U.S. to Sanction Brazil’s Amazon Deforestation Criminals

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In a bid to better address climate change, the United States aims to sanction environmental criminals who contributed to the worsening deforestation in Brazil’s Amazon rainforest.

The U.S. has been imposing various strategies, such as tax incentives and multilateral agreements to combat the climate crisis.

But this recent crackdown on Amazon’s deforesters is a major shift in the second largest emitter’s climate strategy.

U.S.’ Sanction Against Amazon Deforestation

Deforestation in Brazil hit a 15-year record high under outgoing President Jair Bolsonaro. Amazon’s deforestation started to surge in 2019 after Bolsanaro took office and loosened environmental protection.

He pushed for more farming and mining the rainforest, arguing it will reduce poverty in the region.

Deforestation in the Amazon soared to record levels in April this year. It hit a record for the first 4 months of 754 sq. miles, up 69% from the same period last year

What that number means is the clearing of the forest area is more than double the size of New York City.

Environmentalists blamed Bolsonaro. They accuse him of “crimes against humanity” at the International Criminal Court (ICC) for his alleged role in destroying the rainforest.

In June, during the Summit of the Americas, the U.S. and Brazil announced a bilateral effort to end illegal deforestation in the Amazon and sanction offenders.

The formed working group aims to contribute to a major and quantifiable reduction in illegal deforestation in the Amazon each year. That’s part of the larger goal of reaching zero illegal deforestation in 2028.

The joint task force will pay special attention to the fight against domestic and international crime on:

Wildlife trafficking,
Illegal mining,
Illegal timber trade, and
Disincentivizing the use of financial system related to illegal activities with forest products

Any major perpetrators of Amazon’s deforestation and other key environmental crimes will be penalized.

Amazon’s Role in Climate Change

Preservation of the Amazon is vital to reversing the catastrophic effects of global warming. That’s because of the huge amount of carbon dioxide the rainforest sequesters.

It has been dubbed as the “lungs of the planet” and absorbs ¼ of the CO2 absorbed by all the land on Earth. That is 2 billion tons of CO2 yearly (or 5% of annual emissions), making it a vital means to prevent global warming.

But that amount is 30% less today than in the 1990s due to deforestation.

Here’s the annual rate of deforestation in the Amazon rainforest until 2021.

A team of experts estimated the Bolsonaro administration’s contribution to rampant deforestation in the region since 2019. They said that the emissions resulting to it will cause over 180,000 excess heat-related deaths globally this century.

According to the leader of a group fighting environmental destruction:

“What’s happening in Brazil — mass deforestation — we want to understand the causal link to the global climate. It is exactly what the Rome Statute defines as a crime against humanity: the intentional destruction of the environment and environmental defenders…”

Ending Deforestation in the Amazon

Brazil’s incoming president-elect Luiz Inacio Lula de Silva pledged to curb deforestation during the COP27 summit last week. He emphasized to the U.S. officials his focus on abating climate change.

Lula promised to end deforestation in the Amazon by 2030, saying:

“There is no climate security for the world without a protected Amazon.”

Brazil’s environment and justice ministries said in a joint statement that the government was working to fight environmental crimes. And that the authorities in the country were cooperating to combat deforestation.

The joint task force between the two countries seeks to achieve these deforestation reduction goals:

15% per year below previous-year levels from 2022 to 2024,
40% below previous-year levels in 2025 and 2026,
50% below previous-year levels in 2027, and
zero in 2028.

Meanwhile, Washington plans to impose “Magnitsky” Sanctions against deforesters.

The Magnitsky Sanctions represent the implementation of multiple legal authorities. Some are in the form of executive orders from the President, while others are public laws by Congress.

The sanctions will punish anybody accused of enabling human rights abuses. They would freeze any U.S. assets and bar all American citizens and firms from dealing with any sanctioned person or entity.

Officials in the U.S. and Brazil have already started identifying and investigating specific targets. Once convicted, their potential punishments range from visa blacklists to Magnitsky sanctions.

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The Great Nuclear Race

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Of the nuclear reactors that have started construction since 2017, 87 percent were designed by either China or Russia.

It’s part of a long-term, calculated effort to steal the nuclear export market from the United States.

From the 1960s through the 1990s, the United States had a booming nuclear export business. It financed and provided the technology for dozens of reactors around the world.

But the market has changed. And the two countries capable of massive government-to-government deals—Russia and China—have skillfully taken over.

Though the nuclear export market has primarily been dominated by Russia in the past decade, China is starting to step up in a big way. 67 percent of all reactors to be completed worldwide by 2030 will be from one of the two countries.

Russia’s state-owned Rosatom has $133 billion in reactor export orders—more than fifty reactors in nineteen countries.

China is planning to export thirty of its Hualong One reactors by 2030, netting it $390 billion.

The U.S.? Zero.

Yet the U.S. Department of Commerce predicts the market will be worth between $500 billion and $740 billion over the next decade.

By 2050, the total nuclear export opportunity is expected to be as high as $1.9 trillion.

But for Russia and China, this isn’t just about money…

It’s about the century-long, unbreakable geopolitical bond created by building a nuclear plant in another country.

That’s why Russia is strategically exporting to surrounding countries.

The death of American nuclear expertise and the associated exports is having other terrifying consequences, too:

It’s losing its influence on foreign policy…
It’s losing its access to nuclear-powered aircraft carriers and submarines…
And it’s losing the ability to set safety standards for nuclear around the world.

In other words, the war for global nuclear reactor dominance has nothing to do with energy security.

It’s about national and global security.

And that’s something the entire U.S. government takes seriously.

“The U.S. Government will move into markets currently dominated by Russian and Chinese State Owned Enterprises (SOE) and recover our position as the world leader in exporting best-in-class nuclear energy technology.”

– United States Department of Energy

Nuclear Comes Home

Restoring the United States to a position of nuclear supremacy is one of the strongest bipartisan issues in the government today.

In fact, for the first time since Richard Nixon was president, both Democrats and Republicans have nuclear energy development in their platform.

And in the past four years, a flurry of laws have been quietly passed to support American and global nuclear energy development.

The legislation is intended to promote four primary areas:

Existing Infrastructure
Innovation
Exports
Fuel

Redeveloping American capacity for each of those will rapidly bring it back as a massive force on the world stage.

In April 2022, the implemented a $6 billion Civil Nuclear Credit Program to prevent reactors from shutting down prematurely.

It’s a deliberate move to force the U.S. to restore its nuclear infrastructure and rebuild its nuclear supply chain and workforce.

Four months later, the Inflation Reduction Act of 2022 (IRA) included several key provisions that made it clear that the United States is throwing its full weight behind nuclear energy.

There’s $150 million for the Office of Nuclear Energy to build out R&D.

And there’s $250 billion that can be used to update, repurpose, and revitalize nuclear infrastructure.

But the most significant is a first-ever production tax credit of up to $15 per MWh.

Not only does the credit make nuclear energy far more attractive to investors . . .

It makes the cost of nuclear $33/kWh lower than offshore wind.

As the subsidies enjoyed by wind and solar are winding down, they’re ramping up for nuclear.

Next, Congress is turning toward developing the next generation of reactors—and the generation after that.

A Different Kind of 5G

Every year, new laws are granting significant funding to nuclear:

Nuclear Energy Innovation Capabilities Act of 2017 – Authorized the creation of the National Reactor Innovation Center.
Consolidated Appropriations Act of 2018 – More than $2.1 billion for Department of Energy and NRC nuclear programs, plus tax credits for new reactors.
Nuclear Energy Innovation and Modernization Act of 2019 – Forced the NRC to streamline the licensing process for advanced reactors.
Bipartisan Infrastructure Law of 2021 – Funding for the Advanced Reactor Demonstration Program.

These laws are all designed to stimulate billions in investment to “help domestic private industry demonstrate advanced nuclear reactors in the United States.”

They even created an “Office of Clean Energy Demonstrations” for that purpose.

The office has already funded an advanced nuclear research group that is building a direct competitor to China’s Fourth-Generation nuclear reactor.

All of this is the exact same template as the ‘60s: quietly fund lots of different types of experimental reactors to see what works.

Then, move full-bore ahead on the ones that do.

Bill Gates says that it’s the only way to optimize new nuclear technology and get “Green Premiums” down.

And it’s working.

More than fifty companies in the U.S. are working to bring advanced nuclear reactor technologies to market.

The first small modular reactor (SMR)—ostensibly the future of nuclear—is targeted to be operational in 2030.

The company running it expects a cost of $58/MWh (compared to ~$70MWh+ for natural gas). And that’s before the new production incentives.

These new reactors will be unlike anything any other country can offer:

“Advanced reactors in development are nothing like the existing technology
prevalent at nuclear plants . . .”
– Director of New Reactors for the Nuclear Energy Institute Marcus Nichol

The Alternative Is Darkness

In April 2022, it was time for step three: financing exports.

You see, the most unassailable edge that China and Russia have isn’t nuclear technology.

It’s state money.

China knows how powerful it can be to force a country into debt.

When the U.S. exported four AP1000 reactors to China—the only U.S. reactor export since 2000—it offered $5 billion in financial assistance. China refused.

And China doesn’t just extend debt financing at favorable terms; it actively takes equity investment in international nuclear projects.

Eventually, China will be able to fund global nuclear solely from its profits from offshore nuclear energy . . . enabling it to offer better financing terms than any other country in the world.

In addition to financing, Russia offers turnkey nuclear plant packages—construction, training, and even operations.

It’s a proposition that the United States is completely unequipped to match.

And it’s why, in early 2022, two senators brought back a secret U.S. weapon in the bipartisan International Nuclear Energy Act.

The Act establishes an Executive Office for Nuclear Energy Policy to develop a civil nuclear export strategy.

“This bill … seeks to ensure we can provide nuclear energy solutions to countries that might otherwise pursue Russian or Chinese nuclear plants.”– Senator James Risch

More importantly, it reopens the floodgates of U.S. nuclear financing.

The U.S. Export-Import Bank (EXIM) is designed to make exports financially available to other countries. Between 1955 and 1965, the bank enabled the U.S. to capture 100 percent of global nuclear exports.

During the ‘70s, EXIM gave out $4.2 billion in grants and $2 billion in guarantees for international nuclear (1975 dollars).

In 1974 alone, the U.S. EXIM bank financed thirty-seven reactors in eleven countries.

And the bank has a sizeable war chest—$135 billion—completely available for spending.

EXIM has already begun funding nuclear exports.

It agreed to finance up to $7 billion for nuclear projects in Romania, including SMRs, after Romania cancelled a reactor order from Russia. . . and it has signed an agreement with Poland to provide financing for their nuclear program.

It’s all part of a master plan toward renewing American supremacy in nuclear energy, and ensuring no one else catches up.

Now that the infrastructure is being restored, innovation is being accelerated, and financing is available, it’s time for the United States to dominate the final chokepoint of nuclear:

Uranium.

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Seafields Unveils 1 Billion Carbon Removal Project Off West Africa

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Seafields revealed its plan to tokenize one billion carbon removal credits from a seaweed farm off West Africa in partnership with the blockchain-based carbon company JustCarbon.

Seafields is a UK carbon removal firm that aims to remove billions of tonnes of carbon dioxide from the atmosphere through its seaweed farm. JustCarbon is Seafields’ sister company aiming to create an accountable, transparent, blockchain-based carbon marketplace for Seafields’ credits to be sold.

Seafields director and co-founder, John Auckland remarked that:

“Stopping ongoing carbon emissions isn’t enough. We also need to scrub existing pre-industrial CO2 fast… By sustainably growing sargassum, we will use the vast space available in the ocean to remove billions of tonnes of CO2 from our atmosphere while also meeting the increasing demand for carbon offsets over the next two decades.”

Seafields Carbon Removal Credits

Seafields’ compressed Sargassum bales are natural ‘carbon batteries’. They’re ocean-grown seaweed sunk to the sea floor to lock away the CO2 for hundreds of years.

Another partner of Seafields, Carbonwave, is making Sargassum into sustainable, high-value products. This, in turn, produces carbon credits.

The carbon removal company plans to build a seaweed farm the size of Portugal – 94,000 sq. km. – off the West African coast. Seafields will grow, harvest, bail, and sink sargassum in the South Atlantic gyre to remove 1 gigatonne of carbon yearly.

This carbon removal project, if fully operational in 2031, will be significant in removing CO2 from the air. The scientists and impact investors supporting it are confident of that.

The certified carbon removal that Seafields will achieve via this project will produce tradable carbon credits called offsets.

The price for each carbon credit varies depending on its co-benefits.

Co-benefits refer to the extra benefits that the project delivers apart from emission reduction like biodiversity conservation and job security.

Most often marketing the co-benefits of CO2 removal projects is left in the hands of intermediaries. If brokers and retailers get a hefty margin from the sale of carbon removal credits, project developers like Seafields end up with a smaller share.

On this note, Auckland said that the project is not viable if they “hand over too much of the margin to retailers and other intermediaries”. He further added:

“If hyper-scale projects like Seafields do not get the funding and investment needed, we will not meet the targets for the decarbonisation of the globe and limiting global warming to 1.5⁰C…”

If the price of a carbon credit goes over $75, as predicted by the IMF, Seafields will receive an income of $74.25 billion from generating 1 gigatonne of carbon removal. While JustCarbon can get as much as $750 million or 1% of the total sales as its minting fees.

The 1 billion tonnes that Seafields and JustCarbon will be removing will help boost the carbon removal market.

As per estimates, the value for this market will grow to over $500 billion by 2050.

Source: BNEF Projections

Blockchain-Based Carbon Removal Credits Platform

The JustCarbon platform uses blockchain technology in minting carbon removal credits from Seafields. It directly connects sellers with buyers by removing brokers from the sales process.

Doing so ensures that 99% of the carbon credits value goes back to the developer to support more projects that remove CO2. This allows Seafields to deal with buyers and sell the carbon credits for a fair price.

Co-founder of JustCarbon, Chad Williams, remarked in the announcement that:

“…and we aim to maximize the funding received by these projects. That’s why we take such a small minting fee rather than the typical intermediary fees of retailing carbon credits, which can be as high as 80% of the credit value.”

The firm’s blockchain-powered system will facilitate the direct sale of Seafields’ carbon removal credits to a global market. It enables everyone from individual consumers to large organizations to offset their unavoidable emissions.

The UK company seeks to supply carbon credits early in 2024 after getting a certification from a carbon standards body. Seafields then hopes to scale up its carbon removal capacity to gigatonnes by 2031.

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Carbon Credits From Drip Irrigation

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An Israeli company Netafim introduced its landmark carbon credits initiative for global rice farmers with its pioneering drip irrigation technology at the COP27 summit.

Netafim is part of the global conglomerate Orbia and was the first to introduce drip irrigation in the ‘60s. The company says its precision agriculture technology can save water, boost crop yields, and reduce carbon emissions.

Netafim said it’s bringing its drip irrigation to Italy, Turkey, India, and other parts of Southeast Asia tod help farmers earn extra income from carbon credits.

Netafim President Gaby Miodownik said:

“This program marks the first time a carbon credit is being generated based on the application of irrigation technology. In the face of climate change, the only surefire route to sustainable agriculture is to grow more with less — less land, less water and significantly less greenhouse emissions.”

Netafim and Its Drip Irrigation Method

Traditionally, growing rice uses up to 40% of the world’s freshwater. It’s also responsible for 10% to 15% of all methane emissions from human activities.

When the world has to reach net zero emissions by 2050, there’ll be 20% less arable land per person to grow enough calories. The demand for rice will also increase by 28% by that period to feed 10 billion people living on earth, according to Netafim.

Add to that the increasing water scarcity, and so it’s clear why efficient agricultural practice is a must.

This is where Netafim and its drip irrigation fits in, championing a precision agriculture technique.

Drip irrigation is one the most efficient water and nutrient delivery systems for growing crops. That’s because it delivers water and nutrients across the rice field in pipes called ‘dripperlines’. They have smaller units known as ‘drippers’.

Each dripper emits drops containing water and nutrients directly to each plant’s root zone, in the right amounts and at the right time. Each crop gets exactly what it needs and when to grow optimally.

By introducing its pioneering drip irrigation system for rice production, Netafim said it can save 70% of the water used in producing rice.

According to the company, the traditional method of rice irrigation requires about 5,000 liters or 1,320 gallons of water per kilo of rice produced. But with drip irrigation technique, only 1,500 liters or 396 gallons of water is needed.

Plus, Netafim’s method uses 36% less energy and 30% less fertilizer. It also cuts methane emissions to almost zero and arsenic uptake by 90%.

But there’s a catch – the drip equipment will be costly for poor farmers. And it may not be an option if water is cheap and abundant.

But that could change with Netafim’s novel carbon credit program.

Carbon Credits from Drip Irrigation

The firm’s new initiative can enable rice farmers to afford the system. And that’s through the cash from carbon credits its drip irrigation generates.

Carbon credits are tradable permits produced from reducing or removing gasses like CO2 and methane. These credits allow companies to offset and lower their emissions which are hard to fully avoid.

Netafim works with researchers who put flux chambers into the rice fields. These devices measure emissions from the ground to the atmosphere in real-time.

The company also has verifiers to validate that the measurement is done properly. The data is further validated by Verra, one of the top carbon credit verifiers. It checks that the method used to sequester carbon follows international standards.

Miodownik noted that:

“If just 10% of paddy rice farmers switch to drip, the drop in emissions will be equal to taking 40 million cars off the road.”

Rice growers using Netafim’s drip lines can earn 10 carbon credits per hectare of land each year.

Given the current prices for each tonne of carbon or its equivalent, running between $20 – $30, it will be another income for many small farmers.

Pre-selling of Carbon Credits

Netafim will see that rice growers adhere to its drip irrigation procedures. Then it will submit the data for verification to Verra, who will issue the carbon credits.

Once those credits are bought, the firm will pay the farmers what is due to them.

But there’s one big problem, especially in developing countries. Farmers have to buy the drip equipment upfront, but the carbon credits will be paid later at the end of the rice season.

So Netafim is looking for those willing to pre-purchase the credits to help farmers access the capital they need. It’s also exploring other models for managing carbon credits and payments.

The cash incentive that the credits represent is a game changer. It’s a “win-win for the farmers, the buyers of carbon credits, and the environment.”

Netafim’s carbon credits program and drip irrigation system will be available to farmers worldwide in 2023.

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Key Highlights of COP27 Climate Summit

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The progress in advancing the global climate change agenda wasn’t only represented in the headlines of this year’s annual UN climate change summit known as COP27. It’s also represented in the efforts of the world leaders behind the scenes.

There were no big decisions due to land at the COP27 conference. But due to multiple crises in 2022, several breakthroughs were reached. Here are some of the key highlights concluded within the two-week summit in Sharm El-Sheikh, Egypt.

COP27 Climate Summit Delivers Several Breakthroughs

The biggest breakthrough came in support for climate victims.

Nations closed the COP27 climate summit with a hard-fought deal to provide financial support from developed countries to poorer ones suffering from climate disasters. They call it compensation for “loss and damage” of the climate crisis. It can be worth up to $1.7 trillion by 2050 according to a study.

This conclusion was seen as a triumph in responding to the disastrous effects of global warming on vulnerable countries. But many nations said this brought a lot of pressure on them to give up tougher pledges to tackle warming for the loss and damage fund to push through.

Developing countries, especially the small islands and other vulnerable nations got the loss and damage fund they have long fought for. The deal is a win for them over the EU and the US, the countries who had long resisted the idea of setting up this fund. But who pays and who benefits remains a battle for COP28.

However, there was little to stop polluters that caused more damage. A proposal to phase out all fossil fuels discussed at last year’s COP26 went nowhere.

And while India decided to turn the heat onto other fossil fuels, along with 80 other countries, Egypt opted out and openly struck gas deals on the sidelines.

Another breakthrough is the US’ revelation of a new voluntary carbon trading market scheme.

Under this new framework, the country will use the proceeds from carbon credits to fund new clean energy projects and help developing nations end their use of fossil fuels. It allows state bodies to earn carbon credits by cutting their power sector’s emissions if they stop using fossil fuels and go for renewable sources instead.

International Trading for Carbon Credits

Carbon credits or offsets allow countries or firms to pay others to cut carbon emissions to make up for their own.

COP negotiators have been discussing how to make international trading of carbon credits work since the 2015 Paris Agreement. In Glasgow’s COP26, they outlined the broad framework for a new global carbon trading scheme. In Egypt’s COP27 climate summit, they filled in some details in a draft text.

By the end of the first week of COP27, negotiators agreed to put off decisions on which projects should be eligible to generate carbon credits. In the second week, they made progress on determining how country-to-country trading would go about.

They also clarified how nations could authorize a project within their jurisdictions to sell those credits outside their borders.

Their agreement creates a two-tier carbon market, specifying the rules on who buys the credits and for what purposes. And though they had finalized most of the guidelines for how the credits under the old trading system can be tied with the new rules, its launch is off as the debate continues into COP28 next year.

The decisions yet to be agreed upon include whether the avoided emissions from deforestation and other projects do quality for carbon credits.

According to Dirk Forrister, the chief executive of the International Emissions Trading Association (IETA) said that:

“The texts provide key elements to implement high-integrity carbon markets that can help deliver net-zero ambitions for all countries. We expect further decisions at COP28 and beyond.”

In the new second-tier market, carbon credits are called “mitigation contributions”. An entity can buy credit from another country, and the host doesn’t have to tweak its emissions inventory.

On the Sidelines of COP27 Climate Summit

Some nations have approved at the COP27 climate summit the first-ever voluntary cooperation known as the Internationally Transferred Mitigation Outcome (ITMO). It’s a carbon emissions trading system where nations can buy or trade carbon credits from other countries. This opens doors to creating new carbon markets and more emissions reductions.

Also, India revealed for the first-time its long-term strategy to reach net zero emissions by 2070. While Canada launched its carbon pricing initiative called the Global Carbon Challenge at the summit.

Meanwhile, Cambodia agreed to sign deals with international corporate buyers for about 15 million tonnes of carbon credits from the country’s landmark REDD+ projects.

REDD+ is a kind of climate change mitigation strategy. It allows communities and governments to gain payments for emissions reductions achieved through forest protection projects.

COP’s Old-Time Favorites and Late-Comers

The most vulnerable nations hit by climate disasters say the annual COPs focus too much on ways to cut emissions. But they don’t pay enough attention to climate adaptation. Early warning systems for climate disasters are some of the adaptation measures.

This concern has been on the table since the Paris Accord started. COP delegates agreed to double the amount of adaptation financing by $40 billion by 2025 in Glasgow.

And though there is some progress in defining a global goal on adaptation, the decisions still fall short of the funding goal. For the director of the Red Cross Red Crescent Climate Center:

“Too little, too late’ is what developing countries are arguing, as climate change is already exacerbating flood events, drought and sea level rise…”

Instead of reaching a final agreement, nations at COP27 adopted a framework that laid out the questions that need answers at a future COP.

The late-comers to the debate are agriculture and food, which accounted for ⅓ of global GHG emissions. Yet talks on reducing these emissions are quite new in the COP agenda.

At the COP27 climate summit, countries authorized a group’s workshops on how to deal with climate-related agricultural issues for 4 more years. These include best practices in livestock, water use, and soil management, as well as food security.

But apart from conducting workshops, nations must translate them into measures that can be done in practice. Over 100 organizations signed a letter urging COP27 delegates to expand the scope of emissions to waste and food consumption. However, the debate kept its focus on agriculture.

Emissions from the food system have to go down, too, for the world to limit global warming. And as the head of advocacy at World Wildlife Fund (WWF) U.K. said, “you can just phase out fossil fuels, you can’t phase out food”.

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Abu Dhabi Wealth Fund Mubadala Acquires 20% Stake in ACX

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Abu Dhabi wealth fund Mubadala Investment Company has acquired a strategic stake in Singapore-based AirCarbon Exchange (ACX), which is establishing a carbon credits trading exchange and trading house in the emirate.

Mubadala, the $284 billion Abu Dhabi sovereign fund, will acquire at least a 20% stake in AirCarbon Exchange. The acquisition supports the plan of the oil-rich OPEC member to enable companies to trade and finance carbon credits.

Mubadala said that the deal with ACX has been successfully done but they didn’t disclose any financial details.

The executive director of UAE Clusters at Mubadala Badr Al Olama said that the UAE is leading the transformation of the financial ecosystem. This recent investment is a testament to its role in contributing to that change.

He further noted that:

“By investing in Air Carbon Exchange and pioneering the future of environmental commodities, we demonstrate our ability to combine impact with investments that support both the decarbonisation and diversification of the UAE economy…”

ACX uses blockchain technology to securitize carbon credits. It will soon begin its first carbon exchange operations in the United Arab Emirates.

Regulating Carbon Credits Trading in Abu Dhabi

Emissions trading schemes in carbon markets are tools to reduce greenhouse gas emissions. They place a cap or limit on the amount countries or firms can emit. If they exceed those limits, they can buy permits in the form of carbon credits from others.

Carbon credits are known as carbon offsets in the voluntary carbon markets. The market for these instruments can grow to over $50 billion by 2030, according to some estimates.

The UAE has been spending billions of dollars to increase oil and gas production. But the Arab’s 2nd largest economy also plans to invest about $165 billion in clean and renewable energy to reach net zero emissions by 2050. Doing so makes it the first nation in the Middle East to have a net zero pledge.

Abu Dhabi’s stake in ACX is part of UAE’s net zero strategies and efforts to offset its emissions. The move is also a preparation for hosting the next climate change summit COP28.

In February this year, ACX partnered with the Abu Dhabi Global Market (ADGM) to set up the first regulated carbon credits trading exchange in the capital. ACX also plans to set up a regulated recognized clearing house called ACX Clearing Corporation for clearing and settling commodities and their derivatives.

ADGM will regulate carbon credits and offsets as emission instruments in the country. It will also issue licenses for exchanges to operate both spot and derivative markets.

In January, ADGM revealed that it had achieved carbon-neutrality status by offsetting its carbon emissions in 2021. As such, it becomes the “world’s first international financial center to become carbon neutral”.

ADGM’s chairman Ahmed Al Zaabi remarked that:

“The investment by Mubadala in ACX is a great testament to the commitment towards climate action… which will enable investors and businesses to voluntarily purchase verified emissions reductions in the form of carbon credits within the progressive ecosystem of ADGM.”

Financing the Green Transition in UAE

Governments around the world are pursuing net zero emissions goals. New initiatives have been announced at this year’s COP27 summit in Egypt that just concluded. And a lot of investments are necessary to achieve those net zero targets – about $50 trillion.

Also, the world needs to cut GHG emissions by about 51 billion tonnes each year to reach net zero by 2050.

The International Monetary Fund urges the investment industry to scale up efforts to finance the green transition and mitigate the climate crisis.

Saudi Arabia and other Gulf Arab states have been boosting their green credentials.

In October, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, had auctioned off 1.4 million tonnes of carbon credits. It’s the Middle East’s first carbon offset auction and the largest-ever in the world.

Oil giant Saudi Aramco, mining firm Ma’aden, and Olayan Financing Company bought the largest number of carbon credits.

And the investment of Mubadala in ACX is the most recent commitment to finance green transition in UAE. Through the initiative, Abu Dhabi aims to attract inflows from global capital markets through carbon credits as investors seek for more ESG-compliant investments.

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How to Calculate Carbon Credits? (5 Easy Steps to Follow)

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Carbon credits are vital components of global emissions trading strategies to lower emissions and global warming. But not everyone knows how to calculate carbon credits and price them.

If you’re one of those wondering how carbon credits are calculated, then this article will guide you through from start to finish.

It will help you know the steps detailing how carbon credits are calculated, the importance of accounting them and how to measure the credits you need to offset your emissions. This is even more important if you are so eager to reduce your own carbon footprint and compensate for it well.

How To Calculate Carbon Credits

A carbon credit is a unit of exchange that individuals and firms alike use to offset their greenhouse gas (GHG) emissions.

One carbon credit, or offset in the voluntary carbon market (VCM), is equal to one metric tonne of GHG reduced or avoided from entering the atmosphere.

Carbon credits don’t have the same value. This is mainly because the carbon credit market, like any other voluntary markets, are not regulated. Different factors affect the final value or price of the credit.

Market dynamics or the supply and demand, project costs and location, and the project developer all impact how much is the worth of each credit. So the results of measuring and accounting for carbon credits can vary a lot, depending on those factors.

Accounting for carbon credits also varies for personal and business purposes.

On the individual level, home energy use, travels, meals, and hotel stays are the key items to factor in when calculating emissions. For businesses, the entire value chain of the products or services offered must be taken into account. Plus, employees’ travel and commute.

The total tonnes of emissions calculated determine the amount of carbon credits you need to offset your footprint.

How Are Carbon Credits Calculated?

There are five easy steps to follow on how to calculate carbon credits you have to buy for offsetting emissions according to DEFRA.

It refers to the Department for Environment, Food and Rural Affairs in the UK. But in general, the steps for calculating carbon footprint to know the corresponding offsets are the same from country to country and here’s how to do that.

Step #1: Determine activities that emit GHGs

The first thing you should do is to identify activities you or your firm do that release GHGs.

The more complex the structure of your organization, the more difficult it is to identify who or what are the sources of emissions. But most often, doing it involves three different ways based on the following emissions scopes.

The following diagram shows the common types of emissions sources under each scope.

Identifying those activities under each of the 3 scopes will be helpful when targeting the emissions source for later reductions.

Step #2: Quantify polluting activities

The most common approach used to calculate GHG emissions is to apply emission factors to known activity data from your home or organization.

This means getting the quantity of resource use through receipts, invoices, or bills associated with the activities. For instance, calculate the amount of electricity, fuels, goods, and services you paid for.

Activity data can be collected in different units of measurement. For example, weights in the case of food or volume for fuel used and kilowatt hours for electricity consumed.

For water, you quantify emissions in cubic meters while it’s mileage for travel. The costs for each of these polluting activities should be monitored and summed up for each year.

It is best to collect activity data by volume or mass (e.g. liters of petrol) as emissions can be measured more accurately.

The table below sets out common polluting activities and sources of information to turn the data into GHG emissions.

And if it’s impossible for you to calculate emissions from known activity data, you can estimate. But be transparent of the estimation method used to ensure that results are reasonable.

Step #3: Get the emission factor of major GHGs

This is when things can be quite tricky as to how carbon credits are calculated. That’s because there’s a formula to get the emissions from all six major GHGs. But keep in mind that your reporting period should be for 12 months.

Your emissions year should also ideally correspond with your financial year. In case they’re different, most of your reporting year must fall within your financial year.

Going back to the DEFRA guide, it notes that different activities or fuels also have different emission factors (EF). That’s to reflect how polluting each of the following GHGs is:

Carbon dioxide (CO2),
Methane (CH4),
Nitrous oxide (N2O),
Hydrofluorocarbons (HFCs),
Perfluorocarbons (PFCs), and
Sulfur hexafluoride (SF6).

Different activities and fuel can release one or more of them. So, it’s important that you know their corresponding EF. To calculate emissions of each GHG, here’s the formula to follow:

“Activity data x Emission factor = GHG emission”

Activity data refers to total use of a resource in a year. Multiplied that by the EF of all the GHGs generated by that certain activity and you get the emissions.

The Environment Protection Agency (EPA) Greenhouse Emission Inventories provide the EFs for various fuels/resources. These include coal and coke, biomass, electricity, fossil fuels, natural gas, and petroleum.

You can also find the EF of GHGs per type of vehicle that you or your company use and corresponding year.

The EPA also keeps a record of EFs for various industries called AP-42. It contains EFs of over 200 air pollution source categories, industry sectors or groups of similar emitting sources.

For the EFs of the foods and drinks you consume, you can find them in this Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories.

Step #4: Change the EF to carbon dioxide equivalent

One crucial thing to take note is that the 6 major GHGs don’t have equal damage to the planet, also called their Global Warming Potential (GWP).

In other words, one unit of CO2, for instance, has a different warming effect than methane. It’s the same for the other GHGs.

Likewise, one unit of nitrous oxide has a GWP of 298 or equal to 298 units of CO2. It means N2O has the potential to warm the earth 298x more than the same amount of CO2.

That’s why it’s important to convert emissions into CO2 equivalent (CO2e). To do this, multiply the EF of each GHG with its corresponding GWP.

Step #5: Compute total emissions

The last step left to do is to calculate the total emissions of your activities/resource use. Get it by summing up all emissions in CO2e for a year.

For personal emissions, there’s another way to get your carbon footprint. For instance, you can use an online calculator that can generate your total emissions after you provide all the information.

But if you prefer a manual calculation for your organization’s emissions, you can always follow the five easy steps mentioned.

Sample computation to calculate carbon credits

The steps serve as a guide on how carbon credits are calculated. To give you a clearer picture, here’s a sample calculation you can try.

It’s based on electricity use of a household with four persons living in the U.S. The basis is the known 2015 activity data.

Step 1: Electricity use is under Scope 1 emissions

Step 2: Average use of electricity by 1 person in the US is 4,517 kWh/year.

So, it means the household of 4 people uses about 18,068 kWh (kilowatt per hour). That is equal to around 18 MWh of electricity use. 1,000 kWh = 1 megawatt (MWh).

The next step is to calculate the emissions for the activity by getting its EF.

Step 3: Electricity use EF from the EPA Greenhouse Emission Inventories

Get the EFs for electricity from the EPA Greenhouse Emission Inventories. You’ll find three GHGs for this – CO2, CH4, and N2O. Here’s the corresponding EFs for each one of them:

CO2/MWh = 650.31 lbs
CH4/MWh = 0.03112 lbs
N2O/MWh = 0.00567 lbs

Following the formula provided earlier, multiply the 3 EFs above by 18 MWh of electricity used by the household of 4. The computation to calculate total emissions for a year goes as follows:

650.31 lbs (CO2) x 18 = 11,705.58 lbs of CO2
0.03112 lbs (CH4) x 18 = 0.56016 lbs of CH4
0.00567 lbs (N2O) x 18 = 0.10206 lbs of N2O

Step 4: Converted CO2e for CH4 and N2O

To express all the emissions in CO2e, multiply their GWP specified in the EPA Greenhouse Emission Inventories.

In this case, the methane (25) and nitrous oxide (298) GWPs as explained earlier. The calculation goes like this:

11,705.58 lbs of CO2 x 1 = 11,705.58 lbs of CO2e
0.56016 lbs of CH4 x 25 = 14.00 lbs of CO2e
0.10206 lbs of N2O x 298 = 30.41 lbs of CO2e

Step 5: Total emissions is 11,750 lbs of CO2e

Lastly, sum up all the 3 converted emissions from step 4 above. Then you’ll arrive at around 11,750 lbs of total CO2e emitted in a year for electricity consumption of 4 people.

Carbon emissions often come in tonnes. So 11,750 pounds is equal to about 5.33 tonnes of CO2e.

So, what does that figure mean to calculate the carbon credits you have to buy? It’s pretty simple. Just multiply the total emissions (5.33) with the price of carbon per tonne as per the market’s rate.

For example, if the carbon price in the market that you buy from is at US$15.0/tCO2e, that would be: 5.33 tCO2e x $15.0 = $79.95.

So, the family of four wanting to offset their emission due to electricity use can buy carbon credits worth $79.95. Or it can be lower depending on the certain market they’ll be buying from.

That money is then spent on projects that reduce or avoid carbon from entering the atmosphere.

Accounting For Carbon Credits

High CO2 emitting sectors like the energy, aviation, and automobile are under regulatory or compliance carbon credit schemes. It means they have to meet a certain limit on emissions set by a government regulatory framework.

This is also called the cap-and-trade scheme or Emissions Trading System (ETS). These systems create the Certified Emissions Reduction (CER) credits. Firms with excess CER credits can trade with others who are over their limits.

There are some key international accounting bodies for regulatory carbon credits after the Kyoto Protocol. But since there’s no regulatory guidance yet, some firms made their own emissions accounting policies. But most companies are accounting for their carbon credit transactions using the IASB’s IFRS.

You can also buy carbon credits from a voluntary carbon project, also known as carbon offsets. The steps involved when accounting for carbon credits under VCM are identical, but only without the regulatory approving bodies.

Still, a third-party entity must verify the carbon credits created by the project. This is to ensure that the amount of reductions they claim are verifiable and real or measurable.

How To Assess or Measure Carbon Credits?

A project’s emission reductions represented by carbon credits are measured in tonnes of CO2e reduced or removed from the atmosphere. How to measure these carbon credits involves considering a set of key criteria.

A project’s emission reductions represented by carbon credits are measured in tonnes of CO2e reduced or removed from the atmosphere. How to measure these carbon credits involves considering a set of key criteria.

Though each credit represents one tonne of emission reduction, not all carbon credits are created equal and so their prices also vary. In general, there are three criteria that you can use to guide your buying decision – additionality, permanence, and measurability.

Additionality: a carbon reduction or removal is “additional” if it would not have happened without the carbon credit.

Additionality is crucial when evaluating or measuring carbon credits to buy. It affects the quality of a particular carbon credit. This is because buying credits to offset your emissions may only worsen the climate if the reductions are not additional. By definition, most carbon removal credits have high additionality as they rely on carbon credits to work.

Permanence: this refers to the duration and risk of leakage of carbon reduction or removal project.

This criterion considers the fact that most CO2 emitted today will not be 100% removed later. Only 25% of it stays in the air for over a hundred years.

And so, high-quality credits are the ones that go with reductions/removals that are permanent. >100 years is permanent and below that is temporary.

Measurability: this deals with data availability and verification.

The reported emission reductions must be accurate and verifiable. In particular, overestimation of GHG reductions should not occur. Otherwise, the measurability of the data won’t be reliable.

Projects that have no data to verify have poor measurability while those with verified data have good measurability.

Pricing Carbon Credits

In regulated carbon markets like the case of the EU ETS, the regulation influences the price setting. But in the VCM, prices vary based on project location, carbon program, and market conditions.

Carbon credits prices also differ depending on the specific type of projects that generate them.

For instance, carbon credits from wind projects in India (which are abundant) have an average price of $1.2/tonne. In comparison, carbon credits from the same project type in the US (which is not common) cost about $3.7/tonne.

Also, the carbon program Gold Standard often prices carbon credits higher than others. That’s because it includes in the price the social costs of the credits used for offsetting emissions.

You can learn more about carbon pricing in this comprehensive guide.

How Do You Calculate Carbon Credits? – Key Takeaways

Carbon credits put a price on air pollution. They serve as a currency used by entities to pay for their emissions.

Carbon credits are available either in compliance or voluntary carbon markets. Though prices and standards vary between these markets, carbon credits still play the same vital role in preventing or reducing emissions.

Most importantly, measuring your own emissions to calculate the carbon credits needed to offset them is one way you can help to save the planet from damaging effects of the climate.

So, if you’re ready to do it, you can start by following the 5 easy steps discussed on how to calculate carbon credits. Then you can begin searching for the best carbon offset programs to consider.

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Cambodia to Sell 15 Million Tonnes of REDD+ Carbon Credits

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At COP27’s talk to end deforestation, Cambodia agreed to sign contracts with international corporate buyers for about 15 million tonnes of Verified Emission Reductions (VERs) or carbon credits from the country’s landmark REDD+ projects.

The announcement from Cambodia shows a groundbreaking collaboration among the government, NGOs, local communities, and large companies, to end deforestation. It represents an effective way to address deforestation while driving investments for sustainable development.

The Royal Government’s Ministry of Environment will be signing agreements with a group of leading corporations that will buy the carbon credits from three of Cambodia’s REDD+ projects developed by the Wildlife Conservation Society and Wildlife Alliance.

Cambodia, REDD+ and Carbon Credits

Deforestation and forest degradation are some of the biggest contributors to the climate crisis, representing around 10% to 12% of all emissions. And it will be impossible to achieve the 1.5°C warming goal without ending emissions from forest loss by 2030.

The UN Conference of the Parties (COP) created the REDD+ framework. It refers to Reducing Emissions from Deforestation and Forest Degradation, with the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries.

REDD+ is a climate change mitigation strategy that allows communities and governments to gain payments from the voluntary carbon markets for emissions reductions achieved through forest protection projects. These projects tackle the main culprits of deforestation.

REDD+ projects allow stakeholders to get value from protecting and conserving their forestlands. And the government of Cambodia finds REDD+ and the carbon credits the projects generate relevant to their cause.

According to the country’s Minister of Environment, Dr. Say Samal, project-based REDD+ is an essential part of Cambodia’s strategy to achieve its nationally determined contributions (NDCs). The mechanism also ensures that the communities have enough resources to deliver the projects.

He also said that:

“Funds generated from VER sales help Cambodia’s Ministry of Environment enact effective policies that support our country’s efforts to reduce deforestation, including our transition to a nested jurisdictional REDD+ program. At a time when the world is struggling to meet the commitments enshrined in the Glasgow Leaders’ Declaration on Forests and Land Use, Cambodia’s experience demonstrates how project-based REDD+ can help countries like ours, which are ready to preserve its forests, to secure immediate, sustainable, and large-scale financing…”

Protecting Forests With Carbon Credits (VERs)

By closing the deals, the Cambodian government managed to have critical financing to protect its vulnerable forests. It will help support local communities working on the frontline to end deforestation.

The sales from REDD+ carbon credits were part of Everland’s offering. Last June, the forest conservation company revealed its “Forest Plan”. It’s an action plan by Everland to end deforestation by developing up to 75 REDD+ projects worldwide.

Here’s how the plan will look like for REDD+ projects until 2030.

Those community-based forest projects will protect a total of about 50.5 million hectares. They represent 17% of deforestation in 15 critical forest nations, which include Cambodia. Other countries are Brazil, Indonesia, Papua New Guinea, and the Democratic Republic of the Congo.

The government of Cambodia selected Everland to market the carbon credits from its REDD+ projects with large global corporations as buyers. The offering yielded a total bid of 15 million tonnes of emission reductions.

The corporate buyers will use the VERs as part of their strategy to offset unavoidable emissions. All the while contributing to wildlife protection and community development.

Proceeds from the carbon credit sales will be used to:

scale up site-based activities within the REDD+ project landscapes,
strengthen local and community-based institutions to govern community-level revenue sharing,
increase access to jobs, education, and healthcare for the local communities, and
secure the long-term financial stability of the projects in Cambodia.

Scaling up REDD+ Programs in Cambodia

Cambodia has been scaling up its REDD+ program by expanding its portfolio of projects. This is done through the help of its major project developer partners, including the Wildlife Conservation Society (WCS) and Wildlife Alliance.

The Ministry of Environment has implemented three REDD+ projects since 2016. These projects are in Keo Seima, the South Cardamoms and Prey Lang, covering an area of 1.27 million hectares.

So far, the projects have received around $11.6 million from the sale of carbon credits. The revenues are all reinvested in further environmental conservation.

The ministry is also preparing for an additional REDD+ project on 1.19 million ha. This will bring the total REDD+ project area to over ⅓ of Cambodia’s protected areas.

With these programs, the CEO of Wildlife Alliance Suwanna Gauntlett commented at the COP27 discussion:

“Cambodia’s REDD+ projects adhere to the most rigorous monitoring, evaluation, and independent verification processes. They produce high-quality verified emissions reductions that protect forests, reduce emissions, and safeguard the populations of endangered species in addition to ensuring services and livelihoods for forest communities…”

She also said that those benefits only show the forest nations that they can seek economic growth while preserving the natural beauty of their countries at the same time.

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The Fault in Our Air

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