November 2023 – The Global Carbon Fund

Uranium Royalty Corp. Publishes First-Ever Sustainability Report

November 30, 2023/in Uncategorized /by

Uranium Royalty Corp. (URC) stands out as the sole uranium-focused royalty and streaming company listed on the NASDAQ, offering investors exposure to uranium commodity prices. URC‘s portfolio includes strategic acquisitions in uranium interests like royalties, streams, debt, equity in uranium companies, and physical uranium trading.

The company, trading as (NASDAQ: UROY, TSX: URC), recently released its inaugural 2023 Sustainability Report. It outlines URC’s sustainability approach, performance, and future goals, including the following highlights:

Strengthening due diligence processes, with 100% of deals reviewed using an enhanced sustainability approach.
Enhancing corporate risk management practices.
Approving Sustainability, Anti-Corruption, and Corporate Disclosure Policies, emphasizing sustainability commitment and robust governance.
Achieving 33% diversity in both female and ethnically diverse representation in executive management.
Contributing approximately $48,000 to local community programs.

Scott Melbye, URC’s CEO, expressed pride in presenting the report, emphasizing their position as the sole uranium royalty company.

URC has a growing portfolio of 20 interests across 18 uranium projects in key jurisdictions. By applying a successful royalty and streaming model to the uranium sector, URC offers vital capital to uranium mining companies, supporting a cleaner future through carbon-free nuclear energy.

Melbye stressed URC’s role in promoting sustainability and innovation in mining. The company diligently selects operators sharing values of responsible environmental stewardship and robust community support, striving to foster long-term relationships based on these principles.

Uranium For A Net Zero World

According to the World Nuclear Association, tripling of nuclear generation is what the world needs to achieve carbon reduction goals and meet growing global energy demand.

For the International Energy Agency, the nuclear industry has to double in size over the next 2 decades to meet net zero emissions targets. And according to McKinsey’s forecast, nuclear power generation needed in 2050 is massive.

Currently, there are only 400+ nuclear reactors in operation worldwide. But 90 nuclear reactors are on order or planned globally, with 300+ more in the proposal stage.

And as nations strive to reduce carbon emissions, nuclear power presents a viable option for a large-scale energy source. Emerging economies in Asia are investing heavily in nuclear power. China and India, in particular, are considering nuclear energy for powering up energy grids, pumping up demand for uranium.

Nuclear energy will play a major role in the global energy mix as the world moves towards net zero. And Uranium Royalty Corp is at the forefront in revolutionizing how business is done in the uranium sector. It is the only business leveraging innovative deals involving uranium.

URC’s strategic approach aims to support cleaner, carbon-free nuclear energy while fostering long-term relationships based on sustainability principles. As the world looks toward nuclear power for achieving net zero goals, URC is ready to lead the charge in using uranium for a sustainable future.

Disclosure: Owners, members, directors and employees of carboncredits.com have/may have stock or option position in any of the companies mentioned: UROY

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involve risks which could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

The post Uranium Royalty Corp. Publishes First-Ever Sustainability Report appeared first on Carbon Credits.

VCMI Unveils New Rules for Net Zero Using High-Integrity Carbon Credits

November 29, 2023/in Uncategorized /by

The Voluntary Carbon Markets Integrity Initiative (VCMI) has introduced additional guidance for its Claims Code of Practice, allowing firms to make claims about their use of high-quality carbon credits.

The new guidance encompasses a Monitoring, Reporting, and Assurance (MRA) Framework, an identity mark for asserting ‘Carbon Integrity’ Claims. It’s also an initial version of an added claim, labeled ‘Scope 3 Flexibility.’

Commending VCMI’s new guidance, U.S. Special Presidential Envoy for Climate, John Kerry, stated:

“By creating sound guardrails for the use of high-quality carbon credits, the new VCMI guidance will provide strong assurance that this finance will help deliver the greater climate action we so urgently need.”

Using the new framework and the ‘Carbon Integrity’ Claims branding, companies can now make Silver, Gold, or Platinum Claims, following the original Claims Code published in June.

It empowers companies to declare their use of high-quality carbon credits, channeling financial support toward initiatives that counteract climate change. It also showcases their efforts in surpassing science-based emissions reductions.

Fast-tracking Net Zero with High-Integrity Carbon Credits

Voluntary carbon markets (VCMs), when used properly, can increase financial resources directed toward low- and middle-income economies. They can significantly aid in achieving the Paris Agreement’s goal of limiting global warming to 1.5°C above pre-industrial levels.

Estimates suggest that if companies begin investing in VCMs as part of their net zero strategies today, over $50 billion could be unlocked by 2030. This exponential growth in VCM demand is illustrated below, going beyond 900 metric tons of carbon dioxide.

Evidence indicates that companies engaging in these markets tend to be more ambitious and undergo faster decarbonization compared to those that do not.

As per Ecosystem Marketplace analysis, buyers in VCMs are 1.8x more likely than non-buyers to continually reduce their footprint.

But there’s a big catch to achieve that: voluntary carbon markets must work with integrity.

That means carbon credits must genuinely represent verified reductions and removals of emissions, complying with robust environmental and social standards. Companies should use these credits in addition to—rather than as a substitute for—decarbonization efforts in their transitions to net zero.

Claims associated with these credits must be credible and reliable. Adhering to the VCMI Claims Code, which includes the newly provided guidance, ensures the assurance of these principles.

VCMI’s Executive Director, Mark Kenber, noted the relevance and timing of the release of this new guidance. He said that as COP28 approaches, discussions about VCMs will regain prominence and that “it is important that what is discussed is the promotion of credible, and believable, climate action”.

With the new guidelines for credible claims, companies can credibly use carbon credits and be confident in doing so.

The Scope 3 Flexibility Claim

Moreover, the VCMI has launched the beta version of a new claim – the Scope 3 Flexibility Claim. It’s a practical step to hasten corporate climate action. It permits companies to use carbon credits while scaling their internal decarbonization investments and initiatives.

Once completed in 2024, this claim allows companies to be accountable for their Scope 3 emissions while moving toward their net zero goals by using high-quality carbon credits. Stringent measures are in place to ensure the integrity of this claim and prevent its misuse.

Scope 3 refers to the indirect emissions from the company’s value chain.

According to MSCI Carbon Markets, about $19 billion could be mobilized if companies used the credits to fill the emissions gap between their scope 3 reductions targets and current emissions.

VCMI has established guardrails to further promote integrity in the new claim and prevent greenwashing, including:

Making the First VCMI Claims

The launch of the ‘Carbon Integrity’ brand and the MRA Framework is a significant milestone, enabling companies to initiate their first VCMI claims.

The ‘Carbon Integrity’ Claims is a distinct brand for such claims with a tagline “accelerating global net zero”. They signify that corporations are actively propelling the achievement of that goal.

The brand showcases a unique mark used across the Carbon Integrity Claims, with variations denoting the type of Claim—Silver, Gold, or Platinum.

The newly released guidelines aim to assist companies in effectively communicating their attainment of Carbon Integrity Claims.

On the other hand, the new MRA Framework serves as a mechanism for companies to substantiate their claims. Under this framework, companies provide details satisfying the Claims Code’s Foundational Criteria, setting the standard for optimal corporate climate action.

Additionally, companies must disclose essential information concerning the carbon credits used to support their claims. This information will then undergo independent verification by a third party, reinforcing the credibility of the Carbon Integrity Claims.

Consequently, the MRA Framework forms the foundation of authority that upholds the authenticity and credibility of Carbon Integrity Claims within the VCMI framework.

The VCMI Claims Code of Practice serves as a rulebook outlining how companies can ethically use carbon credits within credible, science-aligned pathways toward achieving net zero decarbonization. By establishing this guidance, VCMI aims to cultivate trust and bolster confidence in how companies participate in voluntary carbon credit markets.

The post VCMI Unveils New Rules for Net Zero Using High-Integrity Carbon Credits appeared first on Carbon Credits.

Rockefeller Foundation Aims 2050 Net Zero for $6B Endowment

November 29, 2023/in Uncategorized /by

Ahead of the United Nations Climate Change Conference (COP28) in Dubai, UAE, The Rockefeller Foundation made a significant announcement. The foundation is targeting net zero greenhouse gas (GHG) emissions for its $6 billion endowment by 2050. This move positions it as the largest private U.S. foundation to pursue such a target.

Following other US institutions like Harvard University, which committed in 2020 to reaching net zero emissions for its >$50 billion endowment by the same deadline, Rockefeller’s next step involves driving more significant decarbonization efforts.

The Rockefeller Foundation’s Net Zero Influence

President Rajiv Shah highlighted The Rockefeller Foundation‘s commitment to divesting from fossil fuels 3 years ago. They have pledged $1.5 million to a global initiative that will support developing countries’ transition towards clean energy.

Image from The Rockefeller Foundation

Today, they are focusing on pushing for greater decarbonization through both direct investments and influence.

According to the foundation’s Chief Investment Officer, Chin Lai, the move is more than their endowment. Lai commented noted:

“Because net zero is a collective goal… we will encourage our fund managers to engage with companies on emissions reduction plans, invest in climate solutions, and use our convening power to advance net zero adoption among investors.”

Lai outlined three strategies for Rockefeller to extend its net zero influence.

First, working with money managers who can have a more significant impact on decarbonization efforts.
Second, directly investing in companies offering climate change solutions (pledging $1B to climate solutions over the next 5 years).
Third, establishing benchmarks to measure progress and sharing these with other investors, aiming to encourage wider participation in their efforts.

The 5 Core Guiding Principles

The new strategy centers around maintaining the endowment’s crucial role in providing sustainable funding for The Rockefeller Foundation’s global initiatives. It primarily focuses on engaging with asset managers and other stakeholders on data, disclosures, and decarbonization plans.

Moreover, it emphasizes investments in climate solutions and other climate-focused strategies. The strategy aims to exert influence by organizing influential gatherings, advancing collaboration, setting standards, promoting best practices, and fostering shared learning.

The net zero strategy for the $6 billion endowment rests on five core principles:

Prioritize Real-World Change: Prioritizing scalable approaches today and technologies expected to scale in the next 15-20 years.
Be Pragmatic: Recognizing diverse roles in asset classes, investment managers, and vehicles .
Learn Continuously: Recognizing that there isn’t a single correct method for an investor, fund manager, or company to achieve net zero.
Maintain Accountability: Promoting transparency at both portfolio and manager levels and committing to regularly share progress to uphold accountability.
Lead by Example: Organizing crucial stakeholder gatherings and leveraging The Rockefeller Foundation’s influence and voice in the investment industry and philanthropic institutions.

Going Beyond Setting Net Zero Targets

The Foundation’s philanthropic journey traces back to 1913 when it started with an initial endowment of $100 million from John D. Rockefeller, the founder of Standard Oil. It’s a company that once held control over more than 90% of petroleum production in the United States.

Over the past 110 years, the Foundation has invested $26 billion in philanthropic capital. This recent policy continues the Foundation’s commitment, initiated in 2020, to divest its endowment from existing fossil fuel interests.

Additionally, it pledges to abstain from making any future investments in fossil fuels, building upon this ongoing dedication to environmentally responsible investing.

The Rockefeller Foundation’s new net zero endowment policy aligns its internal investment strategy with the commitment to spend over $1 billion to drive the global climate transition. This comprehensive climate strategy, unveiled in September, also involves efforts to achieve a net zero standard for its facilities.

The Foundation’s operational sites, spanning from its headquarters in New York City to locations in Washington, D.C.; Nairobi, Kenya; Bangkok, Thailand; Bellagio, Italy; and other operational areas worldwide, are included in this initiative.

As part of this ongoing effort, The Rockefeller Foundation completed its assessment of the accounting of its carbon footprint for the baseline year of 2022. The evaluation revealed an estimated annual emission of 12,000 metric tons of greenhouse gasses across its operations.

The Foundation’s Roadmap to Net Zero is still in process and will be finalized in early 2024.

RELATED: IEA’s 2023 Net Zero Roadmap

With that, the Foundation’s goal extends beyond establishing targets and strategies for reducing carbon emissions across Scope 1, 2, and 3. It also aims to collaborate with and support others within its ecosystem by sharing the knowledge gained and the progress made during this journey toward decarbonization.

The Rockefeller Foundation’s 2050 net zero is a milestone in climate-focused philanthropy. Their dedication to transparency, innovation, and accountability is a significant step towards driving systemic change in the fight against climate change.

The post Rockefeller Foundation Aims 2050 Net Zero for $6B Endowment appeared first on Carbon Credits.

Revolutionizing Forest Protection: Verra Introduces New REDD+ Methodology

November 28, 2023/in Uncategorized /by

Verra, a nonprofit that works on climate action and verifies carbon credits, has introduced a new way to protect forests. This method, which is under the Verified Carbon Standard (VCS) program, is a big change in how they measure the impact of activities that help keep forests safe and decrease the amount of greenhouse gasses (GHG) they produce.

The new approach also matches the rules set by countries in their plans to lower emissions under the Paris Agreement. As such, it opens doors for more global investment in safeguarding nature.

Redefining REDD Methodology for Enhanced Quality and Alignment

The new REDD methodology involves two essential firsts for Verra:

A new approach to the baseline-setting process that decreases the potential for conflict of interest and adds greater quality control; and
Aligns key features of forest projects with global and government action for the first time.

Toby Janson-Smith, Verra’s Chief Program Development and Innovation Officer, emphasized the importance of forests in meeting our global climate goals. He noted that deforestation causes about ⅕ of the world’s GHG emissions, further adding that:

“…carbon markets are the best and most readily available tool we have for forest protection. Today marks a substantial advancement for ensuring the integrity of REDD and supporting the scaling up of these critical activities.”

This new way of working has been in progress since 2020 and focuses on REDD. It means “Reducing Emissions from Deforestation and Forest Degradation”.

REDD covers various activities, from stopping illegal logging to helping forest communities find other ways to make a living. This system has safeguarded large areas of forests worldwide and directed millions of dollars to communities in developing countries that take care of these forests.

Under this new methodology, Verra will handle the process of setting the baselines for measuring the impact of REDD activities. They will use specific data and a strong process to estimate the expected deforestation in an area. Advanced remote-sensing technologies and a robust risk assessment will be used to achieve accurate calculations.

This would help ensure that the number of reduced emissions verified from all projects in an area matches the overall measurement for that region. Such an approach brings consistency, lessens possible conflicts of interest, improves quality control, and better supports government actions.

Empowering Carbon Markets with High-Integrity Forest Projects

A senior director for Verra’s REDD+ program, Naomi Swickard, emphasized the role of carbon markets in ensuring that forest projects “deliver nationally aligned high-integrity credits”. She added that it assures buyers that their contributions truly count towards climate action while benefiting biodiversity and local communities.

Overall, it will boost the value of REDD+ projects in carbon credit markets.

In 2022, more than 400 million REDD+ credits have been issued on the VCM, accounting for a quarter of total credits issued in the market.

For those new to the space, Verra’s REDD+ projects were scrutinized by a team of investigative journalists at the beginning of the year. They claimed that the carbon credits from those projects likely don’t represent real emission reductions.

Verra responded that their findings are incorrect because their studies miscalculate the impact of the organization’s forest projects.

The newly released REDD+ methodology is the outcome of teamwork and agreement among experts and stakeholders in the carbon market. According to Verra, it’s a work among co-authors, including Tim Pearson of GreenCollar, Kevin Brown and Sarah Walker of the Wildlife Conservation Society, Till Neeff, Simon Koenig of Climate Focus, and Manuel Estrada.

What’s Next?

There would also be an allocation tool soon to be launched that will complement the new methodology.

Verra has outlined a clear plan for how current Avoided Unplanned Deforestation (AUD) projects will transition to this new methodology. The roadmap also details what the transition process will involve. Here’s an important piece of information about the transition.

Moreover, Verra will provide a route to Core Carbon Principles (CCP) labeling under the Integrity Council for Voluntary Carbon Markets (ICVCM) for previously verified emission reductions and issued VCS carbon credits.

This will happen once the VCS program is evaluated by ICVCM as CCP-Eligible and it’s recognized in a CCP-Approved category. This pathway will allow project initiators to voluntarily switch their projects to the new methodology and adjust previous project calculations accordingly.

Detailed information about this transition concerning various methodologies will be available in the upcoming months.

Verra’s new REDD+ methodology marks a pivotal moment in safeguarding forests and reducing global GHG emissions. This groundbreaking approach not only enhances quality control but also fosters greater confidence in carbon markets, driving investments towards nature preservation and supporting climate action.

The post Revolutionizing Forest Protection: Verra Introduces New REDD+ Methodology appeared first on Carbon Credits.

New Rules to Jumpstart China’s Voluntary Carbon Credit Market

November 24, 2023/in Uncategorized /by

The Ministry of Ecology and Environment (MEE) in China released guidelines signalling the revival of the domestic voluntary carbon market (VCM), alongside revealing the rules for account registration, giving final touches on the market’s reboot.

China’s VCM, known as China Certified Emission Reduction (CCER), restarted after a six-year hiatus. The market had been paused since 2017 for new project registrations while the government sought to strengthen regulatory frameworks.

The Role of China’s Voluntary Carbon Market

China introduced its national compliance emissions trading system (ETS) in 2021, being one of the first Asian countries to do so. The world’s largest in terms of emissions covered, China’s ETS is estimated to account for >40% of its carbon emissions. This footprint is largely from its power sector.

After the completion of the first compliance period for China’s ETS, the government has been preparing to relaunch its CCER.

The discontinuation of the CCER plan in 2017 was due to low trading volumes and inadequate carbon audit standards. With the establishment of China’s national ETS, the revival of the CCER system gained momentum, aiming to address previous shortcomings and bolster carbon reduction efforts.

Under CCER, carbon emitters compensate credit-holding entities, such as renewable energy producers, for their credits. These voluntary CCER credits allow companies within the compliance markets, ETS, to offset their emissions.

They can be used to cover shortfalls in China Emissions Allowances (CEAs) or as tradable credits within the national ETS. But their use for offsetting emissions is restricted to only 5% of emissions exceeding the national ETS targets.

Earlier this year, the MEE introduced new legislation and approved 4 methodologies for CCER credit issuance, clearing the path for new projects and supplies to enter the market. The Beijing Green Exchange, to host the trading platform for CCER credits, also issued rules for CCER trading and settlement.

VCM Complementing the Compliance Market

China’s VCM reopening may increase supplies for compliance market companies, allowing them to use the credits to offset their emissions.

Chart from S&P Global Commodity Insights

Since 2021, the compliance carbon price hit a record of $10.12/mtCO2e on August 18, surpassing the $10/mtCO2e mark for the first time. This ETS price traded 4x – 5x that of international voluntary carbon prices, partly due to the government tightening policy and resolving compliance problems.

Moreover, the increasing awareness of climate issues among the public might lead to tangible policy changes and a gradual transition in the business approaches of state-owned enterprises towards decarbonization. These businesses have also begun to manage their carbon assets strategically like physical assets.

However, some experts speculate that the availability of government-backed CCER registry credits may reduce voluntary carbon credit supplies from China in the international market. This shift could be due to more favor on government-backed credits, which could have higher prices compared to VCM credits.

Go here for the most recent China ETS prices.

Per S&P Global Commodity Insights, nearly 21% of VCM credits issued globally in Q1 of 2023 came from China. This figure emphasizes the nation’s major role in the international carbon credit market.

New Rules for CCER Credits Trading

With the new guidance from the MEE, a project would be qualified to generate CCER credits by meeting the following criteria:

Perform a comprehensive and accurate emission reductions accounting;
Estimations of emission reductions must be conservative;
Transparent disclosure of a project’s information; and
Not registered twice under other ETS.

The MEE-approved methodologies include forestation, mangrove cultivation, solar thermal power and grid-connected offshore wind power projects. But there are other projects that can also potentially participate in CCER credits trading, including:

Carbon capture, utilization, and storage (CCUS)
Transportation
Sustainable agriculture
Improved efficiency in power generation
Methane mitigation
Waste treatment
Industrial production

In terms of registration, trading, and settlement of CCER credits, the new rules set no restrictions on who can participate. Businesses under the compliance carbon market, project developers, and other trading entities can trade CCER credits.

According to the Beijing exchange, which will solely manage and publish all trading information, forms of trading include the following:

Listed transactions
Block trades
One-way bidding

For carbon credit price fluctuations, changes should not go beyond 10% above or below the base price for listed transactions. Base price refers to the weighted average price in the previous trading period. For block trades, price changes should be limited to 30% above or below the base price.

However, there’s currently no clear indication on how a foreign investor can engage in China’s domestic carbon markets.

Ultimately, non-public trading is illegal and strictly not allowed to disclose such information for CCER credits trading. Similar measures were published by the host of the Chinese compliance carbon market to avoid leakage of information.

Despite these measures, the official timeline for the CCER market’s restart has yet to be announced by the MEE. Yet, their introduction indicates the readiness of the CCER market for a prompt relaunch, aiding the biggest polluter to lower its towering carbon emissions.

The post New Rules to Jumpstart China’s Voluntary Carbon Credit Market appeared first on Carbon Credits.

Canada Insures Carbon Price Contracts with $7B Funding

November 24, 2023/in Uncategorized /by

About 50% of the Canada Growth Fund for clean technology investments is allocated for special contracts aimed to bolster companies’ confidence in making substantial initiatives to reduce their greenhouse gas emissions.

Finance Minister Chrystia Freeland said that nearly half of the $15-billion Fund will be for carbon contracts for difference (CCfD). She confirmed in her recent fall economic update that up to $7 billion will be allocated for CCfD.

What are Carbon Contracts for Difference?

The Canada Growth Fund employs carbon contracts for difference as a financial mechanism to support clean growth projects. These contracts encompass future carbon pricing, offering businesses predictability and mitigating risks associated with crucial emissions reduction initiatives.

RELATED: Canadian Gov’t Sets out $83B for Clean Investment Tax Credits

CCfDs recognize that companies base their investment decisions on anticipated carbon pricing over several years to curb emissions. Such investments are deemed viable if they cost less than what the company would otherwise pay for the price of carbon in the absence of the technology.

In essence, the contracts serve as an insurance policy of sorts against the carbon price going down or being eliminated, making the clean tech investments less risky.

For over a year, Freeland has been considering CCfDs, especially as major energy firms seek further assistance to maintain competitiveness amid substantial subsidies provided by the U.S. Inflation Reduction Act. She specifically remarked that:

“We are in a race, and we are committed to owning the podium… This is a plan to attract investment. It is a plan for the economic transformation, for the industrial transformation.”

Since Budget 2023, the federal government has engaged in consultations to develop an extensive framework for CCfD, complementing the offerings of the Canada Growth Fund.

Additionally, federal accounting bodies have been exploring the accounting treatment for broad-based carbon contracts for difference. Contracts featuring elevated strike prices may pose substantial fiscal risks for the government, requiring upfront acknowledgment of potential costs.

Despite this, experts voiced disappointment over the absence of a clear framework for the swift execution of these agreements.

But for many, the carbon contracts might serve as the last piece needed by major oilsands companies to build large-scale carbon capture and storage projects. These initiatives are vital for Canada to have any hope of achieving its emissions targets.

Canada’s Investment Tax Credits for Carbon Capture

Linked to the Canada Growth Fund updates is the investment incentives targeting clean technology and emissions reduction projects.

Source: https://www.budget.canada.ca/

Update on carbon capture and storage tax credits is highly anticipated.

The Pathways Alliance, a coalition of major oilsands companies in Canada, has been pursuing these projects. But they have sought more support beyond what the new tax credit for the technology provides.

The government has provided an outline on the investment tax credits, setting a timeline for delivery and implementation.

Though the oilsands group praised the proposed carbon capture incentives, they highlighted the need to provide clear policy details.

Meanwhile, Alberta expressed concern over the extended timeline in finalizing the tax incentives for carbon capture projects. The tax credits were initially announced 2 years ago.

According to Alberta’s Energy Minister, they have lost 3 construction years due to federal delays in executing the incentive programs.

However, a non-profit executive emphasized that carbon contracts announcement has the potential to really drive low-carbon economic growth in Canada. He believes that CCfDs could launch the best industrial emissions reduction projects, making the country a destination for clean-tech investments.

Sustaining A Robust Carbon Credit Market

The Liberals’ carbon pricing policy has been a subject of constant political contention, facing persistent criticism from the Conservative party. The former’s decision to stop the carbon price increase for 3 years on home heating oil sparked debate.

The recent fall update hinted at progress on previously announced tax credits for transitioning to clean technology. This indicates the forthcoming legislation to establish tax credits for CCS and clean technology in the coming weeks.

It’s only in the summer of 2023 that the Canada Growth Fund was launched, initiating its operations aimed at deploying various financial instruments to reduce risks and enhance private investment in low-carbon projects, technologies, businesses, and supply chains. Engaging with >150 market participants, the fund has curated a portfolio of projects spanning crucial sectors within the clean economy. These include carbon capture, hydrogen, biofuels, critical minerals, and clean technology.

It reached a milestone last month, as the federal government announced its inaugural investment of $90 million in Eavor Technologies Inc., a geothermal energy company based in Calgary.

The federal government will continue to explore further avenues to offer businesses assurance regarding the trajectory of carbon pricing. Through Carbon Contracts for Difference, the Canada Growth Fund aims to bolster companies’ confidence in reducing greenhouse gas emissions. This financial mechanism can help sustain a robust carbon credit market in the country, fostering a low-carbon economy.

The post Canada Insures Carbon Price Contracts with $7B Funding appeared first on Carbon Credits.

World Bank’s Push for Forest Carbon Credit and Climate Finance

November 23, 2023/in Uncategorized /by

The newly appointed President of the World Bank, Ajay Banga, unveiled plans to launch a mechanism for certifying forest carbon credits in the coming months. His mission is to revolutionize the bank’s operations while enhancing the credibility and transparency of voluntary carbon markets.

Banga emphasized the urgent need to redirect resources from affluent nations to less prosperous regions to address climate-related challenges.

In his address to a substantial audience at the Singapore FinTech Festival, he stressed that achieving this goal cannot solely rely on taxation or calls for financial contributions from wealthier countries due to political barriers. Instead, Banga proposed that reinforcing the trustworthiness of voluntary carbon markets holds the key.

Revamping Forest Carbon Credits for Credibility

The World Bank’s imminent certification mechanism for the forestry sector aims to establish reliable carbon credits. It also seeks to ensure proper pricing and direct resources appropriately.

Banga highlighted the significance of incorporating safeguards against deforestation and misleading reforestation practices to enhance the credibility of these markets.

During a conversation with Ravi Menon, the head of Singapore’s central bank, Banga emphasized that endorsing certified green credits could potentially streamline the carbon pricing process.

This strategy is meant to facilitate the flow of funds from companies and investors in developed nations to developing countries. The latter often provide the forest carbon credits that rich nations are buying.

Carbon credits have been a mechanism for companies and governments to mitigate greenhouse gas emissions. However, recent incidents such as the case with South Pole, a major carbon offsets player, have tainted the industry’s reputation.

Renat Heuberger’s exit as South Pole’s CEO followed accusations that the company exaggerated the climate impact of its products. Ajay Banga’s initiatives aim to address such credibility issues and instill trust in the carbon credit markets.

It’s important to note that major companies are also trying to rebuild confidence in these markets. Large asset managers and investors such as Manulife and Stafford Capital have raised millions of dollars in closing their forest carbon credit funds. Also, the likes of Oak Hill Advisors are also spending billions to reduce logging and boost forest carbon deals.

Redefining World Bank’s Focus

Ajay Banga’s leadership at the World Bank has introduced innovative proposals. The major one is expanding the institution’s focus on poverty alleviation to address urgent global issues like climate change.

During his address at the FinTech Festival, Banga advocated for the repurposing of subsidies that contribute to environmental harm. He highlighted the necessity to redirect subsidies, which presently support fossil fuels, towards initiatives that combat climate change.

Emphasizing the significance of allocating resources more thoughtfully, he expressed the need to reconsider how public funds are utilized, saying that:

“Repurposing these subsidies can be enormously helpful in the fight on climate…We must find a better way to spread the peanut butter.”

According to a World Bank report, the global expenditure on sectors like agriculture, fishing, and fossil fuels amounts to a staggering $1.25 trillion annually—equivalent to the size of a major economy such as Mexico.

Banga also stressed the role of multilateral development banks (MDBs), including the World Bank, in mitigating risks associated with climate-related projects. He proposed the idea of absorbing initial losses from projects like wind and solar, making them more appealing to investors.

In 2022, about $61 billion of MDB climate finance was given to low-income and middle-income economies. 63% ($38 billion) of this total was for climate change mitigation finance and 37% ($22.7 billion) for adaptation finance.

Source: 2022 Joint Report on Multilateral Development Banks’ Climate Finance

Mitigating Risks in Carbon Markets

However, Ravi Menon, Singapore’s central bank chief, cautioned that using public capital to reduce project risks has practical challenges and lacks universal acceptance. Concerns about political and foreign exchange risks could deter Western funds from investing in emerging market climate projects.

But Banga countered by underscoring the importance of MDBs in addressing regulatory risks. These financial institutions could offer risk guarantees and insurance to incentivize private investment.

The World Bank’s insurance arm protects investments from non-commercial risks, enhancing access to funding with better financial terms. The new president believes that the bank’s expertise is crucial in this space. Their backing will bolster private sector investments.

Recently, companies like Kita Earth are also introducing insurance products to protect carbon credit purchases. This safeguard has never been more crucial in building trust to scale this essential market that helps combat climate change.

Backing carbon markets underscores a strategic shift in the World Bank’s role. It positions the institution as a key player in steering financial resources towards sustainable and climate-resilient initiatives while navigating the challenges associated with global investment in climate-related projects.

The post World Bank’s Push for Forest Carbon Credit and Climate Finance appeared first on Carbon Credits.

California’s Bold Move: Say Goodbye to Gas Lawn Mowers in 2024

November 22, 2023/in Uncategorized /by

California enacted a law in 2022 to phase out gas-powered vehicles by 2035, and now it’s planning to do the same for millions of lawn mowers, taking effect in 2024.

The state will ban the sale of gas-powered lawn care equipment according to a new law phasing out small, off-road engines.

Small But More Terrible in Polluting Than Cars

The world’s 4th-biggest economy will be the first to phase out fossil fuel-powered landscaping tools. This decision marks a significant move in environmental policy.

The ban isn’t just about eliminating the noise the equipment causes but primarily focuses on curbing emissions from small engines. These small, off-road engines (SOREs) are known to be more polluting than all cars combined in the state.

California’s ambitious goal of achieving carbon neutrality by 2045 requires addressing emissions from various sources, including SOREs. The comparison drawn by the California Air Resources Board (CARB), a state agency that regulates air quality, between the emissions from these SOREs and a 2016 Toyota Camry’s output is quite striking:

1 hour use of a gas-powered lawn mower releases as much pollution as a Toyota Camry does over 300 miles.

The ban has sparked a debate similar to the controversy surrounding the ban on gas stoves. Opposition from certain groups, including some Republicans and gas companies, argues that these restrictions impede consumer choice.

A policy analyst at the environmental think tank Frontier Group highlighted the growing awareness of the impact of gas stoves and gasoline-powered lawn equipment on public health. This move will be closely observed by policymakers across the country to assess its effectiveness in driving environmental change.

The ban also serves as a test of Americans’ acceptance of cleaner technologies in their daily lives amid increasing restrictions on gas-powered appliances, traditional vehicles, and the fervent push toward electric alternatives by companies.

Carbon Emissions of Lawn Care Equipment

The ban on gasoline-powered lawn equipment in California could signify a transformative shift in the landscape of suburban America, where manicured lawns symbolize status and pride. The cultural significance of lawns in the post-war era was associated with the acquisition of homes by returning veterans. Their well-manicured grassy yards became a hallmark.

Back in the 1950s, having a lawn was not a choice but an inherent aspect of owning a house. However, this American dream came at an environmental cost.

Gas-powered lawn equipment, as per the CARB, emits pollutants comparable to driving a car 300 miles in just an hour. The emissions from these tools, especially lawn mowers and leaf blowers, significantly contribute to air pollution while generating excessive noise.

In 2020, lawn tools emitted over 30 million tons of CO2, geographically illustrated below per state.

The emitted gas can negatively impact both human health and wildlife; in contrast, electric alternatives offer quieter and cleaner operation.

The need to maintain lawns has evolved into a substantial industry. The North American market accounts for a considerable portion of the global power lawn and garden equipment market.

Today, manufacturers are investing heavily in encouraging consumers to adopt battery-powered options, particularly as regulations become more stringent. In fact, many individuals and businesses have already transitioned to electric alternatives voluntarily or due to local regulations.

Moreover, various cities and towns nationwide have implemented bans or restrictions on gas-powered equipment, including those in Naples, Florida and Washington, DC. Their decisions emphasize growing awareness and action toward cleaner and quieter lawn maintenance practices.

The Big Push for Electrifying Appliances

The movement towards electric lawn equipment is gaining momentum, driven by incentives provided by local governments and evidenced by an uptick in sales of electric tools. This shift reflects an acknowledged reality among lawn equipment manufacturers: the future lies in battery power.

While companies like Stanley Black & Decker Inc. aren’t entirely eliminating gas-powered equipment, they are prioritizing electrified devices.

Other manufacturers, like Husqvarna and Honda, are focusing on innovations like robotic mowers and autonomous, battery-powered equipment, designed to navigate and maintain lawns efficiently.

Image from Honda website

However, not everyone is readily embracing this transition to electrification, particularly because of the costs. Electric tools can come with a price premium of up to 25% for hand-held grass cutters and 50% for push mowers compared to their gas-powered counterparts.

Concerns also revolve around the performance, durability, battery life, and charging limitations of electric models, especially for extensive landscaping tasks.

The California rule banning the sale of new gasoline-powered lawn equipment in 2024 aims to drive this transition without prohibiting the use of existing gas-powered tools. The new policy also allocates $30 million for rebates and programs to aid landscapers in shifting to zero-emission equipment.

Just last month, the state enacted the nation’s first-of-its-kind climate disclosure law that requires companies to report on their carbon emissions and climate-related financial risks.

The lawmaker behind the new legislation, Marc Berman, envisions a broader implication beyond landscaping. He hopes it will pave the way for more aggressive policies targeting gas-powered appliances like heaters and pumps. The ultimate goal is to achieve significant reductions in air pollutants and greenhouse gas emissions.

The post California’s Bold Move: Say Goodbye to Gas Lawn Mowers in 2024 appeared first on Carbon Credits.

Proposed Methodologies for Carbon Projects Under Paris Agreement’s Article 6.4

November 22, 2023/in Uncategorized /by

The Supervisory Body overseeing Article 6.4 of the Paris Agreement has recently released a preliminary draft document outlining proposed methodologies for carbon reduction projects. This is important as the most anticipated climate conference, COP28, will take place starting this November 30 in Dubai.

The methodologies are integral for projects aiming to claim Article 6.4 emission reduction credits, also called 6.4 ERs. The focus of the draft recommendation centers on the requirements set for projects aimed at curbing greenhouse gas (GHG) emissions.

Supervising “The Mechanism”

The Conference of the Parties (COP), serving as the meeting of the Parties to the Paris Agreement (CMA), during its 3rd session held in Glasgow, made a significant decision by adopting Decision 3/CMA.3. The COP timeline is shown below, alongside the rising global carbon emissions.

The decision captures the rules, procedures, and operational framework for the mechanism established by Article 6, paragraph 4, of the Paris Agreement, commonly referred to as “the mechanism.”

In line with this decision, the CMA has appointed a Supervisory Body responsible for overseeing and administering the mechanism. It operates under the authority and guidance of the CMA.

The Supervisory Body also works with full accountability to the COP.

Comprising 12 members from Parties to the Paris Agreement, the Supervisory Body ensures a wide and fair geographical representation. Its members aim for a balanced representation, with this composition: 2 members from each of the 5 United Nations regional groups, 1 member representing the least developed countries, and 1 member representing small island developing States.

The term of service for the newly appointed members begins from the first meeting of the Supervisory Body this year.

Key Principles for Emissions Reductions & Accountability

Central to the Body’s proposed methodologies are several key principles and features of carbon projects.

For instance, the methodologies advocate for a cautious approach in estimating a project’s emission reductions or removals. This is to ensure the credibility of the credits and to promote greater ambition in emissions reduction efforts.

It involves establishing emission baselines below the scenario of business-as-usual GHG emissions that would have occurred without the carbon project.

Moreover, to uphold increasing environmental ambition, the draft suggests that the baseline should “evolve or lead to a downward adjustment of creditable emission reductions over time”.

Additionally, stakeholder involvement throughout the methodology development process and accounting for potential uncertainties associated with the underlying data are crucial aspects emphasized in the draft.

Demonstrating a project’s additionality is another pivotal requirement within each methodology. It requires an assessment showing that the project activity would not have taken place without the incentives from the mechanism. But this should consider all relevant national policies, including legislation.

Mechanism methodologies will also need to address project leakage. This refers to a change in GHG emissions outside the project boundary linked with the project’s activities.

Finally, the document touches upon non-performance and reversal aspects. These pertain to the potential reversal of emission removals or the risk that the carbon avoided or removed might not remain so for the duration of the project. An example would be a wildfire, which has been reversing the carbon removals of the trees under a carbon project.

The draft mentions the ongoing need for the supervisory body to further develop guidance in these areas.

What Comes Next?

Some market players have commented on the draft prior to its release. An accredited observer organization highlighted the need to come up with an agreed definition of “removals”. They refer to clearly identifying exact removal of greenhouse gasses (GHG) versus carbon dioxide (CO2).

The Supervisory Body responded accordingly, adopting this final definition on its recently published draft:

“Removals are the outcomes of processes to remove greenhouse gasses from the atmosphere through anthropogenic activities and durably store them…”

Others also noted that until the credits are issued under the Article 6.4 mechanism, the voluntary carbon market (VCM) remains the primary avenue for private capital investment in activities aimed at GHG mitigation or removal.

Given the timelines associated with investments in project activities and the preparatory period for project implementation, the VCM is expected to remain the predominant platform for investment. This is likely to persist until 2025, if not longer, as frameworks and methodologies for the mechanism are established.

Therefore, the VCM will continue to attract investments until the Art 6.4 mechanism drafted becomes fully operational.

Nonetheless, the Supervisory Body’s focus on key principles such as cautious estimation of emission reductions, stakeholder involvement, and addressing uncertainties reflects a commitment to credibility and accountability. The preliminary draft outlining methodologies for carbon reduction projects signifies a pivotal step in establishing frameworks for emission reduction credits.

The post Proposed Methodologies for Carbon Projects Under Paris Agreement’s Article 6.4 appeared first on Carbon Credits.