Tesla and Elon Musk break ground at the site of the electric carmaker’s new lithium refinery in Corpus Christi, the first of its kind in North America, which will cost $1 billion upon completion. 

Tesla and Lithium Production for EVs

Last year, Musk tweeted that Tesla may get into the lithium mining and refining business directly due to the high cost of the metal element. He also said that the availability of battery-grade lithium was a “fundamental chokepoint” for the EV industry and other sectors.

The Tesla and SpaceX tech CEO showed the average price of lithium per tonne, which increased massively last year – $78,032/tonne. It has soared up to over 480% from 2021 to 2022, per Benchmark Mineral Intelligence data. 

That big growth is driven by the upsurge in EV sales and a struggle to secure supply.

Musk said that there’s no shortage of lithium because it’s available almost everywhere but extracting and refining it is slow. True enough, there are deposits of lithium all over the U.S. to meet the growing demand.

The US Geological Survey reported that the country has 750,000 tonnes of recoverable lithium in 2021. This figure will go up as new reserves are discovered and established.

Global lithium production increased by 21% in 2022 compared to 2021, surpassing the highest in 2018 levels. 

This increase was not because of new mines, but in large part due to existing Australian capacity getting online. Chile producers also increased production levels by several thousand tonnes.

The US is home to the world’s biggest lithium deposits after those in the so-called Lithium Triangle region in South America – Argentina, Bolivia and Chile. While the states of Nevada, North Carolina, and California together housed about 4% of the world’s lithium reserves.

Still, EV battery production capacity is rising at twice the speed of lithium supply.

Here’s the analysis by cicenergigune of North American EV battery gigafactories.

Source: cienergigune

The U.S. is currently producing only about 1,000 tonnes of lithium. But the country is projected to produce 91 GWh of lithium-ion batteries in 2025, which needs more than 75,000 tonnes of lithium content. 

According to BloombergNEF, an increase of more than 300% in installed lithium cell production capacity worldwide is expected to reach about 1,769 GWh. China (63%) still takes the lead, followed by Europe (15%) while the US (9%) falls down to the third spot. 

Lithium Cell Production Capacity in 2025

Lithium, a non-ferrous metal, is also known as “white gold” and is valuable in making EVs as it’s the lightest and least dense solid element. What that means for Tesla is producing EV units with a high power-to-weight ratio. 

So unsurprisingly, the giant EV maker plans to build in-house lithium refinery and battery materials processing, refining, and manufacturing operations for its sustainable product line. Tesla’s investment in this facility is critical to its mission to accelerate the world’s transition to clean and sustainable energy. 

That largely involves turning on the switch on EV production and accelerating end-use electrification and sustainable power generation and storage. This path enables Tesla to improve its bottom line while significantly earning revenues through its carbon credit sales. The credits are from the carbon emission reductions achieved with the company’s EV production. 

The $1 Billion Lithium Refinery 

Tesla will invest $375 million to construct the refinery to do away with its reliance on outside lithium supply. Once finished, the site will represent an investment of over $1 billion. 

Musk further said that Tesla aims to produce enough battery-grade lithium hydroxide at the South Texas facility to make 1 million electric cars each year. Their goal is also to produce more lithium than what the rest of North America produces in that location.

Mining giant Albemarle revealed plans to invest $1.3 billion in a lithium processing facility in South Carolina last March. The company’s Silver Peak mining site in Clayton Valley in Nevada is currently the only one operating lithium mine in the US. It produces around 6,000 tons each year of lithium carbonate, representing only 1% of the world’s lithium carbonate supply. 

Tesla expects its Texas facility to also process other intermediate lithium sources, such as recycled batteries and manufacturing scrap. The 1,200+ acre facility will be the place of the first industrial deployment of an acid-free lithium refining route.

Acid-free Lithium Refining Process 

The conventional process of refining ore into battery-grade lithium usually involves crushing the raw material, heating it at high temperatures, and mixing it in a slurry with acids. Hydrochloric acid is often used in this process, which is considered hazardous by the U.S. Clean Air Act.

But Tesla’s innovative acid-free lithium processing will use less hazardous reagents and produce usable byproducts. It says in its Texas Comptroller’s filings that the refinery’s byproduct, a mixture of sand and limestone, will make beneficial use of traditional waste streams for producing construction materials. 

Musk asserted that the facility will have no toxic emissions, saying “you could live right in the middle of the refinery and not suffer any ill effects.”

However, he didn’t disclose what would be the exact chemistry that Tesla will use for its acid-free lithium refinery. Yet, Texas Republican Governor, Greg Abbott, praised Elon Musk as the greatest entrepreneur on the planet.

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Carbon credits from climate actions represent a crucial part of a strategy to mitigate climate change while supporting the global priorities on advancing sustainable development goals. 

This decade has been dedicated by the United Nations on restoring ecosystems and reversing their degradation. A successful completion of this huge task achieves a lot of priorities – abating climate change, alleviating poverty, promoting equality, etc. Collectively, they are aligned under the UN’s 17 Sustainable Development Goals (SDGs).

Carbon credits are a well established market mechanism that allows organizations or companies to tackle their greenhouse gas emissions by supporting projects that reduce or remove carbon. These projects often involve land management practices that sequester carbon, making them critical in achieving the Paris Agreement climate goals. 

But more importantly, they can also meet many of the sustainable development goals. This article will explain how carbon credits can help in aligning climate actions with global priorities on SDGs.    

Pricing Carbon is A Climate Action, Plus More

Assigning a real-world value to the cost of emitting CO2 and other GHGs through carbon credits receives both criticism and appreciation. Some consider it greenwashing while others find it an essential tool to reverse the effects of climate change. 

But most people agree on one point – putting a price on carbon forces individuals and companies to pollute less.

Thus, it’s not surprising that carbon credits have become popular as companies strive to reduce their carbon emissions. And as more money is poured into climate action, more corporations are looking to offset their emissions through carbon credits. 

Carbon credits are from activities or projects that avoid, reduce, or remove CO2 emissions. Each credit is equal to one tonne of avoided, reduced, or removed carbon. 

Industry estimates show that demand for carbon offset credits will increase exponentially, primarily because of corporate net zero pledges. These commitments will bolster trading of carbon credits in the voluntary market (VCM), funding actions that mitigate the climate. 

A lot of large companies find that investing in actions that generate carbon credits is the best option they have to curb their emissions. But some of them don’t know how or which projects align with SDGs that match their corporate sustainability priorities. 

Not all carbon offset projects may cover a broad range of sustainability areas. But each project can produce other benefits that go beyond carbon sequestration. The financing provided through carbon credits can bring other social and economic benefits, otherwise known as co-benefits. 

The Value-driven Model of Carbon Credits

There are various ways in considering carbon credits but not all projects factor in the additional value of delivering sustainable development. Some, like the cost-based model, take into account the costs of implementing a project while ensuring its viability. 

It takes into account the costs of implementing a project while ensuring its on-going viability. But they miss factoring in the socio-economic benefits delivered by a project. That’s what the value-driven model tries to address. 

For example, community-based clean cookstoves projects, which often deliver health benefits to women and children, often have higher value than large-scale renewable energy projects, for instance. So, if the carbon offsets these projects produce reflect those co-benefits, they’re priced or valued more. 

Co-benefits also refer to the United Nations’ 17 Sustainable Development Goals.

Some carbon standards consider the beyond-carbon impacts of a project and reflect them in the final price of carbon credits.

Here’s an example of various project types that have different shared values based on the SDGs they deliver.

Source: Gold Standard

The Agenda for Sustainable Development: UN 17 SDGs

The 2030 Agenda for Sustainable Development, adopted by the UN parties in 2015, is a roadmap to ensure sustainable social, environmental, and economic progress worldwide. At its heart are the UN 17 SDGs, an urgent call for action by all countries in a global partnership.

The United Nations 17 Sustainable Development Goals

They believe that ending poverty must go hand-in-hand with improving health and education, lowering inequality, and bolstering economic growth – all while tackling climate change.

Though climate action, SDG 13, is one of the goals, it should go together with other sustainable development areas. 

The Paris Agreement builds upon the global efforts and priorities specified under climate action and sets GHG emissions mitigation targets. It aims to prevent global warming from going above 2°C in this century relative to pre-industrial levels. It also promotes climate adaptation, mitigation, and finance to fight the climate crisis the world faces.

The Agreement advances cooperative approaches where countries can work together voluntarily to meet their climate goals. It also establishes the carbon credit market that facilitates climate action, supports sustainable development, while ensuring environmental integrity and transparency.

The creation of the 17 SDGs provides important momentum for integrating sustainable development into international carbon market agreements.

Alignment of Carbon Credits and Sustainable Development Goals

Climate change mitigation and co-benefits can go hand in hand if considered from the early stages of the project. Careful integration of sustainable development goals into a carbon credit project’s blueprint can ensure their successful delivery.

Most often, nature-based climate solutions like afforestation or improved forest management projects (REDD+) produce higher valued carbon credits. But carbon credits with several co-benefits or bundled with sustainable development goals keep on creating higher or premium values. 

Let’s provide two examples of projects that successfully align climate action with global priorities on SDGs. 

Water Borehole Project

One example is the water borehole project by Plannet Zero in Mozambique, a country in southeastern Africa. The project involves the installation and repair of water boreholes throughout the Manica province in western Mozambique.

The boreholes provide access to clean water and eliminate the need for boiling water to make it safe for drinking. The project is also reducing about 10,000 tonnes of CO2 or its equivalent each year. 

Apart from its carbon reduction outcomes, the project also delivers several co-benefits and SDGs.

Water borehole project co-benefits:

3125 additional people gain access to safe water
Improvement of indoor air quality due to reduced need to boil water 
Reduction in the occurrence of water-borne diseases locally 
Time spent collecting firewood will be reduced by >30 minutes a day with the removed need for wood fuel to boil water
The boreholes are monitored and tested annually for water quality
Water point committees will be set up and trained to ensure that they are empowered to manage the boreholes

The project delivers these specific sustainable development benefits:

SDG 3: Good Health and Well-being
SDG 5: Gender Equality
SDG 6: Clean Water and Sanitation
SDG 13: Climate Action

The boreholes covered by the project will be powered entirely by emission-free technologies such as hand or solar-powered pumps. They, in turn, produce carbon credits linked with other sustainable development goals the project meets.

Clean and Efficient Cookstoves

Most of the household cooking in many countries in Africa and Asia is done by women. They also spend a lot of time collecting wood for fuel and often cook indoors without proper ventilation. 

The clean and efficient cookstove project by Gold Standard seeks to tackle the major development issues of this cooking practice. The goal is to serve the most vulnerable communities while tackling health issues associated with traditional cookstoves while promoting financial security and women empowerment. 

The project generates verified carbon credits, sold and in turn, deployed more efficient cookstoves. 

Source: Gold Standard website

Apart from delivering about 950,000 tonnes of emissions reductions that help fight climate change, SDG 13, the project also brings these other sustainable development benefits:

SDG 1: No Poverty – Households used less of their income and time on acquiring wood fuel, while also offering direct consumer financing or access to microfinance institutions.
SDG 3: Good Health and Well-Being – By reducing fuel consumption by 50%, indoor air quality improved, which reduces related health problems.
SDG 5: Gender Equality – Women need less time daily to gather wood fuel, and some of them are recruited and empowered as cookstove entrepreneurs. 
SDG 7: Affordable & Clean Energy – The cookstoves burn biomass fuel more efficiently.
SDG 8: Decent Work and Economic Growth – More time to look for additional employment as well as job opportunities in cookstove production.
SDG 13: Climate Action – Reduced carbon emissions
SDG 15: Life on Land – Reduced wood sourcing from non-renewable sources, reducing deforestation.

Various Climate Actions Flowing to Each SDG

At the center of a successful climate action or project that generates carbon credits is partnerships – the UN SDG 17. Both the water borehole and cookstove projects facilitate cooperation among private sector, governments, and nonprofits to achieve desired development goals.  

An investor that considers only a carbon project in terms of its carbon reduction benefits is choosing the tree over the entire forest. Opting for carbon credits that supports a number of sustainable development goals that also align with corporate sustainability delivers great benefits. 

Apparently, each SDG has its own targets to achieve but it can also tackle other development issues like SDG 13. More significantly, every climate action can deliver impacts that flow to more than just one SDG. 

Moreover, meeting other sustainable development goals are also eligible for producing different types of carbon credits. 

For example, projects that speed up the clean energy transition (SDG 7) can generate renewable energy credits. This type of carbon credit is from replacing fossil fuel energy sources by renewables such as hydro, solar, and wind.

In sum, investing in carbon credit projects is more than worth it. They can be developed or implemented in a way that mitigates effects of climate change while also addressing other global sustainable priorities. 

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A new report from the Gladstein, Neandross & Associates (GNA) highlights the growing shift towards zero-emission vehicles (ZEVs) and renewable fuels in the transportation sector. 

The fourth annual State of Sustainable Fleets Market Brief reveals that public policy and funding have shifted sharply towards building the ZEV market and phasing out diesel engine development at an accelerated pace. 

This shift is driven by a combination of regulatory requirements, public incentives, and market demand. Furthermore, advances in technology and increasing concerns about climate change and air pollution further encourage moving away from diesel.

The GNA report concludes that:

“The past 18 months have laid the roadmap for a zero-emission future in many states and produced early signals that the era of the diesel engine, the workhorse of HD [heavy-duty] vehicles, will end sooner than many predicted.”

Increasing Regulatory Pressure for ZEVs

According to the report, some clean fuels and vehicles are now superior to gasoline- and diesel-fueled vehicles for many fleet applications. Also, the use of renewable fuels and advanced tech drivetrains has been growing. 

One major reason is the increasing regulatory pressure to transition away from conventional fuels to cleaner alternatives. California’s zero-emission vehicle or ZEV sales mandates, in particular, have forced market players to embrace the change.

Then the US Environmental Protection Agency set the most stringent standards ever on the transportation sector’s emissions that contribute to air pollution. This adds tens of thousands of dollars – $30,000 – to the cost of new diesel engines while also requiring further ongoing maintenance. 

Meanwhile, public sector funding fell while incentives and subsidies soared to historic highs following the introduction of the Inflation Reduction Act (IRA) last year. 

Public incentive funding for clean fleet technologies and vehicles will average $32 billion each year for the next 4-5 years. The focus of this investment will be on the ZEV market and infrastructure. 

A total of 13 states have passed or are considering some form of California’s 2020 Advanced Clean Trucks (ACT) mandate for manufacturers to start selling ZEVs. 

Notably, 75% of the surveyed fleets that have never used clean drivetrain technologies before plan to up their use in the next 5 years.

Furthermore, the production capacity for renewable diesel (RD) to replace fossil diesel has doubled in 2022. Uptake by private sector fleets surveyed grew about 10% for the same year compared to 2021. 

In particular, almost 30,000 medium-duty battery-electric vehicles (BEVs) have already been ordered. Whereas plans to use more clean drivetrains and fleet technologies (e.g. propane, battery-electric, and fuel-cell electric vehicles) were still over 80%.

Other Key Findings on Clean Transportation 

The report also showed another significant result: supply and demand for renewable diesel grew in states with carbon credit markets. Domestic RD production doubled from 2021 (800 million gallons) to 2022 (1.7 billion gallons). 

There has been a drop in the credit price linked to big volumes of renewable fuels traded in California’s carbon credit market. But estimates say that the industry can still achieve its production capacity goal in 2024 – 5 billion gallons. 

Additionally, renewable natural gas replaced nearly all fossil natural gas in California transportation for the second year in a row. Even more remarkable is the finding that orders for medium-duty and heavy-duty BEVs grew by a whopping 640%. And 92% of the fleets surveyed have plans to increase their use.

The report also reveals that the public hydrogen station network grew by 12% to 54 stations in 2022. It also suggests that hydrogen fuel projects unveiled last year will bring over 900 metric tons a day by 2023. 

Hydrogen fueling network developers also plan to construct stations outside of California across the central mid Atlantic and southwestern U.S., which is a first for public fueling networks. 

ZEVs and Carbon Credits 

California’s Low Carbon Fuel Standard (LCFS) market has been driving the demand for zero emission or clean technology in the transportation sector. The program creates a marketplace for technologies that generate carbon credits based on emission reductions brought by fuel or energy use.

Carbon credits are generated from initiatives that reduce, remove, or avoid carbon emissions. Each carbon credit represents one tonne of carbon reduced by using ZEV and other clean technologies.

The supply of several low carbon fuels such as RD and RNG had increased. This pushed down the price of carbon credits for the past 2 years as seen in the chart. 

The falling price for a carbon credit traded under the LCFS market continued in 2022, dropping 44%. In the same year, credit prices averaged $99.66 per metric ton (MT) and declined to as low as $56.10/MT in late October.

That is a significant drop from the highest peak of $219/MT in February 2020. Type 1 credit transaction – credits sold on the “spot” market –  totaled to over $560 million. Overall transactions surged past $3.7 billion in 2022, marking a 24% increase in credit volume. 

A big part of the transactions happening on the California LCFS market involves Tesla, the largest seller of carbon credits so far. The biggest EV maker had, again, grabbed attention with its 12% increase in Q1 2023 revenue from selling carbon credits.

The automaker recorded $521 million carbon credit sales in the first quarter compared to $467 million in Q4 2022. Tesla has been earning big revenues from carbon credits for the previous years, reporting a record $1.78 billion in 2022 alone.

Overall, the State of Sustainable Fleets report demonstrates that significant progress is being made towards a more sustainable and equitable future in the transportation sector with zero-emission vehicles. The growing momentum towards ZEVs and renewable fuels will bring diesel to an end, driving carbon credits market up. 

The report provides a powerful tool for sparking collaboration and promoting decarbonization in the commercial road transport sector.

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