Industry giants, BHP, Rio Tinto and Qantas, will invest A$80 million (USD$53 million) in Silva Capital’s Silva Carbon Origination Fund, the first close from these foundation investors. The fund is designed to offer access to large-scale, high-integrity carbon credits from nature-based projects in Australia focused on reforestation and sustainable agriculture. 

Silva Capital, a joint venture between Roc Partners and C6 Investment Management, focuses on developing high-integrity carbon abatement projects to produce Australian Carbon Credit Units (ACCUs). The Silva Carbon Origination Fund is their first venture. The fund targets mixed-use agricultural and environmental planting projects across Australia to produce ACCUs at a large scale.

Australian Carbon Credit Units (ACCUs) are issued by the Australian government’s $3 billion Emissions Reduction Fund (ERF) to support the country’s goal of reducing carbon emissions by 43% from 2005 levels by 2030.

The ERF primarily grants credits to projects focused on deforestation prevention, native forest regeneration, and methane collection from landfills. These credits can be sold to the government or companies aiming to meet their emissions reduction targets. High-emission industries, such as mining and aviation, are increasingly purchasing carbon credits to offset their environmental impact.

Rio Tinto is Leveraging Carbon Credits For Its Decarbonization Goals

Jonathon McCarthy, Rio Tinto’s Chief Decarbonisation Officer, emphasized the company’s commitment to decarbonizing its operations. He noted that the investment in the Silva Carbon Origination Fund will help meet compliance obligations through high-integrity carbon credits.

Rio Tinto aims to retire 3.5 million carbon credits annually by 2030, covering 10% of its baseline emissions. This increased focus on the Voluntary Carbon Market (VCM) supports its 2030 climate goals, especially after acknowledging it may miss 2025 decarbonization targets.

In 2023, its Scope 1 and 2 emissions were stable at 32.6 million tonnes of CO2 equivalent (tCO2e), with Scope 3 emissions at 578 million tCO2e. Rio Tinto plans to increase carbon credit procurement to 1.7 million tCO2e by year’s end and commit 500,000 hectares to NBS by 2025.  

READ MORE: Rio Tinto Aims 3.5M Carbon Credit Pledge, Eni Leads with Retired Credits 

For 2024, Rio Tinto has allocated an estimated $750 million for decarbonization efforts, including capital and operational expenditures, offsets, and Renewable Energy Credits (RECs). However, the company has revised its total expenditure estimate for meeting its 2030 climate targets, reducing it from $7.5 billion to $5-6 billion.

The company expects to increase its carbon credit procurement, mainly through Australian Carbon Credit Units (ACCUs).

What Role Do Carbon Credits Play in BHP’s Emission Reduction?

Graham Winkelman, BHP’s Vice President of Climate, remarked that while BHP is actively pursuing structural greenhouse gas emission reductions from its operations, carbon credits will play a role in achieving its decarbonization targets.

The world’s largest mining company, expects its carbon emissions to grow in the short term and acknowledges the need for rapid technological solutions and carbon credits to meet its 2050 net zero goal.

While on track for its 2030 emissions reduction target, BHP admits achieving net zero by 2050 will be challenging. The company aims for a 30% reduction in Scope 1 and 2 emissions by 2030 but does not include Scope 3 emissions, which involve its customers’ emissions, like those from steelmakers.

To achieve its 2030 decarbonization goals, BHP plans to invest $4 billion, with the majority directed toward reducing diesel use in haul trucks, electricity, and gas emissions. Diesel accounts for about 50% of the company’s pollution, while methane contributes over 14% of its operational greenhouse gas emissions.

From BHP Report

READ FURTHER: BHP to Spend $4B to Decarbonize by 2030, Carbon Emissions Spikes Up Near-Term

The ACCUs will also help the mining giant in meeting compliance obligations under the Safeguard Mechanism Act.

Why Qantas is Investing in the Silva Carbon Origination Fund

Qantas’ investment in the Silva Carbon Origination Fund will aid in meeting its climate targets by securing high-quality, nature-based carbon credits. 

The airline is financing its investment through its Climate Fund, a A$400 million initiative established last year to support the company’s decarbonization efforts. The fund will also boost the Australian carbon credit market, offering social and economic benefits to local communities.

Andrew Parker, Qantas’ Chief Sustainability Officer, emphasized that high-integrity carbon offsets will be crucial for hard-to-abate sectors like aviation. He further said that:

“We expect the demand for carbon offsets to continue to grow into the future and it’s going to take partnerships across industries to enhance the overall availability of high-quality, high-integrity carbon credits.”

This move builds on Qantas’ broader climate efforts, including its recent investments in the Sustainable Aviation Fuel Financing Alliance (SAFFA) and a Queensland biofuel production facility in partnership with Jet Zero Australia and LanzaJet.

The Focus of The Carbon Fund

The fund’s strategy includes investing in agricultural land to develop large-scale carbon sequestration projects by reforesting cleared areas while maintaining the land’s productivity for farming. These projects integrate robust carbon credit methodologies, enhance farming activities for local communities, and promote habitat restoration and biodiversity protection.

Silva Capital Co-Managing Director, Brad Mytton, highlighted that sustainable agriculture is central to the fund’s investment strategy. He noted that the Silva Carbon Origination Fund aims to create a portfolio of mixed farming land with significant canopy cover, producing a large volume of high-integrity carbon credits. Mytton further stated that:

“The Fund has been designed to appeal to both corporate investors seeking to access carbon credits and institutional investors seeking portfolio diversification…”

Backed by industry heavyweights, the Silva Carbon Origination Fund could play a pivotal role in advancing Australia’s carbon credit market and supporting the nation’s ambitious climate goals.

SEE MORE: ASX Debuts Environmental Futures Contracts for Carbon Markets

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Canada’s steel and aluminum industries are sounding the alarm over what they describe as an “existential threat” while urging the federal government to align with the United States and Mexico in imposing tariffs on Chinese steel and aluminum to prevent market dumping. This plea comes amid growing concerns that Canada could become a conduit for Chinese products circumventing American and Mexican tariffs.

Why Canada’s Steel and Aluminum Industries Raise The Alarm

Canada currently produces primary aluminum—rather than recycled aluminum—at eight smelters located in Quebec and one in Kitimat, British Columbia. These facilities are owned by three major companies: Alcoa, Aluminerie Alouette, and Rio Tinto. Rio Tinto also operates an alumina refinery in Vaudreuil, Quebec. 

The Canadian aluminum industry produces a wide range of products, including doors, windows, house siding, beverage cans, foil products, cooking utensils, and electrical wiring.

As of 2022, Canada ranked as the world’s 4th-largest producer of primary aluminum, following China, India, and Russia. The North American country produced about 3.0 million tonnes of primary aluminum in 2022, which accounts for about 4.4 percent of global production. In contrast, China alone produces more than half of the world’s aluminum. 

A notable advantage of Canada’s aluminum industry is its lower carbon footprint compared to other major producers, thanks to its reliance on renewable energy sources, particularly hydroelectric power.

In 2023, Canada’s smelter production of aluminum was estimated at around 3 million metric tons as seen below. Throughout the observed period, Canada’s aluminum production volume remained relatively stable. The country’s peak production occurred in both 2016 and 2017, when it reached 3.2 million metric tons. 

How Significant Is Canada’s Aluminum Production and Export Market?

Canada is the world’s second-largest exporter of aluminum, with aluminum product exports totaling $18.2 billion in 2022. The United States is the primary market for these Canadian exports, making it a crucial partner in the aluminum trade. This close trade relationship underscores the importance of maintaining strong economic ties and competitive advantages in the aluminum industry.

However, the recent actions of the U.S. government of imposing tariffs on China imports spurred the industry’s interest to do the same. 

READ MORE: U.S. Raises Tariffs on $8B China Imports: EVs, Batteries, and Solar Cells Included

Catherine Cobden, President and CEO of the Canadian Steel Producers Association (CSPA), emphasized the urgency of the issue during a press conference in Ottawa. She stressed the need for Canada to act in concert with its North American trade partners under the Canada-United States-Mexico Agreement (CUSMA).

“We can’t be the only CUSMA country that is not taking this serious action,” Cobden stated, highlighting the critical nature of the moment for Canada’s steel industry.

The CSPA represents 13 steel companies, including major players like Stelco, Algoma Steel Inc., and Rio Tinto.

The Canadian industry leaders’ call to action follows the U.S. government’s May announcement of a 25% tariff increase on Chinese steel and aluminum. Additionally, the U.S. has imposed higher tariffs on other Chinese products, including electric vehicles (EVs), semiconductors, critical minerals, and batteries. 

In response, Mexico, in July, introduced a 10% tariff on aluminum and a 25% tariff on steel not produced within Mexico, in collaboration with the U.S. These measures aim to prevent Chinese producers from bypassing tariffs through Mexican trade routes.

The Implications of Urging Tariffs on Chinese Imports

The CSPA and the Aluminium Association of Canada are advocating for a 25% tariff on all Chinese steel products and most aluminum products entering Canada. This would mirror the recent U.S. decision to impose tariffs on 289 different Chinese steel and aluminum imports. Cobden stressed the urgency of the situation, warning that failure to act could result in job losses and hinder economic growth and investment in Canada’s steel and aluminum industries.

The concern now is that Canada could become a “back door” for Chinese steel and aluminum entering North America, undermining the protective measures taken by the U.S. and Mexico. This potential loophole has prompted Canadian industry leaders to push for similar tariffs to safeguard domestic jobs and industries.

What more Jean Simard, President and CEO of the Aluminium Association of Canada noted that:

”China’s metal is seven times more carbon-intensive than Canada’s.”

Thus, Simard said that allowing Chinese steel and aluminum into Canada would increase the country’s carbon footprint and undermine efforts to promote sustainable industrial practices. He called on the government to act swiftly to protect Canadian jobs, technology investments, and the environment.

What Are The Consequences of No Action?

The potential consequences of failing to impose tariffs are stark. Over 760,000 tonnes of Chinese steel entered the American market in 2023, with similar amounts the previous year. These volumes are 20% higher than the current amount of Chinese steel entering Canada annually. Industry leaders fear that any Chinese steel diverted from the U.S. market due to tariffs could flood the Canadian market, further eroding the domestic steel and aluminum industries.

The CSPA and Aluminium Association of Canada are urging the federal government to act quickly and decisively. They warn that any delay could lead to a further decline in the Canadian steel and aluminum industries, with long-term consequences for employment, economic growth, and Canada’s position in the global market.

As the government considers its next steps, industry leaders are making it clear that urgent action is needed to protect Canada’s steel and aluminum sectors from the growing threat of Chinese overcapacity.

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Carbon Credits vs. Carbon Offsets: What’s the Difference?

At their core, both carbon credits and carbon offsets are accounting mechanisms. They provide a way to balance the scales of pollution. The big idea behind credits and offsets is that since CO2 is the same gas anywhere in the world, it doesn’t matter where emissions reduction happen.

For both consumers and companies, it makes financial sense to reduce emissions where it is cheapest and easiest to do so, even if that does not involve their own operations.

Carbon Offsets and Carbon Credits Defined

While the terms “carbon credits” and “carbon offsets” are often used interchangeably, they refer to two distinct products that serve two different purposes. Before you begin purchasing either, it’s important to understand the difference between the two and which one will help you meet your goals. Here is a broad definition of the terms:

Carbon offset: A removal of GHGs from the atmosphere.
Carbon credit: A reduction in GHGs released into the atmosphere.

To help visualize the difference, imagine a water supply polluted by a nearby chemical plant. A “chemical offset” would mean pulling chemicals out of the water to help purify it. A “chemical credit” would mean paying another chemical company to release fewer chemicals into the water, so the overall level of pollution stays the same. Clear as mud? Great.

A Carbon Offset and Carbon Credit Primer*

Let’s dive a bit deeper into these products one at a time. Creating a carbon offset involves a fancy term we call “carbon sequestration.” Recall how a judge can order a jury to be sequestered—meaning they have to be sealed off from the outside world.

It works the same way with carbon: offsets involves CO2 emissions pulled out of the atmosphere and locked away for a period of time.

There is a growing list of ways to do this, including planting forests, blasting rock into tiny pieces, storing carbon in manufactured devices, capturing methane gas at a landfill, and the holy grail of carbon sequestration: using sophisticated technology to turn CO2 emissions into a usable product.

Carbon offsets are produced by independent companies that pull CO2 emissions from the atmosphere. The offsets are then sold to companies that emit (or have emitted) CO2. In a sense, offset-producing companies are directly funded by those companies that emit GHGs.

Carbon credits, on the other hand, are generally “created” by the government. Governments limit the amount of GHGs organizations can emit by placing a cap on them—a specific number of tons of CO2 the company can emit. Each of those tons are referred to as a carbon credit.

Companies comply with that cap by reducing the emissions produced in their operations through improving energy efficiency or switching to renewable energy sources. An organization that brings its overall emissions below what is required by law can sell the excess credits to businesses that are unable or unwilling to cut their own emissions to become compliant.

There are a few other ways to produce carbon credits. For more detail, see our article on carbon credits.

The Two Carbon Markets

There’s one more important distinction between carbon credits and carbon offsets:

Carbon credits are generally transacted in the carbon compliance market.
Carbon offsets are generally transacted in the voluntary carbon market.

Mandatory schemes limiting the amount of GHG emissions grew in number. And with them, a fragmented carbon compliance market is developing. For example, the EU has an Emissions Trading System (ETS) that enables companies to buy carbon credits from other companies.

California runs its own cap-and-trade program. Nine other states on the eastern seaboard have formed their own cap-and-trade conglomerate, the Regional Greenhouse Gas Initiative.

The voluntary carbon market (think: offsets) is much smaller than the compliance market, but expected to grow much bigger in the coming years. It is open to individuals, companies, and other organizations that want to reduce or eliminate their carbon footprint, but are not necessarily required to by law.

Consumers can purchase offsets for emissions from a specific high-emission activity. An example would be a long flight. Or they can buy offsets on a regular basis to eliminate their ongoing carbon footprint.

Do I Need Carbon Offsets or Carbon Credits?

Now that you know their differences and what they have in common, here’s how carbon credits and carbon offsets work in the grand, global scheme of emissions reduction.

The government is putting heavy caps on GHG emissions, meaning that companies will have to reconfigure operations to reduce emissions as much as possible. Those that cannot be eliminated will have to be accounted for through the purchase of carbon credits. Ambitious organizations, corporations, and people can purchase carbon offsets to nullify previous emissions or to reach net zero.

So which do you need? If you’re a corporation, the answer is likely “both”—but it all depends on your business goals. If you’re a consumer, carbon credits are likely unavailable to you. But you can do your part by purchasing carbon offsets.

Returning to the illustration from earlier, our vital, global goal is to both stop dumping chemicals into the metaphorical water supply, and to purify the existing water supply over time. In other words, we need to both drastically reduce CO2 emissions. And then we work to remove the CO2 currently in the atmosphere if we want to materially reduce pollution.

*Note: See our in-depth articles on carbon credits and carbon offsets for a closer look at how they work.

 

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In an impressive second quarter, ExxonMobil has revealed record profits while cutting emissions. The company’s strong financial results and reduced environmental impact highlight its success in balancing profitability with sustainability.

Exxon Excels in Q2 Profits

ExxonMobil reported its second-quarter 2024 earnings on August 2, revealing a strong financial performance. The company earned $9.2 billion, or an adjusted $2.14 per share. This indicated a 17% jump from the previous year’s profits of $7.9 billion. The acquisition of Pioneer Natural, finalized in May, boosted Exxon’s earnings by $500 million.

Furthermore, excluding working capital movements, cash flow from operations reached $15.2 billion. Exxon Mobil also distributed $9.5 billion to shareholders, including $4.3 billion in dividends and $5.2 billion in share repurchases. These results are consistent with the company’s announced plans.

Darren Woods, Exxon’s chairman and CEO remarked,

“We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company.”

The company achieved the highest production levels in Guyana and the Permian Basin. As per their press release, total net production in Upstream rose by 15%, adding 574,000 oil-equivalent barrels per day from the first quarter.

Exxon also added new businesses. For example, they advanced their carbon capture and storage (CCS) efforts with a new deal that boosted the total contracted CO2 offtake with industrial customers to 5.5 million metric tons annually. This amount is the biggest ever announced by any company.

READ MORE: ExxonMobil to Spend $15B to Reduce Carbon Emissions

ExxonMobil: Cutting Emissions for Cleaner Air

The company has reduced its emissions of nitrogen oxides, sulfur oxides, and volatile organic compounds from 2016 to 2022 by about 23%. Key steps highlighted in their sustainability report are:

Understanding the composition and extent of emissions
Meeting or exceeding environmental regulations
Reducing air emissions to minimize local impacts
Monitoring air quality science and health standards

For new projects, Exxon follows strict environmental policies and standards. They guide facility designs and operations and practice specific procedures at each site to control air emissions effectively.

In 2023, ExxonMobil’s equity-based GHG emissions were 111MMTCO2e.

This was a reduction of 2mmt compared to the previous year. Additionally, their 2030 plans to reduce GHG emissions are intensity-based. They focus on reducing Scope 1 and 2 emissions from their operations, compared to 2016 levels.

Check out the emission data below ranging from 2016-2023.

source: ExxonMobil

These actions are also expected to achieve a 20% absolute reduction in corporate-wide GHG emissions with the 2016 baseline. Notably, Exxon’s 2030 emission reduction plans align with the Paris Agreement.

Statista reported that in 1965, the oil giant released more than 40 billion metric tons of carbon dioxide equivalent, making it one of the biggest contributors to global greenhouse gas emissions in the world.

Woods further said,

“The focused actions we have taken have enabled us to accelerate greenhouse gas reductions, particularly in the areas of methane and flaring. We anticipate meeting our 2025 greenhouse gas emission-reduction plans ahead of schedule, which gives us the confidence to set more aggressive medium-term goals across all of our businesses.”

Net-Zero Path: Pioneering in Low Carbon Solution Business

As the world moves toward net zero, emission-reduction markets are set to grow. Exxon wants to create opportunities for its Low Carbon Solutions business which is significant for their expansion. Apart from mitigating emissions, they focus on strong returns and value during the energy transition.

“Our company manages molecules”- Exxon

For decades, Exxon has focused on capturing, transporting, and storing molecules, producing hydrogen, and sourcing lower-carbon-intensity molecules. It is rapidly expanding its business in these areas with a potential market value of over $6 trillion by 2050.

Carbon Capture and Storage

Exxon’s acquisition of Denbury Inc. is poised to give a major boost to projects and open new opportunities along the U.S. Gulf Coast and beyond. Denbury’s 1,300 miles of CO2 pipelines, primarily in Gulf Coast states, and its strategically located assets are ideal for combating emissions.

Overall, this acquisition supports efficient carbon capture and storage and benefits multiple low-carbon businesses. The goal is to reduce emissions by over 100 MMT annually faster and cost-effectively.

KNOW MORE: Exxon Buys CO2 Pipeline Operator, Betting $5B on Carbon Capture 

Exxon’s CCS portfolio also includes partnerships with the companies mentioned in the image:

source: ExxonMobil

Hydrogen

ExxonMobil uses hydrogen extensively in its refining and chemical plants and plans to expand this use. In Baytown, Texas, the company is building the world’s largest low-carbon hydrogen production facility. This plant will produce 1 billion cubic feet of hydrogen daily, enough to power 1.5 million homes.

The facility will capture over 98% of CO2, about 7 MMTs annually, and provide clean hydrogen to Gulf Coast industrial customers and Baytown facilities. The project, using certified lower-emission natural gas from the Permian Basin, is expected to start in 2028.

Looking ahead, ExxonMobil is exploring technology advancements and transport solutions. It participates in initiatives to advance low-carbon hydrogen and address blending hydrogen into natural gas pipelines. The company is also collaborating with the MIT Energy Initiative to develop a carbon life-cycle tool that will help policymakers design effective emission-reducing technologies.

Lithium

In a new development last November, Exxon announced plans to produce lithium carbonate for EV batteries using direct lithium extraction (DLE) technology in southern Arkansas. The first production is set to begin in 2027, and the product will be branded as Mobil Lithium. This significant achievement in energy transition will also advance U.S. climate policy while minimizing environmental impacts.

Lower-Emissions Fuels

Lower-emission fuels, including biofuels from plants and synthetics made from hydrogen and CO2, produce fewer emissions than traditional fuels. They offer high energy density for heavy trucks, with renewable diesel reducing carbon emissions by up to 70%. Demand is expected to grow significantly, especially in aviation, marine, and heavy-duty trucking, with projections reaching nearly 9 million oil-equivalent barrels per day by 2050.

The company is using the latest technology to expand lower-emission fuels and innovating next-generation options through its Low Carbon Solutions business. Some remarkable efforts include integrating biomass-based fuel production with carbon capture and exploring natural gas conversion into methanol-based fuels.

Current initiatives feature expanding renewable fuel production at the Strathcona, Canada refinery, and delivering certified sustainable aviation fuel (SAF) to Changi Airport in Singapore as part of a pilot project.

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