London Stock Exchange Names First Fund to Trade Carbon Credits

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The London Stock Exchange (LSE) welcomes the first fund to use its new market framework for carbon credits, the Foresight Sustainable Forestry Co., to raise capital and transparency to the market.

The LSE is the first exchange to use a public carbon market framework to drive funding into climate mitigation projects that create carbon credits. It offers access for investors and companies wanting to buy carbon credits to offset emissions.

The Exchange has issued its first Voluntary Carbon Market (VCM) designation to Foresight Sustainable Forestry Company. It’s an investment company offering direct and liquid access to UK forestry and afforestation projects, with future exposure to the VCM.

London Stock Exchange Carbon Credits Framework

Individuals and companies can get carbon credits through intermediaries like brokers. But some of them find it hard to source information about the project and its developers. They may also be struggling to identify certain projects that suit their requirements and preferences.

This is why the London Stock Exchange launches its VCM to give investors easier access to information about carbon credits they seek to buy. The Exchange’s head of sustainable finance for capital markets division Claire Dorrian said:

“I think the overarching principle behind all of this is transparency through disclosure.”

The LSE VCM platform gives entities and individuals a means to raise funds and use the money on projects that cut GHG emissions. In return for their investments, investors and firms can get carbon credits in place of cash dividends. They can then use those credits for offsetting purposes and meeting net zero targets.

Demand for carbon credits in the VCM is growing as firms pledge to reach net zero and help abate climate change. The volume of credits traded last year is up more than 3x, from $520 million to about $2 billion.

LSE First VCM Designation

Foresight Sustainable Forestry Co. (FSF), a London-based investment firm, is the first to take part in the LSE new VCM platform. FSF invests in developing land for commercial forests, primarily in the U.K.

The firm’s current portfolio consists of about 9,700 hectares of UK standing forestry and afforestation assets. The carbon sequestered by its 27 afforestation sites equals to around 800,000 carbon credits under the Woodland Carbon Code.

If the current capital is deployed, FSF can create about 1 million carbon credits in its first wave of afforestation deployment. And in the year ahead using its LSE first VCM designation, the shareholders can elect to get carbon credits instead of cash dividends.

Foresight’s co-head Richard Kelly remarked that:

“We’d be looking to attract companies, and ideally companies with science-based, net-zero pledges, to join us as shareholders… By connecting investors with net zero ambitions to entities such as FSF that generate voluntary carbon credits, the launch of the VCM is a major milestone in the UK’s fight against climate change.”

He also added that the VCM designation means that the ever-growing number of climate-minded investors can easily and confidently identify sustainable solutions.

Investing in LSE’s Carbon Credit Market

Operating companies or investment funds on the LSE are eligible for the VCM. But they must meet all other requirements for the market on which they are listed. The Exchange operates the FTSE 100 and FTSE 250 indexes and provides financial data.

The LSE VCM designation requires issuers to perform disclosures relating to the projects they are directly or indirectly financing.

In particular, developers must disclose the percentage of their total assets invested in climate mitigation projects. They must also disclose the industry standards they follow to certify those projects.

Yet, LSE new VCM may come with challenges for those looking to invest in carbon credits. For example, they may find it difficult to make the narratives about their green investments if the credits they buy are linked to multiple underlying projects. In this case, disclosing information related to the project may be hard.

But the new market in the Exchange can address that challenge and how entities buy carbon credits. Yet, it may take some time for companies to raise funds.

As per Dorrian’s words “it’s going to take, I think, a little bit of time for the market to digest”.

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Hess Signs $750M REDD+ Carbon Credits Deal with Guyana

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US-owned Hess Corporation entered a deal with Guyana to buy $750 million worth of REDD+ carbon credits from the South American nation in the next decade to support efforts in protecting its Amazonian rainforests.

Hess Corporation is a global energy company specializing in the exploration and production of crude oil and natural gas. It’s an industry leader in environmental, social and governance (ESG) performance and disclosure.

Hess is a major partner with ExxonMobil and CNOOC of China in Guyana’s offshore project, the “Stabroek Block”. It’s one of the world’s largest oil and gas discoveries near Suriname’s border.

The multi-year agreement with Guyana that runs from 2022 to 2032 is under the UN Reducing Emissions from Deforestation and Forest Degradation program (REDD+). It involves Hess’ purchase of 37.5 million REDD+ jurisdictional carbon credits (current and future issuances).

This is the second major deal the country has entered in the past decade. In 2009, Norway had agreed to provide $250 million to help ensure Guyana’s 18 million hectares of forest remains intact.

Guyana REDD+ Carbon Credits

The REDD+ carbon credits will be under the ART (Architecture for REDD+ Transactions) registry. ART operates a robust, secure, transparent electronic system to register REDD+ programs. It also records the issuance, transfer, and retirement of serialized verified credits.

The initiative seeks to incentivize governments to reduce emissions from deforestation and forest degradation, restore forests, and protect intact forests.

The REDD+ carbon credits Hess will buy from Guyana will be issued under ART’s REDD+ Environmental Excellence Standard 2.0 (TREES). The program quantifies, monitors, reports, and verifies emission reductions from REDD+ activities at a jurisdictional and national scale.

Remarking on the partnership, President Irfaan Ali said:

“As one of only nine national jurisdictions in the Amazon Basin, we said long ago that national or jurisdiction-scale action on forests, coupled with access to global private finance, could create solutions that benefit the peoples of forest-rich countries while also achieving global climate goals…”

He further noted that the deal represents a massive step forward in “showing the world that developing countries can lead the way to global solutions”.

The government also says it will pursue efforts to attract more partners in the carbon credits market as Guyana works to reduce harvests of forest resources in a country the size of Britain with less than 1 million population.

Avoiding deforestation is critical to the Paris Agreement’s goal to limit the global temperature rise to well below 2°C. It’s one of the major commitments at the COP26 summit where 130+ countries, including Guyana, pledged to end deforestation by 2030.

Officials in the U.S. recently announced plans to sanction Amazon deforesters.

Low Carbon Development & Net Zero

The deal is also part of Guyana’s Low Carbon Development Strategy (LCDS) 2030. It outlines how the country’s rainforest resources can help combat climate change while promoting a sustainable, low carbon economy.

Guyana’s ~18 million hectares of forests that can store about 20 billion tonnes of CO2e. Its LCDS 2030 serves as the small nation’s roadmap for preserving its forests while growing its economy, too.

At the signing ceremony, Hess Corp. CEO John Hess commented:

“Guyana is one of the most heavily forested countries in the world. We admire the efforts that Guyana has undertaken for years to protect the country’s forest, and provide a strong model for other countries, other businesses and other governments… We are pleased to support the country’s efforts to advance sustainable development and enhance the quality of life for its people.”

Buying REDD+ carbon credits from Guyana is a major part of Hess’ commitment to help address climate change. It’s also important for the company’s net zero emissions target by 2050. The deal adds to the company’s ongoing and successful emissions reduction efforts as laid out in its sustainability reports.

Around 30% of the $750 million investment from Hess will be for developing the Indigenous Amerindian communities. There are nine such tribes in Guyana which accounts for almost 10% of its total population.

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Investments in Nature-based Solutions Need $674B a Year by 2050

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Investments into Nature-Based Solutions (NBS) have to be more than double their current levels, reaching $384 billion a year by 2025 and $674 billion by 2050 to deal with the global crises of climate change, biodiversity loss and land degradation, according to a UN report.

The UN report entitled the “State of Finance for Nature” said that doubling investments into protecting and managing the world’s ecosystems is the key to address those triple crises. The authors reveal that NbS are still significantly under-financed.

The report comes 10 days after the end of the COP27 and a week before the start of the UN Conference on Biodiversity (COP15 CBD) in Montreal, Canada. COP15 is where nations will try to agree on a deal to protect nature and wildlife from further losses and degradation.

Authors of the report said in a statement that UNEP urges governments to come up with an agreement at COP15 mandating countries to require the financial sector to align investments with nature-positive goals.

Investments in Nature-Based Solutions (NBS)

According to one of the authors who is the director of McKinsey & Company Robin Smale, Nature-based Solutions refer to:

“Actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, freshwater, coastal and marine ecosystems, which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services and resilience and biodiversity benefits are all considered as nature-based solutions…”

The current global investments in NB$&%S are around $154 billion per year. But that amount has to increase to $384 billion by 2025 to tackle the triple crisis of land degradation, climate, and nature as the chart shows.

Last year, investments into nature-based solutions was at around $133. But this estimate will be altered as the scope of NbS and how they’re assessed keeps on changing, too. Take for instance the case of marine NbS; they are the newest inclusion to the report’s latest edition.

In contrast, investments from governments in economic activities that pollute the air are 3x to 7x higher than financing for NbS.

These subsidies are highest in the sectors of energy and agriculture estimated at $340 billion – $530 billion a year and $500 billion a year, respectively. The report suggested phasing out of these investments.

Nature and The Economy

The authors of the report further noted that:

“This report is a reminder that lots of short-term efforts to boost gross domestic product (GDP) by Governments… without paying attention to the fact that nature underpins many economies, will impose greater costs for both present and future generations in the years to come.”

In fact, about 50% of global GDP is dependent on healthy and well-functioning ecosystems. So, countries have to go beyond just the economics of GDP and consider the principles of natural capital accounting and circular economy.

According to one author, there are already trends pointing to that direction and considering nature in making investment decisions.

Meanwhile, the report also found that governments spend $500 billion-$1 trillion a year on potentially damaging subsidies. And with ~100 parties to last year’s biodiversity summit in Kunming, China, they weren’t able to agree to fund nature conservation efforts in poorer countries.

Over a decade ago in Japan, world leaders who signed a biodiversity pact in 2010 have set targets to cut loss by 2020. Unfortunately, none of those goals were also met.

NbS and Carbon Markets

The third major point of UNEP’s report was the need for private investments in nature-based solutions.

Financing from the private sector accounts for only 17% despite their pledges to reduce deforestation and carbon emissions. With this, the report recommended that private investors will have to “combine ‘net zero’ with ‘nature positive’.”

That means they must do the following actions:

Create a sustainable supply chain
Reduce activities that negatively impact climate and biodiversity,
Offset any unavoidable activities through high-integrity nature markets,
Pay for ecosystem services, and
Invest in nature-positive activities.

Closing the nature-finance gap means directing additional investments in ecosystem restoration, protection, and sustainable land management. The chart below shows how much financing NbS requires to meet the 1.5 degree scenario.

Carbon markets have a role to play in propelling private financing for NbS. And public investments can’t scale up soon due to several issues that governments face, said the report. So working on creating standards and ensuring integrity in carbon markets is crucial.

An officer from the UNEP noted that including NbS in the COP climate summit agenda wasn’t possible before. Making it to the cover text of COP27 and the upcoming COP15 in Montreal is a success.

Discussions on mitigation finance were still not enough but “ambition without finance does not lead to action” the officer said. Financial commitments are vital for negotiations to be in good faith, she added.

The report was released by the UNEP along with the Federal Ministry for Economic Cooperation and Development (BMZ) of Germany, the UN Convention to Combat Desertification (UNCCD) and the European Commission.

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Manulife Launches Forest Climate Fund to Raise $500 Million

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Manulife Investment Management launched its Forest Climate Fund (FCF) which aims to raise $500 million to buy sustainably managed forests that sequester carbon.

Manulife is branching out into forest carbon credit markets. The world’s biggest timberland investment manager is raising funds to buy sustainably managed forests where capturing carbon in standing trees is more important than cutting them down for profits.

Manulife Investment manages about 6 million acres of timberland in the Americas and Oceania on behalf of investors. The firm said it will raise the $500 million fund from its parent company, Toronto insurance and financial-services firm Manulife Financial Corp., and other institutional investors.

The managing director of Manulife Investment Management’s impact investing Eric Cooperström said:

“We are excited to bring a product to investors that we have developed by capitalizing on our decades of experience in sustainable timberland management and on our carbon market expertise…”

The Manulife Forest Climate Fund

With the launch of its Forest Climate Fund, Manulife is the latest financier to use forest carbon credits in its climate strategy.

It joins the likes of Oak Hill Advisors LP, a subsidiary of T. Rowe Price Group Inc., which paid $1.8 billion for 1.7 million acres of forests to harvest carbon offsets. Last year, J.P. Morgan Asset Management also bought timberland manager Campbell Global LLC. eyeing the carbon markets.

The FCF is a closed-end fund that allows investors to promote climate change mitigation through sustainably managed forest assets.

The Fund seeks to include investors from other jurisdictions apart from the U.S. such as the EU to invest in forest carbon credits or offsets. But once offered outside the US, investors must follow the Article 9 of the EU Sustainable Finance Disclosure Regulation requirements.

Carbon credit markets have boomed as more firms pledge to reduce their unavoidable emissions via offsetting. Buyers are pressuring sellers to ensure that offsets represent actual changes in timber harvesting.

Tom Sarno, Manulife Investment global head of timberland investments, commented:

“We believe high-integrity, verified carbon credits will continue to be viewed as premier decarbonization instruments and that, in time, such carbon markets will eventually come to resemble that of more traditional commodities…”

The Manulife Forest Climate Fund will deliver durable, high-quality carbon value to investors through carbon credits. FCF will focus on forests with strong carbon potential, high conservation value, and sustainable management plans.

The fund will provide investors with high-integrity climate benefits and financial returns by using:

carbon credits,
conservation easements,
value-added strategies, and
limited timber harvests.

Manulife Sustainable Timberland Management

Manulife has a long history of timberland management that began in the 1980s. It was before known as the Hancock Timber Resource Group.

Today the company is the largest in the world, by acreage, of Timberland Investment Management Organizations. They are like private-equity firms that use raised cash to buy forestlands instead of companies.

Last year, the firm bought 89,000 acres in northern Maine to be a model for the type of properties that Manulife Forest Climate Fund will buy. It has reserved the option to sell the credits from the forests or hold them and use them toward its parent company’s efforts to slash its own footprint.

FCF investors will also have the same choice – either to receive the cash from returns or use carbon offsets.

The Fund is part of Manulife’s approach it calls “sustainability and responsible investing (SRI)”. Through it, the firm integrates environmental, social, and governance (ESG) factors through all aspects of its business.

Sustainable timberland management is under one of its five sustainability priorities: climate stability. To date, Manulife’s integrated timberland management operations comprise about 6 million acres across 6 countries and ~100 individually managed properties. The firm was able to achieve these results:

100% of its forests globally are certified sustainable
2.7 million tons of CO2 removed by its forests annually (5-year trailing average)
6.1 million carbon credits sold

Forestry Assets and The Carbon Market

The firm’s current portfolio of sustainably managed forestry assets is internationally diversified across the U.S., Canada, Australia, New Zealand, and South America.

But its forests are mostly in the U.S., which represents over 95% of improved forest management carbon credits issued and retired to date.

Forestlands have been one of the most valuable nature-based solutions to combat climate change. Climate investors find that protecting forests (REDD+) is crucial in winning the fight and so they’ve been betting on carbon credits as forestry assets. 

The chart below shows the issuances and retirements of carbon credits by type (April 2022 year to date). In 2021 alone, REDD+ accounted for one of the major issuances (27%) and retirements (38%).

Source: Carbon Direct

A lot of similar efforts are in place today that generate forest carbon credits. Each credit represents one tonne of carbon sequestered by the trees.

For instance, Everland’s Forest Plan seeks to stop deforestation by 2030 by developing up to 75 forest conservation (REDD+) projects around the world. Some startups were also raising funds to develop technologies for forest management where carbon credits help fund their projects.

Manulife intends to make its Forest Climate Fund open to institutional investors globally while being subject to local ESG regulations.

The firm is pitching typical timberland fund investors. These include pensions, endowments and wealthy families, as well as companies that aim to reduce emissions via offsets.

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Batteries From Wood: A Renewable Energy Storage Solution

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Companies worldwide are working on a sustainable power storage solution using renewable biowaste called lignin to make wood batteries.

One of the largest private forest owners in the world, Stora Enso, recently built a production facility worth €10 million to create bio-based carbon by turning trees into batteries.

Producing these wood batteries is possible by using a biomaterial known as lignin.

How Lignin is Made to Create Wood Batteries

Lignin is one of the most common organic polymers, second to cellulose, that’s abundant in the cell walls of some plants. It makes the structure of the plant firm and doesn’t easily rot.

This biomaterial makes up about 30% of the wood’s total composition. In fact, it’s present in all vascular plants and can have a carbon content as high as 60%.

Lignin separates from wood during the production of cellulose fibers from its pulp. After extraction, the by-product is turned into a fine carbon powder.

The powder is then made into electrode sheets and rolls. The sheet can then go with other battery parts, replacing mined graphite, which has a much larger carbon footprint.

Advocates believe that the carbon found in lignin would be enough to end the use of fossil fuels and mined metals in making lithium-ion batteries that need graphite to work.

Here is the process of making batteries from lignin.

According to Stora Enso:

“With Lignode, we can provide a bio-based, cost-competitive and high-performance material to replace the conventionally used graphite… To serve the fast-growing anode materials market, we are now exploring strategic partnerships to accelerate scale-up and commercialisation in Europe.”

The Northvolt Deal

Stora Enso is joining forces with Volkswagen-backed battery developer Northvolt to produce lignin-based batteries. The source for the wood batteries will be from Nordic forests under sustainable management.

Through the partnership, Northvolt will be responsible for cell design, production process development, and scale-up of the technology. While Stora Enso will provide the wood-based anode material lignin.

The deal comes when critical mineral availability poses a significant barrier in sustainable battery and energy storage systems. The creation of renewable batteries offers a greener alternative to the critical mineral geopolitical chess game.

Apart from being one of the largest renewable sources of carbon, the use of lignin in producing wood batteries brings many benefits.

Key Benefits of Lignin-Based Wood Batteries

Graphite has been the main source of making lithium-ion batteries used in making electric cars. For Tesla to make its annual target of 20 million EVs, it has to mine ~1 million tonnes of graphite.

Add to this the future demand for electric airplanes and almost all other portable electronic devices. Hence, engineers find it bothersome how the world can meet those future demands for e-mobility.

Wood Batteries offer 5 major benefits as a renewable energy technology:

Scalability: viable to produce wooden batteries commercially due to the wide availability of the resource needed to make them – trees.

Sustainability: By sourcing raw materials from sustainability-certified forests.

Renewability: By using natural resources removes the need to source battery manufacturing in China and other regions that have a higher carbon intensity.

Faster charging: a fully functional wood battery can charge at a faster rate than fossil-fuel derived graphite.

Better performance at lower temperatures: the battery is operational under cooler temperatures, making it possible to for a wider range of operations .

Lignin-based carbon is applicable in storing energy for a wide variety of uses, power automotive systems. This industry has seen tremendous growth after the pandemic with a 46% increase in sales of EVs such as scooters and e-bikes.

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Nestlé and Fonterra to Develop NZ’s First Net Zero Dairy Farm

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Nestle and New Zealand’s largest milk processor, Fonterra have partnered to develop the country’s first net zero carbon emissions dairy farm.

The net zero milk project will assess the dairy farm’s total carbon emissions and will run for 5 years with co-partner Dairy Trust Taranaki.

It aims to reduce emissions by 30% by mid-2027 and achieve net zero emissions in 10 years.

The pilot project will be on a 290-hectare property, and any insights and activities will be shared with other farmers to increase adoption. Farmers can then adopt techniques and technologies most suitable for their own farms.

Reducing New Zealand’s Dairy Emissions

The agricultural industry makes up 48% of New Zealand’s overall emissions. Methane, nitrous oxide (N2O), and CO2 are the key components of the livestock industry’s total emissions.

The Institute for Agriculture and Trade Policy (IATP) says 15 of the largest dairy companies in the world (including Fonterra) are responsible for 3.4% of global methane emissions and 11% of total global livestock emissions.

Last month, New Zealand sought to levy farmers for the emissions of their cows. But apart from the cows’ own emissions, the dairy ingredients they provide also emit pollution.

The country has the lowest carbon footprint for milk in the world. Still, dairy contributes about 50% of the country’s agricultural livestock emissions. And about a quarter comes from dairy biological emissions (N2O and methane).

Commenting on the partnership, Fonterra chief executive Miles Hurrell said in a statement:

“New Zealand already provides some of the most sustainable nutrition in the world through its pasture-based dairy system. This new partnership will look at ways to further reduce emissions, increasing the country’s low-emissions advantage over the rest of the world…”

Fonterra is one of the largest dairy producers in the world, and this net zero milk project will help lower emissions with its pasture-based farming systems, ideal climate, and efficient producers.

The announcement comes after Fonterra told dairy farmers earlier this month that it’s planning to set a target for Scope 3 emissions. This source includes farm emissions which are critical in meeting sustainability expectations from customers and export markets.

This New Zealand pilot scheme will hopefully be the first of many global projects. The dairy farm project will help both Nestle and Fonterra in achieving their climate goals. Both aim to achieve net zero emissions by 2050.

On their Way to Net Zero

Nestle New Zealand CEO Jennifer Chappell said that the project would build on the food giant’s work worldwide to help transform the dairy industry.

Nestle has over 100 pilot projects globally, with 20 farms working out their net zero targets. She also added that:

“Dairy is our single biggest ingredient, and our vision is that the future for dairy can be net zero… To reduce our Scope 3 emissions, it’s critical we work with dairy farmers and their communities. Working towards a net zero farm means looking at all aspects of the farm, from cow nutrition to sequestering carbon.”

She hopes that this top-down approach of reaching their broader climate goals will only work by closely looking at the details of dairy farming.

Every farm is different so there’s a need to look for specific levers that might work within each farm to keep monitoring and adapting for the conditions on that farm. They will share any lessons learned along the line to mainstream on-farm practices that can slash emissions from dairy production.

Dairy and livestock farming account for around 33% of Nestle total emissions. So to meet their climate goals, the company must support dairy farming to change its means of production.

The dairy farm project with Fonterra will help Nestle meet its goals to reduce emissions by 20% by 2025, 50% by 2030, and net zero by 2050.

Aiming to decarbonize by the same period, Fonterra echoes the food company’s outlook. Miles Hurrell noted that their partnership will enable their customers to also reduce their footprint.

The CEO further said that working with Nestlé will help their farmer-owners discover solutions to the industry challenges.

“Working with partners like Nestlé is our best opportunity to create innovative solutions to local and global industry challenges.”

Cutting On-farm Dairy Emissions

The partnership also involves launching a support program for dairy farmers. Farms enrolled in the project will get additional support from Fonterra to allow reductions in on-farm emissions.

Solutions may include improved management of feed and pasture and enhanced milk production efficiency. The pilot will begin with about 50 farms and be scaled up over the next 3 years.

In the U.S., Neutral Foods is a company that tracks and buys carbon credits to neutralize emissions from dairy farms. It’s also partnering with farmers to help them cut their own emissions at the source.

Neutral Foods measures the emissions of its dairy products’ entire lifecycle. Then the company buys carbon credits for the emissions it wanted to offset.

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TPG-Backed Carbon Credit Firm Rubicon to Raise $1B

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A TPG-backed carbon credit firm Rubicon Carbon announced it would raise $1 billion in capital and be run as a separate entity.

Rubicon Carbon was initially backed by a leading alternative asset manager TPG Rise Climate with $300 million. The carbon credit firm seeks to source and fund projects that remove carbon and sell the credits to other companies.

Rubicon was developed by TPG’s impact investing strategy to deliver innovation and greater scale in the carbon market. It is also to meet the growing demand for high-integrity emissions reduction solutions.

Bank of America, JetBlue Ventures, and NGP ETP will be among the major co-investors in Rubicon’s initial equity financing. With their funds and TPG Rise contributions, the carbon credit firm targets a total capital raise of $1 billion.

TPG will remain the majority owner of Rubicon after the funding but there’s no disclosure on how much is the stake.

Making Access to the VCM Easier

The voluntary carbon market (VCM) is an important mechanism for ramping climate actions. Trading in this market reached around $2 billion in 2021, according to Ecosystem Marketplace. And that could hit $50 billion by 2030, as per McKinsey estimations.

But despite the addition of new carbon credit marketplaces, rating agencies, brokers, and exchanges, some issues remain persistent.

In particular, insufficient project financing, limited supply, and lack of accessibility cause problems in the VCM. To help fix this, Rubicon aims to provide easier access to the carbon market by vetting projects and their credits.

More importantly, the firm will provide a technology-driven method of analyzing, monitoring, and reporting that lowers costs for companies.

Rubicon’s initial product, the Rubicon Carbon Tonne (RCT), provides enterprise customers access to proprietary sets of both nature-based and industrial-based carbon credits. RCTs will be backed by an initial inventory of verified carbon credits amounting to 20 million tonnes of CO2 removed from the air.

All RCTs will include a suite of services, offering a unique end-to-end solution that reduces costs of producing credits.

Moreover, the carbon credit company is developing a financing solution called Rubicon Carbon Capital. This will enable the firm to work with developers and help fund new projects. A portion of the $1 billion will be for establishing this initiative.

According to the firm’s Chairwoman, Anne Finucane, former Bank of America Vice Chair:

“Rubicon is designed to be the market-based solution that allows both the supply and demand side of the global carbon market to scale responsibly. We look forward to working in cooperation with a growing consortium of businesses, governments, and foundations to accelerate the flow of capital to real emissions reduction solutions.”

Rubicon will be partnering with Anew Climate, Pixxel, Planet Labs PBC, and Rialto Markets.

Leading the Carbon Credit Team

Chief Executive Tom Montag, the former chief operating officer of Bank of America, will led Rubicon’s management team.

Remarking on the announcement, Montag said:

“To deliver on net zero and… to balance any remaining emissions that cannot otherwise be eliminated right now, we must scale high-quality carbon credits in parallel. Rubicon addresses several market pain points and offers exceptional ease-of-access to vetted, high-integrity credits to further accelerate emissions reduction globally…”

Dr. Jennifer Jenkins, who won a Nobel Peace Prize on climate change, will be the Chief Sustainability Officer. She noted that as demand for carbon credits grows, “so too should the size and quality of the projects that underpin the carbon market.”

Rubicon joins TPG Rise’s diverse portfolio of climate solutions focused on carbon credit reductions and removals. These include collaboration with Anew, the leading developer and marketer of carbon credits in North America. Anew is Rubicon’s supply partner and manages sourcing and procurement for the firm’s carbon credit inventory.

The company also formed a coalition of corporate sustainability leaders to help guide its platform and product development. They include Aon, Bain & Company, Cushman & Wakefield, Dow Inc., J.P. Morgan, Kirkland & Ellis LLP, McKinsey & Company, SMBC, among many others.

Rubicon Carbon is not a replacement for aggressive carbon emissions reduction, according to the founding partner of TPG Jim Coulter. Instead, it’s an end-to-end solution for entities that choose to include high-quality carbon credits as part of their net zero strategy.

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Saudi Power Firm Inks $7B Green Hydrogen Thailand Deal

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Saudi Arabian renewables developer ACWA Power signed a $7 billion agreement with two Thai state-owned companies to develop green hydrogen in Thailand.

ACWA Power is a leading Saudi developer, operator, and investor of power generation worldwide. It signed a Memorandum of Understanding (MoU) with these state-owned firms in Thailand:

PTT Public Company Limited (PTT), Thailand’s national integrated energy company
Electricity Generating Authority of Thailand (EGAT), an electric power-related state-owned enterprise

The landmark MoU will help meet Thailand’s domestic energy needs while enabling export opportunities with the goal is to establish large-scale renewable-powered green hydrogen plants.

Developing Green Hydrogen in Thailand

Thailand pledged to become carbon neutral by 2050 and reach net zero emissions by 2065. Other Southeast Asian countries have earlier net zero pledges, like Indonesia by 2060.

The Kingdom said it will have a six-point plan to ensure progress towards carbon neutrality and net zero emissions. Part of this plan is to promote eco-friendly or green businesses and boost carbon credit trading in the private sector. Then the government will connect clean energy trading platforms with the carbon credit market.

Thailand sees green hydrogen as clean energy and an alternative renewable energy source. So, it will play a major role in bringing the country to net zero while building a low-carbon circular economy.

According to PTT president and CEO, Auttapol Rerkpiboon:

“The collaboration with international leading companies such as ACWA Power and EGAT to explore and study the opportunity to invest in green hydrogen is a significant milestone for PTT… to promote Thailand’s low-carbon society along with improving the quality of life of Thai people, developing societies, communities, the environment, and strengthen Thailand’s economy to grow together sustainably.”

The signed deal has an investment value worth US$7 billion. It aims to produce around 225,000 tons of green hydrogen each year. That’s equal to about 1.2 million tons of green ammonia.

The three firms will focus first on doing an investment feasibility study for the proposed green H2 and derivatives projects in Thailand.

Expanding Green H2 Worldwide

Paddy Padmanathan, CEO of ACWA Power, commented:

“We are excited at the prospect of supporting green hydrogen and derivatives exploration and advancement in Thailand, a nation that shares our vision for reliably and responsibly delivering clean energy that drives the sustainability agenda and complements essential climate action worldwide…”

The Saudi Arabian developer continues to ramp up its commitment to green H2.

In the first half of this year, the power company also signed a multi-billion dollar joint deal in Oman for a green ammonia production facility.

Also, the developer tapped the Indonesian market with its floating solar PV projects earlier this month. The firm said that these landmark projects will help Indonesia meet its renewable energy target of 23% by 2025.

And in the previous week, ACWA Power also sealed another MoU with an Indonesian state-owned power company PT Perusahaan Listrik Negara or PLN. They will develop potential battery storage and green hydrogen projects in the country.

Same with Thailand, the partnerships with Indonesia will be for the joint development of green H2 and green ammonia facilities.

In the recent debate on clean energy transitions, green hydrogen has been the leading topic. Hydrogen itself is available at an industrial scale. It also offers a lot of uses, especially in powering things.

As per industry estimations, hydrogen demand has tripled since the 1970s. And that volume grew to ~70 million tonnes in 2018 – an increase of 300%.

And since producing green hydrogen uses a renewable energy or low-carbon source, many speculate it would be the energy of the future.

Meeting this forecast calls for trillions of dollars by 2050 – around $15 trillion, which is $800 billion of investments per year.

Major oil companies also have plans to pump huge investments to make green H2 a serious business. Examples are Shell, Adani, and TotalEnergies, who will be deploying billions of dollars in developing green hydrogen.

The parties to the green hydrogen deal in Thailand will now be commencing the feasibility study for the project.

The post Saudi Power Firm Inks $7B Green Hydrogen Thailand Deal appeared first on Carbon Credits.

How Do I Buy Carbon Credits?

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Companies and individuals alike have been investing in carbon credits to offset their carbon emissions. But not everyone is familiar with how to buy carbon credits.

While buyers of the credits don’t have to be expert in all the rules and procedures of carbon offsetting, at least they should have a basic understanding of how the credits are generated, issued, and bought.

So if you’re asking the same question “how do I buy carbon credits” or how do you get carbon credits, this guide will help you through it.

How Do I Buy Carbon Credits?

The annual carbon footprint of an average American is 16 tons. It’s one of the highest globally. So, personally taking action as an individual or company to reduce emissions will make a big difference for the planet.

But only when you know how.

Your buying options largely depend on one thing – where in the lifecycle of the credit you should buy.

Broadly speaking, the earlier in the cycle, the better the price and terms will be. But the delivery risk could be greater. Plus, it may be longer to actually receive the credits.

So, how do you buy carbon credits in the best way possible?

Understanding how carbon credit works, its value, and when in its lifecycle to purchase.

What is the Value of a Carbon Credit?

Carbon credits are the currency of the global carbon market. They represent tonnes of carbon emissions.

Simply put, one carbon credit offsets or permits one tonne of carbon emissions.

The price of a carbon credit varies widely, affected by these things:

Supply and demand
Market sentiment
Project costs/variables
Carbon quality control or standards

Here’s the current prices for carbon credits available in the market.

Under the compliance or regulated carbon market, carbon credits serve as permits to pollute. Within this market, the government has the final say as to how much carbon companies can emit. It’s then up to them to stay under their allowed levels of carbon.

If they went over their limits, they’re going to pay a fee for each tonne of carbon above the permitted amount.

Carbon credits work differently in the voluntary carbon market (VCM). That’s primarily because buying carbon credits is entirely voluntary as the name says.

Entities purchase the credits simply because they want to. Not because the government tells them to do so.

In the VCM, carbon credits are known as carbon offsets. And it’s not only companies but also individuals and other entities that can buy offsets.

So, it means that carbon offsets are handy to both you, as an individual emitter and your company.

Our focus is on the carbon credits in the VCM and how to acquire them.

Going back to your question how to buy carbon credits, let’s walk you through as a company or corporate buyer.

How Can A Company Acquire Carbon Credits?

Buying carbon credits can erase a company’s carbon footprint. But there are some things you need to do first.

Calculate the carbon emissions of your company. Remember that each credit represents one tonne of carbon dioxide or its equivalent.

So, if your company emitted a total of 1 thousand tons of GHG in one year, you need to buy 1,000 carbon credits to offset all of them.

This carbon accounting is to make sure that your firm doesn’t emit more than it can absorb. It will also help provide financing to carbon mitigation projects.

After calculating your company’s total carbon footprint, it’s time to decide how much of it is for offsetting. Then you can determine the amount of carbon credits to buy.

But before you draw out a check for the payment, take a break. And then consider when in a credit or an offset’s lifecycle to make the purchase.

The Carbon Offset Lifecycle and When to Buy the Credits

Stage 1. Methodology development

Before any carbon reductions are certified to be carbon offset credits, they have to show that they meet the criteria. This needs a certain methodology or protocol that’s meant for a specific type of a project that generates the credits.

But project developers can also propose new protocols for the project. This is where a carbon credit buyer can financially support the development of a methodology for the new project.

Stage 2. Project development & registration

The next stage is when developers design the project and develop it with financial support from investors. The design will then be validated by an independent verifier before it gets verified and approved by a carbon offset program.

Only by then that the project can be registered and generate carbon offset credits. This is the point as to when and how a company can acquire carbon credits – by directly investing in a project in return for rights to the credits the project will deliver.

Acquiring carbon credits at this stage can be advantageous for your company as a buyer. That’s because you’ll be able to lock in a price for the credits that’s lower than market price. An option contract is an example of this.

Stage 3. Project verification and carbon credit issuance

A carbon offset project is implemented, then monitored, and verified to determine the quantity of emission reductions it generated. The length of time to verify varies but it’s usually one year.

Once the carbon program approves the reports, it then issues the corresponding number of carbon credits. That’s equal to the amount of verified CO2e carbon reductions. Carbon credits are often deposited into the developer’s account in a registry system by the carbon offset program.

Project developers may have unsold credits for which they’re seeking buyers. If your company buys directly from them, you may avoid some transaction costs. You just have to deal with any quality concerns.

Stage 4. Carbon credit transfer
After they’re issued, carbon credits can be transferred into different accounts in an offset program’s registry. Transfers are made as a result of a trade, and credits can move among multiple accounts.

As a buyer, your company can then use those credits to offset your business’ footprint and then retire them.

Stage 5. Carbon credit retirement

Holders of carbon credits must retire the offsets after they’ve used them and claim their reductions.

After retirement, the offsets cannot be transferred or used. In other words, the credits must be removed from circulation.

If you have a small company and wonder how to acquire carbon credits at this time, one way is through retailers. They can provide access to credits from a wide range of projects and maintain accounts on carbon program registries. They can also retire those offsets on your behalf.

Apparently, whether you own a large firm or just a small one that’s not part of the compliance market, you can still opt to offset your emissions by purchasing carbon credits.

But how do you get carbon credits successfully? What should you have to consider for a successful transaction? Let’s turn to these vital queries next.

How Do You Get Carbon Credits?

Generally speaking, for each metric ton of CO2 captured, reduced, or avoided, you can get one carbon credit for it.

Projects that do a good, verifiable job of sequestering CO2 can earn a large number of credits and then sell them. This offers a great way to fund those projects, or even earn a big profit.

Meanwhile, entities that emit GHGs can purchase credits to offset their emissions. Buying gives them the chance to still become carbon neutral even if they don’t operate the projects or don’t have direct access to them.

In other words, you can still get the credits for pollution you can’t avoid.

Getting the best carbon credits you need, either as an individual or a company, requires a couple of things. Four of the most important ones are:

The right timing: how quickly you need to get the credits and when you need them delivered)
How many carbon credits you need to acquire
The price you can afford
The level of engagement you can put for the transaction: can you go directly with the developers or do you prefer more hands-off buying options?

Factoring in all these variables is crucial so you don’t end up in a mess.

It’s the same when you’re thinking of hosting a party in your place. You have to decide when it will be held, how many people to invite, how much is your budget, and how much effort you can put into it.

Options to Buy Carbon Credits

Once you have slept on those criteria for a successful purchase, you can now proceed choosing from among these many ways to buy carbon credits to offset your footprint.

Buying directly from project developers

The most direct way to get the offsets is at the source. That’s from the project developer you want to support. Here are the top five developers that get the highest ranks.

This option involves three subways to get your hands on the carbon credits.

The first two may not be for you if you need the offsets sooner. But the third one may do.

Direct investment in an offset project.

That money is in exchange for rights to the carbon credits the project will generate. Getting involved at this 2nd stage of project development will give you a full understanding of the project’s weaknesses and strengths.

Not to mention that you can access the credits at a lower cost.

But going for this option also means you have to be willing to wait for around 3 – 5 years before the credits can be delivered. It will be a long-term purchase agreement.

2. Contract for delivery

Many offset buyers opt to contract directly with the developer for delivery of the credits as they’re issued. The contract is often called the “Emission Reduction Purchase Agreements” (or ERPAs). Option contracts are a common form of ERPAs.

Opting for this means brings you the benefit to get the offsets at a cost that’s often lower than market prices. But then again, you’ve to commit to a long-term agreement (2-3 years).

3. One-off transaction.

This purchasing option still involves the project developer who may have unsold carbon credits left on their account. Buying directly from them means you’ll get the credits immediately. It also prevents you from committing in a long-term agreement.

The catch, however, is that the available volumes might be low as the credits are somehow left-over.

Buying from a broker

Just like other commodities, there are brokers for carbon credits. Some developers work with them to deal with the sale of their credits.

Brokers can make it easier for you or your company to locate the credits you’re looking for (project, price, location, etc). They may also give you an analysis of the projects where the credits are from.

This option seems to be practical, especially if you need a lot of carbon offsets. The broker handles all the transactions involved on your behalf. And the acquisition process doesn’t involve long-term contracts.

That sounds cool, not getting you busy looking around. But that comes with a price.

Expect to pay more for all the services the broker did for you. It also may not be a good option if you need low volume of credits only.

Here’s an example of how it looks when you transact on a broker’s website like Nori.

As an individual, you can simply enter the number of credits you want to buy on Nori’s website as shown below. The marketplace also shows on the left panel what project is currently selling offsets.

If you’re a corporate buyer looking for bigger volume, you may opt to subscribe and use various tools available to calculate your footprint. Then based on your total emissions, you can select the corresponding subscription of credits for each month.

Buying from a retailer

If you’re still bothered how do you buy carbon credits and you only need a small amount, then searching for an online retailer could help. This may also be the fastest way to get the offsets.

Retailers can give you at least basic information about the projects from which they get the carbon credits they’re selling. Most often, they hold an account on a carbon registry and retire the offsets on your behalf.

But see to it that after you paid a retailer, you become the official user or holder of the credits.

Buying from an exchange

This last option gives you the opportunity not just to buy carbon offset credits. You can also sell them and earn profits.

There are a number of carbon exchanges or trading platforms that sell offset credits. They often work with registries to enable the trading transactions. We’ll mention the top ones in the next section of the guide.

Getting the credits from an exchange can be quick and easy, and with a lower cost than brokers. But it may also be harder to have enough information to assess the offsets’ quality.

Nonetheless, these exchanges allow you to buy and sell carbon credits. So, how do you do that?

How To Buy And Sell Carbon Credits

Buying and selling carbon credits is a fairly simple process. It’s all about buying low and selling high.

Yet like other markets, the price and value of a carbon credit may fluctuate wildly based on key factors identified earlier.

And though the process is pretty straightforward, the hardest part is knowing which company to pick. But before pondering on some names, here’s a quick 3-step guide to follow.

#1. Select an exchange to trade on. Carbon exchanges work the same way as various stock and commodity exchanges. Here are the top 4 carbon exchanges you’ll find worthy to bet your money.

AirCarbon Exchange (ACX): The most streamlined platform

ACX uses distributed ledger technology (DLT) while leveraging blockchain to create securitized carbon credits. It uses a digital warehouse that lets you, as investors, easily manage assets within your portfolios. This exchange has 6 different tradable carbon asset classes, which includes:

Carbon Trade Exchange (CTX): The most cost-effective spot exchange

Unlike other exchanges, CTX is a member-based spot exchange with various participants, ranging from individual brokers and project developers to big corporations. It allows you to trade credits certified by different standards such as Gold Standard and Verra’s Verified Carbon Standard. The credits that are tradable on CTX include:

Voluntary Emission Reduction (VER)
Certified Emission Reduction (CER)
Verified Carbon Units (VCU)
EUA (EU Allowance)
EUAA (EU Aviation Allowance)

Toucan Protocol: Creator of the most liquid carbon-to-crypto market

Toucan turns Verified Carbon Units or VCUs into crypto via its own proprietary Toucan Bridge. Verification is straightforward all the way down to the offset’s source registry like Verra and Gold Standard.

Plus, “retiring” an on-chain credit on the parent registry prevents double-counting. It means this is done by “burning”, locking it away in a blockchain address that no one has access to.

Xpansiv CBL: The most intelligent exchange for ESG-inclusive commodities

Xpansiv CBL is the global marketplace to trade data-driven, ESG-inclusive commodities like carbon. And the platform does this in an intuitive, user-friendly environment based on deeper data. On the platform, you can trade various carbon offsets from major registries around the world.

By hosting around 90% of all voluntary carbon credit transactions worldwide, Xpansiv is the dominant player in the market. Here’s a quick glance at the Xpansiv CBL’s instructions on how to join its trading platform.

#2. Know the rules of the trading platform. Most exchanges have regulations for who can participate in the trading process. This is why smaller landowners sometimes “pool” their credits together to trade on exchanges. So, carefully read the rules first before you join the trading craze.

#3. Keep your account intact and active. After joining the exchange and starting your first trade, make sure that you understand how to keep your account active.

By keeping in mind those easy steps, you may begin earning money from trading carbon credits.

To wrap things up, here’s the summary of the different options you have when purchasing carbon credits.

Buying Carbon Credits

Purchasing carbon credits or offsets is important. It offers a way to neutralize the emissions you or your company can’t control.

Also, knowing how to buy offset credits is simple as long as you follow this comprehensive guide on how to do it.

Best of all, you even have the option to join an exchange after learning how to buy and sell carbon credits. Carbon offsetting and earning at the same time is a win-win for you and the planet.

It may not be a no-brainer to address your question on how to buy carbon credits, still you have to do more when it comes to which specific type of credit to buy.

But don’t worry, we also got you covered through this informative guide on what’s the best carbon credit to buy. Just go over it and learn more.

The post How Do I Buy Carbon Credits? appeared first on Carbon Credits.