January 2024 – The Global Carbon Fund

Blockchain-Backed Passports for Transparent Carbon Removal Launched by Tomorrow’s Air

January 31, 2024/in Uncategorized /by

PicoNext has recently announced a collaboration with Tomorrow’s Air, the flagship climate initiative of the Adventure Travel Trade Association. Tomorrow’s Air focuses on educating, inspiring, and mobilizing individuals to support carbon removal technologies and sustainable aviation fuel in the travel industry.

The initiative is part of a larger effort to promote sustainable travel practices and innovative climate solutions.

Every payment received by Tomorrow’s Air supports climate conscious travel education. It also funds the scale up of carbon emission reductions and carbon removal innovations.

PicoNext is an end-to-end platform for experienced brands to engage their customers using public ledgers. With integrated Digital Product Passport, sustainability transparency, and loyalty capabilities, PicoNext enables companies to use blockchains in promoting products/services.

What are Digital Product Passports?

As part of their collaboration, PicoNext is powering Tomorrow’s Air’s new Digital Product Passports designed for carbon removal purchases. These passports offer a unique way for travelers to track the progress and impact of associated carbon removal orders.

When individuals embark on a journey with one of Tomorrow’s Air’s partner travel businesses, the Digital Product Passport allows them to gain insights into how carbon dioxide emissions associated with their travel are being effectively removed from the atmosphere.

The Digital Product Passport includes a detailed representation of carbon removal purchases specific to a particular travel business. It offers travelers a deeper understanding of how industry partners are contributing to the scaling up of essential technologies for cleaning up excess CO2.

The carbon removal information stored in Tomorrow’s Air Digital Product Passports is cryptographically secure, ensuring the integrity of the data. This adds an extra layer of transparency and trust to the process, as the information can’t be changed or tampered with once it’s written to the blockchain.

Moreover, updates on the status of climate initiatives within the Digital Product Passport remain accessible indefinitely across distributed ledgers. As such, it provides travelers and Tomorrow’s Air’s travel business customers with insights into the progress of carbon removal actions.

The intuitive web-based viewer provided by PicoNext enables easy access to view the status of these public-ledger carbon removal events.

The Passport to Transparency in Carbon Removals

Tomorrow’s Air is advancing its approach to carbon capture reporting by transitioning from PDF-based certificates to PicoNext’s Digital Product Passports. This evolution aims to provide enhanced transparency to a broader audience of stakeholders using sustainable and energy-efficient public ledgers.

Unlike traditional PDF certificates, Digital Product Passports leverage blockchain technology to offer an easy-to-access method for gaining deeper insights into a company’s sustainability initiatives.

Underlining this aspect, Christina Beckmann, creator of Tomorrow’s Air remarked that:

“Tomorrow’s Air adds value by collaborating with the most trusted, reputable carbon removal suppliers – and by elevating transparency using Digital Product Passports we give our customers unmatched visibility into their carbon removal orders.”

By using Digital Product Passports, Tomorrow’s Air can engage customers with a more interactive and transparent representation of carbon removals. This approach not only substantiates a company’s commitment to sustainability but also fosters greater trust among stakeholders.

More notably, it serves as a proactive measure against greenwashing, addressing consumer concerns about the authenticity of sustainability claims.

Several high-profile cases have highlighted the negative consequences of greenwashing, leading to legal actions and reputational damage. Delta Air Lines, Evian Natural Spring Water, Nivea, TotalEnergies, KLM, and FIFA have all faced legal challenges related to their environmental claims.

It’s no surprise, therefore, that environmental groups unanimously agree in supporting environmental and social data in a Digital Product Passport. As shown in the chart below, 92% of environmental organizations/NGOs prefer to see environmental data in the passport.

PicoNext’s technology allows organizations to showcase their commitment to sustainability on a public ledger, providing a verifiable record of progress toward environmental goals. By leveraging this technology, companies demonstrate that their marketing claims align with genuine environmental impact, thus safeguarding their claims’ integrity.

This innovative approach is applicable across various industries, such as manufacturing, fashion, textiles, batteries, and electronics.

Furthermore, adopting Digital Product Passports assists companies in complying with European Union regulations that emphasize product-level transparency. The passports provide a transparent and substantiated record of sustainability data throughout a product’s lifecycle.

In conclusion, the collaboration between PicoNext and Tomorrow’s Air signifies a significant stride toward transparency and accountability in carbon removal efforts. The introduction of Digital Product Passports not only empowers travelers to track their carbon footprint but also sets a new standard for sustainability reporting in the travel industry.

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Up in Smoke? Study Questions Accuracy of Cookstove Carbon Credits

January 30, 2024/in Uncategorized /by

Companies wanting to offset their harmful emissions have used a type of carbon credit known as “cookstove credits” to compensate for their pollution. But a new study suggests that the clean cookstove projects may be overstating their impact by about 1,000%.

The cookstove projects aim to address issues related to household air pollution and deforestation caused by traditional cooking methods. These projects are seen as a way to achieve UN sustainable development goals (SDGs) and have gained popularity.

Within 6 months in 2023, a report showed cookstove projects issued the most new credits in the market, taking 15% of the total, while also registering the most new projects.

However, the study published in Nature Sustainability suggests that these projects are exaggerating their climate benefits. It reveals that 9 out of 10 of the 96 million certified cookstove credits don’t avoid the emissions they claim.

Burning Questions: The Climate Impact of Cookstove Carbon Credits

Around 3.2 million premature deaths occur annually due to household air pollution, according to the Clean Cooking Alliance (CCA). Burning wood for cooking also contributes to about 2% of global greenhouse gas emissions.

The CCA, backed by governments including the Netherlands, Canada, and the United States, is working on an improved methodology for cookstove credits. The CCA aims to address the challenges associated with accurately measuring emissions reductions from cookstove projects. This is due to the complexity and resource-intensive nature of the task.

The alliance believes that the carbon market can play a significant role in addressing this issue with carbon credits.

Carbon credits represent one tonne of carbon emissions in theory. Companies buy them to offset their emissions, allowing them to neutralize their carbon footprint. These market instruments are facing increased scrutiny as concerns grow about the effectiveness of carbon offset schemes.

Cookstove credits, a type of carbon credit, have become one of the fastest-growing project types on the voluntary carbon market. These credits are issued when cleaner or less energy-intensive cookstoves are distributed to communities that traditionally rely on dirty fuels like wood or kerosene.

They typically cost much more than the other types of carbon credits available today, given the multiple SDGs they address. For instance, the carbon pricing from Gold Standard below shows that cookstove credits are priced higher than forestry credits.

Monetary Value of Gold Standard Project Impacts/Ton of CO2 Emissions Reductions

As of May 2023, cookstove projects represented 1,213 out of the 7,933 project activities on the VCM. They also generated ~78.9 million total issued credits in the market.

Moreover, cookstove offset projects can progress several SDGs such as climate, energy, health, gender, poverty and deforestation.

But the study, conducted by researchers at the University of California, Berkeley, challenges the projects’ claim. The researchers indicate that many offsetting schemes claiming to support “clean” cookstoves often fail to meet World Health Organization standards.

Their results raise concerns about the accuracy of the claimed climate benefits of such projects. They’re calling for a closer examination of their impact on air quality, deforestation, and overall environmental and social benefits.

Carbon Cookout: The Environmental Benefits of Cookstove Projects

The research indicates that the rules allow projects to exaggerate stove usage and the resulting benefits for nearby forests. In turn, they significantly inflate the claimed benefits for climate and biodiversity, the study noted.

Issued Cookstove Credits Across the VCM vs Study Sample

The above images map out the credits issued so far on the VCM across the five methodologies covered as of 9 November 2022 (top panel). The study sample (bottom panel) includes the 51 cookstove project activities. It covers the GS-TPDDTEC, GS-simplified, CDM-AMS-II-G, CDM-AMS-I-E and GS-metered. Source: Gill-Wiehl, A. et al. 2024

While acknowledging the issues, the researchers propose that reforms to the rules governing carbon credits could still make them a meaningful source of climate finance if properly implemented. They also offer a method for clean cookstove projects to avoid overstating their impact.

Some companies have reportedly adopted those practices during the paper’s peer-review process.

The lead author of the study, Annelise Gill-Wiehl, highlighted the potential impact of over-crediting. She stated that it “replaces direct emission reduction and other more effective climate mitigation activities”.

The study contributes to the ongoing scrutiny of the unregulated voluntary carbon market. Major concerns center on the generation of potentially questionable carbon offsets.

Barbara Haya, the director of the Berkeley Carbon Trading Project and a co-author of the study, expressed hope that the recommendations provided could contribute to improving the quality of carbon credits.

Clearing the Air: The Controversy

In response to the study, an open letter from carbon project developers and researchers highlighted concerns about the research. They argued that the academics focused on larger cookstove projects, which usually issued more credits distributed than smaller initiatives.

Carbon credit registries Verra and Gold Standard disputed the findings.

The Gold Standard, a major carbon credit certifier, has disputed the findings. Gold Standard stated that the study’s conclusions weren’t supported by the evidence and were at odds with wider academic literature. The researchers acknowledged that Gold Standard produced the best-quality method for producing offsets, with only a 1.5 times over-crediting.

Verra, the world’s largest carbon standard, also expressed disappointment in the continued attention on the study. The certifier emphasized that the findings did not directly relate to its current methods.

Verra is developing a new methodology for cookstoves that reflects best practices and includes measuring techniques to verify stove usage.

The cookstove company ATEC, working with UC Berkeley to measure benefits more accurately, supported the research’s goal of ensuring accurate emission reductions.

The study challenging the accuracy of cookstove carbon credits raises critical concerns about the claimed climate benefits. The industry disputed the findings, but the call for improved regulations and accurate measurements remain to ensure transparency and effectiveness of carbon offset markets.

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Oil & Gas Firms to Emit 150B Metric Tons of Carbon Pollution

January 30, 2024/in Uncategorized /by

According to an analysis by Global Witness, over 50 oil and gas companies signing the decarbonization pact at the COP28 climate summit are projected to emit over 150 billion metric tons of climate pollution by 2050. That represents about 62% of the remaining carbon dioxide budget to stay below the 1.5°C temperature rise limit.

The data used in the analysis covers only crude oil and gas. It didn’t include figures for NGL and condensate, which makes the production estimates conservative.

The analysts based their carbon budget calculations using the equivalent of 250 billion tonnes CO2 equivalent to retain a 50% chance of limiting warming to 1.5C, which is according to the latest peer-reviewed research.

The dataset includes all assets that are presently in production, under development (approved but haven’t commenced yet), discovery, and undiscovered. The data covers operating production from 2023 to 2050.

Unraveling the Hidden Impact of Oil & Gas Climate Pledge

The Oil and Gas Decarbonization Charter was introduced at COP28 by Saudi Arabia and conference president Sultan Ahmed Al Jaber. Al Jaber emphasized its significance, claiming that companies representing over 40% of global oil production committed to achieving net zero. The pact also commits to end methane emission and halt routine flaring by 2030.

Saudi Arabia’s Aramco and the UAE’s ADNOC, alongside 29 more national oil companies, inked the non-binding charter. PetroChina, ExxonMobil, TotalEnergies, Petrobras, and Shell have signed the agreement, though their agreement is only voluntary.

Direct GHG emissions of largest oil companies in 2022

The pact signifies a promising climate commitment from the oil majors. However, a significant loophole exists, as highlighted by Global Witness.

The charter exclusively addresses emissions directly released by those companies. They leave out the considerable impact of their products’ use, known as Scope 3 emissions. This pollution source comprises up to 90% of the oil and gas’ total carbon emissions.

Global Witness used data from Rystad Energy to look at the production plans of the pact’s signatories, including major state and private companies.

The analysts found out that the companies would produce 265 billion barrels of oil and 26.7 billion cubic meters of gas by 2050. This would result in 156 billion metric tons of CO2 equivalent emissions, or approximately 62% of the remaining carbon budget.

Source: Twitter.com/benmsanderson/

Among the companies that signed the pact, those with the largest carbon footprints through 2050 include ADNOC and Saudi Aramco. Together, they have a combined production of 136.4 billion barrels of oil and 5.5 billion cubic meters of gas between them.

Their projected production would emit more than a quarter of the remaining carbon budget – 64.7 billion tonnes of CO2.

ExxonMobil, Equinor, TotalEnergies, Eni, and Shell also have plans to emit as much as the European Union does in 15 years – 38.6 billion tonnes of CO2.

The Climate Challenges Beyond COP28 Promises

The findings further stir climate activists’ greenwashing claims against oil and gas companies. They have expressed concerns about fossil fuel companies prioritizing profit extraction over environmental preservation, reinforcing the perception of greenwashing.

In another analysis, the COP28 draft dropped mention of fossil fuel phase out. It instead advances the ramping up of renewable energy and efficiency measures. Campaigners stated that governments must do something urgent and concrete to phase out fossil fuels.

Concerns were raised about the portion of the industry’s emissions reduction commitments compared to the environmental impact of their products. A climate campaigner, Cara Jenkinson, Cities Manager at Ashden, remarked that:

“The only way to slash emissions from usage of oil and gas is to cut demand – governments across the world must speed up their electrification plans, with poorer nations being supported to bypass fossil fuel vehicles and ramp up clean renewable energy production.”

Responding to the concern, a spokesperson from Shell said that:

“While Shell’s targets are more comprehensive and ambitious than the Charter requirements, for example with carbon intensity targets that also cover the use of our energy products, we want to share our experience and learn as others in the industry move further along their journeys too.”

In the shadow of climate commitments at COP28, the analysis by Global Witness reveals a stark reality – oil and gas companies are to burn through 62% of the remaining carbon budget. The results raise critical questions about the industry’s true environmental costs.

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Carbon Market Chronicles: 2023 Unveiled and 2024’s Inflection Points

January 29, 2024/in Uncategorized /by

The voluntary carbon market (VCM) witnessed both considerable progress and significant hurdles in 2023 as reviewed by the MSCI Carbon Markets in its recent webinar.

The review includes key developments from 2023 and the potential inflection points to watch out for in 2024. Notably, the findings show that 2023 has the lowest number of credits issued in 3 years. In contrast, the year ended with a record number of monthly retirements.

Here’s a recap of the webinar, focusing on carbon credit issuances and retirements, demand, key market players, investment, major policy developments, and 2024 outlook.

Peaks, Valleys, and 2023’s Record Retirements

In 2023, credit issuances recorded the lowest annual total in 3 years after falling 25% year-on-year, as seen below. This slow down in supply was largely due to Nature-based and renewable energy projects issuing their lowest annual amounts in 5 and 4 years, respectively.

On the other hand, energy efficiency projects were the only major type to increase credit supply. It doubled in 2022 volumes, primarily driven by cook stove projects.

The MSCI report saw retirements rallied in Q4 2023, the second highest quarter on record. And that’s despite the slow down in corporate activity in mid-year. This momentum seems to have been carried into January this year.

In fact, that’s the second highest January to date and may even exceed the 17 MtCO2 set in 2022. December 2023 alone has seen 36 megatons of credit retirement, setting a new monthly high, around 25% above the previous high record.

When it comes to registries, the four largest, namely Verra, Gold Standard, ACR, and CAR continue to dominate the market. They provide more than 90% of the credits retired last year.

Retirements from these “Big 4” registries actually rose last year by 6%, while retirements across the next ten prominent names dropped slightly in 2023.

The Top 10 Credit Retirees

Of the top 10 retirees, Delta Airlines aced the first spot. They were also the largest retiree corporate in 2021 and 2022. While some of these companies exited the top 10 last year, others remain while new ones entered the market.

Shell topped the list in 2023 with around 16 million metric tonnes, followed by Volkswagen with over 8 MtCO2e. Overall, there are more joiners than leavers last year when it comes to retiring credits.

Unlocking the Nascent Carbon Removal Market

Gaining a lot of interest in 2023 is the nascent CDR market, referring to high permanent engineered carbon removals. These include biochar and direct air capture, which usually command a premium price than other project types. That’s because they’re known to be of higher quality and high durability.

Last year, the number of CDR transactions fell slightly year-on-year. But the quantity of credits, represented by the right hand chart, increased significantly to 5.4 million.

Navigating the Ups and Downs of Carbon Credit Prices

The declining trend in 2022 was carried over into the first half of 2023. But looking at the average level, the drop wasn’t that much. It was only 16% lower in 2022 compared to 2023.

In terms of price by project type for last year, all of them were lower in Q4, resulting in full year price declines. REDD+ projects saw the least drop, 15%, while renewable energy experienced the largest price decrease, 39%.

Both energy efficiency (pink line) and REDD+ (green line) projects were subject to increased media and academic scrutiny in 2023. They sustained weaker prices.

Interestingly, both nature restoration and non-CO2 gasses projects rebounded in November and December last year. Meanwhile, energy efficiency, REDD+, and non-CO2 gasses converged around the same price level at $4.65 by the end of the year.

This suggests that the market is not distinguishing between these project types, potentially signaling a weak market environment.

Policy Developments in 2023: From EU Directives to COP28’s Uncharted Territories

Last year also saw some major policy developments. For instance, the EU’s green claims directive aims to empower consumers for the green transition directive. It bans claims of neutral, reduced, or positive climate impact based on carbon offsetting, on the grounds that it’s a misleading consumer practice.

Moreover, the VCMI carbon integrity claims, the Claims Code of Practice (CCPs), is a significant regulation for the VCM.

There are also landmark regulations of market trading and standards wherein national governments are stepping in. For example, the US Commodity Futures Trading Commission (CFTC) introduced proposed guidance for trading of voluntary carbon credit derivative contracts.

In the Global South, there has been growth in national carbon credit markets while carbon pricing systems and schemes are being proposed in several African countries. Amid increased scrutiny in carbon credits certified by Verra, the leading carbon certifier updated its standards.

At the COP28 climate summit, carbon markets find their footing amid Article 6 frustrated talks. Article 6.2 rules are mostly in place but there’s a lack of Article 6.4 agreement on key steps. Disagreements centered on integrity concerns, yet Article 6 agreements are moving ahead.

Looking forward, MSCI Head of Carbon Markets, Guy Turner, raised a pertinent question: “Could we be at an inflection point for the market in 2024?”

There could be a number of inflection points, five in particular.

The potential new sources of demand driven by CORSIA, VCMI, SBTi, and more compliance markets in near and long term.
Quality initiatives moving into implementation.
Jurisdictional approaches are starting to take off – whether by governments or donor institutions. High interests are observed in jurisdictional soil carbon and blue carbon.
Increasing clarity for corporations on claims and disclosures on the use of credits, with the EU and UK taking the lead.
Macroeconomic cycle turning but political uncertainties

In the ever-evolving landscape of the voluntary carbon market, 2023 marked both triumphs and challenges. From record retirements to the rise of CDR investments, the market navigated uncertainties. As 2024 unfolds, potential inflection points await, shaping the future trajectory of the global carbon market.

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Top Lithium Stocks Making Waves in 2024

January 29, 2024/in Uncategorized /by

Lithium, a vital elemental metal, also dubbed as “white gold”, has gained significant attention as a sought-after commodity. This is particularly due to its crucial role in battery manufacturing for electric vehicles (EVs).

The surge in EV sales has fueled optimism among investors regarding companies involved in lithium production and refinement. Despite being a common substance, lithium prices experienced an astounding 1,000% increase from 2021 to the end of 2022. This exceeds the previous highs set in 2017.

However, the landscape changed in 2023.

An increasing supply of lithium from mines in Africa and Australia is putting downward pressure on prices. Plus, reports of lower consumer demand for EVs in the U.S. and China may further contribute to a decline in lithium prices.

Lithium Carbonate (CNY) Price

Source: Trading Economics

Following the unprecedented boom of 2021/2022, stocks of lithium producers have faced significant declines due to a continued plunge in lithium prices.

As with all commodity stocks, lithium stocks are intricately tied to supply and demand dynamics in the underlying materials they deal with. The future trajectory of lithium prices and associated stock values will likely be influenced by the continued demand for EVs.

Investing in top lithium stocks follows a similar process to investing in any other type of stock.

Here are our top picks for lithium stocks that are worth each penny of consideration.

Albemarle Corporation (ALB)

Market cap: US$15.1 billion

Enterprise value: US$17.1 billion

Albemarle Corp. stands prominently among the largest lithium stocks and is a key player in lithium mining. With a market value comparable to other major commodities such as Barrick Gold Corporation (GOLD).

The company’s substantial scale and the optimistic long-term forecasts for EV demand position Albemarle as one of the top lithium stocks in the current market. Albemarle has embarked on a significant production expansion initiative in South Carolina, projecting an annual capacity of about 225,000 metric tons of lithium.

The American lithium giant anticipates this capacity to triple by the 2030, aligning its growth plans and expectations for the growing EV sector.

But recently, it redirected efforts towards its Kings Mountain lithium-spodumene mine resource in North Carolina, in response to softer market conditions.

Albemarle had warned of potential market share loss to Chinese producers after its unsuccessful takeover bid for Australian lithium producer Liontown Resources. The $4.2 billion merger was abandoned.

The largest producer of lithium for EV batteries has also revised its annual forecast downwards at the end of last year. They further reported a lower-than-expected quarterly profit due to declining prices for lithium.

Still, Albemarle now anticipates a 30% increase in lithium sales volume for the year. But with prices expected to rise only 15%, falling short of market expectations for robust growth.

The reduction in demand from consumers has led major EV manufacturers like Tesla, Ford Motor, General Motors, and Rivian to scale back production. Additionally, Toyota Motor has cut its EV sales forecast by 40% in 2024 due to lower demand in China. This reduced demand is impacting the lithium market and related stocks.

Albemarle’s peers have experienced similar declines. For instance, shares of Sociedad Química y Minera de Chile S.A. are down -39.4% YTD.

Sociedad Química y Minera S.A. (SQM)

Market cap: US$15.1 billion

Enterprise value: US$16.1 billion

Chile, globally recognized for its mineral wealth, features Sociedad Química y Minera de Chile (SQM) at the core of its mining industry. While SQM engages in the production of various minerals, its significance in lithium extraction is paramount.

Alongside diversified mining counterparts like Albemarle and Ganfeng, SQM maintains robust double-digit operating profit margins, substantial cash reserves for expansion, and minimal debt.

In 2022, SQM achieved its highest-ever corporate revenues, surpassing $10.7 billion in sales. A substantial 76% of this revenue was derived from lithium and related products.

SQM’s pivotal role goes beyond its economic contributions, as it stands as the largest taxpayer in Chile. Recent discussions about the government potentially increasing its stake in the company have emerged and raised eyebrows.

Such a move introduces the inherent risks associated with government ownership, including the possibility of political interference. Some investors don’t find it a favorable development.

The trajectory of SQM’s shares showed positive momentum until late 2022, when a decline followed. This is largely due to weakened lithium prices and concerns about the company receiving a fair valuation for the anticipated increased government stake.

The impending nationalization raises uncertainties about state control of lithium. Once this pushes through, it may impact SQM’s profitability.

Looking forward to a long-term demand for lithium to exceed supply, SQM has strategically invested in expanding its production capacity. These developments position the company to augment its market share in the lithium supply chain, particularly for EV batteries.

Li-FT Power (LIFT; LIFFF)

Market cap: US$168.5 million

Enterprise value: US$163.4 million

Given the insufficient domestic lithium reserves to meet demand, the U.S. is in a challenging position. With the need for a domestic supply, Canada is positioned to contribute to meeting U.S. lithium requirements. This is where a junior lithium company, Li-FT Power (LIFT: LIFFF), based in Vancouver, British Columbia, perfectly comes into the picture.

Li-FT has acquired promising lithium assets in Canada, starting drilling on their flagship project in June last year. The company’s investment thesis revolves around the aggressive exploration and expansion of high-grade lithium pegmatites to define world-scale resources in a proven mining jurisdiction.

The company’s strategy focuses on consolidating and advancing hard rock lithium pegmatite projects in Canada, particularly in known lithium districts. Li-FT Power aims to apply modern systematic exploration techniques to unveil value in these projects that historical work hasn’t fully realized.

The project portfolio includes assets in the Northwest Territories and Quebec, with flagship projects like the Yellowknife Lithium Project and the Pontax Project, which has revealed an 8km long lithium anomaly.

The company is well-financed to progress its projects, cementing its commitment to advancing the exploration and development of high-quality lithium assets in Canada.

LIFT strategically positions itself to take advantage of weak industry sentiment, allowing for the acquisition of shares at discounted valuations.

The Lithium Deficit Looms

While those top lithium stocks are making waves in 2024, projections indicate that lithium prices will further decline due to:

increasing supplies of the battery metal, and
subdued demand from China.

In China, lithium carbonate prices have plummeted from an all-time high of $81,360 per tonne in November 2022. This is the lowest level in two years at $20,782 per tonne in the current month. As lithium carbonate prices have fallen by 67% year-on-year, Chinese refining companies are responding by cutting production or suspending operations.

This represents a nearly 75% correction due to a series of negative catalysts that have suppressed lithium prices. The situation is even more challenging for lithium hydroxide markets, primarily due to the sluggish performance of the nickel cobalt manganese battery sector compared to the lithium iron phosphate battery sector.

Australia, which contributes 40% of global lithium production, expects a decline in the spot price of spodumene from around $3,840 per tonne in 2022 to $2,200 per tonne in 2025.

Lithium miners are adjusting to the sharp drop in demand for EVs in China by reducing costs and scaling back production expansion plans.

This response aligns with the challenges faced by lithium producers globally as the market grapples with oversupply and weakening demand for EVs.

The inability of China to meet its own demand for lithium, despite being the world’s 3rd-largest producer, has significant implications for other countries that rely on Chinese lithium. This is why the US aims to develop its own lithium supply chain that doesn’t depend on China.

The Inflation Reduction Act, in particular, specifically promotes onshoring of clean energy manufacturing, including EVs, within the U.S. And that also means to reduce or cut off import of lithium from China.

Corinne Blanchard, Deutsche Bank’s director of lithium and clean tech equity research, is among the analysts predicting a future shortage in the lithium industry. Despite forecasting supply growth, she believes that demand will outpace it at a much faster pace.

Blanchard anticipates a “modest deficit” of around 40,000 to 60,000 tonnes of lithium carbonate equivalent by the end of 2025, but she foresees a much larger deficit of 768,000 tonnes by the end of 2030. This forecast aligns with the broader industry expectations of increasing demand for lithium, particularly driven by the growing EV market.

2024 unfolds with challenges for the lithium market, witnessing stock declines post 2023’s meteoric rise. Despite the setback, top players like Albemarle, SQM, and Li-FT Power strategically position themselves. As global trends hint at a Chinese lithium market decline, industry experts see a future lithium deficit, driven by the relentless growth in the EV market.

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January 2024 Reveals Voluntary Carbon Credit Market Surprises

January 26, 2024/in Uncategorized /by

January 2024 has witnessed more retirements compared to the same month last year, and it is projected to exceed 2022 retirements, according to Viridios AI report, a voluntary carbon credit market pricing and data provider.

Viridios is a climate tech platform providing carbon credit prices, valuations and project data to boost voluntary carbon market transparency.

Overall, trading in the Voluntary Carbon Market (VCM) was relatively light in the past week.

Renewable energy credits (RECs), particularly from India, have experienced price increases, leading to a shift in demand from Chinese to Indian credits. In the native species removals market, activity is slow, but a premium is emerging for projects in this category.

However, the REDD+ segment is facing minimal activity, both in the market and over-the-counter, indicating subdued interest in this nature-based category.

Some sources indicate that political risks may not immediately impact pricing due to low credit supply. In contrast, others report current impacts on the Corresponding Adjustment market, with fluctuating premiums for cookstove credits.

For instance, the Rwandan Cookstove project saw a significant jump from $5.85 to $14 for vintage 2021. Cambodia released its Article 6 operations manual, though not yet published, for a water purifier project and an improved cookstoves project.

Riding the Wave: January Retirements Soar

The projects in Viridios analysis come under three major categories: Pre-registration (Development, Review), Registered (Registered, Operational, Verified, Completed, Renewal, Paused), and Issuing.

As seen below, India has the most new projects in the pipeline while household devices got the most count.

Per category, the REDD/REDD+ projects include efforts that avoid both planned and unplanned deforestation and degradation. Meanwhile, the ARR projects, which has the most count, involve various activities, including Afforestation, Reforestation, and Revegetation initiatives.

REDD+ Projects

ARR Projects

Most REDD+ projects, priced highest at $16.17, are in Brazil while ARR, with a $24.66 highest price, are most dominant in China.

Technology projects (TECH) are related to Renewable Energy which include Biomass, Biofuels, Hydro, Solar, Wind, and Geothermal. While it has the largest number of projects, >7,500, its highest price at $7.11 is much lower than nature-based.

The report also provides insights on credit issuances and retirements in metric tonnes per month. The chart below shows a comprehensive view of cumulative credits issued by month over the past 3 years. Highest issuances are in December, both for 2022 and 2023.

The same trend can be observed in terms of credit retirements. Most credits are retired in December for both years, with more than 150 metric tonnes.

When it comes to issuances by recognized standards, Verra has the biggest share, followed by Gold Standard (GS). The same is true for the number of credits retired by standard.

Revealing a Dynamic Carbon Credit Market

For market activity, the majority of the credit volume based on quotations ranges from 0-50,000 credits. This trend applies to all weeks covered from November 2023 to January 2024 as shown below.

Breaking down the market volume per category, Nature-Based versus Technology, the latter has the largest share. This could perhaps be due to the intensifying scrutiny over nature-based carbon credit offsets, which faced high-profile investigations last year.

On the other hand, carbon removal technologies (direct air capture) received great interest from investors and government support globally.

Additionally, Viridios report also looked at the VCM activity by major registries, including Verra’s VCS, GS, ACR, CAR, and CDM. ACR refers to American Carbon Registry, CAR means Climate Action Reserve, and CDM stands for Clean Development Mechanism.

Weekly data reveal that VCS and ACR almost have the same footing when it comes to carbon credit volume.

Lastly, the report presents a geographical analysis on volume by continental regions. The North American region snags the largest market volume per week, followed by Asia. Notably, in the recent week, the Asian region got the most volume with Africa coming second.

In the opening month of 2024, Viridios AI’s insightful report reveals a dynamic carbon credit landscape marked by a significant upswing in retirements and a distinct shift towards Indian RECs. The analysis delves into various project categories, painting a vivid picture of the evolving trends shaping the voluntary carbon market.

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Xpansiv Report: Carbon Credit Markets Experience Slowdown

January 25, 2024/in Uncategorized /by

The recent dynamics in the carbon credit markets have witnessed a slowdown in market momentum, following a period of acceleration during Q4 and into mid-January, according to Xpansiv’s market update.

Xpansiv is a global energy transition market infrastructure provider, trading ESG commodities, including carbon, RECs, digital fuels, and water rights.

Last week, both the CBL spot exchange and CME Group’s CBL GEO emissions futures complex experienced light volumes in carbon credit trading. Despite this, there has been sustained high interest from companies, particularly those facing fiscal year-end reporting deadlines on March 31.

The VCM Brake Amidst Busy Period

Companies focused on pragmatic purchases of currently available credits, irrespective of their eligibility for compliance and best-practice regimes scheduled for implementation later in 2024.

Amidst this backdrop, various companies, including airlines, are actively assessing the potential impact of unresolved Article 6 issues on CORSIA. This refers to the Carbon Offsetting and Reduction Scheme for International Aviation.

The concerns primarily surround regulatory and legal uncertainties regarding credit certification under the current compliance phase of the UN scheme. These are particularly linked with the finality of corresponding adjustments.

Spot prices remained stable week over week, per Xpansiv data. Notably, the N-GEO saw small trades at $0.43 and $0.50 but closed at the same $0.37 assessed price as the previous week.

Conversely, the CBL N-GEO December futures experienced a $0.56 decline on light volume, essentially erasing the previous week’s $0.70 gain. Similarly, the CBL GEO December futures decreased by $0.20. It closed at $0.66 and gave back a portion of the prior week’s $0.25 gain. The spot GEO slipped by $0.05, closing at $0.54.

In November last year, spot GEO jumped by 52% while N-GEO futures increased by 40%.

CBL’s spot carbon credit volume totaled 72,232 tons, with 57,225 nature credits and 11,307 technology credits. Additionally, trades in Australian Carbon Credit Units (ACCUs) contributed 3,700 tons.

Last week, CBL traded 3,000 HIR ACCUs at $36.40 and 700 generic ACCUs at $33.75.

The N-GEO Trailing instrument on CBL emerged as the most active spot contract, indicating continued appeal for the 2016-2017 vintage credits delivered through this contract. In contrast, CME Group’s CBL emissions futures saw a total volume of 2,695,000 tons. Its open interest reached 10,387,000 tons by the end of the week.

Pricing Trends for RECs in North American Market

Massachusetts solar markets took the lead in NEPOOL trading as the 3rd Qtr generation trading period commenced on Monday. NEPOOL stands for New England Power Pool. It’s a system for registering and tracking renewable energy generation and compliance with state and regional renewable energy regulations.

Notably, over 29,000 2023 solar carve-out II credits were matched on-screen, initiating at $260 and settling at $258.50.

In the same market, NEPOOL quad and dual qualified class I credits were initially traded at $39.75. However, subsequent offers saw a decline, resulting in quad-qualified credits settling at $39.20 and dual-qualified credits at $39.05.

Shifting to PJM markets, 6,730 2023 Virginia solar credits were successfully matched at $31.25. The PJM Market procures electricity to meet consumers’ demands both in real time and in the near term.

In Pennsylvania tier I markets, a few transactions occurred, with 2024 credits trading at $31.75. Their 2023 counterparts were priced at a $0.25 discount.

Additionally, 2,000 Maryland tier II credits were matched on-screen at $14.

These trading activities provide insights into the dynamic landscape of regional solar markets, showcasing fluctuations in credit values and volumes. The data reflects the ongoing developments and pricing trends for renewable energy credit markets in Massachusetts, Virginia, Pennsylvania, and Maryland.

The table below shows the best bid and offer for select RECs with markets closing on Friday January 19.

Below is Xpansiv’s CBL standardized contracts key and the corresponding definition.

More information on the Xpansiv’s spot standardized contracts is in the Standard Instruments Program document on their website. Information on the CBL GEO futures contracts are available on the CME Group website.

Existing Participants may log in here to take a closer look or list orders.

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Nuclear Power to Break Global Records in 2025, IEA Predicts

January 25, 2024/in Uncategorized /by

In 2025, nuclear power generation is poised to reach an all-time high next year, says the International Energy Agency (IEA), due to increased investments in reactors to facilitate the transition to a low-carbon global economy. This forecast marks a resurgence of nuclear, bolstering efforts to reduce global carbon emissions.

This surge in nuclear power aligns with the shift towards a low-carbon economy, where electricity demand is projected to rise. The transition is fuelled by the adoption of electric vehicles, heat pumps, and various low-carbon industrial processes that rely on electricity rather than traditional oil and gas sources.

Concurrently, renewable energy is projected to surpass coal as a primary power source in the early months of the upcoming year, according to IEA data.

Nuclear Renaissance: Reaching Historic Peaks in 2025

Nuclear power plant output is projected to increase by around 3% in both the current year and the next. It would reach 2,915TWh and surpass the previous peak of 2,809TWh in 2021, according to the report.

The IEA also anticipates an additional 1.5% growth in 2026, driven by the commissioning of new reactors in China and India.

The report further highlights the collective impact of expanding nuclear power and the rapid growth of renewable sources. Wind, solar, and other clean energy sources are expected to contribute significantly, with renewables accounting for about a third of global electricity generation by early next year.

This projection would displace fossil fuels from the electricity system. The agency also expects low-emission sources to meet the growing power demand over the next few years. This would lead to a record low share of global supply delivered by fossil fuel generators, at 54% in 2026.

IEA’s Executive Director, Fatih Birol, underscored the significance of these trends in reducing carbon dioxide emissions from the power sector. The sector is currently the largest emitter globally.

Birol attributed the positive developments to the substantial momentum behind renewables. This particularly involves the increasingly cost-effective solar energy and the resurgence of nuclear power, which is on track to reach historic highs by 2025. He said that:

“This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power. While more progress is needed, and fast, these are very promising trends.”

Global Nuclear Expansion: 29 GW by 2026

Between 2024 and 2026, an additional 29 GW of new nuclear capacity would come online globally. Over half of them would be in China and India.

There’s also anticipations on the commencement of commercial operations in new nuclear plants across various regions. Add to this the recovery of the French nuclear sector and anticipated restarts in Japan. Overall, the outlook for global nuclear generation foresees a nearly 10% increase in 2026 compared to 2023.

In 2022 and 2023, numerous countries strategically prioritized the introduction or expansion of nuclear power as a central component of their climate policy objectives, igniting a substantial resurgence of global interest in nuclear energy.

RELATED: How Nuclear Energy in the U.S. Got Its Groove Back, Poised to Soar in 2024

The IEA’s updated Net Zero Roadmap indicates a more than 2x increase in nuclear energy by 2050. This serves as a complement to the deployment of renewables and alleviating the strain on critical mineral supplies.

While a minority of European countries are contemplating phasing out nuclear energy, several emerging economies and some advanced nations are actively planning to introduce or expand nuclear energy generation. The current growth in nuclear power generation is predominantly concentrated in Asia.

During COP28, a significant development occurred as more than 20 countries joined forces to sign a collective declaration aiming to triple nuclear power capacity by 2050. If globally implemented, this commitment would involve adding 740 GW of nuclear capacity to the existing stock of 370 GW.

As of November 2023, the World Nuclear Association reported that 68 GW was actively under construction. Moreover, an additional 109 GW is in the planning stage and a substantial 353 GW proposed.

While these figures indicate substantial growth potential, achieving the declared objective by 2050 would need an extra 210 GW. That’s even when all the planned and proposed projects are successfully realized.

Leaders of Nuclear Growth: 50% of New Capacity

China and India jointly represent more than half of the anticipated 29 gigawatts of new nuclear capacity.

China, in particular, has experienced rapid growth in nuclear technology, elevating its generation share from 5% in 2014 to 16%. The country is aspiring to increase its installed nuclear capacity from approximately 56 GW to 70 GW by 2025.

Furthermore, the IEA notes that both China and Russia are expanding their influence in the nuclear sector. These two nations provide the technology for 70% of the reactors currently under construction.

The IEA has further observed a renewed interest in nuclear energy in Europe and Americas, but nuclear projects in China are experiencing fewer delays compared to those in the former regions. Overall, here’s how nuclear energy fits into the policy agenda of selected countries.

The International Energy Agency’s projections signal a notable resurgence in nuclear power generation, reaching an unprecedented high in 2025. With a 3% increase in output, nuclear energy is set to play a crucial role in the global transition to a low-carbon economy, complementing the growth of renewables. This forecast underlines nuclear power’s integral position in shaping the future energy landscape.

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Unleashing Africa’s Climate Finance with Billions of Carbon Credit Potential

January 24, 2024/in Uncategorized /by

Climate finance for the African continent witnessed a significant stride with the launch of the African Carbon Markets Initiative (ACMI), unlocking the region’s carbon credit potential. The initiative seeks to make climate finance available for African nations, fostering increased access to clean energy and sustainable development.

The recent Memorandum of Understanding (MoU) that the Jospong Group of Companies (JGC) has with EKI Energy Services signals a joint effort to accelerate carbon credit development in the region, specifically in Ghana. The collaboration aims to secure an impressive $1 billion in carbon credit financing in the West African nation.

Other countries in the region are also ramping up their efforts in developing their carbon credit markets, with Kenya and Nigeria taking the lead.

Africa’s Carbon Quest: 300M Credits Annually by 2030

Championed by a 13-member steering committee comprising African leaders, chief executives, and industry specialists, ACMI aims to broaden the continent’s involvement in voluntary carbon markets. These markets serve as trading platforms, enabling individuals, businesses, and governments to finance projects that contribute to emission reduction.

ACMI aims to mobilize up to $100 billion carbon credits per year by 2050.

According to estimates, the African carbon markets are growing steadily as shown in the chart below, reaching almost 54 million tonnes of credits issued.

Chart from The Rockefeller Foundation

Several African countries, including Kenya and Nigeria have already expressed their intention to collaborate with the market.

The range of climate projects under consideration includes reforestation, renewable energy, carbon-removing agricultural practices, and the implementation of direct air capture technologies. Investors supporting these projects receive carbon credits—certificates enabling them to offset or compensate for their carbon emissions.

The African Carbon Markets Initiative sets an ambitious target of generating 300 million new carbon credits annually by 2030. This goal is equivalent to the total number of credits issued globally in voluntary carbon markets in 2021.

Jospong & EKI’s $1B Deal Sets New Standard

Jospong and EKI Energy’s carbon credit deal is a major development in scaling carbon markets in Ghana. EKI will play a crucial role by providing essential technical assistance for the successful implementation of the project. The partnership covers a 5-year period.

The JGC is a diversified holdings company operating across 14 sectors of the economy, including banking, automobile and equipment. The company’s operations extend to other African countries and Asia.

Jospong’s Chairman, Dr. Joseph Siaw Agyepong, expressed confidence in EKI Energy’s expertise in climate change, saying they’re the ideal partner for the venture. He further noted that:

“We are partnering with EKI Energy because of their experience, so they can hand-hold us and propel strong development in the sector.”

Mr. Manish Dabkara, EKI’s CEO, assured strong support from them in attracting carbon investments for Jospong. The Indian-based carbon credits developer and supplier has an impressive track record of supplying over 200 million carbon offsets.

EKI Energy aims to create 1 billion carbon credits by 2027 and reach net zero by 2030. The Bombay Stock Exchange-listed company brings over 15 years of experience to the collaboration. Operating in 16 countries, EKI is a market leader in climate change, carbon offset solutions, and carbon asset management.

Below is the company’s project portfolio, covering various areas.

Nigeria’s $2.5 Billion Carbon Credit Opportunity

The West African country has been keen in positioning itself in the international carbon market. At COP27 climate summit in 2022, Ghana inked the first-ever voluntary cooperation involving ITMOs (Internationally Transferred Mitigation Outcomes) with Switzerland.

ITMOs, also known as Article 6.2 credits, allow countries to buy or sell carbon credits with other countries.

The ITMO project will help thousands of rice farmers in Ghana to practice sustainable agriculture to reduce methane emissions. Apart from Ghana, other countries in the continent are also committed to develop carbon markets to help mitigate climate change.

Nigeria, for instance, has been acknowledged for its gradual progress in establishing a carbon market framework. President Bola Tinubo announced at the COP28 climate conference that they’re to establish a special committee that will draft a national carbon market strategy. He highlighted the substantial $2.5 billion opportunity for the country within the ACMI.

The draft regulation would include an emissions trading scheme, a carbon registry, and a framework for high-integrity carbon credits. All these would contribute to the broader voluntary carbon market.

Nigeria, committed to achieving net zero carbon emissions by 2060, faces a significant funding challenge to advance its climate strategy.

The recent initiative of the Western African nation will have a pivotal role in addressing the country’s extensive carbon credit potential. Nigeria needs a staggering amount of almost $2 billion to meet its net zero ambition.

Kenya also has taken bold step in its carbon market regulations, particularly amending the country’s Climate Change Act in 2023. The Act introduces a framework for regulating carbon markets and establishes a Designated National Authority responsible for authorizing participants. This authority is also entrusted with maintaining a National Carbon Registry, containing information on carbon credits issued or transferred by Kenya and on carbon credit projects implemented to reduce greenhouse gas emissions.

The Act marks a positive step in creating, participating in, and regulating carbon markets in Kenya. As international investors already engage in various sectors in the country, the Act lays the foundation for future regulations that will provide finer details.

In a bid to tackle climate change challenges, the African nations are actively collaborating and supporting innovative financing. From Ghana’s $1 billion carbon credit deal with EKI Energy to Kenya and Nigeria’s supportive policies, the continent is on its way to drive climate action.

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