Carbon Streaming Corporation signed a project pipeline streaming agreement with Mast Reforestation for up to $15 million, plus another $2 million investment into Mast’s parent company. 

The deal seeks to advance Mast’s pipeline of post-wildfire reforestation projects in the Western USA. Each project will have a separate stream agreement with Carbon Streaming.

Carbon Streaming is pioneering the use of streaming transactions to scale high-integrity carbon credit projects to accelerate global climate action. The streaming company now joins Mast’s existing investors, including Social Capital, TIME Ventures, DBL Partners, and Elemental Excelerator.

The carbon removal credits from the projects will be issued by the Climate Action Reserve’s (CAR) Climate Forward program.

Carbon Credits from The Streaming Deal 

Carbon Streaming will make an upfront deposit under each agreement. In return, the company will receive up to 100% of the carbon credits produced by Mast Reforestation Projects. It will then make ongoing payments to Mast for every carbon credit sold.

The CAR’s program will issue the credits called Forecasted Mitigation Units which will sell at a premium price to typical ARR – Afforestation, Reforestation and Revegetation – credits. This is because of the conservation and biodiversity benefits the projects also bring and their good location.

Carbon Streaming expects the Mast Reforestation Projects to cover over 9,000 acres of land severely damaged by wildfires. Collectively, they can remove about 1 million tonnes of CO2 and generate a corresponding number of carbon credits – 1 million. Each credit represents one tonne of carbon removed.

The first project under the financing agreement is the Sheep Creek Reforestation Stream that can remove about 225,000 tonnes of CO2 equivalent. Carbon credits from this project are based on two planting phases and will be issued in 2025 and 2026, respectively.

The project covers a 2,700+ acre in Montana that was severely burned during the 2021 Harris Mountain Fire. The supply of seedlings from Mast will restore the area and Carbon Streaming financing will support its reforestation efforts. 

Last year, Mast pre-sold all carbon credits from a similar creek project to corporate buyers like Shopify and Time CO2.

Under the terms of this first stream agreement, Carbon Streaming will pay Mast an initial amount of $0.54 million. Then additional stream payments of up to $3 million will follow as the Sheep Creek reaches key milestones such as site preparation and planting.

Carbon Streaming will also make ongoing delivery payments to Mast for each carbon credit sold under the project. The company expects financial payback after first issuance of the credits. 

Impact of the Reforestation Projects

The rate and amount of damage of wildfires have been intensifying in recent years, costing billions of dollars and losing thousands of lives. It also takes decades for fauna and flora to recover from the damages of wildfire. Thus, post-wildfire restoration efforts of Mast are an important part of climate change mitigation. 

Mast is a leading end-to-end reforestation company, combining proven reforestation practices with new technology to regrow healthy, resilient, climate-adapted forests. Its reforestation projects will bring positive impacts to wildlife and terrestrial as well as aquatic ecosystems.

Here’s how Mast’s reforestation project works:

The company invests heavily in biology, software, and hardware technologies to reduce costs and timelines needed to reforest post-wildfire areas. It is supporting these investments through innovative financing models like that of Carbon Streaming. 

One of the major challenges in North American forestry is the source of seeds and the space to grow them. This is where Mast’s business model comes in, positioning itself as the biggest private seedbank in the American West. The company grows most of the seedlings used for reforestation in California. 

Mast also provides various services ranging from seed collection and cultivation to traditional hand planting and ongoing site monitoring. Its reforestation projects support rural livelihoods while providing jobs across the project’s activities. 

Remarking on the partnership, Mast Founder and CEO Grant Canary said: 

“We are excited to collaborate with Carbon Streaming in this new partnership as it shares our unique vision for scaling reforestation and carbon removal solutions. This Pipeline Agreement is a scalable model that will help us get more trees in the ground, accelerating reforestation efforts in areas devastated by the rise in forest fires amplified by climate change.”

Carbon Streaming is also investing another $2 million into Mast’s parent company. It will be for adding key personnel, and continued investment into software, hardware, and field technology. 

Mast Reforestation seeks to continue growing its pipeline of projects by looking for more partners that see the value in the high-quality carbon removal credits that its reforestation projects generate.

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Voluntary carbon credits are attracting more attention, both negative and positive, and many believe that they’re playing a crucial role in the fight against climate change. 

As businesses pledge more lofty climate goals to help reduce global carbon emissions, the market specially developed to help polluters cut and manage their carbon footprint is also growing. The instrument or unit used in trading within this market is carbon credits. 

How essential is this marketing tool really in keeping global warming at bay? This piece will explain how as well as discuss the twin role of carbon credits in abating climate change and the major challenges the market must address. 

Taking on the Climate Crisis with Carbon Credits

Carbon credits are also known as carbon offsets in the voluntary carbon market (VCM). Under the compliance or regulated market, they are referred to as carbon allowances or permits that allow the holder a certain amount of carbon emissions. 

The regulated carbon market is born out of the laws mandating carbon reductions. It’s managed by emission trading systems (ETS) and is also called the cap and trade system. It dwarfs the size of the VCM ($1 billion), with market value hitting $851 billion.

While carbon emissions trading in the compliance market is equally effective, our focus is on the VCM. 

Only heavy emitters are mandated by national governments not to go beyond their allowed or cap emission limits but voluntary carbon reduction initiatives from large corporations are also moving the needle in the haystack. More so today when more and more investors and stakeholders are pushing for ambitious CO2 reductions. 

That means companies have to invest in technologies that can massively cut their CO2 footprint. Any emissions they can’t yet avoid or reduce should be offset by buying or investing in projects that generate carbon credits.

Carbon offset credits allow companies to meet their decarbonization targets and reach their net zero emissions goals. As a result, they ramp up global efforts to fight climate change and mitigate their catastrophic effects in two ways. 

The Role of Carbon Offsets in the Fight Against Climate Change

Each carbon credit represents one metric ton of CO2 or its equivalent gas that’s avoided from getting released into or removed from the atmosphere. 

But for a project to produce carbon credits, it has to show that its emission reductions meet a set of criteria. These include being real, additional, measurable, permanent, and verified. 

It is also important that appropriate safeguards are in place to ensure projects really address and mitigate any potential environmental and social risks.

Only after meeting those criteria that the project can issue the credits, corresponding to the amount of carbon emissions reduced. And only when the credit is retired, removed from a registry, can it be counted toward the climate goal. 

In other words, only upon retirement can the buyer, whose name the credit was registered and retired, claim its impacts. Once retired, that credit should not be circulating anymore or traded again in the carbon market. 

The income from the sale of carbon credits will support the development of or, in some cases, the implementation of carbon projects that come under 170+ different types. These include the major categories of the following, among others:

Renewable energy, e.g. solar or wind farms
Fossil-fuel based replacements, e.g. biofuels 
Natural climate solutions, e.g. reforestation
Energy efficiency 
Resource recovery, e.g. methane emissions avoidance

These projects fall under either carbon avoidance/reduction or carbon removal.

Distinguishing between them is important to show the dual role of carbon credits in tackling climate change. 

First role takes effect in the short term: carbon credits from emissions avoided or reduced can help ramp up the transition to a decarbonized economy. Common examples of the projects supported by carbon avoidance credits include renewable energy, energy efficiency, and improved forest management. Avoiding emissions is often a cost-efficient means to tackle CO2 emissions.
Second role happens in the medium and long term: carbon credits playing this role are crucial in scaling up carbon removal projects and they’re essential to offset residual or emissions that are unavoidable. To reach net zero emissions by 2050, about 5 gigatons of CO2 emissions must be removed every year. 

Examples of CO2 removal projects include reforestation and technology-based carbon capture such as direct air capture (DAC). Carbon credits can help finance the development and scale-up of these solutions.

Use of Carbon Credits in Corporate Climate Targets

Aligning corporate sustainability and climate commitments with the latest science is the best practice in the fight against climate change. If a company doesn’t have any baseline to base its emission reduction targets on, it must create one first. 

The Science Based Targets initiative (SBTi) has established methodologies for setting climate targets, adopted by more than 1,000 companies. 

They particularly include the large multinational corporations and heavy emitters that are implementing various actions to reduce emissions. These include enhancing energy efficiency, shifting to renewable energy, and tackling value chain or Supply 3 emissions.

Different Types of Climate Targets and Actions

Under the climate mitigation hierarchy, shown above, avoiding emissions directly within the company should be the priority. But for CO2 emissions that can’t be avoided, the next step is to offset them through carbon credits. 

Companies can use carbon offset credits in ways they deem suitable for their climate change goals, which come in different types. They can use it to pledge to be carbon neutral, climate positive, and net zero. 

Though they vary, they all often involve a company or organization supplementing internal reductions by financing reductions elsewhere through the purchase of carbon credits. Offsetting CO2 footprint allows a company to count the reductions in its residual climate mitigation reports. 

Being carbon neutral means compensating for unabated footprint by accounting the carbon credits toward a certain part of its emissions. It can be on a product level or activity level, which is often on a yearly basis. 

Aiming for a climate positive target refers to going beyond the targets set to make a net-positive impact. Microsoft, for instance, has gone one step further in its climate action by stretching their targets beyond being neutral to becoming climate positive. The tech giant has been investing millions of dollars in projects that generate carbon credits, advancing CO2 removal initiatives.

Lastly, reaching a net zero emissions goal means reducing carbon emissions and balancing residual emissions by the target year. For some industry actors, a credible net zero target involves cutting footprint in line with science using carbon removal credits.  

The largest public climate commitment in American history, the U.S. Inflation Reduction Act, further propels the market for CO2 removal credits. The financial incentives provided by the climate change law encourage groundbreaking projects across sectors from startups innovating carbon removal technologies. 

So, how committed are the large corporations in their pledge to either be carbon neutral or net zero? 

The chart below shows that. 

After 3 consecutive years of massive growth, the VCM had seen a record high growth in carbon credit issuances and retirements. This is largely due to the growing and intensifying corporate net zero pledges and other climate commitments. 

The number of companies pledging to be net zero increased by almost 400% in 2022 relative to 2015 figure.

This growth is projected to grow even more as both corporations and individuals are pouring their money into carbon projects. The resulting environmental impact of these projects earn the trust of many that carbon credits are indeed serving their purpose. That’s being an essential market tool that entities can use to help battle the bad effects of climate change. 

As a result, though the voluntary carbon credit market is relatively small, it’s experiencing significant momentum and its potential in equipping the world to tackle the climate crisis is attracting more attention.

It is, therefore, understandable that industry estimates show that the VCM will continue to expand. 

Key Challenges to Deal With 

The upward growth trend of the VCM is not a straight line; there are some major challenges the market has to address to reach its full potential. Let’s identify three of them and why facing them heads on is essential for the carbon market to keep growing.

Providing solutions to these challenges will uncork more potential for carbon credits to serve their role as an important tool in combating climate change. The guideline established by the Integrity Council the “Core Carbon Principles” was designed to help promote integrity, transparency, and market growth. 

Guaranteeing Quality and Impact 

Though standards do exist that certify projects to ensure they meet certain methodology requirements, investors still don’t have full transparency on how the projects are progressing. 

Add to that the concerns stakeholders bring up when it comes to some issues linked to the projects they support. These often involve matters relating to additionality and permanence of the carbon reductions the projects claim to achieve. 

For example, what if the trees protected under a reforestation project are burned down due to wildfire? Any carbon they promise to capture releases back into the atmosphere, and thus, loses their permanence. This raises questions about the permanence of the credits linked to the project. 

Hence, assuring the quality of the carbon credits and their environmental impact is very important. 

Getting Everyone’s Understanding Uniform

It’s clear that carbon credits do have a crucial role in the world’s quest to mitigate climate, not all stakeholders or concerned parties agree on how to use this tool as part and parcel of their climate strategy. 

That is because there’s no single standard that guides the market. This causes confusions and differences in the use of the credits in companies’ net zero pathways.

Eliminating the differences is critical so that company leaders know how to align the use of carbon credits in their corporate sustainability plans and climate strategies. Should they invest directly into carbon removal innovations or support other carbon avoidance projects? A clear and uniform standard can help resolve this matter. 

Clearing out Ambiguity in Regulations

Article 6 of the Paris Agreement gave birth to the voluntary carbon credits, advancing them as an important market tool or mechanism to drive investments in climate action. However, negotiations about the specific Article 6 guidelines are still ongoing, leaving unclear regulatory obligations for market players. 

For instance, should carbon offsets bought by a private company count toward a country’s climate goals? Or that they remain private and voluntary? Should governments stay out of the VCM transactions and let market forces be at play on their own?

Making the lines clear can give both project developers and investors enough drive to continue their work. Confusion about regulatory requirements will deter them from innovating and investing. 

Undeniably, carbon credits do play a crucial part in the fight against climate change. They enable corporate investors to support climate actions that are beyond their reach and fund their own carbon removal projects. 

But to bring out the market’s full potential, removing the key roadblocks along its way is necessary. This will be beneficial not just in battling the climate crisis but also in providing other benefits to people and the planet.

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Tesla and Elon Musk break ground at the site of the electric carmaker’s new lithium refinery in Corpus Christi, the first of its kind in North America, which will cost $1 billion upon completion. 

Tesla and Lithium Production for EVs

Last year, Musk tweeted that Tesla may get into the lithium mining and refining business directly due to the high cost of the metal element. He also said that the availability of battery-grade lithium was a “fundamental chokepoint” for the EV industry and other sectors.

The Tesla and SpaceX tech CEO showed the average price of lithium per tonne, which increased massively last year – $78,032/tonne. It has soared up to over 480% from 2021 to 2022, per Benchmark Mineral Intelligence data. 

That big growth is driven by the upsurge in EV sales and a struggle to secure supply.

Musk said that there’s no shortage of lithium because it’s available almost everywhere but extracting and refining it is slow. True enough, there are deposits of lithium all over the U.S. to meet the growing demand.

The US Geological Survey reported that the country has 750,000 tonnes of recoverable lithium in 2021. This figure will go up as new reserves are discovered and established.

Global lithium production increased by 21% in 2022 compared to 2021, surpassing the highest in 2018 levels. 

This increase was not because of new mines, but in large part due to existing Australian capacity getting online. Chile producers also increased production levels by several thousand tonnes.

The US is home to the world’s biggest lithium deposits after those in the so-called Lithium Triangle region in South America – Argentina, Bolivia and Chile. While the states of Nevada, North Carolina, and California together housed about 4% of the world’s lithium reserves.

Still, EV battery production capacity is rising at twice the speed of lithium supply.

Here’s the analysis by cicenergigune of North American EV battery gigafactories.

Source: cienergigune

The U.S. is currently producing only about 1,000 tonnes of lithium. But the country is projected to produce 91 GWh of lithium-ion batteries in 2025, which needs more than 75,000 tonnes of lithium content. 

According to BloombergNEF, an increase of more than 300% in installed lithium cell production capacity worldwide is expected to reach about 1,769 GWh. China (63%) still takes the lead, followed by Europe (15%) while the US (9%) falls down to the third spot. 

Lithium Cell Production Capacity in 2025

Lithium, a non-ferrous metal, is also known as “white gold” and is valuable in making EVs as it’s the lightest and least dense solid element. What that means for Tesla is producing EV units with a high power-to-weight ratio. 

So unsurprisingly, the giant EV maker plans to build in-house lithium refinery and battery materials processing, refining, and manufacturing operations for its sustainable product line. Tesla’s investment in this facility is critical to its mission to accelerate the world’s transition to clean and sustainable energy. 

That largely involves turning on the switch on EV production and accelerating end-use electrification and sustainable power generation and storage. This path enables Tesla to improve its bottom line while significantly earning revenues through its carbon credit sales. The credits are from the carbon emission reductions achieved with the company’s EV production. 

The $1 Billion Lithium Refinery 

Tesla will invest $375 million to construct the refinery to do away with its reliance on outside lithium supply. Once finished, the site will represent an investment of over $1 billion. 

Musk further said that Tesla aims to produce enough battery-grade lithium hydroxide at the South Texas facility to make 1 million electric cars each year. Their goal is also to produce more lithium than what the rest of North America produces in that location.

Mining giant Albemarle revealed plans to invest $1.3 billion in a lithium processing facility in South Carolina last March. The company’s Silver Peak mining site in Clayton Valley in Nevada is currently the only one operating lithium mine in the US. It produces around 6,000 tons each year of lithium carbonate, representing only 1% of the world’s lithium carbonate supply. 

Tesla expects its Texas facility to also process other intermediate lithium sources, such as recycled batteries and manufacturing scrap. The 1,200+ acre facility will be the place of the first industrial deployment of an acid-free lithium refining route.

Acid-free Lithium Refining Process 

The conventional process of refining ore into battery-grade lithium usually involves crushing the raw material, heating it at high temperatures, and mixing it in a slurry with acids. Hydrochloric acid is often used in this process, which is considered hazardous by the U.S. Clean Air Act.

But Tesla’s innovative acid-free lithium processing will use less hazardous reagents and produce usable byproducts. It says in its Texas Comptroller’s filings that the refinery’s byproduct, a mixture of sand and limestone, will make beneficial use of traditional waste streams for producing construction materials. 

Musk asserted that the facility will have no toxic emissions, saying “you could live right in the middle of the refinery and not suffer any ill effects.”

However, he didn’t disclose what would be the exact chemistry that Tesla will use for its acid-free lithium refinery. Yet, Texas Republican Governor, Greg Abbott, praised Elon Musk as the greatest entrepreneur on the planet.

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