U.S. Natural Gas Prices to Jump 44%: What’s Driving the Surge?

September 16, 2024/0 Comments/in Uncategorized /by

As the northern hemisphere summer winds down, U.S. natural gas markets are already preparing for the upcoming winter and looking ahead to 2025. The markets are forecasting a sharp rise in Henry Hub futures, the benchmark for U.S. natural gas prices.

Data from LSEG shows that prices could average $3.20 per million British thermal units (mmBtu) in 2025. This is a significant increase from the $2.22 average so far in 2024. This projected 44% price jump would represent the steepest annual climb since 2022, potentially increasing energy product inflation trends.

Chart from Reuters

Renewables Rise, but Gas Still Powers the Grid

According to the U.S. Energy Information Administration (EIA), natural gas generates 43% of the nation’s electricity, coal 16%, and nuclear nearly 19%. Renewables provide around 21%, accounting for 84% of new capacity additions in 2023, down slightly from 85% in 2022.

Joey Mashek from Burns & McDonnell highlights that while renewables are growing, natural gas is replacing coal in a one-for-one swap in many states. This transition has led to a 25% drop in CO2 emissions since 2005.

Despite the bullish outlook for the future, U.S. natural gas markets have been relatively downbeat throughout 2024. Prices reached 4-year lows in the spring, as major storage hubs entered the year with unusually high stockpiles. This is due to mild winter temperatures that reduced heating demand.

These bloated inventories have remained around 10% above the long-term average, limiting price progress even during the summer months when increased cooling demand typically drives up consumption.

This past summer, U.S. natural gas consumption surged in July and August due to higher demand for air conditioning. However, prices failed to gain momentum. Recently, they slumped by around 3%, as a storm forecast to hit Louisiana threatened to disrupt power and reduce gas use at liquefied natural gas (LNG) export plants.

U.S. Gas Production Hits Record Highs

Amid the uncertain price landscape, U.S. natural gas production has been strong. Through the first eight months of 2024, average daily dry gas production hit a record 102.5 billion cubic feet per day (Bcf/d), a slight increase from the same period in 2023. This is also nearly 9.5% above the average production rate between 2020 and 2022.

The EIA forecasts that production will rise further, averaging 105 Bcf/d by 2025. Similarly, the demand for U.S. natural gas is poised to grow as well. This is primarily due to the power generation, industrial processes, and LNG export sectors.

According to the EIA, the power sector alone accounts for 38% of total U.S. gas demand, while industrial use contributes an additional 32%. The LNG export sector represents about 10% of total demand.

U.S. natural gas exports offer significant opportunities. The country currently has 5 LNG export projects under construction with a combined capacity of 9.7 Bcf/d. These projects include:

Plaquemines (Phase I and II),
Corpus Christi Stage III,
Golden Pass,
Rio Grande (Phase I), and
Port Arthur (Phase I).

Developers expect the first LNG production from Plaquemines LNG and Corpus Christi LNG Stage III by the end of 2024.

U.S. LNG exports could hit new records as new export terminals begin operations, tapping into the increasing global reliance on natural gas. Feedgas, the amount of natural gas consumed by LNG export facilities, is projected to rise from 13 Bcf/d to 17 Bcf/d by the end of 2025.

This surge in LNG exports, coupled with the growth in power generation, is expected to tighten the U.S. gas supply, putting upward pressure on prices.

LNG Exports Set to Break Records, Tightening U.S. Supply

The expected 31% increase in LNG demand is just one factor contributing to the tightening supply of natural gas. The power sector is also expected to consume more gas as it continues to replace inefficient coal-fired plants with gas-fired units.

Gas plants produce about 77% less carbon dioxide than coal plants, making them a more environmentally friendly alternative. As U.S. electricity consumption continues to grow, gas-fired power plants will play a significant role in meeting that demand.

This combination of increasing demand and tightening supply is reflected in the current upward trend in forward gas prices. By 2025, the average price for Henry Hub futures is projected to be $3.20/mmBtu, significantly higher than the average in 2024. This increase is likely to motivate producers to boost output, but it could also begin to curb demand. It is particularly true among industries sensitive to rising gas costs.

The Risks and Challenges for Gas-Dependent Sectors

Although higher natural gas prices might prompt producers to ramp up supply, they could also create challenges for certain sectors. The industrial sector, which consumes about a third of U.S. gas, may look to electrify some processes if gas prices climb too high. Additionally, LNG exporters that do not have favorable long-term contracts may find it harder to remain competitive if gas prices continue to rise.

While LNG exporters currently enjoy a price differential that allows them to profit from selling gas to international markets—especially Europe, where Dutch gas prices are 4.6x higher than Henry Hub prices—this gap is expected to narrow. By 2025, the price differential between U.S. and European gas prices is forecast to shrink to 3.5x.

Furthermore, natural disasters such as storms off the Louisiana coast pose another risk. The Gulf region is a critical hub for both natural gas production and LNG exports. Thus, any disruptions due to weather could temporarily reduce demand and complicate the supply chain. This could create volatility in the market, even as overall production remains high.

As U.S. natural gas markets prepare for the coming winter and look ahead to 2025, the outlook for prices suggests a significant increase driven by tightening supply and rising demand. The power generation, industrial, and LNG export sectors will continue to be the primary drivers of gas consumption, with LNG exports set for particularly robust growth.

As the market evolves, it’s worth keeping a close eye on the balance between supply, demand, and the growing role of the U.S. in the global natural gas market.

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$65 Billion Green Fund from Carbon Credits Sale? Says Indonesia’s President-elect Prabowo Subianto

September 16, 2024/0 Comments/in Uncategorized /by

Indonesia is preparing for a green revolution as President-elect Prabowo Subianto plans to launch a groundbreaking green economy fund. The fund aims to raise $65 billion by 2028 through carbon emission credits sales from large-scale environmental projects.

Prabowo intends to manage the fund via a “special mission vehicle,” which will oversee all sustainable activities in the country, including forest preservation, reforestation, and other green initiatives. This ambitious plan marks a significant step in Indonesia’s efforts to combat climate change and promote sustainability.

Unlocking the Special Mission Vehicle to Manage the Green Fund

Prabowo has pledged to raise Indonesia’s economic growth from 5% to 8% during his five-year term, focusing strongly on investments in green projects. According to Ferry Latuhihin, one of Prabowo’s climate policy advisers, this fund will play a key role in helping Indonesia meet its emissions targets under the Paris Agreement.

Latuhihin explains that a newly established regulator will oversee Indonesia’s carbon emission rules and form a “special mission vehicle” to manage the green fund. This entity will handle various carbon offsetting projects, including forest preservation, reforestation, and the replanting of peatlands and mangroves. These initiatives are designed to generate carbon credits that can be sold both locally and internationally.

Latuhihin remarked in an interview with Reuters,

“By pooling funds through this vehicle, Indonesia hopes to finance large-scale green projects without tapping into the government’s budget.”

The government has set an ambitious goal to expand the special mission vehicle to $65 billion (1,000 trillion rupiah) by 2028. While it will start with seed capital, the fund is expected to grow primarily from the sale of carbon credits. Once the fund becomes profitable, it will pay dividends back to the government.

Latuhihin also emphasized that they will adhere to international verification standards and use technology to accurately measure how much CO2 each project removes from the atmosphere.

KNOW MORE: The Pitfalls of Low-Quality Carbon Offsets: Are They a Threat to Our Planet?

Challenges in Carbon Credit Pricing and Sales

While the plan is bold, raising such a large sum from carbon credits will not be easy. Christina Ng, Managing Director of the Energy Shift Institute, an independent nonprofit think tank focused on Asia’s energy transition, pointed out that nature-based carbon credits typically trade between $5 and $50 per metric ton of CO2 equivalent. She noted that last year the average price was below $10 per ton.

Considering the maximum price of $50 per ton, Indonesia would need to sell 200 MTS of carbon credits annually to reach the $10 billion mark. This is still short of the $65 billion target over the next four years.

Ng further explained that at the lower price point of $10 per ton, the same amount of carbon credits would only raise $2 billion annually, making the goal even more daunting. The global voluntary market peaked at 239 MTS of carbon credits in 2021, highlighting the magnitude of Indonesia’s challenge.

Another important factor is Indonesia’s past government issues, which haven’t always been conducive to such efforts. However, if the country offers nature-based credits, the entity will need to prove its premium quality.

Leveraging Indonesia’s Nature-Based Solutions for Carbon Credits

Despite these challenges, the potential is enormous. Indonesia is one of the world’s top 10 carbon emitters and is home to the planet’s third-largest tropical rainforest. The vast tropical rainforests and peatlands offer a unique advantage in the global carbon credit market, providing ample opportunities for large-scale carbon offset projects. Latuhihin emphasized that these offset projects will reduce emissions and create significant job opportunities, supporting Prabowo’s broader economic growth plans.

Notably, Indonesia hosts the world’s largest carbon offset project, the Rimba Raya Conservation. This REDD+ project developer recently won a legal victory in Indonesia, allowing it to resume operations in Borneo.

MUST READ: Rimba Raya Resumes Operations in Borneo with Epic Legal Victory

In July, the U.S., Indonesia, and four NGOs signed the debt-for-nature swap and Coral Reef Conservation Agreement. Under the deal, the U.S. will reduce Indonesia’s debt payments by $35 million over nine years. In return, Indonesia would use these funds to create a conservation fund supporting coral reef protection and restoration. Local NGOs will manage projects that benefit both the reefs and local communities.

The McKinsey Report

McKinsey has significantly reported on how high-quality carbon credits are becoming essential for organizations, especially in high-emitting sectors like aviation, cement, steel, and oil and gas. Nature-based solutions (NBS) such as reforestation, mangrove restoration, and peatland recovery offer effective ways to sequester carbon and generate carbon credits. Emerging markets, like Indonesia, with vast natural resources, provide cost-effective opportunities with environmental and social benefits.

Having the spotlight on Indonesia, they explained that the country holds one of the world’s largest NBS potentials, translating to over 1.5 GtCO2 in carbon credits.

With corporations increasingly committed to reducing emissions, the demand for Indonesian carbon credits is expected to grow tenfold by 2030. These credits not only support climate action but also boost local economies, improve biodiversity, and enhance soil and water quality.

Source: McKinsey and Company

KNOW MORE: Indonesia’s Coal Emissions at Record High, Up 33% in 2022

Global Push to Achieve Carbon Neutrality

Reuters noted that the soon-to-be government plans roadshows and partnerships with major global banks to boost international carbon credit sales. They will target markets where carbon credits command higher prices to enhance their chances of meeting financial goals.

Despite reduced deforestation, Indonesia still faces challenges with forest fires, often caused by farmers clearing land. As the green fund advances, credible and verifiable carbon offset projects will be crucial for attracting international buyers.

By adhering to international standards and using advanced technology to measure carbon dioxide removal, Indonesia seeks to position itself as a global leader in the carbon credit market and achieve net carbon neutrality by 2060.

Disclaimer: Report compiled from Reuters

FURTHER READING: WEF and Indonesia Join Hand to Boost Blue Carbon Credits

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Spodumene Prices Plunge 87%, But a $1.6 Trillion Lithium Opportunity Looms

September 16, 2024/0 Comments/in Uncategorized /by

Spodumene prices, a key raw material for lithium production, have hit their lowest levels since August 2021, driven by a significant slump in lithium chemical prices. With major producers feeling the heat, the lithium market faces turbulence.

As of September 4, spodumene FOB (Free on Board) Australia prices fell 14.4% this year, reaching $818 per tonne, according to the Benchmark Lithium Price Assessment. This represents a massive drop from their December 2022 peak of $6,401 per tonne—a fall to just one-eighth of their highest value.

The decline is largely attributed to the falling prices of lithium chemicals, which spodumene prices tend to follow closely.

In addition to this lithium price drop, there’s another factor at play: high inventory levels. Spodumene suppliers and producers in China continue to flood the market to maintain their share, even as prices fall.

A New Competitor Emerges in the Lithium Race

Spodumene isn’t the only game in town anymore. Prices for lepidolite, another lithium-bearing mineral, have also dropped sharply, particularly in China.

In August, lepidolite prices fell significantly, making it a more attractive option for lithium producers. This shift has further reduced demand for spodumene, accelerating its price decline.

In fact, during the two-week assessment period ending on September 4, spodumene prices saw a 3.3% decline. The growing interest in lepidolite as a feedstock, combined with existing inventory surpluses, continues to create a bearish outlook for spodumene producers.

Benchmark’s data also revealed sharp declines in the spot prices of lithium carbonate and lithium hydroxide in China. Lithium carbonate prices have fallen 23.8% this year, while lithium hydroxide prices have dropped 15%. These declines in lithium chemicals mirror the challenges faced by spodumene producers and reflect broader market dynamics.

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Producers on the Ropes: The Pain of Falling Prices

The current lithium price environment is particularly challenging for spodumene producers, especially those with higher production costs. As prices approach the $800 per tonne mark, many higher-cost producers are finding it increasingly difficult to maintain profitability. Some are being forced to make tough decisions, such as cutting production or delaying expansion projects.

Adam Megginson, a senior analyst at Benchmark, explained:

“As we have approached the $800 a tonne mark, we have started to hear lower bids, but they have not closed. So, we’re beginning to see resistance at these levels.”

Producers face a dilemma: announcing production cuts could signal to the market that they are struggling to keep up with the price environment. At the same time, many lithium producers want to keep operating to be ready to capture market share once prices rise again. This means that some upstream players continue to produce even when prices fall below their operational costs.

For instance, Arcadium Lithium recently announced that it plans to place its Mt Cattlin mine into care and maintenance by 2025 due to the low-price environment.

However, Greenbushes, a major spodumene producer, appears to be weathering the storm. Its expansion, expected to ramp up to 60,000 tonnes per year of lithium carbonate equivalent (LCE), is still on track to go online next year.

In contrast, projects in Africa, which are mostly owned by Chinese companies, have continued without pause, driven by vertical integration within the Chinese market.

More Clouds Before the Storm Clears

Sophia Jang, Benchmark’s analyst, noted that any price increases this year are unlikely to be significant. However, she did suggest that there could be a short-term spike in prices in late September as Chinese cathode producers look to secure materials ahead of China’s National Day Golden Week on October 1.

Looking further ahead, the fourth quarter typically sees higher demand for electric vehicles, which could help stabilize demand for lithium. However, it remains uncertain whether this will be enough to drive a meaningful recovery in spodumene prices.

Lithium Company Spotlight: The Fastest Developing North American Lithium Junior

The Long Game: $1.6 Trillion Needed to Meet Future Demand

While the lithium market is experiencing short-term turbulence, the long-term outlook remains bullish.

Benchmark’s Lithium-ion Battery Database forecasts that at least $1.6 trillion in investment will be needed to meet battery demand by 2040. This is almost triple the $571 billion requirement to meet demand by 2030.

Battery demand could grow significantly in the coming years, from 937 gigawatt-hours (GWh) in 2023 to 3.7 terawatt-hours (TWh) in 2030. This demand will double again between 2030 and 2040, highlighting the immense need for new investment in lithium production, processing, and battery manufacturing.

A significant portion of this investment—44%—will go towards building gigafactories, which will produce battery cells and assemble battery packs.

Recycling will also play a major role in meeting future lithium demand. As more EVs reach the end of their useful life, the battery scrap pool is set to grow substantially. According to Benchmark, $26 billion will be needed by 2030 to build the capacity to recycle this scrap into usable battery materials. By 2040, this figure will rise to $157 billion.

Lithium Takes the Lead

Among critical raw materials, lithium will require the largest investment to meet future demand. By 2030, $94 billion is needed to scale lithium production, with this figure doubling by 2040.

While the current lithium market may be facing challenges, the long-term trajectory remains positive. This is primarily driven by the growth of electric vehicles and renewable energy storage. Spodumene producers may be navigating rough waters now, but those that can weather the storm are likely to benefit from future demand growth.

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The Lithium Paradox: Price Plummet, Supply Surge, and Demand Dip – What’s Happening Now?

September 16, 2024/0 Comments/in Uncategorized /by

Lithium has recently experienced a rollercoaster ride, particularly with concerns about the potentially dwindling EV industry. This year, prices hit their lowest point in three years due to growing fears of excessive supply. With shifting trade rules and increased production, the lithium market faces new challenges.

Lithium Price Plunges Amid Oversupply

As of early September, lithium carbonate and lithium hydroxide prices fell below $11,000 per metric ton for the first time since June 2021. Trading Economics reported Lithium carbonate prices remained stable at 10,552.50 per ton in September, marking the lowest level in over three years. Experts predict that global supply could increase by almost 50% this year, adding to the existing oversupply.

The S&P Global chart shows lithium prices dipping into the global cost curve, with total cash costs for lithium carbonate and lithium hydroxide properties listed in dollars per metric ton of lithium carbonate equivalent (LCE) as of September 4, 2024:

Lithium Hydroxide: Typically sourced from lithium-rich salt lakes or brines, primarily used to produce lower-cost, lower-energy density lithium iron phosphate (LFP) batteries. Price: $10,550/ton.
Lithium Carbonate: Derived from spodumene ore mining, offering higher energy density and commonly used in nickel, cobalt, and manganese (NCM) battery chemistries. Price: $10,400/ton.

The chart compares various lithium production projects worldwide, showing how their costs relate to these prices. Many projects, particularly for lithium carbonate, have cash costs below current market prices, indicating profitability. However, some projects, especially for lithium hydroxide, face financial pressure due to higher costs.

Source: S&P Global Market Intelligence

SEE MORE: Understanding Lithium Prices: Past, Present, and Future

Market Concerns: Oversupply and Low EV Sales

Lithium prices fell after peaking at over $79,637 per ton in December 2022, driven by surging demand for EVs. Despite starting the year near record highs, prices dropped as overcapacity in battery production, particularly lithium iron phosphate (LFP) batteries, began to impact the market. Slowing EV sales, especially in China (accounting for 60% of global EV registrations), added to the downward pressure.

China’s uncertain economic recovery and the phase-out of EV subsidies further dampened demand. According to the IEA, new electric car registrations grew by 35% in 2023, a notable slowdown compared to the 82% growth in 2022. Despite this, experts believe the EV sector will remain a significant driver of lithium, with projections showing it will account for over half of global lithium consumption by 2024.

The IEA forecasts global electric car sales could hit 17 million units by the end of 2024, up from 14 million in 2023. While growth continues to be concentrated in China, Europe, and the US, emerging markets like Vietnam and Thailand are seeing increased EV adoption, with electric cars making up 15% and 10% of sales, respectively.

Market Uncertainty Forces Lithium Giants to Rethink Strategies

Lithium producers are feeling the pinch as oversupply drives prices down. Major players like Albemarle Corp. and Arcadium Lithium PLC have paused expansion plans, while SQM and Ganfeng Lithium Group continue to ramp up production, hoping for a price rebound once the market stabilizes.

Albemarle Adapts to Lithium Market Flux

In July, Albemarle halted expansion plans at its Kemerton lithium hydroxide refinery in Australia to manage costs more effectively. CEO Kent Masters emphasized the need for adaptability in the changing industry landscape. Despite many producers struggling to cover cash costs, the timing for a price recovery remains uncertain.

Albemarle, which reported a $1.96 per share net loss for the second quarter, may shift towards lithium carbonate batteries, potentially influencing future expansion strategies. The company maintains its full-year outlook, reflecting anticipated lithium market price trends.

Source: Albemarle

Despite Albermarle’s July lower market prices, the $15/kg forecast should hold due to cost reductions, strong volume growth, increased Talison shipments, and robust Energy Storage contracts.

Ganfeng’s Bold Lithium Move

Ganfeng Lithium Group plans to splash in 2024 with expanded lithium production and increased market presence. The $500 million joint venture with Turkish lead-acid producer Yiğit Akü for lithium batteries adds a significant boost.

Despite recent stock declines from a peak of HK$132 in 2021 to HK$17.10, Ganfeng continues to expand globally, securing resources in Argentina, Australia, Mali, and Mexico. The company plans to issue five-year overseas bonds worth up to $200 million to fund a project in Argentina. Look out Bloomberg’s chart:

Some More Industry Adjustments

CATL’s Strategy Shift: UBS analysts predict an 8% drop in China’s lithium carbonate production, potentially balancing supply and boosting prices.
Arcadium’s Cutbacks: Slowing sales and reduced earnings prompted the pause of its 40K ton spodumene Galaxy project in Canada and scaled-back expansion in Argentina.
Global Market Tensions: Trade barriers and slow EV demand contribute to price declines, while Chile and China push for increased lithium output to balance the future market.

Lithium Price Forecast 2024-2030

Source: Techopedia

MUST READ: Lithium Prices Hit New Lows: Can the Market Survive the EV Slowdown and Price Plunge?

Forecasting long-term lithium prices is tough, mainly because the metal trades mostly in spot markets, not futures. Only a handful of analysts provide forecasts up to 2030. The Australian Government’s Office of the Chief Economist (OCE) predicts a short-lived recovery for lithium hydroxide prices, with a decline expected by 2026. This drop may result from emerging alternative battery technologies potentially impacting the lithium-ion EV battery market.

Disclaimer: Data Source

Lithium Price Forecast 2024, 2025 & Beyond | Is Lithium a Good Investment? (techopedia.com)
Lithium supply race heats up | S&P Global Market Intelligence (spglobal.com)

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CATL Shuts Jiangxi Mine: How Will It Affect Global Lithium Balance?

September 14, 2024/0 Comments/in Uncategorized /by

Lithium spot prices have plummeted by around 90% since 2022, leading to vital mine closures and market shifts worldwide. However, CATL’s recent shutdown in Jiangxi, China, stands out as one of the most significant closures to date. What led to this decision, and how has it impacted the global lithium industry?

CATL Shuts Down Major Lithium Mine Amid Plunging Prices

Jiangxi province, located in southeastern China, accounts for about 5% to 6% of the global lithium supply. Despite its large reserves, CATL’s Jiangxi mine has faced financial strain due to rising production costs and falling prices. According to BMO (Bank of Montreal) analysts, mining lepidolite has become unprofitable because, despite its high lithium content, lepidolite is costly to convert into usable lithium.

CATL has remained competitive by utilizing its fully integrated business model, which includes refining, cathode active material (CAM) production, and battery manufacturing. However, the company could not sustain the current market pressure. The closure of this lepidolite mine, a key source of lithium carbonate, has caused significant disruptions in the market. Additionally, CATL is considering pausing one of its three lithium carbonate production lines in Jiangxi.

CATL’s Mine Closure and Its Global Impact: UBS Analysis

This news has garnered significant attention across the lithium market. According to UBS Lithium Analyst Sky Han, this mine accounts for roughly 5% of the world’s primary lithium supply and about 20% of China’s supply. The mine was expected to increase production from 60,000 tons of lithium carbonate equivalent (LCE) in 2024 to 95,000 tons in 2025, positioning it as the fifth-largest lithium mine globally.

While the closure is notable, it is not expected to drastically alter the overall market surplus for 2025. However, a tighter supply situation could develop if other lepidolite producers in China follow suit.

Experts believed that integrated lithium producers like CATL would navigate falling lithium prices effectively through their downstream operations. However, recent developments suggest that even vertically integrated companies might struggle in a low-price environment. Reports from China and Africa indicate that the challenges are substantial, with vertically integrated companies also facing difficulties.

Source: Wood Mackenzie, Company Filings, UBSe.

What Lies Ahead for Lithium Prices?

The suspension of the mine will reduce China’s monthly lithium carbonate output by 8%, or approximately 5,000 to 6,000 tons, according to UBS analysts. With reduced output from one of China’s largest mines, experts anticipate that lithium prices could stabilize, potentially offering relief to struggling producers. The significant cost outcomes include:

Prices could stabilize between $10,000 and $11,000 per ton, reflecting global cash costs. The upper limit is driven by CATL’s cost base, estimated at $10,968 per ton.
Conversion costs of around $3,000 per ton could push spodumene prices up to as high as $1,000 per ton in the near term, compared to current spot prices of about $730 per ton.

While CATL’s closure could positively impact pricing, more supply reductions will be necessary to address the anticipated market surplus in 2025. The evolving situation in China’s lepidolite supply will be crucial. Analysts remain cautious about the growth of Africa’s lithium supply, and the seaborne spodumene price, rather than the GFEX, will be critical for Australian lithium producers ramping up production.

For now, analysts recommend selling stocks like IGO, LTR, PLS, and Ganfeng, while maintaining a neutral stance on companies like Albemarle (ALB), Livent (LTM), and Tianqi. They are more optimistic about Qinghai Salt Lake and PMET. Falling lithium prices have led to mine closures and project delays globally.

The mine in Yichun City, Jiangxi province, had significantly boosted China’s lithium supplies. Now, CATL faces the difficult decision to cut back.

CATL’s Move Drives Stock Surge

CATL’s decision has already impacted the global market. Contrary to expectations, shares of several global lithium companies have seen gains. Furthermore, the closure has eased oversupply concerns, leading to a surge in lithium prices and a boost in stock performance for producers around the world. For instance, Bloomberg reported that shares of Albemarle jumped as much as 17% in New York, while SQM saw a 12% rise. In Australia, Pilbara Minerals Ltd. shot up by 16%, and Tianqi Lithium Corp. climbed by 16% in Hong Kong.

Following the CATL announcement, lithium carbonate futures on the Guangzhou Futures Exchange rose by 5.5%, hitting 76,700 yuan per ton ($10,700), although they remain down 27% for the year.

Several lithium producers in Australia, including Arcadium Lithium Plc and Core Lithium Ltd., have shut down high-cost sites due to plummeting prices. Global Lithium Resources Ltd. is reducing costs at its promising project as it faces a longer-than-expected price slump. Additionally, Albemarle has paused its global expansion plans in response to the ongoing price drop. This was reported by Bloomberg.

Source: Bloomberg

Analysts from Guotai Junan Securities Co. predict that lithium prices might rebound by 2026, and lithium stocks could start rising six to nine months before the commodity’s price improves.

Alice Yu, lead metals & mining research analyst at S&P Global Commodity Insights, stated,

“There is a stronger signaling effect from CATL’s cut. As the world’s largest battery producer, its mine-side suspension reinforces the expectation of a prolonged weakness in downstream demand.”

In conclusion, as lithium prices continue to plunge, CATL’s actions are crucial for stabilizing the supply chain. The company is adjusting its operations to navigate the tough market conditions, hinting at possible shifts in the industry’s lithium production strategies in the coming months.

FURTHER READING: CATL Unveils Ambitious 2,000 km Electric Plane Vision

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Lithium Shortage Looms: Meeting the Surge in Demand by 2030

September 14, 2024/0 Comments/in Uncategorized /by

The Looming Lithium Shortage

Lithium, often referred to as the “white gold” of the clean energy transition, is a crucial element in battery storage technology. Its significance stems from its role in powering electric vehicles (EVs) and storing renewable energy from wind and solar sources.

Demand for lithium has surged dramatically and that’s all thanks to the rise of EVs and renewable energy storage. Now, take a look at the graphic. It shows the huge gap between lithium demand and supply by the decade’s end.

In 2021, the world consumed around 500,000 tonnes of lithium, a figure that is expected to reach over 3 million tonnes by 2030. This rapid growth is primarily due to the escalating need for lithium-ion (Li-ion) batteries, which are at the heart of the electrification trend.

Today, nearly 60% of lithium is mined for battery applications, a figure projected to jump to 95% by 2030. This growth is closely tied to the increasing demand for EVs (about 4,300 GWh), which could account for up to 90% of passenger car sales in certain countries by the end of the decade.

Meeting this need may strain the current lithium supply chain. Even lithium prices have recently been making headlines.

Lithium Supply: Can It Keep Up?

Take for example the case of Tesla’s Cybertruck 123 KWh battery pack. It requires around 80 kg of lithium carbonate equivalent. So, the 2023 production of the largest lithium producing mine, the Greenbushes Mine, could power 2.6 million Cybertrucks. What about the other EVs and energy storage requirements worldwide?

Despite lithium reserves being well-distributed globally, high-grade deposits are concentrated in a few hands only: Australia, Chile, China, and Argentina. The first three countries accounted for 88% of the world’s total lithium production in 2023.

The main challenge lies in the mining and extraction processes, which have historically been underfunded. Deteriorating ore quality and the increasing difficulty of extraction pose additional hurdles.

Not only that. Delays in scaling up battery-cell factories due to shortages of manufacturing equipment, raw materials, and skilled labor are other bottlenecks.

But there’s still hope. Vertical integration of the supply chain, along with long-term contracts and partnerships, could ease some of these issues. Collaboration with local communities and transparent operations will also be crucial in ensuring the smooth expansion of lithium mining.

Innovation in lithium extraction and processing could further help close the gap between supply and demand. Additionally, producing lithium sustainably, with a low carbon footprint, may offer companies a competitive edge, especially as demand for greener technologies rises.

The global energy transition depends heavily on lithium supply. This means stakeholders must collaborate, innovate, and invest in sustainable lithium production to meet the surging demand for this “white gold.”

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Altman-Backed Startup Reveals Solar-Powered Solution for AI and Data Centers

September 13, 2024/0 Comments/in Uncategorized /by

As AI data centers surge in number, their energy consumption poses a significant challenge. These facilities are increasingly straining power grids and threatening the climate commitments of major tech companies like Microsoft, Google, and Amazon. This is what the Miami-based Exowatt, a startup backed by Sam Altman of OpenAI, tries to solve.

The next generation renewable energy company aims to provide a clean, affordable alternative with its modular system that can generate, store, and dispatch solar energy to power these data centers. With a 1.2-gigawatt demand backlog, Exowatt is stepping into a market hungry for sustainable energy solutions.

Following a $20 million seed round led by a16z, Atomic, and Sam Altman, Exowatt could make a significant impact in renewable energy.

Revolutionizing Energy Storage

Exowatt’s system is revolutionary; it’s called Exowatt P3. It pairs a solar energy collector with a thermal battery that can either provide heat or electricity on demand. According to Jack Abraham, Exowatt’s co-founder, data center operators are desperate for affordable, renewable energy. Highlighting the demand for cleaner power, he said that:

“Even if our energy costs were three or four times higher, we’d still have nearly the same number of customers.”

The system has been designed to help data centers self-sustain, thereby reducing their dependency on traditional grids or, worse, fossil fuels.

Exowatt’s Unique Energy Collection Process

Exowatt P3’s optical collection system features cutting-edge technology. It is akin to using a magnifying glass to focus the sun’s rays. The energy is then stored in a heat battery composed of a clay and ceramic composite—a readily available and cost-effective material.

The solar energy can be stored for months, but most customers are interested in storing energy for periods of 8 to 24 hours, to be used when other power sources become more expensive. Compact enough to fit within a 40-foot shipping container, this low-maintenance “install and forget” system meets the needs of industries aiming to cut energy costs and reduce their environmental footprint.

According to the company, their unsubsidized energy cost is $0.04 per kilowatt hour, competitive with conventional energy sources. Producing electricity at this rate, the Exowatt P3 is both scalable and efficient, storing energy for 24-hour use.

In real-world application, the system can save up to $35 million in energy costs and reduce CO2 emissions by 438,000 tons for an average data center project.

Meeting Data Center Power Demand

As data centers continue to grow, Exowatt’s solution becomes even more critical.

According to an analysis by the Electric Power Research Institute (EPRI), data centers could account for between 4.6% and 9.1% of U.S. electricity consumption by 2030. The EPRI report estimated that data center energy use under four scenarios will be 2x more by 2030 due to AI.

EPRI U.S. Data Center Load Projections

Exowatt’s first data center project will go live in West Texas later this year, targeting a large crypto-mining customer.

By next year, this project could reach 50 megawatts. While Exowatt has declined to name its current customers, the demand points to its system’s ability to alleviate energy pressures on the grid and meet the clean energy needs of these power-hungry facilities.

Thermal Batteries and the Climate Tech Boom

Exowatt is part of a broader wave of investment in thermal battery technology. Competitors like Antora Energy and Rondo Energy have raised substantial funds to scale systems that store energy as heat. While these companies primarily target heavy industries such as cement and steel production, Exowatt has chosen a simpler and more scalable market in data centers.

Despite the fast-growing interest, scaling thermal battery systems can be challenging. Industries often require customized retrofits that are costly and complicated. Convincing customers to transition from fossil fuels can be a hard sell, especially where there’s institutional resistance. But by starting with data centers, Exowatt avoids much of this complexity, offering a more straightforward path to market.

Scaling Up: Challenges and Opportunities

The demand for the energy startup’s product is strong. However, scaling Exowatt’s production will be a significant challenge. As co-founder Hannan Parvizian pointed out, building a few prototypes is easy, but producing thousands or millions of units is an entirely different case.

Supply chain issues and manufacturing capacity will play a critical role in determining whether Exowatt can meet the huge market potential.

Moreover, Exowatt’s solution also has geographical constraints. According to Abraham, about 60% of U.S. data centers are located in areas with enough sun to make the system viable. This means Exowatt’s technology may not be a universal fit, leaving a significant portion of the market unserved.

Despite its challenges, Exowatt’s approach to clean energy for data centers is a promising step toward reducing the carbon footprint of the tech industry. By providing an affordable, renewable alternative to fossil fuels, the startup is helping data centers meet their climate goals while also easing the strain on power grids.

As AI continues to grow, the need for sustainable, reliable energy solutions like Exowatt’s will only become more pressing. The company’s success will depend on its ability to scale manufacturing, build a robust supply chain, and continue innovating in the thermal battery space. With the backing of Sam Altman and a growing list of eager customers, Exowatt could play a significant role in the future of clean energy for AI and data centers.

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Microsoft’s 234,000 Carbon Credit Purchase Restores Mexican Rainforest

September 12, 2024/0 Comments/in Uncategorized /by

Microsoft has once again extended unwavering support for carbon removal by announcing the purchase of 234,000 rainforest restoration credits from Mexico-based company Toroto. It creates a win-win situation, allowing Microsoft to both offset its carbon emissions and contribute to restoring the ecosystem of the forestland.

Microsoft’s Carbon Credit Deal Brings Hope for Mexico’s Rainforests

Toroto, a startup founded in 2019 specializes in nature-based solutions. It has been working to develop projects that enhance ecosystem services and combat climate change.

The press release from Toroto explains that these credits were generated by a nature-based project in the Calakmul region of Campeche, southeastern Mexico. They were issued under the Climate Action Reserve (CAR) Mexico Forest Protocol, and are the result of forest restoration efforts that actively remove atmospheric carbon dioxide.

Since 2021, a forest restoration project in this region has been working to regenerate over 47,000 hectares of tropical rainforest. This initiative promotes carbon sequestration while safeguarding a diverse ecosystem, home to endangered species like the Baird’s tapir and jaguar. The project not only protects wildlife but also provides essential services such as water filtration and habitat preservation.

By purchasing carbon credits from this project, Microsoft supports global climate goals while contributing to the conservation of this vast rainforest.

Brian Marrs, Senior Director of Energy and Carbon Removal at Microsoft says,

“The Conhuás project is an example of the potential for community-led ecosystem restoration to drive positive climate impact. We are pleased to collaborate with Toroto to help incentivize both natural ecosystem restoration and community-led climate action.”

Toroto’s Carbon Credits: Empowering Local Communities

Founded in 2019, Toroto has quickly become a leader in nature-based solutions. With projects across Mexico and aspirations to expand throughout Latin America and globally, the company focuses on large-scale ecological challenges. By balancing carbon sequestration, biodiversity protection, and water conservation the company is building ecosystems that can endure climate change.

Moving on, the collaboration with the tech giant gives a major boost to its innovative climate solutions. This partnership not only advances Toronto’s global sustainability goals but is also immensely beneficial for the local communities.

For instance, The Conhuás ejido benefits directly from this carbon credit initiative. By selling these credits, the community earns crucial income while helping to preserve one of the largest rainforests in the neotropics.

The Conhuás Project

According to Santiago Espinosa de los Monteros Harispuru, CEO and Cofounder at Toroto,

“Microsoft’s commitment to the Conhuás project represents a very important milestone for climate action in Mexico. They are setting an example on how the private sector can invest in nature through mechanisms that channel resources directly to the conservation and restoration of the rainforest, while the guardians of this rainforest, the Conhuás community, acquire the technical and financial capacities to continue caring for its regeneration.”

Microsoft’s Carbon Negative Milestones: Tech-Driven Solutions

Microsoft continues to create milestones in carbon dioxide removal (CDR), advancing efforts to build large-scale, impactful projects. Last year it had been very eventful for the company as it procured 5.015 MMT of carbon removal credits as part of its drive toward carbon neutrality and negative emissions. These multi-year agreements are designed to help projects secure external financing while ensuring additional, durable, and measurable carbon credits that are net-negative.

MUST READ: Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

Advancing High-Quality Carbon Removal

Additionally, contracts signed as of December 2023 are expected to contribute 875,000 metric tons toward the company’s 2030 target. These agreements include long-term carbon removal from reforestation in the Brazilian Amazon.

In 2023, the focus shifted to enhancing high-quality carbon removal through new investments and partnerships. Key innovations included advancements in digital monitoring, verification, and reporting (MRV), as well as improved efforts in ecosystem restoration.

Yard Stick PBC: Provides in-ground soil carbon measurements, accelerating project development and ensuring high-quality credits.
Vibrant Planet PBC: Uses AI to map forests, aiding in wildfire risk management, climate adaptation, and ecosystem service enhancement.

Partnerships between CarbonCure Technologies and Heirloom Technologies demonstrated the power of combining direct air capture with CO₂ storage in concrete. Heirloom captured CO₂ in California, and CarbonCure integrated it into concrete production in San Jose.

Microsoft remains dedicated to fighting climate change while supporting local ecosystems and communities. This partnership reflects Microsoft’s growing leadership in corporate sustainability, demonstrating how nature-based solutions can be a key element in achieving carbon neutrality while empowering local communities and preserving biodiversity.

FURTHER READING: Microsoft and Stockholm Exergi Strike Historic Deal for 3.33 MTs of Carbon Removal

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Zefiro Methane Works with Fiùtur to Boost Transparency in Carbon Credits

September 12, 2024/0 Comments/in Uncategorized /by

In a significant move to enhance transparency and reliability in carbon credit markets, Zefiro Methane has entered a strategic partnership with Fiùtur, a digital verification network ecosystem. This collaboration is poised to streamline the aggregation, verification, and delivery of environmental data critical for carbon credit issuance.

By addressing gaps in the current system, Zefiro aims to bring much-needed integrity and transparency to carbon credit markets. The methane offsets provider gone public in Cboe Canada in April.

Tackling Environmental Market Deficiencies

One of the major challenges in today’s voluntary carbon markets is the lack of auditable, verifiable data. Through its partnership with Fiùtur, Zefiro intends to bridge this gap by using cutting-edge technology to generate reliable, large-scale data sets. These will be integrated into Fiùtur’s SMART Data Governance Framework, ensuring standardized and verifiable environmental data for carbon credit issuance.

Image from company website

Fiùtur created the SMART system to enhance financial investment opportunities in environmental outcomes. By automating and processing environmental data using structured digital monitoring, reporting, and verification (MRV) systems, SMART Programs ensure transparency and integrity in environmental claims, allowing them to be accurately priced and trusted.

Moreover, the Governance Framework aims to enable effective collaboration, ensuring an accurate and indisputable representation of climate action. The data comes from various sources, including farms, forests, factories, refineries, and infrastructure projects like buildings and energy systems.

Secured and Traceable Data

The partnership is set to leverage Fiùtur’s SMART ID-enabled partner ecosystem, enabling digital tracking or “digital lineage” from real-world field data to institutional-level distribution channels. This means that data collected from Zefiro’s well-plugging operations will not only be securely stored but also made traceable for issuing offsets, insets, and other related data products.

Additionally, Zefiro will use this digitally captured data for advanced analytics. This will help the company pinpoint high-leakage wells, optimizing its operations by reducing both costs and cycle times.

The Zefiro Lifecycle Solution, built on Fiùtur’s technology, is scheduled for launch in Q4 2024.

Zefiro’s experience in methane measurement and abatement, coupled with Fiùtur’s advanced data-driven tools, allows for more accurate tracking and auditing of emissions reductions. This collaboration ensures that emissions removal data—whether from leaking wellheads or completed projects—will be captured, verified, and ready for the carbon market.

Strengthening Carbon Markets with Transparency

In an era where trust is paramount in environmental markets, this partnership seeks to bolster confidence in carbon credit solutions.

Zefiro and Fiùtur are focused on embracing interoperability with emerging network tools like Xpansiv Connect and the Canton Network, adding further credibility to their mission.

Zefiro Methane’s CEO, Talal Debs, emphasized the barriers institutions face in accessing high-quality environmental solutions, including reliable carbon offsets. According to Debs, data limitations have hindered progress in these markets, and Zefiro’s partnership with Fiùtur is a step toward resolving those issues. Debs further stated that:

“This step will enable Zefiro to deliver more high-quality environmental contract volumes to our existing customers and open up numerous new buyers and delivery channels.”

By embedding rich digital data and provenance into their offerings, Zefiro plans to meet the growing demands of institutional markets.

Forging A New and Digital Era for Carbon Credits

In a sign of its confidence in Fiùtur, Zefiro has also invested in Fiùtur’s Series A round. This financial commitment underscores the long-term potential of the partnership and the significant role Fiùtur will play in supporting Zefiro’s environmental remediation services.

Fiùtur’s open architecture platform allows for transparent, digitally enforced measurement, reporting, and verification (dMRV) protocols. This creates a robust ecosystem where market participants can develop and deliver verifiable, real-world outcomes—a critical need in the evolving carbon credit market.

Fiùtur CEO Joe Madden commented, “Zefiro’s vision of a digital future, combined with their unique commercial approach, is set to elevate these markets to new levels of scale and integrity.”

The Zefiro and Fiùtur partnership comes at a pivotal moment for carbon markets, as buyers increasingly demand verifiable, high-quality data. The Zefiro Lifecycle Solution could streamline the carbon credit process, enabling more efficient and trustworthy carbon offset and inset projects.

With the launch set for later this year, the collaboration between Zefiro Methane and Fiùtur is poised to lead the charge toward greater transparency, accountability, and scalability in the fight against methane emissions.

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