Apple’s iPhone 16 Slashes Carbon Footprint by 30%

September 17, 2024/in Uncategorized /by

From creation to disposal, Apple has always taken responsibility for its products in all aspects. This time the brand-new iPhone 16 lineup has a 30% reduced carbon footprint. Their latest Product Environmental Report emphasizes sustainability and showcases how smartly they have reduced climate impact, conserved resources, and used safer materials in their design and aesthetics.

Eco-Conscious Design with 30% Recycled Materials

The first step to sustainability with the iPhone 16 and iPhone 16 Plus is incorporating over 30% recycled or renewables in its design. The company aims to eventually source only sustainable and carbon-free materials while maintaining responsible sourcing of primary resources.

Significantly, the company enforces strict standards for suppliers of tin, tantalum, tungsten, gold, cobalt, and lithium through third-party audits. By 2025, it plans to use 100% recycled cobalt in batteries, 100% recycled tin for soldering, and 100% recycled rare earth elements in magnets. Apart from this, they prioritize product safety by restricting harmful substances beyond legal requirements.

Sustainable Materials Packed Inside iPhone 16:

Aluminum: 85% recycled aluminum in the enclosure and 100% recycled aluminum in the thermal substructure. This reduced product emissions by 8%.
Gold: 100% recycled gold in the USB-C connector, cameras, and multiple circuit boards.
Cobalt and Lithium: 100% recycled cobalt in the battery and 100% recycled lithium in the battery cathode.
Copper: 100% recycled copper in multiple printed circuit boards, 100% copper wire in the Taptic Engine, and 100% recycled copper foil and wire in the inductive charger.
Rare Earth Elements: 100% recycled rare earth elements in all magnets, making up 97% of the device’s total.
Steel and Plastic: 80% recycled steel in various components and at least 50% recycled plastic in multiple parts, including the antenna lines made from upcycled plastic bottles.

Shrinking the Carbon Footprint of iPhone 16

Apple’s latest report reveals a 30% reduction in lifecycle greenhouse gas (GHG) emissions for its iPhone 16 Pro 128 GB and iPhone 16 Pro Max 256 GB models. The most significant factor in reducing the greenhouse gas (GHG) footprint of the new iPhone is the increased use of low-carbon electricity within Apple’s supply chain. Simply put, they made it possible by using electricity only from the grid, without any other clean energy source.

Meanwhile,

The carbon footprint of iPhone 16 is 61 kg CO2e for the 256GB model and 64 kg CO2e for the 512GB model
The iPhone 16 Plus has a footprint of 74 kg CO2e for the 256GB configuration and 77 kg CO2e for the 512GB model

Source: Apple

Moreover, Apple credits its suppliers for significantly reducing product emissions by implementing low-carbon solutions. These exclusive efforts have collectively cut emissions by over 20%, highlighting Apple’s commitment to improving its environmental impact with cleaner energy solutions. Notably, last year the company’s Supplier Clean Energy Program helped avoid 18.5 MMT CO₂e emissions.

Their latest sustainability report highlighted that Apple, to date achieved over a 55% reduction in CO₂e emissions across its carbon footprint since 2015.

MUST READ: Is Apple Leading the Way in Tech and Sustainability? Q3 Results Beat Expectations

Pioneering Plastic-Free Solutions in Packaging

Apple boasts of its packaging! Not only is it aesthetically classy but it is 100% sustainable. They use 100% fiber-based packaging, eliminating plastic except for necessary inks, coatings, and adhesives. Every year they are improving packaging by optimizing recycled content, minimizing packaging volume, and using fewer materials overall.

By 2025, Apple wants to go 100% plastic-free for all its packaging materials. Some notable work and efforts that go behind the entire packaging process are:

All wood fibers in the packaging are either recycled or sourced from responsibly managed forests. This guarantees that any new wood fiber used is balanced by preserving or creating an equal amount of forested land. Apple practices this ritual to maintain the health of forests, which are essential for air and water purification.

The redesigned packaging for the iPhone 16 and iPhone 16 Plus is 8% smaller and more efficient compared to previous models, such as the iPhone 15 and iPhone 15 Plus. They say that this size reduction allows for more boxes to fit on each pallet, thereby reducing the number of shipping trips required.

Source: Apple

Additionally, Apple is prioritizing lower carbon-intensive shipping methods, such as rail and ocean transport, and over-air freight to further reduce emissions associated with product delivery.

So,

What is Apple, after all? Apple is about people who think ‘outside the box,’ people who want to use computers to help them change the world, to help them create things that make a difference, and not just to get a job done – Steve Jobs

SEE MORE: Apple Reveals First-Ever Carbon Neutral Watch, Aims to Offset 25% Product Emissions with Carbon Credits

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U.S. DOE Greenlights $1.5B Conditional Loan to Wabash Valley’s Carbon-Capture Ammonia Project

September 17, 2024/in Uncategorized /by

The U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) announced a $1.559 billion conditional commitment loan to Wabash Valley Resources, LLC. The loan guarantee will help finance the construction of a groundbreaking waste-to-ammonia production facility in West Terre Haute, Indiana. Notably, this investment is a part of the Biden-Harris Administration’s Investing in America agenda.

Wabash Valley’s Cutting-Edge Carbon-Capture Ammonia Project

Ammonia plays a crucial role in U.S. agriculture, especially for farmers in the Midwest’s Corn Belt who rely on nitrogen fertilizers to grow their crops. However, producing ammonia has traditionally been an energy-intensive process that contributes to 1-2% of global carbon emissions.

Wabash Valley Resources is stepping up with a new approach to meet the growing demand while cutting down on harmful environmental impacts. Thus, this Indiana project aims to secure a local low-carbon supply of ammonia that will reduce the region’s dependence on imports and mitigate emissions simultaneously.

They expect the plant to capture 1.65 million tons of carbon dioxide annually once fully operational.

The key attributes of the project are:

Repurpose an industrial gasifier to process petroleum (pet) coke, a waste byproduct from oil refining, and convert it into 500,000 MTS of anhydrous ammonia annually.
Utilize carbon capture and sequestration (CCS) technology to permanently store carbon dioxide, significantly reducing emissions.

Wabash Valley Resources is investing in cutting-edge technology to reduce the need for imported fertilizer in the Eastern Corn Belt. The new ammonia facility will replace a former coal plant and use nearby closed coal mines to store carbon dioxide, creating new opportunities in that region. Furthermore, they aim to make this the largest carbon sink in the U.S. and a model for zero-carbon fertilizer production.

Economic Lift: Boosting Farmers and Communities with Sustainable Innovation

In addition to the environmental benefits, the project is set to provide a significant economic boost, improving the livelihood of farmers and several other community benefits to West Terre Haute and the surrounding region.

Job Boost and Economic Growth

The press release highlights that, “With an investment of $2.4 billion—bolstered by DOE’s $1.559 billion loan guarantee—the facility will create an estimated 500 construction jobs and 125 permanent operational positions.”

A third-party analysis predicts the project will create 1,100 more permanent jobs, boosting the local economy. These will be high-quality union jobs, offering fair wages and benefits to workers. They also plan to hire hundreds of construction workers and invest nearly $900 million in this innovative project. Once fully operational, the facility will employ 125 skilled team members exclusively.

This initiative aligns with the Biden-Harris Administration’s goal to create quality jobs, especially in communities that once depended on declining industries.

Securing Food Supply and Reducing Volatility

Farmers residing in the Midwestern region often deal with unpredictable fertilizer prices driven by global events. For example, the Russian invasion of Ukraine caused ammonia prices to soar, adding strain on U.S. farmers. Even currently, the region relies heavily on Canadian and overseas imports for nitrogen fertilizers.

The new facility offers a local, cost-effective alternative to imported ammonia, helping to stabilize fertilizer prices. Overall, this domestic boost will protect U.S. agriculture from global market fluctuations, secure critical supply chains, and strengthen food security.

Environmental and Community Benefits

Beyond stabilizing the agricultural supply chain, this project aligns with the Biden-Harris Administration’s Justice40 Initiative, which aims to direct 40% of the benefits of federal climate and clean energy investments to less privileged communities.

Wabash Valley Resources is taking a proactive approach to ensuring that the benefits of this facility extend to the local population, particularly in Vigo County, Indiana, where the project is located. In this perspective, they have

Developed a comprehensive Community Benefits Plan (CBP) to create good-paying jobs, enhance community well-being, and minimize environmental impacts.
Engaged with the community and collaborated with stakeholders, including the Central Wabash Valley Building and Construction Trades Council.
Committed to redeveloping the 50-acre brownfield site, supporting Indiana’s efforts to revitalize local communities.

In addition to economic development, Wabash Valley Resources is partnering with local institutions like Rose-Hulman Institute of Technology, Indiana State University, and Ivy Tech Community College to develop training programs that will equip workers with the necessary skills to operate the facility. This effort reflects the administration’s commitment to building an inclusive clean energy workforce.

Aligning with DOE’s Energy Infrastructure Reinvestment (EIR) Program

The Wabash Valley Resources project turns pet coke—a waste product typically burned in low-income countries—into ammonia, cutting emissions and offering a sustainable alternative. By sequestering carbon and investing in clean technologies, this initiative aligns with the DOE’s Energy Infrastructure Reinvestment (EIR) program which is authorized by the Inflation Reduction Act.

Through this program, they can repurpose outdated energy infrastructure for cleaner uses and reduce industrial emissions. In essence, this project embodies the Biden-Harris Administration’s dedication to a cleaner, more sustainable future, ensuring that all communities benefit from the transition.

However, since DOE’s commitment to financing the project is conditional, both parties need to meet specific technical, legal, environmental, and financial requirements before finalizing the loan. All in all, we look forward to finalizing this commitment, allowing Wabash Valley Resources to transform the ammonia production landscape.

FURTHER READING: U.S. DOE Injects $54.4M to Boost Carbon Management Tech and Cut Carbon Emissions

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Andurand Predicts a 50% Increase in UK Carbon Prices: What Fuels the Growth?

September 17, 2024/in Uncategorized /by

Andurand Capital Management, led by renowned oil trader Pierre Andurand, has set its sights on the UK carbon market as a major growth opportunity. The fund is betting on a significant rise in UK carbon prices, with expectations that the market will outperform other cooling commodities markets in the coming months.

The UK government’s push toward stricter climate policies, combined with the country’s post-Brexit carbon market developments, is setting the stage for what could be a major price surge in carbon allowances.

The UK Carbon Pricing System: An Overview

Following Brexit in 2021, the UK has developed its own Emissions Trading System (ETS) to replace the EU’s carbon market. The UK ETS requires power plants, industrial facilities, and airlines to buy permits for each tonne of carbon they emit.

The UK carbon permits, also called carbon allowances (UKAs) or carbon credits, can be traded in the market, with prices fluctuating based on demand and policy changes. By capping the total amount of emissions allowed, the system effectively forces businesses to either cut emissions or buy allowances. As such, it becomes a key tool for reaching the country’s climate goals.

Currently, the UK carbon price trades at a discount of more than 20% compared to its EU counterpart, a gap that investors like Andurand see as a potential opportunity. The EU ETS has benefited from a series of reforms that have driven carbon prices higher. However, the UK’s system has been slower to align with these moves.

UK Allowance (UKA) Futures Pricing from May 2022 to September 2024 (in GBP per metric ton of carbon dioxide)

Chart from Statista

Remarkably, with the Labour government looking to close a £22 billion ($28.8 billion) fiscal gap and accelerate decarbonization efforts, a rise in carbon prices could benefit both the environment and government revenues.

Andurand’s Bullish Bet on UK Carbon

Mark Lewis, Andurand’s head of research and portfolio manager, believes the UK carbon price could rise by 50% in the near term. It could reach over £60 per ton, up from its current level of £42 per ton.

The price forecast is driven by several potential policy changes, which could align the UK market more closely with the EU’s, where prices have surged following moves to tighten emissions caps.

Lewis argues that the UK market presents a unique opportunity for growth, particularly as policies could potentially drive prices higher. He said in an interview that:

“This is a significant-policy driven catalyst. Those catalysts don’t exist in other markets.”

Investors are increasingly focusing on UK carbon credits as one of the most interesting opportunities in the compliance carbon market.

Major Catalysts for UK Carbon Price Surge

Interestingly, several upcoming developments could drive UK carbon prices higher and closer to EU levels.

A key factor is a potential linkage between the UK and EU ETS, allowing businesses to trade permits across both regions. This could significantly reduce the price gap.

The UK government is also considering raising the floor price for the allowances, creating a minimum price to prevent sharp declines and offer stability for businesses. Additionally, the introduction of a mechanism to remove excess permits from the market could help raise prices by limiting supply.

Another measure includes reducing the number of free allowances given to industries, which would increase demand and drive prices up. These changes, if implemented, would create a more competitive and stable carbon market. It can then encourage businesses to invest in reduction efforts and help the UK transition to a low-carbon economy more effectively.

Risks and Uncertainty

Though Andurand’s outlook on UK carbon prices is bullish, there are risks. For one, it’s unclear when these changes will be implemented, and some of the specifics remain undecided.

Key policy changes, like linking the UK and EU carbon markets, raising the floor price, and reducing free permits, lack a confirmed timeline. Additionally, demand for carbon permits has weakened due to the growth of renewable energy like wind and solar.

As more clean energy is added to the grid, fossil-fuel plants need fewer carbon permits, potentially limiting price increases. Analyst Henry Lush from Veyt highlights that while the long-term outlook is positive, short-term uncertainty could lead to price volatility before details are finalized.

Hedge Funds Betting on UK Carbon

Despite the risks, hedge funds are increasingly turning their attention to the UK carbon market. At the end of last week, investment funds placed a record number of bets that the UK carbon price would increase, according to data from ICE Futures Europe. This trend highlights growing confidence that policy-driven catalysts will push prices higher, making the market an attractive opportunity for speculative investors.

The UK carbon market has the potential to mirror the EU’s success. In 2021, reforms to the EU ETS pushed the carbon price up by nearly 150%, creating lucrative opportunities for investors who had positioned themselves early. Andurand and other hedge funds are hoping to replicate that success in the UK.

The UK ETS stands at a pivotal moment, with a combination of policy changes and market dynamics likely to drive prices higher in the coming months. For investors like Andurand, the market presents a rare opportunity to profit from the energy transition while supporting the fight against climate change.

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$65 Billion Green Fund from Carbon Credits Sale? Says Indonesia’s President-elect Prabowo Subianto

September 16, 2024/in Uncategorized /by

Indonesia is preparing for a green revolution as President-elect Prabowo Subianto plans to launch a groundbreaking green economy fund. The fund aims to raise $65 billion by 2028 through carbon emission credits sales from large-scale environmental projects.

Prabowo intends to manage the fund via a “special mission vehicle,” which will oversee all sustainable activities in the country, including forest preservation, reforestation, and other green initiatives. This ambitious plan marks a significant step in Indonesia’s efforts to combat climate change and promote sustainability.

Unlocking the Special Mission Vehicle to Manage the Green Fund

Prabowo has pledged to raise Indonesia’s economic growth from 5% to 8% during his five-year term, focusing strongly on investments in green projects. According to Ferry Latuhihin, one of Prabowo’s climate policy advisers, this fund will play a key role in helping Indonesia meet its emissions targets under the Paris Agreement.

Latuhihin explains that a newly established regulator will oversee Indonesia’s carbon emission rules and form a “special mission vehicle” to manage the green fund. This entity will handle various carbon offsetting projects, including forest preservation, reforestation, and the replanting of peatlands and mangroves. These initiatives are designed to generate carbon credits that can be sold both locally and internationally.

Latuhihin remarked in an interview with Reuters,

“By pooling funds through this vehicle, Indonesia hopes to finance large-scale green projects without tapping into the government’s budget.”

The government has set an ambitious goal to expand the special mission vehicle to $65 billion (1,000 trillion rupiah) by 2028. While it will start with seed capital, the fund is expected to grow primarily from the sale of carbon credits. Once the fund becomes profitable, it will pay dividends back to the government.

Latuhihin also emphasized that they will adhere to international verification standards and use technology to accurately measure how much CO2 each project removes from the atmosphere.

KNOW MORE: The Pitfalls of Low-Quality Carbon Offsets: Are They a Threat to Our Planet?

Challenges in Carbon Credit Pricing and Sales

While the plan is bold, raising such a large sum from carbon credits will not be easy. Christina Ng, Managing Director of the Energy Shift Institute, an independent nonprofit think tank focused on Asia’s energy transition, pointed out that nature-based carbon credits typically trade between $5 and $50 per metric ton of CO2 equivalent. She noted that last year the average price was below $10 per ton.

Considering the maximum price of $50 per ton, Indonesia would need to sell 200 MTS of carbon credits annually to reach the $10 billion mark. This is still short of the $65 billion target over the next four years.

Ng further explained that at the lower price point of $10 per ton, the same amount of carbon credits would only raise $2 billion annually, making the goal even more daunting. The global voluntary market peaked at 239 MTS of carbon credits in 2021, highlighting the magnitude of Indonesia’s challenge.

Another important factor is Indonesia’s past government issues, which haven’t always been conducive to such efforts. However, if the country offers nature-based credits, the entity will need to prove its premium quality.

Leveraging Indonesia’s Nature-Based Solutions for Carbon Credits

Despite these challenges, the potential is enormous. Indonesia is one of the world’s top 10 carbon emitters and is home to the planet’s third-largest tropical rainforest. The vast tropical rainforests and peatlands offer a unique advantage in the global carbon credit market, providing ample opportunities for large-scale carbon offset projects. Latuhihin emphasized that these offset projects will reduce emissions and create significant job opportunities, supporting Prabowo’s broader economic growth plans.

Notably, Indonesia hosts the world’s largest carbon offset project, the Rimba Raya Conservation. This REDD+ project developer recently won a legal victory in Indonesia, allowing it to resume operations in Borneo.

MUST READ: Rimba Raya Resumes Operations in Borneo with Epic Legal Victory

In July, the U.S., Indonesia, and four NGOs signed the debt-for-nature swap and Coral Reef Conservation Agreement. Under the deal, the U.S. will reduce Indonesia’s debt payments by $35 million over nine years. In return, Indonesia would use these funds to create a conservation fund supporting coral reef protection and restoration. Local NGOs will manage projects that benefit both the reefs and local communities.

The McKinsey Report

McKinsey has significantly reported on how high-quality carbon credits are becoming essential for organizations, especially in high-emitting sectors like aviation, cement, steel, and oil and gas. Nature-based solutions (NBS) such as reforestation, mangrove restoration, and peatland recovery offer effective ways to sequester carbon and generate carbon credits. Emerging markets, like Indonesia, with vast natural resources, provide cost-effective opportunities with environmental and social benefits.

Having the spotlight on Indonesia, they explained that the country holds one of the world’s largest NBS potentials, translating to over 1.5 GtCO2 in carbon credits.

With corporations increasingly committed to reducing emissions, the demand for Indonesian carbon credits is expected to grow tenfold by 2030. These credits not only support climate action but also boost local economies, improve biodiversity, and enhance soil and water quality.

Source: McKinsey and Company

KNOW MORE: Indonesia’s Coal Emissions at Record High, Up 33% in 2022

Global Push to Achieve Carbon Neutrality

Reuters noted that the soon-to-be government plans roadshows and partnerships with major global banks to boost international carbon credit sales. They will target markets where carbon credits command higher prices to enhance their chances of meeting financial goals.

Despite reduced deforestation, Indonesia still faces challenges with forest fires, often caused by farmers clearing land. As the green fund advances, credible and verifiable carbon offset projects will be crucial for attracting international buyers.

By adhering to international standards and using advanced technology to measure carbon dioxide removal, Indonesia seeks to position itself as a global leader in the carbon credit market and achieve net carbon neutrality by 2060.

Disclaimer: Report compiled from Reuters

FURTHER READING: WEF and Indonesia Join Hand to Boost Blue Carbon Credits

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U.S. Natural Gas Prices to Jump 44%: What’s Driving the Surge?

September 16, 2024/in Uncategorized /by

As the northern hemisphere summer winds down, U.S. natural gas markets are already preparing for the upcoming winter and looking ahead to 2025. The markets are forecasting a sharp rise in Henry Hub futures, the benchmark for U.S. natural gas prices.

Data from LSEG shows that prices could average $3.20 per million British thermal units (mmBtu) in 2025. This is a significant increase from the $2.22 average so far in 2024. This projected 44% price jump would represent the steepest annual climb since 2022, potentially increasing energy product inflation trends.

Chart from Reuters

Renewables Rise, but Gas Still Powers the Grid

According to the U.S. Energy Information Administration (EIA), natural gas generates 43% of the nation’s electricity, coal 16%, and nuclear nearly 19%. Renewables provide around 21%, accounting for 84% of new capacity additions in 2023, down slightly from 85% in 2022.

Joey Mashek from Burns & McDonnell highlights that while renewables are growing, natural gas is replacing coal in a one-for-one swap in many states. This transition has led to a 25% drop in CO2 emissions since 2005.

Despite the bullish outlook for the future, U.S. natural gas markets have been relatively downbeat throughout 2024. Prices reached 4-year lows in the spring, as major storage hubs entered the year with unusually high stockpiles. This is due to mild winter temperatures that reduced heating demand.

These bloated inventories have remained around 10% above the long-term average, limiting price progress even during the summer months when increased cooling demand typically drives up consumption.

This past summer, U.S. natural gas consumption surged in July and August due to higher demand for air conditioning. However, prices failed to gain momentum. Recently, they slumped by around 3%, as a storm forecast to hit Louisiana threatened to disrupt power and reduce gas use at liquefied natural gas (LNG) export plants.

U.S. Gas Production Hits Record Highs

Amid the uncertain price landscape, U.S. natural gas production has been strong. Through the first eight months of 2024, average daily dry gas production hit a record 102.5 billion cubic feet per day (Bcf/d), a slight increase from the same period in 2023. This is also nearly 9.5% above the average production rate between 2020 and 2022.

The EIA forecasts that production will rise further, averaging 105 Bcf/d by 2025. Similarly, the demand for U.S. natural gas is poised to grow as well. This is primarily due to the power generation, industrial processes, and LNG export sectors.

According to the EIA, the power sector alone accounts for 38% of total U.S. gas demand, while industrial use contributes an additional 32%. The LNG export sector represents about 10% of total demand.

U.S. natural gas exports offer significant opportunities. The country currently has 5 LNG export projects under construction with a combined capacity of 9.7 Bcf/d. These projects include:

Plaquemines (Phase I and II),
Corpus Christi Stage III,
Golden Pass,
Rio Grande (Phase I), and
Port Arthur (Phase I).

Developers expect the first LNG production from Plaquemines LNG and Corpus Christi LNG Stage III by the end of 2024.

U.S. LNG exports could hit new records as new export terminals begin operations, tapping into the increasing global reliance on natural gas. Feedgas, the amount of natural gas consumed by LNG export facilities, is projected to rise from 13 Bcf/d to 17 Bcf/d by the end of 2025.

This surge in LNG exports, coupled with the growth in power generation, is expected to tighten the U.S. gas supply, putting upward pressure on prices.

LNG Exports Set to Break Records, Tightening U.S. Supply

The expected 31% increase in LNG demand is just one factor contributing to the tightening supply of natural gas. The power sector is also expected to consume more gas as it continues to replace inefficient coal-fired plants with gas-fired units.

Gas plants produce about 77% less carbon dioxide than coal plants, making them a more environmentally friendly alternative. As U.S. electricity consumption continues to grow, gas-fired power plants will play a significant role in meeting that demand.

This combination of increasing demand and tightening supply is reflected in the current upward trend in forward gas prices. By 2025, the average price for Henry Hub futures is projected to be $3.20/mmBtu, significantly higher than the average in 2024. This increase is likely to motivate producers to boost output, but it could also begin to curb demand. It is particularly true among industries sensitive to rising gas costs.

The Risks and Challenges for Gas-Dependent Sectors

Although higher natural gas prices might prompt producers to ramp up supply, they could also create challenges for certain sectors. The industrial sector, which consumes about a third of U.S. gas, may look to electrify some processes if gas prices climb too high. Additionally, LNG exporters that do not have favorable long-term contracts may find it harder to remain competitive if gas prices continue to rise.

While LNG exporters currently enjoy a price differential that allows them to profit from selling gas to international markets—especially Europe, where Dutch gas prices are 4.6x higher than Henry Hub prices—this gap is expected to narrow. By 2025, the price differential between U.S. and European gas prices is forecast to shrink to 3.5x.

Furthermore, natural disasters such as storms off the Louisiana coast pose another risk. The Gulf region is a critical hub for both natural gas production and LNG exports. Thus, any disruptions due to weather could temporarily reduce demand and complicate the supply chain. This could create volatility in the market, even as overall production remains high.

As U.S. natural gas markets prepare for the coming winter and look ahead to 2025, the outlook for prices suggests a significant increase driven by tightening supply and rising demand. The power generation, industrial, and LNG export sectors will continue to be the primary drivers of gas consumption, with LNG exports set for particularly robust growth.

As the market evolves, it’s worth keeping a close eye on the balance between supply, demand, and the growing role of the U.S. in the global natural gas market.

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Spodumene Prices Plunge 87%, But a $1.6 Trillion Lithium Opportunity Looms

September 16, 2024/in Uncategorized /by

Spodumene prices, a key raw material for lithium production, have hit their lowest levels since August 2021, driven by a significant slump in lithium chemical prices. With major producers feeling the heat, the lithium market faces turbulence.

As of September 4, spodumene FOB (Free on Board) Australia prices fell 14.4% this year, reaching $818 per tonne, according to the Benchmark Lithium Price Assessment. This represents a massive drop from their December 2022 peak of $6,401 per tonne—a fall to just one-eighth of their highest value.

The decline is largely attributed to the falling prices of lithium chemicals, which spodumene prices tend to follow closely.

In addition to this lithium price drop, there’s another factor at play: high inventory levels. Spodumene suppliers and producers in China continue to flood the market to maintain their share, even as prices fall.

A New Competitor Emerges in the Lithium Race

Spodumene isn’t the only game in town anymore. Prices for lepidolite, another lithium-bearing mineral, have also dropped sharply, particularly in China.

In August, lepidolite prices fell significantly, making it a more attractive option for lithium producers. This shift has further reduced demand for spodumene, accelerating its price decline.

In fact, during the two-week assessment period ending on September 4, spodumene prices saw a 3.3% decline. The growing interest in lepidolite as a feedstock, combined with existing inventory surpluses, continues to create a bearish outlook for spodumene producers.

Benchmark’s data also revealed sharp declines in the spot prices of lithium carbonate and lithium hydroxide in China. Lithium carbonate prices have fallen 23.8% this year, while lithium hydroxide prices have dropped 15%. These declines in lithium chemicals mirror the challenges faced by spodumene producers and reflect broader market dynamics.

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Producers on the Ropes: The Pain of Falling Prices

The current lithium price environment is particularly challenging for spodumene producers, especially those with higher production costs. As prices approach the $800 per tonne mark, many higher-cost producers are finding it increasingly difficult to maintain profitability. Some are being forced to make tough decisions, such as cutting production or delaying expansion projects.

Adam Megginson, a senior analyst at Benchmark, explained:

“As we have approached the $800 a tonne mark, we have started to hear lower bids, but they have not closed. So, we’re beginning to see resistance at these levels.”

Producers face a dilemma: announcing production cuts could signal to the market that they are struggling to keep up with the price environment. At the same time, many lithium producers want to keep operating to be ready to capture market share once prices rise again. This means that some upstream players continue to produce even when prices fall below their operational costs.

For instance, Arcadium Lithium recently announced that it plans to place its Mt Cattlin mine into care and maintenance by 2025 due to the low-price environment.

However, Greenbushes, a major spodumene producer, appears to be weathering the storm. Its expansion, expected to ramp up to 60,000 tonnes per year of lithium carbonate equivalent (LCE), is still on track to go online next year.

In contrast, projects in Africa, which are mostly owned by Chinese companies, have continued without pause, driven by vertical integration within the Chinese market.

More Clouds Before the Storm Clears

Sophia Jang, Benchmark’s analyst, noted that any price increases this year are unlikely to be significant. However, she did suggest that there could be a short-term spike in prices in late September as Chinese cathode producers look to secure materials ahead of China’s National Day Golden Week on October 1.

Looking further ahead, the fourth quarter typically sees higher demand for electric vehicles, which could help stabilize demand for lithium. However, it remains uncertain whether this will be enough to drive a meaningful recovery in spodumene prices.

Lithium Company Spotlight: The Fastest Developing North American Lithium Junior

The Long Game: $1.6 Trillion Needed to Meet Future Demand

While the lithium market is experiencing short-term turbulence, the long-term outlook remains bullish.

Benchmark’s Lithium-ion Battery Database forecasts that at least $1.6 trillion in investment will be needed to meet battery demand by 2040. This is almost triple the $571 billion requirement to meet demand by 2030.

Battery demand could grow significantly in the coming years, from 937 gigawatt-hours (GWh) in 2023 to 3.7 terawatt-hours (TWh) in 2030. This demand will double again between 2030 and 2040, highlighting the immense need for new investment in lithium production, processing, and battery manufacturing.

A significant portion of this investment—44%—will go towards building gigafactories, which will produce battery cells and assemble battery packs.

Recycling will also play a major role in meeting future lithium demand. As more EVs reach the end of their useful life, the battery scrap pool is set to grow substantially. According to Benchmark, $26 billion will be needed by 2030 to build the capacity to recycle this scrap into usable battery materials. By 2040, this figure will rise to $157 billion.

Lithium Takes the Lead

Among critical raw materials, lithium will require the largest investment to meet future demand. By 2030, $94 billion is needed to scale lithium production, with this figure doubling by 2040.

While the current lithium market may be facing challenges, the long-term trajectory remains positive. This is primarily driven by the growth of electric vehicles and renewable energy storage. Spodumene producers may be navigating rough waters now, but those that can weather the storm are likely to benefit from future demand growth.

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The Lithium Paradox: Price Plummet, Supply Surge, and Demand Dip – What’s Happening Now?

September 16, 2024/in Uncategorized /by

Lithium has recently experienced a rollercoaster ride, particularly with concerns about the potentially dwindling EV industry. This year, prices hit their lowest point in three years due to growing fears of excessive supply. With shifting trade rules and increased production, the lithium market faces new challenges.

Lithium Price Plunges Amid Oversupply

As of early September, lithium carbonate and lithium hydroxide prices fell below $11,000 per metric ton for the first time since June 2021. Trading Economics reported Lithium carbonate prices remained stable at 10,552.50 per ton in September, marking the lowest level in over three years. Experts predict that global supply could increase by almost 50% this year, adding to the existing oversupply.

The S&P Global chart shows lithium prices dipping into the global cost curve, with total cash costs for lithium carbonate and lithium hydroxide properties listed in dollars per metric ton of lithium carbonate equivalent (LCE) as of September 4, 2024:

Lithium Hydroxide: Typically sourced from lithium-rich salt lakes or brines, primarily used to produce lower-cost, lower-energy density lithium iron phosphate (LFP) batteries. Price: $10,550/ton.
Lithium Carbonate: Derived from spodumene ore mining, offering higher energy density and commonly used in nickel, cobalt, and manganese (NCM) battery chemistries. Price: $10,400/ton.

The chart compares various lithium production projects worldwide, showing how their costs relate to these prices. Many projects, particularly for lithium carbonate, have cash costs below current market prices, indicating profitability. However, some projects, especially for lithium hydroxide, face financial pressure due to higher costs.

Source: S&P Global Market Intelligence

SEE MORE: Understanding Lithium Prices: Past, Present, and Future

Market Concerns: Oversupply and Low EV Sales

Lithium prices fell after peaking at over $79,637 per ton in December 2022, driven by surging demand for EVs. Despite starting the year near record highs, prices dropped as overcapacity in battery production, particularly lithium iron phosphate (LFP) batteries, began to impact the market. Slowing EV sales, especially in China (accounting for 60% of global EV registrations), added to the downward pressure.

China’s uncertain economic recovery and the phase-out of EV subsidies further dampened demand. According to the IEA, new electric car registrations grew by 35% in 2023, a notable slowdown compared to the 82% growth in 2022. Despite this, experts believe the EV sector will remain a significant driver of lithium, with projections showing it will account for over half of global lithium consumption by 2024.

The IEA forecasts global electric car sales could hit 17 million units by the end of 2024, up from 14 million in 2023. While growth continues to be concentrated in China, Europe, and the US, emerging markets like Vietnam and Thailand are seeing increased EV adoption, with electric cars making up 15% and 10% of sales, respectively.

Market Uncertainty Forces Lithium Giants to Rethink Strategies

Lithium producers are feeling the pinch as oversupply drives prices down. Major players like Albemarle Corp. and Arcadium Lithium PLC have paused expansion plans, while SQM and Ganfeng Lithium Group continue to ramp up production, hoping for a price rebound once the market stabilizes.

Albemarle Adapts to Lithium Market Flux

In July, Albemarle halted expansion plans at its Kemerton lithium hydroxide refinery in Australia to manage costs more effectively. CEO Kent Masters emphasized the need for adaptability in the changing industry landscape. Despite many producers struggling to cover cash costs, the timing for a price recovery remains uncertain.

Albemarle, which reported a $1.96 per share net loss for the second quarter, may shift towards lithium carbonate batteries, potentially influencing future expansion strategies. The company maintains its full-year outlook, reflecting anticipated lithium market price trends.

Source: Albemarle

Despite Albermarle’s July lower market prices, the $15/kg forecast should hold due to cost reductions, strong volume growth, increased Talison shipments, and robust Energy Storage contracts.

Ganfeng’s Bold Lithium Move

Ganfeng Lithium Group plans to splash in 2024 with expanded lithium production and increased market presence. The $500 million joint venture with Turkish lead-acid producer Yiğit Akü for lithium batteries adds a significant boost.

Despite recent stock declines from a peak of HK$132 in 2021 to HK$17.10, Ganfeng continues to expand globally, securing resources in Argentina, Australia, Mali, and Mexico. The company plans to issue five-year overseas bonds worth up to $200 million to fund a project in Argentina. Look out Bloomberg’s chart:

Some More Industry Adjustments

CATL’s Strategy Shift: UBS analysts predict an 8% drop in China’s lithium carbonate production, potentially balancing supply and boosting prices.
Arcadium’s Cutbacks: Slowing sales and reduced earnings prompted the pause of its 40K ton spodumene Galaxy project in Canada and scaled-back expansion in Argentina.
Global Market Tensions: Trade barriers and slow EV demand contribute to price declines, while Chile and China push for increased lithium output to balance the future market.

Lithium Price Forecast 2024-2030

Source: Techopedia

MUST READ: Lithium Prices Hit New Lows: Can the Market Survive the EV Slowdown and Price Plunge?

Forecasting long-term lithium prices is tough, mainly because the metal trades mostly in spot markets, not futures. Only a handful of analysts provide forecasts up to 2030. The Australian Government’s Office of the Chief Economist (OCE) predicts a short-lived recovery for lithium hydroxide prices, with a decline expected by 2026. This drop may result from emerging alternative battery technologies potentially impacting the lithium-ion EV battery market.

Disclaimer: Data Source

Lithium Price Forecast 2024, 2025 & Beyond | Is Lithium a Good Investment? (techopedia.com)
Lithium supply race heats up | S&P Global Market Intelligence (spglobal.com)

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Lithium Shortage Looms: Meeting the Surge in Demand by 2030

September 14, 2024/in Uncategorized /by

The Looming Lithium Shortage

Lithium, often referred to as the “white gold” of the clean energy transition, is a crucial element in battery storage technology. Its significance stems from its role in powering electric vehicles (EVs) and storing renewable energy from wind and solar sources.

Demand for lithium has surged dramatically and that’s all thanks to the rise of EVs and renewable energy storage. Now, take a look at the graphic. It shows the huge gap between lithium demand and supply by the decade’s end.

In 2021, the world consumed around 500,000 tonnes of lithium, a figure that is expected to reach over 3 million tonnes by 2030. This rapid growth is primarily due to the escalating need for lithium-ion (Li-ion) batteries, which are at the heart of the electrification trend.

Today, nearly 60% of lithium is mined for battery applications, a figure projected to jump to 95% by 2030. This growth is closely tied to the increasing demand for EVs (about 4,300 GWh), which could account for up to 90% of passenger car sales in certain countries by the end of the decade.

Meeting this need may strain the current lithium supply chain. Even lithium prices have recently been making headlines.

Lithium Supply: Can It Keep Up?

Take for example the case of Tesla’s Cybertruck 123 KWh battery pack. It requires around 80 kg of lithium carbonate equivalent. So, the 2023 production of the largest lithium producing mine, the Greenbushes Mine, could power 2.6 million Cybertrucks. What about the other EVs and energy storage requirements worldwide?

Despite lithium reserves being well-distributed globally, high-grade deposits are concentrated in a few hands only: Australia, Chile, China, and Argentina. The first three countries accounted for 88% of the world’s total lithium production in 2023.

The main challenge lies in the mining and extraction processes, which have historically been underfunded. Deteriorating ore quality and the increasing difficulty of extraction pose additional hurdles.

Not only that. Delays in scaling up battery-cell factories due to shortages of manufacturing equipment, raw materials, and skilled labor are other bottlenecks.

But there’s still hope. Vertical integration of the supply chain, along with long-term contracts and partnerships, could ease some of these issues. Collaboration with local communities and transparent operations will also be crucial in ensuring the smooth expansion of lithium mining.

Innovation in lithium extraction and processing could further help close the gap between supply and demand. Additionally, producing lithium sustainably, with a low carbon footprint, may offer companies a competitive edge, especially as demand for greener technologies rises.

The global energy transition depends heavily on lithium supply. This means stakeholders must collaborate, innovate, and invest in sustainable lithium production to meet the surging demand for this “white gold.”

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CATL Shuts Jiangxi Mine: How Will It Affect Global Lithium Balance?

September 14, 2024/in Uncategorized /by

Lithium spot prices have plummeted by around 90% since 2022, leading to vital mine closures and market shifts worldwide. However, CATL’s recent shutdown in Jiangxi, China, stands out as one of the most significant closures to date. What led to this decision, and how has it impacted the global lithium industry?

CATL Shuts Down Major Lithium Mine Amid Plunging Prices

Jiangxi province, located in southeastern China, accounts for about 5% to 6% of the global lithium supply. Despite its large reserves, CATL’s Jiangxi mine has faced financial strain due to rising production costs and falling prices. According to BMO (Bank of Montreal) analysts, mining lepidolite has become unprofitable because, despite its high lithium content, lepidolite is costly to convert into usable lithium.

CATL has remained competitive by utilizing its fully integrated business model, which includes refining, cathode active material (CAM) production, and battery manufacturing. However, the company could not sustain the current market pressure. The closure of this lepidolite mine, a key source of lithium carbonate, has caused significant disruptions in the market. Additionally, CATL is considering pausing one of its three lithium carbonate production lines in Jiangxi.

CATL’s Mine Closure and Its Global Impact: UBS Analysis

This news has garnered significant attention across the lithium market. According to UBS Lithium Analyst Sky Han, this mine accounts for roughly 5% of the world’s primary lithium supply and about 20% of China’s supply. The mine was expected to increase production from 60,000 tons of lithium carbonate equivalent (LCE) in 2024 to 95,000 tons in 2025, positioning it as the fifth-largest lithium mine globally.

While the closure is notable, it is not expected to drastically alter the overall market surplus for 2025. However, a tighter supply situation could develop if other lepidolite producers in China follow suit.

Experts believed that integrated lithium producers like CATL would navigate falling lithium prices effectively through their downstream operations. However, recent developments suggest that even vertically integrated companies might struggle in a low-price environment. Reports from China and Africa indicate that the challenges are substantial, with vertically integrated companies also facing difficulties.

Source: Wood Mackenzie, Company Filings, UBSe.

What Lies Ahead for Lithium Prices?

The suspension of the mine will reduce China’s monthly lithium carbonate output by 8%, or approximately 5,000 to 6,000 tons, according to UBS analysts. With reduced output from one of China’s largest mines, experts anticipate that lithium prices could stabilize, potentially offering relief to struggling producers. The significant cost outcomes include:

Prices could stabilize between $10,000 and $11,000 per ton, reflecting global cash costs. The upper limit is driven by CATL’s cost base, estimated at $10,968 per ton.
Conversion costs of around $3,000 per ton could push spodumene prices up to as high as $1,000 per ton in the near term, compared to current spot prices of about $730 per ton.

While CATL’s closure could positively impact pricing, more supply reductions will be necessary to address the anticipated market surplus in 2025. The evolving situation in China’s lepidolite supply will be crucial. Analysts remain cautious about the growth of Africa’s lithium supply, and the seaborne spodumene price, rather than the GFEX, will be critical for Australian lithium producers ramping up production.

For now, analysts recommend selling stocks like IGO, LTR, PLS, and Ganfeng, while maintaining a neutral stance on companies like Albemarle (ALB), Livent (LTM), and Tianqi. They are more optimistic about Qinghai Salt Lake and PMET. Falling lithium prices have led to mine closures and project delays globally.

The mine in Yichun City, Jiangxi province, had significantly boosted China’s lithium supplies. Now, CATL faces the difficult decision to cut back.

CATL’s Move Drives Stock Surge

CATL’s decision has already impacted the global market. Contrary to expectations, shares of several global lithium companies have seen gains. Furthermore, the closure has eased oversupply concerns, leading to a surge in lithium prices and a boost in stock performance for producers around the world. For instance, Bloomberg reported that shares of Albemarle jumped as much as 17% in New York, while SQM saw a 12% rise. In Australia, Pilbara Minerals Ltd. shot up by 16%, and Tianqi Lithium Corp. climbed by 16% in Hong Kong.

Following the CATL announcement, lithium carbonate futures on the Guangzhou Futures Exchange rose by 5.5%, hitting 76,700 yuan per ton ($10,700), although they remain down 27% for the year.

Several lithium producers in Australia, including Arcadium Lithium Plc and Core Lithium Ltd., have shut down high-cost sites due to plummeting prices. Global Lithium Resources Ltd. is reducing costs at its promising project as it faces a longer-than-expected price slump. Additionally, Albemarle has paused its global expansion plans in response to the ongoing price drop. This was reported by Bloomberg.

Source: Bloomberg

Analysts from Guotai Junan Securities Co. predict that lithium prices might rebound by 2026, and lithium stocks could start rising six to nine months before the commodity’s price improves.

Alice Yu, lead metals & mining research analyst at S&P Global Commodity Insights, stated,

“There is a stronger signaling effect from CATL’s cut. As the world’s largest battery producer, its mine-side suspension reinforces the expectation of a prolonged weakness in downstream demand.”

In conclusion, as lithium prices continue to plunge, CATL’s actions are crucial for stabilizing the supply chain. The company is adjusting its operations to navigate the tough market conditions, hinting at possible shifts in the industry’s lithium production strategies in the coming months.

FURTHER READING: CATL Unveils Ambitious 2,000 km Electric Plane Vision

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