London Stock Exchange Finally Reveals its VCM Platform

The London Stock Exchange has finally launched its voluntary carbon market (VCM) rules for entities that seek to raise funds through its listings for climate solutions.

LSE’s announcement came after almost a year since it first revealed that it would create a new market solution to hasten the availability of financing for projects that support the transition to net zero emissions.

The aim it to bring more capital into emissions reduction projects. It will also help scale up the global VCM with the new rules for voluntary carbon credits, also called offsets.

The London Stock Exchange‘s VCM

According to LSE, it’s the first public stock exchange to create this kind of capital raising solution that supports the VCM’s expansion.

The Exchange’s CEO Julia Hoggett said the solution:

“… paves the way for capital at scale to be channeled into a range of climate change mitigation projects… while providing corporates and other investors with net zero commitments with the ability to access a diverse supply of high-quality carbon credits.”

The solution that the LSE VCM offers will enable an entity to use an initial public offering (IPO) to raise capital. The fund will then be put into climate mitigation projects, either nature-based or technology-led.

Moreover, it will also help corporations that want to offset unavoidable emissions as part of their net zero journeys. It will also expose investors to a growing asset class of carbon credits.

There is a growing demand for carbon credits as more businesses vow to reach net zero by 2050. To meet this demand, supply must scale effectively.

And thus, the London Stock Exchange VCM designation was created to support the scaling of the VCMs globally.

What is the LSE VCM designation?

The designation may be applied to qualifying Funds or Operating Companies that are admitted to the Main Market or AIM. They must also invest in climate change mitigation projects that yield carbon credits.

The applicants may invest in those projects entirely or as part of a broader portfolio of climate-aligned assets.

Apart from the existing regulatory requirements, applicants also have to disclose detailed information for the carbon credit projects. This includes the following details:

the qualifying bodies whose standards will apply to the projects,
project types,
expected carbon credit yield, and
whether the projects are to meet any of the UN Sustainable Development Goals.

Finally, the VCM designation does not represent a trading venue for carbon credits.

Rather, it’s for the applicant to decide whether to trade carbon credits on a trading platform.

How Does the LSE’s VCM work?

The London Stock Exchange VCM follows the general process of the existing VCMs.

The market platform is available for entities that meet the criteria set out in Schedule 8 of the Admission and Disclosure Standards.

Here are the specific steps that interested entities will go through when dealing with the LSE VCM.

LSE intends to facilitate a deep, liquid venue for the listing of carbon funds. These funds will provide the VCM with a clear price signal and confidence that money can move in and out of investments as needs change.

Upon successful implementation, the platform will enable the development of funds focused on specific project types supported by a new flow of investment from corporates.

This design allows asset managers and owners to have a clearer picture of how effective climate action is within their portfolio companies.

The publication of the final rules comes about a year after LSE announced its intention to form a carbon markets solution at COP26 last year.

So far, it’s the latest among the efforts from around the globe as investors and regulators aim to have robust standards for the fast-growing carbon markets.

Better yet, it’s a response to grave concerns that some projects fail to deliver their promised emissions reductions. By promoting transparency through its admission and disclosure rules, the LSE VCM seeks to fix this issue.

This will build the confidence and liquidity needed for institutional investors to join in scaling up the market.

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Is Green Hydrogen the Energy of the future?

The global energy market has become even more unstable and uncertain. Add to this the challenges caused by climate change. To meet future demand, sustainable and affordable energy supplies are a must.

Recently, hydrogen is leading the debate on clean energy transitions. It has been present at industrial scale worldwide, offering a lot of uses but more so in powering things around us.

In the U.S., hydrogen is used by industry for refining petroleum, treating metals, making fertilizers, as well as processing foods.

Petroleum refineries use it to lower the sulfur content of fuels. NASA has also been using liquid hydrogen since the 1950s as a rocket fuel to explore outer space.

This warrants the question: is green hydrogen the energy of the future?

This article will answer the question by discussing hydrogen and its uses, ways of producing it, its different types, and how to make green hydrogen affordable.

Using Hydrogen to Power Things

Hydrogen (H2) is used in a variety of ways to power things up.

Hydrogen fuel cells produce electricity. It reacts with oxygen across an electrochemical cell similar to how a battery works to generate electricity.

But this also produces small amounts of heat and water.

Hydrogen fuel cells are available for various applications.

The small ones can power laptops and cell phones while the large ones can supply power to electric grids, provide emergency power in buildings, and supply electricity to off-grid places.

Burning hydrogen as a power plant fuel is also gaining traction in the U.S. Some plants decided to run on a natural gas-hydrogen fuel mixture in combustion gas turbines.

Examples are the Long Ridge Energy Generation Project in Ohio and the Intermountain Power Agency in Utah.

Finally, there’s also a growing interest in hydrogen use to run vessels. The Energy Policy Act of 1992 considers it an alternative transportation fuel because of its ability to power fuel cells in zero-emission vessels.

A fuel cell can be 2 – 3 times more efficient than an internal combustion engine running on gasoline. Plus, hydrogen can also fuel internal combustion engines.

Hydrogen can power cars, supply electricity, and heat homes.

Once produced, H2 generates power in a fuel cell and this emits only water and warm air. Thus, it holds promise for growth in the energy sector.

The IEA calculates that hydrogen demand has tripled since the 1970s and projects its continued growth. The volume grew to ~70 million tonnes in 2018 – an increase of 300%.

Such growing demand is driven both by the need for ammonia and refining activities.

Producing hydrogen is done using different processes and we’re going to explain the three popular ones.

3 Ways to Produce Hydrogen

The Fischer-Tropsch Process:

The commonly used method in producing hydrogen today is the Fischer-Tropsch (FT) process. Most hydrogen produced in the U.S. (95%) is made this way.

This process converts a mixture of gasses (syngas) into liquid hydrocarbons using a catalyst at the temperature range of 150°C – 300°C.

In a typical FT application, coal, natural gas, or biomass produces carbon monoxide and hydrogen – the feedstock for FT. This process step is known as “gasification”.

Under the step called the “water-gas shift reaction”, carbon monoxide reacts with steam through a catalyst. This, in turn, produces CO2 and more H2.

In the last process known as “pressure-swing adsorption”, impurities like CO2 are removed from the gas stream. This then leaves only pure hydrogen.

The FT process is endothermic, which means heat is essential to enable the necessary reaction.

The Haber-Bosch Process:

The Haber-Bosch process is also called the Haber ammonia process. It combines nitrogen (N) from the air with hydrogen from natural gas to make ammonia.

The process works under extremely high pressures and moderately high temperatures to force a chemical reaction.

It also uses a catalyst mostly made of iron with a temperature of over 400°C and a pressure of around 200 atmospheres to fix N and H2 together.

The elements then move out of the catalyst and into industrial reactors where they’re eventually converted into ammonia.

But hydrogen can be obtained onsite through methane steam reforming in combination with the water-gas shift reaction. This step is the same as the FT process, but the input is not carbon but nitrogen.

Both the FT and Haber-Bosch are catalytic processes. It means they require high-temperature and high-pressure reactors to produce H2.

While these two methods are proven technologies, they still emit planet-warming CO2. And that’s because most of the current hydrogen production (115 million tonnes) burns fossil fuels as seen in the chart below.

76% of the hydrogen comes from natural gas and 23% stems from coal. Only ~2% of global hydrogen production is from renewable sources.

This present production emits about 830 million tonnes of CO2 each year.

Thus, the need to shift to a sustainable input and production method is evident. This brings us to a modern, advanced way to produce low-carbon hydrogen or green hydrogen.

The Water Electrolysis Method:

When water is used as imput, hydrogen features both high efficiency in energy conversion and zero pollution as it emits only water as a byproduct.

That’s possible through the water electrolysis method. It’s a promising pathway to achieve efficiently and zero emission H2 production.

Unlike the FT and Haber-Bosch processes, water electrolysis doesn’t involve CO2.

Instead, it involves the decomposition of water (H2O) into its basic components – hydrogen (H2) and oxygen (O2) via passing electric current. Hence, it’s also referred to as the water-splitting electrolysis method.

Water is the ideal source as it only produces oxygen as a byproduct.

As shown in the figure above, solar energy is used for decomposing water. Then electrolysis converts the stored electrical energy into chemical energy through the catalyst.

The newly created chemical energy can then be used as fuel or transformed back into electricity when needed.

The hydrogen produced via water electrolysis using a renewable source is called green hydrogen, which is touted as the energy for the future.

But there are two other types of hydrogen, distinguished in color labels – blue and grey.

3 Types of Hydrogen: Grey, Blue, and Green

Though the produced H2 have the same molecules, the source of producing it varies.

And so, the different ‘labels’ of hydrogen represented by the three colors reflect the various ways of producing H2.

Processes that use fossil fuels, and thus emit CO2, without utilizing CCS (Carbon Capture & Storage) technology produce grey hydrogen. This type of H2 is the most common available today.

Both FT and Haber-Bosch processes produce grey hydrogen from natural gas like methane without using CCS. Steam methane reforming process is an example.

Under the grey hydrogen label are two other colors – brown (using brown coal or lignite) and black (using black coal).

On the other hand, blue hydrogen uses the same process as grey. However, the carbon emitted is captured and stored, making it an eco-friendly option.

But producing blue H2 comes with technical challenges and more costs to deploy CCS. There’s a need for a pipeline to transport the captured CO2 and store it underground.

What makes green hydrogen the most desirable choice is that it’s processed using a low carbon or renewable energy source. Examples are solar, wind, hydropower, and nuclear.

The water electrolysis method is a perfect example of a process that creates green H2.

In a gist, here’s how the three types of hydrogen differ in terms of input (feedstock) and byproduct, as well as their projected costs per kg of production.

Since the process and the byproduct of producing green hydrogen don’t emit CO2, it’s seen as the energy of the future for the world to hit net zero emissions.

That means doing away with fossil fuels or avoiding carbon-intensive processes. And green H2 promises both scenarios.

But the biggest challenge with this green hydrogen is the cost of scaling it up to make it affordable to produce.

Pathways toward Green Hydrogen

As projected in the chart above, shifting from grey to green H2 will not likely happen at scale before the 2030s.

The following chart also shows current projections of green hydrogen displacing the blue one.

The projections show an exponential growth for H2. What we can think out of this is that green hydrogen will take a central role in the future global energy mix.

While it’s technically feasible, cost-competitiveness of green H2 becomes a precondition for its scale up.

Cheap coal and natural gas are readily available. In fact, producing grey hydrogen can go as low as only US$1/kg for regions with low gas or coal prices such as North America, Russia, and the Middle East.

Estimates claim that’s likely the case until at least 2030. Beyond this period, stricter carbon pricing is necessary to promote the development of green H2.

According to a study, blue hydrogen can’t be cost competitive with natural gas without a carbon price. That is due to the efficiency loss in converting natural gas to hydrogen.

In the meantime, the cost of green hydrogen from water electrolysis is more expensive than both grey and blue.

Estimates show it to be in the range of US$2.5 – US$6/kg of H2.

That’s in the near-term but taking a long-term perspective towards 2050, innovations and scale-up can help close the gap in the costs of hydrogen.

For instance, the 10x increase in the average unit size of new electrolyzers used in water electrolysis is a sign of progress in scaling up this method.

Estimates show that the cost of green H2 made through water electrolysis will fall below the cost of blue H2 by 2050.

More importantly, while capital expenditure (CAPEX) will decline, operation expenditure (OPEX) such as fuel is the biggest chunk of producing green hydrogen.

Fuel accounts for about 45% – 75% of the production costs.

And the availability of renewable energy sources affects fuel cost, which is the limiting factor right now.

But the decreasing costs for solar and wind generation may result in low-cost supply for green H2. Technology improvements also boost efficiency of electrolyzers.

Plus, as investments in these renewables continue to grow, so does the chance for a lower fuel cost for making green H2.

All these increase the commercial viability of green hydrogen production.

While these pathways are crucial for making green hydrogen, the grey and blue hydrogen productions do still have an important role to play.

They can help develop a global supply chain that enables the sustainability and eventuality of green H2.

When it comes to the current flow of capital in the industry, there have been huge investments made into it.

Investments to Scale Up Green H2 Production

Fulfilling the forecast that green hydrogen will be the energy of the future requires not just billions but trillions of dollars by 2050 – about $15 trillion. It means $800 billion of investments per year.

That’s a lot of money! But that’s not impossible given the amount of capital poured into the sector today.

Major oil companies have plans to make large-scale investments that would make green H2 a serious business.

For instance, India’s fastest-growing diversified business portfolio Adani and French oil major TotalEnergies partnered to invest more than $50 billion over the next 10 years to build a green H2 ecosystem.

An initial investment of $5 billion will develop 4 GW of wind and solar capacity. The energy from these sources will power electrolyzers.

Also, there’s another $36 billion investment in the Asian Renewable Energy Hub led by BP Plc. It’s a project that will build solar and wind farms in Western Australia.

The electricity produced will be used to split water molecules into H2 and O2, generating over a million tons of green H2 each year.

Other large oil firms will follow suit such as Shell. The oil giant decided to also invest in the sector and build Holland Hydrogen I that’s touted to be Europe’s biggest renewable hydrogen plant.

Green Hydrogen as the Energy of the Future

If the current projections of green hydrogen become a reality, it has the potential to be the key investment for the energy transition.

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The Algorithm that Keeps Track Circular Cities

Holcim and Bloomberg Media Studios together created the Circular Cities Barometer – a proprietary algorithm that measures how quick global cities transition from a linear to a circular economy.

In the world’s race to net zero carbon emissions, circular cities play a significant role.

Cities release over 60% of the world’s greenhouse gas emissions, according to the United Nations. But they are also important actors in fighting climate change by adopting a circular economy.

Compared with a linear economy that works around taking, making, and wasting, a circular economy applies the approach of reducing, reusing, and recycling.

The Circular Cities Barometer

To track which cities are circular, the Circular Cities Barometer is using a dozen circularity indicators under four categories.

Living, and

Circular Buildings

As per the International Energy Agency, buildings produce about 40% of annual global CO2 emissions. This is why building cities needs a circular approach to construction.

Under this category are three indicators, namely:

Energy Efficiency: The intensity of energy use of a city’s buildings.
Urban Temperature: How much higher a city’s temperatures are in comparison to surrounding areas.
Building Certification: How many of a city’s buildings are certified as green.

Circular Systems

The U.S. recycling industry processes ~130 million tons of recyclables each year, according to the Bureau of International Recycling. Metrics that monitor the circularity of a city’s systems include:

Renewable Energy Consumption: How much of a city’s energy is sourced from renewables.
Solid Waste Recycling: How much of a city’s solid waste is diverted from landfills and incineration.
Water Recycling: How much of a city’s wastewater is safely treated.

Circular Living

Right now, there are around 4 billion people living in cities. And according to the UN estimates, plus 2.5 billion people will live in urban areas by 2050, making it 6.5 billion in all.

Measuring the circularity of urban living takes into account the following indicators:

Green Space: How much of a city has trees and greenery.
Transport: How much of a city is within walking distance of public transit.
Sharing Economy: How many bike-, e-bike- and scooter-sharing programs exist in a city.

Circular Leadership

Over a thousand cities around the world committed to achieve net zero emissions by 2050. The following metrics measure leadership in the urban areas:

The Paris Agreement: Whether a city committed to measures to limit warming to 1.5℃.
Policies and Roadmaps: How many commitments and achievements a city has made in the transition to a circular economy.
Investment: A city’s financial incentives to adopt renewable energy for transport and buildings.

The City of Seattle

Seattle is the U.S. 15th largest city that outscored other metro areas within the Circular Cities Barometer. It earned the number 1 spot among the 25 cities with a score of 100.

That’s partly due to the fact that the city has been dealing with circularity much longer since 1988. The city has a lofty goal to achieve a 60% recycling rate.

While Seattle failed to hit that target within the set deadline, it was still able to go beyond the 50% national recycling rate required by the federal government in 2021.

Moreover, Washington State’s clean energy legislation in 2019 placed Seattle on a path toward 100% carbon neutrality by 2030. The bill also called for utility firms to get rid of coal energy or fossil fuels by 2025.

More remarkably, the city itself plans to reach net zero by 2050 and drive climate action toward these three major areas:

Net zero emission buildings,
Zero emission transportation, and
Clean energy economic opportunities

Seattle has a robust and popular public transportation system that contributes to its circularity. Add to this the city’s plan to have more green spaces that attract walking and reduce temperatures.

In fact, the King County where Seattle is the seat unveiled its aim to plant 3 million new trees by 2025 and conserve over 6,000 acres of forest. Part of the plan is acquiring new green spaces like the Glendale Forest

At a glance, here’s how the top 1 circular city performs under the Barometer scoring criteria.

The top 25 cities were from 100 cities worldwide, representing all global regions.

The data for each indicator was normalized in a way that make the comparison “apples to apples.” They are the basis to score each city from 0 to 100 for each of the 12 indicators, each category, and overall circularity.

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Macquarie Invests in Carbon Offset Consultancy EP Carbon

Macquarie invested in carbon offset consultancy EP Carbon to advance its voluntary carbon offsets business and support the latter’s expansion.

Macquarie’s “Global Carbon” division provides integrated carbon offsetting solutions across the entire offset lifecycle from generation to retirement. It also offers clients greater access to compliance and voluntary carbon credits.

The company also provides solutions that bring capital to carbon removal and reduction projects across the globe.

Macquarie’s investment in EP Carbon, a US-based carbon offset consultancy firm, seeks to drive climate solutions.

Supporting the Growth of Voluntary Carbon Credits

Macquarie’s investment comes as demand for carbon offset projects is seen to rise even more over the next several years. This is due to the growing corporate pledges to reach net zero emissions.

Companies consider carbon credits, also known as carbon offsets in the voluntary carbon market, as a bridge to reducing their absolute emissions.

Offsets also provide near-term solutions to emissions that are difficult to avoid.

And this is where EP Carbon comes in to deliver those solutions. The firm advises on the feasibility and design of nature-based carbon offset projects.

It also provides leading technical advice in the space including assistance with:

geospatial analysis,
project risk mitigation, and
capacity-building for project implementation.

EP Carbon focuses on forest conservation projects. These projects reduce carbon emissions from forests through sustainable conservation and restoration activities.

The company uses carbon markets to monetize the avoided emissions through healthy forests. Carbon credits fund their conservation efforts while providing a long-term source of revenue.

To date, EP Carbon has the following achievements:

Examples of carbon offset projects that EP Carbon support include:

The Rimba Raya Biodiversity Reserve Project in Indonesia
REDD+ Project for Caribbean Guatemala
Mutatá REDD+ Project in Colombia

Speaking for the partnership with Macquarie, Managing Director of EP Carbon Sam Frankel remarked that:

“EP Carbon is a passionate team of foresters, environmental scientists and international development professionals… We’re excited to combine our tested expertise building the highest quality nature-based carbon projects with Macquarie’s comprehensive market insight and global reach…”

He also said that the investment will help them serve more projects, and deliver more climate impact while improving livelihoods.

EP Carbon will use the proceeds from Macquarie’s investment to develop its technology suite further, hire and train carbon technical experts, and fund its new “Toll” service plan.

Driving Climate Solutions

How much Macquarie invests in EP Carbon is not disclosed. But the infusion of capital will help increase access to climate finance.

According to Erik Petersson, the Head of Macquarie’s Global Carbon:

“As a trusted name in the industry, our investment will also deepen the technical decarbonization expertise Macquarie provides its clients as the global energy transition accelerates…”

Macquarie has a proven track record in low-carbon global transition, developing innovative solutions in carbon and emissions.

Its newly formed Global Carbon business will focus on the growing voluntary and emerging carbon markets. It offers a full suite of market-leading investment, supply, and risk management solutions in carbon markets.

In line with companies’ climate commitments, Macquarie invests in carbon reduction and removal projects to help grow the market and drive more climate action.

Its global platform will help EP Carbon deliver a range of services to carbon offset projects around the world.

Macquarie Global Carbon and EP Carbon will work closely together to establish a pipeline of high-quality carbon offsets.

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World’s 1st Enhanced Rock Weathering Methodology Opens for Public Consultation

Finnish registry Puro.Earth opens a public consultation for the world’s first Enhanced Rock Weathering (ERW) methodology to generate carbon credits.

ERW processes have been considered for around 30 years to remove carbon dioxide. But they’re not part of the existing carbon crediting programs today.

By including ERW to the list of CO2 removal standards, it can enhance safety and profile of the carbon removal technologies.

It is for these reasons that introduces the ERW carbon crediting methodology and solicits helpful ideas.

The carbon credits produced by ERW projects are called carbon dioxide removal certificates (CORCs). They’re tradable digital asset representing a ton of carbon removed from the air.

What is Enhanced Rock Weathering?

Natural rock weathering is a process that takes several millennia to complete. And so ERW comes in to fast track the slow process during which CO2 reacts with rocks.

Enhanced Rock Weathering is a way of geochemically sequestering CO2 through natural rock chemical reactions. It aims to permanently remove CO2 from the atmosphere.

This carbon removal technique optimize weathering reactions via three ways:

Selecting the most reactive rock types,
Increasing the surface area of the rock, and
Applying rocks to optimal soils and climatic conditions.

In particular, silicate weathering starts with the reaction between water, CO2 and silicate rocks. CO2 is then removed from the air and converted to bicarbonates or carbonates.

Rocks used for ERW are from the Earth’s crust such as peridotite, basalt, feldspars, among many others. enhanced rock weathering protocol doesn’t specify or exclude rock types. But it sets limits on acceptable levels of the rock’s toxicity.

ERW as a Carbon Removal Method

ERW is one of the two main types of “carbon mineralization” – a process that turns CO2 into a solid mineral.

The other type involves injecting CO2 deep down the underground where it will be stored for good.

ERW involves finely grinding down rocks to boost their surface area and spreading them over soil. This results in permanent storage of CO2 for over 10,000 years.

As a carbon removal method, ERW offers the following key benefits:

Mineral resources – rock types and application surfaces – are abundant across the globe.
Rock mining, grinding, and spreading are established technologies.
ERW is among the most permanent forms of CO2 removal, with little risks of reversibility.
ERW offers several positive co-benefits in agriculture. For example, enhance agronomic productivity, reduce fertilizer use, and water retention.
Residual rocks from other processes such as mining are useful for ERW approaches to CO2 removal.

For example, a mining giant, BHP, considered enhancing CO2 capture of its nickel mine tailings. The company believes that doing so can offset its entire mining operations emissions.

But at that time, there’s no framework yet for carbon credits using ERW. Neither Verra nor any other 3rd party carbon standards has it in place.

Enter’s ERW framework…

The ERW process is applicable in terrestrial (soils), coastal and aquatic environments.

But the enhanced rock weathering methodology of considers only the terrestrial or land-based application. It doesn’t cover coastal and aquatic areas.

Under the registry’s Puro Standard, weathering in controlled conditions to produce carbonated material falls under its Carbonated Building Material methodology.’s ERW methodology is a product of a working group of scientific and carbon market experts. They oversee the registry’s CO2 removal protocols.

The team also ensures high carbon credit integrity and science-based principles for the standard.

Moreover, the group has set safeguards and quantification approaches aligned with the latest science. This is to ensure little to no environmental impact, which is vital to promoting ERW to the public.

More importantly, the protocol sets strict thresholds for toxicity levels of the rock in accordance with the EU regulation for inorganic soil improvers shown in the table.

It also requires ERW projects to perform laboratory tests of soil samples to create baselines. Here’s a diagram showing the general processes involved in an ERW project.

With all the safeguards in place, thinks that projects can be designed and implemented safely. The collected data will eventually help improve the framework.

The public consultation period will be open until October 17, 2022.

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Levi’s Vows to Reach Net Zero Emissions by 2050

Levi Strauss showed its commitment to achieve net zero emissions by 2050 under its new slate of sustainability goals detailed in its 2021 Sustainability report.

There are 16 sustainability goals that the giant apparel brand is focusing on under three major pillars – climate, consumption, and community.

They’re the major highlights of Levi’s recent sustainability report.

Commenting on the company’s goals, CEO and President Chip Bergh said that:

“These goals are crucial to the future of our business… By doubling down on sustainability and ESG reporting at Levi Strauss & Co., we are committed to being transparent about our progress on ESG matters and working to address the most pressing challenges of our time…”

A big part of Levi’s goals is to reduce its greenhouse gas emissions and achieve net zero by 2050.

Levi’s Net Zero Goal by 2050

In tackling climate change, the company pledges to face it head-on. Levi’s stated in its report that:

“Reducing our climate footprint across our value chain and galvanizing others for collective action are top priorities… This includes reducing energy use and emissions as well as innovating to reduce freshwater use in our own operations and our supply chain — while striving to protect and restore biodiversity…”

As of 2021, the apparel firm has the following footprint:

The company seeks to reach its net zero ambition by reducing absolute emissions in all its facilities through these levers:

energy reductions,
onsite renewable energy, and
energy attribute credits.

Its operated facilities include 1,083 retail stores in 37 countries and about 80 offices.

To cut down emissions, the company takes on these climate action strategies.

Such climate action targets are absolute rather than compared to net revenues, size or other economic metrics.

Levi’s Climate Goals

Levi’s also detailed its other sustainability goals apart from net zero emissions under the climate pillar. These particularly include the following climate goals against their 2016 baseline:

40% absolute reduction in supply chain (Scope 3) emissions by 2025
90% absolute reduction in GHG emissions associated with all company-operated facilities by 2025
100% renewable electricity in all company-operated facilities by 2025
Reduce freshwater use in manufacturing by 50% in areas of high water stress by 2025 against the 2018 baseline
Continue to assess and identify material impacts and dependencies on nature across the value chain to implement a comprehensive biodiversity action strategy by 2025

Levi’s plans to submit those goals to SBTi and get its approval in 2023.

2021 Climate Highlights

As of 2021, the San Francisco-based firm was able to achieve 85% renewable electricity use at its company-operated facilities. This is on track to its path towards 100% by 2025.

Electricity makes up 68% of the total Levi’s company-operated energy footprint. So reaching its goal of 100% renewable electricity will significantly reduce the firm’s total emissions.

Here are the other key progress that the firm has accomplished under its near-term climate goals.

In addition, as a crucial part of its energy efficiency measure, Levi’s managed to have the following achievements.

Used a solar power array to meet 20% of electrical demand at its Leadership in Energy and Environmental Design (LEED) Platinum-certified distribution center in Nevada. 
Development of a new distribution center in Germany with Platinum-level LEED design and Platinum-level WELL certification following the circular design principles. 
Incorporated LEED principles for energy, waste management, indoor air quality and water use.

The company was also able to make progress in reducing its absolute emissions through various means.

Shipped products using biofuels with net zero carbon emissions (Maersk ECO Delivery)
Worked with key suppliers in creating roadmaps detailing climate and water targets and identify solutions
Encouraged supplier participation in company programs that promote low carbon solutions

One theme that cuts across all Levi’s sustainability goals is the need for increased partnership across sectors to fight climate change.

In fact, the company is aligning with other brands to work with manufacturing partners and other organizations on climate solutions, be it directly cutting emissions or resorting to carbon offsets.

And so over the past months, Levi’s has been collaborating with partners like Fashion for Good, the Ellen MacArthur Foundation, and Organic Cotton Accelerator to help bring the apparel industry toward more sustainable, circular production.

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The BMO Voluntary Carbon Market Primer – 4 Major Takeaways

The Canadian Bank of Montreal or BMO recently released its report on the voluntary carbon market (VCM), providing an in-depth overview of market growth potential and complexity.

BMO Capital Markets believes that the VCM is slated for impressive growth. But that will be predicated on VCM’s ability to deliver high-integrity carbon credits.

Here are the four key takeaways from the report.

BMO Voluntary Carbon Market Projections

As per BMO’s projections, the banking giant sees the potential growth of the VCM to reach 6.5x by 2030 and 17.4x by 2050, relative to 2020 VCM total traded volumes.

That also means the VCM can hit an annual volume of ~1.2 GT CO2e by 2030 and 3.3 GT CO2e by 2050.

This projection is based on the median of BMO’s four scenario analyses described below.

BMO VCM Growth Projections

Top-Down Growth Scenarios

Hard to Abate Emissions: This scenario was from “hard-to-abate” global emissions where offsetting is strictly reserved for.

BMO considers emissions hard to abate if the abatement cost is above US$200/T of CO2e or ~18 GT of CO2e per year. Three major sectoral emitters fall under this scenario:

Industry, and

Implied Need, Removals Only: This BMO top-down scenario reflects how much CO2 must be removed to meet climate goals.

To stay within the 2°C carbon budget, BMO estimates that collective efforts must remove more than 110 GT CO2. This is under an assumption that VCM will get 30% carbon market share.

Bottom-up Growth Scenarios

SBTi limits: This scenario is based on a corporate offsetting limit of 10% to hit emissions targets.

The assumption under this scenario is that public firms have net zero targets for scope 1 but excluding scope 2 emissions.

Also, BMO assumes that offset price will rise over time, so the implied growth is ~4x by 2030 and ~14x by 2050.

Removal Potential: Under this bottom-up growth situation, BMO assumes that each carbon removal reaches the lower bound of their potential.

Applying 30% penetration rate, BMO projects voluntary carbon market growth of ~7x by 2030 and ~19x by 2050.

Overall, market volatility will have a negative effect on price and trade volumes of carbon credits or offsets.

Carbon Removal Offsets Are Necessary

Market based solutions, particularly the ones that promote carbon removals, become increasingly necessary.

As governments are slow to enact climate policies, total emissions continue to increase. And current projections say that they will go beyond the budget needed to limit warming to 2°C.

Hence, it’s clear that climate finance is crucial to combine fossil fuel infrastructure with abatement technologies.

Carbon offsetting solutions are efficient even for projects that represent near-term reductions.

In particular, carbon removal technologies must be deployed to meet global climate goals. This also calls for investment in these technologies in the near-term.

As per BMO’s analysis, the highest quality carbon offset credits come from removal projects. Direct air capture scores best when it comes to meeting a set of criteria including:

Net negativity, and

Correlation Between Pricing and Credit Quality

Right now, the VCM is opaque with most credits trading over-the-counter. As such, price discovery and transparency are a challenge.

Credit quality and price should be directly correlated according to BMO.

The firm also believes that credits not listed on one of the top carbon registries such as Verra, Gold Standard, Climate Action Reserve, and American Carbon Registry are challenged from a quality perspective.

That’s because investors likely don’t have the level of information or sophistication to evaluate a project absent from a top registry.

Quality projects are sought after and their credits mostly trade through bilateral agreements. They’re the ones that get premium pricing.

Evidently, direct, bilateral transactions for offsets remained the top choice for buyers and sellers.

As carbon exchanges provide the most transparent pricing data, transaction preference impacts market transparency.

Prices from exchanges don’t represent the market as a whole. But their movements may offer context on price momentum in the VCM.

With all these, investors must consider pricing transparency alongside the quality of carbon credits.

Corporate Offsetting Guidelines Shape the VCM

Offsetting in corporate decarbonization plans will be a key driver of demand growth in the VCM. But there are very few offsetting standards that guide net zero pursuit.

BMO examined offsetting strategies among the 2,000 largest public firms. They found little consistency across their decarbonization plans.

Due to inconsistency in net zero definitions, there are various categories for emissions reduction commitments from companies. In fact, the Net Zero Tracker identifies 14 different categories.

By industry, apparel took the #1 spot with 100% of companies having emissions reduction pledges.

When it comes to disclosed detailed decarbonization plans, BMO said that firms with no targets have a low level of reduction planning, as expected.

Microsoft has one of the more detailed disclosures on its offsetting strategy and portfolio. The tech giant discloses carbon credit quality criteria and its offset purchases.

The company further documents offsets by:

project name,
contracted durability, and
contracted volume.

BMO finds Microsoft’s example as a sophisticated and transparent offset disclosure. And more firms will have the same detailed reporting as education enhances and disclosure guidelines improve.

Overall, there are only a few official offsetting guidelines. These include the VCMI, SBTi, and the Oxford Principles.

While that’s the case, BMO thinks that there’s a growing agreement on ways of best practice that will affect offsets demand and shape the voluntary carbon market.

Entities that are not using carbon offsets properly may be at risk of reputational damage.

The post The BMO Voluntary Carbon Market Primer – 4 Major Takeaways appeared first on Carbon Credits.

Twelve Transforms Carbon into Sunglasses, Car Parts, and Fuel

As firms around the world are tackling climate change, Twelve is offering a solution through its carbon transformation tech which turns CO2 into products usually made from fossil fuels.

Using fossil fuel-derived oil to create products is not cheap, but what if it’s possible to make products using air instead of fossil fuels?

California-based Twelve is a carbon transformation company that’s shaking up the status quo of making products. Ranging from Mercedes car parts to equipment for NASA, the startup makes them using CO2.

Twelve’s Carbon Transformation Technology

To describe how the technology works, the director of product ecosystems Heidi Lim said:

“Our technology transforms carbon dioxide and water molecules using renewable energy. We split up and then rearrange molecules into building blocks that are usually made from fossil fuels.”

Products that rely on petrochemicals for assembly vary. According to the International Energy Agency, they include:

digital devices,
medical equipment,
detergents, and

With Twelve’s carbon transformation technology, an electrochemical reactor named Opus was built that cuts fossil fuels out of the process completely. The company calls this “industrial photosynthesis“.

It’s the same as what plants do during photosynthesis; Opus takes water and CO2, and using renewable energy, it changes them into new chemicals, materials, or fuels.

Inside the reactor, the electricity separates the CO2 and water. Then the membrane allows the separated elements to be recombined and make different chemicals.

The reactor is modular in design so that it can be installed in any industrial system. Better yet, the reactors system is made with a “plug-n-play” design.

It can be integrated into existing industrial systems easy and fast. Plus, the process can be done using CO2 from the point of emissions or direct air capture.

According to Twelve, they can cut up to 10% of global emissions through Opus.

And that’s possible by transforming existing supply chains from running on fossil fuels to running on CO2.

CO2Made Products

The firm’s commercial products are called CO2Made. These include the fashion brand Pangaia sunglasses, Mercedes car parts, Tide detergents, and carbon-neutral fuels among others.

According to CEO Nicholas Flanders, Twelve produces “building blocks for a wide range of materials, chemicals, and fuels that are currently made from fossil fuels today.”

He also claims that the CO2Made products have no change in quality compared to the ones they replace.

Apart from making CO2Made items, the firm is also working on another innovation – E-jet. It’s a jet fuel with 90% lower emissions than conventional jet fuel and works with current engines.

After announcing a $130 million Series B funding round last June, Twelve sets to ramp up its industrial-scale carbon transformation platform.

Some big names support the firm’s unique technology. Mercedes-Benz, NASA, Shopify, Procter & Gamble, and the Air Force partnered with Twelve to make CO2Made products.

Speaking for Procter & Gamble, Todd Cline remarked that:

“Delivering low-carbon products consumers desire will require scaling innovative solutions such as Twelve’s carbon transformation technology… We’re glad to see Twelve given the opportunity to expand their opportunity to impact a broad variety of sustainable consumer products enabled by their technology.”

The company also sees opportunities for working with firms already capturing and storing CO2 emissions. Popular names are Global Thermostat and Shell.

The carbon transformation tech of Twelve has the potential to turn CO2 from a harmful waste stream into useful products.

The carbon firm is currently taking pre-orders for its CO2Made materials and E-Jet.

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