Aluminum is everywhere, from cars to cans, but its production is a major carbon polluter. With global aluminum demand soaring, Rio Tinto and Hydro will $45 million in carbon capture tech to cut emissions. Could this be the breakthrough the industry needs?
The Carbon Footprint of Aluminum: A Heavyweight Problem
Aluminum production accounts for about 2% of global carbon emissions. The industry emits about 1.1 billion metric tons of CO₂ per year. That’s the same as the emissions from 150 million U.S. homes.
The electrolysis process alone is responsible for 791 million metric tons. Electrolysis is the main step in aluminum smelting. It uses carbon anodes, which release CO₂ during the process. This stage accounts for around 75% of a smelter’s direct CO₂ emissions.
With transportation, construction, and packaging relying on aluminum, we must reduce its environmental impact. Many aluminum producers are now seeking ways to cut emissions and reach net-zero targets.
A $45 Million Push for Carbon Capture
To tackle this, Rio Tinto and Hydro will invest $45 million over the next five years to develop carbon capture technologies for aluminum smelting. Smelting takes up most of the total GHG emissions of aluminum production.
Source: Carbon Chain
The partnership focuses on finding, testing, and scaling up methods to capture and store CO₂ emissions from the electrolysis process. The initiative includes:
Testing carbon capture technologies from laboratory research to real-world applications.
Running pilot projects at Rio Tinto’s facilities in Europe and Hydro’s sites in Norway.
Sharing research, costs, and expertise to accelerate progress.
Why Carbon Capture Is Difficult in Aluminum Smelting
Capturing carbon in aluminum production is more challenging than in other industries like power generation. This is because CO₂ levels in aluminum smelter emissions are extremely low (only about 1% by volume). This makes conventional carbon capture methods less effective.
There are two main approaches to capturing CO₂ from aluminum smelters:
Point source carbon capture: This technology captures emissions at the source but must be adapted for lower CO₂ concentrations.
Direct air capture (DAC): While typically used to remove CO₂ from the atmosphere, DAC could be modified to work in aluminum smelters.
Both methods need significant development to move from the lab to full-scale commercial use. This is where Rio Tinto and Hydro’s investment plays a key role in advancing these technologies.
Racing Toward Net-Zero: Can They Pull It Off?
This partnership is part of a broader push toward decarbonizing aluminum production. Both companies have already been working on independent initiatives, including:
ELYSIS (Rio Tinto & Alcoa): A joint venture focused on developing carbon-free aluminum smelting technology.
HalZero (Hydro): A new smelting process that eliminates CO₂ emissions from aluminum production.
While these long-term projects aim to create zero-emission aluminum, carbon capture can help reduce emissions from existing smelters. By combining their expertise, Rio Tinto and Hydro hope to make these technologies commercially viable sooner.
As industries transition toward sustainable materials, demand for low-carbon aluminum is rising. Companies in automotive, construction, and packaging are seeking greener alternatives to meet climate targets.
Global aluminum demand is projected to rise nearly 40% by 2030, according to CRU International’s report for the International Aluminium Institute (IAI). The industry must produce an extra 33.3 million metric tons (Mt), increasing from 86.2 Mt in 2020 to 119.5 Mt in 2030. Key drivers of this growth include transportation, construction, packaging, and the electrical sector, which will account for 75% of total demand.
Source: CRU
China will remain the largest consumer of semi-finished aluminum products by 2030. The Asian country makes up for over 45% of the market since 2015.
As industries push for lighter, more sustainable materials, aluminum’s role in global manufacturing will expand. This emphasizes the need for efficient production and decarbonization efforts to meet the rising demand sustainably.
Regulations are also pushing aluminum producers to reduce emissions. Governments worldwide are setting stricter carbon limits and introducing carbon pricing mechanisms that penalize high-emission industries. Carbon capture for aluminum production could give Rio Tinto and Hydro a competitive edge in this evolving market.
Beyond Carbon Capture: Other Ways to Cut Emissions
Beyond carbon capture, the aluminum industry is exploring other solutions to reduce emissions and energy use:
Recycled Aluminum: Producing aluminum from recycled materials uses 95% less energy than primary production. Expanding aluminum recycling can significantly cut industry-wide emissions.
Inert Anodes: Traditional carbon anodes release CO₂ during electrolysis, but inert anodes could eliminate these emissions. This technology is still in development but shows great potential.
Renewable Energy-Powered Smelters: Switching from fossil fuels to solar, wind, or hydroelectric power can drastically reduce emissions from aluminum production.
By combining these strategies with carbon capture, the industry can move closer to achieving net-zero emissions.
Rio Tinto and Hydro’s partnership marks a major step toward decarbonizing aluminum smelting. If successful, their investment could lead to groundbreaking advancements that benefit the entire sector. By working together, they are taking a critical step toward making low-carbon aluminum a reality—a move that aligns with global climate goals and industry sustainability efforts.
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Global investment in energy transition technologies reached an all-time high of $2.1 trillion in 2024, according to BloombergNEF. This marked an 11% increase from the previous year, driven by EVs, renewable energy, and advanced grid infrastructure. While the record-breaking investment highlights growing momentum toward cleaner energy solutions, experts caution that current funding levels fall far short of what’s needed to meet global climate targets.
Countries are ramping up investments in low-carbon energy to tackle climate change and meet Paris Agreement targets. However, experts warn that the current spending pace isn’t enough.
Bloomberg’s latest Energy Transition Investment Trends report shows that to hit net-zero emissions by 2050, global investment needs to triple to $5.6 trillion annually between 2025 and 2030. The gap is massive, highlighting the urgent need for bigger commitments and faster action.
Why do Energy Transition Investments Matter for Net Zero?
The energy sector plays a crucial role in addressing climate change as it contributes to approximately 75% of global greenhouse gas emissions. With temperatures rising every year, this transition to clean energy has become increasingly urgent.
Countries have committed to reducing emissions sustainably, aiming to keep global temperature rise below 2°C and limiting it to 1.5°C. The Paris Agreement target would be fulfilled only when the energy sector can reach net zero emissions by 2050.
This transition significantly requires phasing out fossil fuels fairly and systematically while eliminating inefficient fossil fuel subsidies that hinder transition.
Closing the Funding Gap
Now talking about the key factor i.e. investments. Governments and businesses are focusing on sustainable solutions like electric vehicles (EVs) and renewable energy. This certainly gives a positive signal towards developing a low-carbon economy.
However, there’s a funding gap. As said before, global investments in energy transition technologies reached $2.1 trillion. Yet, this amount is only 37% of the annual $5.6 trillion required from 2025 to 2030 to meet net-zero targets.
Achieving the net zero target will require not only increased funding but also bold policies and stronger international cooperation. Governments will need to be more decisive in scaling up efforts, remove barriers, and foster innovation across energy sectors.
For instance,accelerating progress in renewable energy, electrified transport, and grid modernization. With faster progress the funding gap can close and combating climate change will be easier.
The report revealed that last year electrified transport topped the charts, pulling in $757 billion in funding. This includes investment in electric cars, commercial EV fleets, public charging networks, and fuel cell vehicles. With the EV market booming, it’s clear the world is betting big on cleaner mobility solutions.
Renewable energy also performed well. Globally $728 billion was invested in wind, solar, biofuels, and other green power sources. Additionally, power grid modernization secured $390 billion for upgrades like smarter grids, improved transmission lines, and digital tools to manage energy demand. Nuclear investment was flat at $34.2 billion.
In contrast, investment in emerging technologies, like electrified heat, hydrogen, carbon capture and storage (CCS), nuclear, clean industry and clean shipping, reached only $155 billion, for an overall drop of 23% year-on-year.
Investment in these sectors was hampered by affordability, technology maturity, and commercial scalability. Thus, the public and private sectors must work together to progress these technologies to reduce emissions.
Mature vs. Emerging: Where Clean Energy Investments Stand
Bloomberg further categorized investments into “mature” and “emerging” sectors. Mature technologies like renewables, energy storage, EVs, and power grids dominated funding while emerging sectors such as hydrogen, CCS, electrified heating, clean shipping, nuclear, and sustainable industries lagged.
The mature Sector attracted $1.93 trillion in investments, accounting for the bulk of global energy transition funding.
The emerging sector closed $154 billion in investments, making up just 7% of the total.
Despite facing challenges like higher interest rates and changing policies, mature technologies saw steady growth, increasing by 14.7% compared to the previous year. Their proven scalability and established business models make them trustworthy for governments and investors.
In contrast, emerging technologies faced significant setbacks. Investment in these sectors dropped by 23%, mainly due to high costs, unproven scalability, and limited commercial readiness. These challenges continue to slow their progress and hinder their potential to scale effectively
Source: Bloomberg
China Leads the Energy Investment Race
In 2024, mainland China emerged as the top market for energy transition investment, contributing $818 billion—a 20% rise from the previous year. This growth accounted for two-thirds of the global increase, with sectors like renewables, energy storage, nuclear, EVs, and power grids seeing robust development. China’s total investment surpassed the combined contributions of the US, EU, and UK.
Notably, China’s energy investment now equals 4.5% of its GDP, outpacing other nations like the EU and the US. While the US remains the second-largest market with $338 billion, Germany took third place, investing $109 billion in clean energy.
Other players like India and Canada also contributed to the global growth story, increasing investments by 13% and 19%, respectively.
2035 Forecast: A 3.6X Surge in Clean Energy Spending
To conclude Bloomberg came up with an investment forecast for 2030. The report says clean energy spending is set to rise sharply after 2030.
Between 2031 and 2035, annual investments are projected to reach $7.6 trillion—3.6 times higher than 2024 levels.
This marks a 37% increase compared to the annual spending expected between 2025 and 2030.
Electrified transport, including EVs and charging infrastructure, will continue to dominate investments during this period. As demand for clean mobility grows, funding for these technologies is likely to accelerate further, supporting the transition to a low-carbon future.
Thus, this steep rise in renewable energy spending after 2030 highlights the necessity for quick action. However, this year with Trump taking over, his stance on clean energy investment has been mixed. He has continued to promote traditional energy sources over clean energy, aligning with his “America First” agenda.
For 2025, the world is yet to get a clear picture of trade tariffs and clean energy funding with shifting political priorities and global economic uncertainties.
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Palantir Technologies Inc. (NASDAQ: PLTR) released its financial results for the fourth quarter ending December 31, 2024. The company showed strong growth in key areas. Its success mainly came from its artificial intelligence (AI) solutions, which integrate advanced technology into commercial and government sectors.
Their core work revolves around combining AI and machine learning, helping clients analyze data more efficiently and make smarter decisions. They work closely with the U.S. Department of Defense, intelligence agencies, and global allies to improve data management, strengthen decision-making processes, and enhance security. This is how it plays a vital role in both the public and private sectors.
Alexander C. Karp, Co-Founder and Chief Executive Officer of Palantir Technologies Inc. said,
“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact. I would also like to congratulate Palantirians for their extraordinary contributions to our growth. They have earned every bit of the compensation from the delivery of their market-vesting stock appreciation rights (SARs).”
U.S. Market Fuels Palantir’s Strong Q4 Performance
Total revenue reached $828 million, a 36% year-over-year increase and 14% growth from the previous quarter.
U.S. revenue alone surged 52% compared to the prior year, hitting $558 million.
In the commercial sector, U.S. revenue climbed 64% year-over-year, reaching $214 million, while government revenue grew by 45% to $343 million. The company also set a record by closing $803 million in total contract value (TCV) for U.S. commercial deals, marking a 134% increase year-over-year.
Karp also noted,
“The demand for large language models from commercial institutions in the United States continues to be unrelenting. Every part of our organization is focused on the rollout of our Artificial Intelligence Platform (AIP), which has gone from a prototype to a product in months. And our momentum with AIP is now significantly contributing to new revenue and new customers.”
Financial Highlights in Q4
The company achieved impressive operational and financial results during the quarter which further indicated a strong performance. The key success parameters were:
Generated $460 million in cash from operations, reflecting a healthy 56% margin. Additionally, its adjusted free cash flow climbed to $517 million, with a higher margin of 63%.
On the earnings front, Palantir reported a GAAP net income of $79 million, equivalent to $0.03 per share.When excluding one-time stock-related expenses, net income significantly increased to $165 million, or $0.07 per share. Furthermore, the company’s adjusted earnings per share (EPS) rose to $0.14, which drove its shareholder value.
Source: Palantir
Expanding Customer Base and Key Deals
Palantir added new customers at a rapid pace, with its customer base growing 43% compared to the previous year. The company closed 129 deals worth at least $1 million, 58 deals valued at $5 million or more, and 32 deals exceeding $10 million.
The company’s remaining deal value (RDV) for U.S. commercial contracts rose to $1.79 billion, nearly doubling from the prior year. These figures highlight Palantir’s growing influence across industries.
Fiscal Year 2024 Was All About Sustained Growth
Palantir delivered strong results for the full year, with total revenue reaching $2.87 billion—an impressive 29% growth compared to the previous year.
The U.S. market played a key role, contributing $1.9 billion to the total. Commercial revenue saw remarkable growth, surging 54% to $702 million, while government revenue increased 30%, reaching $1.2 billion.
Other significant revenue drivers were:
Robust cash flow that generated $1.15 billion from operations with a solid 40% margin.
It reported an annual net income of $462 million. It reflected a 16% margin with sustainable profitability.
With $5.2 billion in cash and short-term investments, Palantir envisions growth and expansion in the future.
Palantir’s 2025 Outlook: Strong Growth Ahead
The company is already envisioning strong financial expectations for 2025, projecting solid growth across several key areas. For the first quarter of 2025, the company anticipates:
Revenue between $858 million and $862 million.
Adjusted operating income between $354 million and $358 million.
For the full year 2025, Palantir anticipates total revenue between $3.741 billion and $3.757 billion, driven by a growth rate of at least 54% in U.S. commercial revenue, which is expected to exceed $1.079 billion.
The company is also projecting adjusted operating income to range between $1.551 billion and $1.567 billion, with adjusted free cash flow between $1.5 billion and $1.7 billion. It will also continue to report GAAP operating income and net income each quarter, ensuring transparency while navigating the ambitious targets.
Committed to achieving Net Zero, Palantir is focused on reducing emissions further and aligning with the UK Carbon Reduction Plan that focuses on limiting global warming to 1.5°C.
Total Carbon Emissions 2023
While Palantir acknowledges that its direct emissions—Scope 1, 2, and 3—are relatively small on a global scale, it believes its greatest contribution lies in empowering its customers. In this perspective, the company helps businesses track and reduce emissions, particularly within complex supply chains.
Its tools are already enabling companies to transition to clean energy and adopt e-mobility solutions, paving the way for a Net Zero future.
In 2023, Palantir reported emissions totaling 4,196 tCO2e, a significant drop from its baseline year emissions of 7,161 tCO2e in 2019.
Source: Palantir
Renewable Energy Goals
Palantir has joined forces with leading organizations to accelerate global sustainability efforts. The company plays a vital role in helping its partners decarbonize supply chains, enhance grid resilience, and roll out EV networks. Its innovative Agora platform, launched in 2022, enables global commodity companies to track and reduce emissions across the value chain.
The company also supports renewable energy projects and uses digital twin technology to improve efficiency in energy-intensive industries.
Mitigating Cloud Compute and Data Center Emissions
Cloud computing has been one of Palantir’sbiggest sources of carbon emissions. However, advancements in cloud efficiency and the use of sustainable energy by partners like AWS, Microsoft Azure, and Google Cloud have significantly reduced this impact.
In 2023, Palantir cut cloud-related emissions by 32% compared to the previous year.
This progress came from improved compute efficiency in its platforms—Foundry, Gotham, Apollo, and the Artificial Intelligence Platform (AIP)—along with ongoing engineering efforts.
The company’s teams are continuously finding new ways to optimize cloud usage. By balancing efficiency with business growth, Palantir stays on track with its sustainability goals.
Slashing Travel Emissions with SAF
As a global company, business travel is essential to Palantir’s operations which also impacts its Scope 3 emissions. To reduce this impact, Palantir encourages employees to opt for virtual meetings when possible and carefully considers the need for in-person meetings to balance environmental and business needs.
In 2023, Palantir also continued its partnership with United Airlines’ Eco-Skies Alliance, committing to the use of sustainable aviation fuel (SAF) for its air travel. This initiative aims to lower its travel-related emissions while still supporting face-to-face collaboration.
Palantir’s impressive financial results in 2024along with its reduced carbon emissions, highlight its commitment to both growth and sustainability. The company is on track to continue innovating and expanding, setting itself up for long-term success.
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Carbon credit projects are gaining significant attention as businesses aim to reduce greenhouse gas (GHG) emissions while maintaining profitability. These projects offer a pathway for companies to offset emissions, improve sustainability, and tap into new revenue streams.
But how do they do that? This guide explores the types, benefits, challenges, and future trends of carbon credit projects, helping businesses navigate this critical climate solution.
5 Key Types of Carbon Credit Projects
Carbon credit projects include a range of activities designed to either reduce or capture GHG emissions. Here are the five primary types, each with specific mechanisms and benefits:
1. Reforestation & Afforestation
Reforestation involves replanting trees in deforested areas, while afforestation refers to planting trees in regions that have not been forested for extended periods. These projects sequester carbon dioxide (CO₂) from the atmosphere as trees absorb CO₂ during photosynthesis, storing carbon in their biomass and soil.
Reforestation and afforestation projects continue to play a crucial role in carbon sequestration. Some large-scale reforestation projects are financially backed by multinational corporations such as this Amazon reforestation initiative by Mombak.
However, there are also a lot of small nature conservation projects worldwide that need funding to scale up. Some of them are still in the development stage but offer innovative approaches to reforesting degraded lands.
One example in Asia is a re-greening project that aims to reforest hectares of deforested land. Using innovative seed ball technology and drone deployment, the project will disperse seeds across vast areas, promoting large-scale forest restoration. This initiative will not only sequester CO₂ but also support local biodiversity and provide economic opportunities for surrounding communities.
Reforestation and afforestation projects are pivotal in global carbon sequestration efforts. According to the Food and Agriculture Organization (FAO), forests absorb approximately 2.6 billion tonnes of CO₂annually. This figure offsets about ⅓ of the CO₂ released from burning fossil fuels. Such projects also contribute to biodiversity conservation, soil preservation, and the enhancement of water resources.
2. Renewable Energy Projects
Renewable energy projects involve the development of energy sources that do not emit GHGs during operation. Common examples are wind, solar, and hydroelectric power. By replacing fossil fuel-based energy generation, these projects significantly reduce CO₂ emissions.
Renewable energy projects remain a significant source of carbon credits. In 2024, renewable energy credits represented 31% of total retirements, with 51.1 million credits retired. This result indicates a continued commitment to clean energy initiatives.
For instance, one of the world’s largest solar energy projects, the Noor Ouarzazate Solar Complex in Morocco covers 3,000 hectares. It has a total capacity of 580 MW, supplying power to over a million people. The project reduces CO₂ emissions by approximately 760,000 tonnes annually.
The Gansu Wind Farm in China is another example. It is one of the world’s largest wind power projects, with a planned capacity of 20 GW. Located in the Gobi Desert, it currently produces over 8 GW of electricity, powering millions of homes. The project reduces CO₂ emissions by millions of tonnes annually and plays a crucial role in China’s renewable energy expansion.
Since 2010, over 750 million voluntary carbon credits have been issued by over 1,700 renewable energy projects worldwide. Wind projects contribute 40% of these credits, followed by hydro (30%) and solar (15%). These projects play a crucial role in diversifying energy portfolios and reducing reliance on fossil fuels.
3. Methane Capture & Destruction
Methane (CH₄) is a potent GHG with a global warming potential about 28 times greater than that of CO₂ over a 100-year period. Projects that capture methane aim to collect and use or destroy methane emissions from sources like landfills, agricultural activities, and wastewater treatment facilities.
In the U.S., numerous landfill gas-to-energy projects have been established to capture methane produced by decomposing organic waste. The captured methane is then used to generate electricity or heat, thereby reducing GHG emissions and providing a renewable energy source.
As of 2024, the U.S. Environmental Protection Agency (EPA) reports 542 operational landfill gas (LFG) energy projects nationwide. These projects harness methane emissions from landfills to generate energy, thereby reducing GHG emissions and providing a renewable energy source.
One company, Zefiro Methane, focuses on sealing abandoned oil and gas wells across the U.S. to prevent methane leaks. By capping and properly decommissioning these wells, Zefiro reduces emissions and generates carbon credits that can be traded in voluntary markets. Their work supports climate goals while addressing the millions of abandoned wells contributing to methane pollution.
The Global Methane Pledge, launched in 2021, aims to reduce global methane emissions by at least 30% from 2020 levels by 2030. Achieving this target could reduce warming by at least 0.2°C by 2050, demonstrating the significant impact of methane capture initiatives.
4. Carbon Capture & Storage (CCS)
Carbon Capture and Storage (CCS) involves capturing CO₂ emissions from industrial processes or directly from the atmosphere and storing them underground in geological formations. This technology prevents CO₂ from entering the atmosphere, thereby mitigating climate change.
Image from Congressional Budget Office
CCS technologies have seen advancements, with increased investments in projects aimed at capturing CO₂ emissions from industrial processes. In 2024, significant policy developments, including breakthroughs on Article 6 at COP29, are expected to shape the global market for carbon credits, potentially influencing the implementation of CCS projects.
A popular example of CCS is Northern Lights, a joint venture by Equinor, Shell, and TotalEnergies. It is a large-scale carbon capture and storage project in Norway.
It captures CO₂ emissions from industrial sources, liquefies them, and transports them for permanent storage under the North Sea. The project aims to store up to 1.5 million tons of CO₂ annually in its first phase, with expansion plans for up to 5 million tons per year, helping industries decarbonize while generating carbon credits.
As of 2024, the global CCS landscape has seen significant growth. There are now 50 operational CCS facilities worldwide, capturing around 50 million tonnes of CO₂ annually. Additionally, 44 facilities are under construction, and 534 are in various stages of development, indicating a robust expansion in CCS initiatives.
The International Energy Agency (IEA) emphasizes that to achieve net-zero emissions by 2050, CCS capacity needs to increase to 1.6 billion tonnes of CO₂ annually by 2030.
5. Community & Land Management Initiatives
These projects focus on sustainable land use practices, conservation, and community-driven efforts to enhance carbon sequestration and support local economies.
Community-driven projects focusing on sustainable land management have been instrumental in generating carbon credits. These initiatives often involve agroforestry and conservation efforts that not only sequester carbon but also provide socio-economic benefits to local communities.
A great example is the Kasigau Corridor project protects over 200,000 hectares of dryland forest in southeastern Kenya. By preventing deforestation and promoting sustainable land management, the project has generated over 1 million carbon credits. It also provides employment opportunities, supports education, and funds community development initiatives, benefiting approximately 100,000 local people.
Community and land management projects are integral to the Reducing Emissions from Deforestation and Forest Degradation (REDD+) program under the United Nations Framework Convention on Climate Change (UNFCCC). These initiatives sequester carbon as well as promote biodiversity conservation and enhance the livelihoods of local communities
4 Benefits of Carbon Credit Projects for Businesses
Environmental Impact & Carbon Reduction
Participating in carbon credit projects enables businesses to offset their carbon footprint effectively. In 2023, global carbon pricing revenues reached a record $104 billion, reflecting increased corporate engagement in emission reduction initiatives.
Beyond compliance, carbon credit projects play a crucial role in meeting global climate goals. According to the IEA, the world must cut emissions by 45% by 2030 to limit global warming to 1.5°C. Businesses that invest in high-quality credits contribute to this target while mitigating their own climate risks and cutting carbon emissions.
Additionally, some programs, like REDD+ help protect biodiversity and improve land-use practices, making them doubly beneficial.
Financial Benefits & Revenue Streams
The carbon credit market has become a substantial financial avenue for businesses. In 2024, credits worth a total of $1.4 billion were utilized by corporations, underscoring the market’s potential for generating additional revenue streams.
Companies not only purchase credits to offset emissions but also develop their own projects to sell verified carbon offsets.
For instance, major corporations like Microsoft and Shell invest in carbon capture projects to generate high-value credits. According to Allied Market Research, the global voluntary carbon market is projected to reach $100 billion by 2030, presenting lucrative opportunities for businesses that engage early. While MSCI data suggests that voluntary carbon credit market could reach up to $250 billion by 2050.
Enhancing Corporate Reputation
Engaging in carbon credit projects enhances a company’s reputation by demonstrating a commitment to sustainability. This proactive approach improves brand image and fosters customer loyalty, as consumers increasingly prefer environmentally responsible companies.
A 2023 survey by IBM found that 70% of consumers are willing to pay a premium for sustainable brands, highlighting the competitive advantage of climate-conscious business strategies.
Moreover, ESG (Environmental, Social, and Governance) investing has surged, with global ESG assets expected to surpass $40 trillion by 2025. Companies that actively reduce their carbon footprint through verified credit projects are more likely to secure funding from institutional ESG-focused investors.
Regulatory Compliance & Market Demand
With the implementation of stricter environmental regulations worldwide, carbon credits assist businesses in complying with emission targets. The expansion of carbon pricing instruments, now totaling 75 globally, indicates a growing market demand for sustainable practices.
Governments are tightening emission policies, making carbon credits a crucial tool for avoiding hefty fines and maintaining operations.
The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to be fully implemented by 2026, will require importers to pay for embedded emissions in products like steel and cement. Similarly, the U.S. Inflation Reduction Act (IRA) includes billions in incentives for clean energy projects and carbon capture. These policies create a clear incentive for companies to invest in carbon credits to maintain regulatory compliance and gain a competitive edge.
3 Steps To Implementing A Successful Carbon Credit Project
If you’re planning or simply thinking about how to have a carbon credit project that emerges successfully, here are the three major steps to follow:
1. Identifying Project Scope & Goals
Start by defining your carbon credit project’s objectives. What are you aiming to achieve? This could range from reducing carbon emissions to generating new revenue streams or ensuring compliance with regulatory frameworks. Each objective should be clear and measurable to track progress.
Once your goals are set, choose the right project type. Whether it’s reforestation, renewable energy generation, or methane capture, aligning your project’s nature with your goals is essential. For instance, if emission reductions are a priority, a renewable energy project may be the best fit. Careful selection of the project type will streamline efforts and maximize impact.
Next, focus on obtaining certification for the carbon credits you generate. Certification from established, recognized standards—such as the Gold Standard or Verra—validates the legitimacy of your carbon credits. Stick to proven methodologies and ensure full transparency in your project’s implementation.
Rigorous monitoring and reporting will ensure that your carbon credits are verified correctly and gain credibility in the marketplace. Remember, the higher the standard of certification, the more trustworthy your credits will appear to buyers, enhancing their marketability.
3. Market Engagement & Carbon Credit Trading
Finally, engage with carbon credit trading platforms to bring your credits to market. Established marketplaces, such as those launched by governments or private entities, allow for easy buying and selling of carbon credits. For example, Indonesia’s entry into the global carbon market in 2024 was a significant step toward green energy funding.
By listing your credits on such platforms, you can contribute to the global effort against climate change while monetizing your efforts. The carbon trading landscape is growing, making it crucial for businesses to stay informed and ready to leverage these platforms for maximum impact.
5 Challenges in Managing Carbon Credit Projects
After knowing the benefits of and the steps needed to implement a carbon credit project, it’s also wise to learn the challenges involved.
Ensuring Project Validity & Monitoring
Rigorous monitoring and validation are necessary to maintain project integrity and avoid issues like double counting. This ensures that emission reductions are genuinely achieved.
Avoiding Double Counting
Implementing robust tracking systems is crucial to prevent the same carbon credit from being counted multiple times, preserving the credibility of carbon offset claims.
Managing Volatile Market Prices
The carbon credit market can experience price fluctuations, impacting the financial sustainability of projects. Staying informed about market trends and diversifying project portfolios can help mitigate these risks. Go over this carbon price page to stay informed.
Meeting Strict Regulatory Standards
Compliance with evolving environmental regulations requires businesses to stay updated. Engaging with policy developments, like the breakthroughs in Article 6 at COP29 in 2024, ensures projects align with international standards.
Securing Long-Term Financing
Attracting and maintaining investment for carbon credit projects can be challenging. However, by the end of the third quarter of 2024, $14 billion had been raised or committed, reflecting increasing investor interest and confidence in the market.
3 Future Trends in Carbon Credit Projects
Finally, it helps to know what trends are unfolding in the market and learn how to leverage them, namely:
Innovations in Carbon Capture Technologies
As carbon capture technologies evolve, they are expected to significantly improve the efficiency and scalability of emission reduction efforts. Innovations like Direct Air Capture (DAC) are poised to capture carbon dioxide directly from the atmosphere, making it easier to offset emissions from difficult-to-decarbonize sectors.
Climeworks DAC technology
These advancements will drive the development of high-quality carbon credit projects that can scale rapidly to meet global climate goals. The global carbon capture market could reach $7.3 billion by 2030, highlighting its growing potential as a major player in carbon credit generation.
Expansion of Carbon Credit Marketplaces
The emergence of new carbon credit marketplaces is a key trend shaping the future of carbon trading. Platforms like Indonesia’s IDX Carbon, launched in 2024, are increasing global participation in emission reduction initiatives. Such marketplaces are making carbon credit trading more accessible, especially for emerging economies looking to fund sustainability projects through carbon sales.
There are over 60 carbon trading platforms now active worldwide. The expansion of these digital platforms is expected to drive greater liquidity and efficiency in the carbon market, enabling more businesses to engage in carbon offsetting.
Increasing Focus on Quality & Additionality
Looking ahead, the carbon credit market will place an increasing emphasis on the quality of credits and additionality. Additionality ensures that carbon reduction projects would not have happened without the credit system, proving their real-world impact.
The Integrity Council for the Voluntary Carbon Market (ICVCM) is leading efforts to create new benchmarks for high-quality carbon credits. As sustainability-conscious investors and businesses seek reliable offsets, there will be a stronger demand for verified, additional, and impactful carbon credit projects.
Conclusion
Carbon credit projects are vital tools for achieving sustainability and profitability in today’s business landscape. By understanding the different types, benefits, and challenges, companies can effectively implement these projects to reduce their carbon footprint, meet regulatory standards, and enhance their market position. With innovations and growing market opportunities, these projects would be pivotal in the global effort to combat climate change.
The global energy sector is in transition, with major oil companies under pressure to cut emissions while staying profitable. Shell, Chevron, and ExxonMobil—three of the world’s biggest energy giants—are taking different paths to navigate this shift.
Their latest earnings reveal how each company is balancing investments in oil, gas, and low-carbon initiatives. While some struggle with declining profits, others are outperforming expectations.
Beyond financials, their sustainability goals and net-zero targets set them apart. But are these commitments keeping pace with financial performance? Let’s dive into their latest financial results and see which energy giant leads the charge toward a greener future.
Who’s Winning the Oil Game? A Financial Face-Off
Shell: Struggling Profits, Big Promises
Shell reported Q4 2024 earnings of $1.20 per ADS (American Depository Share), missing the Zacks Consensus Estimate of $1.78 and significantly lower than $2.22 per ADS in Q4 2023. The company’s revenue dropped to $66.8 billion from $80.1 billion, falling short of expectations by 16.6%. The decline was driven by weaker realized prices, reduced trading margins, and lower LNG sales.
Shell repurchased $3.6 billion in shares and increased its dividend by 5%, with plans for another $3.5 billion in repurchases in Q1 2025. Here is the oil giant’s income per segment:
Upstream: Profit fell to $1.7 billion from $3.1 billion, missing expectations due to lower oil and gas prices. Liquids prices fell 11%, while natural gas declined 7%.
Chemicals & Products: Reported a $229 million loss, reversing a $29 million profit from the previous year, due to lower margins and unfavorable tax movements.
Integrated Gas: Adjusted income dropped to $2.2 billion from $4 billion, missing the expected $2.8 billion due to a 14.3% drop in LNG sales.
Marketing: Income rose to $839 million from $794 million, but missed expectations of $885 million.
Renewables & Energy Solutions: Recorded a $311 million loss, down from a $173 million profit a year earlier, due to rising costs and adverse tax effects.
Chevron: A Mixed Bag of Losses and Growth
Chevron’s Q4 earnings fell below Wall Street expectations, reporting adjusted EPS of $2.06 versus the estimated $2.11. This led to a 4% drop in its stock price. The company’s downstream segment posted a $248 million loss, compared to a $1.15 billion profit in Q4 2023. This is because refining margins weakened amid declining fuel demand in the U.S. and China.
Oil & Gas Production: Profits rose to $4.3 billion from $1.59 billion a year ago, despite a flat overall output of 3.35 million boepd (Barrels of oil equivalent per day). Permian Basin production grew 14% to a record 992,000 boepd.
Refining: Weak jet fuel demand contributed to the company’s first refining loss since 2020.
Chevron expects global output to grow 6-8% in 2025 and 3-6% in 2026. The company raised its quarterly dividend by 5% and reaffirmed share buyback plans of $10-$20 billion annually.
Exxon: Defying Expectations Amid Industry Headwinds
Exxon announced Q4 2024 earnings of $7.6 billion, or $1.72 per share, exceeding analyst estimates of $1.56. Despite lower oil prices, higher production helped offset the weaker refining margins of this big oil company.
Oil & Gas Production: Adjusted earnings rose to $6.28 billion from $4.15 billion a year earlier. Production increased to 4.6 million boepd, driven by low production costs in the Permian Basin and Guyana projects.
Refining: Earnings from gasoline and diesel production dropped sharply to $323 million from $3.2 billion a year earlier due to increased refinery capacity in Asia.
Exxon reported $33.7 billion in earnings for 2024, down from $38.57 billion in 2023, but highlighted strong operational efficiency and profitability.
The three energy giants all faced challenges in Q4 2024, with weaker refining margins and lower oil prices impacting profitability. However, Exxon outperformed expectations, while Chevron and Shell struggled with underwhelming results. All three companies remain focused on capital discipline, shareholder returns, and production efficiency moving forward.
The Green Pivot: Are Big Oil’s Net Zero Pledges Enough?
Shell, Chevron, and ExxonMobil are charting distinct paths toward sustainability as the energy landscape evolves. Their climate commitments, emissions targets, and investment in renewables illustrate their vision for a lower-carbon future.
Each of the energy giants has its own roadmap to net-zero emissions, with varying approaches and strategies. To have a clearer picture of how much carbon pollution each of them emitted in 2023, look at the image below.
While some are making bolder moves in renewables, others remain focused on carbon capture and efficiency improvements. Understanding Shell, Chevron, and ExxonMobil’s strategies provides insight into the future of the oil and gas industry.
Shell’s Carbon Commitment: Big Talk or Real Action?
Shell aims to become a net-zero emissions energy business by 2050 as part of its Powering Progress strategy. This commitment includes eliminating operational emissions and reducing the emissions from the energy products it sells.
Shell net zero pathways
The company has set several targets to achieve this goal:
50% absolute emissions reduction by 2030 (Scopes 1 and 2) compared to 2016 levels.
Eliminate routine flaring of natural gas by 2025 to curb carbon emissions.
Reduce methane emissions intensity below 0.2% and reach near-zero methane emissions by 2030.
15-20% reduction in customer emissions from oil products by 2030 (Scope 3, Category 11, 2021 baseline).
Progress Achieved
By the end of 2023, Shell had cut more than 60% of its emissions goal for 2030. The company’s methane emissions intensity was 0.05% for facilities with marketed gas and 0.001% for facilities without marketed gas.
Charts from Shell report
Shell tracks its emissions reductions through Net Carbon Intensity (NCI), which measures emissions per unit of energy sold. Key milestones include:
6-8% reduction achieved in 2023 (from 2016 levels)
9-12% reduction target for 2024
100% reduction goal by 2050
Shell’s strategy for 2030 balances energy security with sustainability. The company plans to reduce emissions by evolving its product mix and shifting towards low-carbon solutions such as biofuels, hydrogen, and renewables.
Shell has also invested heavily in carbon offset initiatives to negate its GHG emissions. However, under CEO Wael Sawan’s leadership, the oil giant is reducing its focus on nature-based projects and is considering engineered carbon removals instead.
Today, 70% of Shell’s cash flow comes from Integrated Gas and Upstream businesses, while 75% of its emissions come from Downstream, Renewables, and Energy Solutions. Additionally, Shell has invested heavily in offshore wind projects, with plans to expand its renewable energy portfolio across multiple continents.
Chevron’s Climate Play: Real Solutions or Greenwashing?
Chevron is investing $8 billion in lower-carbon energy projects from 2021-2028, including renewable fuels, carbon capture, hydrogen, and offsets. An additional $2 billion is allocated to reducing emissions within its operations.
Source: Chevron report
The company is also developing new partnerships with tech firms to enhance energy efficiency and reduce its environmental impact.
Chevron targets net-zero upstream Scope 1 and 2 emissions by 2050 but acknowledges that achieving this goal depends on technological advances, regulatory support, and viable carbon capture and offset mechanisms.
2028 Carbon Intensity Targets
Chevron’s plans to lower carbon intensity include:
71 g CO₂e/MJ portfolio carbon intensity (Scope 1, 2, and 3)
24 kg CO₂e/boe oil carbon intensity (Scope 1 and 2)
24 kg CO₂e/boe gas carbon intensity (Scope 1 and 2)
36 kg CO₂e/boe refining carbon intensity (Scope 1 and 2)
GHG Reduction Initiatives
Chevron uses the Marginal Abatement Cost Curve (MACC) to optimize carbon reduction. The company has identified 150+ GHG abatement projects, with over $600 million in investments planned for 2024.
Between 2021-2028, Chevron expects $2 billion in GHG reduction investments, targeting 4 million metric tons (mt) of annual emissions reductions. Here are the company’s other sustainability plans and strategies to achieve its ambitious 2050 net zero goal.
ExxonMobil has cut 23% of nitrogen oxides, sulfur oxides, and volatile organic compounds emissions since 2016. In 2023, its GHG emissions stood at 111 MMTCO₂e, marking a 2 MMT reduction from the previous year. The company is also exploring new ways to enhance energy efficiency across its global operations.
ExxonMobil aims for a 20% absolute reduction in GHG emissions by 2030, compared to 2016 levels. The company aligns its emissions reductions with the Paris Agreement while emphasizing intensity-based reductions.
Chart from ExxonMobil report
Beyond burning down emissions in its own operations, Exxon is also helping other industries decarbonize. Its Low Carbon Solutions business focuses on hard-to-decarbonize sectors like heavy industry, power, and transportation. The oil giant seeks to lead in profitable, large-scale emission reduction solutions, with the following key strategies.
Shell, Chevron, and ExxonMobil are taking different approaches to sustainability and emissions reduction. While Shell focuses on reducing absolute emissions and net carbon intensity, Chevron prioritizes carbon intensity reduction and methane management. ExxonMobil, meanwhile, is expanding CCUS and methane detection efforts to lower emissions.
As global climate policies tighten, Shell, Chevron, ExxonMobil, and other energy companies should accelerate their transition strategies to meet net-zero targets.
https://globalcarbonfund.com/wp-content/uploads/2018/10/GCF_header_logo_340x156.png00carbonfundhttps://globalcarbonfund.com/wp-content/uploads/2018/10/GCF_header_logo_340x156.pngcarbonfund2025-02-03 11:10:312025-02-03 11:10:31Big Oil’s Showdown: How Shell, Chevron & ExxonMobil Balance Big Profits with Net Zero?
Microsoft, a major buyer of carbon credits, is investing again in forest carbon removal projects. The tech giant has signed a long-term agreement with Chestnut Carbon, based in New York. Chestnut is known for developing nature-based carbon removal credits.
Through this partnership, Microsoft will get more than 7 million tons of carbon credits. These credits will come from Chestnut’s ARR project, which covers the Southern United States, including Arkansas, Texas, and Louisiana.
The partnership marks a significant step forward to their initial agreement from December 2023. The delivery of carbon credits will take place in multiple phases, with each phase operating under a 25-year term. As part of the project, approximately 60,000 acres of land will be restored by planting 35 million native hardwood and softwood trees, creating lasting environmental benefits.
How Chestnut’s Sustainable Restoration Project Works
Chestnut’s Sustainable Restoration Project targets marginal croplands and pastures across the United States. The company collaborates with local foresters, landowners, and nurseries to plant diverse hardwood and pine seedlings tailored to each region’s ecology. These forests are designed to improve air and water quality, enhance wildlife habitats, and support local communities.
Ben Dell, CEO of Chestnut and Managing Partner of Kimmeridge said,
“We’re excited to be expanding our collaboration with Microsoft given their market leadership in net zero commitments and the signing of a second agreement within the span of a year reaffirms their view that Chestnut is delivering high quality removal credits.”
He emphasized that nature-based afforestation is currently the most scalable and cost-effective method for carbon removal. Furthermore, they remain committed to delivering high-quality credits while continuing to strengthen their market leadership.
Chestnut Sustainable Restoration Project site preparation in Cleveland County, Arkansas.
Source: Chestnut
Key steps include:
Designing and planting sites based on regional soil, drainage, and land-use characteristics.
Monitoring tree survival rates to ensure the project’s long-term success.
Measuring carbon stocks after five years using proprietary technology verified by Gold Standard®.
High-Quality, Removal-Based Carbon Credits
Most significantly, Chestnut’s Sustainable Restoration Project delivers measurable and durable carbon removal, distinguishing it from emissions-avoidance initiatives. Furthermore, the company ensures accurate carbon sequestration tracking by adhering to Gold Standard® verification.
Chestnut uses its proprietary technology to measure and monitor the stored carbon in trees rigorously for five years. Additionally, it issues credits based on carbon removal measurements rather than emissions avoidance.
Key Features of the Project:
Durability: Long-term conservation efforts mitigate risks from fire, disease, or other threats.
Additionality: Restores degraded agricultural lands to native ecosystems, creating benefits that would not exist without carbon credit markets.
Environmental Impact: Enhances air, water, and wildlife habitats while supporting local economies and stakeholders
Microsoft Scaling Up Chestnut’s ARR Portfolio for Long-Term Impact
Microsoft’s commitment to the project is vital for its success. The collaboration enables Chestnut to expand its Afforestation, Reforestation, and Revegetation (ARR) portfolio to 500,000 acres by 2030.
Notably the project aims to remove 100 million tons of CO2 from the atmosphere over the next 50 years. With this milestone, it would be one of the largest nature-based carbon removal initiatives in the U.S.
Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft noted,
“This agreement with Chestnut Carbon is another positive step towards Microsoft’s goal to become carbon negative by 2030. We look forward to the prospect of scaling forest restoration within the United States, attracting sophisticated private capital in the process. We are glad to see the Sustainable Restoration Project diversify the ecological impact of our global carbon removal portfolio.”
Digging deeper into the tech leader’s sustainability portfolio, carbon removal holds a key place. In recent years, the company has aggressively ventured into nature-based carbon credits, enhanced rock weathering, and bioenergy with carbon capture and storage (BECCS), apart from DAC and CCS projects.
Microsoft’s latest sustainability report revealed that in 2023, the company contracted over 5 million metric tons of carbon removal to be retired within 15 years. Its strategy includes a balanced portfolio of solutions with varying durability, from short-term impact to long-term carbon storage.
Source: Microsoft
Low-durability solutions like forestry and soil-based methods store carbon for up to 100 years, offering high-volume potential in the short term.
Medium-durability options, such as biochar, sequester carbon for up to 1,000 years and adhere to best practices to ensure safety.
High-durability methods, including direct air capture (DAC) and BECCS, provide over 1,000 years of carbon storage and involve advanced monitoring for lasting impact.
Commitment to Carbon-Negative Future
Along with forest removals, Microsoft has a strong focus on BECCS. This emerging technology captures carbon dioxide released from burning biomass and stores it underground, making it carbon-negative.
Nearly 80% of Microsoft’s 2024 carbon credits came from BECCS projects. The company’s largest purchase—3.3 million credits—came from Stockholm Exergi in Sweden.
Source: Microsoft
Microsoft aims to become carbon-negative by 2030 and offset its entire historical emissions by 2050. However, emissions rose by 29.1% in 2023, signifying the urgent need to purchase carbon credits from nature-based developers. All in all, this partnership with Chestnut Carbon marks a significant step forward in its sustainability journey and net-zero goals.
