Carbon Market Momentum: CIX’s $22M Raise and Bain & Company’s Climate Leadership

As the world grapples with the urgency of climate action, two significant developments in the voluntary carbon market (VCM) signal a positive shift towards sustainability. With Climate Impact X securing substantial funding and Bain & Company earning a prestigious carbon integrity claim, the momentum for carbon market integrity and climate leadership is substantial.

Leading the Charge in Carbon Credit Market Confidence

Temasek-backed carbon exchange Climate Impact X (CIX), a global marketplace for carbon credits, received a fresh capital injection of S$30 million or over US$22 million.

The funding round was led by Mizuho Financial Group with S$20 million. It is also joined by Chartered Bank, DBS Bank, and the Singapore Exchange (SGX).

At the core of CIX’s operations lies its commitment to fostering confidence in the carbon credit market. Founded in 2021 by a coalition including DBS Bank, SGX, Standard Chartered, and Temasek’s GenZero, CIX has swiftly emerged as a leading figure in this arena.

With a suite of services encompassing the CIX Marketplace, CIX Auctions, CIX Exchange, CIX Intelligence, and CIX Clear, the organization is dedicated to catalyzing transactions, facilitating price discovery, and enhancing liquidity for carbon credits.

Since its inception, Singapore-based CIX has made remarkable progress. It has notably surpassed the trading and clearance of over 1 million tonnes of carbon credits through its exchange. 

The carbon trading company also specializes in standardized spot contracts and specific carbon projects. It has facilitated transactions totaling more than 2 million tonnes of carbon credits across its platforms to date.

In July 2022, CIX partnered with Nasdaq to help scale up the global carbon market. Their partnership enables CIX to leverage Nasdaq’s technology to power its spot exchange for quality carbon credits. 

READ MORE: CIX and Nasdaq Join Forces to Develop Global Carbon Market

Bain & Company Driving Climate Leadership

In the U.S., Bain & Company has made history by becoming the first organization to achieve a ‘carbon integrity platinum claim’ under the VCMI standard’s CCP. 

A global consultancy firm Bain & Company is the first organization to make a Carbon Integrity Platinum Claim. The Claim is the highest Claim of the Voluntary Carbon Market Integrity Initiative (VCMI) standard’s Claims Code of Practice (CCP).

The Claims Code enables companies to make Carbon Integrity Claims, showcasing their commitment to climate action. These claims come in three tiers – Silver, Gold, and Platinum – allowing companies and non-state actors to demonstrate their efforts in surpassing science-aligned emissions reductions. 

Leveraging high-quality carbon credits, making a claim signifies a proactive contribution to climate action critical for net zero emissions.

The prestigious claim signifies Bain’s commitment to offsetting its greenhouse gas emissions by purchasing and retiring high-quality carbon credits. The credits are equivalent to or exceeding 100% of the company’s remaining emissions.

In achieving this platinum claim, Bain & Company demonstrates significant internal decarbonization efforts and substantial investment in high-integrity carbon credits.

The VCMI, one of the two primary ‘meta-standards’ in the VCM, aims to become the leading benchmark for market demand. The CCP sets out four key criteria for companies with emission reduction targets and carbon credit procurement strategies.

RELEVANT: Navigating the Path to Net Zero: VCMI’s Claims Code of Practice

Redefining Carbon Credit Quality

Mark Kenber, executive director of VCMI, hails Bain’s achievement as a crucial step in promoting integrity within the VCMI. He specifically said:

“Their role as a first mover paves the way for other companies to step up, and demonstrates true climate leadership. This… shows how corporate decarbonization and the use of VCMs can complement each other to accelerate the transition to net zero.”

In response, Sam Israelit, Chief Sustainability Officer at Bain & Company, underscores the company’s commitment to reducing its climate impact. The consultancy expert aims to slash scope 1 and 2 emissions by 30% and reduce business travel emissions by 35% per employee by 2026.

High-quality credits, as defined by VCMI, adhere to the Integrity Council for Voluntary Carbon Markets (IC-VCM)’s Core Carbon Principles (CCP). These principles were introduced to establish a comprehensive quality threshold for carbon credits and restore investor confidence amid price volatility and negative media coverage. 

The ICVCM is currently reviewing carbon credit categories and programs, with results expected soon. Earlier this month, the carbon standard setter announced plans to assess more than 100 carbon credit methodologies for adherence to its CCPs.

READ MORE: ICVCM Sets the Bar High with 100 Carbon Credit Methodologies Under Assessment

In the interim, companies making VCMI claims can either retire credits eligible under the International Civil Aviation Organization’s CORSIA offset scheme or disclose their due diligence processes aligned with all 10 core carbon principles.

The infusion of funds into Climate Impact X and Bain & Company’s pioneering carbon integrity claim underscores the growing momentum in the voluntary carbon market towards transparency, credibility, and climate action. These developments herald a promising future where businesses are pivotal in driving meaningful emissions reductions and environmental stewardship.

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The Carbon Countdown: AI and Its 10 Billion Rise in Power Use

In a frenzied race against a looming carbon time bomb, tech behemoths are grappling with the environmental ramifications of their sprawling data centers worldwide. These data centers, essential for powering today’s digital infrastructure, have emerged as greedy consumers of energy, particularly as the demand for artificial intelligence (AI) continues to skyrocket. 

As AI becomes increasingly integral to various industries, the energy demands of data centers are exploding. This, in turn, calls for urgent action to mitigate their massive environmental footprint.

AI’s Energy Appetite: Unleashing Data Center Emissions 

Between 2010 and 2018, there was an estimated 550% increase globally in the number of data center workloads and computing instances.

Data centers and transmission networks collectively contribute up to 1.5% of global energy consumption. They emit a volume of carbon dioxide comparable to Brazil’s annual output. 

Hyperscalers like Google, Microsoft, and Amazon have committed to ambitious climate goals, aiming to decarbonize their operations. Hyperscalers are large-scale, highly optimized, and efficient facilities. 

However, the proliferation of AI poses a huge challenge to these objectives. The energy-intensive nature of graphics processing units (GPUs), essential for AI model training, magnifies the strain on energy resources. 

According to the International Energy Agency (IEA), training a single AI model consumes more power than 100 households in a year.

Per another source, the amount of computing power needed for AI training is doubling every 6 months. Fifty years ago, that happened every 20 months, as seen in the chart below. 

More alarmingly, in just over a decade, the computing power used for AI model development has increased by a staggering factor of 10 billion. And it would not slow down.

Industry estimates forecast that power use can go up to 13% by 2030 while the share of global carbon emissions would be 6% for the same year.

The Cost of AI: Balancing Power and Progress

The climate risks posed by AI-driven computing are profound, with Nvidia CEO Jensen Huang highlighting AI’s significant energy requirements. Jensen projected a doubling of data center costs within 5 years to accommodate the expanding AI ecosystem.

For instance, compute costs for training advanced AI models like GPT-3,  boasting 175B parameters, and potentially GPT-4 are predictably substantial. The final training run of GPT-3 is estimated to have ranged from $500,000 to $4.6 million. 

Training GPT-4 could have incurred costs in the vicinity of $50 million. However, when factoring in the compute required for trial and error before the final training run, the overall training cost likely exceeds $100 million.

On average, large-scale AI models consume approximately 100x more compute resources than other contemporary AI models. If the trend of increasing model sizes continues at its current pace, some estimates project compute costs to surpass the entire GDP of the United States by 2037.

According to computer scientist Kate Saenko, the development of GPT-3 emitted over 550 tons of CO2 and consumed 1,287 MW hours of electricity. In other words, these emissions are equivalent to those generated by a single individual taking 550 roundtrip flights between New York and San Francisco.

Not to mention that such figures account for the emissions directly associated with developing or preparing the AI for use. Other sources of emissions are not included. 

RELEVANT: How Big is the CO2 Footprint of AI Models? ChatGPT’s Emissions

Solutions to Reduce Data Center Carbon Footprints 

To mitigate data center emissions, industry players have pursued various strategies, including investing in renewable energy and using carbon credits

While these initiatives have yielded some progress, the escalating adoption of AI requires additional measures to achieve meaningful emission reductions.

Google’s load-shifting strategy exemplifies a promising approach to addressing this challenge. It synchronizes data center operations with renewable energy availability on an hourly basis.

By deploying sophisticated software algorithms, Google identifies regions with surplus solar and wind energy on the grid and strategically ramps up data center operations in these areas. 

The logic behind the approach is simple: Reduce emissions by upending the way data centers work. 

The tech giant has also initiated the first initiative to align the power consumption of certain data centers with zero-carbon sources on an hourly basis. The goal is to power the machines with clean energy 24/7.

Google’s data centers are powered by carbon-free energy approximately 64% of the time, with 13 regional sites achieving an 85% reliance on such sources and seven sites globally surpassing the 90% mark, according to Michael Terrell, who spearheads Google’s 24/7 carbon-free energy strategy.

Cirrus Nexus actively monitors global power grids to identify regions with abundant renewable energy. Then they strategically allocates computing loads to minimize carbon emissions. By leveraging renewable energy sources and optimizing data center operations, significant reductions in carbon emissions were achieved. 

The company was able to cut computing emissions for some workloads and the clients by 34%. It uses cloud services offered by Amazon, Microsoft, and Google. 

Navigating the AI-Driven Energy Crisis

In recent years, both Google and Amazon have experimented with adjusting data center usage patterns. They do it both for their internal operations and clients using their cloud services. 

Nvidia offers another solution to this AI-driven power crisis – green computing accelerated analytics technology. It can slash computing cost and carbon footprints by up to 80%. 

READ MORE: Nvidia’s Accelerated Analytics Can Cut Computing Cost and CO2 Footprint by 80%

Implementing load shifting necessitates collaboration between data center operators, utilities, and grid operators to mitigate potential grid disruptions. Still, this strategy holds immense promise in advancing sustainability goals within the data center industry.

As the demand for AI soars, addressing the energy requirements of data centers is paramount to mitigating carbon emissions. Innovative strategies such as load shifting offer a pathway towards achieving carbon neutrality while ensuring the reliability and efficiency of data center operations in an increasingly AI-driven landscape.

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Indigo Ag Sets Record with Third Carbon Crop, Sequestering Over 163K Tons of CO2

Indigo Ag, a pioneer and trusted ally in sustainable agriculture, has announced the successful completion of its third carbon crop, solidifying its position as an industry leader in carbon programs. 

With 163,048 carbon credits produced, Indigo Ag stands as the sole company to accomplish three carbon harvests at scale. The program demonstrates continued growth, marked by year-over-year increases in the number of participating farmers, fields filed, and credits generated.

Harvesting Hope: Farmers Lead the Charge in Carbon Sequestration 

According to the Environmental Protection Agency, agriculture is responsible for releasing 10% of the U.S. greenhouse gas emissions in 2021. But the sector also has the means to remove and sequester those planet-warming emissions.

Crops, grasses, and other plants play a crucial role in sequestering CO2 from the air and with effective soil carbon capture and farming practices, they have the capacity to effectively draw down CO2.

The following chart illustrates the potential of various carbon farming practices in cutting emissions by decade until 2050.

Since its launch in 2019, farmers engaged in Indigo Ag’s carbon program have sequestered or abated nearly 300,000 metric tons of carbon dioxide. The corresponding carbon credits are rigorously verified and issued by the Climate Action Reserve, one of the leading carbon registries globally. 

Each metric ton of sequestered CO2 generates one carbon credit.

To date, farmers participating in Indigo Ag’s sustainability initiatives, Carbon and Sustainable Crops, have collectively earned over $12 million. Payments for the third carbon crop are scheduled for March 2024.

Indigo’s carbon farming program offers companies seeking a market-based approach to capture and store carbon in soils, a credible, nature-based climate solution. The generated credits represent the efforts of farmers who have embraced Indigo’s climate-friendly farming practices, known as regenerative farming. Examples include planting cover crops and reducing soil tillage.

The program is serving 5.5 million enrolled acres, 2,000 enrolled farmers, and issued 133,000 carbon credits.  

Dean Banks, CEO of Indigo Ag, remarked:

“Our record-breaking third carbon crop reinforces that farmers can earn money and have a real and measurable impact leveraging agricultural soil as one of the world’s largest carbon sinks.”

Indigo’s latest batch of credits signifies the sequestration or abatement of 163,048 metric tons of CO2 by U.S. farmers across 28 states. The growth of Indigo’s carbon program emphasizes the increasing adoption of sustainable farming practices, with remarkable year-over-year increases: 

333% surge in new acres, 
297% rise in new fields, and 
215% uptick in new grower participation.

Furthermore, Indigo collaborates closely with its expanding network of over 25 agribusiness partners to provide unique insights and support growers in advancing their transition to sustainable practices.

In September last year, the U.S.-based company raised +$250 million led by Flagship Pioneering. The goal of the funding was to further grow Indigo’s sustainable agriculture programs and bolster farmers’ revenues with carbon credits. 

READ MORE: Indigo’s $250M Raise Boosts Agricultural Carbon Credits Generation

Indigo Ag’s Carbon Credits Gaining Traction

The company has broadened its network of carbon credit buyers by partnering with Watershed. It’s an enterprise climate platform that assists companies in measuring, reporting, and acting on their emissions to allocate credits to their corporate clientele.

Industry analysts predict that corporate demand for high-quality carbon credits will continue to surge. BloombergNEF’s (BNEF) report suggests that restoring trust in the market could encourage companies to buy billions of carbon credits annually. This can potentially increase prices to $238 per ton and bring market value to over $1 trillion yearly by 2050. 

In this case, Indigo Ag foresees its soil carbon credit commanding higher prices in future crop cycles. 

The ag tech firm is currently one of the only companies providing corporations with high-integrity soil carbon credits on the voluntary carbon market (VCM). This enables them to secure future buyer commitments with purchase prices ranging from $60 to $80 or more, depending on delivery time. 

The forward price curve will result in increased earnings for the participating farmers over time, Banks further added. 

Growing Green: Indigo Expands Carbon Program

Indigo is expanding its eligibility criteria for the 5th carbon crop, covering the 2023-24 planting season. It is also currently open for farmer enrollment.

Part of the expansion is adding more eligible crops for its sustainability programs, including hemp, perennial and annual alfalfa, millet, collard greens, and four perennial legumes. This offers farmers additional options for program eligibility, alongside existing crops such as corn, soy, and cover crops.

Furthermore, Indigo is collaborating with industry partners to streamline data importation and entry processes for farmers. It works whether they are importing data from spreadsheets or their FSA 578 insurance forms. Product enhancements include historical data validation and the capability to spread out carbon harvests.

More details on the fourth carbon crop will be shared in early 2025 when credits are slated for delivery.

Indigo Ag’s success in completing its third carbon crop marks a big step forward for sustainable farming. By helping farmers fight climate change and earn money, the company is making agriculture greener and more profitable. 

RELEVANT: Agricultural Carbon Credits and Carbon Farming Guide

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Nikola’s $230M Raise in Q4 and the Hydrogen Revolution

As the world seeks to reduce carbon emissions and fight climate change, hydrogen emerges as a promising alternative in the global shift towards clean energy solutions. In this context, Nikola Corporation’s advancements in hydrogen represent a significant step in driving the transition within the transportation sector.

Nikola Corporation, a prominent player in zero-emissions transportation and energy supply and infrastructure solutions under the HYLA brand, has released its financial results and business updates for the fourth quarter and full year ending December 31, 2023.

Driving Toward a Hydrogen-Powered Future with $230M Raise in Q4

The reported achievement underscores Nikola’s market-leading position, highlighting the quality of its products and the success achieved by its fleet operations. In July last year, the company received a total of $58.2 million to bolster its hydrogen infrastructure.

READ MORE: Nikola Wins $58M Total Grant for Hydrogen Stations

Here are the company’s Q4 and full year 2023 remarkable results:

Successfully delivered the first production hydrogen fuel cell electric truck available in North America.

Delivered 35 hydrogen fuel cell electric trucks in Q4, resulting in no finished goods inventory at the end of Q4.
Witnessed 225 additional voucher requests submitted in California for hydrogen fuel cell electric trucks from October 2023 through January 31, 2024, all attributed to Nikola.

Launched the first HYLA modular refueling station in Ontario, California, and announced a partnership with FirstElement Fuel in Oakland, California, providing fleets with fueling solutions in both Northern and Southern California.
Raised $230.3 million during Q4, ending the year with $464.7 million of unrestricted cash, the highest since Q4 2021.

Looking forward to 2024, the company’s focus is on optimizing revenue and costs within its business. They commit to securing more modular refueling sites and scaling up the production of their hydrogen fuel cell electric trucks.  

Investing their resources in the direction of hydrogen appears to be a strategic move for the company. 

Hydrogen Fueling the Green Revolution

Amidst the urgent need to reduce carbon emissions worldwide, there’s a surge in innovations focusing on alternative energy sources. Hydrogen stands out among these alternatives, particularly for providing a cleaner option in the transportation sector.

Unlike fossil fuels, which emit planet-warming gases, hydrogen fuel offers the potential to be 100% clean. In hydrogen fuel cell electric vehicles (FCEVs), hydrogen combines with pure oxygen in specialized cells, with the only resulting by-product being water.

Projections also highlight the significant role that hydrogen fuel will play in the coming decades. Experts anticipate that the global hydrogen market will soar to about $231 billion by the year 2030. Low-carbon hydrogen production could significantly reach 38 million metric tons per annum by the same period. 

McKinsey & Company estimated that the total hydrogen production capacity announced by companies by 2030 jumped by 40% as seen below.

Nikola believes that they have introduced the first production Class 8 hydrogen fuel cell truck to the North American market. 

In California, Nikola holds an impressive 99% share of all hydrogen fuel cell electric tractor HVIP vouchers requested between 2023 and January 2024. The number of requests for their fuel cell truck surpasses those for all other truck OEMs combined. This includes both battery and hydrogen fuel cell electric trucks during the same period. 

The promising future of hydrogen and its emission regulation compliance, particularly in California, motivated truckers to embrace this zero-emission technology. Many trucking companies believe that it brings advantages for long-haul trips and quick refueling. Plus, hydrogen-powered trucks can move heavier loads because they don’t need large batteries. 

READ MORE: Truck Companies Are Shifting to Hydrogen Fuel for Long-Haul Trips

Powering up the Hydrogen Economy

What further ignites the growing demand for hydrogen is the implementation of the largest and most aggressive investment taken by the US government for climate, the $369 billion Inflation Reduction Act of 2022.

The IRA has caused a significant shift in hydrogen economics, particularly impacting green hydrogen. This type of hydrogen, produced through the process of electrolysis using renewable electricity and water, has now become cost-competitive with its natural gas-derived counterpart.

Under the Act’s provisions, production tax credits are offered for a duration of 10 years to “clean hydrogen” production facilities. These incentives are structured based on the carbon capture rates during the production process.

Initially, the incentives start at $0.60 per kilogram (kg) for hydrogen produced with a carbon capture rate that exceeds half of the emissions from the Steam Methane Reforming (SMR) process, subject to meeting workforce development and wage requirements. But as the carbon capture rates increase, the value of the production tax credit rises to $1.00/kg. Eventually, for hydrogen produced with minimal to no emissions, the production tax credit reaches $3.00/kg.

The carbon capture rate estimates assume an emissions rate of 9.00 kg CO2e / kg H2 from producing gray hydrogen. Source: Utility Drive

Alongside the IRA is the bipartisan Infrastructure Investment and Jobs Act that helps the U.S. unleash clean energy. The latter law provided a $7 billion grant to seven regional clean hydrogen hubs (H2Hubs) under the Department of Energy. 

The program is part of a strategic move to accelerate the deployment of clean hydrogen across the country. 

Collectively, the 7 chosen hydrogen hubs will cut about 25 million metric tons of carbon dioxide from end-users annually. They will share the cost of developing the network, located in carbon-producing centers, including Appalachia, the Gulf States, and the Midwest. Read more about them here.

In California, Nikola hydrogen infrastructure brand HYLA seeks to establish a comprehensive zero-emission transportation solution to help fleets achieve their climate goals. The company recently unveiled the opening of its inaugural HYLA modular refueling station in Ontario, California. 

The initiative enables fleets to use the refueling station that facilitates freight transport between Southern and Northern California. The HYLA team plans to secure 9 additional fueling sites across the state throughout 2024. 

RELEVANT: Indian Government Announces Massive New Green Hydrogen Project

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Indian Government Announces Massive New Green Hydrogen Project

India’s National Green Hydrogen Mission is another decarbonization strategy to become energy-independent by 2047 and achieve net zero by 2070.

The mission was approved by the Union Cabinet on 4th January 2023, with a budget allocation of ₹ 19,744 crore. The ultimate objective of the Mission is to make India the Global Hub for the production, usage, and export of Green Hydrogen and its derivatives.

Before moving on to the current scenario of monetary investments and the use of green hydrogen in transport pilot projects, we will examine what this comprehensive plan looks like for the coming years.

India’s Plan to Take a Quantum Leap in the Green Hydrogen Race

To become the world’s largest producer and exporter of green hydrogen in the world, India has set forth a series of milestones. As per data from Govt. of India’s Ministry of New and Renewable Energy they include:

The Mission aims to establish capacities to produce at least 5 Million Metric Tonne (MMT) of Green Hydrogen annually by 2030, with the potential to reach 10 MMT per annum through expansion of export markets and international partnerships.
The initial budget for the mission will be Rs 19,744 crore. From this Rs 17,490 crore will be allocated for the SIGHT program, Rs 1,466 crore for pilot projects, Rs 400 crore for R&D, and Rs 388 crore for other mission components.
Kick-off global demand to nearly 100 million metric tonnes (MMT) for Green Hydrogen and its derivatives, like green ammonia by 2030. The target is to capture 10% of the global market with an annual export demand of about 10 MMT of Green Hydrogen/Green Ammonia.
The decarbonization target is to mitigate 50 MMT per annum of CO2 emissions with the implementation of the Green Hydrogen initiatives charted under the Mission.
Replace fossil fuel with green hydrogen and its derivates to reduce f ₹1 lakh crore in fossil fuel imports by the year 2030 and enhance India’s energy security.

An examination of the industrial sectors that would drive demand for green hydrogen in the future are shown in the growth graph below.

Revving Up Sustainability: Transport Sector Emerges as the Prime Hub for the Green Hydrogen Revolution

The Ministry of New & Renewable Energy (MNRE) recently released guidelines for a program aimed at backing pilot projects centered on utilizing green hydrogen as a fuel for four-wheelers, buses, long-haul trucks, and heavy-duty vehicles. The technology uses fuel cell-based and internal combustion engine-based propulsion techniques.

The iron and steel sector and the shipping sector would be bolstered under the Green Hydrogen Mission to undertake the pilot projects. The important features of this project are:

Pilot Projects through the Ministry of Ports, Shipping and Waterways (MoPSW) to drive green hydrogen innovation with Rs. 115 Crore Budget by 2025-26.
Inaugurating green hydrogen in maritime for use in piloting maritime propulsion, passenger ferries, boats and cruising, and refueling of ships. Testing technical feasibility, economic viability, and effectiveness in real-world operations.
The Ministry of Steel and designated Implementing Agencies will oversee pilot projects in the Steel and Iron Sector, aiming to substitute fossil fuels and feedstock with green hydrogen and its derivatives.
The program will also fund projects exploring innovative hydrogen applications to cut carbon emissions during the iron and steel manufacturing process.

As stated by the MNRE, the initiative will be executed with a total budget allocation of Rs 496 crore until the fiscal year 2025-26. Such a huge budget means primary focus on pilot projects in the transport sector and building hi-tech infrastructure to manufacture green hydrogen and installing hydrogen refueling stations wherever required.

RELATED: Indian State Inks Three Deals Worth $266M in Carbon Credits

India’s Strategic Edge: Powering the Global Energy Shift with Distinct Advantages

Currently, China is the largest producer and consumer of green hydrogen followed by the US. But India’s ambitious green hydrogen goals would certainly make it a strong player in the race for more production.

More insight into the distinct advantages India has over other hydrogen superpowers give weight to these goals:

That the government foresees a substantial decrease in the costs of renewable energy and electrolyzers paves the way for highly cost-effective use of green hydrogen in passenger and commercial vehicles in the coming years

This could enable India to achieve the world’s lowest green hydrogen production costs, potentially hitting USD 0.75 per kilogram by 2050. This further adds an edge to India’s green hydrogen export market.

India holds rich and vast sources of renewable energy with global giants like Reliance Industries (RIL), GAIL India Ltd., Adani Group, NTPC (National Thermal Power Corporation Limited), Indian Oil Corporation (Indian Oil), and Larsen and Toubro (L&T) owning most if not nearly all of the assets and resources to firmly lead the green hydrogen revolution.

Green Hydrogen is likely to play a critical role in India’s energy transition. Moreover, shifting to green hydrogen aligns India with global climate leaders such as the US and EU. India’s 2030 pledge under the terms of the Paris Agreement to reduce greenhouse gas emissions will eventually empower the country to make it a global hub for production, usage and export of Green Hydrogen and its derivatives.

To Read More About India’s National Green Hydrogen Mission Click Here

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Canada’s $5 Billion Carbon Pricing Revenue Sparks Debate

Canada’s federal carbon pricing policy is a pivotal component of the nation’s efforts to combat climate change. The Parliamentary Budget Officer’s latest estimates show that it will yield over $5 billion in revenue from federal sales tax over the next 7 years. 

However, concerns are raised as to why there are no specific plans to channel the revenue to climate programs. The federal government also scaled back carbon tax rebates for small businesses. 

The estimated figures come from a private member’s bill put forward last fall by Conservative MP Alex Ruff, aiming to entirely remove the sales tax from carbon pricing.

RELATED: Saskatchewan to End Carbon Tax on Natural Gas & Electric Heating

Canada’s Carbon Tax Revenue and Redistribution Framework

In an era increasingly characterized by environmental responsibility, Canada’s carbon pricing policy was initially hailed as a bold stride toward fostering a sustainable future. However, the revelation that the revenue from the tax lacks specific earmarks for environmental initiatives has sparked widespread concern. 

Critics argue that without a targeted focus on climate action represents a missed opportunity in the fight against global warming. 

According to law, revenue generated from the carbon price must be redistributed to households and businesses through rebates and granting programs. 

The PBO projected that the redistribution will amount to about $600 million in 2024-25, growing to $1 billion annually by 2030-31, alongside the increase in the carbon price itself. Over the period from April 2022 to March 2031, this could accumulate to $5.7 billion.

These projections include revenue from the 8 provinces and 2 territories subject to the federal carbon pricing system. They also include British Columbia, Quebec, and Northwest Territories, which have their own systems. Thus, the federal carbon pricing system do not apply in those 3 jurisdictions.

Source: Environment and Climate Change Canada (ECCC)

Directing these funds towards climate action can help the country achieve its 2030 greenhouse gas emissions targets.

The carbon pricing framework was structured with the intention that 90% of the funds collected from consumers and smaller businesses would be allocated to individual households in the form of rebates. 

The remainder of the funds was designated for Indigenous communities, municipalities, hospitals, and schools. The ultimate goal is to facilitate energy efficiency upgrades through a range of programs.

To date, over $100 million has been disbursed through these programs. Approximately $35 million was allocated to small businesses, $60 million to schools, and around $6 million to Indigenous communities.

Scrutiny Over Carbon Tax Rebates for Small Businesses

But the scrutiny over the $5 billion income from the carbon price continues to intensify. It is further compounded by recent developments, particularly the reduction of carbon tax rebate percentages for small and medium-sized enterprises (SMEs). It sparked strong reactions from business communities nationwide. 

The Canadian Federation of Independent Business (CFIB) has been particularly vocal in its opposition, launching a petition against these alterations and advocating for immediate measures to support affected businesses.

The CFIB estimates that small businesses contribute up to 40% of the government’s total carbon price revenues. However, Clean Prosperity, an economic and climate change think tank, suggests a lower estimate, placing it closer to 25%.

Small businesses were never slated to receive more than 7% of the carbon price revenues back. Moreover, this allocation is now diminishing further, dropping to 5%.

The incentives were intended to assist businesses in covering a portion of the expenses associated with acquiring energy-efficient equipment. They also cover initiatives on upgrading buildings and operations to reduce fuel consumption. The targeted businesses are in emissions-intensive and trade-exposed sectors, but these haven’t yet been defined. 

Clean Prosperity’s executive director, Michael Bernstein, commented on the issue:

“Even two years ago, we calculated that there was enough money within the HST [Harmonized Sales Tax] on the carbon tax to fund a one-percentage-point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein further noted that SME businesses contribute around one-quarter of Canada’s carbon price revenue, according to their estimates. Since 2019, the government has yet to disburse about $2.5 billion from this income owed to small businesses. 

Perspectives and Proposed Solutions

Dan Kelly, CFIB President and CEO, argued that businesses require assistance to mitigate the financial impact of carbon pricing. He particularly remarked that:

“The whole principle of a carbon tax is you tax carbon-based activities and you give the money back so that then people make decisions to use those dollars in lower-carbon activities.”

Conservative spokesperson Sebastian Skamski affirmed the party’s commitment to eliminating carbon pricing. While Conservative MP Alex Ruff’s proposal to remove the sales tax from carbon pricing serves as an interim measure, the party advocates for broader exemptions and reductions to alleviate the burden on businesses.

READ MORE: Canada Faces 2 Carbon Issues: Shaky Carbon Tax and Missed Emissions Goal

However, Minister of Finance Chrystia Freeland’s office didn’t express openness to utilizing GST and HST revenues to bolster rebates. Katherine Cuplinskas, a spokesperson for Freeland, said that the government promises a portion of carbon price revenues to be returned to businesses. However, no specific details were provided. 

Canada’s carbon pricing policy generates significant revenue but lacks specific allocations for climate programs. Reductions in rebates for small businesses raise concerns. Balancing revenue generation, fair redistribution, and business support is crucial. Transparent communication and flexible policy frameworks are needed for effective climate action and economic stability.

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The Implications of Technology-Neutral Tax Credits in U.S. Power Sector

Clean energy projects completed after 2024 in the U.S. could access innovative, technology-neutral tax credits under the Inflation Reduction Act (IRA). These credits, similar to existing incentives, target facilities achieving net zero carbon emissions. Guidance from the Treasury Department will clarify eligibility. 

The credits, effective from January 1, 2025, will replace existing production and investment tax credits for wind and solar projects. They will also extend to qualified energy storage facilities and rapidly evolving clean energy technologies. 

More notably, they phase out by 2032 or when U.S. electricity production emissions reach 25% of 2022 levels or lower.

A Shift Towards Sustainable Finance

The U.S. power sector’s greenhouse gas emissions have significantly decreased in 2023 compared to 2022, according to the Environmental Protection Agency. The drop in emissions is mainly due to shifts in the mix of fossil fuel-based electricity generation.

The agency’s report revealed a 7% decrease in CO2 emissions from the sector, the largest annual drop since 2020.   

READ MORE: US Power Sector Sees Largest CO2 Emission Drop Since 2020

The technology-neutral approach emerged from House and Senate committees’ negotiations on the IRA, enacted in August 2022. House Democrats aimed to extend traditional renewable incentives, while Senate leaders favoured emissions-based credits. Ultimately, the IRA extended existing incentives until the tech-neutral credits kicked in. 

The IRA has instituted highly specific phaseout schedules for the new technology-neutral tax credits. These credits will remain in effect either until 2032 or until CO2 emissions from the country’s electricity sector reach or fall below 25% of 2022 levels, whichever comes later. 

Once this threshold is met, a three-year phaseout period will commence, featuring defined annual reductions in the value of the tax credits. Wood Mackenzie’s analysis suggests that the United States will likely surpass the 25% of 2022 threshold after the year 2032.

In addition to extending the Production Tax Credit (PTC) and Investment Tax Credit (ITC), the IRA has introduced PTCs for existing nuclear plants and clean hydrogen, along with enhanced incentives for carbon capture and storage (CCS). Unlike the technology-neutral PTC and ITC, these specific credits are set to expire at the end of 2032.

Pioneering Tax Credit Phasing and Potential Impact

Based on the language in the IRA, Wood Mackenzie views that these tax credits will extend for longer than 2032. Absent IRA repeal means that instead of several hundred billion dollars in tax credits for new renewables and storage, the real money on the table is on the order of trillions of dollars over multiple decades.

The American Council on Renewable Energy (ACORE) supports the approach for simplifying the tax code and advancing climate goals. By encompassing all carbon-free resources, these credits promote diverse technologies without requiring frequent legislative extensions, fostering innovation and investment.

Alongside renewable energy projects, the new technology-neutral tax credits could also benefit coal and natural gas plants adopting carbon capture and sequestration (CCS) technology. However, only a small number of coal and gas plants are actively pursuing CCS due to their high costs and operational challenges. 

Among those that do, some may choose to use the enhanced CCS production tax credit offered by the IRA. However, this credit cannot be combined with the technology-neutral clean power PTC. 

Nevertheless, as utilities seek additional sources of zero-emission electricity to meet their climate objectives, the technology-neutral system might ultimately prove to be a more effective solution.

Anticipated Guidance and Project Projections

The Treasury Department will provide guidance on technology-neutral credits in the coming months, offering clarity to developers. Although a Treasury spokesperson didn’t provide an update on timing, they suggested it’s likely to be in the second quarter. 

This guidance could offer clarity regarding how specific projects can demonstrate eligibility. Treasury’s Assistant Secretary for Tax Policy Lily Batchelder noted that:

“Our guidance on these credits will create a framework that allows future innovation in clean energy technologies — supporting American ingenuity, jobs, and energy security for the long haul.”

According to data from S&P Global Market Intelligence, the U.S. would incorporate nearly 220,000 MW of fresh solar capacity between 2024 and 2030.

Within the same timeframe, the nation would also integrate 85,615 MW of combined capacity from onshore and offshore wind projects. Plus, another 110,687 MW of standalone and co-located energy storage.

Despite potential regulatory and potential risks, developers of clean energy are pressing ahead with their project plans. 

RELATED: Transforming the American Clean Energy Landscape Under Biden’s Era

Although the precise timing remains uncertain, it’s evident that the core provisions of the IRA, particularly the technology-neutral tax credits, will endure for decades to come. The interest in these credits will only grow further, as industry experts believe to be. 

The post The Implications of Technology-Neutral Tax Credits in U.S. Power Sector appeared first on Carbon Credits.

India Revises Its Carbon Credit Trading Scheme for Voluntary Players

India made a bold move in 2024 by revamping its Carbon Credit Trading Scheme (CCTS), allowing non-obligated entities to participate in the tradable carbon credits market. That means companies and individuals can voluntarily use carbon credits to address their planet-warming emissions. 

This significant revision introduces an offset mechanism, enabling these entities to register projects and obtain tradable carbon credit certificates (CCCs). Each credit represents one tonne of carbon dioxide equivalent (tCO2e). The aim is to efficiently price emissions through CCC trading and expand the voluntary carbon market.

India Opens Doors for Voluntary Carbon Credit Buyers 

In 2023, India introduced the 2023 Carbon Credit Trading Scheme (CCTS), encompassing both compliance and voluntary sectors. However, while the compliance segment is scheduled to commence in 2025-26, there is no set timeline for the launch of the voluntary carbon market. 

Under India’s revised carbon market scheme, obligated entities have the flexibility to purchase additional credits or sell surplus ones. Meanwhile, businesses can trade CCCs to offset their emissions. 

RELATED: Indian State Inks Three Deals Worth $266M in Carbon Credits

However, sectors facing challenges in meeting reduction targets, particularly those with hard-to-abate emissions, are exploring the possibility of trading energy-saving certificates (ESCerts) and renewable energy certificates (RECs) as offsets.

India emerged as a favorable destination for energy transition investments after successfully hosting the G20 Summit last year. During the same year, the country added about 17 GW of capacity, with non-fossil additions accounting for 13.8 GW. 

As seen below, renewable energy has the largest growth in terms of electricity supply capacity in the South Asian country. 

Chart from Reuters

Moreover, India increased its financial support to propel the green hydrogen ecosystem and initiated preparations for its domestic carbon markets.

Key decisions regarding international participation in the carbon credit market are expected in 2024, setting the trajectory for India’s engagement. Additionally, discussions on the scope, design, and procedures of the scheme, including linkages with international standards and registries, are anticipated to be addressed.

India’s Energy Transition Priorities to Drive Climate Action

India’s move reflects its commitment to combating climate change and aligning with global efforts towards decarbonization. This year, the super-emitter is anticipated to intensify its efforts in implementing its energy transition strategy while navigating challenges related to energy security and affordability. 

India’s strategy will prioritize various aspects in power and renewables market, including:

Clean energy transition advancing; coal reliance to remain high:

Electricity demand to grow with GDP growth, driven by local activity due to elections and El-nino impact.
Total capacity addition to grow by 60% YoY; coal share in generation to decrease marginally to 73.2% in 2024.

Improving domestic fuel supply (Coal and Gas) remains top priority:

India expected to surpass 1 billion metric tons of domestic coal production in 2024.
Boost in domestic gas production due to new gas pricing reforms.

Focus on green hydrogen/ammonia:

Shift towards creating local demand and supporting excess costs.
Launch of new schemes to aggregate demand from public sector units and large consumers.

Renewables at the forefront of India’s climate policy:

Highest renewable capacity addition (>20 GW) expected in 2024.
Falling module costs and tender backlog driving record capacity addition.
Increasing prominence of hybrid renewable tenders and stand-alone storage tenders.

Chart from Reuters

Bridging the Gap: Integrity Measures and Global Carbon Markets

The strategy also underscores the importance of integrity measures in bridging the emissions reduction gap and achieving climate goals.

In a recent report by the Carbon Market Institute, global carbon pricing mechanisms have raised an impressive $100 billion in 2022 and now covered 23% of global greenhouse gas emissions. 

Despite these achievements, current government pledges are projected to result in a temperature rise between 2.1°C and 2.8°C. Carbon markets hold considerable potential to bridge the emissions reduction gap necessary to approach a 1.5°C trajectory. 

However, there is still work to be done to bolster integrity measures and accelerate international cooperation in this regard.

In 2023, the global carbon trading markets experienced robust growth, reaching a record value of over $947 billion, representing a 2% increase from the previous year. This growth was primarily driven by higher prices in key markets such as Europe and North America, despite similar permit trading volumes.

The EU’s Emissions Trading System (ETS) maintained its position as the most valuable market, accounting for 87% of the global total. However, weakening demand from industrial buyers and the power sector towards the end of 2023 led to a bearish trend that has persisted into 2024. 

RELATED: Carbon Prices and Voluntary Carbon Markets Faced Major Declines in 2023, What’s Next for 2024?

Conversely, North American prices reached record highs, and China’s national ETS also saw unprecedented price levels in 2023.

India’s revised Carbon Credit Trading Scheme (CCTS) presents a significant step forward in the global effort towards decarbonization. This, combined with the strong growth observed in the global carbon trading market, underscores a promising trajectory towards reducing greenhouse gas emissions. 

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Lululemon and Samsara Eco Reveal World’s First Recycled Textile Using Enzymes

Australian environmental technology startup Samsara Eco, in collaboration with athletic apparel giant Lululemon, has unveiled the world’s first enzymatically recycled nylon 6,6 product. Their initiative represents a significant milestone, advancing the fashion industry closer to establishing a circular, sustainable ecosystem.

Launched in 2020, Samsara Eco specializes in infinite recycling to end plastic pollution. They believe that the planet can’t solve the climate crisis without solving the plastics crisis. The company’s patented process that breaks plastic down to its core molecules is carbon-neutral and can re-create brand-new plastic infinitely. 

A Step Towards Sustainable Fashion

The fashion industry currently contributes about 10% of annual global carbon emissions, poised to increase by 50% by 2030. Additionally, the industry heavily relies on plastic-derived textiles sourced from petroleum, equivalent to 342 million barrels of petroleum.

Alarmingly, the industry produces 2 million tonnes of textile waste every year, while around 10% of microplastics found in the ocean come from this waste.

However, a small portion of these materials undergo recycling. According to the U.S. Environmental Protection Agency, merely 15% of plastic-derived textiles are recycled.

Nylon 6,6 is one of the most widely used plastics in the textile sector, with nearly 4 million tonnes of it manufactured annually. The material serves as a fundamental fiber in many of Lululemon’s top-selling products, particularly its popular Swiftly Tech long-sleeve top. 

Using the recycled nylon 6,6 produced through Samsara Eco’s recycling technology, the clothing giant has developed samples of the said top, marking the world’s first instance of this nylon recycled in such a manner. 

Due to its robust, heavy-duty properties, nylon 6,6 has traditionally posed challenges for recycling. Yet, it has found applications across various industries, including fashion, automotive, and electronics.

But with Samsara Eco’s pioneering technology (patent pending), nylon 6,6 can now be recovered and extracted from end-of-life textiles. This offers the potential to create a fully circular ecosystem for the apparel industry. 

Enzymatic Recycling: Revolutionizing the Textile Industry

Currently, fashion companies like Lululemon have two primary methods for recycling textiles: mechanical and chemical processes involving solvents. However, both approaches pose challenges. Mechanical recycling limits the number of times recovered plastics can be recycled, while chemical methods often consume excessive energy.

Samsara Eco, which secured a $56 million Series A in 2022, addresses both of those concerns through its innovative enzymatic infinite textile recycling. The Australian startup’s manufacturing process operates swiftly and at low temperatures, producing a more sustainable recycled and new product. 

Paul Riley, the company’s CEO and Founder, highlighted their commitment to keeping a low carbon footprint during their recycling process. Riley also noted that their enzymatic recycling process reduces emissions and can save millions of tonnes of carbon compared to producing virgin nylon 6,6. He further said that:

“We’ve started with nylon 6,6, but this sets the trajectory of what’s possible for recycling across a range of industries as we continue expanding our library of plastic-eating enzymes. This is one giant leap for the future of sustainable fashion and circularity.” 

The company employs enzymes capable of targeting complex plastics, known as polymers, and converting them back to their original chemical composition, referred to as monomers. This unique capability is what renders the startup’s recycling technology infinite.

Here’s how the recycling process looks like and its major benefits:  

Over 90% of the nylon used in each of the Lululemon Swiftly top samples is from Samsara’s enzymatic recycling process.

In June 2023, Samsara Eco unveiled its partnership with Lululemon as its inaugural textile collaborator. The Swiftly recycled nylon marks the subsequent phase of their collaboration, fostering lower-impact alternative textiles within the apparel industry.

READ MORE: Lululemon to Recycle Textiles Infinitely with Plastic-Eating Enzymes

Collaboration and Innovation in Sustainability

For decades, scientists have dedicated extensive research efforts to discovering the most cost-effective methods for breaking down plastics, with a particular focus on polyethylene terephthalate (PET). Through collaborative initiatives and the integration of artificial intelligence (AI), practical applications of plastic-eating enzymes have been accelerated.

Other startups are also innovating in the field to help address the plastic crisis. For instance, Circ has pioneered a distinctive hydrothermal processing technology tailored for recycling blended textiles, such as polyester-cotton blends. The Circ system utilizes hot water, pressure, and chemical solvents to recycle both materials.

RELATED: Revolutionizing Textile Recycling with HTC

These innovative ventures may qualify for plastic credits or carbon credits. Each plastic credit represents the diversion or recycling of one ton of plastic waste that would otherwise have been left uncollected or unrecycled.

By incorporating plastic credits alongside carbon credits, companies can effectively address their sustainability objectives. Many organizations view reducing plastic waste as an integral component of their broader commitments to achieving net-zero emissions.

The partnership between Lululemon and Samsara Eco goes beyond mere material innovation. They embody the exciting potential and influence that can be realized through collaboration and inter-industry partnerships. This breakthrough not only heralds a pivotal moment for sustainable innovation in apparel but also for all sectors aiming to transition towards more circular models. 

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