Carbon Removal Startup Hits $100M Fund to Save Amazon Forest

The Amazon Reforestation Fund, formed by Brazilian startup Mombak, received two separate investments worth $35 million in total from Rockefeller Foundation and Canada Pension Plan Investment Board, reaching its $100mln target funding.

Mombak aims to be the world’s biggest carbon removal company generating high-quality carbon credits through reforestation of the Amazon. 

The startup’s reforestation project got support from high-profile investors including Byers Capital, Union Square Ventures, and Bain Capital Partnership Strategies. These large partners are recently joined by Rockefeller Foundation and Canada’s largest pension fund, the CPP Investments. 

Generating High-Quality Carbon Removal Credits

Mombak’s reforestation project will plant native Brazilian tree species on degraded land, ensuring trees aren’t cut down for timber production. 

Mombak’s carbon removal

The project’s activities like selecting land and plant species will use innovative technology and drones to measure carbon baselines. It also utilizes satellite imagery and bioacoustic sensors to assess biodiversity and optimize results.

The Amazon Reforestation Fund was launched in December last year aimed at raising $100 million financing to support reforestation in the region. The fund will enable Mombak to not just remove carbon dioxide but also help improve soil quality and biodiversity.

Carbon removal through nature is one of the sought-after solutions that help mitigate climate change. Forests have been the long-standing ally of the planet in avoiding too much heat by capturing carbon.  

The startup’s first project in Northern Brazil will plant 3 million trees with over 100 native species. They include 200 hundred thousand seedlings of endangered species, with over 1 million seedlings to be planted by September. 

Mombak will also start multiple projects of this kind before this year ends. The landmark carbon removal project will create jobs in the local community.

Unlike existing forests, reforesting Brazil’s pastureland to rebuild the Amazon forest produces high-quality carbon credits. It does so through additional carbon removed from the atmosphere by the new forests created. 

The project’s permanent carbon sequestration will create verified carbon removal credits that are tradable in carbon markets. They can be sold through spot trading as well as offtake agreements with end-buyers. 

The additional and permanent carbon removals created by the project attracted large investors. Rockefeller Foundation and Canada’s CPP Investments are just the two recent companies onboard.

Closing the $700B Annual Financing Gap

Canada’s largest pension fund will invest up to $30 million in Mombak’s reforestation fund and another half million in the carbon removal startup itself. Speaking for the CPP Investments, the pension fund’s global head of sustainable energies noted that:

“We expect that the value of high-quality, verifiable, nature-based carbon removal credits such as the ones produced through The Amazon Reforestation Fund will continue to rise.”

CPP, one of the largest pools of investment capital in the world, supports efforts that strengthen carbon credit markets. Investing in the potential of carbon credits is part of CPP’s pathway to net zero emissions.

CPP Investments commits its portfolio and operations to achieve net zero emissions across all scopes by 2050.

The CPP’s $30 million investment, plus a smaller outlay from the Rockefeller Foundation, brings Mombak’s Reforestation Fund to its $100 million goal, according to the company’s CEO and co-founder Peter Fernandez.

The Rockefeller Foundation is making big bets in promoting the well-being of humanity and making opportunity universal and sustainable. Its $5 million investment in Mombak’s reforestation project helps reinforce its integrity where trust is the biggest issue, Fernandez said. 

Acknowledging the importance of its small yet impactful investment, senior VP at Rockefeller Foundation Maria Kozloski remarked that nature-based solutions (NbS) play a crucial role in curbing carbon emissions but it remains short of funding. She further said that:

“[Nbs] remain grossly underfunded, with an estimated $700 billion financing gap per year… The Rockefeller Foundation is proud to help close this gap by investing in Mombak’s innovative model that seeks to remove carbon by reforesting the Amazon.”

Part of its efforts to fill in gaps in investable NbS projects, the Foundation provided a grant to Nature Conservancy. The philanthropic company also co-launched 3 other innovative initiatives namely the African Carbon Markets Initiative (ACMI), the Coal to Clean Credit Initiative (CCCI), and the Energy Transition Accelerator.

Raising the Bar for Carbon Removals

Apart from drawing in major investing companies, the carbon removal company is also working closely with leading non-government organizations. Their goal is to raise the bar in the carbon removal credit industry. 

A critical part of achieving that aim is ensuring that their reforestation projects meet the most stringent standards and requirements. As such, the startup focuses on selling carbon removal credits to high-end buyers without questioning the quality of carbon removal. These buyers use the credits to offset their own carbon emissions. 

The carbon removal industry, also known as carbon dioxide removal (CDR), is booming recently. According to CDR.fyi, CDR purchases have increased 437% in the first half of 2023, a defining moment for CDR. Purchases climbed to about 3.4 million tonnes, showing robust growth of 5.6x versus the full-year 2022. 

Leveraging this growth, Mombak has been pre-selling carbon removal credits at over $50 each, which is a premium in voluntary carbon markets.

The carbon removal company will continue to raise more funds for its Amazon reforestation projects. The startup expects to deploy $1 billion in the next 3 to 5 years. 

This recent funding not only propels Mombak towards its goal of becoming a prominent carbon removal leader but also highlights the critical role of nature-based solutions. It also underscores the need for innovative models to address the huge financing gap in carbon removal efforts.

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Lamborghini Reveals First Concept Car for Electrification Plan

Italian supercar maker Lamborghini has revealed its concept EV car Lanzador, which captures and symbolizes its sustainability and carbon emission reduction efforts as part of its “Direzione Cor Tauri” roadmap.

Lamborghini debuted Lanzador at the Monterey Car Week, marking a significant step towards its decarbonization and electrification plans. It is the super sports car brand’s first EV offering, featuring a high ground-clearance GT with 2+2 seats. 

Lamborghini’s Sustainability and Carbon Reduction Efforts

Sustainability goes beyond just a buzzword these days and has penetrated all parts of the economy, particularly mobility. Though sports car users have considered electric vehicles unnecessary, supercar manufacturers have joined the global race to net zero emissions

They have to because of the pressure both from regulators and investors. Lamborghini is the latest to take on the challenge and drive along the road to decarbonization. Under its Cor Tauri strategy launched in 2021, the sports carmaker aims to decarbonize through the following phases:

Celebrating internal combustion engine (2021-2022)
Transitioning to hybrid (by the end of 2024)
Going first full electric (second half of the decade)

The Latin term Cor Tauri means “heart of the Bull” and refers to the brightest star of the constellation of Taurus. It shows the direction Lamborghini is taking towards an electrified future, while remaining faithful to the brand’s heart and soul.

The Italian luxury carmaker has been channeling its efforts on reducing its carbon emissions for years. Lamborghini’s production site in Sant’Agata Bolognese has been certified as carbon-neutral since 2015. Emissions generated in this site are responsible for about 90% of the company’s total carbon emissions included in its inventory.

The following table shows Lamborghini’s greenhouse gas or carbon emissions for the past three years. 

There’s a slight increase in the carmaker’s Scope 1 and 3 emissions, which was compensated by a decline in Scope 2 emissions (electricity use). Scope 1 represents the majority of emissions – 60%, followed by Scope 2 with 33%.

Overall, total emissions increased by over 2% (>400 tCO2) but emission intensity (emissions/vehicle produced) dropped to 2.7 tCO2. That’s an improvement in reductions by over 15% compared to previous year’s intensity. 

The company aims to reduce its product carbon emissions by 50% by 2025 and reach carbon neutrality by 2050 for its entire value chain. It has been implementing internal carbon reduction measures while offsetting unavoidable emissions through carbon credits

Internal efforts in cutting emissions also resulted in about 44% decrease in 2022 relative to 2014 baseline. 

Lamborghini offsets its electricity consumption emissions by purchasing Green Certificates – certifying that energy is from renewable sources. While the remaining emissions are offset by buying carbon credits – each credit representing one tonne of carbon reduction or removal. 

These credits are certified and recorded in the Eco2care VER (Verified Emissions Reduction) Registry, managed by CE.Si.S.P. Since 2020, Lamborghini has purchased over 35,600 tCO2 used to offset its emissions. 

Now, for its next major decarbonization step, the supercar maker unveiled its first EV concept Lanzador. 

Lamborghini’s First EV Concept: Lanzador

The new concept car is part of Lamborghini’s broader strategy to reduce carbon emissions for a more sustainable future. It offers a sneak peek into the carmaker’s future EVs. Remarking on this great milestone, the automaker’s CEO and Chairman, Stephan Winkelmann, said that: 

“With this concept, we are ushering in a new car segment, the Ultra GT, which is poised to offer customers a new and unparalleled driving experience, one that’s quintessentially Lamborghini, thanks to groundbreaking technologies.”

The Lanzador embodies its maker’s sustainability efforts, both in its exterior and interior design, performance, and software. 

It uses 2 electric motors, one for each axle to ensure permanent all-wheel drive in all conditions and driving styles. Using battery packs instead of burning oil without affecting performance and range is a big plus for the luxury carmaker’s carbon cutting initiatives. 

Equipped with all-active control systems, the driver can actively modify the car’s behavior while on the road. Users can personalize their driving profile to best express and suit their driving needs. All thanks to Lamborghini’s “Vision of Smart Aerodynamics” future philosophy, delivering driver requests and range requirements. 

Additionally, almost all materials used for the concept car’s interior are sustainable. The use of sustainably sourced leather, 100% renewable wool, and regenerated carbon testifies the automaker’s commitment to reducing its environmental impact without giving up Lamborghini’s brand signature – comfort and luxury.

The plastic materials from recycled fibers used in the seats are 80% more eco-friendly than new plastic made of petroleum. This and the futuristic design of the sports car showcases Lamborghini’s “Feel like a pilot” approach.

Source: Lamborghini

The Brighter Road Ahead

Winkelmann also said that their electrification plan is a big part of their goal to reduce their environmental impact. With that, Lamborghini seeks to electrify its entire product range by the end of 2024.

The sports car maker invests almost 2 billion euros over 4 years to transition to hybrid technology. This is, by far, the largest investment in the history of the Italian luxury brand. 

The production of Lanzador, Lamborghini’s concept for the fourth model, isn’t a whim of engineers and designers. It is a proof of a concrete electrification plan of the super sports carmaker that it expects to bring to production in 2028.

Though it’s a huge change in Lamborghini’s 6 decades of tradition, it will keep the brand’s DNA while demonstrating where the company is heading – towards a brighter future with EVs. 

The Italian brand is not alone in this quest. Its long-standing supercar rival Ferrari has also committed to electrification, whose all-electric GT is rumored to have 4 electric motors and will debut in 2025. Ferrari is, in fact, establishing a factory to build electric motors, inverters, and batteries for its hybrids and EVs.

Lamborghini’s debut of its EV concept car Lanzador signifies a significant stride in their commitment to decarbonization and electrification while embodying a fusion of luxury and environmental responsibility. This milestone doesn’t only underlines Lamborghini’s path toward carbon neutrality but also speaks of the broader transformation in the supercar industry.

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Blackstone’s $7.1B Credit Fund to Propel Global Energy Transition

The world’s largest private equity firm and asset manager Blackstone Inc.’s $7.1 billion credit fund will help pump capital into assets that propel energy transition such as electric vehicle factories and carbon capture facilities. 

The company said that its recently closed Blackstone Green Private Credit Fund III was the biggest fund ever raised to financially support the energy transition. 

As per the head of Blackstone Credit’s Sustainable Resources Group, Robert Horn, the transition impacts major sectors of the economy. This further led to more private capital requirements.  

Funding the Energy Transition to Decarbonize the Global Economy

Innovative and revolutionary solutions are a must for both clean energy transition and industrial decarbonization. 

According to the International Energy Association, technologies that are under development can reduce over 40% of carbon emissions in 2050. Some of these technological solutions include green hydrogen, sustainable aviation fuels (SAF), and carbon capture and storage (CCS).

But these green technologies are still in their early phases and remain uncompetitive with the current carbon-intensive alternatives. Trillions of dollars in capital investments are necessary to fund their R&D and scale them up to commercialization. 

As seen below, the IEA estimates that the annual capital investment needed for net zero is over $4 trillion

Given the high risk and capital-intensive nature of those investments, there has been a shortfall in available financing today. But bridging the funding gap is crucial to decarbonize industries and reach the global net zero targets. 

Though most of global carbon emissions are covered by government net zero commitments, the private sector still has a big hole to patch. And the world needs more than $100 trillion through 2050 to decarbonize the global economy as per IEA data. 

Blackstone has committed over $15 billion in private investments that align with the broader energy transition. Its $7.1 Green Private Credit Fund III is part of the bigger $2 trillion private credit market. It’s managed by its Credit’s Sustainable Resources Platform.

Horn noted that there has been a rising demand for financing in the natural gas and renewable energy sectors. He added that incoming deals through their energy transition fund would involve sectors like carbon capture, LNG, and residential solar. 

Carbon capture (CCS or CCUS), in particular, has taken the spotlight lately, both in terms of private and public investments. 

Occidental subsidiary Oxy has acquired a carbon capture innovator startup for over $1 billion. The US government has also been betting huge in the sector and just recently revealed its $1.2 billion investment in two leading carbon capture companies, including Oxy.

Private Funding to Finance the Transition

Leveraging the rising demand for energy transition capital investments, Blackstone expects a $100 billion opportunity over the next decade. The private equity firm’s credit and insurance segment has $295 billion in assets under management. 

Its Green Private Credit Fund III includes a wide investor base comprising “sovereign wealth funds, endowments, pensions, and insurance companies”.

As part of its energy transition funding commitment, Blackstone invested $400 million in Xpansiv last year. The asset manager finds Xpansiv, the largest ESG-commodity trader, to have a sweet spot for the energy transition. 

Meanwhile, the S&P Global Commodity Insights Climate and Cleantech reported that private debt represented 22% of a certain energy transition project financing from September last year to June this year. This figure shows an expanding role of private funding or lending in energy transition financing. 

The Inflation Reduction Act (IRA) and other government subsidies further amplify the need for private financing such as Blackstone’s fund. In a sense, the more subsidies or government grant programs made available, the more capital investments are needed. And Blackstone will help fill it up through its $7.1 billion private credit fund. 

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An Introduction to Hydrogen Energy

These days, with the importance of furthering the fight against climate change, more and more different options are being explored. Making the transition to clean renewable energy is one of the centerpieces of our net zero future, and one of these potential sources is hydrogen energy.

The International Energy Agency (IEA) projects that from here out to 2050, hydrogen energy will play a small but noticeable role. It accounts for 6% of the cumulative emission reductions needed to hit our net zero targets by mid-century.

But what is hydrogen energy, exactly? And what does it do that other sources of clean energy can’t do right now?

Let’s start with the fundamentals of hydrogen energy: how does it work?

Hydrogen Fuel: The Basics

The first thing to know about hydrogen energy is that hydrogen is a fuel.

What that means is that like other fuels, such as coal or natural gas, we can burn it to create energy.

However, when burned in a fuel cell, the only emission from hydrogen energy is water.

Unlike fossil fuels that emit greenhouse gasses, hydrogen fuel can burn 100% clean – or mostly clean, depending on how it’s done.

In a hydrogen fuel cell EV or FCEV, hydrogen is burned with pure oxygen in specially made cells to create water.

However, there’s also a type of hydrogen vehicle called the hydrogen internal combustion engine vehicle, or HICEV.

HICEVs are actually very similar to our current, commonly used gas-powered vehicles. Indeed, many HICEV prototypes have simply been modified versions of previously existing vehicles, as shown below:

HICEVs burn hydrogen fuel with air in order to generate energy. Since there’s no carbon in the fuel, no carbon dioxide is emitted in the process.

However, since air contains nitrogen, the byproducts from burning hydrogen in an HICEV include nitrogen oxide (NOx) alongside water. And while NOx isn’t a greenhouse gas, it’s an air pollutant that contributes to smog.

And while traditional gas-powered vehicles produce significantly greater amounts of NOx, the fact that HICEVs produce some as well means that they’re not true zero-emissions vehicles – even if this can be mitigated with catalytic converters much like in a regular car.

Even with that taken into consideration, however, both FCEVs and HICEVs produce zero carbon emissions, which are the main focus of our net zero transition.

As a result, hydrogen is being considered for use in vehicles as a replacement for traditional gas-powered internal combustion engines, alongside electric vehicles (EVs).

Why Hydrogen Fuel?

Now, you’re probably thinking – EVs are everywhere, and chances are pretty good that your local dealership has several on their showroom floor, whether they’re plug-in hybrids or fully electric battery EVs.

But if you’re reading this article, there’s a good chance you’ve never even heard of hydrogen-powered cars. Much less be able to drive one off a lot yourself (unless you happen to live in China, Japan, South Korea, or Germany).

Haven’t EVs already established themselves as the dominant replacement option for gas-powered cars? What could hydrogen bring to the table that EVs can’t offer?

Here are some of the major advantages and disadvantages of FCEVs and HICEVs (referred to as H2-ICEs in this table) vs. traditional EVs, as well as a fourth option: biogas/synthetic fuel:

As you can see, regular EVs and FCEVs share many of the same advantages and disadvantages. But HICEVs are slightly more advantageous on a couple of measures as a trade-off for not being 100% emissions-free vehicles.

One thing not mentioned in the table above is that hydrogen vehicles generally have the same range as their traditional gas-powered counterparts. In contrast, battery EV owners must shell out the big bucks if they want their vehicle to have a range competitive with that of a regular car.

These longer-range EV batteries would weigh more, in turn causing the vehicles to use more energy. Hydrogen fuel’s energy density is significantly higher than that of batteries. As such, a hydrogen vehicle of equivalent range would weigh much less than the battery EV equivalent.

A longer-range battery EV also directly translates to a longer charging time. In contrast, refilling a hydrogen vehicle is essentially identical to how you fill up your car at a gas station.

In summary, hydrogen vehicles, and HICEVs in particular, offer a number of competitive advantages over battery EVs. But they do have their own disadvantages too. Hydrogen fuel is more difficult to store than electricity, for instance.

The main barrier to mass adoption for both EVs and hydrogen vehicles is that they require extensive build-out of refueling infrastructure. But EVs do have an advantage in this regard as many battery EV owners can recharge their vehicles at home, even if the process is slow.

That’s why battery EVs are winning – at least for now.

How Do We Get Hydrogen Fuel?

That battery EVs can be charged at home is perhaps the biggest advantage battery EVs have over hydrogen vehicles right now. Electricity is all around us and part of our daily lives. Hydrogen fuel, however, would require production and distribution facilities just like how gas stations need to get their gas from refineries and bulk storage terminals.

Unlike oil, however, hydrogen doesn’t naturally form in large quantities on Earth. There aren’t any hydrogen formations we can drill down into to start producing from. Instead, hydrogen fuel needs to be produced through manmade processes.

There are two main methods of hydrogen production: from natural gas, and from water.

The former is known as blue hydrogen. This type of production usually combines methane from natural gas with high-temperature, high-pressure steam to form hydrogen and carbon monoxide. This process is known as steam methane reformation.

Currently, this is how the world gets most of its hydrogen. However, since methane contains carbon, inevitably we end up with carbon emissions. That would mean we need some method of capturing and storing the carbon emissions to make this hydrogen a clean energy.

However, hydrogen can also be produced from the electrolysis of water, which is known as green hydrogen.

It’s rather aptly named, as the process uses electricity to split water into hydrogen and oxygen, thus creating zero harmful emissions – it’s as green as it gets.

Now obviously, between the two it’s clear that green hydrogen is the preferred method of production.

The problem, unfortunately, is that green hydrogen is the newer tech of the two. It still needs to solve a major issue before it can take over blue hydrogen’s role as the world’s primary source of hydrogen.

Producing green hydrogen is extremely power-intensive, even much more expensive than blue hydrogen – a bit over 3x. That’s why lowering the cost of green hydrogen is one of the main focuses in the hydrogen industry right now.

In fact, back in June 2021, the U.S. Department of Energy launched its “Hydrogen Shot” program. It aims to reduce the cost of green hydrogen by 80% by the end of the decade.

The U.S. DOE’s “1 1 1” Hydrogen Shot initiative

This puts the cost of green hydrogen production at $1 per kilogram, which would be below even blue hydrogen’s average cost of around $1.50 per kilogram.

Of course, this is an ambitious goal, and it’s uncertain if getting to $1/kg by 2030 is feasible. But any advancements in green hydrogen tech will significantly benefit the adoption of hydrogen energy as a whole. Unsurprisingly, there’s a lot of work going on in this field.

Hydrogen and Carbon Credits

While it’s still early days for the hydrogen energy industry, there are already clear use cases – and clear synergies.

Carbon credits are one of those synergies that perfectly go hand-in-hand with hydrogen fuel. Hydrogen fuel is primarily being advocated for use in vehicles. So, you can look at the electric vehicle industry to see how things work out.

Major EV maker Tesla, for instance, has generated around a billion and a half dollars each year since 2020 from carbon credits resulting from the sales of their vehicles.

It seems logical, then, to expect that hydrogen fuel vehicle makers would benefit the same way as battery EV companies.

On top of this, green hydrogen production would be another potential avenue for carbon credits.

Hydrogen is actually used in many industrial processes, including making fertilizers, refining oil, and manufacturing steel:

The world uses a lot of hydrogen – 95 million tonnes of it in 2022. That’s why there’s a significant case for clean hydrogen production, even before bringing hydrogen vehicles into the picture.

As development continues on transitioning hydrogen consumption towards net zero, whether through the addition of carbon capture and sequestration to blue hydrogen production or further technological advances in green hydrogen production, you can be sure that carbon credits will have a role to play.

The Future of Hydrogen in a Net Zero World

Right now, the hydrogen energy sector is still in its nascent early stages of growth.

Cheap, clean hydrogen production remains one of the primary obstacles the industry must contend with before hydrogen energy can really start seeing widespread adoption.

Luckily, hydrogen is highly in demand in a number of other industries as well. So there’s plenty of incentive behind cleaning up blue hydrogen or lowering the cost of green hydrogen.

In fact, Mckinsey & Company estimated that the total hydrogen production capacity announced by companies by 2030 increased by over 40% to 38 metric tons per annum. This capacity is about half the volume necessary to be on track to net zero (75 Mt p.a.).

Total announced direct investments in hydrogen also grew from $240 billion to a whopping $320 billion to date.

Source: McKinsey & Company Hydrogen Insights

Back in 2021, Swedish steelmaker SSAB built a pilot plant to produce the world’s first fossil fuel-free steel. The facility is using green hydrogen in place of coking coal in the iron ore reduction process.

The company is still in the process of transitioning its steel production. They expect to be able to go fossil-free on most of their steel production by 2030. BUT they’ll need more hydrogen to do it.

Hydrogen vehicles also have competition in the form of battery EVs. They also face the same challenges of requiring the extensive build-out of a distribution and refueling network.

But when it comes to vehicles, there’s one niche hydrogen fuel has where battery EVs have a harder time competing. That niche is heavy industry and long-distance transport. The superior energy density of hydrogen fuel makes it a more attractive solution for this segment.

For instance, trucks that need to drive very long distances with heavy loads and intermittent access to charging – such as many truck routes through the interior of North America – would find hydrogen fuel a perfect fit for their needs.

Some vehicle manufacturers are even hedging their bets by making hybrid hydrogen fuel battery vehicles. They’re much like plug-in hybrid EVs except with hydrogen fuel instead of gas.

Of course, hydrogen refueling infrastructure is still sorely lacking and lagging behind battery charging infrastructure. Unless you live in one of a few countries that made hydrogen energy a central part of their energy transition:

Still, hydrogen fuel will have a major role to play in the coming decades. Currently, hydrogen accounts for around 1.6% of global final energy consumption. The bulk of it is used for refining and industrial purposes as detailed previously.

The IEA’s net zero forecast calls for hydrogen usage to grow sixfold by 2050 to account for 10% of total final energy consumption, all supplied from low-carbon sources. 

As of last year, over 30 countries have developed, or started to prepare, national hydrogen strategies, joining France, Japan, and South Korea – the first three countries to do so.

It may still be early, but you can expect lots of development and advancements in the hydrogen energy field in the years to come as governments and corporations alike further work hydrogen into their clean energy transition plans.

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America’s Richest 0.1% Emits 62x More Than a Typical US Household

A new study led by the University of Massachusetts Amherst suggests that America’s richest people, whose investment income are responsible for the considerable part of the nation’s carbon emissions, should be taxed. 

The researchers found that the top 0.1% wealthiest Americans emit 3,000 tons of carbon a year, or equal to over 62x more than what a typical American household emits – 48 tons. 

The authors of the study published in PLOS Climate said they aim to get the answer to this question: “What happens when we focus on how emissions create income, rather than how they enable consumption?”

They examined huge datasets covering 30 years to determine how income relates to carbon emissions. Their results call on US lawmakers to reconsider the current carbon taxation to address climate change. 

Richest Americans’ Share of The Nation’s Carbon Emissions 

The study’s model provided a carbon footprint for every dollar of economic activity in the U.S. The researchers did that by looking at inter-sectoral financial transfers and their associated flow of income and carbon emissions. They then came up with 2 different values for income’s carbon emissions – supplier and producer

The supplier value refers to emissions from industries/companies that supply fossil fuels while the producer value refers to carbon emitted directly from business operations themselves. 

The researchers then linked that information to households using data showing industries where people work and their earnings. They analyze data income from two different sources: active income from employment (wage/salary) and passive income from investments.

As such, their study is the first to link income from financial investments to carbon emitted in generating that earning. Here are the major insights they found out.

The Key Facts:

For 90% of Americans, wages give them the money they need to live and buy things they want. These people are in the lower and middle income households whose carbon emissions are mostly linked with their salaries. 

But for the wealthiest 10% (Top 1%+Next 9% income group), they’re getting most of their income passively from investments. And the researchers found that over 40% of the country’s national emissions were from the income of those 10%. These wealthy people earn more than $178,000 annually.

The authors also discovered that the higher income group pollutes more through their investment income. In particular, the top 1% wealthiest Americans are responsible for up to 17% of the country’s total emissions. These extra rich people make more than $550,000 a year.  

Most notably, their results also included the top 0.1% or the “super-emitters” as what the authors call them. These extremely wealthy Americans get most of their income from investing in finance, insurance, and mining industries, the report said. Their investment income drives >50% of emissions.

They’re called super-emitters because they’re responsible for producing around 3,000 tons of carbon each year. Compare that with 2.3 tons of carbon per year – the emissions limit for each person to mitigate global warming, and to the typical American household emissions of 48 tons a year

The authors also shared this insight: 

15 days of income of the rich in the top 0.1% pollute as much carbon as a lifetime of income for those in the bottom 10%.

The study further suggests that income size isn’t the only contributor to climate but also the industries that create it. 

For instance, a household that earns $980,000 from fossil fuel industries is a super-emitter. However, a household sourcing income from the hospital industry has to earn $11 million to generate the same amount of carbon.

With these facts, the lead author, Jared Starr, noted how relevant their findings are for policymakers, saying that:

“This research gives us insight into the way that income and investments obscure emissions responsibility… An income-based lens helps us focus on exactly who is profiting the most from climate-changing carbon pollution, and design policies to shift their behavior.”

Tax The Rich People’s Income Instead of Consumption

The researchers recommend that governments must rethink how they use carbon taxes. Rather than taxing things that people buy, (consumption-based approach), policymakers should focus instead on making shareholders responsible for the carbon emissions of their investment incomes. 

The authors believe that a shareholder-based taxation can help countries achieve the goal of keeping global temperature levels to 1.5C. 

According to Starr, consumption-based taxation misses something crucial about limiting carbon emissions and noted that it is rather “regressive”. It means the carbon tax punishes the poor and has little impact on the wealthiest people whose large amount of income is saved or reinvested into stocks. That portion of income is, therefore, not subject to a carbon tax. 

Take for instance the case of the top 1% of household earners who’s responsible for 15-17% of national emissions. That carbon pollution is about 2.5x higher than their consumer-related emissions (6%), as per the report. 

The trend is exactly the opposite for the bottom 50% of American earners whose share of national emissions is 31%. That’s 2x more than their income-based carbon emissions (14%). 

The further the income distribution goes up, from the top 10% to top 0.1%, the more carbon emissions are generated from investments, instead of salaries the households earn. 

Thus, carbon taxes focusing on shareholder income linked to carbon emissions seem to be more reasonable, the authors suggest. This can help incentivize the rich people who significantly profit from their carbon-intensive investments such as oil and gas to decarbonize their industries. The government can then use the revenues earned from their taxes to invest in decarbonization initiatives. 

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Cargill Pioneers Wind-Powered Ship With 37.5M High Sails to Cut Emissions

America’s largest private company and world’s largest agricultural shipping firm, Cargill, has made its maiden voyage using special sails powered partly by the wind. The goal is to study how wind power can help reduce energy use and carbon emissions of cargo ship and the entire sector.

Cargill is hauling 225 million tons of dry bulk cargo around the world each year on over six hundred vessels. One of these cargo ships is retrofitted with WindWings sails designed to cut fuel use, and thus, shipping’s carbon emissions. 

Harnessing Wind Power to Decarbonize Shipping

The maritime industry currently accounts for almost 3% of global carbon emissions largely because of its reliance on carbon-intensive bunkers. And over 80% of the global merchandise trade by volume is shipped by sea. 

According to the International Maritime Organization, the industry is producing over 830 million tonnes of carbon each year. That’s equal to spewing as much CO2 as 283 coal-fired power plants do in a year. 

The industry faces pressure from environmentalists and investors to accelerate decarbonization. As such, major players have been exploring some ways to shift away from dirtier fuels to cleaner power sources. And Cargill finds renewable wind power a promising option to explore. 

One of the commodity giant’s chartered massive cargo ships, 80,000-ton Pyxis Ocean just sailed from China to Brazil using two gigantic sails called WindWings. The ship is owned by Mitsubishi Corporation’s shipping arm while creating the revolutionary sails is also funded by the European Union

The pioneering wind-powered carrier is the world’s first to be retrofitted with two 37.5 meters or 123-foot high sails. When the vessel is in port, the wings, made from the same material as wind turbines, fold down and open out when in open water. 

The enormous wings can reduce the ship’s fuel consumption by about ⅕, according to its designer BAR Technologies. This maiden sail is an opportunity for Cargill to see if returning to the traditional way of moving ships would be the way forward for transporting goods at sea.

If the test becomes a success, the charterer will install WindWings to ten more ships. After all, “wind is there for free”, as Cargill’s ocean transportation president Jan Dieleman says. He further added that there’s no silver bullet to decarbonize the industry but believes that wind-assisted propulsion technology can help. 

Wind-Powered Sails Are Making a Comeback 

Sailing through the wind has been the way of moving things and people until powerful fossil fuel-powered ships took over. Now, wind-powered shipping is making a comeback, though not that fast.

Pyxis Ocean joins a tiny fleet of only 2 dozen large commercial ships run by some form of wind-assisted propulsion. For more than 110,000 new-build order vessels, only below 100 feature wind-assisted technology currently. 

But if more ship owners, operators, and charterers choose to also use renewable energy to fuel their fleet, it can make a huge difference in cleaning up the dirty shipping industry. 

For America’s largest private firm by revenue, the groundbreaking technology can help reduce emissions and decarbonize bulk cargo by 30%. The company also claimed that installing WindWings is possible for both existing cargo ships and new constructions. 

According to Yara Marine Technologies, the company that produced the sails, giant crude carriers can install up to six WindWings. That means more fuel and carbon emission savings. 

If the vessel is powered by a clean fuel (e.g. green methanol), the sails can drive down costs. If the cargo ship is burning fossil fuels, wind power can reduce carbon emissions. 

Here’s the estimated fuel savings of installing WindWing as per BAR Technologies:

1 WindWing sail can save 1.5 tons of oil-derived fuel per day on an average route
2 WindWing sails like the Pyxis Ocean can save 1,095 tons a year (20% of what a Kamsarmax vessel consumes each year)
Installing 3 WindWing sails on Kamsarmax ship can save about 30 tons on fuel

Saving 1 ton of marine fossil fuel use is equivalent to reducing about 3 tons of carbon dioxide emissions. 

These savings on CO2 emissions is critical as the global shipping industry has to meet its ambitious targets. And same with the rest of the industries, it has to reach net zero emissions by 2050. 

Other parts of the sector have been using innovative technologies on their ship to help cut down carbon emissions. 

In June, a Norwegian cruise line made headlines by sailing the world’s most energy-efficient and first zero emission cruise ship. It’s also harnessing the power of the wind, plus the sun with its solar panel-covered retractable sails. Other efforts focus on ammonia and hydrogen for clean shipping. 

While wind-assisted propulsion technology won’t make a huge impact right now in cleaning up the sector, it’s gaining some traction. BAR Technologies and Yara Marine have another project to install WindWing sails on a different vessel. 

Cargill’s groundbreaking move is to help their partners in the maritime industry transition to a more sustainable future. As Dieleman remarked, 

“We’re always used to going the shortest way… Now, you might want to go the way where there’s more wind.”

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Nature-Based Carbon Offsets Crucial in the Road to Net Zero

While a few instances may have tarnished its reputation, dismissing all carbon offset projects as “greenwashing” because of a few probable bad actors is like throwing the baby out with the bathwater.

How Effective Are Carbon Offsets?

In the face of the escalating climate crisis, the urgency to achieve net zero emissions has never been more pronounced. The world is confronting a climate emergency, underscored by the unmistakable extreme weather patterns occurring across the globe. Given these circumstances, it is surprising that we even are having this debate. 

Amid the discussion around a few possible cases of potential exaggeration, carbon offsets often come under fire for being viewed as a convenient “get-out-of-jail” card for emitters. Critics argue that these offsets allow companies to maintain their emissions without addressing the root causes.

However, this perspective fails to acknowledge that the process of transitioning towards a low-carbon economy is both intricate and gradual. The road to a net zero state demands attention not only on emission reduction but also on carbon sequestration.

The goal of net zero, simply put, involves balancing the amount of greenhouse gases emitted into the atmosphere with an equivalent amount removed. As we strive to find this balance, carbon offsets offer a pathway that harmonizes economic growth with ecological restoration.

The essence lies in enhancing natural systems like forests, wetlands, and farmlands absorbing more carbon dioxide than they release.

The IPPCC report earlier this year underscored the immediate and pressing necessity for more ambitious actions aimed at emission reduction.

In this perform-or-perish battle, it’s crucial to acknowledge that nature-based carbon offsets were never meant to be a standalone approach. Rather, they are just one piece in the broader strategy to reduce emissions. While there have been instances of problematic nature-based carbon offsets, there are also legitimate offsets that reduce and mitigate emissions.

Let’s look at some statistics.

According to the United Nations Framework Convention on Climate Change (UNFCCC), 13 out of the 60 developing countries which reported REDD+ activities to the UN Climate Change Secretariat, reported a reduction of almost 10 billion tons of carbon dioxide. That is almost twice the amount of greenhouse gas emissions from the United States in 2020, and taking 150 million cars off the road for a year. 

REDD stands for ‘Reducing emissions from deforestation and forest degradation in developing countries. The ‘+’ stands for additional forest-related activities such as sustainable forest management and conservation, and enhancement of forest carbon stocks. Projects under REDD+ regulated by the United Nations can yield results-based payments for emission reductions when they reduce deforestation.

Undoubtedly, transforming REDD into a market-based mechanism holds great potential as a critical action to combat climate change. At the same time, it advances the SDGs agenda in the Global South.

Beyond natural ecosystems, agriculture plays a pivotal role in the carbon offset narrative. Sustainable farming practices, such as zero-till or reduced-till farming, agroforestry, cover cropping etc. bolster soil health while simultaneously capturing carbon.

Agroforestry, for instance, involves integrating trees into farmland, enhancing carbon sequestration and providing numerous benefits such as improved soil fertility, water conservation, and diversified income streams for farmers. 

No-till farming involves growing crops without disturbing the soil, resulting in numerous benefits. These include reduced soil erosion, improved soil health and air quality, and increased water retention. It can also sequesters 0.3 tons of carbon/acre/year, noted by a Soil Society of America paper

As has happened in the Canadian Prairies.

The Canadian Agri-Food Policy Institute notes that the adoption of “no-till methodology has had a dramatic impact on carbon losses in western Canada, moving the provinces from a net loss of carbon to a net gain position since 1981”. 

In fact, carbon sequestration in Saskatchewan farmlands due to zero till farming is in the range of 0.3 to 0.65 tons per acre per year, according to another study conducted by GHG Registry, an organization founded by a group of academics focused on creating rigorous scientific standards for carbon sequestration projects, and the scientific team of CarbonTerra, a Saskatchewan-based company engaged in building a carbon-neutral agriculture ecosystem in the province.  

Aside from providing farmers with an additional income stream, the process augments soil organic carbon content. For example, the Chicago Climate Exchange currently compensates land managers with approximately $2 to $3 per acre for adopting practices like conservation tillage to sequester CO2, the Soil Society of America paper notes.

This improvement in soil composition leads to heightened productivity, decreased soil erosion and nutrient runoff, and improved water quality. Soil carbon sequestration thus presents a mutually beneficial outcome for both the agricultural sector and the environment.

Further, such sustainable farming practices also lead to a decrease in the utilization of equipment and labor on agricultural land. Thus, cutting down fossil fuel emissions associated with these operations.

In fact, studies have estimated that adopting no-till practices can result in as much as a 71% reduction in the GHG impact compared to conventional tillage methods.

Carbon Offsets a Powerful Tool

Nature-based carbon forest offsets allow individuals, companies, or governments to offset their carbon footprint by investing in projects that remove or reduce carbon dioxide from the atmosphere. This helps neutralize emissions and combat climate change. 

The industry has two segments: the compliance market, where entities are legally required to offset their emissions under regulations or agreements, and the voluntary carbon market, where entities choose to offset their emissions for ethical or reputational reasons. It is the voluntary market which has been under scrutiny in recent times.

In general, the offset industry is experiencing remarkable growth. The value of the global carbon credit market reached upwards of $850 billion in 2021, a 164% increase from 2020, according to Refinitiv.

Meanwhile, the voluntary carbon market alone grew at a record pace, reaching $2 billion—four times its value in 2020. And the pace of purchases is still accelerating in 2022, according to a report by BCG. By 2030, the market is expected to reach between $10 billion and $40 billion.

The nature-based carbon offset market was valued at $0.6 billion in 2020. This represents just 0.01% of the compliance credit market, as per a report from HSBC Centre of Sustainable Finance. However, according to BCG, nature-based solutions will be one of the most popular project types in the voluntary carbon market.

Need For Robust Regulations

As the regulatory frameworks struggle to keep pace with this rapidly evolving global market, as is with any new industry, the carbon offset sector is presently grappling with teething troubles.

Nonetheless, these obstacles didn’t deter the agri-foodtech investors from placing carbon-related startups at the forefront of their investment priorities for 2023, as noted by the AgFunder Global AgriFoodTech Investment Report 2023.

Establishing norms for strong governance, independent verification and standards of the market are crucial steps for reliable nature-based carbon offsetting. So are tackling issues such as additionality, leakage, and permanence.

The 2015 Paris Agreement had already established guidelines for proper accounting of offsets, laying the groundwork for their integration. 

Last month, the Integrity Council for the Voluntary Carbon Market (ICVCM) published its full Core Carbon Principles (CCP) Assessment Framework. It sets high standards that aim to elevate the quality of the voluntary carbon market. ICVCM claims the CCP Framework will help restore confidence, deliver impact and attract increased investment for urgently needed climate solutions.

At the same time, ICVCM has also emphasized that there is no path to 1.5C without nature-based solutions. 

Earlier, the new Claims Code of Practice released by the Voluntary Carbon Markets Integrity Initiative (VCMI) in June this year, provided guidance for private companies and other non-state actors on how to use carbon credits to achieve their short-term emissions reduction goals and long-term net-zero commitments. The VCMI recommends that companies “must purchase only high-quality carbon credits representing emissions reductions and/or removals from outside the value chain of the company”. 

These are promising strides toward enhancing transparency and establishing standards within the carbon offset market. They replace the wide array of norms and a patchwork of regulatory systems across countries.

Let’s be honest, the recent critiques of nature-based carbon offsetting actually is a boon in disguise that is providing us with an opportunity to reflect on the state of the market and learn valuable lessons.

Already what is emerging as an encouraging trend is buyers showing a clear preference for a reputable monitoring, reporting, and verification (MRV) framework as a top criterion for purchasing credits. Over 90% of buyers rank MRV as a major factor in credit purchase decisions, noted the BCG report.

As the focus on carbon offsets intensifies, buyers are increasingly inclined to ensure that the credits they acquire are high-quality. Or what ICVCM calls them “high-integrity”, thereby safeguarding against accusations of greenwashing.

Despite the initial teething troubles, the carbon industry has great potential to really contribute to the fight against climate change. But for that, the industry must be open to criticism and willing to evolve.

By concentrating on proven approaches and achieving substantial net negative emissions on a large scale, we can cultivate public trust. Meanwhile, it is also imperative for all stakeholders including governments, regulators, and even investors, to demonstrate a responsible and ethical approach to carbon offsetting.

Contributed by: Anusuya Datta and Rachel Hor

Author Bios

Anusuya Datta: A writer/journalist with a special interest in earth observation and sustainability issues. Anusuya has written for several international platforms, including Geospatial World, Space News, and CBC among others.

Rachel Hor: Founder and COO, CarbonTerra. An experienced and proven global technology and business leader, Rachel is passionate about climate sciences while having vast experience in the financial services space globally and has led technology transformation. Her recent work is focused on sustainability in various verticals. 

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Google Signs Up Shell’s SAF Program to Cut Business Travel Emissions

Google has joined a Shell-backed sustainable aviation fuel (SAF) program intended to scale up SAF as part of its stride to be carbon neutral throughout entire operations by 2030.  

The SAF program called Avelia was launched last year by Shell and American Express Global Business Travel (Amex GBT). It allows airlines to sell SAF and corresponding carbon credits to business customers. 

The world’s most popular search engine is the latest multinational corporation to sign up for the SAF and carbon credit program. 

Reducing Aviation’s Carbon Emissions with SAF

Aviation is one of the sectors that finds it challenging to reduce its carbon footprint and reach net zero emissions. And business travel is a critical customer segment for airlines as it generates 40% of their revenues. It also represents about 15% of global air travel, as per Amex GBT president Andrew Crawley.

Crawley further noted that having Google onboard their SAF program shows how corporate collaboration can help make travel more sustainable. It can also help ramp up the aviation industry’s transition to net zero.

Why Avelia?

Shell and Amex GBT launched the Avelia program with the goal to provide companies with access to SAF and use it to reduce their business travel emissions. The paid premium price will also ramp up the demand for emerging low-carbon biofuels like SAF. 

Avelia is the first blockchain-powered SAF “book and claim” tool built together by Shell Aviation, Accenture, and Energy Web Foundation. The initiative aims to offer 1 million gallons of SAF credits to buyers, equivalent to powering about 15,000 corporate travels from London to New York.

As Shell Aviation puts it, 

“Avelia aims to jumpstart the SAF market by enabling business travelers and airlines to share the benefits of SAF while each receiving respective credit for the associated carbon emission reductions.”

SAF is made from renewable and sustainable resources that can be combined with fossil-based jet fuel to slash emissions. As a ‘drop-in’ fuel, airlines can use SAF without the need for modification and it’s currently in use. 

Experts consider SAF as one of the most promising solutions to accelerate the sector’s transition to a low-carbon future.

Source: Amex GBT website

Joining the Avelia program enables Google to receive the credits for the amount of carbon emissions their purchased SAF reduces. Each credit represents a tonne of reduced carbon emissions. 

Google’s Flight Toward A Green Future

For years, Google has been investing in low-carbon initiatives that can help reduce global carbon emissions. From its eco-friendly routing to the green cloud, the tech giant commits to reaching carbon neutrality across its entire value chain. 

This recent move brings Google’s commitment to aviation. It’s joining other major companies that commit to decarbonize the sector such as insurance firm Aon and Bank of America. Major airlines are also onboard the program, including JetBlue, Delta, Japan Airlines, and Cathay Pacific, among many others. 

The tech major believes that SAF plays an important role in driving down aviation’s carbon emissions. Google’s climate and energy director said that signing up in Shell and Amex GBT’s SAF program “represents Google’s continued efforts to accelerate the global transition to a carbon-free future”.

Just like how the tech company leverages its eco-friendly Map feature, Google is also partnering with key industry players to help pilots pick flight paths with the lowest emissions. 

This is in line with its latest research initiative with American Airlines and Breakthrough Energy. They aim to harness the power of AI data mapping to tackle the impact of aircraft contrails on the climate. This can further help reduce airlines’ carbon footprint, alongside the use of SAF.

Why Promote SAF?

Compared to conventional jet fuel, SAF can cut a plane’s flight emissions by up to 80%. That’s because it can be made from renewable sources like crops, animal fats, waste oils, municipal waste, and captured carbon.

However, sustainable fuel comprises less than 0.1% of global aviation fuel available right now. Plus, it costs more than conventional jet fuels, about 2x to 8x higher. 

Thus, some are doubtful if there would be enough input to satisfy the growing demand for SAF and if its cost can be cut down to make it affordable for the airlines to use.

Despite these concerns, Amex GBT believes that SAF is critical in decarbonizing aviation, accounting for 90% of business travel emissions. This figure highlights the crucial need for corporations to address their air travel carbon footprint. 

Amex GBT has over 19,000 corporate clients globally and Shell Aviation has major airlines as customers. Combining their client base in forming Avelia, together they think that the program can help reduce costs and increase demand to scale SAF. Google’s signup helps them send a significant investment signal to the market. 

There are also important milestones happening in the sector that contribute to ramping up SAF and top-up demand. 

In April, JPMorgan Chase, Bank of America, Meta, Boston Consulting Group, and other major firms agreed to buy SAF credits. They join together as members of the Sustainable Aviation Buyers Alliance (SABA) aimed to boost demand for biofuel.

Also, earlier this year, United Airlines launched a $100 million investment vehicle for SAF. Last month, a climate tech startup Twelve revolutionized SAF production in the US by breaking ground in its commercial facility that turns captured carbon into biofuel.

By promoting sustainable aviation fuel and carbon reduction, Google, Shell Aviation, Amex GBT, and other companies embody the commitment of corporations to pursue a greener business aviation travel.

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Fueling the Future: Lone Cypress Energy Project Revolutionizes Blue Hydrogen

In the heart of California’s Elk Hills Field, a hydrogen revolution is unfolding. The Lone Cypress Hydrogen Project is ramping up with a daily production capacity of 65 metric tonnes, positioning the company as the Western US’s blue hydrogen leader. 

The project isn’t just impressive; it’s a game-changing venture of Lone Cypress Energy Services. The initiative aims to convert methane emissions into blue hydrogen, an innovative approach that can potentially transform the energy sector. 

The project’s Front-End Engineering Design (FEED) study was successfully completed. It was a collaboration between Lone Cypress and its strategic partner Carbon TerraVault JV Holdco, LLC (CTV). CTV is a joint venture of California Resources Corporation (CRC) and Brookfield Renewable. 

The project will utilize carbon sequestration assets developed by CTV.

Championing a Greener Energy Sector

Lone Cypress Energy Services is an energy company specializing in hydrogen generation, waste-to-energy solutions, and traditional oil and gas midstream facilities, boasting 100 years old combined experience. 

California Resources Corporation is an energy and carbon management company spinning out from Occidental Petroleum in 2014. CRC currently holds the biggest mineral reserves in California, producing some of the US’s lowest carbon-intensity oil. 

Brookfield Renewable is a global leader in renewable power, operating a vast portfolio of hydroelectric, wind, solar, and storage facilities worldwide. They’re under Brookfield Asset Management, a global company with assets under management worth about $850 billion.

Greg Brooks, Lone Cypress’ President and CEO, emphasized the importance of the study, stating it validated both the technical and commercial viability of the project. He also expressed confidence in the project saying:

“…this facility will generate the most cost-competitive low-carbon liquid hydrogen in the Western United States.”

The Lone Cypress project is not just about energy but is also an economic dynamo. It will inject over $500 million into California’s local economy and bring benefits to the community. 

With 1,200+ future jobs during its construction phase, the project will significantly uplift employment in the state. The best part is that it will help in the global efforts in slashing carbon emissions. 

The Lone Cypress Hydrogen Project’s integrated carbon capture system is a marvel. It will store 500,000 metric tonnes of CO2 annually, which is like erasing 100,000 cars from the roads.

What’s Next for Lone Cypress Hydrogen Project?

Strategic location matters and Lone Cypress knows it. Sprawling over 300 acres at CRC’s Net Zero Industrial Park at Elk Hills Field, the project has the potential to be California’s hydrogen hub. The company ensures this through its FEDD study design to maximize impact and reach. 

Money flows to innovative efforts. Drawing a staggering $1.5 billion in investments, Lone Cypress has caught the eye of major energy stakeholders. Sustainability-focused funds are flowing through the project’s promise of a sustainable, profitable future.

CorEnergy Infrastructure Trust, for instance, also supported the development of the project with about $1 million.

The initiative also shows how collaboration among industry leaders is critical in advancing this kind of project. With over 10 industry players working together, including CRC and Brookfield Renewables, the project is a joint force of giants.

Market analysts are buzzing with predictions for Lone Cypress. They estimate that by 2026, the project will cater to up to 5% of California’s hydrogen demand. 

Following the FEED study, Lone Cypress has submitted the necessary permits and is in the process of finalizing agreements for hydrogen off-take from the facility. A final investment decision is due by this year-end, with the project beginning operations in the 4th quarter of 2025.

Harnessing state-of-the-art steam methane reformation technology for blue hydrogen production, Lone Cypress is pushing boundaries and setting new industry standards. 

The Race for Hydrogen Plants and Vehicles

Blue hydrogen refers to hydrogen gas that’s produced through steam methane reforming (SMR), a type of natural gas reforming process. The key characteristic of blue hydrogen is that producing it uses fossil fuels, primarily methane, as the input.

The Steam Methane Reforming Process

Source: energypost.eu website

The Lone Cypress project is the first carbon sequestration project under CRC’s “carbon terra vault” initiative, aiming to capture and store 200 million metric tons of CO2 at an estimated cost of $2.5 billion. This initiative is in partnership with Brookfield Renewable. 

Despite its modest size, this project using a hydrogen plant is notable for its approach and meaningful for California Resources’ rollout of carbon capture and sequestration technology. According to them, it will be the first of many projects to come. 

But CRC is not the only major player in the field. Two other oil giants are considering blue hydrogen facilities to generate hydrogen. Texas-based ExxonMobil Corp also unveiled last March its plan to build a blue hydrogen plant at its facility in Baytown.

It’s worth noting that blue hydrogen is part of a broader conversation around transitioning to cleaner energy sources and reducing carbon emissions. Many people are not aware that the global hydrogen market is worth $120 billion.

S&P Global estimates blue hydrogen’s global production capacity will be over 3 million metric tons a year in 2028.

Source: S&P Global

The idea behind blue hydrogen is to mitigate the emissions of producing hydrogen, making it more eco-friendly compared to conventional hydrogen production, though it still relies on fossil fuels, unlike green hydrogen. Green hydrogen is produced using renewable power so it’s emission-free.

Some experts consider blue hydrogen as a transitional solution that can help industries shift away from high-carbon energy sources while infrastructure for green hydrogen is being developed and scaled up. Here’s how green hydrogen differs from blue hydrogen.

Source: Iberdrola SA website

In other Hydrogen news, First Hydrogen (TSXV: FHYD),  is one of those companies championing the use of green hydrogen in producing hydrogen-fuel-cell-powered vehicle (FCEV). 

The award-winning fleet management provider Rivus trialed First Hydrogen’s FCEV, concluding that its range is unbeatable (700 miles or 1126 km) and refueling is very quick, taking below 5 minutes. 

These major milestones in the industry, particularly on Lone Cypress hydrogen project and First Hydrogen’s record-breaking FCEV, ignite the hydrogen revolution. They show that transitioning to cleaner, greener energy sources is possible and is starting to unfold.

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