HSBC Commits $1B to Climate Tech Startups Going to Net Zero

HSBC has committed $1 billion to finance climate technologies including carbon dioxide removal globally, helping startups grow and scale their clean solutions. This aligns with the global financier’s pledge to bring its financed portfolio to 2050 net zero emissions.

This funding will support startups focusing on various ranges of climate tech solutions, including electric vehicle (EV) charging, battery storage, sustainable food and agriculture, and carbon removal technologies.

Unlocking Critical Finance for Climate Tech 

The new investment follows two similar programs of HSBC aimed at advancing the cleantech space: HSBC Innovation Banking and HSBC Asset Management’s Climate Tech Venture Capital. The latter seeks to provide financial support to tech startups that address climate change across sectors like energy, transportation, and agriculture.

The UK-based universal bank and financial services group has also invested $100 million in Bill Gates’ Breakthrough Energy Catalyst Fund last year. This fund supports green projects worldwide.

Remarking on the $1B pledge, HSBC’s global commercial banking CEO Barry O’Byrne said: 

“Access to finance is critical for early-stage climate tech companies to create and scale real world solutions… With HSBC’s global reach, in-house climate tech expertise, we can offer these pioneer companies unrivaled support.”

Study shows that venture capital (VC) funding for climate startups declined by 40% in the first half of 2023, HSBC noted. 

Though it sounds depressing, zooming out to the bigger picture will put things into perspective. There is a total of $117B of venture funding raised by around 2,500 climate tech companies since 2020. The slower growth rate in quarterly results indicates a relative slowdown in overall industry growth. It does not suggest an all-out retreat. 

It’s also worth noting that before this year’s dip in climate tech VC funding, it skyrocketed up to last year. According to HolonIQ, climate tech VC funding reached over $70 billion in 2022. 

As the bridge to capital markets, VC investors are crucial in helping startups to develop, commercialize, and scale up. While there are various factors at play, supportive policies such as the EU Green Deal Industrial Plan and the U.S. Inflation Reduction Act help ramp up early-stage investments. 

According to CTVC analysis, the most active climate tech investors by stage in 2022 are the following:

Key strategic investors, such as Microsoft, Aramco Ventures, and SK are frequently participating in Late-stage and Growth funding rounds.

RELATED: Aramco, Chevron Invest in $150M Round for Climate Tech Startup

Climate tech startups are in dire need of these investors, especially since the IEA estimated that about 50% of carbon reductions needed to reach 2050 net zero emissions depends on how fast their technologies develop at scale. HSBC’s climate tech VC initiative aims to fast-track the adoption of these crucial technologies.

HSBC’s Climate Action Efforts

The $100M that HSBC allocated will particularly support four major technologies – Direct Air Capture (DAC), clean hydrogen, long-term energy storage, and sustainable aviation fuel.

Earlier this year, the universal bank also joined the World Bank’s Private Sector Investment Lab. It focuses on amplifying financing for renewable energy and infrastructure projects.

Last year, it also supported Hong Kong’s Exchanges and Clearing Ltd (HKEX) in developing a global carbon market. In the same year, the banking giant also declared that it would not support projects involving the development of new oil and gas fields. 

All these efforts are geared towards HSBC’s commitment to the net zero transition. The bank aims to achieve net zero in operations and supply chain by 2030 and in the financing portfolio by 2050. 

To meet these climate targets, HSBC aligns its financed emissions – emissions generated by customers and funded projects – to net zero. And the $1 billion pledge in climate tech startup funding will help make that happen.

HSBC’s financial support for climate tech startups reflects its commitment to tackling climate change. By supporting early-stage businesses and project financing, the bank contributes to developing innovative and clean tech solutions such as carbon removal.

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Scaling the Carbon Removal Industry: The Urgent Push for a Greener Future

An analysis by the carbon removal market platform shows that only 0.5% or 32 companies with Science-based targets have bought durable carbon removal. A separate report by the BCG showed that demand for carbon removal credits must reach 40 to 200 million tonnes of CO2 a year in 2030, or $10 to $40 billion, to meet climate goals. is the largest open data platform dedicated to tracking high-permanence carbon dioxide removal (CDR). Their goal is to provide accurate data on CDR to help guide investment decisions and scale up the industry. 

The Need to Scale Up

Carbon removal is an emerging industry but is an important component of the fight against climate change.

Businesses need some amount of carbon removals to achieve their net zero goals. Yet, only a number of large companies are onboard the CDR sector and charging to help it scale. Out of almost 6,000 companies with Science-based targets, only 32 of them have bought CDR credits. 

Last year, only over 45,000 tonnes of permanent carbon removal credits were delivered, according to the CDR platform. So, to bring it to the level required by 2030, at 40 million tonnes, that figure has to increase by around 1000x.

RELATED: CDR Purchases Jump 437% in H1 2023

The growth seems to be lofty to achieve but it’s possible because several companies have existing plans to develop and build facilities that can remove carbon in megatonne level.

Today’s CDR purchases of future tonnes are much higher than deliveries. And these are mostly offtake deals where carbon credit delivery will be for several years. To achieve the 2030 target, CDR credits have to be ordered by 2026 at the latest. 

Forecasting the long-term requirement for carbon removals is not easy but the lowest estimates suggest it would be in billions of tonnes by 2050.

In a separate analysis by BCG, the CDR market will continue to be dominated by voluntary demand from large corporations. 

They estimated that demand for durable CDR is projected at 40 – 200 Mt CO2/yr worth $10 billion to $40 billion in 2030, increasing significantly to 80 – 870 Mt CO2/yr or $20 billion to $135 billion in 2040. But that’s the low scenario projection. 

The high scenario, as seen in the chart below, calls for a demand of 200 – 870 MtCO2/yr in 2030 to 2040. That is equivalent to $40 billion – $135 billion market value.

It is, therefore, apparent that there’s a high need to scale up the CDR industry to meet those projections. The BCG analysis also indicates that while voluntary demand will take up the CDR market, compliance demand will also grow. It will reach around 15% in 2040. 

The Pivotal Role of CDR Buyers 

To achieve the 40 million tonnes of carbon removal capacity by 2030, investment in CDR should be over $100 billion

However, according to data, only around 4.8 Mt of CO2 have been purchased to date. But if the growth in CDR purchases this year (10x) and beyond is maintained, it would be possible to reach the 40 Mt capacity.  

That means the number of large corporate buyers has to increase significantly. From today’s 6 buyers ordering an average of 100k tonnes, it must grow to 4,000 CDR purchasers. 

In this case, buyers of carbon removal credits play a critical role in helping ramp up market growth as well as spur innovation necessary to build a diversified CDR supply chain. 

As per BCG report, there will be more diverse buyers as the price of carbon credit drops. Currently, early buyers with corporate net zero pledges such as Microsoft and J.P. Morgan primarily drives CDR demand.

RELATED: Microsoft’s $200M CDR Deal With Heirloom

But by 2030-2040, the CDR market can expect to see a broader range of industry buyers if average prices decrease. 

The same BCG study revealed that the key driver for most CDR buyers is the quality of the credits. From the current 26% share of durable CDR in carbon credit portfolio mix, it will grow to 35% in 2030 and 48% in 2040. 

Moreover, about 70% of them said that they will increase CDR purchases if there’s guidance from scientific or standard setters.

Recognized bodies such as the Science-based Target Initiative (SBTi) and VCMI can impact purchasing behavior by providing guidance on how carbon removals be included in corporate Net Zero targets. The standards can help facilitate faster project lead times and carbon credit issuance. 

There’s also a need for clean incentives to attract more buyers of carbon removal credits. In particular, 80% of the surveyed CDR buyers said that their spending will increase with government incentives. 

The carbon removal industry is vital for climate goals, but only 0.5% of companies with science-based targets invest in it. Scaling the industry needs more corporate support, government incentives, and guidance from leading organizations.

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US Saw $213B Investment in Clean Technologies, Paving the Way for Net Zero

A new database tracking the progress of the U.S. toward its decarbonization journey showed that a total of $213 billion was invested in clean technologies and infrastructure that lower carbon emissions in the last year. 

Rhodium Group and MIT’s Center for Energy and Environmental Policy Research (CEEPR) developed the database called the Clean Investment Monitor. It tracks real-time all announced private and public investments in the manufacture and deployment of clean energy in the country. 

The developer has released an accompanying report “The Clean Investment Monitor: Tracking Decarbonization Technology in the United States”. Per Brian Deese who led the team and served as the director of the White House National Economic Council: 

“The Clean Investment Monitor is a tool designed to help us understand and assess this growth in a real-time, comprehensive way. Our hope is that the CIM will enhance research and improve public policies designed to accelerate the clean energy transition.”

Clean Investment Trends in the U.S. 

Clean energy is increasingly becoming one of the biggest industries in the U.S. 

Data from the CIM reveals that from July 2022 to June 2023, clean investments amounted to $213 billion. To put that into perspective, the amount is higher than the annual GDPs of 18 states in the U.S.

The data goes back to 2018 to provide a baseline before the enactment of the legislation in 2021 and 2022.

The $213 billion represents a 37% increase from the $155 billion invested in the previous year and a 165% increase from 5 years ago.

The report included investment data from three categories: manufacturing, energy and industry, and retail.

Manufacturing saw the fastest growth where investment increased by 125% year-on-year since 2021, primarily in EV and solar manufacturing. It reached a total of $39 billion, most of which channeled into battery manufacturing.

RELATED: $542M Raised For EV Battery Production

Retail got the most funding, with $113 billion and EVs also received the biggest share of the investments. Other retail segments reported include zero-emission vehicles (ZEVs) and heat pumps. Specifically, ZEVs has the fastest growth, with an estimated $70 billion investment over the past year.

The CIM report also provided investment data in clean energy production, including solar, wind, and nuclear. Investments in clean hydrogen, carbon management, and sustainable aviation fuels increased to $80 billion over the past 2 years. It’s a 5x growth versus the preceding 2 years. 

Laws Advancing Investment in Clean Energy

In the previous two years, the federal government passed a series of new legislation seeking to advance national investment in clean energy. Three of them, as follows, offer subsidies and tax incentives to spur funding for clean technologies that reduce carbon emissions. 

Infrastructure Investment and Jobs Act 2021
Inflation Reduction Act (IRA) 2022
CHIPS and Science Act 2022

It does make sense that ZEVs and batteries are getting the spotlight in these investments. The IRA tax incentives, in particular, promote the manufacture of EV batteries (48C) and clean energy storage (45X). 

RELATED: BMW and Toyota Leading The ZEV Revolution

For instance, in Q2 2023 alone, over $10 billion funded battery technology. 

The effectiveness of these climate-related policies in speeding up the transition to a clean economy will be crucial in assessing how the U.S. progresses toward its net zero emissions goals. In the short term, the country aims to reduce carbon emissions by 50% to 52% below 2005 levels in 2030. 

A previous analysis showed that the IRA will result in a 43% – 48% reduction in economy-wide emissions by 2035. Without the provisions, the reductions would only be between 27% – 35%. 

With that, experts believe that the legislation helps in ramping up the pace of clean investments in the country. Based on the report’s findings, the funding trend will continue to grow upward, with investments increasing in the coming years. 

Rhodium and MIT will update their CIM database quarterly with accompanying reports showing how investment trends are going. Their next report publication will provide insights on the breakdown of public and private investments. They will also provide an initial analysis of how the current pace of funding compares to forecasts when the laws were enforced. 

The U.S. has witnessed a substantial increase in clean energy investments, demonstrating its commitment to decarbonization. With substantial growth in manufacturing, energy, and retail sectors, and the influence of climate-related policies, the nation is on a promising path towards its net zero goal.

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BASF’s New Plastic Additives Reduces CO2 Emissions by 60%

German chemical giant BASF announced the launch of the first biomass balanced plastic additives that can reduce a product’s carbon footprint by up to 60%.

Manufacturing the new plastic additives uses renewable feedstocks instead of fossil fuel-based feedstocks. As such, these novel product solutions can help companies’ achieve their sustainability targets such as reducing carbon emissions, BASF said.

BASF is the leading innovative global partner for plastic additives, focusing on aligning with customer sustainability goals through its biomass balance approach. As per ISCC Plus (International Sustainability and Carbon Certification), BASF new additives are certified by TÜV Nord for mass balance.

BASF Biomass Balance Approach

This manufacturing approach is a groundbreaking way of using renewable resources in the chemical industry. BASF uses this approach in its integrated production system and applies it to the majority of its products. 

BASF Biomass Balance Approach

Under this method, renewable raw materials such as bio-naphtha or biomethane from organic wastes, crops, or vegetable oils are used as feedstock at the very beginning of the Production Verbund. 

The BASF Verbund system creates efficient value chains, extending from basic chemicals right through to high-value-added products such as coatings.

The ISCC PLUS certifies this production process. It’s an international certification program that ensures the chain of custody along the value chain from feedstocks to final product.

The renewable resources used are then allocated to the respective sales products using a 3rd-party verified certification method. The chemical expert markets its biomass balanced products under its BMBcert portfolio.

BMBcert additives are a part of BASF’s VALERAS portfolio to create new value for plastics. The first certified biomass balanced plastic additives include the Irganox 1010 BMBcert and Irganox 1076 FD BMBcert.

This first offering will initially be produced at BASF’s site in Kaisten, Switzerland, with further availability in McIntosh, USA in early 2024. 

These innovative product offerings are identical to the conventional grades in terms of performance, quality, and regulatory. Thus, customers don’t have to reformulate their products or requalify the biomass balanced plastic additives.

Saving on Fossil Resources and Carbon Emissions

With their sustainably sourced renewable feedstocks, the products’ cradle-to-gate carbon emission is significantly lowered by up to 60% versus the global average product CO2 footprint of conventional grades.

The certified biomass balanced plastic additives offer customers unique product solutions, along with the following major benefits.

Saves fossil resources: rather than sourcing virgin fossil fuel feedstocks, the additives use renewable resources, thereby saving on fossil resources. The bio-based amount is then allocated to specific products sold by means of the certified method.

Saves carbon emissions: by replacing fossil fuel-based materials with bio-based resources, biomass balanced plastic additives save on carbon footprint. By applying a closed chain of custody, the carbon savings for each product is quantifiable.  

Independent certification: An independent certification validates that BASF plastic additives have replaced fossil feedstock following the REDcert2 requirements.

Identical product performance: the drop-in solution applies for other BASF products, such as dispersions and superabsorbent. These biomass balanced products have identical formulation and quality but can reduce carbon emissions significantly. 

Highlighting these characteristics and benefits of their sustainable plastic additives, Joerg Bentlage at BASF said:

“By leveraging BASF’s highly integrated global production network of interconnected sites and plants, we are able to produce these industry-first, low carbon footprint, drop-in solutions with the same performance characteristics.” 

The certified additives thus contribute to global sustainable development by saving fossil resources, reducing carbon emissions, and promoting the use of renewable resources. 

BASF’s innovative product solution allows partner companies to meet their sustainability goals without trading off performance and quality, signifying a significant step toward sustainability in the chemical industry. 

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Ontario Teachers’ Pension Plan Buys Majority Stake in KKR’s Australian Carbon Project Developer

A Canadian pension fund Ontario Teachers’ Pension Plan (OTPP) has agreed to acquire KKR’s stake in a leading Australian carbon markets platform GreenCollar.

KKR acquired the 49% stake in GreenCollar three years ago for $100M. Greencollar is now worth close to $800 million so KKR pocketed a nice return on their investment with this sale to OTPP.  This investment marks Ontario Teachers’ deepening commitment to GreenCollar, building upon their initial investment in March 2022. 

The pension fund will now hold a significant majority stake in the company, though the financial terms weren’t disclosed. GreenCollar CEO and Co-founder James Schultz will remain as the business leader and a substantial shareholder.

Delivering Positive Environmental Impacts

The OTPP continues to look for positive environmental impacts of their investments. As one of the world’s biggest pension funds, it boasts net assets of C$249.8 billion as at June 30, 2023.

Since their 2050 net zero announcement in 2021, Ontario Teachers’ saw a significant drop in their carbon emissions by shifting to active exposure. Since then, the Canadian pension fund has been investing billions to reach net zero

OTPP’s climate strategy reflects its commitment to lowering the environmental impact of its portfolio. Its strategies also capitalize on investment opportunities that support the transition to a net zero future. And acquiring KKR’s carbon project developer is one of those decarbonizing strategies. 

KKR initially invested in GreenCollar in 2020 as part of its Global Impact strategy, focusing on companies contributing to the United Nations Sustainable Development Goals (SDGs). 

GreenCollar, a certified B corporation, aligns with SDG 13 (Climate Action) and supports other sustainable goals like SDG 15 (Life on Land) and SDG 14 (Life Below Water) through its environmental initiatives.

A notable feature of this deal is that GreenCollar will become the first Global Impact Fund investment to implement a comprehensive employee ownership plan. Under the plan, all GreenCollar workers will join to bolster company strength, financial inclusion, and engagement. 

They also had about 10% of the private equity, meaning they will be dividing around $75 million in cash.

GreenCollar is a profit-for-purpose organization. It’s the leading environmental markets project developer and investor across the Australian climate, water quality, biodiversity, and plastics markets. 

The Australian carbon credit project developer and investor has expanded internationally. The expansion includes forest protection projects in SouthEast Asia, plastic recovery projects in Africa and the Pacific, and cook stove projects in Southern Africa. 

Being the largest project developer in the Australian carbon market, GreenCollar handles 220+ projects covering more than 10 million hectares and generating over 126 million Australian Carbon Credit Units (ACCUs). ACCUs are initiatives that avoid clearing vegetation in Australia. 

Investing in Carbon Credits as Market-Based Solution

In 2021, Ontario Teachers’ has also supported carbon market developer GreenCollar with a $250M investment, apart from last year’s funding. This alongside KKR investment accounted for about 2/3 of the developer’s shares.

The generated carbon credits are sold by GreenCollar to first and secondary markets.

OTPP supports GreenCollar because they see the positive impact of its carbon credit projects which align with their return goals.

In this new transaction, the Ontario Teachers’ Natural Resources group will manage the investment. Operating within the Infrastructure and Natural Resources department, the group boasts extensive experience investing in various environmental sectors, including agriculture, aquaculture, timberland, and natural climate solutions.

Remarking on their new deal, Senior Managing Director Christopher Metrakos said that:

“We are pleased to increase our investment in GreenCollar… a proven leader in delivering positive environmental outcomes with market-based solutions and we are excited to continue supporting the company in its next chapter of growth in Australia and beyond.”

In Australia, KKR has invested across sectors including financial services, healthcare, infrastructure, technology, real estate, consumer goods, etc. since 2007. The global investor has also impact investments in other regions such as in Asia Pacific.

Since 2011, KKR portfolio companies have awarded billions of dollars through broad-based equity programs to 60,000+ non-senior employees. In all these investment programs, a culture of employee ownership is reinforced. 

Ontario Teacher’s transaction with KKR will close in the 4th quarter of 2023, pending customary regulatory approvals.

Interests and investment opportunities in environmental programs are growing, with global carbon markets expected to hit $22T by 2050

Ontario Teachers’ Pension Plan’s expanded investment in GreenCollar demonstrates its commitment to environmentally responsible investments and carbon reduction strategies. If more large pension plans choose to have the same goals as OTPP, the planet will see significant carbon reductions. 

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Biochar Makes the Grade: Unlocking The Potential of Engineered Carbon Removals

BeZero Carbon has given its first Biochar project the rare “A” rating, a distinction held by only 21 of the 350+ projects rated on their platform. This rating is based on a comprehensive analysis of publicly available data and assesses the project against various risk factors, including additionality, carbon accounting, and non-permanence risks.

This pivotal move signifies the maturation of the Carbon Dioxide Removal (CDR) sector and particularly biochar which accounts for over 90% of all CDR deliveries.

The engineered carbon removal sector has been hindered by a lack of transparency and public information and that is set to change.

Puro.Earth expects the supply of CDR in the next 18 months to grow by an “order of magnitude”.
The U.S. Department of Energy has plans to purchase up to $35M of CDR credits from a portfolio of CDR pathways consistent with the objectives of the Carbon Negative Shot.

What is Engineered Carbon Removal?

As the world grapples with the climate crisis, there is a growing consensus that large-scale engineered carbon removal is indispensable.

In fact, projections indicate that by 2030, the annual demand for durable engineered carbon removal could range from 40 to 200 million tCO2. Rating the quality of these carbon credits including biochar will help enhance transparency and integrity in the market.

Currently, here are the top 5 carbon dioxide removal technologies available:

Direct Air Capture (DAC)

Captures CO2 directly from ambient air using chemical processes.
Suitable for long-term storage or utilization in various industries.

Bioenergy with Carbon Capture and Storage (BECCS)

Combines biomass energy production with carbon capture technology.
Captured CO2 is stored underground.

Enhanced Weathering

Spreads crushed minerals on land or in the ocean to react with CO2.
Forms stable carbonates, storing CO2 in a solid form.

Ocean Alkalinity Enhancement

Increases the ocean’s capacity to absorb CO2 by adding alkaline substances.
Also helps to mitigate ocean acidification.


Involves the pyrolysis of biomass to create a stable form of carbon.
Can be added to soil to improve its quality and store carbon long-term.

What is Biochar?

Biochar is a form of charcoal produced from the pyrolysis of organic matter, usually plant-based materials like wood, crop residues, or manure. Its molecular structure changes to a more stable form, thus storing carbon much longer than biomass feedstock.

Key Advantages

Stable Carbon Storage: Biochar is highly stable and can remain in the soil for hundreds to thousands of years, effectively sequestering carbon.

Soil Fertility: When added to soil, biochar can improve water retention, nutrient availability, and microbial activity, thereby enhancing agricultural productivity.

Waste Utilization: Biochar can be produced from agricultural and forestry waste, providing a way to utilize these materials while reducing methane emissions from decomposition.

Energy Co-Production: The pyrolysis process also generates heat and syngas, which can be an input for energy.

Earlier this year BeZero Carbon found that biochar encounters fewer obstacles to scaling compared to other methods under consideration. 

Notable advantages for biochar include third-party verified methodologies, cost-effectiveness, well-developed ancillary value chains, and the potential for energy production. 

Biochar: The Market Leader

Biochar is at the forefront of the ex post technological carbon removal market; it is furthest along the Technology Readiness Level (TRL) of all carbon removal methods.

As a product of pyrolysis, a high-temperature, low-oxygen process, biochar has the ability to store carbon for extended periods, far surpassing its original biomass feedstocks. 

The process also generates waste gasses that can be useful as waste heat in district heating networks. Biochar’s versatility extends to its use as a soil amendment, a feed additive, and even as an input in concrete production.

‘A’ Rating: A Benchmark for Excellence

BeZero’s ‘A’ carbon rating is based on the rating analysis of publicly available information. Carbon credits rated ‘A’ have a high likelihood of achieving 1 tonne of avoided or removed CO₂e. This biochar rating assesses the project against BeZero’s risk factors.

Carbon Credit 3rd-Party Verification

In the Voluntary Carbon Market (VCM), third-party verification is a fundamental aspect of the carbon credit process. It serves as the initial step in confirming that a carbon removal activity has occurred. 

There are two ways to perform verification:

Developing an internal methodology that is subsequently verified by an external auditing service
Adopting methodologies established by third-party standards-issuing organizations.

Currently, key third-party methodologies available for Biochar include the European Biochar Certificate, Puro.Earth, and the Verified Carbon Standard.

A lower hydrogen to carbon and lower oxygen to carbon ratio generally means the Biochar is more stable and less likely to break down, making it better for long-term carbon storage

As the CDR sector gains momentum, biochar stands out as a key solution for long-term carbon sequestration and soil improvement. BeZero Carbon’s ‘A’ rating for a biochar project underscores the growing importance and effectiveness of engineered carbon removal in addressing climate change.

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Stalled but Profitable: How Fortune 500 Companies Miss Climate Targets Yet Earn Billions More

A study by a leading global carbon finance organization, Climate Impact Partners, revealed that the climate commitments of Fortune Global 500 companies are stalling. The report also showed that businesses that reduced emissions earned about $1 billion more in profit than those that didn’t. 

Amid the rising global warming, urgent action from the world’s largest companies is crucial in meeting global climate goals. But there’s no increase in the number of companies with 2030 targets and there’s only a 3% increase in those that have 2050 commitments, the study found

Climate Impact Partners develops and delivers high-quality and high-impact carbon-financed projects for climate action. The company committed to delivering 1 billion tonnes of emissions reductions, supporting 600+ carbon removal and reduction projects worldwide. 

Fortune 500 companies covered in the study are defined as follows:

More Companies Report Emissions and Targets Lead to Reductions

There has been a steady rise in corporate climate commitments but the number of Fortune Global 500 businesses with a significant climate commitment has stagnated at around 66%

Though commitments are sluggish, carbon emissions continue to rise. But lowering emissions isn’t just good for the environment, but it also pays off financially for the companies. Those who reported annual emissions reductions also profited about $1 billion more than their peers (climate bystanders). 

Remarking on the report’s findings, Climate Impact Partners CEO Sheri Hickok noted that the lack of climate commitments is concerning. But she also said that

“At this critical juncture, we need companies to lean in, not pull away. The good news is that we have found clear markers for the companies making the most positive impact on emissions today, serving as an example for others to follow.”

One major marker is that more top-earning companies are now reporting their carbon emissions. 

76% of the companies are reporting annual emissions year over year, with 55% reporting some form of Scope 3 and 23% completing Scope 3 reporting.

Scope 3 emissions account for 90% of the companies’ total reported footprint. 

Fewer than 5 in 10 Climate Bystanders report any emissions data while over 9 in 10 companies with commitments do. Most of the Fortune 500 companies that report complete Scope 3 emissions also have significant climate commitments.

Another notable marker is that setting 2030 climate targets leads to significant emissions reductions. Businesses with a 2030 or sooner target managed to lower operational emissions by 7% year over year. 

Overall, 42% of companies have a 2030 climate target, but those targets only cover 18% of total reported emissions. This leaves 72% of reported emissions not covered by a significant climate target as only 38% of Fortune 500 have commitments involving their Scope 3 emissions

CSOs Drive Earlier Climate Targets

The report also discovered that 43% of top companies have a Chief Sustainability Officer (CSO) or equivalent. With these officers in place, businesses set net zero, carbon neutral, and other climate commitments sooner, 7, and 3 years respectively.

Climate bystanders, those without set targets, and without a CSO reported an increase in emissions by 3%. Thus, this new sustainability role “is expected to increasingly deliver greater impact”, the report said. 

That’s mainly because CSOs aid companies in developing more ambitious climate targets and action plans than those without. 

Lastly, the study concluded that Europe leads the way with 108 out of 112 Fortune 500 list with climate pledges. 

The U.S. and China have the most businesses in the surveyed companies. 74% of top companies in the U.S. have voluntary climate goals while only 15% of those in China have. 

Between net zero and carbon neutral pledges, net zero goals are more popular among new commitments across Europe and North America; carbon neutral targets are preferred in Asia. 

While corporate climate commitments remain stagnant, this study emphasizes the financial benefits of emissions reductions for businesses. With urgent action needed to address global warming, this report serves as a call for companies to lean into climate action and explore the financial gains of reducing emissions.

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Carbon Credit Investments Surpass $36B, But $90B Gap Looms for 2030 Climate Targets

A report by Trove Research revealed that there’s a total of $36 billion invested in carbon credit projects from 2012 to 2022, accelerating with more than $18 billion raised in the last 2.5 years. But global efforts are still short of $90 billion to meet the 2030 carbon reduction targets.

Investments in developing carbon credit projects are an important market signal indicating levels of corporate climate action. 

However excessive criticism of quality may deter companies from engaging in their voluntary commitment to support carbon credits. This, in turn, may undermine critical voluntary climate actions from large companies. 

The new commitment will deliver over a thousand new carbon projects, ranging from forest protection to carbon capture and storage solutions. It will also provide a growing supply of carbon credits that companies can use for their net zero strategies. 

Trove Research is a leader in delivering data and intelligence on voluntary carbon market (VCM) and corporate climate pledges.

Carbon Credit Investments Reach $36 Billion

The report also analyzed capital invested in 7,000+ carbon credit projects from 2012 to 2022. Around $36 billion has been invested over this period, with $17 billion in 2021-2023 and $7.5 billion of this investment in 2022 alone.

Capex refers to investment in building carbon credit projects; Feasex refers to feasibility-related expenditure; and Devex represents development-related expenditure.

The increase in investment is especially notable in the years from 2020 to 2022 as seen above. This has been fueled by the ballooning interest in using carbon credits by corporations to reach their climate targets. These corporations include the world’s largest companies.

The researchers also examined announced capital raises associated with the VCM since 2021. Results show that a total of $18 billion has been secured for carbon credit funds just for the last two and a half years. 

The largest raise was in 2021 with $7.8 billion. And around $3 billion has been committed up to 2025. 

Among those raised funding and committed investment, over 80% or $15 billion are for nature-based projects. These include REDD+, nature restoration, and improved forest management. A total of 246 nature-based initiatives cover a total area of 30 million hectares, almost the same size as Italy. 

But notably, there’s a growing share of capital for carbon engineering projects which include Direct Air Capture (DAC) and Bio-energy with CSS (BECCs). 

DAC, in particular, has been getting attention both from the private sector and federal government. Billions of dollars have been invested and promised by the U.S. Department of Energy into DAC and other carbon capture innovations. 

Bridging the $90B Funding Gap 

By region, since 2020 North America maintained the top spot as the largest destination for carbon credit investment, accounting for up to 16%. In comparison, only 1% of global carbon credits funding went to Europe. 

In terms of share, the East Asia and Pacific region got the biggest investment, representing ⅓ or $2.7 billion in 2022. However, the Sub-Saharan African region is keeping pace with its 70% increase in global investment share. 

The analysis also showed that since 2020, over 1,500 new carbon credit projects have been developed and registered with the 5 leading carbon registries. It represents a 160% increase in registration rate compared to the 2012-2020 period.

Together, these new projects claim to reduce an additional 300 million tonnes of CO2 annually, or about the same as the UK’s annual emissions. 

Amid the growth in the number of registered projects, more than 3,000 additional projects are awaiting registration. Once implemented, together they could reduce another 530 million tonnes of CO2 emissions. 

Developments in carbon credit investment are bullish. However, the current commitment is still not enough to satisfy the global 2030 emission reduction targets. In fact, it represents just a third of the total funding needed to realize enough carbon credits by the decade’s end. 

The report said that another $90 billion in capital is necessary by 2030 to meet net zero goals. By 2050, that capital expenditure must grow to a whopping $1,600 billion, or $1.6 trillion, in carbon credit funding to reach the 1.5C scenario. That means a $60 billion annual investment in carbon credit projects

Investments in carbon credit projects have surged but a significant gap remains to achieve 2030 climate targets. Urgent funding is required to bridge the $ 90 billion deficit and accelerate the transition to a net zero future.

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Carbon Pricing: Understanding The Economics and Trends of Fighting Climate Change

As global temperatures continue to rise, the urgency surrounding climate policies has intensified, thrusting carbon pricing into the limelight of climate discussions.

The race to achieve net-zero emissions has made it imperative to understand how carbon pricing functions, its benefits, and the key trends shaping its future.

What is Carbon Pricing? 

Basically, carbon pricing is a climate policy approach that governments use to regulate carbon emissions and form carbon markets. But it’s a pricing tool that’s also available in the private sector for voluntary carbon reductions. 

There’s no single price that emitters should pay for each ton of CO2 they release into the atmosphere; it depends on various factors and the specific type of mechanism they follow. 

The primary carbon pricing mechanisms are carbon tax and emissions trading system (ETS), also known as cap-and-trade. Other mechanisms include internal carbon pricing, Results-Based Climate Funding (RBCF), and carbon offsetting.

A carbon tax is a fixed price that emitters must pay for their carbon emissions, which typically goes up over time. It works like a sin tax wherein increasing the amount of tax on carbon discourages emitters from polluting more.

On the other hand, the government permits an entity to emit a limited amount of carbon by issuing emissions allowances. Each carbon allowance, also called carbon credit or carbon certificate, grants the holder the right to emit one ton of CO2. 

Limiting the number of allowances is also putting a cap on a company’s or industry’s total emissions. These carbon credits are tradable among regulated companies, creating a market price for their carbon emissions. 

The map below shows the current levels and coverage of carbon prices, including carbon taxes and ETS, in world regions.

Source: World Bank Report

Why Put a Price on Carbon?

For many policy experts, carbon pricing is an efficient climate policy approach as it can help lower harmful emissions at the lowest possible cost. 

It’s also flexible; it allows the market to decide how to reduce emissions that suit the emitter’s capacity. It’s like punishing the criminal but giving them a choice on how to pay for the crime in a way that they can afford. 

Moreover, carbon pricing promotes all types of emissions reductions that cost as much as or less than the carbon price. Yet, it discourages reduction measures that are more costly. 

By allowing polluters to pay the same price for their emissions, a carbon price facilitates reductions for entities that can cheaply do it. In effect, the mechanism enables the most cost-effective total emissions reductions.

And lastly, carbon pricing brings more revenue to governments and benefits the citizens. Public officials can send it back to consumers in the form of rebates or use it to fund green investments.

According to the World Bank Carbon Pricing 2023 report, revenues from carbon taxes and ETSs jumped by >10% in 2022. The amount reached almost $95 billion globally.

Overall, the goal of pricing carbon is to force polluters to emit less CO2 and other planet-warming emissions. 

Now, let’s talk about the latest trends going on in the sector globally, focusing on carbon credit prices and markets. Knowing the trends is essential for anyone wanting to take part in the global fight against climate change. 

Global Trends in Carbon Prices and Markets

Carbon pricing has to continue growing, both in terms of price and coverage, to drive climate action and meet the Paris goals. That’s what the entire industry hopes for, but what are the global trends dominating the market today? 

Let’s uncover the top three that every carbon market speculator must know. 

Slow Yet Resilient Growth

After steep growth since 2020, carbon credit prices (ETS) started to slow down in 2022. However, it showed resilience amid various challenges happening at the macroeconomic level. 

Carbon prices graced through the global energy crisis last year. In fact, half of the various pricing instruments have gone up while a third maintained steady price levels. 

Source: World Bank Report

As seen above, the EU ETS experienced the biggest increase, with carbon price surging 100 Euros in February this year. However, the trend isn’t uniform as carbon prices in other ETS went down as what happened in the Korean ETS. 

Demand is Mostly Voluntary 

Despite its recent decline, voluntary demand for carbon credits from corporations remains the primary driver behind the market growth. Compliance demands play a small role. 

Total retirements monitored by Ecosystem Marketplace decreased by over 1% to 196 million in 2022. Most of these credits retired account for voluntary demand.

But issuances from international carbon pricing mechanisms (e.g. Clean Development Mechanism) increased in 2022, accounting for 30% of the total issued credits. 

The sustained dominance of voluntary demand means corporate commitments continue to grow. A survey of 500+ medium and large businesses across Europe and the U.S. found that about 90% consider carbon credits significant to offset emissions that can’t be reduced yet. 

The same trend is observed among countries as more governments are considering establishing their own carbon credit schemes. These mechanisms often come alongside a carbon tax policy or an ETS.

CDR Credits Are At Premium

Carbon credit prices vary significantly, depending on the factors at play – project type, credit issuer, credit vintage, co-benefits, etc. The actual carbon price reflects project costs and buyer preferences. 

As per Xpansiv CBL 2022 carbon trading data, newer vintage sells at higher prices.  

Though claimed as the go-to option for carbon reduction solutions, nature-based credits’ glory seems to have reached an end. The chart shows that they have the biggest price drop, from over $15/tonne to less than $5/tonne.  

Source: World Bank Report

The price gap across credit types has narrowed down, with exchange-traded credits from carbon removal credits trading at a premium. 

CDR credits appear to swarm the market. Carbon removal purchases have, in fact, grown insanely by 437% just for the first half of 2023. Projections show that it will rise even more as both federal funding and private investments are pouring down the CDR projects.

What Lies Ahead for Carbon Pricing

Carbon markets continue to grow in diversity and sophistication. 

New service providers, advanced technological platforms and marketplaces, improved products, and new investors will further drive growth. What this means for carbon pricing is more standardization and regulations.

As per the World Bank report, there are currently 73 carbon pricing instruments, covering around 23% of global GHG emissions. 

This current coverage of carbon prices is far too below what’s needed to achieve the Paris climate goals. So, the EU Commission chief Ursula von der Leyen asked government leaders at the G20 to join global carbon pricing. Leyen has been pushing hard to introduce global carbon pricing to hasten the transition to a net zero economy.

With evolving trends, growing voluntary demand, and calls for broader adoption, it becomes increasingly clear that carbon pricing is essential for driving efforts toward a sustainable and net zero future.

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