October 2023 – The Global Carbon Fund

First Hydrogen Track Day with Europe and UK’s Largest Companies

October 30, 2023/in Uncategorized /by

First Hydrogen Corp. (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) announced further to its previous news that its first-ever track day will be held on October 31st at the HORIBA MIRA, UK.

First Hydrogen is a Vancouver and London UK-based company focused on zero-emission vehicles, green hydrogen production and distribution. The company’s hydrogen-fuel-cell powered vehicles (FCEV) boasted a range of >630 km (400 miles), which is far more than the minimum range requirement for zero emission vehicle (ZEV) at 193 km only.

The vehicles have been trialed with energy company SSE Plc. and fleet management company Rivus.

All attendees will get the chance to test drive the company’s FCEV and see its under-the-hood technology. Fortune Business Insights projected that the global EV market will grow from $500 billion in 2023 to nearly $1.8 billion by 2030.

Attendees will include some of Europe’s and UK’s largest companies from various sectors, including parcel delivery, supermarkets, healthcare, leasing, utilities, and mining.

As the company’s CEO said: “With the UK Government’s recent recognition of FCEV within its definition of ZEV, sales of the FCEVs will be included in production targets for ZEV.”

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UK Carbon Credit Scheme, ETS, Under Fire for Profitable Plant Closures

October 27, 2023/in Uncategorized /by

A loophole in the UK Emissions Trading System (ETS), designed to reduce planet-warming emissions, allows companies to profit millions of dollars from unused carbon credits after closing factories, leading to concerns about the misuse of the government scheme.

Notably, the closure of a fertilizer plant by US firm CF Industries in Cheshire resulted in a windfall of £32 million (over US$39M) from the sale of carbon credits. Several other companies, including Mitsubishi Chemical and Cemex, have also benefited from the said “loophole”, triggering calls for immediate regulatory changes.

The Controversy Surrounding UK ETS

Under the UK government carbon trading scheme, firms in the heavy industry are given a free allocation of emissions. This is to prevent UK businesses from being disadvantaged compared to their foreign peers operating in nations with weak climate policies.

Same as the EU ETS, companies in the UK must buy credits if their carbon emissions surpass their allocation. If they have unused or excess credits, they can sell those in carbon markets at the end of the year. The scheme is considered as fundamental to the UK’s net zero strategy.

Greenpeace’s Unearthed investigated the UK ETS. Their investigation found that the scheme allocated free carbon credits to companies that closed plants, thereby reducing their emissions.

There’s no time limit as to when the companies can sell the credits. That means they can wait when carbon prices are high to sell the credits and earn profits from it. The price surged to £100/tonne last year.

Unearthed particularly discovered that US fertilizer giant CF Industries received 630,000 carbon credits from shutting down two UK factories. The company first closed its plant in Ince last year, causing 350 job losses.

The unused carbon credits gave CF Industries an income of £32 million by selling those credits under the UK ETS. The total worth of the credits stand at £49M, using the average UK carbon price from 2022 of £78/tonne.

Another company, Mitsubishi Chemical, has also shut down one of its plants in Billingham, Teesside this 2023. This caused over 200 people to lose their jobs.

Production at one of the world’s biggest chemical plants stopped, causing a significant drop in the company’s emissions. The chemical plant emitted 182,000 tonnes of carbon in 2021, which dropped to only 6,000 in 2022 due to the closure. This leaves Mitsubishi with 155,000 free carbon allowances, which is worth about £12 million.

The investigation also found that the UK Government has no way to recall the credits once they have been allocated.

The issue has raised concerns among environmental campaigners about the prioritization of financial gains over environmental and social responsibilities.

Calls for Regulatory Changes

With the growing outcry, policymakers called for an urgent solution to close the loophole in the UK carbon scheme. This loophole gives companies that reduce emissions by closing plants the opportunity to earn millions from trading carbon credits.

Labour MP Alex Cunningham, in particular, emphasized the need to prevent companies from capitalizing on emissions reductions at the expense of local jobs and communities.

The questionable practice has sparked debates about the effectiveness of market-based mechanisms in curbing emissions.

According to a carbon market expert at Carbon Market Watch, under the current UK ETS rules, a factory that shuts down on January 2nd will get free emissions allowances for the entire year. The government can’t get those credits back in any way.

Remarking on this scheme, the expert further noted that allocating carbon credits to ghost plants “doesn’t serve climate goals or any economic purpose.”

As per Unearthed, the UK government is currently reviewing its free carbon allowance rules. However, any proposed changes to the rules will be accommodated by 2026.

Whenever a firm stops operations or leaves the country, their carbon allowances won’t be distributed in the next year.

For the proponents of the carbon trading scheme, they argued that it helps the country in meeting its ambitious climate goals. It was able to cut emissions by over 48% since 1990, quicker than any other G7 nation.

A spokesman for the Department for Energy Security and Net Zero commented that:

“As previously announced, we are reviewing free allocation rules to make the system as robust as it can be while continuing to support UK businesses through the transition to net zero.”

In theory, carbon credit markets are designed to incentivize initiatives that reduce harmful emissions. Each credit represents a tonne of removed or avoided emissions.

While there are some issues surrounding the validity and quality of the credits in carbon markets, studies have shown that they helped major companies cut emissions. High quality credits meet a set of criteria, validating their emission reduction claims.

The UK’s emissions trading system has come under scrutiny as companies profit from the closure of factories and the resulting unused carbon credits. The controversy has led to demands for immediate regulatory amendments to prevent the misuse of the government carbon credit scheme meant to help achieve net zero emissions.

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Carbon Credits Are a Key Player in Closing Carbon Emissions Gap

October 27, 2023/in Uncategorized /by

Carbon credit prices are projected to increase dramatically as more lofty climate goals are made and achieved, according to a report published by Bloomberg with support from Carbon Growth Partners.

The report “Investing in Carbon Markets: Cleared for Take-Off” underlines the importance of carbon credits in reaching net zero emissions. It also highlights the need to invest in the market with growing demand and close the emissions gap.

Closing the Emissions Gap

In 2023, the carbon market faced significant challenges. Yet, a surge in corporate demand, alongside stricter carbon credit generation rules, will push the market from oversupply to scarcity. In effect, this will drive carbon prices upward, particularly for nature-based credits, at over $55 per tonne of carbon dioxide in voluntary carbon markets.

The significance of carbon credits as a pivotal tool in bridging the emissions gap is underscored by a whopping 350% increase in annual retirements since 2016.

Carbon Credit Retirements by Project Type (tCO2e)

Substantial further growth in offsetting efforts is necessary to meet the target of limiting global warming to 1.5°C. This calls for total emission reductions of 150 billion tonnes of CO2 equivalent by 2030, 45% below 2019 levels.

The report also said that the investment needed in renewable energy will be over $44 trillion by 2030.

However, several challenges, including higher borrowing costs, competition for limited capital, and economic slowdowns, may lead to a scaling back or deferral of investments in internal decarbonization by companies. This drives a significant surge in corporate demand for carbon credits as a supplementary strategy throughout the decade.

Many corporations are intensifying their emission reduction commitments, with 6,323 entities taking action under the Science-Based Targets Initiative. Together, they’re emitting around 32 billion tonnes of greenhouse gas each year, involving Scope 1, 2, and 3 emissions.

Collectively, these climate pledges suggest a substantial potential demand for carbon credits, even with conservative action scenarios. There’s also a possibility of annual demand for credits reaching 6x the total annual supply from existing and pipeline projects if businesses with an approved SBTi target opt to offset 20% of their emissions.

Moreover, given the sensitivity of carbon pricing, a moderate increase in corporate climate goals and action would push prices up.

New Driver of Demand for Carbon Credits

A burgeoning demand for carbon credits is coming from a new and notable source – investors who recognize the potential of the expanding carbon market.

Though institutional investor involvement has been limited so far, an increasing interest is evident. Many investors are starting to see the opportunity to generate financial returns while supporting climate solutions.

Recognizing the prospective increase in carbon prices due to government and business commitments to carbon emission reduction, major players such as Citi Group and JP Morgan have committed substantial sums to carbon credits.

Citi Group, in particular, emphasizes the enduring nature of the market, claiming that it is “here to stay”. Two months later, JP Morgan revealed its $200 million investment in carbon removal credits to decarbonize operations.

Similarly, State Street also announced its pioneering role in offering carbon asset fund administration and depository services. This will help facilitate the integration of carbon-related assets such as voluntary carbon credits into investment portfolios.

Notably, one of the largest asset management companies in the world found out that as an asset class, carbon assets can improve portfolio diversification and efficiency.

Other institutional investors, including Temasek, AXA, CPP Investments, and TPG, have also made significant investments in various carbon-related ventures. The last three companies opted to fund forest protection projects, which generate carbon credits in return.

Their move indicates a growing trend towards using carbon markets for diversified financial returns and climate impact mitigation.

Bloomberg’s latest report, supported by Carbon Growth Partners, highlights the indispensable role of carbon credits in combating climate change, drawing attention to the increasing participation of institutional investors. This dynamic market shift underscores the pivotal role of carbon credits in closing the emissions gap and achieving climate targets.

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ACX Reveals Major Trades on Historic Carbon Credit Exchange in ADGM

October 27, 2023/in Uncategorized /by

AirCarbon Exchange (ACX) revealed that its exchange and clearing house in Abu Dhabi Global Market (ADGM), became live. The carbon exchange also announced that key trades have already started on their platform, expected to be a rapidly expanding market for voluntary carbon credit trading.

Singapore-based ACX is a digital exchange seeking to speed up the world’s journey to net zero which uses blockchain technology to securitize carbon credits. These credits are certificates representing certain carbon emission reductions achieved by an initiative or project.

The Pioneering Move in Carbon Credit Regulation

Emissions trading schemes in carbon markets are valuable instruments to reduce greenhouse gas emissions. In the voluntary carbon markets (VCM), carbon credits are called carbon offsets, demand for which is projected to skyrocket.

In compliance carbon markets, the credits are allowances or cap on the amount of carbon companies can emit. When they exceed the emissions cap, they can buy carbon credits from others with surplus or unused allowances.

In February last year, Singapore-based ACX worked with the ADGM to establish the world’s first regulated carbon credits trading exchange in the emirate’s capital. ADGM will regulate the credits and the offsets as emission instruments while also issuing licenses for exchange platforms to work both as spot and derivative markets.

Abu Dhabi’s sovereign wealth fund, Mubadala, acquired a 20% stake in ACX in November 2022. This move is part of the fund’s economic diversification and commitment to responsible investing.

In the same year, the ADGM made history by becoming the first jurisdiction to regulate voluntary credits as financial instruments. This milestone was facilitated through the Environmental Instrument classification, which established a regulatory framework for licensing exchanges and clearing houses.

Following that groundbreaking step, ACX Abu Dhabi became the first entity to be licensed under ADGM’s framework. The exchange earned the recognition as the world’s first regulated Recognized Investment Exchange and Recognized Clearing House.

Setting the Stage for Carbon Credit Trading

The regulatory licenses gained by ACX significantly bolstered trust, security, and investor protection within the carbon credit trading space. By mandating fair trading practices, real-time market surveillance, and strict adherence to regulatory standards, ACX ensured heightened market integrity, transparency, and efficient price discovery.

With these in place, ACX successfully laid the groundwork for enabling VCM participants to trade under a robust regulatory framework.

Asserting the significance of this historic achievement, Arvind Ramamurthy, Chief of Market Development at ADGM noted that:

“As we find ourselves in a critical time with the development of global carbon markets, this step marks a momentous milestone in the journey towards a thriving market for voluntary carbon markets.”

The inaugural carbon credit trade on the fully regulated carbon trading platform occurred through a collaboration between First Abu Dhabi Bank (FAB) and Helix Climate.

FAB is UAE’s largest bank whereas Helix Climate simplifies the process of trading, settlement, valuation and retirement of carbon credits in the VCM. Their involvement underscores the importance of this remarkable evolution in the carbon market landscape.

Leading the Way to Market Integrity and Climate Action

Expanding its offerings, ACX Abu Dhabi announced the successful execution of the first trade on its Carbon Market Board (CMB). It is an advanced electronic trading platform that enables participants to carry out and finalize over-the-counter transactions.

The significant trade was in collaboration with South Pole, a renowned global leader in climate project development and solutions provision. The carbon developer’s Executive Director, Abderrahman Kasmi, emphasized the pivotal role of ACX in fortifying the integrity of carbon markets.

ACX’s commitment to innovation in this sector was recently acknowledged by Environmental Finance. It awarded ACX Abu Dhabi the prestigious title of the best carbon exchange of 2023 for the third consecutive year.

Meanwhile, ADGM’s progressive ecosystem allows businesses and investors to voluntarily buy verified carbon credits, signifying testament towards climate action.

Partnering with ACX is part of the United Arab Emirate’s net zero strategies. It’s also in preparation for hosting the upcoming climate change conference, COP28, in Dubai.

The UAE leads the process for all COP28 parties to come up with a clear roadmap to accelerate progress to inclusive climate action by employing a pragmatic global energy transition and a “leave no one behind” approach. The COP28 Action Agenda provides a practical plan of action to turn the Paris Agreement objectives into reality.

With the adoption of advanced technology and a robust regulatory framework, ACX could help facilitate transparent and secure carbon credit transactions, fostering trust and integrity within the burgeoning carbon market landscape.

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Sustainable Biomass Sourcing: A Buyer’s Guide for Biomass-Based CDR Contracting

October 27, 2023/in Uncategorized /by

Carbon Direct, a carbon management solutions provider, just published a practical buyer’s guide for sustainable biomass sourcing to help mitigate the risks of biomass-based carbon dioxide removal (CDR) contracting.

The guide is a product of collaboration between buyers and Carbon Direct’s expert advisory group with large corporations as signatories, including Microsoft, Shopify, and Stripe. It provides practical insights for CDR agreements while emphasizing the need for stringent standards and oversight for sustainable biomass sourcing.

The report also underscores the potential of biomass-based CDR in fighting global warming and achieving ambitious climate targets. It marks an initial step toward establishing effective safeguards through its four sourcing principles, each with its own criteria.

While not a standard or certification, the report considers multiple implementation pathways, aiming to minimize risk and pave the way for the industry’s expansion.

Mitigating Risks in Biomass-Based CDR Contracting

The biomass-based CDR industry is expanding rapidly in the voluntary carbon markets. And as demand for durable carbon removals grows, biomass-based solutions are at the forefront.

Most of the available supply of highly-durable CDR to date include bioenergy with carbon capture and storage (BECCS), biochar, and other biomass carbon removal and storage (BiCRS). These biomass-based CDR projects can scale rapidly in the next decade, with millions of tonnes of announced offtake agreements already.

Given that the largest biomass-based CDR projects will start storing carbon as early as 2026, the report focuses on tools and frameworks that will be executed within the next few years. This near-term approach is crucial in providing recommendations for seamless integration into contracts involving different biomass-based CDR applications.

Per global projections, the demand for biomass in ambitious decarbonization scenarios could potentially surpass conservative estimates of sustainable, low-lifecycle-emissions supply by a considerable margin, ranging from 11x to 16x by the year 2050.

These studies, while showing varying figures, all underscore the significant disparity between the accessible biomass resource and its various potential applications in a net zero economy. The chart shows the variance between demand and supply of biomass by 2050.

A Mismatch Between Biomass Demand & Supply by 2050

The biggest potential source of new demand for biomass is energy conversion. Some estimates suggest that biomass demand from biopower alone would consume all supply by 2050. These projections emphasize the importance of developing sound guardrails on biomass use before these industries scale up.

This is where the new guidance comes in, providing the guardrails to mitigate the risks of biomass-based CDR contracting. This goal is guided by four core sourcing principles outlined in the document.

The 4 Core Principles for Sustainable Biomass Sourcing

The principles are achievable through the satisfaction of a set of criteria and implementation options as suggested.

Principle #1.

The criteria for this principle are as follows:

Source certified through an independent, third-party audited forest certification standard; or from areas of low risk (determined by risk-based assessment).
Source from jurisdictions with robust forest governance or strong oversight of forest certification standards (using the Corruption Perception Index (CPI) and similar resources).
Biomass must be traceable across the entire supply chain, from the sourcing jurisdiction to point of conversion for carbon removal.

Chain-of-custody (CoC) tracking is often the primary method used to trace products from their source to their final destination.

Principle #2.

Complying with the second principle involves these things:

Sourcing from wood processing operations with low risk of impact to community’s health,
Sourcing from forest operations respecting the rights of the Indigenous Peoples (IPs),
Sourcing from forest operations protecting the economic, social, and environmental well-being of workers.

Principle #3.

The third principle emphasizes the importance of forest protection and preservation with biomass sustainably sourced from:

Areas not considered as primary forest (per UN FAO definition) or old-growth forest (per national/subnational definition),
Forest management initiatives that don’t threaten protected areas or High Conservation Value forests (unless harvest is explicitly granted),
Forest management efforts that preserve or improve ecological functions (e.g. biodiversity, soil health, regeneration, and nutrient cycling),
Areas where forest stocks are in steady-state or growing.

Principle #4:

This last principle focuses on biomass sourcing that doesn’t compete with existing agricultural or forestry products. The biomass must be:

A by-product of non-energy products or services,
From wood that can be accounted for existing economical counterfactual biomass uses (carbon storage) to understand the real carbon benefits of biomass,
Not from plantation forests developed within the past 2 decades (except previously used for agricultural purposes for ten or more years).

Each criterion is accompanied by a comprehensive explanation in the guide. The criteria provided seek to provide specific, measurable outcomes, with multiple implementation options for flexibility.

Though the report considers the most conservative option as “preferred”, it emphasizes the potential for customized oversight in specific cases. It particularly depends on certain factors at play in specific area.

Finally, buyers should take into consideration any trade-offs between practical and conservative approaches when adopting the recommended options into their biomass-based CDR offtake agreements.

Below is the list of the prominent voluntary and regulatory certification schemes that certify forest biomass provided in the guide.

Biomass Certification Schemes

As the biomass-based CDR industry continues to expand, establishing effective safeguards and standards for sustainable biomass sourcing is crucial. Carbon Direct’s buyer’s guide provides comprehensive insights and principles for mitigating risks and ensuring responsible sourcing practices.

By emphasizing the necessity of stringent oversight and sustainable biomass sourcing, the guide paves the way for the industry’s sustainable growth and underscores its significant role in global climate action.

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Carbon Capture to Urgently Scale to 7 Billion Tonnes/Year to Hit Net Zero

October 26, 2023/in Uncategorized /by

To achieve global net zero goals by 2050, the world has to urgently fast track capturing 7 billion tonnes of carbon dioxide per year, according to Wood Mackenzie research.

According to their analysis, the current pace of carbon removal is on course to reach only 2 billion tonnes of CO2 by 2050 (base case scenario). This carbon capture capacity aligns with the 2.5°C global warming scenario.

Current and Planned Carbon Capture and Removal

Achieving the critical 1.5°C warming threshold requires 7 billion tonnes of carbon capture and removal by midcentury.

Speaking for Wood Mackenzie during their Carbon Capture, Utilization and Storage (CCUS) Conference, the research head Mhairidh Evans said that:

“We need a huge amount of carbon to be captured out of our industries and the power sector to decarbonise the last miles that can’t be easily reached by green electrification or alternatives… To come close [to 1.5°C], we need to get shovels in the ground quickly.”

Wood Mackenzie is currently monitoring planned global CCUS capacity at 1,400 million tonnes of CO2 per annum. This includes all kinds of projects: carbon capture, transportation, and storage, with the U.S. leading the way with 33%.

The UK comes second with 14% of the projects, followed by Canada with 12%, with the rest shown in the chart below.

Evans further noted that the U.S. Inflation Reduction Act 45Q tax credit provides significant support for polluters to decarbonize. Moreover, the Infrastructure Investment and Jobs Act also helped companies in developing the infrastructure essential for CO2 transport and storage.

Add to this the vast geological carbon storage resources available in the country for companies to tap. All these make the U.S. well-positioned for strong growth in the CCUS market.

Still, the analysis suggests that delaying actions or waiting for CCUS projects to become economically viable can make it more difficult to meet climate goals. This can further cause more economic implications due to the climate crisis.

Key CCUS Opportunities and Challenges

The United Nations’ IPCC and other renowned organizations believe that CCUS has a big role in avoiding carbon emissions that warm the atmosphere. The panel argues that capturing carbon and locking it away for good is key to achieving the Paris Agreement targets.

CCUS is one of the carbon removal technologies that’s getting the most attention from private and public investors in previous years.

Source: CBInsights.com

To date, the U.S. Department of Energy has been investing billions of dollars in carbon capture projects. The agency is supporting both early-stage (R&D) and commercial carbon capture initiatives.

Additionally, with the new rules proposed by the Environmental Protection Agency, which regulate emissions from coal and new gas-fired facilities, CCUS technologies became an attractive solution for hard-to-decarbonize sectors.

Other governments are also keeping pace with the U.S. Canada, the UK, and the EU have also committed large sums of money to advance these climate technologies.

What Makes it Hard to Expand CCUS?

But the global research and consultancy firm highlighted some key challenges that hinder the industry to grow more and expand. These include nascent policy and regulations, unfit business models, and most particularly, high costs.

Costs remain the biggest concern for businesses in the sector. Despite the 45Q tax credit, companies still have to wait for prices to go down to scale up their projects.

Furthermore, most technologies available today for carbon capture, transport and storage are still evolving. They have yet to demonstrate that they can deliver as promised. Majority are startups, needing large capital investments to develop and scale their carbon capture and removal technologies.

Some scientists and industry leaders even question the technology’s feasibility and efficacy. They claim that it detracts from the more urgent call to transition to renewables and other cleaner energy alternatives.

Add to this the challenge of convincing heavy polluters to embrace carbon capture as part of net zero strategies, as WoodMac noted. While there has been a growing number of carbon storage hub initiatives, there’s a limited demand from potential customers.

WoodMac expects project development costs to decrease by up to 30% during this decade. However, if companies wait for this price drop, that also means delaying the impact of their projects. In that case, the delayed carbon emission reductions will make the 1.5°C global warming dream far from reality.

The post Carbon Capture to Urgently Scale to 7 Billion Tonnes/Year to Hit Net Zero appeared first on Carbon Credits.

Occidental Petroleum Quietly Abandons Biggest Carbon Capture Plant

October 25, 2023/in Uncategorized /by

Occidental Petroleum, a leader in carbon capture and storage (CCS) technologies, has quietly abandoned its largest CCS plant, the Century, as per Bloomberg report. The technology worked, but economic concerns caused the plant to underperform at no more than a third of its capacity, leading to Occidental’s eventual divestment.

The oil giant sold the Century last year only for a fraction of the cost it spent on constructing it. Today, Oxy is building a landmark carbon capture plant in Texas called Stratos.

Oxy’s Failed CCS Venture

Stratos is the second big bet of the oil major on CCS technology to manage carbon emissions. Century, built in 2010, is located 100 miles away from Stratos. It was designed to be the largest carbon capture plant, accounting for over 20% of global CCS capacity.

While both plants are categorized as CCS, they use different carbon capture technologies. Stratos is using Direct Air Capture (DAC) while Century is pulling carbon from a specific source of emissions.

Century was also built into a natural gas processing plant to suck in the CO2 it spews before it escapes into the air. This carbon capture process is cheaper, uses simpler tech and is more established than the DAC used in Stratos.

Though Oxy benefited from the direct application of Century, with the captured CO2 used by the oil firm in producing more oil, the older CCS plant failed to deliver expected results.

As per Bloomberg investigation, Century has never worked at over ⅓ of its carbon capture capacity since it started working 13 years ago. The carbon capture technology successfully worked but limited gas supply is the biggest challenge.

Source: Bloomberg

Century had two engines capable of capturing CO2, but only one was operational, never functioning beyond half its capacity. One engine can capture 5 million tons of carbon while the other can catch over 3 million tons. Satellite data show that cooling towers on one engine don’t function, suggesting non-operation.

After a decade of running the project, Oxy quietly sold the struggling asset in January 2022 for about $200 million. The oil major had invested more than 4x that amount in building the plant. An operator at Century noted that they don’t have enough gas to run the plant.

Thus, the company decided to sell it off to Mitchell Group. Despite the sale, Occidental claims to continue using all the CO2 from the old carbon capture plant.

Century’s under delivery raises concerns about the viability of large-scale CCS projects. Can they be economically sustainable?

Carbon Capture Essential for Net Zero

According to the International Energy Agency, rapid scale up of CCS (also called CCUS) is essential to achieving net zero emissions targets. The technology plays four crucial roles in the net zero transition.

First, it handles emissions from existing energy sources. Second, it offers an abatement solution for hard-to-abate sectors. Third, it could be a platform for green hydrogen production. Lastly, it removes CO2 from the air to compensate for emissions that can’t be directly avoided.

Carbon capture, particularly DAC, is one of the focus of the upcoming climate change conference COP28 hosted by the United Arab Emirates. COP28 in the UAE will be a milestone moment when the world will get to know its progress on the Paris Agreement.

As the 2050 net zero target is getting closer, climate experts expect vast expansion of DAC projects to keep temperatures in line with the Paris Agreement goals. A climate scientist believes that the world absolutely needs carbon capture to get to safe warming levels.

However, the current total carbon capture capacity stands only at around 45 million tons of CO2 a year. As per IEA analysis, that’s only 4% of CCS required by 2030 to be on track for net zero.

Oxy’s new billion-dollar DAC plant Stratos aims to rapidly scale carbon capture by absorbing up to 500,000 metric tons of CO2 each year once it operates. That would make Stratos the largest DAC plant on the planet.

The amount of carbon captured by the plant generates corresponding carbon removal credits. Tech giants, aviation leaders, and other major companies have already pre-purchase carbon removal credits from Oxy.

Amazon, Shopify, Airbus, Houston Astros, and Houston Texans are just some of Oxy’s customers for forward purchase agreements. The US government is also pouring billions of dollars in support of the technology.

Oxy’s Stratos is a next-generation DAC plant for capturing CO2 that remains more expensive today than Century’s technology.

According to the company’s estimates, it’s worth over $400/ton compared to below $60/ton to absorb CO2 from processing plants like Century. But DAC costs will go down eventually as Oxy learns and develops more of it.

A rising number of corporations are willing to pay for higher carbon removal credits from capturing CO2. As more of them are getting serious about their net zero commitments, projections show that the market for carbon removals could hit hundreds of billions of dollars.

Powering the Future: US Government’s $3.5B Bet on Sustainable Energy Solutions

October 25, 2023/in Uncategorized /by

With the aim of addressing the challenges posed by climate change and increasing power demands, the Biden-Harris Administration, via federal agencies, invested in critical grid infrastructure upgrades and clean energy projects.

The US Department of Energy (DOE) revealed a $3.5 billion funding for 58 projects in 44 states to fortify the aging U.S. power grid against extreme weather and fires and integrate renewable energy sources.

Meanwhile, two other agencies, the US Department of the Treasury (USDT) and the US Department of Housing and Urban Development (HUD), launched a clean energy project tax bonus and awarded building retrofit funds, respectively.

Upgrading Power Grid Through Renewables

The DOE’s funding comes from the Bipartisan Infrastructure Law, marking the most substantial direct investment in the grid to date. The initiative is a response to the challenges posed by climate change-induced disasters and increasing power demands from new technologies like electric vehicles and AI.

Energy Secretary Jennifer Granholm emphasized the need for a more robust, larger, and smarter grid to accommodate the evolving landscape of energy production and consumption.

The projects include plans to generate over 35 GW of renewable energy and establish 400 microgrids to enhance energy independence. Microgrids refer to self-sufficient energy systems.

More than 75% of the projects have collaborations with the International Brotherhood of Electrical Workers union. The goal of this partnership is to keep or generate union jobs.

Notably, the funding is part of the DOE’s larger $10.5 billion grid resilience and innovation partnerships (GRIP) program.

One remarkable project, receiving more than $507 million, focuses on bolstering remote communities in Georgia. The funding will enhance a smart grid in the state, incorporating battery storage, local microgrids, and transmission lines.

Over in Pennsylvania, PECO Energy will work on improving grid reliability and resilience by implementing various measures. These include flood mitigation for substations, updating aging infrastructure, and deploying battery systems for backup power.

Moreover, some initiatives aim to expand transmission across multiple states, including a wildfire mitigation project in Western states. For the complete list and information of the GRIP selected projects for award negotiations, refer to the DOE’s website.

Boosting Clean Energy and Zero-Energy Buildings

In a separate announcement, the federal government also unveiled another important initiatives under the Inflation Reduction Act. The goal is also to bolster renewable energy access and enhance climate resilience in low-income communities.

These efforts, spearheaded by the USDT, DOE and HUD, include bonus incentives under Section 48(e) for small clean energy projects and awards for resilient, zero-energy housing.

Under the bonus credit program, the agencies pledged support for qualifying wind and solar energy facilities in low-income communities.

With a capacity of 1.8 GW for 2023, the program enables eligible wind and solar facilities to benefit from a 10 or 20 percentage-point increase to the investment tax credit of up to 30%. Eligible renewable energy facilities must have a maximum output of <5 MW.

These incentives aim to drive investments into underserved areas and significantly reduce energy costs and pollution. Applications for this year’s program are acceptable until early 2024.

The HUD’s Green and Resilient Retrofit Program (GRRP) manages the other funding program for resilient, zero-energy retrofits. The agency allocated $103.4 million in loans and grants for the renovation of over 1,500 low-income households.

The funding will facilitate substantial retrofits to ensure climate resilience and achieve zero-energy status for those residential buildings. This effort reinforces the administration’s commitment to affordable and sustainable housing for low-income families.

With a total investment of >$800 million in grant and loan subsidy, the HUD program awarded >$121 million to date.

This recent financial support comes at the heel of the HUD’s prior funding allocations. These include the Elements category that focuses on climate resilience and utility efficiency measures.

Likewise, the DOE also launched its Earthshot program earlier this month to achieve a minimum of 50% cost reduction in decarbonizing homes and lowering energy costs for residents by 20% within the next 10 years.

These funding initiatives directed towards grid fortification and clean energy expansion reflect the Biden-Harris Administration’s commitment to sustainable and resilient energy solutions. By prioritizing grid resilience, renewable energy integration, and climate-conscious housing retrofits, these efforts aim to foster a greener and more sustainable future for communities across the nation.

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US DOE’s $7B Clean Hydrogen Hub Grant: The 7 Chosen Ones

October 20, 2023/in Uncategorized /by

President Biden’s Investing in America agenda has allocated $50 billion to launch 7 Regional Clean Hydrogen Hubs (H2Hubs), an initiative that the Department of Energy (DOE) will support with a $7 billion grant.

This comprehensive plan is part of a strategic move to accelerate the deployment of low-cost, clean hydrogen across the country. Designed to create jobs, increase energy security, and fight climate change, the investment marks a significant milestone in America’s transition to a clean energy future.

Fueling Emission Reductions, Driving Sustainability

Clean hydrogen, also known as green hydrogen, production in the United States will grow from almost nothing last year to >10 million metric tons in 2032 (almost $18B in size). This includes the 7 hydrogen hubs chosen to receive the grants.

Funded by the Bipartisan Infrastructure Law, the H2Hubs will produce 3 million metric tons of hydrogen annually. It will also support the production, storage, delivery, and end-use of clean hydrogen, while reducing emissions from hard-to-decarbonize industrial sectors.

The funding will go to 7 selected regional hubs located in carbon-producing centres, including Appalachia, Gulf States, and the Midwest. Together, they will cut about 25 million metric tons of CO2 from end-uses each year.

The regional hubs will also create and retain tens of thousands of jobs, contribute to healthier communities and reinforce the nation’s commitment to environmental sustainability.

Clean hydrogen serves as a versatile energy carrier that can be produced from various clean energy sources such as renewables, nuclear, and fossil fuels with carbon capture.

By using these resources, the H2Hubs can significantly reduce harmful emissions from energy-intensive sectors. For instance, the chemical and industrial processes, as well as heavy-duty transportation will largely benefit from using clean hydrogen. All these while creating economic opportunities across the U.S.

The selected H2Hubs will share the cost in developing the network, alongside the Energy Department’s historic $7B investment. Their share is estimated to be over $40 billion, driving significant private sector investment in clean hydrogen. Read more about the seven selected projects in the following list below.

The 7 Chosen Hydrogen Hubs in America

Appalachian Hydrogen Hub:

The Appalachian Regional Clean Hydrogen Hub (ARCH2) in West Virginia, Ohio, Pennsylvania will utilize the region’s natural gas resources to produce low-cost clean hydrogen and store carbon emissions. With an allocated budget of up to $925 million, it aims to create over 21,000 jobs. It will benefit the Appalachian community through job opportunities and cost-effective hydrogen distribution.

California Hydrogen Hub:

The Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) in California will produce hydrogen exclusively from renewable energy and biomass. It is particularly aiming to decarbonize the key emitters in the state – transportation and port operations. The project plans to generate 220,000 jobs, with a budget of up to $1.2 billion.

Gulf Coast Hydrogen Hub:

The HyVelocity H2Hub will center in Houston, Texas and will focus on large-scale hydrogen production using natural gas with carbon capture and renewables-powered electrolysis. It anticipates creating around 45,000 direct jobs, with an allocated budget of up to $1.2 billion.

Heartland Hydrogen Hub:

This project in Minnesota, North Dakota, South Dakota, will leverage the region’s energy resources, aiming to reduce agricultural sector emissions and facilitate clean hydrogen use in electric generation and heating. It plans to create around 3,880 jobs, with a budget of up to $925 million.

Mid-Atlantic Hydrogen Hub:

The Mid-Atlantic Clean Hydrogen Hub (MACH2) in Pennsylvania, Delaware, and New Jersey will unlock hydrogen-driven decarbonization, utilizing innovative electrolyzer technologies. With an allocated budget of up to $750 million, it expects to to create 20,800 jobs.

Midwest Hydrogen Hub:

The Midwest Alliance for Clean Hydrogen (MachH2) will be in Illinois, Indiana, Michigan – a key U.S. industrial corridor. The hub will facilitate decarbonization across multiple sectors, including steel and glass production, power generation, and transportation. Leveraging diverse energy sources like renewables, natural gas, and nuclear energy, it aims to create 13,600 direct jobs, with a budget of up to $1 billion.

Pacific Northwest Hydrogen Hub:

The PNW H2 will cover Washington, Oregon, Montana, will produce clean hydrogen through electrolysis, driving down costs and promoting accessibility. It aims to generate over 10,000 jobs, with an allocated budget of up to $1 billion.

Promoting Economic Growth, Benefiting Communities

Each hydrogen hub is tailored to leverage the unique characteristics and energy resources of its respective region. The projects will harness the potential of clean hydrogen in diverse sectors, including agriculture, manufacturing, and transportation, driving economic growth.

More importantly, the Administration emphasizes the importance of community engagement and benefits in the development of the hydrogen hubs. Each H2Hub has to implement a comprehensive Community Benefits Plan (CBP) to ensure that the initiative benefits all communities.

To ensure the long-term success of the clean hydrogen economy, the DOE has issued a Request for Proposals for a demand-side initiative. This is crucial to provide market certainty for both producers and end-users in the H2Hubs.

Apart from hydrogen producing companies, who would be the other winners of the $7B federal hydrogen grants? Big oil and electric utilities will also benefit from the DOE investment.

Among the listed partners in the H2Hubs construction and operation are the major oil companies, including ExxonMobil and Chevron. Exxon, alone, has pledged $7 billion to produce hydrogen in the U.S.

Natural gas companies will also benefit from the hydrogen funding and will use the gas to power turbines. Popular names include Dominion Energy, Xcel Energy, and the AES Company.

And clearly, key players in the hydrogen market can take advantage of the historic investment.

Nikola and its hydrogen fueling stations will benefit from the grant, and so will other companies developing hydrogen fuel cell vehicles (FCEVs). FCEVs are gaining traction, with growing interest and demand for these vehicles, especially for long-haul trucking and parcel deliveries.

As such, First Hydrogen Corp. (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) will surely benefit from the projects once the hubs become functional. The company is poised to capitalize on the emerging zero-emission fleet vehicle market led by FCEV.

The clean hydrogen hub program, managed by the DOE’s Office of Clean Energy Demonstrations (OCED), represents a significant step towards achieving the Biden-Harris Administration’s ambitious climate and energy goals. It will lay the groundwork for a cleaner, equitable, and more sustainable energy future for the country.

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