Xpansiv Joins Forces with S&P Global and CME to Supercharge Australia’s Carbon Credit Market

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Xpansiv announced a strategic collaboration with S&P Global Commodity Insights and CME Group to enhance the Australian Carbon Credit Unit (ACCU) market. This partnership will introduce new pricing mechanisms, improve liquidity, and provide risk management tools, including ACCU futures contracts. 

The effort marks a milestone in carbon markets, allowing for better carbon price discovery and future price risk management.

Strengthening Carbon Price Discovery and Liquidity

Xpansiv, a leading market infrastructure provider for the global energy transition, is set to integrate its existing standardized ACCU spot contracts with a new CBL-Platts ACCU price assessment. This will improve alignment in end-of-day price references and support physical market trading. 

CME Group will also launch a CBL ACCU futures contract, scheduled for October 13, 2024, pending regulatory review. This contract will settle against Xpansiv’s CBL spot ACCU market, creating a seamless carbon credit trading experience for market participants.

The collaboration marks the first initiative of its kind for compliance carbon market. This partnership aims to enhance the transparency and liquidity of the ACCU market, a key component in achieving national emission reduction goals. 

By leveraging expertise in market insights and commodity exchanges, the collaboration seeks to create a more standardized and efficient trading environment for carbon credits. This, in turn, can promote stronger participation in carbon markets and support global climate efforts.

These carbon credits represent emissions reductions that fund renewable energy and decarbonization projects. Companies purchase these credits to offset their hard-to-abate emissions that they can’t reduce directly.

Ben Stuart, Chief Commercial Officer, Xpansiv, emphasized the importance of their initiative, saying:

“We are pleased to continue our collaboration with market leaders S&P Global Commodity Insights and CME Group, each of which are relied upon for solutions to pricing challenges in the marketplace. Together we have set a new standard for reliable price signals and trading instruments in this important, evolving market.”

A Robust Market for Compliance and Carbon Reduction

The ACCU market has grown rapidly. There are over 3.5 million tons of Australian carbon credits traded through Xpansiv’s CBL platform since January 2023. The new collaboration builds on this momentum by combining robust physical market data, improved price assessments from S&P Global, and a new hedging tool via CME’s futures contracts. 

The initiative is designed to give carbon market participants, including major carbon emitters and financial institutions, enhanced tools for price risk management and portfolio reporting.

Brian Casey, Head of Markets Strategy & Partnerships at S&P Global Commodity Insights, noted that the partnership will deliver “a deeper and broader view of value” in the ACCU market. 

Australia’s carbon market is rapidly expanding, positioning itself as a major global producer of carbon credits. Recent data from the Clean Energy Regulator shows that 51% of all ACCUs are now by safeguard or safeguard-related entities. Leveraging these volumes could further boost the market.

Rising ACCU Holdings and Issuances

As of Q1 2024, the Australian National Registry of Emissions Units (ANREU) reported a holding of 38.6 million ACCUs. That’s a rise of 2.4 million during the quarter. ANREU issued 3.8 million ACCUs during the same period. This is robust progress towards a record issuance target of 20 million ACCUs for the year.

RELATED: ASX Debuts Environmental Futures Contracts for Carbon Markets 

The number of Safeguard accounts holding ACCUs rose by 11, totaling 54 accounts. Safeguard entities now hold 12 million ACCUs, with a 4.6 million increase in Q1. Many ACCUs are likely held by intermediaries on behalf of these entities, suggesting a higher volume overall.

CME Group’s Peter Keavey, Global Head of Energy and Environmental Products, added that these developments are part of a broader suite of risk management tools designed to help clients meet carbon reduction targets, whether through compliance or voluntary programs.

A Growing Market Infrastructure for Environmental Commodities

CBL will manage futures delivery for positions held to expiration through its Xpansiv Connect post-trade infrastructure. This is linked to 14 prominent carbon and renewable energy registries. The CBL ACCU futures will be listed by and governed under the rules of the New York Mercantile Exchange (NYMEX).

Xpansiv has been instrumental in scaling market infrastructure for environmental commodities like carbon credits globally. The company operates the largest spot exchange for carbon credits and renewable energy certificates, as well as leading platforms for environmental portfolio management. This collaboration with S&P Global and CME further cements its role in shaping the future of energy transition markets.

READ MORE: Record-Breaking Trade in Xpansiv CBL Platform Shakes Up Carbon Credit Markets

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Will AI Drive a Global Copper Shortage? BHP Rings the Alarm

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As artificial intelligence (AI) is taking over industries, its impact on global copper demand is becoming increasingly evident. BHP, the world’s largest mining company, has warned that AI’s growth and clean energy transition could aggravate an already looming copper shortage. With copper’s critical role in powering data centers, EVs, and renewable energy systems, the metal’s future availability is a growing global concern.

BHP Predicts Soaring Copper Demand in The Future

BHP’s chief financial officer Vandita Pant has reported to Financial Times that the company predicts the global demand for copper to soar by 72% by 2050. This clearly shows a rising trend from 30.4 million tons in 2021 to 52.5 million tons annually. She further explained the surge to be driven by the increasing need for copper in electric vehicles (EVs), solar farms, and particularly, data centers powered by AI technologies.

Pant added,

“Today, data centers are less than 1 percent of copper demand, but that is expected to be 6 to 7 percent by 2050.”

Notably, AI applications, which require energy-intensive computing, are expected to increase copper demand by an additional 3.4 million tons each year by 2050. The copper dominates the power transmission and cooling systems that keep these facilities operational. As AI continues to drive the expansion of data centers, its infrastructure will rely heavily on copper, intensifying competition for the red metal.

To sum up, BHP right now sees a temporary weak copper demand but predicts strong long-term potential.

Global Copper Shortage an Imminent Challenge, Reports Financial Times

BHP’s concerns come amidst a broader conversation about the future of copper supply. A copper shortfall is expected in the medium to long term, triggering a race among mining companies to secure access to copper deposits.

Financial Times reported, that earlier this year, BHP failed to acquire Anglo American, a major copper producer, in a bid to strengthen its position in the copper market. Though the $49 billion offer was rejected, BHP continues to invest heavily in copper assets. In July 2024, the company teamed up with Canada’s Lundin Mining to acquire South America-focused Filo Corp. for $3 billion, securing copper-rich assets in Chile and Argentina.

Colin Hamilton, commodities analyst at BMO Capital Markets said,

“Data centers themselves are becoming incrementally less copper intensive, but getting the electricity to them, that is copper intensive”

Despite these efforts, global copper inventories have been declining. In CME warehouses, copper stock fell by 71% between March and July, reaching their lowest levels since 2008. Furthermore, new copper mines aren’t being developed quickly enough to meet rising demand, as it takes nearly more than a decade to actively set up a project. This lag in supply could lead to a significant shortage of copper in the coming decades.

Source: IEA

Is China’s Slowdown Holding Copper Prices Steady?

While the long-term outlook for copper remains robust, the short-term market is facing challenges. This year weak demand from China, the world’s largest consumer of copper, has weighed on prices. Copper is currently trading at around $9,207 per tonne, down 15% from its peak earlier this year. Media reports say that concerns about China’s property sector and slower-than-expected economic growth have contributed to this decline.

Most recently Bloomberg reported,

The latest 3-month closing price for LME copper is $9,515.00, reflecting a 1.22% increase.

Even The Wall Street Bank has projected copper prices to average $10,100 per metric ton in 2025 which is significantly lower than its earlier forecast of $15,000.

Source: Technopedia

However, analysts and mining executives agree that copper’s demand remains solid. The energy transition, driven by renewable energy projects and electrification, will be a key growth driver for copper demand. BHP expects that as the world advances towards its net-zero goals, the demand for copper will certainly spike, especially in developing countries.

READ MORE: Copper Prices Slump Below $9,000: What Does It Mean for Global Growth? 

A Race for Copper in the Age of AI: Who Are the Top Players?

As copper prices hit a two-month high, major mining firms like Anglo American, Southern Copper, Vale, Ero Copper, Rio Tinto (RIO), Antofagasta, Freeport-McMoRan, and Glencore gained the spotlight on the London Stock Exchange. Furthermore, the recent half-point rate cut by the U.S. Federal Reserve has contributed to broader gains in the metals market, making it an exciting time for copper investors.

Source: IEA

READ MORE: The World Needs 194 New Large Copper Mines to Reach Net Zero 

The growing influence of AI and the energy transition is reshaping the global copper market. BHP’s warnings about a potential shortage underscore the importance of securing copper resources for the future. As the demand for AI-driven data centers and clean energy solutions rises, industries are bracing up for the coming copper crunch.

We can see how significant sustainable mining and innovation in resource management have become more critical than ever. Copper, once only made for traditional industries, is now at the forefront of the global energy transition.

Well, the race to secure copper mines is on, with mining giants like BHP positioning themselves to meet the future needs of the tech world. Nonetheless, the question remains: Will the supply of copper keep up with the rapid advancements in AI and the shift toward renewable energy? Let’s wait and watch!

LATEST: The Clean Energy Powerhouses: US Lithium Imports Soar 49% and Argentina’s Copper Ambitions

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Carbon Price Showdown: Poilievre’s ‘Nuclear Winter’ Warning Rattles Canadian Politics

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Conservative Leader Pierre Poilievre set the tone for his party’s fall agenda by targeting the Liberals’ carbon price policy. Poilievre warned of a “nuclear winter” for the economy if the government’s planned carbon price increases take effect. 

Poilievre described a dire scenario, claiming that high taxes would lead to “mass hunger and malnutrition” and force older people to endure frigid conditions just to survive the winter. He further argued that rampant inflation would make it impossible for Canadians to afford basic transportation.

Singh and Trudeau Clash on Climate Strategy

With the fall session of Parliament set to resume, all parties are recalibrating their strategies after NDP Leader Jagmeet Singh ended the agreement that kept Prime Minister Justin Trudeau’s Liberal government in power. Poilievre, maintaining his party’s lead in the polls, is preparing to introduce a non-confidence motion as early as this week. 

However, passing the motion will be a challenge, as the Conservatives would need support from both the NDP and the Bloc Québécois, and neither has shown a willingness to trigger an election.

Jagmeet Singh criticized both the Liberals and the Conservatives for their climate policies. But he avoided clarifying whether an NDP government would maintain the consumer carbon price. 

The administration sets a carbon price of $65 per tonne of CO2 in 2023. This translates to an added cost of 14 cents per liter of gasoline, 10 cents for propane, and $145 per tonne of high-grade coal.

In response, Trudeau accused Singh of succumbing to political pressure from Poilievre. Meanwhile, Poilievre took aim at both leaders of Canada, calling the carbon tax an “existential threat to our economy and our way of life.” He also criticized Singh for failing to commit to bringing down the government despite withdrawing from the previous agreement.

RELATED: Canada Faces 2 Carbon Issues: Shaky Carbon Tax and Missed Emissions Goal

The political stage is set for a heated session, with carbon pricing and economic policy at the forefront of the debate. Poilievre’s push against the carbon price signals a season of political maneuvering, as each party navigates shifting alliances and voter sentiments.

Poilievre’s ‘Nuclear Winter’ Comment Sparks Heated Political Debate

The Canadian political scene further heated up as Liberal House leader Karina Gould criticized Poilievre for his recent comments on carbon pricing. Poilievre warned of a “nuclear winter,” arguing that the federal carbon price would lead to widespread starvation and freezing as people struggle with unaffordable food and heating costs. 

Gould fired back. She called Poilievre a “fraudster” for what she saw as irresponsible rhetoric that ignores Canada’s rebate system intended to offset carbon pricing.

The Canada Carbon Rebate (CCR), previously the Climate Action Incentive Payment (CAIP), is a tax-free benefit aimed at offsetting the federal carbon price for eligible individuals and families. It includes a basic amount plus a supplement for those in small or rural communities. The rebate amount varies by province and household size and is calculated annually based on the expected revenue collected from carbon pricing in each province.

Poilievre-Gould’s fiery exchange comes just as the House of Commons reconvenes, following the summer break and the end of an agreement that had insulated the Liberals from a snap election. Poilievre aims to trigger what he calls a “carbon tax election,” urging the other parties to vote the government down. 

Bloc Québécois Leader Yves-François Blanchet hinted at the possibility of a short-lived parliamentary session, describing the current political climate as “playing chicken with four cars.”

Carbon Price Rebates: Poilievre’s Rejection and Public Misconceptions

The federal carbon price currently adds about 17.6 cents to every liter of gasoline, but quarterly rebates aim to offset these costs for Canadians. 

The chart below shows the federal government’s proposed annual carbon price increases each April 1st.

READ MORE: How Will Canada’s Carbon Price Increase Affect You?

The Parliamentary Budget Office notes that 80% of households in Canada receive more in rebates than they pay in carbon pricing. However, the long-term economic impact, such as potential harm to jobs and wage growth, remains a concern. 

Despite these nuances, Poilievre dismisses the rebate system and criticizes carbon pricing as an “existential threat” to the economy. His comment sparked accusations that he is ignoring expert opinions. 

More than 200 economists have cited carbon pricing as the most efficient way to lower emissions, yet Poilievre pushes forward with his campaign against it.

Political Strategy Amid Carbon Pricing Debate

The Liberals are sharpening their attacks on Poilievre in an attempt to reverse his rise in the polls. Despite the end of the supply and confidence agreement, Gould stated that they are returning to a “normal minority parliament.” That means they’re willing to collaborate with any party to advance legislation. 

Meanwhile, NDP Leader Jagmeet Singh has distanced himself from the consumer carbon price, focusing instead on holding big polluters accountable. The Conservatives plan to bring a non-confidence motion against the government. However, they would need support from both the Bloc and NDP to succeed, which appears uncertain.

The stage is on for a potentially turbulent parliamentary session, with major bills like the online harms act and the NDP-backed pharmacare bill in the legislative pipeline. The political debate over carbon pricing is poised to continue dominating discussions in the House. At the same time, each party maneuvers to address Canadians’ concerns on affordability, climate policy, and economic stability.

READ MORE: Carbon Pricing Surge Sparks Climate Finance Boom with $100B Raise

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Alaska Energy Metals Pioneers A Model of Carbon-Neutral Mining

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Alaska Energy Metals Corporation has announced a pioneering collaboration with the Colorado School of Mines and Virginia Polytechnic Institute (Virginia Tech). This partnership aims to evaluate the carbon sequestration potential of its Eureka nickel deposit at the Nikolai project in Alaska.

The collaboration aims to evaluate how much carbon dioxide (CO2) can be captured and stored by the project while simultaneously extracting critical minerals for the energy transition. These include nickel, copper, cobalt, and platinum group metals (PGMs).

Greg Beischer, President and CEO of Alaska Energy Metals, emphasized the importance of sustainable mining, saying that:

“U.S. domestic mining is essential for both the electrical energy expansion and U.S. national security. For these reasons, we have intentionally begun to study and assess the use of modern technological innovations like ultramafic mine tailings carbonation at the early stages of the development phase of our project.” 

Ultramafic Rocks: Nature’s Carbon Vaults

The Eureka deposit contains more than 8 billion pounds of nickel, embedded in ultramafic rocks that are rich in magnesium. These rocks have a unique capability: they naturally react with atmospheric carbon to form carbonate minerals, which trap CO2 for a long time. This natural process, known as carbon sequestration, locks CO2 in solid rock, providing a long-term solution to storing greenhouse gasses.

Typically, ultramafic rocks remain buried beneath the Earth’s surface, limiting their interaction with carbon dioxide. However, mining operations provide an opportunity to bring these rocks to the surface. Crushing the rock to extract valuable minerals exposes more surface area to the atmosphere, creating ideal conditions for carbon sequestration.

Cutting-Edge Research and Technology

In 2023, the Colorado School of Mines received a grant from the U.S. Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) to develop new technologies for assessing the carbon-absorbing potential of ultramafic deposits. These deposits are enriched with essential metals like nickel, copper, and PGMs, which are vital for the energy transition. 

The program focuses on using advanced scanning technologies and machine learning algorithms to analyze the potential of these rocks to capture carbon. These technologies are now being applied to Alaska Energy Metals’ Nikolai project. The goal is to better understand how the Eureka deposit can help mitigate climate change by sequestering carbon.

The research will be essential in understanding the environmental benefits of the mining operation and its potential economic advantages. The partnership between Alaska Energy Metals, Colorado School of Mines, and Virginia Tech aims to deliver these specific outcomes:

Eureka Deposit: A World-Class Resource

The Eureka deposit in Nikolai project contains a vast resource of potentially carbon-absorbing ultramafic rock. According to calculations, the deposit holds:

Indicated resource: 813 million metric tons averaging 0.22% nickel (3.88 billion pounds), 0.07% copper (1.28 billion pounds), 0.02% cobalt (303 million pounds), and 0.15 grams per metric ton palladium-platinum-gold (4 million ounces).
Inferred resource: 896 million metric tons averaging 0.21% nickel (4.23 billion pounds), 0.05% copper (1.04 billion pounds), 0.02% cobalt (327 million pounds), and 0.12 g/t palladium-platinum-gold (1.3 million ounces).

These resources represent a significant source of metals critical to renewable energy technologies and an enormous opportunity for carbon sequestration.

Key Research Objectives

The first phase of the study will focus on quantifying and characterizing the magnesium-rich minerals within the Eureka deposit. Key minerals such as brucite, olivine, pyroxene, and anorthite will be examined for their carbon-absorbing potential. 

Previous research from the University of British Columbia has identified brucite as a particularly effective mineral for carbon sequestration.

Once these magnesium minerals have been thoroughly studied, researchers will use reactive transport modeling to simulate how much carbon can be sequestered into one ton of mining tailings. This model will provide a clear framework for estimating the carbon footprint reduction associated with nickel production at Eureka.

Pioneering Sustainable Mining for National Security and Energy Independence

The Eureka deposit, with its potential to supply energy-related metals, represents a significant opportunity for the U.S. to reduce its reliance on foreign sources of critical minerals. 

The study findings will be instrumental in determining how much carbon can be captured by the mine’s tailings and wastes. These findings will provide a roadmap for implementing carbon capture technologies in future mining operations. As such, it can potentially help reduce the carbon footprint of nickel and other critical metal production.

Furthermore, this research may reveal economic benefits associated with carbon sequestration, such as the possibility of generating carbon credits. These credits can be sold to companies seeking to offset their emissions.

READ MORE: Generating Carbon Credits from Mining Waste

As governments and industries seek ways to reduce carbon emissions, projects like Eureka can play a crucial role in achieving net zero goals.

Alaska Energy Metals’ collaboration with the Colorado School of Mines and Virginia Tech represents a forward-thinking approach to mining in the 21st century. By integrating carbon sequestration into the mining process, AEMC is positioning itself as a leader in sustainable resource extraction. Its Eureka deposit could serve as a model for future carbon-neutral mining projects. 

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Google to Buy 50,000 MTs of Nature-Based Carbon Credits from Brazil Startup Mombak

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Google has taken a significant step in its sustainability efforts with a forest carbon removal deal from a Brazilian startup Mombak. The tech giant aims to buy 50,000 metric tons of carbon credits by 2030 to bolster its fight against climate change.

Google Embraces Reforestation: A New Step in Carbon Removal Strategy

Last year, Microsoft committed to buying up to 1.5 million credits from Mombak, highlighting a growing trend of companies incorporating nature-based carbon removal into their sustainability strategies.

Dan Harburg, Mombak’s Chief Technology Officer, remarked,

“As we scale our operations, this collaboration with Google is a major milestone in our mission to become the world’s largest and most impactful carbon removal project developer. We look forward to working with Google and other leading organizations to further develop the field of nature-based carbon removal, ensuring that our projects continue to meet the highest standards for climate impact, transparency, and community engagement.”

Notably, Google, Microsoft, Meta, and Salesforce are co-founders of the Symbiosis Coalition. This collective has committed to buying 20 million tons of nature-based carbon removal credits by 2030.

Previously, Google had invested in carbon capture and storage (CCS) carbon credits. However, this new deal signals a shift toward nature-based solutions like reforestation thereby joining other biggies Microsoft and Meta to meet their climate goals. Earlier this week, Meta also announced purchasing up to 3.9 million carbon offset credits from Brazilian bank BTG Pactual’s forestry division.

Randy Spock, Google’s Carbon Removal Lead, said:

“We’re pleased to partner with Mombak on our first purchase of forestry-based carbon removal credits, with an eye to solving a central challenge of this field: ensuring certainty of climate impact. Looking ahead, we’re excited to build on this deal via our participation in the Symbiosis Coalition.”

MUST READ: Microsoft’s 234,000 Carbon Credit Purchase Restores Mexican Rainforest

Aiming for Net-Zero by 2030

To achieve its goal, the company aims to cut 50% of its combined Scope 1, Scope 2 (market-based), and Scope 3 absolute emissions by 2030, using 2019 as the baseline. To offset remaining emissions, it plans to invest in both nature-based and technology-driven carbon removal solutions.

Google’s sustainability report highlights its commitment to the Science Based Targets initiative (SBTi) to validate this highly ambitious emissions reduction target. The company’s 2023 progress indicates:

Emissions Reductions: Total GHG emissions reached 14.3 million tCO₂e, reflecting a 48% increase compared to 2019.
Residual Emissions: The company signed offtake agreements for approximately 62,500 tCO₂e of removal credits.

Source: Google

Can Mombak Solve Google’s Carbon Problem?

Mombak is on a mission to become the world’s largest carbon removal company, focusing on large-scale reforestation and carbon sequestration from the atmosphere. The company mainly focuses on native, biodiverse reforestation projects in the Amazon rainforest.

They restore degraded pastureland with native trees and assist regeneration to reduce carbon, boost biodiversity, and improve ecosystems. Apart from environmental benefits, their projects impact local communities by improving water resources, creating jobs, and uplifting their social standards.

Private-sector involvement in carbon reduction drives Mombak’s high-impact reforestation. Significantly, the startup’s innovative approach has caught the attention of global corporations like Microsoft and now of course Google. They use advanced technology and data to guarantee the highest quality carbon removal credits in the market while minimizing carbon leakage.

Thus, it’s pretty much evident that Mombak’s robust plan can potentially help Google achieve its carbon removal goals while restoring the vital ecosystem of the planet.

This is why Harburg noted that Google’s involvement sends a strong vote of confidence for both Mombak and the carbon removal sector as a whole, describing it as a very positive signal. He also hopes that the growing market for nature-based carbon removal will trigger more deals in the future.

Although Mombak and Google did not disclose the financial details of the agreement, Mombak’s credits sold for more than $50 per ton when McLaren Racing purchased in 2023. This pricing sets a potential benchmark for the future value of nature-based credits, especially as demand grows among companies eager to offset their emissions.

The Growing Demand for Nature-Based Carbon Credits

Carbon offsets help companies reduce their environmental impact by funding projects that remove greenhouse gases. Each carbon credit represents one ton of CO2 removed from the atmosphere. By purchasing these credits, companies like Google, Microsoft, and Meta aim to offset their emissions while supporting global sustainability initiatives.

Speaking about Amazon rainforests, they absorb vast amounts of carbon and are crucial to global climate efforts. Google’s investment in nature-based solutions or forest carbon credits through reforestation efforts in the Amazon with startups like Mombak, offers immediate benefits. By supporting Mombak, Google not only offsets emissions but also aids in preserving this essential ecosystem.

However, there’s a catch. As more companies enter the carbon credit market, transparency and accountability will be key to ensuring these projects deliver measurable results. Many environmentalists and sustainability experts predict that the future of carbon offsets may shift towards more personalized, localized solutions.

On the flip side, the rising demand for carbon offsets is subjected to substantial criticism. Groups like Greenpeace argue that offsets can allow companies to delay direct actions like adopting renewable energy. Critics claim relying on credits could slow the transition to cleaner technologies and energy efficiency.

Google’s Strategy to Strengthen its Carbon Markets

Source: Google

Google boats of investing over $6 million to enhance carbon markets, digitize infrastructure, and establish standards for high-quality carbon credits. Recently, they committed $35 million to carbon removal credits, becoming the first major company to support the US DOE’s push to build a robust and credible carbon removal market.

Google’s partnership with Mombak marks a critical step in advancing carbon removal strategies while showcasing trust in nature-based carbon credits.

LATEST: Google Strikes $100/ton Deal with US DAC Startup Holocene 

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Can the U.S. Break China’s Grip on Rare Earths?

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The United States’ goal to break China’s grip on the global supply of rare earth minerals faces numerous hurdles. In a remote field outside Houston, Texas, plans are in place for a rare earth processing plant by Lynas Rare Earths, an Australian company. 

Despite its potential significance, this plant is just one step in the US’s larger, multibillion-dollar effort to challenge China’s monopoly, which controls roughly 70% of the world’s rare earth output and over 90% of its refining capacity.

US Investment: Slow Progress in a High-Stakes Race

Rare earth elements are essential components in various high-tech applications like smartphones, wind turbines, and military equipment.

The Texas plant, set to be built by Lynas, is part of a growing US initiative to reduce reliance on China for rare earths. For the 149-acre (60 hectares) site, Lynas has secured more than $300 million in contracts from the Pentagon. If all goes according to plan, this facility will be operational within 2 years, contributing significantly to the US’s rare earth processing capacity.

This plant represents just a fraction of the billions of dollars in subsidies and loans pledged by the US and its allies to foster domestic rare earth production. The American government has increasingly viewed the development of a domestic rare earths supply chain as a matter of national security. It aims to break China’s near-total control over refining and production.

RELATED STORY: China’s Grip On Rare Earth Elements Loosens

However, while the intention is clear, market conditions present a significant challenge. Since 2022, the global prices for rare earth elements have slumped. This is primarily due to an increase in supply from China and a slowdown in its domestic economy. 

This decline has raised doubts about the long-term financial viability of many new projects outside China. Thus, the prospect of establishing a robust, independent supply chain remains uncertain.

Market Volatility Threatens New Rare Earth Ventures

Despite global demand for rare earth elements, their extraction and processing remain fraught with economic and environmental challenges. Rare earths are not truly “rare” but are seldom found in concentrations high enough to justify environmentally intensive mining operations. 

There are 17 chemically related elements in this category, each with properties critical to manufacturing electronics, renewable energy components, and defense technology.

Current market conditions pose a threat to new entrants. According to MP Materials Corp., which operates the only rare earth mine in the US and is building a factory to manufacture magnets in Texas, CEO James Litinsky:

“These market conditions have now destroyed most of the hoped-for projects from just a couple of years back.” 

However, even with domestic mining in place, refining and processing are still predominantly under Chinese control, underscoring the dominance of China’s supply chain.

In the face of these market challenges, Laura Taylor-Kale, the US Assistant Secretary of Defense for Industrial Base Policy, promised earlier this year that the US would establish a “sustainable mine-to-magnet supply chain capable of supporting all US defense requirements by 2027.” 

She further highlighted that the Lynas project in Texas could produce around 25% of the world’s supply of rare earth oxides once operational.

China’s Dominance: Strategic Price Manipulation at Play

China’s control over the rare earth market stems from its aggressive mining and refining activities, supported by government policies. Per Katusa Research report, the country merged its 5 largest producers into a single entity, further tightening its grip on the world’s rare earth supply.

The Chinese Ministry of Natural Resources, along with its industry ministry, raised mining quotas for rare earths in 2023 and 2024, driving down global prices and applying further pressure on competing projects. The result has been a market environment in which many rare earth mines struggle to break even, forcing early-stage projects into delays and funding shortfalls.

The current situation has echoes of past geopolitical maneuvers. In 2011, China temporarily cut off rare earth supplies to Japan over a territorial dispute. This move pushed Japan to seek diversification in its rare earths supply chain, eventually investing in Lynas. The event shows how geopolitics and market control can intersect in ways that significantly impact global supply chains.

Despite securing substantial investments, some rare earth projects outside China are already encountering setbacks. Arafura Rare Earths is one such company. It received an A$840 million (approximately $560 million) loan from the Australian government and signed agreements with two Korean auto firms in 2022 to supply rare earths from its Nolans project in Australia. 

However, construction has yet to begin, largely due to funding gaps. CEO Darryl Cuzzubbo mentioned that while debt and approvals are in place, the “one missing piece is the equity.” The company aims to secure half of the required equity from cornerstone investors before turning to the broader market for the remaining funds. Cuzzubbo hopes to finalize the equity by the end of the year to start construction in early 2025.

The Key to Rare Earth Supply Chain Independence

Japan’s experience offers critical insights into the complexities of establishing an independent rare earth supply chain. Following China’s 2011 export restrictions, Japan invested $250 million in Lynas, allowing the company to start trial production two years later. 

However, it took Lynas until 2018 to become profitable, highlighting the extended timeline and considerable financial backing required for such projects.

Lynas CEO Amanda Lacaze emphasized the need for “patient capital” when venturing into the rare earths market. This is particularly true for projects breaking new ground. Recent delays with the Texas facility due to issues with wastewater permits highlights the obstacles facing new rare earth projects in the West.

The US’s push to build a competitive rare earths supply chain faces headwinds in both market conditions and geopolitical maneuvering. As the global rare earth prices slump and China’s strategic control persist, the development of a robust, independent supply chain remains an uncertain endeavor. The Western world’s goal of building a competitive supply chain will require not just investment but strategic patience and international cooperation.

READ MORE: Magnate Gina Rinehart Moves into Rare Earth Metals

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Microsoft, BlackRock, Global Infrastructure Partners, and MGX Form $100B AI Infrastructure Partnership

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A groundbreaking initiative is set to reshape the AI landscape with huge funding to develop the infrastructure needed for the industry’s rapid growth. Finance and technology behemoths Microsoft, BlackRock, Global Infrastructure Partners (GIP), and MGX are forming the Global AI Infrastructure Investment Partnership (GAIIP) to unlock up to $100 billion in investments to propel AI infrastructure, mainly in the U.S.

Unlocking the $100B Global AI Infrastructure Investment Partnership

Elaborately speaking, the joint venture aims to address the growing demand for AI by expanding data centers and creating new energy sources. The press release explains that initially, they will unlock $30 billion in private equity capital, eventually mobilizing up to $100 billion with the inclusion of debt financing.

Most of these infrastructure projects will focus on the U.S. but a fraction of investment might also extend to U.S. partner countries. This is because AI is not just confined to the U.S., it’s everywhere worldwide.

Notably, the chip giant NVIDIA will also play a significant role in this JV. They will contribute their expertise in AI data centers and factories, helping GAIIP optimize AI supply chains and improve energy sourcing for industry and customers alike.

Source: McKinsey

As said before this collaboration between BlackRock, GIP, MGX, and Microsoft is a perfect combination of financial strength with technological expertise. By integrating investments in infrastructure, technology, and energy, GAIIP plans to scale AI facilities efficiently while promoting decarbonization.

Furthermore, the partnership will be an open platform where a wide variety of companies can collaborate freely. With no restrictions, it invites businesses from different sectors to join in and contribute, making it easier for everyone to be part of this initiative.

Larry Fink, Chairman and CEO of BlackRock.

“Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi-trillion-dollar long-term investment opportunity. Data centers are the bedrock of the digital economy, and these investments will help power economic growth, create jobs, and drive AI technology innovation.”

Microsoft’s AI Ambitions: A Major Win for the Joint Venture

The entire world is aware of Microsoft’s AI endeavors. It’s just last year, the company announced the massive multibillion-dollar investment in ChatGPT creator OpenAI. Consequently, this investment in the GAIIP yet again proves their motive to revolutionize businesses and products with AI-driven platforms and tools. However, on a broader scale, they are committed to using AI responsibly and empowering people and organizations worldwide to achieve more with technology.

Satya Nadella, Chairman and CEO of Microsoft remarked,

“We are committed to ensuring AI helps advance innovation and drives growth across every sector of the economy. The Global AI Infrastructure Investment Partnership will help us deliver on this vision, as we bring together financial and industry leaders to build the infrastructure of the future and power it in a sustainable way.”

READ MORE: Microsoft’s 234,000 Carbon Credit Purchase Restores Mexican Rainforest

Abu Dhabi’s MGX Set to Transform AI and Tech Industries Globally

Abu Dhabi-based MGX is a new tech investment firm that boosts growth and use of AI-driven technologies and semiconductors. Created by the Artificial Intelligence and Advanced Technology Council (AIATC), MGX aims to become one of the largest global funds dedicated entirely to AI, with plans to manage over $100 billion in assets. This move empowers Abu Dhabi’s strong history of investing in data centers, computing power, and essential infrastructure, marking a significant step in the region’s push toward AI leadership.

Ahmed Yahia Al Idrissi, CEO of MGX expressed himself on the significance of AI in this promising partnership. He said,

“Building the necessary infrastructure required to advance and accelerate the adoption of AI will reshape and revitalize almost every aspect of how we live,” said  “Similar to our transportation infrastructure, new data centers and power sources will enable growth and commerce in the future innovation economy.”

Source: hai.stanford.edu

BlackRock’s Acquisition of GIP Set to Revolutionize AI and Data Center Investments

One of the biggest asset managers and most trusted leaders in financial technology, BlackRock makes investing simpler and more affordable. GIP is also a top investor focused on infrastructure. They have expertise in owning and managing large assets in energy, transportation, digital infrastructure, and water management.

On September 13, BlackRock announced plans to finalize its acquisition of GIP by October 1, 2024, whose regulatory approvals are still pending. This news comes along as the global economy undergoes shifts, creating opportunities for private capital to partner with governments and businesses on infrastructure projects. BlackRock would leverage its corporate relationships, while GIP would bring infrastructure expertise to drive investments in AI and data centers.

Bayo Ogunlesi, Chairman and CEO of Global Infrastructure Partners assured that,

“There is a clear need to mobilize significant amounts of private capital to fund investments in essential infrastructure. One manifestation of this is the capital required to support the development of AI. We are highly confident that the combined capabilities of our partnership will help accelerate the pace of investments in AI-related infrastructure.”

All in all, this joint venture stands as one of the most significant AI infrastructure funding efforts to date.

FURTHER READING: Altman-Backed Startup Reveals Solar-Powered Solution for AI and Data Centers 

The post Microsoft, BlackRock, Global Infrastructure Partners, and MGX Form $100B AI Infrastructure Partnership appeared first on Carbon Credits.

What’s the Worth of Meta’s Massive Carbon Credit Deal with BTG Pactual?

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Meta, the owner of Facebook and Instagram, has entered a significant carbon offset agreement with Brazilian investment bank BTG Pactual’s forestry arm, Timberland Investment Group (TIG). The contract involves the purchase of up to 3.9 million carbon credits through 2038. 

The deal is Meta’s largest carbon removal initiative from a single project. Though the financial terms of the deal were not disclosed, the scope suggests a considerable investment. 

Meta’s Mega Move: Investing in Carbon Offsets

According to Allied Offsets, the average price of forestry carbon offsets was $4.22 per credit last week. Based on this pricing, the deal could be valued at around $16 million. The agreement allows Meta to purchase 1.3 million carbon credits initially, with options for an additional 2.6 million credits over the contract’s duration.

Each carbon credit represents a reduction of one metric ton of carbon dioxide emissions, offering companies a way to offset their carbon footprint. For Meta, this move aligns with its commitment to achieve net-zero emissions across its entire value chain by 2030. This poses a major challenge, as 99% of the company’s carbon footprint in 2022 came from Scope 3 emissions.

The tech giant’s Scope 3 emissions, also known as value chain emissions, are rising due to the growing global demand for its services. And one of the key strategies that Meta employs to tackle this emissions source is carbon removal solutions. 

Meta has supported various nature-based carbon removal projects worldwide since 2021. These initiatives include boosting forest carbon stock in community ejido forests in Oaxaca and safeguarding forests in California.

Now the company is investing millions of dollars again to protect forestland in Latin America through forest carbon offset projects.

How BTG Pactual’s Reforestation Powers Meta’s Carbon Goals

BTG Pactual TIG’s forest restoration projects across Latin America will generate the carbon credits that Meta will purchase. TIG has planted more than 7 million seedlings as part of its reforestation efforts, contributing to carbon capture and emission reduction in the region. This deal underscores the growing focus on forestry-based carbon offsets as a method for mitigating climate change.  

Another big tech company, Microsoft, has also signed a carbon removal credit agreement with BTG Pactual TIG in June. Under their deal, Microsoft will receive up to 8 million carbon credits from TIG, making it the biggest carbon removal transaction ever. 

RELATED: Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

These deals highlight a trend of major tech companies investing in large-scale carbon offset projects despite skepticism in the market.

Demand for Carbon Offsets: Challenges and Market Skepticism

While Meta’s and Microsoft’s significant offset purchases illustrate ongoing investment in climate mitigation efforts, the overall demand for carbon offsets has faced hurdles. 

Last year, demand stalled as companies like Nestlé and Gucci reduced their credit purchases. This downturn is partially attributed to concerns over the effectiveness of offsets in genuinely reducing emissions. 

Critics argue that offsetting can sometimes serve as a loophole. This allows companies to continue emitting while relying on external projects for carbon reduction.

In 2023, entities retired approximately 180 million MtCO2e in carbon offsets to counterbalance their emissions as shown below.

The debate over carbon offsets has intensified as efforts grow to normalize their use in climate finance. Recently, the Science Based Targets initiative (SBTi) endorsed the use of credits for offsetting supply chain emissions, sparking criticism. 

READ MORE: Will This Be The End of Carbon Offsets?

Opponents argue that this move undermines emission reduction goals by allowing companies to offset their largest emissions sources instead of directly eliminating them.

Despite these market challenges, Meta’s long-term agreement with BTG Pactual reflects its strategy to support credible offset projects that contribute to meaningful carbon removal. 

Tech Giants Commitment to Forest Carbon Credits

On the other side of the debate, industry reports indicate that companies, especially large ones using carbon credits, are more effective in reducing their emissions. Data from Ecosystem Marketplace research reveals several key findings about the use of voluntary carbon credits. The results show that companies supporting carbon credits are:

1.8 times more likely to actively decarbonize year-over-year,
1.3 times more likely to have supplier engagement strategies and involve employees and customers in climate action, 
3.4 times more likely to have approved science-based climate targets, 
1.2 times more likely to have board oversight of their climate transition plans,
3 times more likely to include Scope 3 emissions in their climate targets, despite the control challenges, and
Investing 3 times more in emission reduction within their value chain.

Meta’s 3.9 million carbon credit deal with BTG Pactual signals confidence in forestry-based carbon offset projects. It shows how large companies are still willing to support this carbon market initiative to help mitigate climate change.

SEE MORE: Meta’s Bold Bet on Geothermal Energy and Carbon Footprint Reduction

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Study: Fortune 500 Companies Using Carbon Credits Are Reducing Their Emissions Faster

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Companies are key players in achieving global net zero goals by reducing emissions and adopting sustainable practices. With increasing pressure to lower their environmental impact, businesses are setting bold carbon reduction targets with the help of carbon credits, science-based targets, and innovative technologies.

Growth in Net Zero Targets

According to Climate Impact Partners annual report, net zero commitments among Fortune Global 500 companies have grown by 6%. This marks a resurgence after stagnation between 2022 and 2023, where only 2% of growth was recorded. 

Currently, almost half of the Fortune 500 companies have set net zero goals, a significant leap from 2020, when only 8% of companies had such targets.

The Science Based Target Initiative’s (SBTi) Net Zero Standard has gained popularity among companies aiming to make credible net zero claims. However, its stringent requirements present challenges for many. 

RELATED: How Effective Are Carbon Credits in Corporate Net Zero? SBTi Speaks

Notably, only 17% of Fortune Global 500 companies are using the SBTi framework, down from 18% the previous year. This dip suggests that while frameworks are available to guide companies, compliance with these standards can be difficult.

Last year, 15% of companies committed to setting SBTi-aligned net zero targets. Since then, 4% have had their targets approved, while 3% were removed. The rest are still in the process of getting their targets validated, which must be done within 24 months after committing.

About 35% of companies have established near-term Science-Based Targets (SBTs), a figure that has remained flat compared to the previous year. However, regional differences are evident. 

In Europe, the percentage of companies with near-term targets decreased from 64% to 60%, while in North America, the figure rose from 38% to 43%. New SBT commitments from Fortune Global 500 companies in Europe and Asia have been recorded since 2024. Of them, 11 and 6 companies, respectively, commit to these targets.

Carbon Credits in Climate Action Plans

Carbon credits are playing an increasingly central role in climate action plans, per the report findings. Only 2% of companies have explicitly ruled out the use of carbon credits. 

Interestingly, companies that embrace carbon credits are 2x as likely to have near-term Science-Based Targets and 3x as likely to set net zero targets covering their entire value chain.

Contrary to criticism that carbon credits allow companies to delay internal emission reductions, research shows that companies purchasing credits are actually reducing their emissions faster. 

Companies that have already achieved or plan to achieve carbon neutrality by 2030 are nearly twice as likely to have near-term Science-Based commitments.

Carbon Neutrality Progress and Regional Differences

The percentage of companies achieving carbon neutrality or planning to do so by 2030 has remained stable. Currently, 8% of companies are carbon neutral, while 9% aim for neutrality by 2030, and 17% by 2050. 

In total, 34% of companies mention some form of carbon footprint compensation, with terms like “carbon neutral,” “climate neutral,” and “100% offset” frequently used.

There are notable regional differences in carbon neutrality targets as highlighted in the study. North American companies with targets set for 2050 increased from 30% to 32%. Conversely, European companies’ targets decreased from 59% to 51%. 

Despite these targets, companies seem to be toning down their communication around carbon neutrality, with only 7% of companies mentioning their carbon-neutral achievements in their latest sustainability reports. This shift may be in response to rising regulatory scrutiny, particularly in the European Union, where carbon-neutral claims on consumer-facing products may be banned by 2026 as part of the Green Claims Directive.

Challenges in Reducing Scope 3 Emissions

Scope 3 emissions, which account for about 90% of most companies’ total emissions, remain one of the most challenging aspects of corporate climate action. These emissions are typically beyond a company’s direct control, making it difficult to meet value chain reduction targets. 

New initiatives, such as the Voluntary Carbon Markets Integrity Initiative’s (VCMI) Scope 3 Flexibility Claim, have emerged to address these challenges. At the same time, the SBTi is considering revising its Scope 3 abatement rules. However, its recent update clarified that carbon credits cannot be used to meet the 90% Scope 3 reduction requirement.

The debate around Scope 3 emissions has also led to discussions about Beyond Value Chain Mitigation (BVCM), which encourages companies to purchase carbon credits for emissions beyond their immediate control.

The Future of Corporate Climate Action

As corporate climate action evolves, companies are balancing internal reductions with the use of carbon credits to meet both short- and long-term net zero targets. By purchasing carbon credits and taking responsibility for their emissions annually, companies can maintain clearer communication with stakeholders and foster internal buy-in for sustained climate efforts.

However, the increasing regulatory scrutiny, especially in Europe, could force companies to refine their climate messaging and strategies. These companies have to ensure that their actions align with credible frameworks to avoid greenwashing accusations. 

SEE MORE: Climate Clash: SEC’s Climate Disclosure Rule Faces Legal Showdown

The path to net zero remains complex, with regional, regulatory, and operational challenges. But by maintaining transparent and consistent climate action, companies can ensure long-term success in their carbon reduction and sustainability goals.

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