What’s Behind the $53 Trillion Energy Investment Needed for Net Zero?

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What's Behind the $53 Trillion Energy Investment Needed for Net Zero?

The talks around climate change and energy transition bring both optimism and concern in 2025. On the positive side, the push for a net-zero carbon future creates significant opportunities for investment.

On the flip side, the physical impacts of rising global temperatures and climate change pose increasing financial risks. S&P Global focuses on measuring these risks and opportunities, suggesting a $53 trillion energy investment requirement.

Meanwhile, other analysis like that from McKinsey also explores the investment opportunities needed to transition to a green economy, indicating a $9.2 trillion annual funding for it. Let’s unlock what’s behind these numbers and why addressing them is essential to achieving net zero.

Net Zero Investments: A $53 Trillion Opportunity Awaits

Investing in low-carbon energy aims to reduce greenhouse gas (GHG) emissions and curb the long-term effects of climate change. According to S&P Global Commodity Insights, achieving net-zero emissions by 2050 could open up $53 trillion in global energy investment opportunities. This includes investments in clean energy technologies, power generation, and transmission infrastructure.

Global CO2 emissions under SSPs and S&P Global Commodity Insights scenarios

In contrast, if companies stick to a business-as-usual scenario with moderate emission cuts (SSP2-4.5 trajectory), investments in these areas will total about $37 trillion by 2050. 

  • SSP2-4.5 (Medium Emissions): A moderate approach where emissions stabilize and warming reaches 2.7°C by 2100.

The $53 trillion estimate is likely conservative, as it excludes spending on electric vehicles, charging networks, energy-efficient buildings, and other non-energy sectors.

The fossil fuel industry, however, faces a sharp decline in investment opportunities. Spending on oil, gas, coal, and thermal power will drop from $800 billion in 2024 to less than $600 billion by 2050 under the base case. In a net-zero scenario, this figure falls even further, to below $200 billion.

  • Net-Zero Scenario: A backcast model where fossil fuel use nearly disappears, and clean energy dominates. This scenario limits warming to 1.5°C by 2100.

Most of the investment in clean energy will occur in non-OECD Asia-Pacific regions (excluding Australia, Japan, New Zealand, and South Korea). These areas will require $25 trillion by 2050 under a net-zero scenario, compared to $17 trillion under the base case. North America and Europe could also be key regions for clean energy investment.

  • Base Case: A probable future where global emissions drop by 25% by 2050, but fossil fuels remain significant. This scenario aligns with the SSP2-4.5 pathway and projects 2.4°C warming by 2100.

RELATED: Constellation and Calpine’s $16.4B Deal Boosts U.S. Clean Energy Transition

Investing Big: Why Net Zero Needs $9.2 Trillion Annually

In a separate analysis by McKinsey, achieving net-zero emissions by 2050 requires $9.2 trillion annually on physical assets (capital expenditures or capex)—$3.5 trillion more than current spending. This increase equals half of global corporate profits and a quarter of 2020’s total tax revenue. 

net zero emissions 2050 McKinsey

  • The $3.5 trillion annual spending for energy and land-use systems represents a 60% rise from current levels. By 2050, that amount will total around $275 trillion.

The figure includes a shift from fossil fuels to renewable energy sources and a move towards zero-emission vehicles. 

With expected economic growth and current transition policies, the additional spending may drop to $1 trillion annually. However, the next decade is crucial, with spending front-loaded and impacts varying across regions and industries.

The low-carbon transition requires immediate and substantial upfront investments, with capital spending peaking around 2026-2030 at about 9% of global GDP before declining, per McKinsey analysis. Early action is crucial to mitigate long-term risks and costs associated with delayed efforts.

The Financial Toll of Climate Risks

While clean energy investments offer financial opportunities, the physical impacts of climate change also come with significant costs. S&P Global Sustainable1 estimates that the world’s largest companies (in the S&P Global 1200 index) could face $25 trillion in cumulative costs by 2050. This figure includes:

  • $4.5 trillion in lost revenue from business interruptions.
  • $3.8 trillion in higher operating costs.
  • $16.5 trillion in property damages and extra capital expenses.

These costs are tied to climate hazards like extreme heat, water stress, droughts, and flooding. Extreme heat alone accounts for 58% of the projected costs, while water stress and drought contribute 21% and 11%, respectively.

Sector-Specific Impacts

Utilities, energy, financial services, and communication companies will bear the largest financial burdens due to climate risks. These sectors are particularly vulnerable to extreme heat, water shortages, and droughts.

It’s worth noting that these costs are based on companies in the S&P Global 1200 index, which includes about 1,200 large firms from regions like North America, Europe, Asia, and Latin America. Together, these companies own nearly 3.5 million physical assets.

  • The estimated $25 trillion in costs by 2050 represents 74% of total revenue and 31% of the total market value of these companies in 2024.

The Long-Term Benefits of Achieving Net-Zero Goals

Investing in low-carbon technologies and renewable energy can significantly reduce the physical impacts of climate change. For example, while achieving net-zero emissions by 2050 won’t drastically lower climate costs for S&P Global 1200 companies by mid-century, it could save them $15 trillion in cumulative costs by 2099 compared to a business-as-usual scenario.

Expanding these savings to the global economy shows an even greater benefit. Reducing emissions and transitioning to renewable energy can help avoid the worst climate impacts and minimize future costs.

Furthermore, the World Economic Forum noted that the investment goals, though represent a significant increase, are not impossible to achieve. According to WEF, McKinsey’s estimate of $9.2 trillion in annual capex highlights the challenge.

According to the IEA, the global economy invests $1.4 trillion annually in clean energy and related infrastructure. With existing policies, this figure could rise by $2.5 trillion, leaving an annual investment gap of $5.3 trillion.

WEF filling the green investment gap
Image from World Economic Forum

Redirecting $3.7 trillion from brown infrastructure—such as high-emission oil, gas, cement, and steel industries—to green energy projects could substantially close this gap. The remaining $1.6 trillion needed would represent just 2% of global GDP annually.

While ambitious, this transition is achievable with strategic shifts in financial priorities, paving the way for a sustainable and low-carbon global economy. By acting swiftly, the world can reduce future climate risks and unlock the vast potential of a net-zero energy future.

The post What’s Behind the $53 Trillion Energy Investment Needed for Net Zero? appeared first on Carbon Credits.

Constellation and Calpine’s $16.4B Deal Boosts U.S. Clean Energy Transition

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calpine

Constellation, the biggest clean energy provider in America announced to acquisition of Calpine Corp. The deal, worth $16.4 billion, involves cash and stock. This strategic merger will combine Constellation’s leadership in emissions-free electricity with Calpine’s extensive portfolio of low-emission natural gas, renewable energy, and its massive geothermal operations.

This is how they plan to create America’s largest clean energy provider in the U.S., serving 2.5 million customers nationwide. Furthermore, Constellation will offer innovative energy solutions to reduce costs and support America’s sustainability goals.

Constellation’s Big Bet on Calpine: Earnings Boost and Expansion

The press release revealed that Constellation will buy Calpine with 50 million shares, $4.5 billion in cash, and by taking on $12.7 billion of its debt. The total cost, after considering Calpine’s cash flow and tax benefits, is $26.6 billion. This makes the deal worth 7.9 times its 2026 earnings.

Additionally, Constellation’s shareholders will benefit significantly. They expect earnings per share to rise over 20% in 2026, adding at least $2 in future years. The acquisition will also bring in over $2 billion in cash each year, allowing strong reinvestment. Constellation aims for double-digit growth for the rest of the decade.

The deal should be finalized within a year, pending certain conditions and approvals. This includes the Hart-Scott-Rodino Act waiting period and clearance from various regulatory bodies. Major Calpine shareholders, like ECP, CPP Investments, and Access Industries, back the deal. They’ve agreed to hold their shares for 18 months.

After the deal, Constellation will stay in Baltimore and keep a strong presence in Houston, where Calpine is based.

Joe Dominguez, president and CEO of Constellation remarked,

“This acquisition will help us better serve our customers across America, from families to businesses and utilities. By combining Constellation’s unmatched expertise in zero-emission nuclear energy with Calpine’s industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry. Both companies have been at the forefront of America’s transition to cleaner, more reliable and secure energy, and those shared values will guide us as we pursue investments in new and existing clean technologies to meet rising demand. What makes this combination even more special is it brings together two world-class teams, with the most talented women and men in the industry, who share a noble passion for safety, sustainability, operational excellence and helping America’s families, businesses and communities thrive and grow. We look forward to welcoming the Calpine team upon closing of this transaction.”

Constellation’s Role in U.S. Carbon-Free Energy

Constellation is a key partner in the U.S. Department of Energy (DOE) and New York State Energy Research and Development Authority (NYSERDA) grants. Under this, the company focuses on clean energy technologies like direct air capture of CO2, long-duration energy storage, and clean hydrogen production.

Its diverse portfolio includes America’s largest nuclear fleet and other renewable resources like hydroelectric, wind, solar, natural gas, and oil. Some promising services include:

  • Supplies 10% of America’s clean and carbon-free energy and nearly 90% of its annual output is carbon-free.
  • Offers sustainable gas and carbon offset solutions, such as renewable natural gas (RNG) and carbon credits, to help retail gas customers meet their decarbonization goals.

Notably, Constellation Energy Solutions (CES) designs energy-efficient and renewable projects for commercial clients, including government and healthcare sectors. As per its sustainability report, in 2023, CES helped avoid more than 227,000 metric tons of CO2.

Constellation Source: Constellation

Calpine’s Decarbonization Strategy

Calpine plays a crucial role in providing clean, affordable, and reliable energy, generating 27,000 megawatts of electricity—enough to power 27 million homes. It also helps customers responsibly manage their energy use and guides them toward a low-carbon future.

Additionally, the company advocates a broad approach to tackling climate change, integrating renewable sources like solar and wind while ensuring reliable backup power to prevent blackouts and rising energy costs. Most crucial is its massive geothermal plant that ensures grid stability during peak usage

Calpine’s decarbonization strategy also focuses on:

  • Expanding operations at The Geysers- the largest geothermal complex in the world
  • Advancing battery storage and natural gas fleet
  • Exploring more prospects for carbon capture technologies

CALPINESource: Calpine

Building the Cleanest and Most Reliable Energy Portfolio in the U.S.

The combined energy portfolio will have nearly 60 gigawatts of zero- and low-emission power capacity. Jointly they plan to expand into Texas and other key states like California, New York, and Pennsylvania.

Constellation will further solidify its position by expanding its renewable energy portfolio. This includes acquiring Calpine’s Geysers facility in Northern California. Additionally, it will also advance its nuclear projects, invest in renewables, and increase nuclear output. One significant milestone is to restart the Crane Clean Energy Center in Pennsylvania.

All these prospects would subsequently increase cash flow and drive innovation and growth in clean energy across the U.S.

Combining Energy Excellence with Community Care

The merger brings together teams with a strong culture of safety, operational excellence, and customer service. Both companies are recognized for delivering reliable, cost-effective energy solutions.

Calpine’s natural gas plants will ensure grid reliability as customers shift to cleaner energy. Both companies have invested in carbon sequestration technology to support this purpose.

Apart from clean energy goals, both companies have plans to boost community development by creating jobs, paying taxes, and fostering growth. It will donate over $21.1 million each year and run volunteer programs in underserved areas.

Andrew Novotny, president and CEO of Calpine said,

“This is an incredible opportunity to bring together top tier generation fleets, leading retail customer businesses and the best people in our industry to help drive a stronger American economy for a cleaner, healthier and more sustainable future. Together, we will be better positioned to bring accelerated investment in everything from zero-emission nuclear to battery storage that will power our economy in a way that puts people and our environment first. It’s a win for every American family and business in our newly combined footprint that wants clean and reliable energy. ECP’s commitment to these goals over the last seven years was critical to the progress we have made as a company and to laying a foundation for future growth.” 

Post-merger, Novotny will join Constellation, ensuring continuity and leadership for the combined business.

In conclusion, the partnership between Constellation and Calpine is set to strengthen the U.S.’s climate goals and support the objectives of the Paris Agreement. By combining resources and expertise, the two companies will create a powerful force in clean energy for a decarbonized future.

The post Constellation and Calpine’s $16.4B Deal Boosts U.S. Clean Energy Transition appeared first on Carbon Credits.

Verra Updates on 4.5 Million Over-Issued Carbon Credits from Rejected Rice Projects in China

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Verra Updates on 4.5 Million Over-Issued Carbon Credits from Rejected Rice Projects in China

Verra announced an update on the ongoing compensation process for carbon credits linked to the 37 rice cultivation projects in China that were rejected in August 2024. The news sheds light on the progress made toward compensating over-issued Verified Carbon Units (VCUs). It also details the remaining steps needed to rectify the situation.

Inside Verra’s Actions to Rectify Carbon Credit Discrepancies

In August 2024, Verra, a leading organization in the voluntary carbon market (VCM), decided to reject 37 rice cultivation projects in China. The rejection followed a thorough review that raised concerns about how these projects were being managed. 

Verra found that the projects did not follow proper methods, and there were problems with the audits done by validation and verification bodies (VVBs). These issues led to more carbon credits being issued than were actually earned by the projects.

Of the 37 rejected projects, 25 were found to have over-issued VCUs, which are critical units in the carbon offsetting market. These credits are used by companies and organizations to offset their carbon emissions.

Any discrepancies in the issuance of these credits undermine the integrity of the entire carbon market. In other words, when too many credits are issued, it makes the carbon offset market less trustworthy.

As a result, Verra took swift action, imposing sanctions on the companies involved and VVBs to ensure accountability and maintain the credibility of its registry.

Verra UNFCCC CDM rice cultivation methodology
Image from Verra

4.56 Million Credits at Stake: Compensation for Issued VCUs

As of January 2025, Verra confirmed that compensation has been made for the first set of over-issued VCUs. A total of 480,000 VCUs from 5 of the affected projects have been compensated by two of the project proponents: 

  • Vitol (China) Energy Co. Ltd. and 
  • Timing Carbon Asset Management Co. Ltd. 

These companies have worked directly with Verra to ensure that the over-issued VCUs were fully compensated for. This is an important step in fixing the issue and making sure the carbon credits are correct.

However, there are still 4,080,000 VCUs that have not yet been compensated. These credits are linked to two main groups of projects managed by: 

  • Search CO2 (Shanghai) Environmental Science & Technology Co. Ltd., and 
  • Hefei Luyu Agriculture Technology Co. Ltd.

Sanctions and Next Steps

Verra has taken a firm stance against the non-complying parties. Search CO2, which is responsible for 10 rejected projects and 2,220,000 outstanding VCUs, has had its registry account suspended. 

If the company does not compensate for the over-issued VCUs, Verra will permanently close its account. This shows Verra’s commitment to holding companies accountable and ensuring the integrity of the carbon credit market.

The remaining 1,860,000 VCU credits are linked to projects managed by Hefei Luyu Agriculture Technology Co. Ltd. 

Hefei had an agreement with Shell Energy (China) Limited to manage these projects, but in September 2024, they ended their agreement. This left the projects without an active account holder on Verra’s registry.

As a result, Verra moved these projects to an administrative account and is now requiring Hefei to resolve the issue before they can open a new account or register new projects.

Integrity First: How Verra Is Shaping the Future of Carbon Markets

Verra’s actions in response to the rejected rice cultivation projects are a direct reflection of its commitment to maintaining the integrity, transparency, and quality of the VCM. According to Justin Wheler, Verra’s Chief Program Management Officer, 

“This was the first time Verra imposed such sanctions, demonstrating Verra’s commitment to greater integrity, transparency, and quality in the voluntary carbon market. Verra took decisive action at every level at which concerns were identified. Verra is committed to continual improvement of its standards programs, particularly as we address issues arising from inappropriate marketplace conduct.”

In addition to its work with the project proponents, Verra is also finalizing its review of the responses received from the four VVBs that were involved in the rice cultivation projects.

The largest carbon registry issued non-conformity reports to these VVBs. Depending on the findings of the review, further sanctions may be imposed. These could include suspending the VVBs’ ability to validate or verify projects in the future, which would have significant implications for their operations in the carbon market.

The outcome of this review will be crucial in determining the long-term credibility of the VVBs involved. It will send a strong message about the importance of ensuring quality audits and transparency in issuing carbon credits.

Verra’s handling of rejected rice projects in China shows its commitment to carbon market integrity. How the carbon standard manages this situation will have a big impact on the future of the carbon credit market, especially as more and more companies turn to carbon credits to help meet their decarbonization targets.

By addressing discrepancies, ensuring carbon credit accuracy, and holding VVBs accountable, Verra aims to build trust. Its focus on transparency and quality will shape carbon credit standards, supporting global climate goals and the transition to a low-carbon future.

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EU’s 2025 Emission Rules Led Tesla and Mercedes to Pool Carbon Credits to Avoid $15.6 Billion Fine

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EU's 2025 Emission Rules Led Tesla and Mercedes to Pool Carbon Credits to Avoid $15.6 Billion Fine

Automakers are turning to carbon credit pooling to meet targets and avoid fines with stricter European Union (EU) emission regulations set for 2025. Electric vehicle (EV) makers like Tesla and Polestar are key players in this strategy, using their fully electric fleets to generate surplus carbon credits.

EU Rules Drive Carbon Credit Market

Under EU rules, automakers must meet strict carbon emission limits for their fleets, with the following rules to adhere:

EU Emission Rules for passenger cars

A report analyzing 2023 data estimates carbon reduction targets for car manufacturers in 2025, considering adjusted plug-in hybrid vehicle emissions and zero- and low-emission vehicle incentives.

  • Volkswagen and Ford: Face the largest challenge, requiring around 21% CO₂ reductions.
  • Hyundai, Mercedes-Benz, and Toyota: Need reductions exceeding the average of 12%.
  • BMW, Kia, Stellantis: Closest to meeting targets, requiring cuts of 9%–11%.
2025 Manufacturer CO2 targets versus 2023 fleet performance
Note: The 2025 targets are adjusted for expected changes in plug-in hybrid CO2 emissions. Data (sorted alphabetically) is shown for the 10 largest, leaving aside Tesla, a manufacturer that solely sells BEVs.

These projections highlight the varying levels of effort needed across the automotive sector to meet emissions goals. To address this concern, carmakers plan to pool carbon emissions credits as auto lobby ACEA pushes for relief on the EU’s 2025 regulations. Some governments, including Italy, have also advocated for suspending 2025 fines. 

Companies falling short can pool their emissions with leaders like Tesla, buying credits to reduce their overall carbon averages. This allows manufacturers to avoid penalties that could total hundreds of millions of euros.

Several automakers, including Stellantis, Toyota, Ford, Mazda, and Subaru, are joining Tesla’s emissions pool. Meanwhile, Mercedes has partnered with Polestar, Volvo Cars, and Smart. These alliances highlight a growing reliance on carbon credit trading to bridge the gap between current emissions and regulatory targets.

For instance, Polestar and its partners expect a significant CO₂ surplus this year, with Polestar spokespersons confirming plans to sell credits to Mercedes. Volvo Cars, majority-owned by China’s Geely, also reported over a 40% reduction in global tailpipe emissions since 2018. 

The two pools, led by Tesla and Mercedes, remain open to other carmakers, with application deadlines set for February 5 and 7, respectively. These deals are based on 2025 sales figures, but the filing did not disclose the volume of credits involved.

How Much Will It Cost for Automakers?

The stakes are high. EU regulators have warned automakers of fines that could reach €300 million for every missed percentage point of EV sales targets. 

  • Renault CEO Luca De Meo estimates that the 2025 rules could cost European carmakers €15 billion ($15.6 billion).

To avoid these fines, manufacturers like Stellantis ramp up their EV sales. The group’s European operations chief, Jean-Philippe Imparato, recently outlined plans to increase EVs from 12% to 21% of sales to meet targets. 

Pooling with Tesla offers a safety net, ensuring compliance while companies accelerate the transition to electric models.

Tesla’s Carbon Credit Surge: How the EV Giant is Raking in Billions

Tesla’s role in the carbon credit market cannot be overstated. In the third quarter of 2024, Tesla reported $739 million in revenue from carbon credit sales. This far surpasses the $539 million analysts predicted. This marks a 33% year-over-year increase and accounts for 34% of Tesla’s net income for the quarter.

Tesla carbon credit revenue 2024 Q3

Tesla’s carbon credits are highly profitable, as they can be sold at full margins. Since Tesla started selling these credits in 2009, they’ve become a billion-dollar revenue stream. 

  • In 2023 alone, Tesla earned $1.79 billion from credit sales, the highest annual figure in its history.

These credits play a critical role in Tesla’s financial performance. They boost profits and provide a competitive edge, as traditional automakers face challenges reducing emissions from EV components like batteries and aluminum.

Tesla Partnerships and Global Impact

While Tesla rarely discloses its carbon credit buyers, industry reports highlight key collaborations. Stellantis, for example, has purchased billions in credits to offset emissions, aligning with its goal of achieving zero emissions by 2038.

Stellantis net zero 2038 strategy
Image from Stellantis

China is another key market for Tesla’s carbon credits. Reports suggest that a joint venture between Volkswagen and FAW Group may have purchased credits worth $390 million from Tesla in 2021. Though details remain scarce, these partnerships underline the global importance of Tesla’s credit sales.

Automakers’ Dual Strategy: Carbon Credit Pooling and EV Innovations

Pooling agreements are just one part of the equation to deal with the 2025 EU emission regulations. Automakers are simultaneously investing in new EV technologies to reduce reliance on carbon credits in the long term. For instance, Stellantis has emphasized its focus on innovative electric and low-emission technologies, ensuring compliance while minimizing costs.

Stellantis is adopting a dual-chemistry strategy, offering both lithium-ion nickel manganese cobalt (NMC) and lithium iron phosphate (LFP) battery options. This approach provides customers with greater flexibility and choice in battery cell and pack technologies, aligning with the company’s commitment to diverse and innovative energy solutions.

The EV giant aims to launch 75 battery EV (BEV) models across its 14 iconic brands by 2030, targeting annual sales of 5 million units. From 2025, all new luxury and premium models will be BEVs, while expanding to all European segments by 2026. Supporting this, 

Stellantis is investing €30 billion this year in electrification and software, reinforcing its commitment to sustainable mobility and market leadership.

Mercedes-Benz, too, has acknowledged the transformative pace of the automotive industry. In a statement, the company emphasized its commitment to closing the emissions gap through both pooling agreements and internal advancements in EV production.

Mercedes aims to achieve carbon neutrality across its new vehicle fleet by 2039 as part of its “Ambition 2039” plan. The company has operated carbon-neutral production sites since 2022, powered by renewable energy and sustainable practices. By 2030, Mercedes targets EVs to comprise 50% of its sales. 

The Bigger Picture 

The surge in carbon credit trading reflects broader challenges in the transition to sustainable transportation. Tesla’s success in this space underscores the potential of fully electric fleets to generate both environmental and financial benefits.

As more automakers invest in EVs, the reliance on pooling agreements may diminish. However, until that transition is complete, carbon credits will remain a critical tool for compliance.

The EU’s 2025 emission regulations have intensified the race to reduce automotive carbon footprints. Carbon credits may be a temporary fix, but they provide a crucial bridge toward more sustainable transportation. As the industry evolves, partnerships between traditional and electric automakers highlight the importance of working together. 

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Top 5 Carbon ETFs for Sustainable Investing in 2025

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CARBON ETF

Like stocks, investors can buy and sell Exchange-Traded Funds (ETFs) whenever the market is open. Often investing in carbon credits through ETFs offers a simple and diverse way to enter this expanding market.

We’ve covered some of the top ETFs for 2025 in the carbon credit market and how they are supporting sustainable investments.

1. iShares Global Clean Energy ETF (ICLN): Ethical Investing with Sustainability

The iShares Global Clean Energy ETF (ICLN) is a part of BlackRock and a top-performing ETF. It focuses on renewable energy companies like solar, wind, and other sustainable technologies. It’s a great option for investors wanting to capitalize on clean energy stocks worldwide.

Essentially, this fund tracks an index of stocks in the global clean energy sector. One important attribute of this ETF is its strict sustainability rules. It excludes companies involved in weapons, tobacco, coal, oil sands, and Arctic drilling. These exclusions ensure the fund supports ethical and sustainable investing.

ICLN currently manages assets worth $5-6 billion. By 2025, its value could reach $8-10 billion.  

iShares Global Clean Energy ETF ICLNsource: NASDAQ

Top Holdings Portfolio

Among its top holdings are First Solar Inc., a major solar panel manufacturer; Iberdrola SA, Enphase Energy Inc., Vestas Wind Systems, and Ørsted. These companies contribute significantly to ICLN’s diversified and growth-oriented portfolio.

2. Invesco Solar ETF (TAN): A Focus on Solar Energy Growth

The Invesco Solar ETF, known as TAN, manages assets valued between $3–4 billion and has a projected valuation of $6–8 billion by 2025.

This fund focuses on solar energy companies, such as manufacturers, installers, and technology providers. As a result, TAN is an excellent option for those looking to invest in solar power.

Index Alignment and Key Holdings

TAN is based on the MAC Global Solar Energy Index. It invests 90% of its assets in securities, American depositary receipts (ADRs), and global depositary receipts (GDRs) listed in the index.

The index includes solar energy companies and adjusts returns for taxes on non-resident investors. Both the fund and index are rebalanced quarterly to stay aligned with market changes.

Its top holdings include Enphase Energy, First Solar, Sunrun, Nextracker, Class A, GCL Technology Holdings Ltd., and Encavis AG.

TAN Invesco Solar ETF source: NASDAQ

3. First Trust Global Wind Energy ETF (FAN): A Wind Energy Investment

The First Trust Global Wind Energy ETF, known as FAN, currently manages assets worth $2–3 billion, with an expected valuation of $5–7 billion by 2025.

Notably, this ETF is for the wind energy sector. It’s prospective for those managing wind farms, producing wind power, or making wind energy equipment. However, companies must have a market cap of at least $100 million, a daily trading volume of $500,000, and a free float of 25% to join the index.

FAN benefits from the global growth of wind power and strong government support for renewables. Its focused strategy and diverse portfolio make it attractive for wind energy investors. However, like any investment, returns are not guaranteed.

Comprehensive and Diversified Portfolio

FAN has a global portfolio of 52 wind energy companies worldwide. It includes “Pure Play” firms with 50% or more revenue from wind energy and “Diversified” firms partially in the sector. The index gives 60% weight to Pure Play and 40% to Diversified companies. Top holdings include Orsted, Vestas, EDP Renováveis, Northland Power, Siemens Energy, and GE Vernova.

First Trust Global Wind Energy ETF source: NASDAQ

4. SPDR S&P Kensho Clean Power ETF (CNRG): A Clean Energy Investment

The SPDR S&P Kensho Clean Power ETF (CNRG) currently has assets worth $1–2 billion, with a projected value of $4–6 billion by 2025. It is managed by State Street’s Investment Solutions Group and is built for long-term growth.

With its focus on innovation and the clean energy sector, this ETF is a great option for those wanting to invest in the future of renewable energy.

CNRG tracks the S&P Kensho Clean Power Index, which uses AI to find companies leading in clean energy. The index includes firms in solar, wind, geothermal, and hydroelectric power. It also covers energy storage and other emerging technologies. This way it offers a diverse portfolio of companies advancing low-emission power solutions.

Key Holdings and Diversified Portfolios

CNRG’s portfolio includes innovative companies like Eos Energy Enterprises, Shoals Technologies Group, Plug Power, and Array Technologies. It also features Constellation Energy, Nextracker, GE Vernova, and Bloom Energy. These holdings highlight the fund’s focus on emerging technologies and their potential in the growing renewable energy market.

4. SPDR S&P Kensho Clean Power ETF (CNRG)

source: NASDAQ

5. Global X Lithium & Battery Tech ETF (LIT): Powering the Future

The Global X Lithium & Battery Tech ETF (LIT) gives investors access to the booming electrification, lithium, and battery technology sector. Their assets have a $4–5 billion valuation and are projected to reach $8–10 billion by 2025. The ongoing global demand for lithium and supply constraints make this ETF a promising investment in this sector.

Additionally, LIT tracks the Solactive Global Lithium Index, which follows top companies in lithium exploration, mining, and battery production. Although no financial instruments track lithium prices directly, the ETF offers indirect exposure by investing in key firms in the lithium supply chain.

Top Holdings Portfolio

LIT’s portfolio includes top companies in lithium and battery technology like Albemarle Corp, Tesla Inc, and Ganfeng Lithium. Other key holdings are Panasonic Holdings, CATL, and Tianqi Lithium.

Global X Lithium & Battery Tech ETF (LIT)

source: NASDAQ

Quick Check: 5 Reasons to Choose ETFs over Individual Stocks

Often, ETFs are a better option than buying individual stocks, providing more stability and less risk. Find out why…

  1. ETFs combine various assets, helping spread out risks and reduce volatility in the carbon market.
  2. They offer more stability compared to individual stocks, providing a balanced way to invest.
  3. ETFs reduce risk by pooling multiple investments, offering a smoother experience for investors.
  4. They usually have lower costs and fees than managing individual stocks. This saves investors money.
  5. ETFs simplify investing in the carbon credit market, allowing exposure without requiring deep expertise.

The post Top 5 Carbon ETFs for Sustainable Investing in 2025 appeared first on Carbon Credits.

China’s Massive Lithium Discovery Elevates It to Second in Global Reserves

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china lithium

China’s lithium reserves have risen to 16.5% of the global total, up from 6%, says Xinhua, the leading Chinese media agency. It is now the second-largest holder of this critical battery metal.

Interestingly, China has now surpassed both Australia and Argentina in lithium reserves. So, what sparked this nearly 3X increase in lithium deposits? And with such massive reserves, can China become self-reliant in lithium production? Let’s explore.

What Led to China’s 3X Lithium Boom?

China Geological Survey (CGS) revealed this leap elevated China’s global ranking from sixth to second. As the top consumer of this vital battery metal, China relied heavily on imports. To address this, Beijing has intensified domestic exploration. The goal? To strengthen its supply chain and boost self-sufficiency and capacity for new energy vehicle (NEV) production.

 CGS has unlocked important updates on China’s breakthrough in lithium exploration.

Lithium Findings Across Key Regions

Wang Denghong, a senior scientist at CGS explained that China has been ramping up nationwide lithium exploration efforts Since 2021. These initiatives uncovered over 30 million metric tons of lithium ore across regions like Sichuan, Qinghai, Jiangxi, and the Xinjiang Uygur and Inner Mongolia autonomous regions. Key discoveries include:

  • Lepidolite Lithium: Approximately 10 million tons were found in Hunan, Jiangxi, and Inner Mongolia.
  • Brine Lithium: Qinghai’s reserves now total about 10 million tons.
  • Spodumene Lithium: Xinjiang added another 10 million tons to the tally.

Exploration in Tibet also revealed a 2,800-km-long spodumene belt in the Xikunsong-Pan-Ganzi region, further boosting China’s reserves.

Technological Advancements Lower Costs

The CGS highlighted advancements in lithium extraction from lepidolite which they consider a “challenging” mineral. These technological upgrades made extracting the 10 million tons of lepidolite reserves more efficient and cost-effective.

Additionally, China’s salt lake lithium resources have increased significantly. So now it has over 14 million tons of lithium in its salt lakes. It’s the world’s third-largest lithium resource in a salt lake, after South America’s lithium triangle and the western US.

Salt lakes are an eco-friendly and cost-effective source of lithium that can substantially enhance China’s resource base.

Lithium Demand Fuels Growth in China

Lithium has become a critical resource for modern industries. It powers batteries used in electronics, electric vehicles (EVs), and energy storage systems. The rapid expansion of the EV market has pushed global lithium demand to new heights.

China’s EV market remains the largest contributor to lithium demand. As people and industries shift from traditional fuels to electric vehicles, demand is expected to rise further by 2025.

ICCT CHINA EV lithiunSource: ICCT

As per the International Council on Clean Transportation (ICCT) Global and Regional Battery Material 2024 report, BEV and PHEV sales shares reach 60% for new light-duty vehicle sales nationwide in 2030 and remain constant thereafter.

The assessment assumes that most of these combined BEV and PHEV sales will be BEVs, with PHEV sales shares decreasing from 10% in 2023 to 4% in 2030 and 3% thereafter.

Easing Supply Constraints

China houses the world’s top lithium battery manufacturers, including CATL, BYD, Gotion, EVE Energy, and A123, which have customers worldwide. This is why China’s lithium demand is constantly high.

According to ICCT, it’s predicted that China’s demand for lithium will reach 125 kt in 2030 and 163 kt in 2040. This indicates a steady rise from 39 kt in 2023.  

                        Annual raw material demand for lithium in China under the                                                    Baseline and demand reduction scenariosLithium demand chinaSource: ICCT

However, the country’s new technologies and discoveries could ease its lithium supply issues and reduce dependency on imports.

Global Impact of China’s Lithium Expansion

The massive expansion of China’s lithium reserves can potentially meet both domestic and industrial needs. Analysts also expect a boost to stabilize supply chains, and production costs, and support the sustainable growth of lithium markets worldwide.

However, it could also intensify competition among nations vying for this crucial resource.

China’s new lithium discoveries are a major step in its renewable energy efforts and in reducing fossil fuel reliance. This surplus lithium will enhance EV batteries and energy storage, and ensure a steady supply for future technologies. Precisely, China has taken the next step to continue dominating the global resource market.

Lithium

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Unlocking the Power of Critical Minerals with US DOE’s $45 Million Investment: A Focus on Antimony

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Unlocking the Power of Critical Minerals with US DOE’s $45 Million Investment: A Focus on Antimony

Critical minerals are the backbone of modern technology, clean energy, and national security. They are essential for producing batteries, semiconductors, renewable energy systems, and defense applications like antimony. As such, they are indispensable for a sustainable future, powering clean technologies.

The United States, like many countries, is working to secure its supply of these materials amid growing geopolitical challenges and rising demand. This effort is underlined by the U.S. Department of Energy’s (DOE) recent funding announcement. The agency revealed a $45 million investment to develop regional consortia for critical minerals and materials.

America’s Growing Need for Critical Minerals

The U.S. is heavily reliant on imports from various countries for most of its critical minerals as shown below. The country relies on imports for 95% or more of 13 critical minerals, with China supplying more than half of these, according to the U.S. Geological Survey (USGS). Thus, the government is working hard to address this reliance, with the DOE’s recent investment.

America import reliance on critical minerals

The funding supports six projects aimed at extracting minerals from unconventional and secondary sources like coal by-products, petroleum industry waste, and acid mine drainage. These innovative approaches not only reduce reliance on imports but also create high-wage jobs and environmental benefits.

For example, the University of Texas at Austin is exploring resources from the Gulf Coast and Permian Basin, while Virginia Polytechnic Institute is evaluating critical minerals in the Appalachian Mountains. These initiatives align with the DOE’s Carbon Ore, Rare Earth, and Critical Minerals (CORE-CM) Initiative, expanding its scope to cover eight regions across the U.S.

DOE Carbon Ore, Rare Earth, and Critical Minerals (CORE-CM) Initiative
Image from U.S. DOE

The U.S. DOE’s CORE-CM Initiative is a multi-year effort aimed at promoting regional economic growth and job creation. It focuses on accelerating the development of upstream and midstream critical mineral supply chains, essential for clean energy technologies and national security.

Brad Crabtree, Assistant Secretary of Fossil Energy and Carbon Management, emphasized the dual benefits of these efforts, saying:

“Rebuilding a domestic supply chain for critical minerals and materials here at home will both safeguard our national security and support the continued development of a clean energy and industrial economy.” 

Trump’s Approach to Critical Minerals: A Mixed Outlook

The incoming President Donald Trump has criticized Biden’s Inflation Reduction Act (IRA), labeling it a “green scam” and pledging to repeal it if re-elected. This raises concerns for renewable energy initiatives like EVs and wind power. Yet, his past policies suggest a strong focus on critical mineral self-sufficiency.

In 2020, Trump declared foreign dependence on critical minerals a national emergency, advocating for the domestic production of these resources. Though he opposes the IRA’s renewable energy spending, his administration supported industrial revitalization, including $75 million to upgrade Constellium’s aluminum mill, ensuring critical minerals remain a priority.

Trump’s “America First” stance focuses on reducing U.S. dependency on China for critical minerals. The DOE and DOD are investing in domestic metal production, targeting materials like lithium and antimony. 

Antimony: A Critical Mineral of Strategic Importance

Among the critical minerals, antimony is a key player. It is used in applications such as battery technology, solar panels, flame retardants, and even ammunition. However, the U.S. currently relies heavily on imports, primarily from China, for its antimony supply.

This dependency highlights the importance of the Stibnite Gold-Antimony Project in Idaho. Perpetua Resources Corp., the company behind the project, recently received approval from the U.S. Forest Service to begin development. The decision followed eight years of environmental studies, tribal consultations, and regulatory reviews.

The project stands out for several reasons:

  • Domestic Supply: With 148 million pounds of antimony reserves, it is the only domestic source of this mineral in the U.S.
  • Reducing Foreign Reliance: The project could meet 35% of the total U.S. antimony demand in its first six years, lessening dependence on Chinese exports.
  • National Security: Antimony is vital for defense applications like bullet manufacturing, making its domestic availability a strategic priority.

The Forest Service’s decision comes at a critical time, as China recently banned antimony exports to the U.S. This restriction resulted in soaring prices for this mineral as shown in the chart.

Antimony price

Jon Cherry, President and CEO of Perpetua Resources, described their project as transformative:

“The Stibnite Gold Project delivers wins for communities, the environment, the economy, and our national security.”

Another key player in securing a stable antimony supply is Military Metals Corp. (MILI.V) With strategic assets in Slovakia and Canada, the company is revitalizing historical mining sites. In Trojarova, Slovakia, and West Gore, Nova Scotia, Military Metals plans to unlock significant antimony resources for defense and renewable energy needs.

Sustainable Solutions For a Path Toward Critical Minerals Independence

The focus on critical minerals extends beyond mining. The DOE and private companies are exploring innovative ways to recover these materials sustainably. Secondary and unconventional feedstocks, such as coal waste and acid mine drainage, offer untapped opportunities.

For instance, the University of Alaska Fairbanks is investigating underexplored mineral deposits in the Northwest, while the University of Wyoming is assessing critical minerals across ten states in the Great Plains and Interior Highlands. These projects demonstrate the potential of leveraging local resources to build a resilient supply chain.

The U.S. government’s investments and private sector initiatives are paving the way for a future where critical minerals are sourced sustainably and domestically. Antimony’s role in this landscape underscores its strategic importance. Through innovative projects and partnerships, the U.S. is positioning itself to lead in the global race for these essential resources.

Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: MILI.V.

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

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Nickel Prices in 2025: Indonesia’s 40% Supply Cut Plan and EV Market Shifts

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Nickel Prices at the Crossroads in 2025: Indonesia's 40% Supply Cut Plan and EV Market Shifts

Nickel producers are bracing for a tough year in 2025, with the global nickel market expected to remain oversupplied, putting downward pressure on prices. Analysts attribute this oversupply to Indonesia’s rapidly expanding nickel industry, disrupting global markets and driving nickel prices down from previous highs. However, the largest nickel producer revealed plans to cut production by almost 40%, greatly impacting global supply. 

Nickel Price Dynamics and Producer Responses

The London Metal Exchange (LME) reported the three-month nickel price at $15,415 per metric ton on December 30. This marks a 7.2% year-over-year drop and a 28.7% decline from its peak of $21,615 in May. 

Despite rising global demand, production surges from top producers. Indonesia and China will maintain an oversupply, with further price reductions anticipated.

The global surplus is forecast to shrink slightly, from 103,000 metric tons in 2024 to 87,000 metric tons in 2025, according to Jason Sappor, a senior analyst at S&P Global Commodity Insights. However, this surplus is still substantial enough to keep prices down, increasing the risk of more mine closures.

nickel prices LME 2020 to 2024

Producers are already adjusting. The Indonesian government announced plans to manage supply and support prices, while companies have begun suspending operations. 

For example, BHP Group paused its Nickel West operations in Australia. Meanwhile, Anglo American announced the sale of two Brazilian nickel mines as part of a restructuring effort.

Adrian Gardner, principal analyst for nickel markets at Wood Mackenzie, warned that further temporary mine closures could occur if prices fall below production costs.

Indonesia’s Nickel Plan Cutting 35% of Global Supply

Indonesia has solidified its position as the world’s top nickel producer. The Southeast Asian country supplied over 56% of global mined nickel in 2024. This dominance could grow further, with the country’s output projected to increase by 7.7% in 2025 to 2.4 million metric tons.

The Indonesian nickel boom comes from a 2020 ban on raw ore exports, encouraging Chinese companies to invest in local processing facilities. These plants convert nickel laterite ore into ferronickel, a key material for stainless steel production. 

While Indonesia’s growth boosts its economy, it also increases the global nickel surplus, putting further pressure on prices.

Recently, the world’s top nickel producer is considering cutting its nickel mine quotas by nearly 40% in 2025. This move could reduce global supply by over a third, potentially driving up nickel prices, according to Macquarie Group Ltd. as reported by Bloomberg.

  • The proposed cuts would lower output from 272 million tons in 2024 to just 150 million tons this year.

The Indonesian government’s restrictions on nickel mining have already caused supply strains. In 2024, these limitations led to record nickel ore imports from the Philippines, the second-largest producer. 

However, the market still experienced oversupply, with weakening demand from the stainless steel and battery sectors contributing to nickel’s second consecutive annual price drop.

Demand Concerns: EV Market Slowdown

Nickel demand, particularly from the battery sector, is under strain and the metal’s role in the electric vehicle (EV) market adds more complexity. 

The growing adoption of lithium-iron-phosphate (LFP) batteries and increased demand for plug-in hybrid EVs reduce the need for nickel-rich battery chemistries. These batteries are primarily produced by Chinese companies. 

LFP batteries, which are nickel-free, offer lower costs and reduced environmental impact. Their growing adoption, even in Indonesia, is challenging nickel’s dominance in the EV supply chain.

Analysts at ING highlighted sluggish EV sales and a potential rollback of the $7,500 federal tax credit for EV purchases under the Inflation Reduction Act (IRA) as additional challenges. If President-elect Donald Trump follows through on this plan, it could slow the U.S. energy transition and reduce nickel demand from American trading partners.

Amid these shifts, Indonesia’s partnerships with China remain pivotal. Recent agreements between the two nations emphasized collaboration in EVs, lithium batteries, and critical minerals like nickel. These efforts aim to stabilize supply chains and advance the energy transition.

If Indonesia proceeds with significant supply cuts, the nickel market could experience tighter conditions, boosting prices. However, the rise of alternative battery technologies highlights the evolving dynamics in the global nickel and EV industries.

Optimistic Outlook Amid Challenges

Despite the oversupply and price pressures, some analysts remain optimistic about nickel’s prospects. Adrian Gardner from Wood Mackenzie, for instance, remarked:

“We are expecting [a] 10%-12% increase in demand for primary nickel in 2025, almost double the rate of production growth…We are expecting a small average price rise for 2025 on an annual average basis.” 

S&P Global Commodity Insights predicts that nickel prices will remain low in the coming years. The analysts project that the global surplus will be at 39,000 metric tons by 2028. This is partly due to the declining demand for primary nickel in the European Union’s EV battery sector over 2024–2028.

global nickel production forecast

Amid this dynamic shift in the nickel market, one company is making huge efforts to advance U.S. nickel independence – Alaska Energy Metals Corporation (AEMC). Its flagship Nikolai project in Alaska holds significant resources of nickel, copper, cobalt, and platinum group metals, essential for renewable energy and electric vehicles.

While nickel producers face immediate challenges, the metal’s long-term outlook depends on balancing supply and demand, technological shifts in the battery sector, and policy decisions in major producing nations like Indonesia.

Overall, 2025 will likely be a pivotal year for the nickel market, testing the resilience of producers and the effectiveness of regulatory interventions.

Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: AEMC.

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

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Vale and GreenIron Partner to Revolutionize Metal Production with Green Hydrogen

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Vale

Vale and Sweden’s GreenIron have teamed up to reduce emissions in the mining and metals supply chain. The MOU focuses on key initiatives in Brazil and Sweden, including a feasibility study for a direct reduction facility in Brazil operated by GreenIron. Additionally, Vale will also supply iron ore to GreenIron’s commercial operations in Sandviken, Sweden.

Rogério Nogueira, EVP of Commercial and New Business at Vale noted,

“This agreement brings together Vale’s superior product portfolio, Brazil’s competitive advantage on green hydrogen and GreenIron’s expertise on sustainable iron production to provide low-carbon solutions for the mining and metals industry”,  “We are focused on helping our clients achieve their decarbonization targets and also fostering Brazil’s new industrialization.

Vale and GreenIron’s Collaborative Vision for Metal Recycling

Moving on, their feasibility study will identify the best site and assess renewable energy and resource options for a direct reduction facility in Brazil. Most importantly, it will explore green hydrogen and innovative technologies to reduce the environmental impact of the industries.

GreenIron has conducted rigorous trials to commercialize its hydrogen-based, fossil-free, and energy-efficient technology. The press release revealed that in the last two years, Vale and GreenIron have tested Vale’s iron ore pellets at GreenIron’s Swedish facilities.

  • The new MoU includes plans to test Vale’s iron ore briquettes, which produce lower CO2 emissions than pellets.

Additionally, GreenIron’s technology offers exceptional adaptability. It can handle various feedstocks and customize capacity to meet specific client requirements. It is also cost-effective and compatible with green hydrogen use.

GreenIron’s Sandviken Facility

The company plans to bring the Sandviken Industrial Park, located 160 kilometers north of Stockholm into full-scale production by the end of this year. This is crucial for the company’s goal of becoming a leader in CO2-free metals and mining while advancing to a circular economy.

  • Each GreenIron furnace is expected to cut CO2 emissions by at least 56,000 tonnes annually, paving the way for a greener future.

Edward Murray, CEO of GreenIron said,

“This MOU with Vale marks a significant milestone for GreenIron. It represents a clear commitment to pursue collaborative opportunities that align with our vision for a sustainable mining and metals industry, and to drastically reduce the sector’s climate footprint. By pooling our expertise and resources, we aim to innovate and develop projects that not only benefit both companies but also positively impact the environment and the communities in which we operate.”

Vale Iron Ore: Sustainably Sourced from Brazil

Vale is one of the largest iron ore producers in the world. Iron ore, the key raw material for steelmaking, is found in rocks mixed with other elements. It is refined through advanced industrial processes and then sold to the steel industry.

Vale’s iron ore from Carajás is among the best globally, with a 67% iron content. In Northern Brazil, the company’s mines occupy just 3% of the Carajás National Forest. The remaining 97% is protected in collaboration with environmental institutes. Vale operates in Brazil, China, and Oman to suffice global supply of this crucial resource.

Here’s Vale’s 3Q24 production and sales report for Iron ore, pellets, copper, and nickel.Vale

Source: Vale

By 2025, the company plans to transition entirely to renewable energy in Brazil and 100% renewable energy by 2030 globally. Additionally, Vale aims to enhance its global energy efficiency by 5% by 2030, using 2017 levels as the baseline

DOE Partnership

In November, Vale completed negotiations with the U.S. Department of Energy’s Office of Clean Energy Demonstrations. The company will start Phase 1 of a project to develop an industrial-scale briquette plant in Louisiana. It will use over $3.8 million in DOE funds to support engineering studies and community engagement in 2025.

Vale’s sustainably sourced iron ore briquettes can reduce scope 3 emissions by 15% by 2035. These efforts align with Vale’s sustainability targets to cut absolute scope 1 and 2 emissions by 33% by 2030 and achieve net zero by 2050.

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