches affected by the influx were closed.

Local measures were taken to harvest the algae pestering the region.

But after removal, the seaweed often ends up in landfills. This further prompts issues with decaying sargassum and its effects on water runoff and pollution.

Fortunately, new initiatives are exploring ways to monetize sargassum harvesting via processing.

And while some decided to bury the algae deep down into the oceans, Carbonwave turns this seaweed into a solution generating carbon credits.

Carbonwave’s patented sargassum processing

The Puerto Rico-based startup began collecting sargassum as raw materials for their patented processing technology that turns it into high-value, carbon-neutral products.

Jason Cole, Executive VP of Innovations, said that:

“Our goal is to manage the Sargassum bloom responsibly, and to avoid the environmental impacts it has had in the Caribbean.”

Instead of rotting away, the firm makes Sargassum into various products including the following:

bio-stimulants for cultivation and ecosystem restoration,
emulsifiers for pharmaceuticals and cosmetics, and
bio-leathers for fashion, apparel, and interior design.

The company’s key advantage is the ability of its seaweed products to have the lowest carbon footprint on the market.

Not to mention that instead of paying for the raw materials, they’re paid by the hotels to collect sargassum in most cases. Plus, it’s basking on energy and a cost-efficient patented production process.

Carbonwave believes that their market is poised to grow due to strong demand for sustainable, plant-based inputs. Here are the firm’s major growth drivers:

Carbon credits from sargassum

Alongside other major products, the startup expects to amass revenue from carbon credits this year up to 2025. The market size for this product is seen to grow by around 70% (from 2020 – 2025) as per the firm’s projection.

A carbon credit represents one tonne of CO2, or its equivalent, avoided or removed from the air.

The rotting sargassum on the shore releases methane, which is 34x worse than CO2 for causing global warming.

By turning the rotted seaweed into sustainable products, Carbonwave helps reduce and offset emissions from fossil fuels.

Also, as the company makes products that replace fossil fuels, it’s further cutting carbon emissions. And this qualifies them more to generate a corresponding amount of carbon credits once measured and verified.

The firm can then sell the credits to those who seek to offset their emissions.

Other initiatives include growing seaweed in the desert and making floating offshore farms to capture carbon and earn credits.

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Ammonia: Carbon-Free Fuel for the Shipping Industry

Converting ammonia into hydrogen is an emission-free fuel to help decarbonize the heavy-duty and shipping transportation industry.

The transportation industry is the biggest polluter in the U.S. In 2020, it accounted for the largest share at 27% of all the country’s GHG emissions according to the US Environmental Protection Agency.

Due to the significant amount of transportation emissions, actions are taken to reduce the sector’s pollution. This includes the notoriously dirty shipping industry.

The recently introduced Clean Shipping Act of 2022 aims to rid of emissions in ports in 2030 as the soonest. The law also restricts anchoring of ships in U.S. ports that don’t follow the zero emissions guidelines.

Ammonia Is Key to Hydrogen Rollout

As per the International Maritime Organization (IMO), ships with 5,000 gross tonnage and above are responsible for 85% of net GHG emissions from the shipping industry.

The industry currently emits about 1 billion tons of carbon annually. But with increased regulation, carbon offsets, and innovative technology, carbon emissions can be reduced.

IMO’s goal is to decrease that by 50% by 2050, and will implement a long-term strategy by 2023.

Given the size and weight of those ships, battery technology is not possible to use in them. Thus, hydrogen has become the leading alternative technology to power the massive vessels.

And to support the rollout of hydrogen, ammonia is a critical element.

Ammonia naturally doesn’t contain any carbon molecules. So it has a great potential to be a zero emission fuel. Plus, it can carry hydrogen effectively to a fuel cell.

Hydrogen, in itself, has some challenges when it comes to storage and transportation. This is where ammonia becomes helpful in aiding the deployment of hydrogen.

Why ammonia?

There’s already existing infrastructure for ammonia as it has been used in agriculture for long years as input. There’s a pipeline for ammonia production and storage, making it a potential renewable fuel.
Also, ammonia is a liquid which makes it easy to store. This reduces the cost and space requirements for its storage in comparison with hydrogen and LNG.
Lastly, ammonia even has a high volumetric energy density. It means the storage vessels can be light, fast, and travel long distances.

With all these qualities of ammonia, it’s suitable for decarbonizing the shipping industry. After all, there has been an agreement that the sector has to shift to new fuels and propulsion technologies to reach global emission goals. And ammonia is one option for that.

Based on the infographic below, zero carbon fuels will hit a 5% fuel mix by 2030. That means the industry has about 8 years remaining to achieve 60GW of electrolyzers to produce about 30 million tons of ammonia.

Meanwhile, it’s the size and operational profile of a ship that determines the applicability of carbon-free technologies.

For instance, the most vital performance metric for huge sea vessels like cargo ships is often the energy density requirements for fuels and motor systems. But for small and medium-sized ships like ferries, such factors are less strict.

Ammonia & Hydrogen for Clean Shipping

The clean hydrogen community expects that government financing programs will promote the technology and infrastructure in the U.S.

There are some major initiatives in place to advance the policy environment and drive the ambitious hydrogen agenda.

Take for example the case of putting up regional “Hydrogen Hubs”. These efforts make it easier for advancing clean hydrogen technology. These hubs can positively impact the country’s climate policy environment.

More collaboration, funding, and technology demonstrations can help push this fuel alternative for a clean shipping industry.

Ammonia is currently gaining traction as a solution for carrying hydrogen and decarbonizing shipping. In this case, it makes sense to include ammonia technology solutions in those efforts.

Ultimately, there must be a full transition away from fossil fuels to tackle global warming. And the shipping sector must do its part to cut down its emissions.

Clean hydrogen technology alongside ammonia may offer a suitable solution.

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How The First Carbon Negative Nation of Bhutan Did It

As the world’s richest and largest emitting countries are struggling to reduce emissions, Bhutan became the first carbon negative nation.

Fog-enshrouded temples nestled in mountainous terrains make Bhutan attractive to tourists.

But this tiny Asian nation in the Himalayas has an added bonus. It’s the first to achieve carbon negativity through its vast forests.

In fact, forests cover about 75% of the small nation’s land area.

Bhutan enshrined in its constitution a commitment to protect 60% of its territory as forest land.

This is key to its carbon neutrality as its forests sequester about 9 million tons of carbon each year while the country generates only 2 million tons in 2020.

What Does Carbon Negative Mean?

To be carbon negative means an entity’s actual emissions are outweighed by the footprint it offsets. Bhutan is the first country to achieve carbon negativity.

Not only is the small kingdom a net sink for carbon; it also offsets its emissions by exporting renewable energy. It exports a lot of hydroelectric energy to its neighbor India.

As mentioned, its vast forestland absorbs far way more carbon (9 million tons) than the country emits (2 million tons).

Beyond abating carbon via sequestration and renewables, Bhutan is also preserving biodiversity.

The country allows wildlife to travel between different preserved areas of nature.

GNH: Happiness over Money?

Other countries are having hard times to reduce emissions, even the richest ones.

So, many are wondering how did the small nation with less than 1 million population manage to become carbon negative.

The answer lies in a concept which Bhutan is famous for – GNH or Gross National Happiness. It’s one of the major governing principles of the country that prioritizes happiness over GDP.

It recognizes the importance of economic growth. But it also asserts that it must not undermine the nation’s pristine environment.

Thus, the country’s growth strategies are then suited to maximize happiness rather than GDP.

Bhutan’s GNH index has two important parts:

sustainable socio-economic development
environmental conservation

Bhutan’s happiness-based philosophy is a key factor in driving its green policies.

In official documents relating to climate change, the government places strong emphasis on the rights of future generations to environmental safety and the enjoyment of natural resources.

This approach makes intergenerational climate justice a key enabler in affecting climate action.

In summary, here are the ways how Bhutan became a carbon negative nation:

It bans log exports
Preserves 60% of the country’s total land area under forest cover for all time
Uses free hydroelectric power from its bountiful rivers rather than fossil fuels
Rural farmers are given free electricity

Add to this, Bhutan has also secured long-term funding for its projects with “Bhutan for Life”. It’s a fund developed in partnership with the World Wildlife Fund in 2017 to finance the nation’s sustainability and conservation efforts.

Besides preserving protected areas, the project also finances R&D in renewable energy. It will also encourage more sustainable living in local communities.

Such efforts reduce the country’s negative impact on the environment while allowing it to capture more carbon than it emits.

Yet, it’s important to note that Bhutan is a small, non-industrialized nation. This could mean that its approach to curb emissions may not be suitable for larger countries like the U.S.

Still, its accomplishments do show what’s possible when environmental sustainability is at the center of the political agenda.

What does the Bhutan experience tell us?

Bhutan achieved what all participating countries of the Paris Agreement hope to achieve by 2050.

The fact that it reached net zero status and continues to draft bigger plans to remain so is something to which all countries may aspire.

The constitution and the culture of Bhutan go together to make net zero a reality. It protects its major carbon sink: the forests.

While the exact Bhutanese model for reducing emissions may be hard to apply to larger industrialized countries, the principle of prioritizing environmental sustainability as part of promoting happiness may be a good start.

But there’s no guarantee that other nations can catch up in time to prevent Bhutan from suffering from the adverse effects of climate change.

As the former Bhutanese prime minister Tshering Tobgay once said,

“After all, we’re here to dream together, to work together, to fight climate change together, to protect our planet together… Because the reality is we are in it together.”

Bhutan may be the first carbon negative nation but many others could also follow.

The post How The First Carbon Negative Nation of Bhutan Did It appeared first on Carbon Credits.

Google’s Eco-Friendly Routing Comes to Europe

Google expanded its eco-friendly routing on its Google Maps to 40 countries across Europe.

With Google Map’s eco-friendly routing, drivers can choose a route that’s optimized for lower fuel consumption by showing the most fuel-efficient routes. This helps users save money on fuel and cut carbon emissions, too.

The ability to reduce emissions is a great concern among the EU states. That’s because road transportation is the largest source of emissions throughout Europe.

The internet giant’s eco-friendly routing roll out appears to be a timely intervention.

Google’s Eco-friendly Route Feature

In addition to showing the fastest route, Google Maps can now also display the one that’s most fuel efficient across European nations. These include France, Ireland, Poland, Spain, and the UK, while it was introduced in Germany last month.

Users can see the eco-friendly route marked with a leaf label.

The feature was originally launched in the US and Canada last year. It’s part of what Google calls its sustainability initiatives.

The company claimed that after rolling-out eco-friendly routes in the U.S. and Canada, it has saved carbon emissions equivalent to 100,000 cars. That equals to removing over half a million metric tonnes of emissions.

This is exactly the reason behind Google’s eco-friendly routing feature. It will highlight routes that use less energy if they have a similar ETA to other alternate routes.

As shown in the image, the user can choose among the driving options to prefer fuel-efficient routes.

How to select eco-friendly routes

The user can easily make that choice with only a few taps. Here’s the quick steps to follow:

Tap on profile on Google Maps
Go to Settings > Navigation Settings
Scroll down to route options
Tap and select “Prefer fuel-efficient routes” to turn on eco-friendly routing

What’s even more powerful is that users are given various options based on what type of fuel their cars run on.

For instance, diesel engines are usually more efficient at higher speeds than petrol or gas. While hybrid and electric vehicles perform better in stop-and-go traffic.

This is why Google will allow drivers to use its eco-friendly routing across Europe, Canada, and the US in the coming weeks based on their engine type.

Petrol or gas
Electric vehicle (EV)

Doing so will give them the best route and most accurate fuel efficiency estimates.

According to the tech giant, this technology is possible with insights from the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and data from the European Environment Agency.

The company also stated that:

“By pairing this information with Google Maps driving trends, we were able to develop advanced machine learning models trained on the most popular engine types in a given region.”

Google is going green

In recent years, Google has been encouraging people to consider more eco-friendly navigation options with new features in Google Maps.

For example, the company first introduced EV charging station information to its app in 2018.

Two years later, Google Flights also allowed flyers to compare CO2 emissions and overall price. The firm also rolled out features for bike navigation with details like the amount of road traffic along the route.

Here’s a list of how Google Maps can help users make sustainable choices.

EV charging station: this feature allows users to see charging stations nearby with helpful information like types of ports and charging speeds. It’s even possible to know if there’s an available charger in a station to save waiting time.

Cycling route: Google Maps also provides cycling route information such as car traffic, steep hills, and even stairs on the route. The app further gives detail on bike and scooter shares in 500+ cities across Europe.

Directions for pedestrians: Google Maps offers turn-by-turn directions for pedestrians. It also has a Live View option that displays arrows and directions overlaid on the map. Pedestrians can also preview their walking route with the Street view feature.

Public transport navigation: In Directions on the app, there’s a transit icon that gives directions to destinations by bus, train, subway, and even ferry. The feature also provides details such as how crowded the ride will be. Plus, wheelchair-accessible routes are available.

All these features are a part of Google’s commitment to empowering 1 billion people through its products by the end of the year.

The post Google’s Eco-Friendly Routing Comes to Europe appeared first on Carbon Credits.