China Expands Carbon Reporting to Airlines and Heavy Industry in Major Climate Disclosure Shift

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China Expands Carbon Reporting to Airlines and Heavy Industry in Major Climate Disclosure Shift

China has updated and expanded its carbon reporting rules to cover new sectors. The changes are part of the country’s effort to improve transparency on climate risks and emissions.

Officials have extended carbon reporting requirements to include the airline industry and major industrial sectors such as petrochemicals and copper producers. This is a major shift in how companies disclose climate data and manage emissions.

China also introduced a new national climate reporting standard in late 2025. This standard aims to align with global best practices and to make climate data clearer and more useful to investors and regulators.

The changes reflect China’s strategy to meet its climate targets and to build stronger systems for environmental data. They also show how the Chinese reporting regime is becoming more structured and consistent.

Inside China’s New Climate Disclosure Rulebook

In December 2025, China’s Ministry of Finance and eight other ministries issued the Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial). This is a national framework for climate disclosures.

The standard is based on the International Sustainability Standards Board (ISSB) IFRS S2 Climate-related Disclosures. It focuses on reporting climate risks, opportunities, and impacts.

Under the new framework, companies are expected to report on their governance, strategy, risk and opportunity management, and metrics and targets.

The Chinese framework also requires more extensive emissions data, including value chain emissions in many cases. This goes beyond basic climate risk reporting.

Currently, the Chinese authorities present the standard as a trial (voluntary phase). However, they plan to expand its use and make parts mandatory over time. They will start with large companies and key sectors.

High-Emission Sectors Now Under the Spotlight

The newly announced carbon reporting expansion will affect energy-intensive and high-impact sectors, not only traditional industries:

  • Airlines: This includes carriers operating domestic and international flights.
  • Petrochemical firms: Companies that refine oil and produce chemical products.
  • Copper producers: Firms involved in mining and processing copper.

These sectors consume large amounts of energy and generate significant greenhouse gas emissions.

The aviation sector accounts for about 2% of global energy-related CO₂ emissions, according to the International Energy Agency (IEA). In 2023, aviation emissions reached roughly 950 million tonnes of CO₂, returning close to pre-pandemic levels. China is one of the world’s largest aviation markets, and fuel combustion remains the dominant source of airline emissions.

The petrochemical industry is also highly carbon-intensive. The IEA reports that petrochemicals account for about 14% of global oil demand and 8% of global gas demand. China is the world’s largest producer and consumer of many petrochemical products, making emissions monitoring in this sector especially important.

Copper production is another energy-heavy industry. The International Copper Association states that producing refined copper needs 2 to 4 tonnes of CO₂ for each tonne of copper. This varies by ore grade and energy source.

China produces over 40% of the world’s refined copper, says the International Energy Agency and global metals stats. Smelting and refining processes consume large amounts of electricity, often generated from fossil fuels.

china copper 2025 production
Chart from Reuters

From Patchwork Rules to a National Framework

The new reporting requirements and standards are part of a wider shift in China’s climate disclosure regime. The country has been building a national corporate climate reporting framework since 2024. This includes guidance from stock exchanges, government agencies, and new national standards.

In January 2026, the national climate reporting standard was formally released. It follows the IFRS S2 climate disclosure framework, but it adds China-specific details. One key requirement is to report the actual business impact on the climate.

Authorities say they’re working on guidelines for industries with high emissions. These include power, steel, coal, petroleum, fertilizer, aluminum, hydrogen, cement, and automobiles, among others.

The current trial phase mainly targets listed companies. But it plans to expand to non-listed firms and small and medium-sized enterprises (SMEs) later on.

China aims to make its climate disclosure regime more comprehensive and quantitative. Companies are expected to shift from narrative statements to detailed data reporting as they develop their climate information systems.

Driving Data to Deliver on Dual-Carbon Goals

As the world’s largest greenhouse gas emitter, China aims to have its National Emissions Trading System (ETS? cover all major emitting industries by 2027 to help achieve its “dual-carbon” goals:

IEA’s suggested path towards carbon neutrality for China

Achieving these goals requires accurate, timely, and comparable emissions data from companies. Improved reporting helps regulators, investors, and the public understand corporate climate risks and progress.

Standardized disclosure can help cut down on greenwashing. This happens when companies overstate or misrepresent their climate performance. Clear rules make it harder to present incomplete or misleading data.

Those who fail to comply will face consequences. For instance, a power plant in Ningxia was recently fined 424 million yuan ($58.5 million) for missing compliance deadlines.

Better climate data also supports green finance. Investors use emissions and climate information to assess risks and make decisions about capital allocation. Reliable data can help direct funding toward low-carbon technologies and projects.

The expanded rules also fit within China’s broader strategy to build a national carbon market and improve its emissions trading system. This market already covers a growing share of the economy and underpins carbon pricing across industries.

The move also responds to global pressures. For example, the European Union’s carbon taxes on imports impact Chinese exporters in these sectors.

China’s ETS and the Use of Carbon Offsets

This data collection phase is a precursor to integrating the industries into China’s ETS. The system initially covers only the power sector, but it has added steel, aluminum, and cement.

The covered companies can use a limited number of carbon offsets to meet compliance requirements. Under the ETS design, entities can use China Certified Emissions Reductions (CCERs). These must come from projects not included in the national ETS. But companies can surrender CCERs for up to 5% of their verified emissions.

Also, only CCER credits from projects in the new national CCER program can be used after January 2025. This offset flexibility gives companies an option to meet part of their compliance obligations while broader reporting and reduction measures take effect.

China ETS market 2030
Source: WEF Asia’s Carbon Markets Strategic Imperatives for Corporations, 2025.

The system currently regulates more than 5 billion tonnes of CO₂ annually from the power industry alone. Analysts estimate that once the additional sectors are fully included, the ETS could cover between 8.7 and 10.6 billion tonnes of CO₂ by the late 2020s — representing a significant share of China’s total emissions.

A Transparency Push With Global Implications

China’s expanded reporting rules represent a clear shift toward greater transparency in corporate climate data. Better reporting helps policymakers track progress toward national climate goals. It also helps businesses understand their own climate risks and opportunities.

For investors, richer data support more informed decisions about sustainable investments. This can help channel capital to cleaner technologies and low-carbon business models.

For the global climate community, China’s moves may influence reporting norms in other markets. As the world’s largest emitter, China’s reporting regime could shape climate disclosure expectations elsewhere.

The post China Expands Carbon Reporting to Airlines and Heavy Industry in Major Climate Disclosure Shift appeared first on Carbon Credits.

How Power Demand, Emissions, and China Will Shape the Global Energy System to 2030

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Global electricity demand is entering a decisive growth phase. IEA’s 2026 electricity report forecasts that over the next five years, power consumption is set to rise faster than at any time in recent decades, marking a structural shift in how the world uses energy. This trend reflects the rapid electrification of industries, transport, buildings, and digital infrastructure, alongside climate-driven demand for cooling and heating.

Unlike previous cycles, electricity demand is no longer simply following economic growth. Instead, power consumption is becoming a leading driver of economic activity. This shift signals the arrival of what analysts increasingly call the “Age of Electricity,” where power is the backbone of modern economies and decarbonization strategies.

Let’s deep dive into IEA’s report here to understand the present and the future of electricity demand.

Electricity Demand Breaks Away from Economic Growth

Global electricity demand is projected to grow at an average annual rate of around 3.6% between 2026 and 2030, significantly faster than the growth seen over the past decade. In contrast, total energy demand will rise much more slowly, meaning electricity will expand at least 2.5 times faster than overall energy consumption.

This divergence marks a fundamental change. Historically, electricity consumption closely tracked GDP growth. That relationship is now reversing. In 2024, electricity demand outpaced economic growth globally for the first time in three decades outside of crisis periods, and this trend is expected to continue.

Several structural drivers are accelerating this shift:

  • Electrification of transport, especially electric vehicles
  • Expansion of data centres and artificial intelligence workloads
  • Rising demand for air conditioning due to climate change
  • Industrial electrification and reshoring
  • Growth in heat pumps and electric heating

Together, these trends are pushing electricity to become the dominant form of final energy consumption.

Emerging economies will remain the main engine of demand growth, accounting for roughly 80% of new electricity consumption through 2030. However, advanced economies are also seeing a resurgence after more than a decade of stagnation, driven by digitalization and electrification.

GLOBAL electricity demand

Global Power Mix: Renewables and Nuclear Take Half the Market

Globally, renewables and nuclear are on track to supply around 50% of electricity generation by 2030. Solar is the fastest-growing source, contributing more than half of annual generation additions.

Renewable generation is expected to grow by about 1,000 TWh per year through 2030, with solar alone adding more than 600 TWh annually. Nuclear power is also gaining momentum, supported by reactor restarts, lifetime extensions, and new builds in emerging economies.

However, coal will likely remain the single largest source of electricity in 2030, even as its share declines. Natural gas generation is also expected to rise, driven by US demand and fuel switching in the Middle East.

Overall, renewables, nuclear, and gas are projected to meet all net new electricity demand globally, displacing coal in aggregate but not eliminating it.

global electricity generation

Advanced Economies Re-Enter the Demand Growth Cycle

Electricity demand in advanced economies is rising again after a prolonged period of stagnation. In the United States, demand is projected to grow by around 2% annually through 2030, with data centres accounting for roughly half of the increase.

In the European Union, electricity demand is expected to grow at around 2% per year, though consumption may not return to pre-2021 levels until the late 2020s. Other advanced economies, including Japan, Canada, Korea, and Australia, are also seeing accelerating growth.

This resurgence reflects:

  • AI and cloud computing expansion
  • Electrification of heating and transport
  • Industrial reshoring and new manufacturing facilities
  • Climate-driven cooling demand

Electricity is becoming a core input for economic competitiveness in digital and industrial sectors.

Power Sector Emissions: Plateau but Not Yet Declining Fast Enough

Electricity generation remains the largest source of energy-related carbon dioxide emissions, producing roughly 13.9 billion tonnes of CO₂ per year. After rising between 2022 and 2024, power sector emissions stabilised in 2025.

Looking ahead, emissions are expected to plateau through 2030, rather than decline sharply. This reflects the rapid growth in electricity demand, offsetting gains from clean power deployment.

power sector emissions

The carbon intensity of electricity has already fallen by around 14% over the past decade, and it is expected to decline faster as low-emission generation expands. This decline is mainly due to more renewable energy and strong nuclear power output.

  • The trend is expected to accelerate. CO₂ intensity is forecast to fall by around 3.7% per year, dropping from 435 g CO₂ per kWh in 2025 to about 360 g CO₂ per kWh by 2030.

However, absolute emissions reductions will be harder to achieve due to rising demand. China’s trajectory is particularly critical. As the world’s largest power market and emitter,  its pace of renewable deployment, coal retirement, and grid reform will heavily influence global climate outcomes.

power sector emissions
Source: IEA

China: The Single Largest Driver of Global Electricity Growth

China will remain the central force shaping global electricity demand over the next decade. Despite slower economic growth and structural shifts toward services, China’s sheer scale means it will contribute close to half of global electricity demand growth through 2030.

Electricity demand in China rose by just over 5% in 2025, down from roughly 7% in 2024. Looking ahead, demand is expected to grow at an average of around 4.9% annually between 2026 and 2030, slower than the past decade but still massive in absolute terms.

The drivers are multifaceted:

  • Continued electrification across industry and households
  • Expansion of manufacturing, including clean energy supply chains
  • Growing services sector electricity use
  • Rising cooling demand due to extreme heat events
  • Digital infrastructure and smart technologies
china renewables
Source: IEA

China’s power demand growth over the next five years alone is expected to match the current total electricity consumption of the European Union. This highlights the scale of China’s influence on global power markets, fuel demand, and emissions trajectories.

At the same time, efficiency improvements are tempering demand growth. Government policies targeting lower energy intensity and more efficient appliances are helping reduce electricity use per unit of GDP. However, these gains are not enough to offset the scale of electrification and economic activity.

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Renewables Surge, But Grid Constraints Loom Large

China’s renewable energy buildout continues at an unprecedented pace. Solar generation jumped by more than 40% in 2025, while wind grew by double digits. The share of variable renewable energy (VRE) in China’s power mix reached around 22%, up sharply from the previous year.

Record capacity additions are transforming the power system. More than 300 GW of solar and over 100 GW of wind were added in a single year, driven partly by developers rushing to complete projects before the end of fixed-price tariffs.

However, this rapid expansion is creating new challenges. Curtailment rates for solar and wind increased, reflecting grid congestion and integration constraints. This highlights a global issue: generation is growing faster than grid infrastructure.

Coal’s Role Is Changing, Not Disappearing

Despite the renewable boom, coal remains a dominant force in China’s power sector. Coal-fired generation declined slightly in 2025, but coal still accounts for the largest share of electricity generation.

China’s coal share is expected to fall from around 55% in 2025 to about 43% by 2030, reflecting the rapid expansion of renewables and nuclear. However, coal capacity continues to grow, driven by projects approved during the 2022–2023 permitting boom.

Rather than serving as baseload power, coal plants are increasingly being used as flexibility and backup resources to support variable renewables. Capacity utilisation is expected to decline, even as installed capacity rises.

This shift illustrates a broader global trend: coal is becoming a reliability asset rather than a growth engine, but its persistence complicates decarbonization efforts.

Grids and Flexibility: The Hidden Bottleneck

The transition to an electricity-centric energy system depends on grid expansion and flexibility. Investment in grids currently lags far behind generation capacity additions. Worldwide, more than 2,500 GW of projects are stuck in grid connection queues, including renewables, storage, and large industrial loads such as data centres. Without faster grid expansion and smarter system management, power shortages and curtailment risks will rise.

Meeting projected demand will require around 50% higher annual grid investment by 2030, rising from roughly USD 400 billion today. Without this, congestion, curtailment, and reliability risks will increase.

Flexibility solutions are also scaling rapidly. Utility-scale battery deployment is accelerating, especially in regions with high solar and wind penetration. However, conventional power plants still provide most flexibility today.

Policy reforms, grid-enhancing technologies, and non-firm connection agreements could unlock 1,200–1,600 GW of stalled projects, significantly accelerating the transition.

grid management

The Global Outlook: A Power-Centric Energy System

The global energy system is undergoing a structural transformation. Electricity is becoming the dominant vector for economic growth, digitalization, and decarbonization. Demand growth is accelerating across emerging and advanced economies, with China playing the most decisive role.

Renewables and nuclear are rapidly expanding, but coal and gas will remain part of the mix for reliability. Emissions are stabilising but not falling fast enough to meet climate targets, highlighting the scale of the challenge ahead.

The next five years will be critical. Grid expansion, flexibility solutions, and policy reforms will determine whether the Age of Electricity delivers a clean, affordable, and resilient energy future—or locks in new infrastructure bottlenecks and emissions risks.

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Climate Reality Check: Only 12% of Global Companies Align With 1.5°C Goal, MSCI Reports

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Climate Reality Check: Only 12% of Global Companies Align With 1.5°C Goal, MSCI Reports

A new report from MSCI shows that many listed companies are still not aligned with the world’s most ambitious climate goal. The findings suggest that progress is uneven. Some companies are moving in the right direction. Many are not yet cutting emissions fast enough.

According to MSCI’s latest Transition Finance Tracker, about 38% of companies in the MSCI All Country World Investable Market Index (ACWI IMI) have emissions trajectories that are aligned with limiting global warming to 2°C or below. This includes 12% aligned with 1.5°C or less and 26% aligned between 1.5°C and 2°C.

However, only about 12% of companies are aligned with the stricter 1.5°C goal set under the Paris Agreement. The remaining companies are on pathways that imply warming above 2°C.

In fact, 36% of companies fall in the range above 2°C but below 3.2°C, while 26% exceed 3.2°C. Overall, the median listed company trajectory implies 3°C (5.4°F) of warming above preindustrial levels this century.

Projected temperature alignment of the world’s listed companies
Source: MSCI

MSCI uses a tool called the Implied Temperature Rise (ITR) metric. This tool estimates how much global temperatures would rise if the whole economy followed the same emissions pathway as a given company. It looks at aggregate emissions, sector-specific carbon budgets, and corporate climate targets.

Inside the ITR: Measuring Corporate Warming Impact

MSCI’s ITR metric helps investors understand climate risk. It compares a company’s projected emissions with global carbon budgets that align with temperature goals. The dataset used in this estimate covers roughly 95% of ACWI IMI constituents, as about 5% lack sufficient data for the calculation.

If a company’s emissions plan fits within a 1.5°C carbon budget, it is considered aligned with the most ambitious Paris goal. If it fits within a 2°C budget, it is considered moderately aligned. If not, it implies higher warming.

  • The Paris Agreement aims to limit global warming to well below 2°C, and preferably to 1.5°C, compared with pre-industrial levels.

The Intergovernmental Panel on Climate Change (IPCC) has warned that global emissions must fall by about 43% by 2030, compared with 2019 levels, to keep 1.5°C within reach.

MSCI’s data shows that most companies are not reducing emissions at that pace. The report also notes that its latest warming estimate is three-tenths of a degree higher than the previous quarter due to a methodological update that removed a cap on how much companies could exceed their carbon budgets.

This gap matters because corporate emissions play a major role in global totals. The MSCI ACWI IMI includes 8,225 companies and captures about 99% of the global equity investment opportunity set as of Dec. 31, 2025.

Winners and Laggards: How Sectors Stack Up on Climate

The Transition Pathway Initiative (TPI) gives a clear look at how corporate climate performance differs by industry.

The TPI report looked at more than 2,000 major companies. These companies have a total market value of about US$87 trillion. The focus was on their climate governance and progress on emissions. It found that 98% of companies lack credible plans to shift capital away from carbon-intensive assets.

corporate climate by sector TPI
Source: TPI

The report warns that 554 companies in 12 high-emitting sectors are on a dangerous path. Their current emissions are on track to overshoot the 1.5°C carbon budget by 61% between 2020 and 2050. These same pathways will also likely exceed the 2°C budget by 13% during that same period.

The analysis suggests that many firms consider climate issues in daily decisions. However, few have solid long-term transition plans.

TPI also shows clear differences in sector progress. For example, automotive and electricity companies reduced emissions intensity nearly five times faster between 2020 and 2023 than cement and steel firms. Conversely, sectors such as oil & gas, aluminum, and coal mining remain among the most misaligned with Paris goals.

This highlights that while some industries are beginning to cut emissions and improve governance, most still need stronger transition plans and clearer capital alignment to meet global climate targets.

Climate Alignment Is Now a Financial Risk Indicator

Findings reveal that climate alignment is not only an environmental issue. It is also a financial one.

Governments are tightening climate policies. Carbon pricing systems now cover about 23% of global greenhouse gas emissions, according to the World Bank’s State and Trends of Carbon Pricing report.

More countries are setting net-zero targets. Regulations are increasing disclosure requirements. Investors face growing pressure to measure climate risk in portfolios.

The MSCI report also shows that 19% of listed companies had a climate target validated by the Science Based Targets initiative (SBTi) as of Dec. 31, 2025, up from 14% a year earlier. Meanwhile, 32% of companies have set a companywide net-zero target, and 60% have published some form of climate commitment.

Companies that are not aligned with global climate goals may face higher regulatory costs, stranded assets, or weaker demand in the future. On the other hand, companies aligned with 1.5°C or 2°C pathways may benefit from new markets and lower transition risk.

MSCI’s data helps investors compare companies on this basis. The 38% alignment figure gives a broad snapshot of progress across global markets.

Progress, But Not Fast Enough

The fact that 38% of companies align with 2°C or below shows improvement compared with past years. Corporate climate reporting has expanded. More companies now set net-zero targets, and many publish science-based targets.

Disclosure rates have also improved. As of Dec. 31, 2024, 79% of listed companies disclosed Scope 1 and/or Scope 2 emissions, up from 76% a year earlier. A majority, 56%, reported at least some Scope 3 emissions, up from 51%.

Emissions disclosure by listed companies
Source: MSCI

Still, MSCI’s findings show that ambition and action are not always the same. Some companies set long-term targets but delay near-term reductions. Others rely heavily on carbon offsets instead of direct emissions cuts. In some cases, emissions intensity improves while absolute emissions remain high.

The IPCC has made clear that global emissions must fall sharply this decade. Delayed action increases future costs and transition risks.

A Fossil-Fuel-Heavy World Complicates the Shift

Global energy-related CO₂ emissions reached a record 37.8 billion tonnes in 2023, according to the International Energy Agency. While renewable energy growth has accelerated, fossil fuels still account for around 80% of global primary energy supply.

These global figures explain why corporate alignment remains challenging. Many companies operate in economies that still depend on fossil energy.

MSCI’s report reflects this broader reality. Corporate alignment depends on system-wide change, not just company-level pledges. Moreover, the report’s findings come as corporate climate pledges continue to rise sharply.

According to the SBTi, the number of companies setting both near-term and net-zero science-based targets surged 227% between late 2023 and mid-2025. Companies setting near-term targets alone grew by nearly 97% over the same period.

Companies with SBTi commitments or targets
Source: SBTi

By the end of 2023, only 17% of companies with validated targets had both near-term and net-zero commitments. That share rose to 33% in 2024 and reached 38% by mid-2025.

The figures show that more companies are formalizing climate commitments. However, MSCI’s data indicates that only 12% of listed firms align with 1.5°C, while 38% align with 2°C or below — highlighting a gap between target-setting and full emissions alignment.

The Road Ahead: Bridging the 1.5°C Gap

The headline figure shows that more than one-third of listed firms are moving in a direction consistent with global climate goals. That gap is significant.

To meet the Paris Agreement’s goals, alignment will need to increase quickly across all sectors. This means faster emissions cuts, clearer short-term targets, and stronger capital allocation toward low-carbon technologies. Today’s alignment rate suggests progress is underway, but it also shows that most companies still have to work harder to be on track to a 1.5°C path.

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Nuclear’s Next Chapter: newcleo Raises $88M to Scale SMR Powered by Nuclear Waste

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Nuclear’s Next Chapter: newcleo Raises $88M to Scale SMR Powered by Nuclear Waste

newcleo, a European nuclear technology company, announced that it has raised €75 million (about USD $88 million) in a new funding round. The cash will help the company build and develop advanced small nuclear reactors powered by recycled nuclear waste. The financing is a sign of growing investor interest in clean and low-carbon energy solutions.

Newcleo also said that it has now raised more than $124 million in total for 2025. The company was founded in September 2021 and is based in Paris, France. The nuclear energy developer also operates in Italy, the UK, Belgium, and Slovakia, with roughly 1,000 employees.

What newcleo’s Technology Does: Turning Nuclear Waste into Usable Fuel

newcleo develops a type of advanced nuclear technology known as lead-cooled fast reactors (LFRs). These reactors are a form of small modular reactor (SMR).

Unlike traditional nuclear reactors that use fresh uranium fuel, newcleo’s design aims to use reprocessed nuclear waste as fuel. This means existing waste from older reactors could become a power source.

Using nuclear waste as fuel is intended to have two benefits:

  • It could reduce long-term waste storage needs.
  • It may help lower the carbon footprint of nuclear power.

Lead-cooled fast reactors also use liquid lead to transfer heat out of the core. The liquid lead acts as a coolant and enables the reactor to operate at high temperatures without high pressure.

This reactor type is still under development and not yet in wide commercial operation. But companies like newcleo believe it could play a role in future clean energy systems.

Heavy Industry and Investors Double Down

The €75 million funding round brought in both new and existing investors. New industrial backers included heavy industry groups such as:

  • Danieli & C, a steel mill manufacturer
  • Cementir Holding, a cement and concrete producer
  • Orion Valves, an industrial valve maker
  • NextChem, an energy engineering firm

Existing financial backers also participated. These included Kairos, Indaco Ventures, Azimut Investments, the CERN pension fund, and Walter Tosto (industrial engineering).

The mix of industrial and financial investors shows that newcleo’s technology draws interest from companies looking for reliable, low-carbon power and firms focused on clean energy investments.

Scaling from Design to Deployment

newcleo said the fresh funding will support several key parts of its business. The company highlighted progress in:

  • Licensing and regulatory approval processes
  • Research and development (R&D) of reactors and fuel systems
  • Vertical integration of technology and manufacturing
  • Geographic expansion in key markets like Europe and the United States

This means newcleo is working not just on reactor design, but on building the skills and facilities needed to support production, testing, and commercial deployment. The company also has partnerships and projects in multiple countries, including France, Italy, Slovakia, and the U.S. These collaborations relate to licensing and siting work, research facilities, and future commercial reactor projects.

Closing the Nuclear Fuel Loop

Nuclear power is often seen as a low-carbon energy source because it produces virtually no direct CO₂ emissions during operation. However, it leaves behind radioactive waste that can remain hazardous for thousands of years.

nuclear carbon emission
Carbon Footprint of Various Energy Sources

Traditional reactors use uranium fuel once and store the resulting waste. newcleo’s approach aims to reuse existing waste as reactor fuel. This could potentially reduce the volume and hazard of waste that needs long-term storage.

Lead-cooled fast reactors are one class of Generation IV nuclear technology. These designs are intended to be safer and more efficient than older reactors. They can run on fuels that traditional reactors cannot and may help make nuclear energy more sustainable in the long term.

Using recycled radioactive fuel helps close the nuclear fuel cycle. This means sourcing more energy from mined uranium, which leaves less waste behind.

Building a Cross-Border Nuclear Footprint

newcleo has stated that it plans to roll out its technology in several countries with active regulatory frameworks for advanced nuclear projects. The company has started licensing and planning partnerships in Europe and the U.S. These moves aim to make it a major supplier of advanced nuclear power systems.

In France, newcleo is preparing regulatory filings for both fuel and reactor projects. In Italy, it is building R&D infrastructure and test systems, while in Slovakia, it has formed a joint venture to deploy multiple reactors at a nuclear site. And in the U.S., it is engaging in collaborations to build fuel manufacturing and fabrication capabilities.

The company’s CEO, Stefano Buono, said investors view newcleo’s progress in licensing, R&D, and global expansion as a key advantage. He further added,

“Our ability to deliver impactful low-carbon energy solutions for energy-intensive firms is proving an attractive investment rationale for both industrial and financial investors. Our tangible progress in licensing, R&D, vertical integration, and geographic expansion is seen by investors as a key differentiator in the race to deliver clean, safe, and affordable nuclear energy.”

Small Modular Reactors Gain Global Traction

Interest in small modular reactors is rising as countries look for reliable, low-carbon power. Governments and industry groups also track SMRs more closely than before.

One sign is the growing number of designs in development. The OECD Nuclear Energy Agency (NEA) reported that its latest SMR Dashboard found 98 SMR technologies globally. It detailed 56 of these SMRs in its dashboard set.

A separate NEA summary shows a larger count of designs tracked over editions. This highlights how quickly the pipeline is expanding.

  • Forecasts also show wider deployment in the coming decades. The International Energy Agency (IEA) publishes scenario data on global SMR capacity from 2025 to 2050.

In its analysis, SMR capacity rises from near-zero today to tens of gigawatts by 2050 in its main scenarios (39 GW), and it grows even higher in its “high SMR” case (190 GW). This suggests that SMRs could move from pilot projects to meaningful scale if costs fall and licensing speeds up.

SMR Global Installed Capacity by Scenario and Case, 2025-2050 IEA data
Data from the IEA; STEPS = Stated Policies Scenario; APS = Announced Pledges Scenario; NZE = Net Zero Emissions by 2050 Scenario.

International institutions also expect nuclear growth overall, with SMRs playing a bigger role. In September 2025, the International Atomic Energy Agency (IAEA) said it raised its long-term nuclear outlook again.

In its best-case scenario, the IAEA predicts that global nuclear capacity could grow to 2.6 times the 2024 level by 2050. It also noted that SMRs will be key to this growth.

Policy signals further support this direction. The NEA reports that over 20 countries at COP28 pledged to triple global nuclear energy capacity by 2050.

These forecasts do not guarantee fast deployment. SMRs still face key hurdles such as licensing timelines, supply chains, fuel availability, and first-of-a-kind costs. 

SMRs are increasingly central to global nuclear talks. The NEA tracks more designs, and the IEA outlines new deployment pathways. And interest from investors and policymakers has grown as countries look for reliable low-carbon baseload power.

The €75 million funding round adds to newcleo’s growing capital base. It boosts the company’s ability to advance its technology and work toward deployment. As of early 2026, newcleo has raised more than $124 million over the past year, with total funding since 2021 likely exceeding €645 million.

Private Capital Signals a Nuclear Comeback

The investment in newcleo highlights a broader trend: private capital is moving into advanced nuclear technologies.

Investors in heavy industry and finance are now seeing nuclear power as key to global decarbonization efforts. Some countries have recently updated their policies. This supports nuclear research and licensing. It shows a focus on energy security and climate goals.

Lead-cooled fast reactors and similar designs remain in early stages of testing and regulatory review. Newcleo and similar companies think their technologies can provide clean, reliable power. They also believe these systems create less waste over their life cycles compared to older reactors.

If successful, this approach could expand the role of nuclear power in the energy transition. But much work remains in testing, licensing, manufacturing, and cost reduction before commercial deployment at scale.

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TotalEnergies and Google’s 1 GW Solar Deal Signals a New Phase in the Data Center Energy Race

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TotalEnergies has signed two long-term power purchase agreements (PPAs) with Google to deliver 1 gigawatt (GW) of solar capacity in Texas. Over 15 years, the projects are expected to generate around 28 terawatt-hours (TWh) of renewable electricity.

The deal reflects a deeper shift in how the tech sector secures power for artificial intelligence, cloud services, and digital infrastructure. As AI workloads surge, electricity has become a strategic resource, and companies like Google are moving early to lock in supply.

The projects will be developed at two TotalEnergies-owned sites—Wichita and Mustang Creek—with construction scheduled to begin in the second quarter of 2026. Once operational, they will directly support Google’s growing data center footprint in Texas.

Texas: A Crucial Hub for Big Tech Power Demand

Texas has emerged as one of the world’s most important regions for data center expansion. Its abundant land, strong solar resources, and deregulated power market make it attractive for hyperscale data centers. However, demand is rising rapidly, and the grid is under pressure from AI-driven electricity loads, industrial expansion, and extreme weather events.

texas data centres
Source: AXIOS

The Wichita solar farm, with a capacity of 805 megawatts (MW), and the Mustang Creek project, with 195 MW, together form one of TotalEnergies’ largest U.S. renewable commitments to a single corporate buyer. These projects will add new generation capacity rather than simply reallocating existing renewable energy credits, which is critical for grid stability.

By building new supply, TotalEnergies and Google are addressing a major challenge facing the power sector: ensuring that clean electricity growth keeps pace with surging demand.

Corporate PPAs Are Now Shaping America’s Power Grid

Power purchase agreements were once seen as a financial tool for companies to claim renewable energy use. Today, they are becoming a core driver of grid expansion. Large corporate buyers are effectively acting as anchor investors for new energy infrastructure.

In this case, the 1 GW of solar PPAs complement another 1.2 GW of agreements recently secured by Clearway, a renewables developer half-owned by TotalEnergies. These deals span multiple U.S. grid regions, including ERCOT in Texas, PJM in the Northeast, and SPP in the Central U.S.

Together, these agreements illustrate how tech firms are diversifying their energy supply across regions to manage risk, hedge against price volatility, and ensure reliability.

Local Economic Impact and Community Benefits

Beyond climate goals, large-scale solar projects bring tangible economic benefits to local communities. The Wichita and Mustang Creek developments are expected to create several hundred construction jobs and generate significant tax revenues over their operating lifetimes.

For rural counties, utility-scale solar projects often become a long-term source of public funding for schools, infrastructure, and emergency services. As data centers expand into smaller communities, energy projects linked to them can transform local economies.

TotalEnergies’ Strategy: Tailored Power for High-Load Customers

TotalEnergies is positioning itself as a key energy partner for industries with massive and growing electricity needs. Its customer portfolio already includes major industrial and technology players such as Amazon, Microsoft, Airbus, Air Liquide, STMicroelectronics, Saint-Gobain, and Sasol.

The company’s approach goes beyond simple renewable supply. It combines solar, wind, battery storage, and flexible gas generation to deliver what it calls “clean firm power.” This hybrid model is increasingly important for data centers, which require 24/7 electricity with minimal interruptions.

Marc-Antoine Pignon, TotalEnergies’ Vice President for Renewables in the U.S., highlighted that the Google deal is the company’s largest renewable PPA volume ever signed in the country. He also pointed to the challenges of land availability and power supply for data centers, noting that large-scale colocation opportunities are becoming essential as AI infrastructure expands.

A Growing U.S. and Global Renewable Portfolio

TotalEnergies has been steadily expanding its renewable footprint. In the United States, it holds around 10 GW of onshore solar, wind, and storage capacity, with roughly 5 GW located in Texas. Globally, the company had more than 32 GW of installed renewable capacity by late 2025 and aims to produce over 100 TWh of net electricity by 2030.

total energies renewable portfolio
Source: TotalEnergies

This growth reflects a broader strategy to transition from a traditional oil and gas company into a diversified energy producer. By investing heavily in renewables and flexible assets, TotalEnergies is positioning itself for a future where electricity plays a central role in the global energy mix.

EARLIER: 

Google’s Aggressive Clean Energy Procurement Drive

Google is one of the world’s largest corporate buyers of renewable energy, and its procurement strategy has accelerated dramatically in recent years. Since 2010, the company has signed more than 170 clean energy agreements totaling over 22 GW of capacity. These deals span North America, Europe, Asia Pacific, and Latin America.

google data centre electricity consumption
Source: Google

In 2024 alone, Google contracted more than 8 GW of additional clean energy—twice the volume of the previous year and the largest annual total in its history. These agreements are designed to stay ahead of the company’s rapid load growth, particularly from AI and cloud services.

google data center emissions
Source: Google

Despite a 27% year-on-year increase in data center electricity consumption in 2024, Google reported a 12% reduction in data center energy emissions.

  • It estimates that its clean energy purchases avoided more than 8.2 million tonnes of CO₂ equivalent in 2024 and over 44 million tonnes cumulatively since 2011.

This shows that large-scale procurement can decouple emissions growth from electricity demand, at least in the near term.

Data Centers Are Reshaping Electricity Demand

The International Energy Agency (IEA )’s latest electricity report has highlighted data centers as a major driver of electricity demand growth in the United States. Electricity consumption rose by 2.8% in 2024 and 2.1% in 2025, with data centers expected to account for nearly half of future growth.

Industrial sectors such as semiconductor manufacturing and battery production will also contribute significantly, but digital infrastructure is among the fastest-growing loads.

AI workloads are particularly energy-intensive. Training large models requires massive, continuously running computing clusters, while inference workloads scale with user demand. This creates a constant, high-load electricity profile that challenges traditional grid planning.

2026 US Renewable Outlook and Policy Headwinds

The IEA also forecasts that nearly 250 GW of renewable energy capacity will be deployed in the U.S. between 2026 and 2030, with utility-scale solar accounting for around 70% of additions. Wind and distributed solar will make up the remainder.

However, recent policy changes and the phase-out of certain tax incentives have led to a downward revision of deployment forecasts. This underscores the growing importance of corporate buyers in sustaining renewable development.

When government support weakens, long-term PPAs from companies like Google provide the financial certainty developers need to build projects. In this sense, tech firms are becoming critical enablers of the energy transition.

iea 2026 us electricty demand

A New Power Paradigm for the Digital Age

The TotalEnergies and Google solar agreement states that electricity is no longer just an operating expense. It is a strategic asset that determines the scalability and sustainability of digital infrastructure.

For TotalEnergies, the deal reinforces its role as a key supplier of tailored renewable power to high-load customers. For Google, it ensures reliable, affordable, and low-carbon electricity for its expanding AI and cloud operations.

More broadly, the partnership reflects a new phase in the global energy transition, where private companies play a central role in financing and building clean power infrastructure. As AI, cloud computing, and digital services continue to expand, similar mega-scale PPAs are likely to become standard practice.

Lastly, but not least, Texas is becoming a global test case for high-growth, low-carbon grids. Its rapid demand growth, combined with large renewable deployment, will offer lessons for other regions facing similar challenges.

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Nigeria Aims for 80 Million Clean Cookstoves and a $5 Billion Carbon Credit Revenue

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Nigeria Aims for 80 Million Clean Cookstoves and a $5 Billion Carbon Credit Revenue

Nigeria is planning a large clean cooking program that aims to distribute 80 million efficient cookstoves to households. Project backers say the rollout could help reduce smoke from cooking, cut pressure on forests, and create a new stream of carbon credits.

Recent reporting in Nigeria says the project is also tied to a revenue target. A senior finance executive at project developer GreenPlinth Africa said the Federal Government could earn up to $5 billion each year from “verified carbon credit revenues” when the program reaches full scale.

Lagos State has also described itself as an early “anchor” for the program. Lagos State Government announced it will lead the way in providing 6 million free cookstoves. Distribution in the state has started in June 2025, beginning in Makoko.

Mr. Tunde Lemo, former Deputy Governor of the Central Bank of Nigeria, commented:

“This is not a pilot. It is not a promise. It is a nationally endorsed, structured, and scalable intervention…This is one of the most ambitious clean cooking and household energy transition programmes ever undertaken globally.”

An 80 Million Stove Rollout With National Ambitions

Lagos State’s climate office describes the initiative as a nationwide effort to deploy 80 million efficient cookstoves free of charge. It says the goal is to sharply reduce traditional firewood use for women and low-income households.

Large stove programs usually try to replace or improve traditional cooking methods that produce heavy smoke indoors. In many households, cooking uses wood, charcoal, or other solid fuels. These fuels can release fine particles and other pollutants, especially in kitchens with poor airflow.

The Clean Cooking Alliance’s Nigeria dashboard uses official sources like the World Bank. It estimates that over 167 million people, or 73.8%, in Nigeria did not have access to clean cooking in 2023.

That gap is wider outside cities. The same dashboard reports that 26.2% of Nigeria’s population had access to clean fuels and technologies for cooking in 2023. It also reports 48.7% access in urban areas versus 9.7% in rural areas in 2023.

Cooking Smoke as a Public Health Crisis

Global health agencies link household smoke from cooking to major health harms. The World Health Organization (WHO) estimates that household air pollution led to around 2.9 million deaths in 2021. This includes more than 309,000 children under age 5.

WHO also estimates that household air pollution caused about 95 million DALYs in 2021. This measure combines years lost to early death and disability. The organization notes that the health burden is tied to diseases such as heart disease, stroke, and lung disease.

Moreover, a WHO technical page shows how household air pollution causes deaths. Here’s the breakdown:

  • Ischaemic heart disease: 32%
  • Stroke: 23%
  • Lower respiratory infections: 21%
  • COPD: 19%
  • Lung cancer: 6%

Global energy data also shows the scale of the challenge. The International Energy Agency (IEA) estimates 2.3 billion people worldwide still cook using open fires or basic stoves that create harmful smoke.

In Nigeria, a large stove program could affect health most in communities that rely heavily on fuelwood or charcoal. It could also change how much time families spend collecting fuel. It could lower daily smoke exposure for cooks and nearby children when stoves are used correctly and consistently.

From Kitchen Emissions to Carbon Markets

The project narrative links emissions cuts from cleaner cooking to carbon markets. Carbon crediting usually relies on measuring and verifying how much a project cuts greenhouse gas emissions compared to a baseline.

International rules also matter if the project aims to generate credits for compliance uses under the Paris Agreement. Under Article 6, countries can cooperate to meet climate targets, including through carbon credits created from verified emission reductions.

Within Article 6, the Article 6.4 mechanism (also called the Paris Agreement Crediting Mechanism) has a UN-backed governance structure. UNFCCC explains that an Article 6.4 Supervisory Body develops and supervises requirements to run the mechanism. This includes approving methodologies, registering activities, accrediting verification bodies, and managing a registry.

This matters because cookstove projects often face scrutiny over real-world use. Carbon credit quality can depend on factors like whether households actually use the new stove, how long they keep using it, and whether old stoves stay in use at the same time. Credible monitoring and verification are central to project integrity under any crediting pathway.

IEA clean cooking projection 2030
Source: IEA

The IEA predicts that clean cooking access will hit around 85% by 2030. This means over 350 million people, mainly in sub-Saharan Africa, will still lack safe cooking options. They will continue to rely on polluting open fires and basic stoves.

To achieve universal access by 2030, there’s a need to connect 160 million people each year. However, funding shortages and infrastructure issues make this unlikely. That requires about $2 billion a year just for Africa to make it happen.

The IEA believes full access by 2040 is more realistic. This will come from increased use of LPG, which will cover about 60% of new connections. It will also involve electric cooking, advanced biomass stoves, and various financing options such as carbon credits. And Nigeria is heading in that direction.

What a $5 Billion Carbon Claim Would Require

Nigeria already has experience with cookstove carbon projects on a smaller scale. The Clean Cooking Alliance’s Nigeria dashboard says the country has 18 registered cookstove projects that have generated 3.4 million carbon credits to date.

The credits from 9 developers are verified by Verra’s VCS and Gold Standard, as seen:

Nigeria cookstove project carbon credit summary
Source: Clean Cooking Alliance

The proposed 80 million-stove rollout is far larger than typical programs. Supporters argue that scale could also mean large volumes of credited emission reductions, especially if adoption remains high over many years.

The $5 billion per year figure has drawn attention because it implies both a large credit volume and a strong credit price. The figure cited in Nigerian reporting was presented as a projection tied to “verified” carbon credit revenues once the project is fully deployed.

Still, projected revenue is not the same as guaranteed income. Real outcomes depend on several conditions, including:

  • The number of stoves actually delivered and used,
  • The verified emissions reductions per household,
  • Approval under the chosen crediting pathway,
  • Market demand, and
  • The price and transaction costs for credits.

Lagos State’s official post highlights a key milestone: 6 million stoves in Lagos. However, it does not confirm future credit volumes or prices.

Delivery, Use, and Verification Will Decide the Outcome

Several signals will help observers judge the program’s progress and credibility.

First is delivery at scale. A plan for 80 million stoves requires large manufacturing or import capacity, distribution logistics, and after-sales support. Maintenance matters because stoves can fail or be abandoned if they do not meet cooking needs.

Second is sustained use. Clean cooking benefits and emissions cuts depend on households consistently using the new stove. Programs often track usage through surveys, sensors, or fuel consumption checks. Strong monitoring also supports more credible carbon claims.

Third is alignment with recognized rules. If the project aims to issue credits under Paris Agreement pathways, it must follow the requirements of Article 6.4 Supervisory Body. This includes using accepted methodologies and verification practices.

Finally, there is the public data baseline. Nigeria’s clean cooking access is still low overall. The Clean Cooking Alliance dashboard, using World Bank data, reported 26.2% access in 2023, with much lower access in rural areas. A well-run program could shift those numbers over time, but it will require steady funding and coordination across states.

For now, the story combines a large public health goal with a climate finance goal, and the scale is ambitious. The key question is whether implementation, monitoring, and market demand can match the size of the revenue promise.

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ICVCM Adds New CCP-Approved Carbon Credit Methods for Isometric, Gold Standard and ACR

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ICVCM Adds New CCP-Approved Carbon Credit Methods for Isometric, Gold Standard and ACR

The Integrity Council for the Voluntary Carbon Market (ICVCM) published new decisions under its Core Carbon Principles (CCP) program. The update covers three carbon credit methodologies, also called “categories” in ICVCM’s system. One methodology received full approval, and two received conditional approval.

ICVCM’s CCP label is meant to help buyers spot carbon credits that meet a clear, minimum integrity bar. ICVCM uses an Assessment Framework to apply its label. This framework checks how programs and methods handle key issues, including quantification, additionality, monitoring, and verification.

According to Annette L. Nazareth, Chair of the Governing Board, ICVCM

“Demand for CCP-labelled credits has grown steadily, commanding price premiums that reflect buyers’ renewed trust. Policymakers, multilateral institutions, and standard-setters have incorporated the CCPs into their own frameworks, recognising the Integrity Council’s role in building coherence across voluntary and compliance markets.”

The three decisions were:

  • Isometric: ISM Reforestation Protocol v1.1 — CCP Approved
  • Gold Standard: Methane emission reduction by adjusted water management practice in rice cultivation v1.0 — CCP Approved (Conditional)
  • American Carbon Registry (ACR): Improved Forest Management (IFM) on Non-Federal US Forestlands v2.0 — CCP Approved (Conditional)

How the CCP Label Works and When Conditions Apply

A CCP-approved method can earn credits for the CCP label. Projects need to follow the method and the program’s usual rules. In this ICVCM update, the Isometric reforestation method was approved without conditions. This means credits issued under it can get CCP labeling immediately.

A CCP-approved but conditional methodology can still earn the label, but only if specific conditions are met. These conditions can apply to how projects prove additionality. They can also apply to how projects account for risks. Finally, they may apply to how projects set baselines and leakage deductions.

ICVCM also published a market-level snapshot with its February 2026 decisions. It approved eight carbon-crediting programs as CCP-Eligible. It also approved 38 methodologies.

However, 22 methodologies did not meet the requirements. About 105 million credits were approved for the CCP label. Of these, 52 million are available, while 53 million have been retired or canceled. Globally, here’s ICVCM’s carbon credit achievement:

ICVCM carbon credit facts global
Source: ICVCM

Isometric Sets a First for Nature-Based CCP Credits

ICVCM granted full CCP approval to Isometric’s ISM Reforestation Protocol v1.1, which Isometric published in October 2025. The protocol outlines rules for measuring carbon removals from reforestation. This refers to restoring forest cover on land that was once forested. ICVCM placed it under the broader Afforestation, Reforestation, and Revegetation (ARR) category.

ICVCM said the assessment found the protocol met all relevant criteria in the CCP Assessment Framework. Because the body approved it with no conditions, it stated that all credits issued under the methodology will be eligible for CCP labels.

The Integrity Council also shared early activity indicators for this protocol. It said no credits had been issued yet, but 20 project developers were already registered under the methodology. The organization added that Isometric expects to issue over 4 million credits annually by 2030 under this protocol.

Isometric announced this week that the approval makes its Reforestation Protocol the first nature-based protocol with the CCP label.

ICVCM core carbon principles
Source: ICVCM

Rice Methane Credits Get a Conditional Green Light

ICVCM gave conditional CCP approval to Gold Standard’s method for cutting methane emissions. This method focuses on adjusting water management in rice cultivation (version 1.0). The Integrity Council announced that it published the methodology in July 2023. It is the first approved method for avoiding methane in rice cultivation.

The basic idea behind adjusted water management is simple. Flooded rice fields can produce methane because organic matter breaks down without oxygen. Changing water levels during the growing season can reduce methane formation.

Gold Standard’s documentation states that methane forms in flooded fields with low oxygen. It also notes that the methodology helps water regime changes that reduce methane emissions.

ICVCM also pointed to recent research on the scale of rice methane. A Nature Research Highlight from May 2025 said that a new inventory found rice paddy methane emissions were over 39 million metric tonnes in 2022.

Why Some Credits Qualify, and Others Don’t

The Integrity Council said the rice methodology qualifies for CCP approval only when specific conditions are met. The conditions show how a project proves additionality in some cases. They also explain a rule update about soil organic carbon loss risk in the methodology.

ICVCM also gave credit volume and pipeline estimates. It said about 50,000 credits had been issued under this methodology so far. However, the body understood that none of those credits complied with the first condition. As a result, the organization said those already-issued credits will not be eligible for the CCP label.

ICVCM noted that Gold Standard plans to issue up to 3.2 million credits in the next five years. This is based on its current project pipeline projections. It also listed the main project locations as India, plus activities in Pakistan, Vietnam, Bangladesh, Cambodia, Ghana, Indonesia, Lao PDR, Nepal, and Thailand.

ACR’s Forest Credits Face Tighter Baseline Tests

Same with Gold Standard, ICVCM also granted conditional CCP approval to ACR’s Improved Forest Management (IFM) on Non-Federal US Forestlands v2.0. IFM projects aim to change forest management practices to increase stored carbon or avoid emissions compared with a baseline scenario.

ICVCM explained that v2.0 is an earlier version of an IFM methodology that its Governing Board had already approved in August 2025 (v2.1). For v2.1, ICVCM had set a condition tied to leakage.

  • A leakage deduction is needed for projects that cut wood product output by less than 5%. This keeps treatment consistent with projects that exceed that threshold.

For v2.0, ICVCM set two additional conditions. The methodology can earn CCP labeling if:

  • A dynamic evaluation of the baseline is verified in line with ACR’s tool for dynamic baseline evaluation (developed with v2.1), and/or
  • Removal credits are generated using a specified equation in the methodology (ICVCM references Equation 30).

ICVCM also quantified the immediate impact. It said 2.7 million credits were expected to be immediately eligible for the CCP label out of 13.3 million issued credits under this methodology.

The Integrity Council also stated that past and future removal credits from this method can get CCP labels. Future emission reduction credits can qualify, too, if they use the dynamic baseline evaluation tool.

ACR said the CCP label will soon activate for 2.7 million eligible IFM 2.0 credits in the ACR registry. They linked eligibility to the same baseline evaluation tool.

What CCP Expansion Means for Buyers and Developers

These ICVCM decisions matter because they expand the set of methodologies that can produce credits with the CCP label. For buyers, the label can act as a quick screen when building procurement rules. CCP decisions can influence method evolution for project developers and standards bodies. Conditional approvals often need updates to methods or stricter project tests.

At the same time, the details show that CCP labeling is not automatic. For example, ICVCM’s conditions for the rice methodology mean that some already-issued credits will not qualify. In the IFM case, ICVCM tied eligibility to specific approaches for baselines and the type of credit (removals versus emission reductions).

The approvals expand high-integrity CCP-labeled credits. They also signal growing supply for buyers while enforcing strict standards on baselines, additionality, and verification—shaping voluntary carbon markets toward greater quality and scale.

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Japan’s GX-ETS Sparks Carbon Credit Surge as Major Polluters Prep for Compliance

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japan

Japan’s largest polluters are rushing to buy carbon credits ahead of the launch of the country’s mandatory emissions trading system. Trading activity on the Tokyo Stock Exchange (TSE) has surged as companies prepare for tighter climate rules and try to meet their corporate sustainability targets before the fiscal year ends.

According to Bloomberg, major Japanese companies are already purchasing credits on the TSE’s voluntary market in anticipation of the GX-ETS launch.

This buying spree highlights growing anxiety about future compliance costs. At the same time, it signals that Japan’s carbon market is shifting from a voluntary experiment to a central pillar of its climate strategy.

What Is the GX-ETS and Why Does It Matter

The Green Transformation Emissions Trading System (GX-ETS) is Japan’s national carbon trading program. The government launched it in 2023 under the GX League, a public-private platform designed to accelerate corporate decarbonization.

The GX-ETS mirrors the European Union’s emissions trading system. Companies receive or buy emissions allowances and can trade them. If they emit less than their cap, they can sell extra allowances. If they exceed limits, they must buy more or face penalties.

Timeline and Key Features

Japan is rolling out the GX-ETS in stages:

  • Phase 1 (2023–2025): Voluntary participation and market testing
  • Phase 2 (2026 onward): Mandatory participation for large emitters
  • Future phases: Auctions, price bands, and fuel levies

Japan plans to introduce power sector auctions around 2033 and a fossil fuel importer levy by 2028. Policymakers are also considering price bands of ¥4,000 to ¥6,000 per tonne by 2027, with potential increases by 2030. Significantly, the compliance market will include a price ceiling and phased expansion with additional policy tools.

The system integrates voluntary credits into compliance trading. Companies can trade GX credits via call auctions on the TSE, with unmatched orders carried forward. This design aims to improve liquidity and price discovery.

Japan’s Path to Net-Zero by 2050

Japan made modest progress in reducing emissions in the first half of 2025. The Ministry of the Environment reported a 2.8% decline compared with the same period in 2024. For the full year, emissions are estimated at 1,070 million tonnes of CO₂ equivalent, down from about 1,272 million tonnes in 1990.

Much of this improvement came from energy efficiency gains in the industrial sector. However, Japan still relies heavily on fossil fuels, and transport emissions remain difficult to reduce. Consequently, current policies are projected to cut emissions by 31% to 37% below 2013 levels by 2030, which still falls short of the country’s 46% national climate target, excluding land-use emissions.

Japan emissions
Source: Climate Scorecard

Heavy industries—such as steel, chemicals, cement, and power generation—account for more than 60% of national emissions, making them key GX-ETS targets. Therefore, the GX-ETS is expected to cover roughly 60% of Japan’s greenhouse gas emissions and support the country’s goal of achieving net zero by 2050.

Japan’s carbon tax remains low at about ¥289 per tonne (roughly $2.16), emphasizing the need for stronger market-based mechanisms. As a result, policymakers view the GX-ETS as a critical lever to accelerate emissions reductions and drive the nation toward net-zero.

Who Must Participate in the GX-ETS

Phase 1 of the GX-ETS was voluntary. However, Phase 2 will become mandatory in spring 2026. Companies emitting more than 100,000 tonnes of CO₂ per year must participate.

This rule affects roughly 300 to 400 companies. Together, they account for about 60% of Japan’s total emissions. Key sectors include steel, chemicals, cement, power generation, automotive manufacturing, and aviation.

Under current proposals, companies can use carbon credits to offset up to 10% of regulated emissions. Therefore, credits complement emissions cuts rather than replace them.

Pre-Compliance Buying Surge Among Big Polluters

Large Japanese companies are buying voluntary credits aggressively before the mandatory launch. TSE officials see strong demand driven by companies preparing for GX-ETS and rushing to retire credits before the fiscal year ends.

Reports also reveal that members of the GX League, such as Toshiba, Tokyo Gas, and Isuzu Motors, have already participated in voluntary trading. Analysts expect steelmakers, utilities, and other heavy industries to dominate future purchases.

This early buying strategy helps companies hedge against future allowance shortages. It also reduces the risk of penalties once compliance rules take effect.

Japan’s Carbon Credits: Demand Soars Ahead of Mandatory GX-ETS

Japan’s carbon credit market is expanding fast. It was valued at about $28.2 billion in fiscal 2023 and could reach more than $121 billion by 2031, growing at roughly 20% annually.

Trading on the TSE began in 2023 and focuses on GX credits, including:

  • J-Credits from domestic renewable and efficiency projects
  • JCM credits from international projects under Japan’s Joint Crediting Mechanism

However, demand already exceeds supply. J-Credit issuance averages around 1 million tonnes per year. Analysts expect demand to reach about 3 million tonnes annually once the mandatory phase begins.

Therefore, limited supply could push prices higher and increase compliance costs for heavy emitters.

Carbon Credit Prices and Market Dynamics

Bloomberg also highlighted that carbon credit prices on the TSE have fluctuated as the market matures. Renewable electricity credits peaked at about ¥6,600 per tonne in early 2025. Since then, prices have fallen by nearly 25%.

The Ministry of Economy, Trade and Industry has proposed a price ceiling of ¥4,300 per tonne for the compliance market. Renewable-linked credits still trade above that level, reflecting strong demand and limited supply. And the prices across voluntary credit categories are converging ahead of the mandatory phase. This trend suggests growing liquidity and market confidence.

carbon credit Japan
Source: Bloomberg

Challenges Facing the GX-ETS

Despite strong momentum, several challenges remain. Limited credit supply could push prices higher if demand grows faster than new issuances. Credit quality also poses a risk, as regulators must ensure offsets deliver real and permanent emissions reductions to avoid greenwashing.

At the same time, Japan still depends heavily on coal, gas, and oil, meaning carbon trading alone cannot transform the energy system. Transport emissions also remain a major hurdle, especially in the road and aviation sectors, where decarbonization is progressing slowly.

Past regional trading systems, such as Tokyo’s cap-and-trade program, achieved emissions reductions of around 15% to 27%. However, scaling that success nationwide will require strict enforcement, transparent monitoring, and strong policy support.

Strategic Role of Carbon Credits in Japan’s Transition

For hard-to-abate sectors such as steel and power, carbon credits provide a temporary bridge while low-carbon technologies mature. Companies can offset a small share of emissions while investing in hydrogen, electrification, and carbon capture.

Early purchases also hedge against future price spikes. If allowance supply tightens, companies holding credits will face lower compliance costs.

Globally, Japan wants J-Credits to align with international carbon markets and potential EU carbon border rules. This strategy could strengthen Japan’s role in Article 6 carbon trading frameworks.

In conclusion, the surge in carbon credit buying shows Japanese companies are taking the GX-ETS seriously. The market is transitioning from a voluntary pilot to a compliance-driven system that will shape corporate strategies for decades.

As climate pressures mount, Japan must close the gap between current policies and its 2030 target. The GX-ETS could become one of the country’s most powerful tools to drive emissions cuts, attract investment, and accelerate clean energy deployment.

However, success depends on credit supply, price stability, and strong governance. Industry analysts and experts suggest early credit buying reflects corporate hedging strategies as Japan’s carbon market moves toward full compliance.

If Japan manages these challenges, the GX-ETS could transform its carbon market and set a model for other Asian economies.

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CATL & CHANGAN Make History with World’s First Mass-Production Sodium-Ion Passenger EV

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China’s CHANGAN Automobile and battery giant CATL have unveiled the world’s first mass-production passenger vehicle powered by sodium-ion batteries. The launch event took place in Yakeshi, Inner Mongolia, and the vehicle is scheduled to reach the market by mid-2026.

The press release explains that this milestone marks a shift from laboratory research and pilot projects to real-world consumer electric vehicles. It also signals the start of a dual-chemistry battery era, where sodium-ion and lithium-ion technologies work together to meet diverse electric mobility needs.

Why Sodium-Ion Batteries Are Gaining Momentum

Lithium-ion batteries have dominated electric vehicles for more than a decade. However, concerns over lithium supply, cost volatility, and environmental impacts have pushed researchers to explore alternatives. Sodium-ion batteries emerged as one of the most promising contenders.

Sodium is abundant, widely distributed, and inexpensive. Unlike lithium, it can be extracted from seawater and common salt deposits, reducing geopolitical risks and environmental strain. This makes sodium-ion batteries attractive for countries seeking greater energy independence.

Cold-weather performance is another major advantage. Lithium-ion batteries lose significant capacity in freezing temperatures, which limits EV adoption in colder regions. Sodium-ion batteries, by contrast, maintain strong performance even in extreme cold, opening new markets for electric mobility.

                          Lithium-ion batteries vs Sodium-ion batteries 

sodium ion

sodium ion battery

Analysts see 2026 as a turning point, when sodium-ion technology begins large-scale commercialization in vehicles and energy storage.

CATL’s Naxtra Sets New Benchmarks for Sodium-Ion Performance

CATL began sodium-ion research in 2016 and invested nearly RMB 10 billion in the program. The company developed close to 300,000 test cells and assembled a dedicated team of more than 300 R&D engineers, including 20 PhDs.

Research focused on fast-ion transport pathways, composite low-temperature electrolytes, and high-safety electrolyte systems. CATL also leveraged its vast battery management data from millions of deployed units to improve range accuracy and reliability.

This long-term investment highlights how major battery breakthroughs require years of sustained research, testing, and industrial scaling.

Under the partnership, CATL will supply its Naxtra sodium-ion batteries across CHANGAN’s full brand lineup, including AVATR, Deepal, Qiyuan, and UNI. The collaboration positions both companies as early leaders in what could become one of the most disruptive battery technologies of the decade.

Urban and Suburban EVs Made Practical

CATL’s Naxtra sodium-ion battery achieves an energy density of up to 175 Wh/kg, which currently sets a benchmark for mass-produced sodium-ion cells. While this is still lower than leading lithium-ion batteries, it is high enough to support practical passenger vehicles.

Combined with CATL’s Cell-to-Pack (CTP) architecture and intelligent battery management system, the technology enables a pure-electric range exceeding 400 kilometers. As the supply chain matures and chemistry improves, CATL expects future sodium-ion EVs to reach 500–600 kilometers per charge. Range-extended and hybrid configurations could achieve 300–400 kilometers on electric power alone.

These figures cover more than half of the typical daily driving needs in the global new energy vehicle market. For many urban and suburban drivers, sodium-ion vehicles could provide sufficient range at a lower cost.

Cold-Climate Performance Could Transform EV Adoption

One of the biggest barriers to EV adoption is winter performance. Lithium-ion batteries often lose capacity and charging speed in cold conditions, which reduces driving range and convenience.

CATL claims:

  • Its sodium-ion battery delivers nearly three times the discharge power of comparable LFP batteries at –30°C.
  • Capacity retention remains above 90% at –40°C, and the system continues to provide stable power at –50°C.

This performance could make sodium-ion batteries particularly attractive in regions such as Northern Europe, Canada, Russia, and northern Japan. In these markets, winter range anxiety has slowed EV adoption despite strong policy support.

If sodium-ion batteries deliver on these claims, they could unlock electric mobility in some of the world’s most challenging climates.

Safety Advantages Strengthen Consumer Confidence

Battery safety remains a top concern for automakers and consumers. CATL subjected its Naxtra cells to extreme tests, including crushing, drilling, and sawing. The batteries reportedly showed no smoke, fire, or explosion and continued delivering power even after physical damage.

These results suggest sodium-ion batteries could offer inherent safety advantages over some lithium-ion chemistries. Reduced thermal runaway risk could lower insurance costs, simplify thermal management systems, and improve consumer confidence.

Safety improvements are also critical for regulatory approval and large-scale adoption, especially in densely populated cities.

CATL
Source: CATL

A Dual-Chemistry Future for Electric Mobility

Both companies emphasized that sodium-ion batteries will not replace lithium-ion batteries. Instead, both chemistries will coexist and complement each other.

Lithium-ion batteries will remain dominant in high-energy applications such as long-range EVs, aviation, and premium vehicles. Sodium-ion batteries are likely to excel in cost-sensitive segments, cold-climate markets, entry-level EVs, and stationary energy storage.

This dual-chemistry ecosystem could accelerate electrification by offering tailored solutions for different use cases. It also diversifies supply chains and reduces reliance on critical minerals.

Choco-Swap Network Could Supercharge Sodium-Ion EV Growth

To support sodium-ion adoption, CATL plans to deploy more than 3,000 Choco-Swap battery swap stations across 140 Chinese cities by 2026. Over 600 of these stations will be located in colder northern regions.

Battery swapping could reduce charging times from hours to minutes, improving convenience for drivers and commercial fleets. It also allows centralized battery management, which can extend battery life and optimize grid integration.

If successful, this infrastructure could give China a major advantage in next-generation EV ecosystems.

Market Outlook: Rapid Growth Across Multiple Sectors

Gao Huan, CTO of CATL’s China E-car Business

“The arrival of sodium-ion technology marks the beginning of a dual-chemistry era.
CHANGAN’s vision shows both its responsibility for energy security and its strategic
foresight. Much as it embraced electric vehicles years ago, CHANGAN is once again
taking the lead with its sodium-ion roadmap. At CATL, we value the opportunity to
work alongside such an industry leader and fully support its strategy, combining our
expertise to bring safe, reliable, and high-performance sodium-ion technology to
market.” 

According to data released by SPIR:

  • Global sodium-ion battery shipments reached 9 GWh in 2025, representing a 150% year-on-year increase.
  • Analysts expect strong growth in energy storage, light-duty vehicles, and passenger EVs starting in 2026.
  • By 2030, sodium-ion batteries could reach 580 GWh in energy storage and over 410 GWh in automotive applications. This would be enough to support around 10 million new energy users.

Energy storage is expected to be the largest early market, followed by entry-level EVs and commercial vehicles. Passenger cars are now entering the commercialization phase, signaling broader industry confidence.

Supply Chain Security and Geopolitical Implications

One of the most strategic benefits of sodium-ion batteries is supply chain resilience. Sodium is around 1,000 times more abundant in the Earth’s crust and roughly 60,000 times more abundant in oceans than lithium.

This abundance reduces the risk of supply shortages, price spikes, and geopolitical conflicts associated with lithium, cobalt, and nickel. Countries without lithium resources could still build domestic battery industries using sodium.

For governments, sodium-ion technology offers a pathway to greater energy independence and localized manufacturing.

Environmental and Lifecycle Benefits

Sodium-ion batteries also offer environmental advantages across their lifecycle. Sodium extraction is less water-intensive than lithium brine mining, which has raised concerns in South America’s lithium triangle. Production often uses less hazardous materials, such as iron and carbon-based cathodes.

Research suggests sodium-ion battery production could reduce carbon emissions by up to 60% per kWh compared with some lithium-ion chemistries. Recycling processes may also be simpler and more energy-efficient.

However, sodium-ion batteries currently require more material per kWh due to lower energy density, which could offset some emissions benefits. Continued improvements in chemistry and manufacturing are expected to close this gap.

China’s Strategic First-Mover Advantage

China is taking a lead in next-generation battery technologies by moving sodium-ion batteries from lab research to large-scale commercialization.

Mordor Intelligence report shows that lithium-ion dominated with a 75.5% share in 2025, while sodium-ion is expected to register the fastest CAGR of 18% between 2026 and 2031. Through advanced R&D, robust manufacturing, and supporting infrastructure, Chinese companies are turning experimental technology into market-ready solutions.

china battery market
Source: Modor Intelligence

The CHANGAN–CATL partnership illustrates this shift. Their sodium-ion passenger car, launching in 2026, marks one of the first instances of mass-produced vehicles powered by this chemistry. The technology promises lower costs, enhanced safety, strong cold-weather performance, and more secure supply chains, making it a practical complement to lithium-ion batteries.

As the dual-chemistry era unfolds, sodium-ion batteries are set to expand the possibilities for electric mobility and energy storage. By combining affordability, reliability, and environmental advantages, they could play a central role in the global transition to clean energy and reshape the future of electric vehicles.

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