Japan’s Nature-Positive Economic Strategy: A Sustainable Growth Roadmap

April 11, 2024/in Uncategorized /by

By 2050, Japan intends to develop innovative strategies poised to reduce atmospheric CO2 globally to “Beyond Zero”. The country’s sustainable growth roadmap contains an effective nature-positive strategy aimed at achieving economic growth and environmental protection.

In December 2022, at the 15th Conference of Parties to the Convention on Biological Diversity (COP15), delegates adopted the Kunming-Montreal Global Biodiversity Framework, outlining global targets for 2030.

The Cabinet under the government of Japan approved the National Biodiversity Strategy 2023-2030 in March 2023 to fulfill its new international commitment. The Transition Strategies toward Nature-Positive Economy were subsequently outlined with the collective decision of the following ministries:

Ministry of the Environment
Ministry of Agriculture, Forestry and Fisheries
Ministry of Economy, Trade, and Industry
Ministry of Land, Infrastructure, Transport and Tourism

Unleashing Japan’s Nature-Positive Strategy

Japan aims to prioritize nature conservation and uplift its economic policies to transition to a decarbonized future smoothly. Here, we have summarized and explained the significant points from the strategy plan proposed by the Ministry of Environment, Japan.

1. Nature Positive Management

The strategy emphasizes the need for companies to shift towards nature-positive management. The plan focuses on integrating nature preservation methods into their value creation processes. This in turn is expected to open avenues for fostering new economic growth from natural capital.

Conservation and Restoration Efforts: Implementing measures to conserve and restore ecosystems, such as forests, wetlands, and marine environments, to enhance biodiversity and ecosystem services.

Sustainable Resource Management: Promoting sustainable practices in resource extraction, agriculture, fisheries, and other sectors to minimize negative impacts on nature.

The press release from the Ministry of the Environment, under the Government of Japan has elucidated the significance of nature capital to achieve the desired results.

The image shows forest restoration work in Japan.

The report explains that individual companies must consider natural capital as materiality in terms of both risks and opportunities for business activities to shift to nature-positive management. Subsequently, investors will analyze the market to evaluate the performance of the companies handling the natural capital. Based on this performance, further value creation process will be determined.

Simply put, the transition extends to a society where consumers and markets assess companies’ efforts. In NP management, cash flow reform involves collaborative efforts among government, citizens, and integrated nature valuations.

2. Maximizing Business Opportunities

The plan seeks to boost corporate value by disclosing TNFD (The Taskforce on Nature-related Financial Disclosures) and other information, responding to risks with the intent of disclosure. This approach aims to enhance the firm’s resilience and sustainability, which the market and society will evaluate. Consequently, this will attract private capital and elevate corporate value.

The Ministry of the Environment (MoE) has weighed various business opportunities and their market sizes. They plan to create opportunities through sustainable approaches, such as decarbonization, resource recycling, and leveraging natural capital.

One example is adopting environment-friendly aquaculture technology. It would help implement compound and efficient feeding techniques. The market size for this business is estimated to be around 86.4 billion yen annually.

3. Support from the Government

The ministries emphasized the significance of businesses integrating natural capital conservation into their operations. The Japanese government has outlined the following initiatives:

Going beyond corporate social responsibility (CSR) initiatives. It involves preserving natural capital for both societal and economic sustainability.
Promote assessing the value of initiatives through the Biodiversity Promotion Activities Promotion Act. Upgrading technologies related to alternative materials, biomimicry, etc.
Implementing governmental initiatives to facilitate the shift towards a nature-positive economy. Focusing on biodiversity conservation and carbon credit initiatives
Motivate companies to minimize their carbon footprint and maximize their efforts on nature.

4. Green Infrastructure Development

Japan’s nature-positive strategy also focuses on investing in green infrastructure projects that enhance natural habitats, such as urban parks, green roofs, and permeable pavements.

Identifying and developing OCEMs- Under the green infrastructure development strategy, some specific private lands undergo certification as Other Effective area-based Conservation Measures (OECM) sites. In Japan, diverse locations include the satochi-satoyama, biotopes, conserved forests, and green spaces in cities and factories. OCEMs incentivize efforts by companies and others, extending beyond protected areas.

Developing green infrastructure assures resilience to climate change and numerous benefits to society. Most importantly, it would help generate robust carbon credit.

Japan’s Green Finance Drive: Strengthening Sustainability Investment

The MoE has outlined guidelines for green finance to promote disclosure based on international standards such as TCFD (Task Force on Climate-Related Financial Disclosures) and ISSB (International Sustainability Standards Board), and has promoted regional financial investments for local decarbonization.

Graph: Data released by the Ministry of Environment reveals domestic funds for sustainable growth in Japan.

Japan has estimated 150 trillion yen decarbonization investment over the next 10 years to fortify its domestic green finance. This decision would further abridge domestic and foreign funds directed to Japan’s decarbonization goals.

The dramatic increase in green bond issuance strengthens the financing of a sustainable society. Although the use of funds has been diversifying over the years, renewable energy and energy conservation still dominate most allocations.

However, recently, financing for sectors beyond climate change mitigation, such as biodiversity conservation and resource recycling has just begun.

Boosting J-Credits through the nature-positive economy

According to media reports, Japan envisions,

“A transition to a “nature-positive” economy which covers areas such as carbon and biodiversity credits could create for Japan 47 trillion yen ($309.7 billion) in new business opportunities annually by 2030.”

Like other countries committed to net zero and engaging in carbon credit trading, Japan also participates actively. The government issues carbon credit certificates, known as J-credits. They can be purchased in Japan for carbon offsetting. Boosting J-credits is one way to foster a nature-positive economy.

The strategy aims to promote the use and creation of forestry J-Credits. It primarily involves the agricultural sector and its role in preserving the biodiversity of Japan.
J-Credits offer domestic GHG reduction or removals, usable for various purposes including the voluntary emissions trading scheme GX-League
They promote the J-Blue Credit system about blue carbon projects that sequester carbon within oceanic ecosystems.

J-Credits demand rises in 2024

Reported from offsel.net:

According to the J-Credit System data for 2024, the number of registered J-Credit projects hit a record high of 1,081. Additionally, the certified amount of CO2 emission reductions was 9.36 million t-CO2.

Source: OFFSEL.net

Japan also intends to engage in international biodiversity credit systems to meet the demand from global industries handling resources outside its national domain.

Furthermore, it has actively engaged with the UK and France in the International Advisory Panel on Biodiversity Credits to discuss future goals for biodiversity credit and offset policies for the country.

From the elaborate information and reports, it seems that Japan has a bright future toward creating a nature-positive economy.

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New EPA GHG Standards for Trucks to Cut 60% Emissions by 2032

April 10, 2024/in Uncategorized /by

The Environmental Protection Agency (EPA) recently finalized stringent greenhouse gas (GHG) standards for medium and heavy-duty trucks from model years 2027 to 2032. Despite constituting less than 6% of vehicles on the road, these trucks emit 25% of the transportation sector’s greenhouse gases. They release significant levels of air pollutants linked to various health issues.

The finalized standards, “Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3”, aim to reduce GHG emissions by up to 60% by 2032. This target would prevent 1 billion metric tons of carbon pollution and 55,000 tons of smog pollution.

The standards are technology-neutral, allowing manufacturers to meet targets through various means such as electric powertrains, and hydrogen fuel cells.

The finalization of the truck rule follows closely on the heels of the EPA’s recent completion of tailpipe emission standards for light- and medium-duty vehicles covering the same model years. Additionally, the agency had previously strengthened emission limits for nitrogen and particulate matter from trucks in 2023.

EPA’s Push for Cleaner Transportation

Trucks and other heavy-duty vehicles play a crucial role in the United States economy, facilitating the transportation of goods, freight, and providing essential services across various sectors such as industry and transit. However, they also contribute substantially to the nation’s GHG emissions.

According to the EPA, the transportation sector is the largest contributor to climate-warming pollution in the United States. In 2021, it accounted for 28% of the nation’s carbon footprint. Addressing emissions from this sector is pivotal for the country to fulfill its Paris Agreement commitments.

These commitments include halving GHG emissions from 2005 levels by 2030 and achieving net zero emissions by 2050. Therefore, efforts to curb transportation emissions play a crucial role in advancing national and global climate goals.

Moreover, the finalized standards will also bring significant societal benefits, including health improvements and fuel cost savings. These savings are estimated to amount to $300 billion by 2055.

Moreover, the regulations will notably benefit poorer urban communities, which often bear the brunt of pollution from older diesel trucks concentrated around ports and industrial areas.

Industry support for cleaner standards is strong, with major players like Ford, Cummins, BorgWarner, and Eaton endorsing them. Leading manufacturers such as Daimler have ambitious goals for carbon-neutral vehicles, with projections of a significant market share for zero-emission trucks by 2030.

The federal agency said that the implementation of the new standards can significantly increase the adoption of zero-emissions trucks. Thus, there would be a substantial reduction in the industry’s reliance on fossil fuels.

Electric Revolution: Market Growth and Industry Shifts

Market demand for electric heavy-duty vehicles is growing rapidly, driven by investments from major fleet operators like PepsiCo and Walmart. Currently, there are nearly 13,000 electric medium and heavy-duty trucks on the road, which could increase substantially in the coming years.

The declining costs of electric trucks, coupled with fuel and maintenance savings, make them increasingly attractive economically. By 2030, electric heavy-duty trucks are projected to be cheaper than their diesel counterparts, even without incentives. Additionally, drivers appreciate their quieter and cleaner operation compared to diesel trucks.

According to the EPA, diesel demand within the industry will decrease by 120 billion gallons by 2055. It will also be accompanied by a corresponding decline of 15 billion gallons in gasoline demand. This shift underscores the standards’ pivotal role in driving the transition towards cleaner transportation technologies and reducing GHG emissions.

Truck manufacturers are making significant investments in transitioning to zero-emission vehicles, signaling a shift away from diesel.

Daimler, the largest heavy-duty vehicle manufacturer in the U.S., aims to sell entirely carbon-neutral vehicles by 2039. In July, Daimler projected that zero-emission vehicle sales would make up 40% of their North American market share by 2030.

Similarly, Navistar and Volvo Trucks have set ambitious goals to sell 50% zero-emission trucks by 2030.

These investments align with the increasing demand for electric heavy-duty vehicles. The four largest private tractor fleets in the nation—PepsiCo, Walmart, Sysco, and US Foods—are heavily investing in electric trucks. Republic Services, a large waste disposal fleet, anticipates that EVs will make up half of its new truck purchases by 2028.

Road Ahead: Impact, Challenges, and Outlook

While electric passenger cars and light trucks initially led the growth in electric vehicles, commercial trucks are rapidly catching up.

Research from BloombergNEF forecasts another record year for commercial electric truck sales in 2024, and the global electric truck market is expected to nearly quadruple from $17.8 billion in 2022 to $65 billion in 2032.

Overall, The EPA’s final rule provides market certainty, enabling companies to set long-term goals and investment strategies. These regulations align with the Biden administration’s broader climate goals, complementing initiatives like the Clean Car program. By reducing transportation emissions, they contribute to cleaner air, protect public health, and advance sustainability for future generations.

However, the projected additional costs for the heavy-duty industry weren’t welcomed by some US oil majors. Trade groups like The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers hailed the new rule “unlawful EV mandate for heavy trucks”.

But for President Biden’s National Climate Advisor Ali Zaidi, the finalized GHG standards are a great policy initiative, noting that:

“By tackling pollution from heavy-duty vehicles, we can unlock extraordinary public health, climate, and economic gains.”

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Woodside Energy Collaborates with Yara Pilbara to Explore CCS in Australia

April 10, 2024/in Uncategorized /by

In a recent development, Woodside Energy-operated Angel CCS Joint Venture and Yara Pilbara Fertilisers Pty Ltd are allying to explore Carbon Capture and Storage (CCS) technology. The main aim is to decarbonize Yara Pilbara’s operations near Karratha, Western Australia.

Woodside Energy and Yara Pilbara have recognized the urgency of global climate change. Consequently, they have committed to leveraging their expertise to reduce their carbon footprint. The collaboration marks a significant step towards sustainable practices in the energy and industrial sectors in Australia.

The Strategic Objectives of the Partnership

Woodside Energy, the leading global energy company, based in Australia is planning to develop a highly efficient multi-user CCS hub in Australia. This ambitious project can potentially reduce carbon emissions on a large scale.

As part of this endeavor, Yara Pilbara has taken a proactive step by signing a non-binding Memorandum of Understanding (MOU) with the Angel CCS Joint Venture.

The primary goal of this collaboration is to assess the viability of integrating CCS into Yara Pilbara’s existing operations to reduce the environmental impact of fertilizer production, a process known for its substantial carbon footprint.

Woodside Vice President for Carbon Solutions, Jayne Baird, has given a long statement in the media release rolled out this year on April 5. He noted,

“A multi-user CCS hub near Karratha would be ideally located to aggregate emissions from various existing industrial emissions sources across the Pilbara, providing users with advantaged access to a local, low-cost, and large-scale emissions abatement solution – a competitive advantage as jurisdictions around the world implement emissions reduction targets.”

He further added,

“The CCS hub would also have the potential to facilitate the development of new lower-carbon industries, such as the production of hydrogen, ammonia, and green steel, supporting the diversification of the Western Australia economy.”

The proposed facility will be capable of processing ~ 5 million tonnes of CO2 annually. With its mammoth capacity, this CCS hub can become the largest in the Asia-Pacific region.

The initial size of the plant is undecided. It depends on the completion of technical, regulatory, and commercial studies.

Yara’s Investments in Carbon Capture and Storage

Yara is the world’s second-largest ammonia producer, boasting the largest ammonia export and trading network and infrastructure globally. It is strategically positioning itself as a leader in low-emission ammonia production through either renewable energy sources or CCS technology.

source: Yara

This initiative enables Yara to provide fertilizers with reduced carbon footprints to the food sector and supply low-emission fuel to the shipping industry.

Notably, at the Porsgrunn plant in Norway, Yara has constructed Europe’s largest electrolysis plants to date, showcasing its commitment to sustainable practices.

Furthermore, Yara is actively investing in CCS technology at the Sluiskil plant in the Netherlands. And the latest and the most significant is the partnership with Woodside Energy to combat carbon emissions.

Woodside and Angel CCS JV: The Roadmap to Carbon Neutrality

Woodside integrates its climate mitigation ambitions through its company strategy. It aspires to energy transition with a low-cost, lower-carbon, profitable, resilient, and diversified portfolio.

Last year, during an investors’ briefing on Woodside’s Climate Transition Action Plan and Progress Report, CEO Meg O’Neill hailed Angel CCS as Woodside’s most developed CCS opportunity.

Shaun Gregory, the Executive Vice President of New Energy Growth and Operations at Woodside Energy mentioned that Angel CCS is currently in the pre-Front End Engineering and Design (FEED) stage. It will not proceed to the FEED stage until there is greater assurance on CO2 storage from potential customers.

The main objective is to finalize the engineering design study, enter FEED, and secure sufficient customer demand. This would ensure that the project reaches its planned capacity.

Woodside has committed to achieving net zero emissions by 2050.
It has allocated $5 billion by 2030 for new energy ventures, including hydrogen, ammonia, and lower-carbon services like CC.
They have already invested $335 million toward this goal

Apart from Angel CCS, Woodside also has Bonaparte CCS in the Northern Territory and South-East Australia CCS off the coast of Victoria.

The image below shows Woodside’s GHG reduction plan by 2030.

source: Woodside

Carbon Capture and Storage (CCS)- Facilitating New Lower-Carbon Industries

Beyond existing industries, the CCS hub has the potential to foster the development of new, sustainable sectors:

Hydrogen Production: Hydrogen, a clean energy carrier, can be produced using CCS technology.

Ammonia Production: Ammonia, essential for fertilizers and other applications, can also benefit from reduced emissions.

Green Steel: CCS can support steel production with significantly lower carbon impact.

These innovations play a role in broadening the Western Australian economy and fostering the emergence of fresh employment prospects.

If successful, this partnership could serve as a model for other industries seeking to reduce their carbon emissions. By sharing their insights and experiences, Woodside Energy and Yara Pilbara can inspire and influence positive change across various sectors.

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US Corporations Ramp Up Renewable Energy, Amazon Leads the Pack

April 10, 2024/in Uncategorized /by

In the dynamic landscape of energy transition, US corporations have embarked on a remarkable journey, ramping up renewable energy initiatives. Since March 2023, corporate initiatives have actively pursued renewables procurement, adding 17 GW of carbon-free generation capacity, per S&P Global Commodity Insights.

The Rise of Renewable Giants

Renewable capacity additions accounted for 9.1 GW of the total added capacity since March 2023. Texas led the market, representing 43% of the added capacity. Solar energy dominated the signed capacity, comprising 81% of the capacity added in the US.

Domestic renewable capacity contracted by US-based corporations reached 67.8 GW by February 2024, with Amazon leading the pack. The tech giant accounts for a quarter of the contracted renewable capacity.

On a global scale, US corporations continued to make deals across five continents, with Europe leading in deal activity. Spain emerged as the most popular destination, adding over 2.1 GW of additional corporate capacity in the past 12 months. Half of this is attributed to Amazon, primarily in solar energy projects.

The trend continues to favor utility-scale solar growth, supported by low-cost solar equipment and federal tax credits. Utility-scale solar capacity in development surged by 24% since March 2023, reaching 286 GW, and solar now comprises over 62% of US capacity contracted to American corporations.

Moreover, grid-scale battery storage capacity in development doubled over the last year, reaching nearly 140 GW. Of that, over 50 GW is colocated with wind or solar projects. This integration of battery storage enhances grid flexibility and revenue streams, particularly for intermittent generation sources like solar.

Over 6 GW of battery capacity is currently paired with wind and solar projects that have contracted with non-utility off-takers.

Fueling Renewables Growth Worldwide

Corporate procurement initiatives expanded to encompass 43 US states, with Texas maintaining its dominance as the leading market, constituting 57% of the aggregate corporate renewable capacity tracked by S&P Global Commodity Insights.

Notably, six deals of 200 MW or more were inked with Texas projects since March 2023. Among these, Amazon’s 250-MW agreement with Hecate Energy for the 514-MW Outpost Solar Project stands out. The partnership will potentially include 508 MW of paired battery storage capacity.

California ranked second to Texas in corporate renewable capacity added. Again, this is primarily driven by Amazon’s contracts with AES Corp. for two 500-MW solar projects, totaling 1 GW.

According to a White House report, there’s an announcements of >100 gigawatts (GW) of solar module manufacturing capacity. This can potentially generate enough solar panels to power about 10% of homes in the U.S., representing over $13 billion in investments.

Solar Capacity Projections Over Time

Outside the US, the technology breakout between wind and solar splits more evenly. Solar accounts for over 50% of the clean energy deals signed internationally.

About three-quarters of the tracked corporate renewable capacity contracted internationally by US businesses was concentrated in Europe. Northern Europe particularly stands out due to its top offshore wind speeds, per S&P Global analysis.

In this region, spanning from the British Isles to the Nordics, US companies accumulated 7.8 GW of corporate-tied renewable energy capacity, with wind accounting for 76% of this total.

Meanwhile, the African continent experienced the second largest year-over-year jump, increasing by 180%. This is primarily driven by an additional 18 MW of tracked capacity subscribed to by US commercial entities in South Africa.

Australasia, boasting abundant solar and wind resources, rounded out the top three in terms of year-over-year growth, expanding by almost 125%. Despite the substantial growth, the region’s cumulative capacity approached the 2-GW mark as of February 2024.

Amazon’s Renewable Energy Leadership

Among the renewable contracts signed worldwide, Amazon takes the top spot. The tech giant is the world’s largest corporate purchaser of renewable energy for the 4th year in a row.

In 2023, Amazon made significant strides in its commitment to renewable energy by investing in over 100 new solar and wind energy projects.

With over 500 wind and solar projects globally, Amazon could generate more than 77,000 gigawatt-hours (GWh) of clean energy annually once these projects become operational. This translates to enough clean energy to power around 7.2 million U.S. homes every year.

These projects are propelling Amazon closer to its goal of sourcing 100% of the electricity for its operations from renewable energy sources by 2025. The renewable energy generated by these projects is already being utilized to power various Amazon facilities, including data centers, fulfillment centers, physical stores, and corporate offices. Moreover, these projects contribute to providing clean power to local communities where they operate.

The impact of Amazon’s solar and wind farms extends beyond environmental benefits. They have also catalyzed over $12 billion in estimated economic investment globally from 2014 through 2022.

Amazon Net Zero Roadmap

Source: Amazon 2022 Sustainability Report

All these renewables initiatives are part of the retailer’s decarbonization strategy. The company also founded the The Climate Pledge in 2019, which lays out its net zero commitments. Amazon aims to reach net zero by 2040, 10 years ahead of the 2050 goal set by the Paris Agreement.

As the world marches towards a sustainable future, US corporations stand at the forefront, driving change through ambitious renewable energy procurement initiatives. Under Amazon’s renewable leadership, they continue to shape the energy landscape and inspire a global shift towards a sustainable future.

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A Trio to Forge A Carbon Credit Market Alliance in the West

April 9, 2024/in Uncategorized /by

As the urgency to combat climate change intensifies, regional efforts in the Western United States and Canada are gaining traction. California, Quebec, and Washington are forging ahead with plans to link their carbon markets, a move that could significantly impact emissions trading dynamics. Let’s delve into the latest developments shaping this convergence.

The three jurisdictions plan to work together to form a bigger carbon credit market. Their proposed alliance could take effect in 2025 at the earliest.

California Carbon Market’s Regulatory Review

The California Air Resources Board (CARB) is expected to submit a standardized regulatory impact assessment (SRIA) to the state’s Department of Finance as part of amending the cap-and-trade program, also known as the compliance carbon market. This assessment will evaluate potential changes to the program, with CARB planning to release a draft of the proposed changes.

The last SRIA submitted by CARB for amending the cap-and-trade program was on June 25, 2018.

Amidst this regulatory plan, secondary market prices for California Carbon Allowances (CCA) showed strength, building on the previous week’s gains. Contracts for both April and December delivery futures saw robust trades. The CCA V24 December 2024 contract trades between $39.60/mt and $40.56/mt on the Intercontinental Exchange (ICE).

Similarly, the ICE CCA V24 April 2024 contract traded at $38.05/mt and $38.80/mt. These prices represent an upward trend compared to the assessments from last Thursday, indicating a positive market outlook.

Meanwhile, Regional Greenhouse Gas Initiative (RGGI) prices show a trend for an upward trajectory, with December delivery contracts showing strong trading activity. Contracts for ICE RGGI V24 December 2024 traded at $20.39/st and $20.40/st.

April delivery contracts also demonstrated positive momentum, indicating potential all-time highs.

Market analysts view the filing of the California Cap-and-Trade SRIA as a bullish signal for the market. It can help maintain regulatory momentum.

Cross-Border Emissions Trading Collaboration

In Quebec, updates to its cap-and-trade program are also anticipated, with a draft regulation expected by September and amendments slated for enactment by December. Quebec’s carbon credit market was linked with California’s program in 2014 to enhance liquidity.

To facilitate this cross-border trading and ensure accurate accounting of greenhouse gas (GHG) emissions reductions, California and Quebec developed an accounting mechanism in place. This mechanism assesses Quebec’s progress towards its GHG emissions reduction targets by considering its domestic emissions inventory and the emission allowances traded between Quebec and California.

Having its own carbon pricing mechanism in place, Canada’s recent carbon price hike won’t impact Quebec. But the province can voluntarily adopt the federal carbon pricing system.

In Washington, Carbon Allowance secondary market prices remained stable, with no observed trades. However, recent legislative actions and announcements by the Washington Department of Ecology regarding the second quarterly cap-and-invest auction scheduled for June 5, continue to influence market sentiment.

Washington Takes a Legislative Leap

Washington State has taken significant steps to integrate its cap-and-invest market with those of California and Québec by signing Senate Bill 6058 into law. This legislation aims to streamline the process of linking Washington’s carbon program with the established joint California-and-Québec cap-and-trade programs.

The new law introduces several amendments to Washington’s Climate Commitment Act, including adjustments to compliance periods, allowance purchase limits, and offset credit usage rules. These changes will align Washington’s regulations with those of California and Québec, facilitating potential linkage agreements between the jurisdictions.

Key provisions of the legislation include:

Adjusted compliance periods to align with those of California and Québec, allowing for synchronization of regulatory frameworks.
Expanded allowance purchase limits (25%) and increased flexibility in offset credit usage to promote market efficiency and integration.
Removal of specific dates from compliance period language to accommodate potential linkage agreements and ensure regulatory consistency.
Provision for rulemaking by the Washington Department of Ecology to further align cap-and-invest policies with the requirements for linkage.

This legislative development follows joint announcements by California, Québec, and Washington expressing their intent to explore linking their carbon markets. If successfully implemented, a linked program would enable joint auctions of allowances and establish a uniform allowance price across jurisdictions.

Ecology Director Laura Watson remarked that:

“As long as we are linked by Nov. 1, 2027, entities that are required to comply in Washington can use allowances from the larger market to meet their Washington compliance obligation.”

Despite fluctuations in market prices, regulatory developments and auction outcomes can significantly shape the trajectory of carbon credit markets.

By integrating their carbon trading systems, Washington, Quebec, and California aim to enhance the effectiveness of their climate mitigation efforts. This collaboration exemplifies a commitment to regional cooperation in reducing greenhouse gas emissions and addressing climate change.

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Silver’s Crucial Role in Achieving a Net Zero World

April 9, 2024/in Uncategorized /by

As investors and environmental enthusiasts scout for tangible opportunities in the green revolution, silver emerges not merely as a precious metal but as a pivotal element in the quest for a net-zero future.

With its price on a notable ascent touching $27 per ounce, silver’s inherent value is being redefined, transcending its traditional allure to become a cornerstone in sustainable technology.

Chart from Trading View

Silver, with its dual role as an industrial workhorse and a financial asset, deserves a closer look from investors, policymakers, and industry stakeholders

Silver’s Ascending Value in the Green Era

Silver’s price trajectory is more than a market anomaly; it’s a reflection of its significant role in modern technology and sustainable initiatives. As industries pivot towards eco-friendly solutions, silver’s conductive and reflective properties are in unprecedented demand, especially in sectors crucial for reducing carbon footprints.

This metal, once confined to jewelry and currency, is now a linchpin in solar panels and electric vehicles, illustrating a direct correlation between its market value and its environmental significance.

Over 50% of silver serves industrial needs, powering sectors from electronics to metalworking.

More than half of silver’s demand is driven by sectors critical to the low-carbon transition. It’s a testament to silver’s versatility and indispensability, echoing its historical role as a currency foundation but now reimagined as a cornerstone of modern technology.

The legacy of silver, from ancient empires to contemporary economies, underscores a metal that has continually adapted and thrived.

The Metal Driving Us Toward Net Zero

The surge in solar installations and electric vehicle production is not just a trend; it’s also a strong call for increased silver demand. The metal’s unmatched conductivity and application in photovoltaic cells position it as a key player in the transition to renewable energy.

Solar panels that harness the sun’s power heavily rely on silver’s conductivity, making it a key player in renewable energy’s expansion. Silver holds a unique position in the realm of metals due to its exceptionally low electrical resistance at standard temperatures. This characteristic makes it unrivaled by substitutes, as they cannot match its energy output per panel.

Moreover, the demand for silver in the solar industry, as a percentage of the total silver demand, increased from 5% in 2014 to around 14% by the end of 2023.

Based on BloombergNEF’s estimate of 12 tonnes of silver demand per gigawatt of solar capacity, the demand for silver in solar panels could surge by nearly 169% by 2030. This increase would amount to about 273 million ounces of silver, constituting roughly one-fifth of the total silver demand based on trend projections.

Similarly, as the automotive industry accelerates toward electric vehicles, silver’s role in electrical contacts and conductors becomes increasingly critical.

This intrinsic link between silver and green technology underscores not just an environmental imperative but a burgeoning market trend. Others consider silver to be the new oil, only if the world has enough of it.

Supply Chain Scrutiny: The Geopolitical Dance of Silver Production

The spotlight on Latin America’s Silver CAMP—Chile, Argentina, Mexico, and Peru—reveals a narrative rich in opportunity and fraught with challenges. These nations, pivotal to silver’s global supply, explore a complex geopolitical landscape where policy shifts and operational risks are huge.

The impending start-up of Guatemala’s Escobal mine adds another layer to this intricate story. It promises to reshape the supply dynamics and spotlight the importance of sustainable mining practices.

According to Katusa Research, Mexico is the largest producer of silver in the world by a comfortable margin, thanks to its generous healthy reserves and low costs of production.

China is also a major player in this space, having maintained steady production of roughly 3,500 tonnes a year for the past decade.

University College London (UCL) researchers are exploring the use of silver in carbon capture and storage (CCS) technologies, aiming to make CCS more cost-effective by utilizing silver’s high-temperature stability in innovative membranes that separate carbon dioxide from other gases. This approach could be crucial for industries like steel and cement, which are slower to transition to renewable energy.

However, the reliance on CCS and its potential to delay immediate emission reduction efforts raises concerns, with some experts cautioning against viewing CCS as a definitive solution to climate change. UCL’s commitment to net-zero targets by 2030 highlights the urgency of reducing emissions alongside developing removal technologies.

Mining for a Greener Tomorrow

While we champion silver’s role in sustainability, it’s crucial to scrutinize its source.

Silver mining, like any extractive industry, poses environmental challenges. However, the industry is on a transformative journey, adopting more sustainable and less invasive mining techniques.

Understanding where and how silver is extracted is vital, as responsible sourcing becomes synonymous with environmental stewardship.

Latin American silver miners are advancing in decarbonizing their operations, aligning with net zero commitments by 2050. However, emissions per ounce are increasing due to lower ore grades.

For example, despite a temporary rise in emissions in 2020, attributed to COVID-19 impacts, the industry is adopting automation and alternative energy to reduce its carbon pollution.

Political factors and energy reforms, particularly in Mexico, pose challenges to these efforts. While larger firms lead in emission reductions, smaller silver miners are also making significant strides, adapting to their unique operational scales and contexts.

A Sterling Opportunity?

Investors are increasingly aligning their portfolios with their values, and silver could offer a compelling narrative that marries financial growth with ecological responsibility.

By investing in silver, one is not just betting on a metal’s value but could be supporting the infrastructural backbone of the net zero movement.

Silver’s story is evolving, from a symbol of wealth to a beacon of sustainability. Its rising demand and price are representative of a broader narrative, where financial markets and environmental goals are increasingly intertwined.

For investors, industry stakeholders, and environmental advocates, silver represents a multifaceted opportunity: a chance to drive and benefit from the monumental shift towards a cleaner, greener, and more sustainable world.

Silver’s journey from a symbol of wealth to a driver of sustainability underscores its evolving role in shaping our net zero future.

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Adani Green Energy Limited (AGEL) Makes History: India’s First 10,000 MW Renewable Energy Capacity

April 9, 2024/in Uncategorized /by

India’s largest and one of the world’s leading renewable energy (RE) giants, Adani Green Energy Limited (AGEL), has soared above 10,000 MW renewable energy milestone. This is indeed a historic achievement not only for the Adani Group but also for India.

An Overview of AGEL’s Powerful Renewable Energy Portfolio

AGEL uses the latest technology and is equipped with the best operational proficiency involving a solid supply chain network. Investing in sustainable practices and long-term infrastructure financing can propel the green energy transition and large-scale decarbonization effort.

AGEL’s current operational portfolio stands at 10,934 MW.
It is capable of powering more than 5.8 million homes.
Can curb 21 million tonnes of CO2 emissions annually.

The company supplies clean power to the national grid at an affordable cost.

AGEL’S Hallmark Clean Energy Projects

Mr. Gautam Adani, Chairman of Adani Group and a visionary has noted,

“In less than a decade, Adani Green Energy has not just envisioned a greener future but has actualized it, growing from a mere idea to explore clean energy to achieving a phenomenal 10,000 MW in installed capacity. This achievement is a demonstration of the rapidity and scale at which the Adani Group aims to facilitate India’s transition to clean, reliable, and affordable energy.”

The company has installed large-scale renewable energy projects at prime locations in India. It encompasses solar, wind, and hybrid projects of differential capacities.

Gujrat’s bold 30000 MW solar project installation is in progress…

AGEL is spearheading the development of the world’s largest renewable energy project, encompassing 30,000 MW, situated on barren land in Khavda, Kutch, Gujarat.

Spanning 538 square kilometers, this colossal project will be 5X the size of Paris and almost the size of Mumbai city.
Remarkably, AGEL has already operationalized 2,000 MW of cumulative solar capacity, marking over 6% completion within just 12 months of project initiation.
Once completed, it will become the world’s largest power plant, regardless of the energy source.

Noteworthy, this latest solar project is bolstered by AGEL’s utilization of:

Adani Infra’s project execution proficiency
Adani New Industries Limited’s manufacturing acumen
Adani Infrastructure Management Services Ltd.’s operational excellence,
Robust supply chain facilitated by strategic partnerships.

Carbon removal potential of Khavda Solar Park

The Khavda project is strategically located to harness abundant wind and solar resources. It is expected to generate an annual green footprint of approximately 30 gigawatts (GW) of clean electricity, equivalent to 81 billion units.

This clean energy will power approximately 16.1 million households. Moreover, the project will create over 15,200 green jobs and avoid approximately 58 MT of CO2 emissions.

Further putting this into perspective, the emission avoided is equivalent to the carbon sequestered by 2,761 million trees. It is also comparable to avoiding the use of 60,300 tonnes of coal and taking 12.6 million cars off the roads.

The Khavda region experiences approximately 2,060 kWh/m2 of high solar irradiation. Additionally, it boasts one of the best wind resources in India, with average wind speeds of around 8 meters per second.

The picture shows the work-in-progress of the massive Khavda Solar Park in Gujrat.

source: AGEL

AGEL achieved another remarkable milestone with the development of the 648 MW solar project at Kamuthi in the State of Tamil Nadu. It is one of the world’s largest single-location solar power projects and is fully operational.

Adani Group has established additional solar setups of varying capacities. They are distributed across multiple states in India, including Uttar Pradesh, Karnataka, Rajasthan, and Punjab.

Adani Group is known for crafting its projects meticulously and making them economically viable. The team radically scrutinizes the land attributes, solar radiation levels, grid infrastructure, and the technologies involved. This comprehensive process also ensures that all capital investments undergo risk assessment before implementation.

Gujrat, the hub for AGEL’s wind projects

According to an editorial synopsis released by the Adani Group, the key developments in the wind domain are:

AGEL has operationalized 126 MW wind power capacity in Gujarat. The completion of the 300 MW project marks the implementation of 174 MW earlier.
The project can generate ~ 1,091 million electricity units, curbing ~ 0.8 MT of CO2 emissions annually.

AGEL has made Kutch district in Gujrat the prime hub for all its major wind and solar projects. Mr. Gautam Adani has further given his statement, that

“This milestone is a validation of the Adani Group’s commitment and leading role in accelerating India’s equitable clean energy transition journey towards its ambitious goals of 500 GW of renewable energy capacity by 2030 and carbon neutrality.”

AGEL’s 10,000 MW Target Aligns with India’s Renewable Energy Ambitions

As per data fetched from the AGEL’s site, the company’s greenfield expansion is the largest in India’s renewable energy (RE) sector. It constitutes ~ 11% of the nation’s installed utility-scale solar and wind capacity.

This is significant to India’s renewable energy landscape. AGEL’s expansion has also generated over 3,200 direct green jobs, further fostering economic growth and sustainability.

Thus, AGEL creating 10,000 MW renewable energy capacity is a huge accomplishment for India towards a decarbonized future. It aligns with the country’s renewable energy objectives, boosting significant job creation and environmental responsibility.

FURTHER READING: JSW Energy Acquires 45 MW Wind Project from Reliance Power • Carbon Credits

The post Adani Green Energy Limited (AGEL) Makes History: India’s First 10,000 MW Renewable Energy Capacity appeared first on Carbon Credits.

US SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits

April 8, 2024/in Uncategorized /by

Multiple private equity firms have recently entered the carbon credit market, capitalizing on the rising demand for high-quality credits. This significant market development is amid expectations of enhanced transparency from the US Securities and Exchange Commission (SEC)’s new disclosure regulations.

Seizing Opportunity Amidst Regulatory Changes

The recent final rules issued by the SEC mandate companies to disclose climate-related information, including the use of carbon credits. While the rules represent a scaled-back version of the initial proposal, notably excluding Scope 3 emissions, they still mark a significant milestone by requiring many of the world’s largest businesses to disclose their emissions and carbon credit usage.

RELEVANT: SEC Finalizes New Climate Disclosure Rule: Here’s What’s New

Key players in this emerging trend include:

Stafford Capital Partners: the London-based firm aims to raise $1 billion for a fund dedicated to investing in forest projects to generate around 30 million carbon offsets.
Bain Capital: the company recently provided backing to Terra Natural Capital, an investment firm specializing in financing offset-generating projects like mangrove forest planting and restoration.
Kimmeridge Energy Management: the New York-based firm pledged up to $200 million to forest manager Chestnut Carbon about two years ago. Chestnut Carbon focuses on reforestation projects.

One aspect of the rules that remains ambiguous is the definition of ‘materiality.’ Specifically, companies can adopt a ‘maximum transparency’ approach by disclosing all retired carbon credits within a reporting period.

Or they may opt for a more selective approach by disclosing only those credits deemed material to specific climate-related goals. This ambiguity will persist until the first wave of disclosures under the rules is observed.

SEC Climate Disclosure Rules FAQs

Image from BeZero Carbon

Moreover, the rules could prompt companies to go beyond disclosure and include climate-related assets and liabilities on their balance sheets. This is good news because it can help internalize the negative externalities associated with their emissions.

This internal carbon pricing mechanism is anticipated to drive companies to intensify their efforts towards decarbonization within their value chains and offset residual emissions through purchasing carbon credits.

From Skepticism to Sustainable Impact

Recent research by Ecosystem Marketplace’s Forest Trends suggests that companies purchasing carbon credits reduce their emissions faster than their peers. For instance, they are investing 3x more in emissions reductions within their own value chains. Analysts see this as an indicator of the potential efficacy of carbon credit utilization in accelerating climate action.

The carbon market is often met with skepticism due to greenwashing claims against companies participating in it. For instance, a class-action lawsuit against Delta Air Lines in California alleged that the carrier overstated its “carbon neutrality” based on potentially questionable offsets.

Some legal experts highlighted a “crisis of confidence” in the quality of voluntary carbon credits from emission reduction projects.

In response to these concerns, some firms, like Bregal Investments in London, have supported developers of carbon-insetting projects. These projects aim to reduce emissions across companies’ supply chains, particularly in the agricultural sector.

In Europe, where the largest carbon-trading system exists, new sustainability-reporting rules mandate businesses to disclose greenhouse gas emissions across their supply chains or by customers using their products, known as scope 3 emissions.

Concerns about the reliability of carbon credits raised doubts about the effectiveness of these projects generating the credits. This is where the new reporting requirements by the SEC would bring greater transparency to the market.

Shaping the Future of Carbon Credit Trading

The new SEC rules will subject carbon credits, also known as carbon offsets when used to compensate for a company’s carbon emissions, to additional scrutiny. Thus, it will drive demand for high-quality offsets.

In the case of private equity firms, some face legal challenges and a temporary suspension of enforcement by the US appeals court. Despite this, these businesses still see potential in meeting the unmet demand for high-quality credits with verifiable mitigation benefits.

Last year saw a decline in the number of credits issued to 277, the lowest in 3 years after dropping to 25% year-on-year, according to an MSCI report.

However, despite the shrinking supply, the average price dropped by 13% to $6/credit in the third quarter of 2023. This underscores the need for greater transparency and quality assurance in the carbon credit market.

While the SEC initially proposed rules that require companies to report scope 3 emissions, this provision was dropped from the final version due to concerns about compliance costs and difficulty. However, legal experts believe that this decision is unlikely to deter companies from their efforts to reduce scope 3 emissions.

Other jurisdictions, including California, Illinois, New York, Singapore, and Australia, are also adopting or proposing climate-related disclosure rules that include scope 3 emissions.

California, for example, passed a law last year mandating businesses to report both direct and indirect emissions, including scope 3. As a result, US public companies may still be subject to similar disclosure requirements from various regulators worldwide, despite the SEC’s decision.

As private equity firms delve into the carbon credit market, the landscape of climate finance undergoes significant transformations. Transparency and reliability remain paramount, driving the need for verifiable mitigation benefits and quality assurance. As stakeholders navigate these complexities, the carbon credit market stands at a pivotal juncture, poised to play a crucial role in accelerating climate action and sustainability initiatives worldwide.

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Key Challenges and Opportunities in Global Lithium Metal Market

April 8, 2024/in Uncategorized /by

The global demand for lithium metal batteries is surging, yet production falls short of meeting the need, hindering industry growth. According to Benchmark’s Solid-State and Lithium Metal Forecast, the sector faces challenges in sourcing adequate lithium metal for battery production, despite its high capacity potential.

In 2024, if all suitable lithium metal produced were used for batteries, it could support 5 to 10 gigawatt-hours (GWh) of cell production. However, much of the lithium metal is diverted to other industries, leading to a supply deficit this year. From almost 10 GWh in deficit in 2024, jumping to around 60 GWh by 2026.

Chinese Dominance and Global Ambitions

China dominates global lithium metal production, accounting for over 90% of capacity in 2023. This dominance is poised to continue, with China aiming to double its capacity within the next 3 to 5 years.

Currently, some companies worldwide are scaling back output and spending due to improved supply prospects and slowing demand from EVs. Yet, Chinese firms are taking a different approach.

China’s leading lithium companies, Tianqi Lithium Corp. and Ganfeng Lithium Group Co., are undeterred by recent profit declines and aim to expand their market presence. Despite sharp drops in net income in 2023 due to plummeting prices, both companies are focused on acquiring global lithium reserves and increasing production capacity. They believe in the long-term potential of rising demand for lithium, looking beyond current challenges.

Tianqi seeks partners to explore high-quality lithium sources, accelerating work at its Yajiang mining project in Sichuan province. Meanwhile, Ganfeng plans to develop low-cost resources like lithium derived from brine and expand processing facilities in China and Argentina.

These companies’ optimism aligns with other Chinese miners like CMOC Group Ltd. and Zijin Mining Group Co. They are also eyeing opportunities in battery materials amid signs of a potential price recovery.

However, this total capacity may not meet the requirements of next-generation battery technologies.

Growing Demand Amid Technical Hurdles

The deficit arises as demand for lithium metal batteries grows rapidly, exceeding 10 GWh by 2026. Developers are transitioning from cell development to pilot production, driving up demand for lithium metal.

RELEVANT: Lithium’s Dynamic Future: Accelerating Demand and Construction Surge in US and Canada

The precursor to lithium metal, lithium chloride, is sourced directly from brine or converted from lithium carbonate. However, most brine resources have unsuitable impurity profiles, and converting lithium carbonate incurs significant capital expense.

Next-generation lithium metal batteries require thinner lithium metal foils for the anode, challenging traditional production processes. Overcoming this technical barrier is crucial for industry growth, with companies exploring novel approaches to address this challenge.

Nevertheless, trading of the metal in CME Group Inc. is experiencing a significant surge, drawing increased attention from funds amid declining battery metal prices.

The contract has seen open interest reach a record high of 24,328 contracts in the first quarter, extending to September 2025. This uptick in open interest indicates a notable increase in liquidity within the contract. This further suggests a maturing market for the lithium industry.

Trading Surge Reveals Market Resilience

The growth in open interest follows a robust year in 2023, primarily driven by arbitrage trading between China and the US. Notably, China introduced its lithium carbonate contract on the Guangzhou Futures Exchange in July last year. In turn, this further contributes to the trading activity.

This development underscores the growing importance of lithium derivatives markets as key tools for industry participants to manage price risks.

The rise in liquidity in CME’s lithium hydroxide contract is a positive sign for an industry grappling with challenges. Prices of lithium have declined by over 80% from their record high in November 2022. This drastic drop in prices has been attributed to shifting market dynamics, swaying between fears of shortages and the emergence of surplus inventories.

Despite the challenges facing the industry, the surge in open interest offers assurance to funds and financial participants. It provides them with the confidence that they can easily trade the contract, enabling them to enter and exit positions as needed, even in the face of adverse price movements.

Additionally, more Asia-based funds are showing interest in trading the CME contract this year, reflecting the growing appeal of lithium as an investment opportunity.

Moreover, the current market conditions, with lithium prices in contango (futures prices higher than spot prices), present lucrative opportunities for funds.

The contango structure allows traders to profit by buying futures contracts and selling them at a higher price in the future. This has attracted the attention of funds looking to diversify their portfolios and capitalize on the volatility in commodity markets.

The increasing liquidity and trading activity in CME’s lithium hydroxide futures contract signal a growing interest in lithium derivatives. With trading volume on pace to surpass last year’s record, lithium futures are attracting the attention of investors seeking exposure to the rapidly evolving battery materials sector.

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