Gold Standard Suspends Russian Carbon Project

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Gold Standard has suspended a Russian carbon project from its marketplace.
 
Gold Standard is a popular Swiss-based carbon standard and emissions registry. But it also established a carbon marketplace where certain projects trade carbon credits.
 
The Russian KronoClimate project replaced the use of fossil fuels with biomass and was the only project in Russia to be on the marketplace.
The factory, Kronostar, used to generate energy using peat and heavy oil that emit high carbon. By replacing it with biomass, the project is cutting down GHG emissions in the factory.
 
The project is also avoiding methane emissions through a regional waste management system.
Now only 33 carbon projects remain on the Gold Standard marketplace. 
There was no comment yet from Gold Standard about its Russian carbon project suspension move.
But the decision happened during the wake of Russia’s attack on Ukraine.
 
The Russian invasion of Ukraine had caused so much chaos and fear in the two countries and among the people.
 
For the corporate world, the huge disruptions caused by the war have negative effects.

Impact of Russian Invasion of Ukraine on Carbon Market

Russia is not a significant player in the voluntary carbon market as it is not a big supplier of carbon credits.
Carbon prices have dropped because of the uncertainty in demand. The Russian carbon project suspension by Gold Standard makes things more unpleasant.
 
Worse is that dozens of Western big companies have cut their business ties with Russia. These include Ford, Toyota, Apple, Amazon, Facebook, IBM, Microsoft, Shell, TotalEnergies, and more.
 
The EU is also considering an oil embargo on Russia.
 
More so, the Russian invasion of Ukraine is the major cause of the rapid increase in gas prices worldwide.
Analysts see this as a driver for higher demand and use of coal, which in turn, would put pressure on carbon prices.
 
For Europe, which is so reliant on Russia for fuel supplies, the effect is a huge energy crisis.
The lack of liquid gas infrastructure means relying on coal as the short-term option. This threatens Europe, particularly the EU’s 2030 climate goal.
 
For the rest of the world, the economic sanctions on Russia made the energy and carbon market chaotic. Fossil fuel prices soared very high. Other commodities prices also went up so steep.
 
Hence, many countries are wondering if their emissions target will be on hold to keep the lights on.

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Nasdaq Adds 3 Carbon Removal Price Indexes

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Nasdaq launched 3 carbon removal price indexes, which are based on its Puro.earth Carbon Removal Certificates (CORCs).

CORC refers to the tradable digital asset representing a ton of carbon removed from the air.

With these indexes, Nasdaq promotes standardization and transparency in the carbon removal market. As such, the expected end result is the growth of the voluntary carbon removal market.

What Are Nasdaq’s New Carbon Removal Price Indexes?

These indexes track the price of removing CO2 from the atmosphere.

According to Nasdaq’s ESG Head, the indexes will create a price benchmark to better understand the costs of removing CO2.

So, they will help potential investors make an informed decision on where to put their money. This will also put forward carbon projects that are worth investing in.

There are three commodity reference price indexes involved here. And they all belong to the CORC Carbon Removal Reference Price Index family.

CORCX – the main index that monitors the price of all CORC transactions from all carbon removal methods. It is otherwise known as the CORC Carbon Removal Price Index.
CORCCHAR – or the CORC Biochar Price Index for biochar, a solid form of carbon generated by pyrolysis.
CORCWOOD – or the CORC Bio-based Construction Materials Price Index. It is the price index for removing CO2 in the form of bio-based construction materials like wood.

These indexes will provide insights into the trends of CO2 removal credit pricing. In effect, they are essential for the climate finance stakeholders out there.

The Value of The Indexes to Voluntary Carbon Market

The launch of the new carbon removal price indexes is pivotal for the voluntary carbon market (VCM). This is because the market is growing fast, capping $1 billion for the first time in 2021, as reported by S&P Global.

Better still, the estimates of the Taskforce on Scaling Voluntary Carbon Markets are even brighter. According to their projections, the VCM will reach as high as $30 billion to $50 billion by 2030.

As the market for carbon removal will be more transparent and fluid, the indexes will be more crucial. They will serve as a medium for creating new financial products that lead the way to net-zero.

In fact, Puro.earth’s CEO said, “The indexes will pave the way for the commoditization of CORCs.”

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Why India’s Path to Net-Zero is Different From Other Super-Emitters

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The picture of India’s path to net-zero looks very different from other emitters.

India has set a net-zero target for 2070, and if things go as planned, India will become the last among the biggest economies to zero out its emissions.

India’s Path to Net Zero Ends by 2070, not 2050

Most nations are targeting their net-zero goals by 2050 in line with the Paris Agreement. But why did India set it to 2070 instead?

The answer might have something to do with poverty levels. While other nations feel the need to tame climate change, India has to lift millions out of poverty first.

So, if India’s net-zero targets are sooner, access to basic services will be harder for Indians.

The country is well-known to be most vulnerable to heatwaves. Thus, the need for air conditioning is increasing, which drives up the demand for more fuel.

The closest comparison when it comes to India’s path to net-zero is China which also has a population over 1.3 billion. Yet, India does not have the capacity to make green technologies that China is capable of doing. By far, it only deployed solar panels and wind turbines, not electric cars.

What Does India’s Journey to Net-Zero Need?

With its unique economic conditions, India doesn’t have a role model to follow. It’s the only lower-middle-income nation among the five largest world super emitters.

Yet, it is the most affected part of the globe by worsening extreme weather conditions. Documented reports also showed increasing intensity and frequency of rainfall and droughts. Plus, falling agricultural productivity and growing food prices make things even worse.

And so, India’s path to net-zero demands enormous financial support from other countries. It needs at least $1 trillion in aid over the next decade, only for itself, before it can fulfill its 2070 commitment.

Sad to say, the promised $100 billion in Paris Agreement to help developing countries like India and Brazil wasn’t delivered.

Without outside support from developed nations, India has to rely on its own measures. But one major barrier to this is the high borrowing costs it will pay to access financial markets. There are other options though that it can try, according to analysts.

One is to get sovereign loans from the World Bank. Another is to boost ties with other green markets that will make it easier to pool funds for renewables. Some efforts in this area are already underway, only waiting for more push.

Best of all, proponents of India’s path to net-zero can think differently. They can consider building new cities and industries that have low emissions.

If these homegrown solutions materialize, India will be its own role model to look up to.

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Occidental ‘Net-Zero Oil’ Deal With South Korean Refiner

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Occidental Petroleum Corporation planned to sell net-zero oil with an Asian trading house.

Occidental signed a deal with SK Trading International to sell its net-zero oil. Under this agreement, Occidental offers SK Trading the option to buy up to 200,000 barrels of oil each year.

The deal covers a five-year period when the refiner can convert the oil into net-zero products.

What’s With Occidental Net-Zero Oil Deal?

The drive for carbon-free fossil fuels is a discomfort for the energy sector. This is because even if refineries reduce their emissions, the oil still produces GHG. Such GHG release refers to the so-called Scope 3 emissions.

In response, Occidental found out how to resolve this carbon emission problem. It plans to offset all its emissions, from crude extraction to consumption. This is through their Direct Air Capture (DAC) facility in the Permian Basin that would remove CO2 from the air.

DAC is Occidental’s low-carbon strategy towards its net-zero goal. The deal with SK Trading for the supply of Occidental net-zero oil will help ensure CO2 removal. This carbon sucking technology will go with an enhanced oil recovery (EOR ) process.

The SK Trading will then use the reconfigured oil from Occidental to create net-zero products. These include low-carbon aviation fuel.

The SK deal shows signs that the final investment decision is on its way. Meanwhile, Occidental said that it would make a decision early this year.

The Transition to Net-Zero Emissions

Same with Occidental, SK Trading also have net-zero goals by 2050. Through its “Carbon to Green” strategy, it seeks to transform its entire portfolio into a low-carbon business. It also pursues ways to curb its Scope 3 emissions or its customers’ emissions.

The company CEO noted that they want Occidental net-zero oil deal for a reason. They aim to be part of the world’s first carbon reduction efforts based on the oil’s life cycle analysis. And the DAC project of Occidental is a good initiative to try.

According to Occidental, they expect to pull as much as 1 million metric tons/year of CO2 emissions via DAC. The company will then store the removed emissions underground. As such, the DAC carbon removal process is permanent and verifiable.

The captured carbon is equal to the expected carbon emissions from the whole oil life cycle. This includes extraction, transportation, storage, shipment, refining, end-use, and combustion.

Occidental’s DAC project is ready to go online in the last quarter of 2024. It needs a capital investment of around $800 million to $1 billion.

The initiative is getting support from other companies wanting to offset their emissions. By injecting tons of CO2 into the ground, the Occidental net-zero oil deal will contribute to global carbon reduction efforts.

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Saudi’s Wealth Fund and Saudi Aramco Form the MENA Voluntary Carbon Market

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Saudi’s Public Investment Fund (PIF) signed an agreement forming the Middle East and North Africa (MENA) Voluntary Carbon Market (VCM).

PIF is Saudi Arabia’s sovereign wealth fund that is now targeting the carbon credit market.

Another member of MENA VCM is Saudi Aramco, the world’s biggest oil producer – by a longshot.

The other partners are ACWA Power, Saudi Arabian Airlines, Saudi Arabian Mining Company, and ENOWA. Each PIF partner signed a separate non-binding MoU.

What’s The MENA Voluntary Carbon Market?

The creation of MoUs is part of the Crown Prince’s efforts to achieve net-zero goals by 2060.

Signing partners will aid PIF’s VCM initiative by supplying and trading carbon credits. PIF expects that establishment of the market will materialize in 2023. More partners will be invited to join the MENA voluntary carbon market in the last quarter of this year.

Public officials are optimistic about the potential of this VCM. They are confident in the commitment of the first five private companies that took part in it. Their cooperation is the first of its kind in the MENA region, giving excitement to everyone.

How Does VCM Initiative Benefit The Partners?

The governor said that the pact will indeed drive net-zero innovations in the country. But since it’s a partnership, the benefits go two-way. It will also help the partners align their own carbon emissions reduction efforts.

For example, Saudi Aramco said that carbon credits are vital in their move to net-zero. They’re contributing to achieving secure and more sustainable energy that powers their business.

The same goes for Saudi Arabian Airlines. Their participation in MENA VCM serves a pivotal role in the airline’s history. They expect it to contribute big to their carbon offsetting and sustainability goals.

The utility company, ACWA Power, even has more to say about its involvement. They acknowledge their essential role in driving carbon emissions reduction globally. And so, taking part in the MENA voluntary carbon market is a great opportunity for them.

As for the other partners, both said that the VCM is a crucial step to achieving their net-zero ambitions, too.

On top of all those pledges is another desirable outcome of creating this very first VCM in the MENA region. That is it will pursue carbon credits that offer the highest quality and integrity in the market.

Other middle east countries, such as UAE have also stated their own net-zero 2050 pledge and could potentially join the MENA VCM in the future.

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Kimmeridge Invests $200M into Carbon Start-up

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Private equity firm Kimmeridge is investing up to $200 million into its own start-up Chestnut Carbon.

Chestnut plans on developing high-quality nature-based carbon offsets. Part of that strategy includes developing new forests by planting trees on 500,000 acres across the U.S.

Chestnut earlier announced its strategic acquisition of forest carbon offsets firm “Forest Carbon Works” (FCW).

What does Kimmeridge carbon offsets investment include?

Kimmeridge’s focus is on energy solutions and launched Chestnut Carbon to generate high-quality forest carbon offsets.

These carbon offsets are biodiverse and verifiable to help Chestnut speed up its way to net zero. Chestnut will focus on forest conservation and reforestation efforts to achieve its goals.

Third-party carbon offset registries will verify the company’s earned credits for accuracy and integrity. In this case, Kimmeridge’s carbon offset investment in Chestnut will help expand access to carbon markets.

How The Merger Will Work

FCW is well-known for developing efficient and accurate approaches in assessing carbon inventories. It uses carbon finance in supporting the conservation of 270 million acres of forests. And so, Kimmeridge carbon offsets investment in Chestnut also means benefitting FCW’s expertise.

Kimmeridge’s expertise is in land aggregation, making Chestnut a strategic platform for carbon offsets.

One of the major strengths of this partnership is the focus on small forest communities. FCW empowers small landowners by giving them access to carbon market revenue streams.

The fresh capital that Kimmeridge provides through Chestnut will support FWC’s current works.

Forest carbon credits are generating a lot of interest from the investment world, last year Amazon made a major investment into the rainforest and Oak Hill acquired 1 million acres of forest for carbon credits.

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Delays in China Carbon Market Expansion

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The designer of China’s carbon market said that expansion into new sectors would be delayed.

China is the world’s biggest source of carbon emissions. In 2021, China’s carbon emissions were over 11.9 billion tons.

New Industries Added to China Carbon Market

Originally, big aluminum and cement producers in China would be part of its carbon market this year. But the country is going to postpone such expansion in 2023 instead.

They are most likely to start trading in China’s carbon market in 2024. By participating in the market, the sectors will meet their carbon emissions allowances.

This delay serves as another blow to the already rough beginning for China. Many consider the nation’s carbon trading system as a game-changer.

In effect, companies have to pay for their carbon emission permits. This is to reduce their carbon pollution and use more efficient fuel.

Effects of Delays in Carbon Market

Since the launch of China’s carbon market last year, it has seen less promising carbon prices. The same is true for carbon trading volumes.

Worse is that there was a crackdown on fabricated data committed by a couple of consulting firms. Regulators have to penalize them for doing such market misconduct. They shamed the companies in the public for committing data fault and negligence.

SinoCarbon, China’s leading verifying entity, is one of those firms. The company defended that they failed to identify faulty reports due to a tight schedule. Add to this the strict pandemic protocols that made the verification process harder.

Since correct data is the lifeline of China’s carbon market, data fraud must not happen again. Otherwise, it will make the expansion even more problematic.

In the meantime, the country’s officials gave a head’s up to focus on coal. This is because energy security is more important than climate issues for Beijing.

In effect, an analyst said that the country would see an increasing carbon emission. And so, it’s the environment that has to pay the price.

The Future of China’s Carbon Market

It was last July 2021 when the carbon market first launched. The carbon trading event largely included the power sector. Big companies in this sector accounted for about 40% of China’s total GHG emissions.

There’s no final date announced when the new sectors can take part in the market. Yet, market regulators expect to see them trading their carbon allowances by 2025. They are also expecting to welcome more firms from other industries.

Market leaders consider this addition essential to the success of China’s carbon market. Still, the series of delays in expansion can also postpone the market’s effectiveness.

In fact, power companies traded only 179 million tons of emissions in 2021. This is very low in comparison with the 4.2 billion tons given to them. Also, the price per ton of carbon emission is too low in China compared with Europe.

So, with very few market players, it will take years before it can help China reduce its carbon emissions.

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Singapore and Indonesia Carbon Trading Deal

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Singapore and Indonesia have entered into a Memorandum of Understanding (MoU) regarding climate change and carbon credits. 

Currently, Singapore is the center of commodity trading in Asia. Indonesia is among the biggest carbon credit suppliers in the region. It is also home to one of the earth’s biggest rainforests. 

The agreement between the two countries allows them to collaborate on carbon-related projects. Through the deal, they can create projects that boost international carbon markets. As a result, it helps them meet their carbon emission reduction goals. 

Tidbits of Singapore and Indonesia Carbon Trading Deal

The MoU will boost cooperation between Singapore and Indonesia in four major areas:

Carbon pricing and markets
Nature-based solutions and ecosystem-based approaches
Clean technologies and solutions
Green and blended finance 

As for blended finance, it refers to a combination of capital sources supporting sustainable projects. Their carbon trading agreement includes developing pilot projects in those areas. It also involves research collaborations and technical exchanges. 

The deal will support research financing solutions in several areas of the industry. These include carbon credit projects, carbon capture and storage, and regional decarbonization.

What The MoU Will Entail

Representatives from both countries show commitment to promoting the goals of the MoU. As proof, they have issued a joint statement that seals their pledge. There will also be annual ministerial meetings and a bilateral Working Group. 

Many stakeholders are involved in Singapore and Indonesia’s carbon trading deal. But government agencies are taking the lead.

For Singapore:

The tie-up will bring more jobs and growth opportunities to Singapore. Also, it will provide greener solutions for a sustainable future. The minister said that it would help the nation achieve its net-zero goals by 2050. 

For Indonesia:

The success of the MoU will advance Indonesia’s Blended Finance Alliance. It has been developed through the G-20 framework which Indonesia is the leader. Its major task is to gather funds for climate change and UN SDG-related projects. 

The pooled funding offers capital for Indonesia’s environmental rehab and restoration projects. The funds will also support the replacement of coal-fired power plants in Indonesia. They will be replaced by renewable energy sources. 

What to Expect

Under this agreement, Singapore and Indonesia are expected to work closely. Their exchanges on carbon trading and carbon pricing are promising. 

Singapore stated that their carbon tax for one ton of carbon emission will increase a lot. So, from $5 this year, it will become $80 by 2030. Likewise, Indonesia has regulations on carbon emission prices and trading carbon. 

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SEC Proposed Rule on Carbon Emissions Disclosure

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The U.S. Securities and Exchange Commission (SEC) is proposing that all public companies report their carbon emissions.

In general, it will increase the reporting transparency of public corporations. It will help investors know more about how climate risks affect their investments.

What to know about the new rule?

One major mandate is that companies disclose both their Scope 1 and Scope 2 emissions. The same goes for their Scope 3 emissions, if “material”.

Some firms have announced their carbon footprint reduction pledges already. The SEC will mandate them to share how they would achieve such commitments. If corporations set their own carbon price, the SEC will demand them to report about it.

Climate activists are vigilant on carbon offsets strategy for reducing carbon emissions.

How would this impact public companies?

Most companies are already disclosing their carbon emissions in their annual sustainability reports. But significant discrepancies remain.

The former SEC chair Schapiro noted that there are still many big companies that won’t do it unless it’s mandatory. The present SEC chair said that both companies and investors would value the new law.

Companies will need help from climate tech experts for their climate risk reports. This is good news for carbon accounting due to increased carbon emissions reporting.

How important is the disclosed information?

According to SEC, it is the investors that pushed them to draft the rule. They demand better and more transparent climate risk information disclosure. This is because climate change disasters impact the environment.

Likewise, climate risks are also becoming essential for investors to make informed decisions. The information will also show which companies commit to reducing their carbon footprint. The public and investors can put pressure on businesses that are true to their words, not actions.

This rule will make the SEC the leading enforcer of climate-related financial disclosures. The draft proposal will be more likely finalized before this year ends.

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