VCM Demand Surge: 147 Million Credits in 2024 Retired Amid Tightening Supply

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VCM Demand Surge, 147 Million Credits in 2024 Retired Amid Tightening Supply

A new report from Viridios AI, a provider of carbon credit pricing and data, offers valuable insights into the current landscape of the voluntary carbon market (VCM). It shows the VCM experienced relatively low trading activity, with notable fluctuations in the prices of specific projects.

However, year-to-date retirements in 2024 reveal strong demand for carbon credits and they’ve exceeded those in the same period in 2023. We highlight the key insights below that may have a huge impact on the VCM’s future.

Demand Outpaces Supply With Record Carbon Credit Retirements

Viridios AI used data from the four major carbon registries in generating the graphs:

  • Verra,
  • Gold Standard,
  • American Carbon Registry, and
  • Climate Action Reserve.

As of now, 2024 year-to-date retirements have surpassed those in the same period in 2023, with a remarkable 147 million credits retired from the largest registries. 

carbon credit retirements cumulative per month Viridios AI

quarterly carbon credit retirements Viridios AI
Charts from Viridios AI

As seen in the first chart above, monthly cumulative carbon credit retirements keep on growing, with the recent month surpassing both the 2022 and 2023 results. Similarly, quarterly credit retirements in 2024 (second chart) exceeded those in the same period last year. 

This trend highlights a growing commitment among companies and organizations to offset their carbon footprints. It also reflects a robust demand for carbon credits in the face of increasing regulatory pressures and climate goals.

In contrast, the market shows signs of shifting from oversupply toward a tightening of inventory with a slowing growth rate. 

The graph reveals that monthly cumulative credit issuances, or credit supply, in 2024 are still growing. However, the amount (in metric tonnes) of issuances this year has significantly dropped compared to last year and even so since 2022. 

monthly Cumulative carbon Credits Issuances Viridios AI
Chart from Viridios AI

The quarterly carbon credit supply paints a different picture. While Quarters 1 and 2 have seen lower issuances in 2024 versus 2023, Q3 experienced much higher supply, with over 10 million metric tonnes compared to the same period last year. 

Quarterly Credit Issuances Viridios AI
Chart from Viridios AI

In a separate analysis, overall credit inventory has risen, but the rate of increase has slowed significantly—from 34% in 2021 to 8% in 2024 so far. 

VCM issuances, retirements and inventory growth Rich Gilmore
Source: Rich Gilmore (Carbon Growth Partners)

These changes point to a narrowing supply-demand market gap, especially as we approach the typical Q4 surge in voluntary carbon credit retirements. 

Credit Supply Challenges Loom

Supply issues are prominent, with REDD+ credit (projects including efforts to avoid deforestation and degradation) volumes declining. REDD+ credit volumes could face reductions exceeding 60% due to new methodologies like VM0048, making some projects financially unfeasible. 

Viridios AI data further suggests that the VCM experienced relatively low trading activity, with notable fluctuations in the prices of certain carbon projects.

The report shows that REDD+ credit prices in all regions, both for vintages 2018 and 2022, have been falling. The biggest retiree of REDD+ carbon credits for the last 30 days is the French energy major Engie SA. The company retired over 907 thousand metric tonnes of these credits from the Congo REDD+ project.

REDD+ carbon credit price
Chart from Viridios AI

Alternative sources, such as cookstove projects, may bridge part of the supply gap but also at reduced volumes. These projects lower carbon emissions through efficient cookstoves that release fewer pollutants and use less biomass. 

Viridios AI report reveals that prices for cookstove carbon credits are increasing in Latin America and Southeast Asia regions. On the other hand, prices in Africa for these projects have been dropping in all vintages (2018-2022). 

cookstove carbon credits price

Carbon Price Tension Ahead

The Viridios AI report on the VCM presents a complex picture of the shifting supply and demand landscape for carbon credits, highlighting trends that are likely to impact future pricing.

The key takeaway is a narrowing supply-demand gap as credit issuances slow, while retirements—reflecting demand—continue to surge. This dynamic has implications for the price stability of specific carbon credits, like those tied to REDD+ and cookstove projects.

The voluntary carbon market is increasingly used by companies to offset their emissions. However, with current low carbon credit prices discouraging new investments, the market’s capacity to meet rising demand may be limited. And with a continued strong retirement rate, this could drive prices up as supply struggles to keep pace, especially for high-quality carbon credits.

The upcoming discussions and decisions at COP29 will likely play a pivotal role in shaping the future of carbon markets, especially concerning the integration of REDD+ initiatives. Stakeholders will be watching closely as they navigate the evolving carbon market.

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Canada’s $16.5 Billion Bet on Carbon Capture: Could It Cut Oil Sands Emissions?

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Canada’s $16.5 Billion Bet on Carbon Capture, Could It Cut Oil Sands Emissions

A group of Canada’s largest oil sands companies, the Pathways Alliance, is in active discussions with Canada Growth Fund (CGF), the federal government’s $15-billion green investment arm, to secure backing for a substantial carbon capture and storage (CCS) project in northern Alberta. 

CCS technology is seen as one of the most effective solutions to reduce emissions in high-polluting sectors like oil, gas, and cement. Canada views this carbon management approach as essential for achieving its net-zero emissions goals.

Carbon Capture Enters the Big Leagues But Price Uncertainty Raises Concerns

The country currently operates several CCS projects that have stored around 44 million tonnes of CO₂ since 2000. 

The federal plan calls for tripling national CCS capacity by 2030 to meet its carbon emission reduction targets. This ambitious goal would require adding new facilities capable of capturing 15 million tonnes of CO₂ annually.

how carbon capture and storage works
Image from Congressional Budget Office.Gov

The Pathways Alliance project would include a $16.5-billion network for capturing and storing CO₂ emissions from over a dozen oil sands facilities. The captured CO₂ will be transported to a central hub in Cold Lake, Alberta. Once operational, this network would permanently store the captured CO₂ deep underground, supporting efforts to reduce emissions across Alberta’s oil sands industry.

This is a major step in decarbonization efforts for Canada’s oil and gas sector. However, oil sands executives remain wary of the potential financial risks tied to the future price of carbon. 

Adam Waterous, executive chairman of Strathcona Resources, emphasized the “stroke-of-the-pen” risk, a term used to describe the industry’s fear that regulatory changes or policy reversals, such as a shift in the carbon tax, could drastically impact the value of carbon credits.

Waterous, whose company is the first in the sector to strike a CCS deal with CGF, suggested that industry leaders are cautious about committing capital to projects that could ultimately result in stranded assets if carbon prices don’t stabilize.

Moreover, Waterous foresees a significant need for sequestered carbon from technology firms looking to offset emissions. In particular, a recent carbon capture deal between Microsoft and Occidental Petroleum, aimed at reducing data center emissions.

The Role of Carbon Contracts for Difference (CCfD)

To address industry apprehensions, experts recommend using Carbon Contracts for Difference (CCfD). It offers a guaranteed floor price for sequestered carbon. CCfDs help “de-risk” investments in emissions reduction technology by providing more stable pricing. 

They argue it could be a decisive factor in encouraging the Pathways Alliance and other companies to pursue costly CCS projects. 

Canada Growth Fund was partially designed to deploy tools like CCfDs to jumpstart green investments. However, it has not yet offered these to oil and gas producers, who are also seeking loan support for carbon capture technology.

The only oil and gas-related agreement involving CCfDs that CGF has reached thus far is with Entropy, a clean-tech company owned by Advantage Energy. The deal allows Entropy to sell carbon credits with an initial value of up to 185,000 tonnes at $86.50 per tonne. 

In contrast, oil producers seeking to meet compliance obligations through carbon credits have been unable to secure similar agreements with CGF, leaving a gap in support for some of the industry’s largest players.

World’s Largest CCS Project by Pathways Alliance

The Pathways Alliance comprises six major oil sands companies:

  1. Canadian Natural Resources,
  2. Suncor Energy,
  3. Cenovus Energy,
  4. Imperial Oil,
  5. MEG Energy, and
  6. ConocoPhillips Canada. 

If successful, their carbon capture and storage network would be the world’s largest and a landmark in global CCS projects. The alliance is eager to collaborate with Ottawa, recognizing the role government backing plays in ensuring the viability of large-scale CCS ventures. 

Kendall Dilling, president of the Pathways Alliance, expressed optimism over Ottawa’s commitment to de-risking industry investments, stating that they “look forward to continued engagement with the government.”

Other policy experts echoed the sentiment that any successful deal would depend on assurance that the operating costs for carbon capture and storage infrastructure will be viable in the long term. This happens if carbon pricing remains stable. 

Carbon Pricing: A Make-or-Break Factor

The fate of the Pathways Alliance’s CCS project will hinge on the development of carbon pricing policies and market demand. The recent surge in carbon credit retirements, representing demand, highlights a potential future trend that could significantly impact carbon prices. 

Remarkably, Rich Gilmore, CEO of Carbon Growth Partners, stated that although retirements have fluctuated in the past, 2024 looks set to hit a record high. He shared on LinkedIn some of his interesting insights regarding voluntary carbon market (VCM) growth. 

Rich Gilmore on voluntary carbon market growth
Source: Rich Gilmore via LinkedIn

As seen in the chart below, demand surged from November 2023 to January 2024, causing a sharp drop in inventory. This spike was largely due to Shell retiring around 17 million credits to hit its internal net emissions efficiency target. That’s one company offsetting about 28% of its Scope 1 and 2 emissions—without even touching Scope 3.

This shift, spurred by one major player, demonstrates the scale of impact that corporations can have on the VCM. 

VCM issuances, retirements and inventory growth Rich Gilmore
Source: Rich Gilmore (Carbon Growth Partners)

Now, imagine the impact when more companies commit to scaling their carbon reduction strategies taking Shell as an example. The demand could quickly outpace supply, driving up carbon credit prices and creating a more competitive market for offsets.

Shell’s industry has a strong reliance on carbon capture technology to help meet decarbonization targets. Canada, as part of its Emissions Reduction Plan, focuses on achieving substantial emission cuts in the oil and gas sector. 

As the country navigates its decarbonization goals, the Pathways Alliance’s CCS negotiations with CGF show the complexities of advancing green initiatives within a competitive, carbon-intensive sector.

With potential government support on the horizon, Canada’s oil sands companies could help make significant progress toward lowering emissions. Once it happens, it will set a precedent for industry-government collaboration on climate action in the years to come. 

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U.S. DOE Approves $2.26 Billion for Nevada Lithium Mine

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U.S. DOE Approves $2.26 Billion for Nevada Lithium Mine

The U.S. Department of Energy approved a $2.26 billion loan for Lithium Americas to construct the Thacker Pass lithium mine in Nevada. It is one of the largest mining investments by the Biden administration. 

The loan, originally approved in March, aligns with the White House’s objective to reduce dependency on China for lithium, a critical element for EV batteries. This announcement follows the recent approval of another lithium project by ioneer.

Thacker Pass Set to Boost U.S. Lithium Independence 

Expected to open later this decade, Thacker Pass will play a major role in the U.S. supply chain. It has the potential to become a key lithium supplier for General Motors (GM). GM recently increased its investment in the mine to nearly $1 billion, showing its importance to the company’s EV production goals.

According to GM’s SVP of Global Purchasing and Supply Chain, Jeff Morrison, getting lithium domestically will help them “control battery cell costs, deliver value, and create jobs”. 

As part of its Net Zero pathway, GM is targeting carbon neutrality across its global products and operations by 2040. 

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This recent project development is also highly significant for the Biden administration. White House climate advisor Ali Zaidi emphasized that secure mineral supplies are vital to the U.S. clean energy transition. Zaidi specifically stated that:

“The Biden-Harris Administration recognizes mineral security is essential to winning the global clean energy race.” 

The mine itself has been a politically complex project. It was initially permitted by former President Donald Trump and later approved for construction by a court following opposition from conservationists, ranchers, and Indigenous groups. Initial work began last year in this remote region near the Oregon-Nevada border.

Thacker Pass lithium mine project
Source: Lithium Americas

The estimated cost for the Thacker Pass mine has risen from $2.27 billion to nearly $2.93 billion. This is primarily due to higher engineering expenses, union labor agreements, and the decision to establish housing facilities for workers in this remote area. The loan, with a 24-year term and interest rates tied to the U.S. Treasury rate, offers a stable financial foundation to support the project’s extended construction and operational goals.

Securing Domestic Battery Supply Chains

Now that the loan has been finalized, Lithium Americas can move forward with large-scale construction, which may take 3 years.

  • In its first phase, Thacker Pass aims to produce 40,000 metric tons of lithium carbonate annually, enough for up to 800,000 EVs. 

CEO Jon Evans views this loan as critical to reducing the nation’s reliance on foreign lithium sources and enhancing domestic energy security.

Global lithium battery demand is set to surge, with worldwide demand expected to increase by over 5x and U.S. demand by nearly 6x by 2030. Although demand is growing, the U.S. remains largely import-dependent for battery materials and components. 

US lithium battery supply chain
Image from DOE website

Currently, the U.S. industry captures less than 30% of the economic value from each battery cell in its market, creating only $3 billion in value-added. By 2030, under a “business as usual” scenario, this could rise to $16 billion. However, the majority—about 70%—of economic value would still be imported.

China dominates the battery supply chain, controlling over 75% of cell production and a majority of material processing and refinement capacities. This global reliance presents vulnerabilities, especially with projected shortages in critical minerals like lithium, nickel, and copper. China’s control of supply and processing infrastructure heightens risks for U.S. energy security without a robust, comprehensive industrial strategy.

A $2 Billion Move for Clean Energy Goals

Without a secure lithium battery supply chain, the U.S. risks missing its key climate targets: a 40% reduction in greenhouse gas emissions by 2030 and net zero emissions by 2050. Failing to meet these goals or falling behind other nations on clean technology could weaken the U.S.’s global standing. 

To protect its security and interests, the federal government must prioritize developing a robust North American lithium battery supply chain that leverages domestic expertise and reduces reliance on foreign sources. The DOE’s $2.2 billion investment to build Nevada’s Thacker Pass lithium mine is a major move. 

Moreover, the expanded 45X tax credit is another significant step the US government has taken in building up its critical mineral supply chain. 

The Section 45X Advanced Manufacturing Production Credit, part of the Inflation Reduction Act, is designed to boost domestic production of clean energy essentials, including renewable components, battery materials, and 50 key minerals for the energy transition. This credit offers a 10% tax reduction on production costs for highly refined metals, supporting supply chains in critical areas like EVs and green energy. 

Eligible minerals include lithium, other essential battery metals like nickel and graphite, and rare earth elements like neodymium.

The $2.26 billion investment in Thacker Pass is a landmark step in boosting U.S. lithium supply for EV batteries, reducing reliance on foreign sources, and reinforcing national energy security. Through projects like these, the country aims to secure critical mineral supplies needed to achieve its clean energy goals and stay competitive globally.

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A Green Journey: Key Insights from Nikola’s First Sustainability Report

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Nikola

Nikola, America’s favorite zero-emissions truck brand, released its first Sustainability Impact Report. This report provides a comprehensive picture of Nikola’s environmental and social initiatives and explains their progress toward sustainability goals.

Nikola owns battery-electric vehicles (BEVs) and hydrogen fuel cell (FCEV) Class 8 trucks, designed specifically to make the environment safer and cleaner. Most significantly, HYLA’s hydrogen refueling ecosystem offers a robust hydrogen infrastructure to support the shift to sustainable fuel sources.

Driving Towards a Zero-Emission Future

The Environmental Protection Agency (EPA) reports that transportation generates around 28% of direct U.S. greenhouse gas (GHG) emissions. Medium- and heavy-duty trucks alone account for about 23% of these emissions. However, the EPA also highlighted that with the rise in transportation costs and freight demands, zero-emission vehicles can be a solution for a sustainable future.

EPA NIKOLA

So Nikola’s mission is clear: to lead the transition to zero-emission technology across critical routes. Thereby, supporting a climate-friendly future for commercial transportation.

Steve Girsky, President and CEO of Nikola, stated,

“Our focus is on zero-emission technologies and the infrastructure to support them, decarbonizing what has been known as a very ‘dirty’ market segment, Class 8 trucks. Medium- and heavy-duty trucks produce more emissions than passenger cars and rail combined. Our commitment—our mission, really—to improving air quality, avoiding emissions, and mitigating our contributions to climate change is why most of us work for Nikola. What we are most proud of, besides our dedicated team, is bringing our battery electric truck to market while developing and launching our hydrogen fuel cell electric truck shortly thereafter.”

Nikola’s sustainability report reveals an interesting piece of information. The company was founded to tackle transportation emissions, specifically. In addition to its net-zero goals, it prioritizes drivers’ health, safety, and community well-being where Class 8 trucks operate.

The truck giant strongly believes that zero-emission transportation is achievable, which is why the company aims to expand its impact throughout the nation.

Environmental Impact and Greenhouse Gas Emissions

Nikola recognizes the risks of climate change and the opportunities that proactive measures offer. The company has taken the following actions to address these risks and capitalize on opportunities:

  • Investment in clean technology and innovation
  • Measurement and identification of emission sources
  • Commitment to renewable energy and energy efficiency in operations
  • Installation of EV charging infrastructure for Nikola trucks and employees
  • Adoption of circularity principles and waste diversion strategies for improved sustainability

In 2023, Nikola’s total emissions (Scope 1 and Scope 2) were 5,155.56 MT CO₂e.

Nikola

Hydrogen Trucks Hit the Highway

In Q4 2023, the company introduced hydrogen fuel cell electric trucks on the road in North America. By year-end, 42 trucks were manufactured, with 35 delivered to dealers and seven retained for ongoing testing and fleet demonstrations.

Early in 2024, the first HYLA modular refueling station was launched in Ontario, California, alongside a new partnership with FirstElement Fuel to offer hydrogen fueling solutions in both Northern and Southern California, including Oakland.

Nikola views both battery electric trucks powered by the grid and hydrogen fuel cell electric trucks as essential to reducing emissions in heavy-duty transportation. The company remains dedicated to advancing both vehicle technologies and fueling infrastructure for broad deployment.

The 3-R Approach to Battery Lifecycles

Nikola is committed to a circular economy, where truck and battery components are built to last long. They can be reused and recycled efficiently. The company collaborates with partners to manage materials responsibly at every stage of a vehicle’s life, focusing on durability and resource efficiency.

Regarding battery sustainability, Nikola has a battery circularity policy based on the 3 Rs: remanufacture, reuse, and recycle all pre-consumer and production batteries. Currently, Nikola’s recycling partners recover up to 95% of materials from lithium-ion batteries, aiming to recycle 100% of scrapped batteries. Notably, last year, the truck titan reused 192 metric tons of batteries.

The company also believes in extending battery life as the most sustainable choice. They use advanced vehicle software to receive over-the-air (OTA) updates that improve battery efficiency and extend battery life before recycling.

Waste and Water Management

The report also highlights the company’s dedication to improving manufacturing practices and minimizing environmental impact. A Waste Management Committee meets regularly to measure performance and implement strategies. They prioritize recycling materials such as steel, aluminum, lithium-ion batteries, plastic, and cardboard. Additionally, Nikola is mindful of water usage, primarily using water for vehicle quality testing and recycling.

Nikola’s environmental impact data for the last year is as follows:

nikola

Resource and Energy Efficiency at Nikola Facility

Nikola is committed to maximizing its resource efficiency and minimizing its manufacturing impact. The 670,000-square-foot Coolidge facility uses advanced eco-friendly technologies, including energy-efficient LED lighting, HVAC systems, and daylighting to cut artificial lighting needs.

Additionally, smart-controlled energy systems optimize resource use, while on-site solar panels and EV charging stations support sustainable practices. Nikola has also deployed electric automated guided vehicles (AGVs) and forklifts to further reduce emissions.

The total energy consumption at the facility is 7,491,559 kWh, of which 771,960 kWh is generated through solar.

By embracing these initiatives, Nikola is paving the way for a more sustainable future.

Disclaimer: Data and visuals- Nikola Sustainability Impact Report

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U.S. Expands 45X Tax Credits: What Does It Mean For Nickel and Other Miners?

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U.S. Expands Critical Mineral Tax Credits But Leaves Pure Miners Behind

The U.S. recently expanded a manufacturing tax credit to cover extraction and material costs, benefiting metal refiners but excluding pure mining companies. This update was announced in final regulations by the Treasury Department and Internal Revenue Service (IRS).

The credit, known as the Section 45X Advanced Manufacturing Production Credit, is part of the Inflation Reduction Act. It aims to support the domestic production of clean energy products, including renewable components, battery materials, and 50 essential minerals critical to the energy transition. 

What is Section 45X Tax Credit and How Does It Work? 

Since its inception, the Advanced Manufacturing Production Credit has already spurred private-sector investments. It has driven $126 billion in investment announcements, including $6 billion targeted for critical minerals, according to the Treasury Department.

The 45X tax credit offers financial benefits for producing solar and wind components, battery parts, and refining or recycling critical minerals. Manufacturers earn credits based on unit production, electrical capacity, or production costs. Importantly, these credits are transferable, allowing companies to maximize their benefits.

  • Starting in 2023, the credit is available until 2032, with most goods phasing down to 75% of the credit value in 2030, 50% in 2031, and 25% in 2032, though critical minerals are exempt from this reduction. 

This stable, decade-long credit has encouraged long-term investments, with manufacturing investments rising 305%. According to Clean Investment Monitor data, they reached $89 billion in 2023-2024 from $22 billion in 2020-2022.  

actual manufacturing investments by technology

The 45X tax credit works by providing a specific tax credit value for each eligible component under IRS guidelines. To qualify, manufacturers must ensure their products meet the requirements outlined in the 45X regulation. Additionally, for the tax credit to be claimed, the component must be sold to an unrelated third party. 

The Expanded Scope of 45X Tax Credit

Initially, the tax credit did not cover extraction or material costs. However, after seeking industry input, the Biden administration decided to broaden the credit’s application.

With this change, the tax credit now includes costs related to materials and extraction for qualifying minerals and electrode materials, provided they meet specific conditions. The Treasury Department stated that this decision is intended to encourage investment in U.S. critical mineral extraction and processing. The broader goal is to enhance U.S. energy security and strengthen clean energy supply chains.

The 10% production cost tax credit applies to highly refined metals. This move is part of a U.S. strategy to build supply chains that support energy transition sectors, like electric vehicles and green energy. Eligible minerals include essential battery metals such as nickel, lithium, and graphite, along with rare earth elements like neodymium.

Treasury Secretary Janet Yellen commented that the final regulations will help companies investing in the U.S. clean energy economy. Additionally, the Treasury confirmed that the tax credit extends to components made with foreign-sourced materials.  This aspect of the rule is intended to ensure flexibility for U.S. manufacturers, particularly in sectors where certain raw materials are difficult to source domestically.

A Boost for Critical Mineral Refiners, But Pure Miners Miss Out

Nickel production, along with other battery metals, would greatly benefit from the tax credits. This comes timely after primary nickel production, which includes ferronickel for steelmaking and intermediates for EV batteries, saw significant growth. 

S&P Global Commodity Insights reported that the top 5 publicly listed nickel producers reached a combined output of 158,937 metric tons. It represents a substantial 35.6% increase from Q2 2023. This boost is largely attributed to the rising demand for refined nickel products, especially for use in EV batteries.

The recent nickel price slump has hit profitability industry-wide, yet companies are hesitant to cut production. They fear that doing so may lead to a loss in market share. 

With the expanded 45X credits, primary nickel producers will have more reasons to accelerate their production. 

However, the final rules of the expanded credit have not gone far enough in the eyes of many in the mining sector. Specifically, pure-play mining companies, which focus solely on extraction without refining, remain ineligible for the credit. 

Stimulus for Clean Energy Goals, Yet Gap Remains

The National Mining Association (NMA) has expressed disappointment, arguing that the regulations do not align with the original intent of Congress to strengthen the entire U.S. mineral supply chain. 

The organization had previously requested that the tax credit apply to all domestic mining companies, regardless of whether they also refine materials. However, the new rules limit credit only to producers who both mine and refine materials. This decision leaves out U.S.-based miners who do not have refining capabilities, and the credit still applies to imported materials.

Rich Nolan, president and CEO of the NMA, criticized this limitation. He stated that the rule does not adequately support efforts to address strategic vulnerabilities in U.S. mineral supplies, especially as it allows credit for foreign-sourced materials.

The NMA argues that this oversight hinders U.S. competitiveness, particularly against countries like China and Russia that dominate global mineral supply chains with cheaper materials.

As the clean energy market grows, balancing interests across the sector will remain challenging. Ensuring that a diverse range of domestic mining companies can benefit from the tax credit will be essential to achieving a resilient, self-sustaining U.S. critical mineral supply chain.

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U.S. Retires Over 267 Million Carbon Credits Amid Push for Voluntary and Compliance Market Integration

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U.S. Retires Over 267 Million Carbon Credits Amid Push for Voluntary and Compliance Market Integration

In the lead-up to COP29, several major announcements on carbon markets are anticipated. These will likely include updates on Article 6 cooperation, enhanced compliance mechanisms, and new developments in voluntary carbon markets (VCM).

A report by the Allied Offsets on carbon markets outlines the evolving landscape and its implications for companies and policymakers. Here are our major takeaways from the report. 

What is Article 6 All About?

Article 6 of the Paris Agreement allows countries to meet their climate targets by working together through carbon markets (Articles 6.2 and 6.4) and other non-market approaches (Article 6.8). 

Article 6.2 facilitates international cooperative approaches, with 91 agreements currently in progress. Leading nations like Japan, Singapore, and Switzerland have spearheaded these efforts, with many deals at either the Memorandum of Understanding (MOU) stage (61%) or finalized bilateral agreements (22%).

  • Among host countries, Cambodia is at the forefront, with the highest emission reductions (56.75 million tons of CO2 equivalent) authorized through various initiatives.

Rwanda has taken unique steps. It mandates that 10% of its mitigation outcomes go to domestic use, 2% contribute to global emissions mitigation, and 5% fund adaptation initiatives. Similarly, Malawi reserves 10% of its outcomes for national use.

Article 6 host countries

The compliance market saw new additions to its eligible credit schemes, including Singapore’s carbon tax and Taiwan’s carbon levy. 

The report highlights the eligibility of voluntary carbon credits in the compliance market. Over 829 million unretired voluntary credits can now be used in 12 different compliance schemes worldwide. Colombia stands out for its market liquidity. Meanwhile, Taiwan and Singapore have set stringent criteria for using international carbon credits domestically.

Singapore’s tax, set at S$25 ($18) per ton for 2024-2025, allows corporations to offset up to 5% of taxable emissions with International Carbon Credits (ICCs). However, the credits must adhere to seven key principles to maintain high environmental standards. 

Taiwan’s Ministry of Environment has laid out foundational regulations for a carbon fee system that permits certain industries to offset up to 5% of emissions using internationally recognized credits.

Navigating Convergence of Voluntary and Compliance Carbon Markets

As of the latest update, there are 348,414,639 eligible carbon credits from 3,343 projects across 11 different schemes in the market that are available for domestic carbon pricing instruments. A significant portion of these credits (17%) and projects (36%) comes from Australia’s Safeguard Mechanism, with 2,339 projects participating. 

carbon credits for domestic carbon pricing
Source: Allied Offsets report

Among international market mechanisms, CORSIA-eligible credits have the highest trading activity, involving 119 brokers. In contrast, the highest number of unique brokers for compliance-eligible credits tied to domestic carbon pricing instruments is seen with Taiwan’s carbon levy (57 brokers) and California’s (47 brokers).

The line between voluntary and compliance markets is blurring as an increasing share of voluntary credits are retired for compliance. Presently, 28% of the VCM’s all-time credit retirements have been used for compliance purposes. 

Colombia, South Korea, and South Africa are at the forefront of this shift. More entities turn to VCM credits to meet their national and regional emissions targets.

Of the VCM’s 1.6 billion all-time retirements and cancellations, 23% (367 million tons of CO2 equivalent) have been directed toward compliance under national carbon pricing systems. For example, Colombia, South Africa, and parts of Mexico (like Querétaro) are notable users of offsets under national carbon taxes. 

All-time Retirements vs. Credits Cancelled for Compliance Purposes
Source: Allied Offsets report

Larger markets such as Brazil, China, and India are integrating carbon offsets into emissions trading systems. Plus, many countries are expected to include carbon removals in these systems starting in 2025.

The U.S. leads in carbon credit cancellations, with over 267 million credits retired within California and Washington’s offset programs. Colombia follows closely with 61 million credits canceled.

South Korea and South Africa have also demonstrated significant activity in compliance offset markets. South Korea’s compliance program (KOP) canceled 20.5 million credits, while South Africa’s Carbon Offset Administration System canceled 15.2 million.

VCM Credits Retired for Compliance Purpose per year
Source: Allied Offsets report

Expanding Role of Compliance-VCM Intermediaries

An increasing number of intermediaries are key in bridging the VCM and compliance markets. Since 2019, there’s been a 137% surge in entities actively involved in credit cancellation or retirement for compliance. South Africa, Colombia, and South Korea leading the trend. 

Companies like Primax Colombia, Chevron, and Biomax in Colombia, are prominent participants in compliance-retired credits. Hu Chems Fine Corp in South Korea, and Sasol and AEL Mining Services in South Africa are also part of the top 25 canceling entities.

Top 25 Cancelling or Retiring Entities by Project Country
Source: Allied Offsets report

Compliance Market Gains Momentum For National Commitments

Interest in Article 6-based cooperation has expanded among nations aiming to fulfill their Nationally Determined Contributions (NDCs). These cooperative approaches enable countries to count cross-border carbon credits toward their climate targets. 

Through initiatives under Articles 6.2 and 6.4, countries and companies alike can partake in carbon reduction activities beyond their borders, accelerating global emissions mitigation.

In 2024, other large countries like Brazil and India made strides in integrating avoidance and reduction credits in emissions trading schemes. This highlights a trend toward including more diverse offset types.

By 2025, countries like Japan, the UK, and the EU are anticipated to focus on incorporating removals. The EU is taking steps through regulations like the Carbon Removals and Carbon Farming Regulation (CRCF).

Ultimately, the report shows that the carbon market landscape is evolving rapidly, shaped by new cooperative agreements and compliance mechanisms. Most notably, it reveals the growing role of voluntary carbon market credits for regulatory compliance purposes. 

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Gentoo.earth Launches AI-Driven Platform to Simplify Corporate Net Zero

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Gentoo.earth, a California-based company has launched an advanced, AI-powered intelligence platform to support carbon removal companies to scale up their operations. The company is founded by Juliet Kirby, an ex-Product Manager at Australian food-tech company Harvest B and former Oliver Wyman Management Consultant.

With powerful insights into market trends, their innovative tool can simplify the complexities of carbon removals and support companies for a lasting impact. This strategy will also help rebuild the VCM from the very beginning to achieve a measurable impact.

Fixing a Market in Crisis: Tackling VCM Challenges with Innovation and Transparency

The company has fairly analyzed the flaws of the traditional Voluntary Carbon Market (VCM). Due to an unstable foundation, it suffers from conflicting incentives, unreliable methodologies, and a few unreliable parties. As a result, the VCM has largely failed to support the global net-zero transition.

According to Gentoo.earth, the key issues include:

Shortage of permanent removals as the market lacks a steady supply of long-term carbon removal solutions.
Inconsistent standards create confusion and entry barriers.
Flawed, untrustworthy methods and opaque practices have damaged market credibility.

Elaborating further, the VCM faces problems due to unclear guidance on how carbon credits support net zero goals. There are also limited options for permanent fossil fuel emissions removal, making it hard for companies to find effective solutions. Another significant issue is the high costs for permanent removals that discourage buyers and reduce market participation.

These challenges contribute to a market that struggles to make a tangible contribution to global net-zero goals. Due to this inconsistency, corporations often find it difficult to track and understand varying net-zero strategies. This makes it hard for carbon removal companies to find suitable buyers.

MUST READ: CDR and Carbon Credits: NASDAQ Surveys the Key Trends Shaping Corporate Sustainability 

Unveiling Demand in Carbon Removals

Gentoo.earth addresses a critical question in the market: Where are the buyers? By analyzing thousands of corporate climate reports, the platform has discovered that 19% of evaluated companies are interested in permanent carbon dioxide removal (CDR) solutions, even though they may not be highly visible to suppliers.

This data highlights an untapped demand for durable removals and bridging a significant gap in the market.

So, what are their solutions for carbon removal companies?

Gentoo.earth’s Solution: Empowering Carbon Removers

Gentoo.earth empowers carbon removal suppliers by offering unique, data-driven insights traditionally held by buyers. The platform encompasses detailed data from over a thousand public companies, shedding light on:

Corporate Net-Zero Targets: Track goals and commitments.
Annual GHG Reduction Progress: Monitor companies’ progress toward emissions goals.
Carbon Credit Strategies: Discover carbon credit preferences and usage.
Key Climate Priorities: Identify what drives companies’ climate agendas.

By consolidating this data, Gentoo.earth makes it easier for companies to find buyers, saving them up to 80% of the time they would spend analyzing climate strategies manually.

Building a Sustainable VCM for the Future

The VCM must scale rapidly to mitigate the impact of climate change effectively. To achieve this, the company advocates a fundamental reset based on transparency, scientific rigor, and equitable access to data across market participants. Key aspects of this transformation include:

Independent standards and exchanges: built with scientific accuracy and impartial oversight.
Clear carbon credit pathways: establishing which credit types apply to specific emissions sources.
Accessible market data: ensuring all participants have access to transparent, high-quality data.

source: Gentoo.earth

The company draws inspiration from Bloomberg’s transformative approach in financial markets, where increased transparency enabled both buyers and sellers to make informed decisions, drastically increasing transaction volumes. They also envision a similarly transparent VCM, where suppliers gain insight into buyers’ demands, reducing friction and accelerating market growth.

Overall, with this explanation, one can understand how Gentoo.earth’s innovative platform transforms the VCM by enabling suppliers to efficiently meet buyer demands. With these tools, carbon removal companies can succeed and create a more effective and sustainable carbon market together.

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

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Strategic Acquisition: Uranium Royalty Corp. Adds Cameco’s Uranium Projects to its Portfolio

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Uranium Royalty Corp. (NASDAQ: UROY, TSX: URC) recently announced the acquisition of a royalty on the Millennium and Cree Extension Uranium Projects located in Saskatchewan, Canada. The company purchased this royalty from a third-party industrial gas firm for $6 million in cash.

Scott Melbye, Chief Executive Officer of Uranium Royalty Corp. stated:

“We are very excited to acquire this significant royalty on the Millennium and Cree Extension Projects. Cameco has previously completed substantial development work on the Millennium project and it remains one of the largest undeveloped projects in Cameco’s portfolio. It represents an important potential contributor to the future global production pipeline. The transaction is another example of our ability to leverage the URC team’s experience and networks to source and execute accretive uranium royalty transactions.”

The Millennium Project

The Millennium Project is an advanced-stage conventional uranium project located 36 km northwest of Cameco’s Key Lake Mill in Saskatchewan, Canada. This project is a joint venture between Cameco and Japan Canada Uranium (JCU). Cameco holds a 69.9% equity share and operates the project.

As one of the largest global suppliers of uranium fuel, Cameco plays a vital role in promoting a clean-energy future. JCU, a Canadian exploration company, focuses on Saskatchewan’s Athabasca Basin and is jointly owned by Uranium Energy Corp. and Denison Mines Corp.

Figure: Location of the Millennium deposit – Source: Cameco Corporation website

The Cree Extension Project

The Cree Extension Project is currently in the exploration stage and is situated 36 kilometers northwest of Cameco’s Key Lake Mill. This project is a joint venture between Cameco, Orano Canada Inc., and JCU. The land is located to the west of Denison’s Wheeler River project and southwest of Cameco’s McArthur River project.

Cameco’s Uranium Revelation

Cameco Corporation, headquartered in Saskatchewan, Canada is the operator of the Millennium and Cree Extension Uranium Projects. The company submitted an Environmental Impact Statement (EIS) in 2009. The EIS outlined plans for the project to produce between 150,000 and 200,000 tons of ore annually, with a potential mine life of 10 years.

They reported that:

The Millennium Project contains an estimated 1.4 million tons of resources at an average grade of 2.39% U3O8. This equates to 75.9 million pounds of U3O8 in the indicated category.
Additionally, it has 0.4 million tonnes at an average grade of 3.19% U3O8, totaling 29.0 million pounds in the inferred category.

However, on May 15, 2014, Cameco decided to withdraw the EIS application due to unfavorable market conditions at that time.

The Millennium and Cree Extension Royalty

The press release revealed that the royalty consists of a 10% net profit interest (NPI) based on an approximate 20.6955% participating interest in the projects. This participating interest was transferred to the current owners in 1992.

In this profit-based arrangement, royalties are calculated from the revenue generated, with deductions allowed for certain expenses, including cumulative development costs. Royalties are only payable after all eligible preproduction expenses are recovered.

By securing royalties on these two projects, URC gains rights to about 12,800 hectares in the Athabasca Basin, which has the world’s top mining areas.

Uranium Royalty Corp.: Powering Decarbonization with Nuclear Efficiency

The only pure-play uranium royalty company is focused on capturing value from uranium price shifts through strategic investments. These include royalties, streams, debt, equity in uranium companies, and even physical uranium holdings. Notably, the company is growing with the rising demand for uranium.

IEA revealed that in the U.S. alone, nuclear energy supplied roughly 19% of total electricity in 2022 and accounted for 55% of the nation’s carbon-free electricity.
This nuclear output mitigated around 482 MMT of CO₂ emissions, which is equivalent to taking 107 million gasoline-powered vehicles off the roads.

More Power per Punch: Nuclear Energy Outshines Fossil Fuels

The U.S. government is boosting nuclear energy with a $6 billion program from the bipartisan Infrastructure Bill to support plants shifting to clean energy. The Inflation Reduction Act also offers Production Tax Credits that can drive investments to the upgradation of plants.

Nuclear energy is not only one of the safest but also among the most cost-effective and economical ways to achieve the decarbonization target.

Moving on and talking about sustainability, Uranium Royalty Corp. will collaborate with its property manager to measure emissions from its corporate office (Scope 1 and 2) for FY 2023. Additionally, the uranium miner will explore opportunities to co-invest with operators to advance shared sustainability priorities.

CHECK OUT: The Atomic Awakening: Unplugging the Energy Crisis, Fueled by Uranium

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Copper Prices Swing as China’s Stimulus Sends Mixed Signals—What’s Next for 2025?

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Copper, the third most used metal, plays a crucial role in the energy transition, particularly in electrification and renewable energy. Recent market movements, particularly China’s stimulus measures, have led to significant volatility in copper prices, making the metal’s future uncertain.

China’s Economic Moves Drive Copper’s Price Rollercoaster

Copper futures are actively traded on major platforms like the London Metal Exchange (LME), COMEX, and the Multi-Commodity Exchange (MCX) in India. Copper is the third most used metal globally, particularly in modern industries. 

Chile is the top producer, contributing over one-third of the world’s supply, followed by Peru, the Democratic Republic of the Congo, China, the United States, and others. The largest copper importers include China, Japan, India, South Korea, and Germany.

Copper prices have shown significant volatility in October 2024, driven primarily by economic developments in China. The country’s central bank introduced a substantial stimulus package in late September to revive its economy, including monetary measures like lowering interest rates and easing mortgage payments. 

RELATED: Copper Prices: Key Factors, Trends, and Outlook

These actions briefly boosted copper demand and drove the London Metal Exchange three-month (LME 3M) copper price to a four-month high of $9,995 per metric ton on September 27. 

However, the optimism was short-lived as market participants realized that details about the spending of the stimulus package were unclear. This, combined with a stronger U.S. dollar and weaker demand for copper, led to a price dip. 

By October 17, the LME 3M copper price had fallen to $9,506 per metric ton as reported and shown below by S&P Global Commodity Insights.

On Monday, copper futures fell to around $4.31 per pound after gaining in the prior two sessions. This decline was driven by a stronger dollar and rising U.S. Treasury yields as a resilient US economy dampened hopes for significant interest rate cuts by the Federal Reserve. 

Meanwhile, investors are watching the upcoming National People’s Congress meeting in China (November 4-8) for updates on debt and fiscal measures. 

Production Setbacks Tighten Supply

Global copper supply has faced challenges, particularly from production setbacks in key regions. A significant incident affecting supply was a fire at Freeport-McMoRan Inc.’s Manyar smelter in Indonesia, which delayed the smelter’s production start to early 2025. This event has resulted in adjustments to the concentrate market deficit forecast. 

Other production challenges included reduced output at key smelters in China, including Baiyin and Jinxin, further tightening the concentrate supply.

Therefore, the anticipated deficit for 2024 is now at 52,000 metric tons. And a larger deficit of 848,000 metric tons is projected for 2025.

Despite these supply disruptions, treatment charges (TC) for copper concentrates could stay at $35 per dry metric ton in 2025. This suggests that tightness in concentrate supply will persist, potentially causing upward pressure on smelter margins.

Demand Dilemma: EV Boom Bolsters Copper, But Buyers Hold Out for Better Prices

The Chinese market exhibited mixed signals. Following the national holidays in early October, downstream copper buyers anticipated further price drops, leading to a slowdown in new orders. 

As a result, production cuts were reported among wire and cable manufacturers. Some buyers shifted to using copper scrap due to its greater availability, delaying purchases of primary copper.

Not all demand indicators were weak. China’s electric vehicle (EV) sector provided a boost, with EV production rising 48.8% year-over-year in September 2024. This trend supported higher demand for copper components, crucial in EV manufacturing. 

Copper is the best metal for conducting electricity, so it is critical for EVs and batteries, as well as other green energy sources like wind and solar. 

An EV uses about 3x more copper than a regular gas-powered car. As the shift to cleaner energy continues, EVs are expected to increase their share of total copper demand from around 11% in 2021 to over 20% by 2040. 

According to BHP’s data, global copper demand will increase by about 70%, reaching over 50 million tonnes annually by 2050. The traded metal will see an average annual growth rate of 2% as shown below.

Source: BHP website

Market Outlook: Copper Prices in 2025

Looking ahead, experts expect copper prices to stay under pressure due to the current balance of supply and demand. However, potential boosts in orders at lower prices and seasonal demand could provide support for prices. 

For 2025, the forecast is for a tighter concentrate market, with a predicted shortfall of 848,000 metric tons. This, in turn, could help stabilize prices around $9,825 per metric ton. Despite current challenges, the outlook suggests a mix of cautious optimism and continued volatility in the copper market.

READ MORE: Will AI Drive A Global Copper Shortage? BHP Rings the Alarm

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