Uncategorized – Page 50 – The Global Carbon Fund

Canada’s 2024 Budget: Accelerating Towards a Clean Economy and Net Zero Future

April 22, 2024/in Uncategorized /by

In the global race for investment and innovation to reach net zero, Canada has positioned itself at the forefront, leveraging its abundant resources and progressive policies to attract capital and drive sustainable growth.

The Canadian government’s announcement of a net zero economic plan, backed by an investment of over $160 billion, marks a significant milestone in the country’s commitment to combatting climate change.

At the heart of this plan are major economic investment tax credits totaling $93 billion by 2034-35. These incentives stimulate private investment, fostering Canadian leadership in clean energy and innovation while generating economic growth and high-quality jobs.

Canada Pioneers Net Zero Investment and Innovation

Investors, both domestic and international, are taking notice of Canada’s strategic vision. Despite global economic challenges, public markets and private equity capital flows into Canada’s net zero economy reached $14 billion in 2023. This is a testament to the effectiveness of Canada’s investments in driving sustainable business growth and job creation.

One area where Canada has particularly excelled is in the development of electric vehicle (EV) battery supply chains. BloombergNEF ranked Canada first in the world for attractiveness in building EV battery supply chains, surpassing even China.

Chart from Canada Budget 2024

This achievement underscores Canada’s advantages, including abundant clean energy, high labor standards, and robust engagement with Indigenous communities. By capitalizing on these strengths, Canada creates high-skilled, well-paying jobs, from resource workers mining critical minerals to technicians assembling EV batteries.

Canada’s commitment to clean energy extends beyond EVs, encompassing a broad spectrum of clean technologies and industries. The government’s investments aim to unlock the full potential of Canadian clean technology firms, facilitating their growth and global competitiveness.

Already, Canada boasts 12 companies on the Cleantech Group’s list of the 100 most innovative global clean technology companies, a testament to the country’s prowess in driving sustainable innovation.

By 2050, Canada’s clean energy GDP has the potential to increase dramatically, possibly growing fivefold to reach $500 billion. This growth trajectory aligns with Canada’s commitment to achieving net zero emissions by 2050. It shows that prioritizing climate action is synonymous with fostering economic prosperity.

Canada’s Blueprint for EV Dominance

Key ongoing actions outlined in the Canada 2024 budget include the following:

Delivering major economic investment tax credits,
Catalyzing private investment through the Canada Growth Fund,
Building clean electricity infrastructure, and
Securing Canada’s position as a global supplier of critical minerals.

These initiatives are essential for propelling Canada towards its net zero target by 2050 while fostering economic resilience and competitiveness.

A highlight of the budget is the introduction of a new Electric Vehicle Supply Chain investment tax credit, aimed at bolstering Canada’s position as an EV manufacturing hub. This 10% tax credit on the cost of buildings used in key segments of the EV supply chain incentivizes businesses to invest in Canada across EV assembly, battery production, and cathode active material production.

By supporting multiple stages of the manufacturing process, Canada aims to secure its role in the global EV supply chain.

To seize the investment opportunities of the global clean economy, Canada is also implementing six major economic investment tax credits.

The government’s proactive approach includes delivering tax credits for clean electricity projects, carbon capture initiatives, and investments in clean technology. These incentives are crucial for accelerating the transition to a low-carbon economy and reducing emissions across various sectors.

Here are the details of the tax credits:

Carbon Capture, Utilization, and Storage Investment Tax Credit: Available as of January 1, 2022.
Clean Technology Investment Tax Credit: Available as of March 28, 2023.
Clean Hydrogen Investment Tax Credit: To be introduced soon.
Clean Technology Manufacturing Investment Tax Credit: To be introduced soon.
Clean Electricity Investment Tax Credit: Already introduced, with expansions planned.
Electric Vehicle (EV) Supply Chain Investment Tax Credit: To be introduced soon.

Of these, the Clean Electricity Investment Tax Credit is particularly significant. It aims to support the growth of Canada’s electricity capacity to meet the increased demand expected by 2050.

Clean Electricity Tax Credits Spark Economic Growth

As Canada’s economy expands, electricity demand is projected to double by 2050. To ensure a clean, reliable, and affordable grid to meet this increased demand, electricity capacity needs to increase by 1.7 to 2.2 times compared to current levels. Investing in clean electricity now can lower Canadians’ monthly energy expenses by 12% and generate around 250,000 quality jobs by 2050.

Canada already boasts one of the cleanest electricity grids globally, with 84% of electricity generated from non-emitting sources. However, significant investments are required in other regions to ensure clean, reliable electricity grids nationwide.

The federal government is committed to supporting provinces and territories in making these investments.

The Clean Electricity Investment Tax Credit offers a 15% refundable tax credit rate for eligible investments in new equipment or refurbishments related to low-emitting electricity generation systems, stationary electricity storage systems, and transmission infrastructure. It is available to both taxable and non-taxable corporations, including those owned by municipalities or Indigenous communities.

The tax credit is expected to cost $7.2 billion over 5 years starting in 2024-25, with additional expenditures projected in the following years.

RELEVANT: Canada’s $5 Billion Carbon Pricing Revenue Sparks Debate

As Canada charts its course towards a clean economy and net zero future, the 2024 budget stands as a testament to the country’s resolve and ambition. By leveraging its natural resources, skilled workforce, and progressive policies, Canada is not only embracing the challenge of climate change but also seizing the economic opportunities inherent in sustainability.

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Power Play: California’s Virtual Power Plant Revolution

April 22, 2024/in Uncategorized /by

California is considering a mandate for virtual power plants (VPPs), with a potential capacity of 7.7 gigawatts by 2035. A recent report by The Brattle Group for GridLab highlights the potential of VPPs to cover about 15% of California’s peak power demand by the same period.

The report identifies various sources contributing to the VPP market potential, including orchestrated electric vehicles (EVs), behind-the-meter batteries, smart thermostats, water heaters, and demand response. These resources could significantly boost VPP capacity, especially from batteries behind residential or commercial meters and managed EV charging.

What is a Virtual Power Plant?

A Virtual Power Plant (VPP) is a network of decentralized, medium-scale power generating units, flexible power consumers, and storage systems. These units are aggregated and coordinated through advanced software and control systems to operate as a single, integrated power resource.

A VPP aims to optimize energy generation, consumption, and storage in real time to meet demand, stabilize the grid, and maximize efficiency. By leveraging distributed energy resources, VPPs offer a flexible and responsive approach to managing electricity supply and demand, enhancing grid reliability, and supporting the integration of renewable energy sources.

Energy experts assert that VPPs are crucial for diminishing the power sector’s reliance on environmentally harmful fossil fuels as the country transitions towards electrifying transportation, buildings, and industrial sectors. While still in the early stages, VPPs are positioned for significant expansion in the United States in the forthcoming years.

Thanks to by President Joe Biden’s recent climate legislation, which incorporates incentives for electric vehicles, solar panels, and home batteries.

However, overcoming barriers to mass VPP deployment may require new policies. Senate Bill 1305 aims to accelerate VPP rollout by directing regulatory bodies, including the following:

California Public Utilities Commission (PUC),
California Energy Commission (CEC), and
California ISO to take actions supporting VPP deployment.

The bill includes provisions for PUC adoption of VPP procurement requirements for investor-owned utilities. The effectiveness of such a mandate hinges on policy details and enforcement mechanisms.

Legislation Propels California’s VPP Evolution

SB 1305 also tasks the CEC and CAISO with estimating the potential of “resource adequacy-qualifying virtual power plant resources” and addressing regulatory barriers.

This initiative builds upon California’s existing goal of achieving 7 GW of flexible demand by 2030. This aim is set to reduce consumer electricity demand during grid stress periods.

The Brattle Group’s assessment reveals that batteries installed at homes and businesses, often coupled with rooftop solar arrays, hold the highest potential for inclusion in software-steered Virtual Power Plants (VPPs).

By 2035, these batteries could cover 5.1% of California’s peak power demand. Synchronized smart thermostats follow closely, offering 4.3%, while managed EV charging, automated demand response, and grid-interactive water heating contribute 3%, 2.3%, and 0.5%, respectively.

The projected 7.7 GW of VPP market potential from these technologies could yield significant savings by 2035. A staggering amount of over $750 million per year could be avoided in traditional system infrastructure investments. Approximately $550 million of these savings would directly benefit consumers.

Realizing the Benefits of VPPs for All Californians

Edson Perez, California lead at Advanced Energy United, emphasizes the tangible benefits of VPPs for Californians, saying that:

“Virtual power plants offer a very real opportunity for Californians to get paid back directly for helping keep the lights on in communities across the state.”

Accessible VPP technologies like smart thermostats and electric vehicles offer residents payments for their participation, he further noted. This would lead to more affordable rates and increased grid resiliency for all ratepayers.

To realize these benefits, the report suggests California adopt emerging best practices for VPPs, drawing from experiences globally. While pilot projects have provided valuable lessons, the focus now must shift to full-scale deployment.

Regulators are also encouraged to ensure that successful pilot programs transition into broader implementation. Additionally, the report recommends providing sufficient incentives to encourage consumer participation in VPPs and support utilities or third-party aggregators in implementing and operating them.

Current payment structures may not fully reflect the value of VPP participation, requiring performance-based incentives for utilities and aggregators. Third-party aggregators could be incentivized with better access to wholesale markets and opportunities to participate in distribution investment deferral programs, among other strategies.

This interesting development comes handy as California faces a challenging task to meet its climate goals. The state must almost triple its efforts in reducing annual emissions to achieve its 2030 target.

Virtual Power Plants represent a crucial step towards a more flexible, efficient, and sustainable energy future. They offer tangible consumer benefits, grid reliability, and the integration of renewable energy sources. Policy initiatives like SB 1305 signal a commitment to accelerating VPP deployment, paving the way for a cleaner energy landscape.

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Copper’s Price Breakout and Big Role in a Net Zero World

April 19, 2024/in Uncategorized /by

Copper is a metal in high demand amidst the energy transition towards net zero emissions and low carbon. This demand stems from its crucial role in powering many technologies pivotal to this transition, including renewable energy generation, electric vehicles, and efficient grid infrastructure.

Copper Prices are Breaking Out

In 2024, copper equities experienced a significant upturn, largely driven by a series of market dynamics including reductions in Chinese smelter activity, global supply concerns, and robust demand forecasts.

Notably, companies like Antofagasta have seen their share values surge, with the top five copper firms witnessing impressive growth. They outperform the broader materials sector.

Supply Challenges and Market Optimism

The closure of the Cobre Panama mine, a substantial global copper source, shifted market expectations from surplus to deficit, contributing to the upward price trajectory. This shift was amplified in March when Chinese smelters decided to reduce output amid a concentrate shortage, leading to a notable price increase as seen below.

Market analysts suggest this trend reflects a mix of speculative buying and genuine supply constraints, pointing to a potentially sustained bullish market for copper.

Meanwhile, the majority of copper-focused equities are currently at or near their 52-week highs. Many are trading above consensus net asset value and analysts’ long-term copper price assumptions.

Implications for Investors and Future Demand

While the rally in copper prices is encouraging for investors, analysts caution that the market needs to validate this trend beyond short-term momentum. The sector’s performance could influence earnings, especially if copper maintains its price above $4 per pound.

Beyond immediate market mechanics, copper’s role in powering AI technology and supporting green energy transitions underscores its long-term value. This signals a sustained demand and investment interest in the metal’s future.

The Critical Role of Copper in Net Zero

Copper plays a crucial role in achieving net zero goals due to its indispensable properties in various key technologies essential for the transition to sustainable energy.

As the world shifts towards renewable energy sources such as solar and wind power, copper is vital for the efficient transmission and distribution of electricity. Additionally, copper is integral in the manufacturing of electric vehicles (EVs) and the development of robust grid infrastructure to support EV adoption.

Its conductivity, durability, and efficiency make copper an essential component in enabling the transition to a cleaner, more sustainable energy landscape. And thereby, contributing significantly to the realization of net zero emissions targets.

Here are the detailed reasons for copper’s significance:

High Electrical Conductivity

Copper has the highest electrical conductivity rating of all non-precious metals. This property is crucial for the efficient transmission of electricity in various applications, including renewable energy technologies like solar photovoltaics (PV) and wind turbines, as well as electric vehicles (EVs) and the infrastructure that supports them, such as charging stations and the electrical grid.

Image from Visualcapitalist.com

Thermal Conductivity and Efficiency

Copper’s thermal efficiency is about 60% greater than aluminum, which means it can remove heat far more rapidly. This makes it ideal for use in components that generate significant amounts of heat, such as electric motors and inverters. Efficient heat dissipation is essential for maintaining the performance and longevity of these components.

Ductility and Malleability

Copper is easily shaped into wires, pipes, or sheets, which is beneficial for manufacturing a wide range of components used in renewable energy systems and EVs. Its ductility allows for the creation of fine, intricate wiring needed in advanced electrical systems.

Recyclability

Copper is 100% recyclable and can be used repeatedly without any loss of performance. This sustainability aspect is critical for the energy transition, as it supports the circular economy and reduces the need for new mining activities.

Essential Role in Renewable Energy Technologies

Renewable energy systems, such as solar PV and wind turbines, require significantly more copper compared to traditional energy systems. For instance, solar PV installations can use between 2,450–6,985kg of copper per megawatt of power generation, and a typical 660-kW wind turbine contains around 350kg of copper. The copper is used in the cabling, wiring, and heat exchangers that are integral to the operation of these systems.

Demand in Electric Vehicles

EVs use up to four times as much copper when compared to an internal combustion engine (ICE) passenger car. Copper is used in every major EV component, from the motor to the inverter and the electrical wiring. A fully electric vehicle can use up to a mile of copper wiring, according to Wood Mackenzie.

Infrastructure Development

As the transition to renewable energy and electrification accelerates, the demand for copper in infrastructure development, such as power grids and charging stations, is expected to rise. Copper is used extensively in the electrical grid to connect renewable energy sources to consumers and in charging stations to facilitate the rapid charging of EVs.

Copper Supply and Demand Challenges for Net Zero

The demand for copper is projected to grow significantly, with estimates suggesting that it could nearly double by 2035. However, the supply of copper is not keeping pace with this demand, leading to concerns about potential shortages that could hinder the energy transition.

Chart from Visualcapitalist.com

New mining initiatives and increased recycling efforts are needed to meet the growing demand for copper in the energy transition.

Copper’s unique physical properties, its role in renewable energy technologies, and its importance in the infrastructure necessary for a low-carbon future are the main reasons for its high demand in the energy transition to net zero emissions.

The challenges associated with meeting this demand underscore the need for strategic investments in copper production and recycling to support the global shift toward sustainable energy sources.

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Is the Battery Boom Heating Up? California Leads the Charge!

April 18, 2024/in Uncategorized /by

California ISO (CAISO) is gearing up for another rapid expansion in battery storage capacity in 2024, building upon its position as the leading provider of electrochemical energy storage assets in the United States.

Developers are set to install 6,813 MW of battery power storage within CAISO’s jurisdiction this year, per S&P Global Market Intelligence data. It will largely consist of 4-hour lithium-ion resources, marking a significant increase from the additions seen in 2023.

Non-hydro energy storage connected to CAISO’s grid stood at 8,453 MW at the start of the year. Most of which was built over the past 4 years.

Charging Ahead with Battery Power

Battery projects constitute the largest portion of the planned 12,126 MW of net CAISO capacity additions in 2024. This is followed by an anticipated new solar capacity of 4,801 MW, often integrated with storage.

Despite potential delays in development timelines, many projects scheduled for completion in 2024 are progressing toward energization ahead of the peak summer demand season. Among them is Calpine Corp.’s Nova Power Bank in Menifee, Calif., a massive 680-MW/2,720-MWh battery system expected to come online in June.

Backed by 5 separate offtake agreements and over $1 billion in debt financing, the Nova Power Bank marks the emergence of Houston-headquartered Calpine as a major developer of battery storage facilities in the United States.

This expansion complements its existing portfolio of approximately 26 GW of operating gas and geothermal assets across North America.

The Nova Power Bank project is set to be deployed in phases. Two 230-MW sections are slated to enter commercial operations in June under contracts with Southern California Edison Co. (SCE). This will be followed by a 50-MW phase for community choice aggregator Peninsula Clean Energy in August.

Furthermore, another 110-MW section for SCE will start service in September, with a final 60-MW tranche to start in 2025. This timeline positions the Nova Power Bank to become operational in less than 5 years following the retirement of GE’s financially struggling combined-cycle gas plant in January 2020.

Alex Makler, senior vice president of Calpine’s Western US region, noted in an interview.

“It’s [battery storage] not only economically valuable; it’s really valuable from a system planning standpoint. It helps with ensuring reliability, adequate supply and it makes room for even more development of renewables.”

Powering Progress with Clean Energy Projects

Arevon Energy Inc. is also actively constructing storage and solar projects in California. These include the Condor Battery Storage Project in San Bernardino County and the Vikings solar-plus-storage complex in Imperial County.

Long-term offtake agreements with utilities and community choice aggregators support these projects.

The contracts assist in meeting the requirements set forth by the California Public Utilities Commission’s significant 2021 mandate for load-serving entities to secure a minimum of 11,500 MW of clean energy resources by 2026.

The directive was originally designed to address potential shortfalls resulting from the anticipated decommissioning of Pacific Gas and Electric Co.’s 2,240-MW Diablo Canyon nuclear power plant in San Luis Obispo County, California, as well as several aging gas plants.

Diablo Canyon nuclear power plant in San Luis Obispo County

The aim is to meet state regulations mandating the procurement of clean energy resources. The delay in retirements of aging gas plants and the Diablo Canyon nuclear power plant has prompted a slowdown in generation retirements in California, with only minimal capacity expected to retire in 2024.

As the development of energy resources accelerates, CAISO is undertaking reforms to streamline its generator interconnection process. This is to ensure a smoother pathway for future energy and storage projects.

This initiative aligns with the state’s ambitious goals, such as those outlined in Senate Bill 100. The ultimate goal is to reinforce the importance of timely and efficient resource onboarding to maintain progress toward sustainable energy.

Energizing Homes with Sustainable Battery Solutions

Once finalized, the Nova Power Bank project could provide power for up to 680,000 homes for up to 4 hours. This capacity is particularly crucial during the early evening hours when power demand surges, coinciding with low solar power generation.

Calpine is actively exploring opportunities to enhance or replace additional facilities within its portfolio with battery systems. This move aligns with a broader industry trend of leveraging existing infrastructure and leveraging federal tax credits.

Calpine has already integrated lithium-ion batteries into its operations at the Russell City Energy Center in Hayward, California, providing “black start” capability to aid grid recovery from blackouts. Integrating batteries into generation operations allows for quicker starts and smoother startup or shutdown processes, Makler explained.

The company boasts a pipeline of around 2,000 MW of additional battery power storage capacity in California. This includes standalone projects and systems co-located with other power plants.

The state has massively increased its battery storage by 757% in just 4 years, from 2020 to 2023 as seen below.

Source: California Energy Commission

California ISO is leading the charge in battery storage expansion, with 6,813 MW of capacity slated for installation in 2024. As the state pushes towards clean energy goals, streamlined interconnection processes and innovative projects like Nova Power Bank will be instrumental in maintaining progress towards its decarbonization journey.

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SLB to Acquire 80% of Aker Carbon Capture: A Massive Boost for CCUS

April 18, 2024/in Uncategorized /by

Schlumberger aka SLB, the leading oilfield services company in the US Schlumberger aka SLB, the leading oilfield services company in the US has acquired a majority stake in Norway’s Aker Carbon Capture to advance their carbon capture technology at an industrial scale.

This merger, announced in late March 2024, is a significant step in reinforcing the decarbonization objectives of both companies.

Unlocking the SLB- Aker Carbon Capture Deal

SLB is set to acquire 80% of Aker Carbon Capture Holding (ACCH) for NOK 4.12 billion, including the operations of ACC. ACC will retain a 20% ownership, cementing its role as a key player in the partnership.

SLB will also integrate its carbon capture business into the merged entity. Over the following three years, SLB could make extra payments of up to NOK 1.36 billion depending on the business’s performance.

The regulatory approval of the transaction is pending but expected to close by the second quarter of 2024.

With SLB’s merging into ACC, the stage is set to leverage technology, expertise, and delivery platforms. It promises to reshape the landscape of carbon capture and utilization.

Olivier Le Peuch, CEO of SLB, emphasizes the urgent need to scale carbon capture technologies to meet global net-zero targets.

She has also highlighted the importance of lowering the operational cost and has noted,

“Crucial to this scale-up is the ability to lower capture costs, which often represent as much as 50-70% of the total spend of a CCUS project. We are excited to create this business with ACC to accelerate the deployment of carbon capture technologies that will shift the economics of carbon capture across high-emitting industrial sectors.”

SLB and ACC aim to accelerate the deployment of carbon capture solutions across high-emission industries, catalyzing a transformative shift in the economics of carbon capture.

SLB’S carbon budget curve:

Source: SLB

SLB’s sustainability report 2022 charts out:

“The carbon budget curve shows the reduction in CO2 e emissions needed over the coming century to limit the global rise in temperature to only 1.5 degrees C, as set by the Paris Agreement. Climate change projections show that the world will reach the budget for this target just eight years from now—in 2030.”

SLB’s mission is to balance emissions in the coming decades with ongoing net negative carbon actions post-2050 to safeguard the planet.

SLB: Pioneering Pathways in New Frontiers

Last year, SLB signed a strategic partnership with Microsoft and the Northern Lights joint venture. It underscored the crucial role of digitalization in streamlining carbon capture workflows.

From SLB’s official website, we discovered that the company is developing extraordinary industry-leading CCUS technologies to address CO2 emissions.

We have streamlined their work ethics below:

Select and design sequestration sites for carbon capture and treatment. Construct high-quality wells to ensure long-term integrity.
Monitor CO2, verify performance, and assure regulatory compliance.
Use digital tools- automation, AI, data management, and sophisticated sensors to enhance operations.
Pioneer an advanced technology portfolio tailored to support CCUS operations throughout every project phase.

SLB’s collaboration with Aker aims to enhance the efficiency and scalability of carbon capture operations. The former can demonstrate its expertise by integrating cloud-based platforms and advanced simulation systems.

Aker’s Global Carbon Capture and Storage (CCS) Ambition

Carbon capture and storage (CCS) reduces or removes CO2 emissions, offering industrial emitters viable decarbonization options. The International Energy Agency (IEA) strongly believes that “reaching net zero will be virtually impossible without CCUS.”

The IEA estimates that by 2030 the world will need to capture over one gigaton of CO2 annually. This figure is expected to surge over six gigatons by 2050.

Egil Fagerland, CEO of ACC has noted,

“The decision to combine ACC and SLB’s carbon capture business is underpinned by a strategic vision that reflects our commitment to accelerate the industrial adoption of carbon capture,”

He also believes that the company’s integrated suite of technologies and extensive global reach will scale up its profits. Consequently, it would benefit their customers, employees, and shareholders.

In parallel with the merger, Aker BP and OMV (Norge) AS have secured a Poseidon license, in CCS on the Norwegian Continental Shelf. The Poseidon license has the potential to store over 5 million tons of CO2 per year. It paves the way for the injection of captured emissions from industrial sources across North-West Europe.

Image: A typical CCS value chain:

source: Aker Carbon Capture

Furthermore, the US government’s commitment has also fuelled the momentum to combat climate change. The Biden Administration’s ambitious emissions reduction targets have spurred investment in carbon capture initiatives. In this mission, technology and innovation will play a pivotal role in achieving net zero by 2050.

The merger between SLB and Aker Carbon Capture ushers a new era in industrial carbon capture. United with a common vision, these industry titans should lead the way to a greener future.

FURTHER READING: Nvidia AI Tech Ramps Up Carbon Capture & Storage Predictions 700,000x (carboncredits.com)

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Netflix, Apple, Shell, Delta Join Kenya’s Carbon Credit Boom

April 18, 2024/in Uncategorized /by

According to a recent report by the World Bank, American video streaming company Netflix, technology giant Apple, and British oil multinational Shell are among the prominent global companies tapping into Kenya’s voluntary carbon market (VCM).

The report, titled ‘Carbon Market Guidebook for Kenyan Enterprises,’ reveals that in 2022, Kenya ranked as the second largest issuer of VCM carbon credits in Africa, trailing only the Democratic Republic of the Congo.

Since the launch of the African Carbon Markets Initiative (ACMI) in 2022, Africa’s huge carbon credit potential has been unlocked. ACMI aims to mobilize climate finance for the continent, focusing on clean energy access and sustainable development. By leveraging carbon markets, the ACMI directs funds to emissions reduction projects, addressing energy poverty and promoting renewable energy.

RELEVANT: Unleashing Africa’s Climate Finance with Billions of Carbon Credit Potential

From Hollywood to Oil Fields: Big Players Enter Kenya’s Carbon Market

Since 2011, Kenya has issued over 59 metric tons of carbon credits to various projects. Eighty three percent of these credits come from voluntary markets.

Most of the voluntary carbon credits issued in Kenya stem from nature-based projects. However, the report further highlights that tech-based projects are beginning to emerge in the market.

In a carbon credit market, organizations and individuals purchase credits generated through emission reduction projects to offset their carbon footprint. Companies whose business operations pollute pay significant sums to support initiatives aimed at removing or absorbing CO2 from the atmosphere.

Each credit represents the reduction or removal of one tonne of CO2 from the air, often achieved through projects focused on combating deforestation, particularly in developing countries.

The primary purchasers of VCM credits in Kenya have been major corporations such as Netflix, Apple, Shell, Air France-KLM, BHP, Delta Air Lines, and Kering, the report notes. Other notable companies participating in Kenya’s carbon credits market include Nedbank from South Africa, Nespresso from Switzerland, and Zenlen Inc.

Unveiling Kenya’s Carbon Credit Landscape

The report highlights that most of the carbon credits generated from Kenya in voluntary markets have been attributed to forestry and land use projects. Specifically, these credits have been issued to four developers, three of which are based in Kenya:

Wildlife Works Carbon,
Chyulu Hills Conservation Trust, and
Northern Rangelands Trust.

These organizations have contributed to carbon credit generation through initiatives aimed at reducing emissions from deforestation and forest degradation (REDD+). They also focus on implementing sustainable grassland management projects to support local environmental conservation efforts.

Additionally, household and community-based credits, particularly those related to cookstoves, represent another significant type of credit generated in the country.

However, there’s limited transparency regarding the prices paid for these credits. They have primarily been sold through bilateral negotiations over the counter, making it challenging to determine the exact prices. The enterprises responsible for these credits are more fragmented and often rely on carbon credit revenue to achieve profitability.

A small portion of credits generated in Kenya have also been sold in compliance markets, issued through the Clean Development Mechanism.

The World Bank has previously estimated the cost of eliminating a ton of carbon dioxide to be between $40 and $80 based on the Paris Climate Agreement. Yet, the specific prices paid for these Kenyan credits remain undisclosed.

Carbon Credit Rush: Kenya Emerges as Africa’s Contender

In 2021, several major companies purchased carbon credits from Kenya and Uganda. Delta acquired a total of 1,164 kilotons of Carbon equivalent (KtCO₂e) from both countries, while Netflix and BHP purchased 699 and 200 KtCO₂e from Kenya alone.

In 2022, 11 million VCM credits were issued to Kenya, making it the second-largest issuer of carbon credits in Africa after the Democratic Republic of the Congo, which issued 24 million credits.

Zambia, Uganda, and Malawi issued 4, 3, and 3 million credits, respectively.

The call for carbon credits as a significant revenue source for Kenya comes amid growing awareness of the environmental impact of industries such as fossil fuels, agriculture, fashion, and transportation. President William Ruto has been advocating for carbon credits to mitigate emissions and generate income for the country.

At the 28th United Nations Climate Summit (COP28) held in Dubai in December last year, Kenya joined other nations in emphasizing the importance of carbon markets as complementary to emission reduction efforts. The countries stressed the need for transparency and high-integrity standards to maximize the effectiveness of these markets.

In response to this, the Ministry of Environment in Kenya published draft regulations that would regulate the carbon market. Among the proposals is the stipulation that 25% of the revenue generated by private companies from the sale of carbon credits would be directed to the government.

Additionally, the ministry plans to establish a national carbon registry that would serve as a database for all issued or recognized carbon credits. Private companies have to register with this registry and pay a fee to begin accumulating carbon credits.

These measures aim to ensure market accountability and transparency while providing a framework for revenue generation and conservation efforts.

Kenya’s voluntary carbon market is gaining traction among global players, with tech giants and oil companies jumping into the fray. With Africa’s carbon credit potential unlocked, Kenya aims to harness this market to combat climate change and drive sustainable development.

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Could Merchant Nuclear Plants be the Savior of Power-Hungry Data Centers?

April 18, 2024/in Uncategorized /by

Merchant nuclear power plants are finding a sweet spot in supplying on-site energy to tech companies constructing data centers across the United States. With a combined capacity of nearly 22 gigawatts (GW), these nuclear reactors possess advantages like ample space and cooling water.

By having nuclear generation on-site, data centers can avoid congested interconnection queues, ensuring a reliable power supply.

Constellation Energy Corp., Vistra Corp., NRG Energy Inc., and Public Service Enterprise Group Inc. are among the companies benefitting from the surge in their stock prices. These firms could reap significant financial rewards as electricity markets tighten, driven by the rising energy demands of data centers.

Powering the Digital Age

The growing energy needs of data centers are creating ripple effects in both the power generation and retail markets. Major tech companies, like Amazon Web Services Inc., are willing to pay premiums for continuous electricity. This is evidenced by their recent purchase of a data center campus in Pennsylvania for $650 million.

The campus, boasting a capacity of up to 960 MW for datacenters, sits adjacent to Talen’s Susquehanna Nuclear power plant. The nuclear facility generates a whopping 2,494 MW of power to fuel its operations.

This Amazon transaction signals an increased interest in securing round-the-clock power supply from nuclear plants. The potential pricing is expected to be around $30 per megawatt-hour (MWh).

The International Energy Agency forecasts that electricity consumption in data centers will rise from 200 terawatt-hours (TWh) in 2022 to around 1,050 TWh in 2026. That is equivalent to the energy demand of Germany.

This surge is expected to represent about 6% of the United State’s total power demand. The country is home to 33% of the world’s data centers.

The Growing Demand of Energy-Hungry AI

According to the IEA report, data centers globally consumed 460 terawatt-hours (TWh) of electricity in 2022, which accounted for 2% of total global electricity usage. Within data centers, the most energy-intensive processes are computing power and cooling.

With the rapid expansion of Artificial Intelligence (AI) services in the past year, data center providers have been investing in power-hungry Graphics Processing Units (GPUs) to meet the growing demand.

Another estimate forecasts that by 2027 the AI sector could use between 85 to 134 terawatt-hours every year. That figure is equivalent to the annual energy demand of the Netherlands.

In a study where the authors tested 88 different AI models across various applications, they repeated each task 1,000 times and estimated the energy consumption.

They found that many tasks showed low energy use. For instance, the AI model generated 0.002 kWh for classifying written samples and 0.047 kWh for generating text. To put this into perspective, it’s like the energy consumed during nine seconds or 3.5 minutes of Netflix streaming, respectively, for each task repeated 1,000 times.

However, image-generation AI models had significantly higher energy consumption, averaging 2.907 kWh per 1,000 inferences. The paper highlights that this is nearly equivalent to the energy used to charge an average smartphone, emphasizing the energy-intensive nature of AI image generation.

In Alex de Vries estimates, a PhD candidate, from 2010 to 2018, energy consumption in data centers remained relatively steady. It constituted about 1-2% of global energy consumption.

While demand increased during this period, de Vries explains that hardware efficiency also improved, effectively counterbalancing the rise in demand.

Renewable Solutions for Data Center Growth

In response to this alarming increase in energy demand to meet data center expansion, grid planners have adjusted their load growth forecasts accordingly, reflecting the escalating energy demands of data centers.

Due to their sizable capacities, nuclear plants like the Salem units in New Jersey and Beaver Valley in Pennsylvania are ideal for colocation with data centers.

Renewables’ developers, such as AES Corp. and NextEra Energy Inc., are also well-positioned to capitalize on the data center boom. They could offer on-site primary power generation solutions to tech giants.

Meanwhile, renewable developers have secured contracts for over 4,000 MW of capacity, catering to data centers’ energy needs. AES, for instance, has contracted 1,000 MW from its Bellefield and Bellefield 2 solar projects in California. Each project comes with battery storage capacity.

Additionally, innovative combinations of wind, solar, and natural gas-fired generation are being explored to provide reliable, low-carbon power to data centers.

As the demand for data centers continues to grow, the convergence of nuclear energy and technology industries presents lucrative opportunities for both traditional and renewable energy providers to meet the evolving needs of the digital age.

Could those merchant nuclear plants be the answer to the rapid growth of data centers and the rise of AIs? This would be an interesting development to have an eye on.

The post Could Merchant Nuclear Plants be the Savior of Power-Hungry Data Centers? appeared first on Carbon Credits.

Laconic Works with Emsurge to Make Carbon Market More Efficient

April 18, 2024/in Uncategorized /by

Laconic has announced a strategic partnership with Emsurge Limited to provide subscribers of its SADAR NCM platform with access to live wholesale carbon pricing data. This collaboration aims to empower Laconic customers with real-time insights and analysis to make informed decisions in the carbon market.

Through the partnership, Laconic SADAR NCM subscribers will gain access to live wholesale carbon pricing, including anonymous daily bids, ask, and last-traded pricing on voluntary carbon credits. This integration of continuous updates from Emstream broker clients to the Emsurge data stream will enable Laconic customers to have real-time price discovery, trading, and valuation data within a single platform.

Empowering Decisions with Real-Time Insights

The Laconic SADAR NCM platform plays a crucial role in providing the structured information interchange required for carbon markets to function properly at scale. By integrating carbon pricing data, Laconic SADAR NCM subscribers can evaluate the valuation of complete portfolios and individual constituent positions.

Additionally, subscribers can utilize the platform’s watch-list functionality to automate pre-trade diligence activities and capitalize on transient market conditions.

Buyers and traders of voluntary carbon credits can source these carbon market financial instruments in various platforms and marketplaces. These credits are available in spot markets, carbon exchanges, and directly from developers.

Other online marketplaces also trade carbon credits, like Salesforce’s Net Zero Marketplace. These markets share the same goal: to make carbon credits available to wider supporters of carbon emission reduction projects.

The biggest challenge is to make these markets more transparent and trustworthy to help scale up carbon reduction initiatives.

This is where the Laconic SADAR Natural Capital Monetization platform comes in to help the market.

Tailored specifically for the carbon market ecosystem, SADAR NCM stands out as the premier carbon data management and interchange platform globally. Subscribers of SADAR NCM gain privileged access to timely and accurate information. This precisely meets the liquidity and compliance needs essential for conducting trades efficiently within the global financial markets.

Unlocking Transparency in Trading Carbon Credits

The carbon credit platform also uses the Laconic Universal Carbon Identifier (LUCID). It is a groundbreaking initiative establishing the first globally harmonized record of carbon credit issuance in the industry.

This unique identifier code serves as a reference point, linking each carbon credit to its distinct geospatial data, physical provenance information, jurisdictional compliance confirmations, and additionality activity.

Much like an ISIN (International Securities Identification Number) serves as a globally harmonized identifier for financial securities such as stocks and bonds, LUCID provides a standardized framework for tracking and verifying the origins and attributes of carbon credits.

On the project details page, users can access a historical view of the project’s carbon credit vintage, including retired credits. Additionally, they have the option to explore the project’s documents and leverage Laconic’s data pedigree engine scoring. This scoring assesses the quality of the data associated with the project and provides an overall evaluation of its quality.

Melissa Lindsay, CEO, and Founder of Emsurge Limited, emphasized the significance of their partnership with Laconic. She particularly noted that:

“Laconic’s SADAR NCM platform provides participants with a much needed, trusted analysis of the accuracy and transparency of data. Emsurge’s pricing data feed will give Laconic’s customers actionable insights to make more informed investment decisions.”

Pioneering Carbon Trading Evolution

Emsurge Limited, a UK-based SaaS company, specializes in digitalizing traditionally opaque brokered environmental product markets. Founded in 2018 alongside Emstream, Emsurge captures live market data from hundreds of carbon projects worldwide.

With over 10 million tonnes of carbon traded and a substantial list of companies and projects on its platform, Emsurge is instrumental in scaling climate finance through digital market infrastructure.

Emstream focuses on the Voluntary Carbon Market (VCM) and provides the necessary technology to facilitate its scalability. They employ a hybrid approach, using both voice and digital channels, to connect buyers or investors with carbon projects that align with their interests and objectives.

Emstream also provides free access to its wholesale broking platform, Emsurge, for corporate buyers, project developers, or traders who value transparency. Emsurge stands out as the sole procurement platform offering a wide range of opportunities, including spot, forward, term, and project finance options, within the carbon and IRECs (Renewable Energy Certificates) markets.

Working together with Laconic, Emsurge brings carbon trading to the next level.

Andrew Gilmour, Laconic’s Co-Founder and CEO, reiterated the company’s commitment to eliminating market friction and enabling carbon trading at scale. He highlighted the SADAR NCM platform’s role in building trust through verified and immutable carbon project data.

Laconic’s collaboration with Emsurge heralds a new era in carbon market transparency and efficiency. Together, they aim to enable governments, corporations, and financial institutions to engage equitably in carbon trading activities globally.

The post Laconic Works with Emsurge to Make Carbon Market More Efficient appeared first on Carbon Credits.

Expert Predicts ‘Double-Digit’ Price Hike for CCP-Labeled Carbon Credits

April 17, 2024/in Uncategorized /by

The Integrity Council for the Voluntary Carbon Market’s (ICVCM) issuance of Core Carbon Principle (CCP) labels could significantly impact the price of carbon credits, potentially increasing it by $10 or more, according to Simon Jones, Founder and Managing Director of Emral Carbon. Jones made this assertion during a webinar panel hosted by the carbon intelligence platform Abatable.

Charting the Course to Premium Carbon Credits

Drawing parallels with projects under Article 6 of the Paris Agreement, Jones noted that cookstove projects with corresponding adjustments have been trading at a premium in the double digits.

Article 6 establishes mechanisms for countries to transfer credits to other nations while ensuring they aren’t counted twice. For instance, Ghana issued a corresponding adjustment to a volume of cookstove credits developed by atmosfair in November. This move will safeguard them from being counted towards the country’s nationally determined contributions.

Other market experts also express confidence in the likelihood of carbon credits labeled with CCPs commanding a double-digit premium compared to those without such labels. This potential premium could significantly impact the carbon credit market.

Read this to learn more about ICVCM’s CCPs: The Core Carbon Principles

Currently, the Voluntary REDD+ Credits Average stands at $11.21 per metric ton for V23. Meanwhile, biochar credits typically trade at over $100 per metric ton. Bids for biochar credits were reportedly heard between $134 to $145 per metric ton.

The Integrity Council for the Voluntary Carbon Market has been evaluating over 100 carbon credit methodologies from 6 different registries based on its CCPs and Assessment Framework published last year. The Working Group has categorized carbon credits into one of 3 types of assessment.

The Council has initially aimed at announcing its first CCP labels by the end of March. But it has adjusted this timeline and expects to announce which methodologies have met its principles over the coming months.

Projections and Realities of CCP Label Assessments

The webinar hosted by Abatable aimed to explore the potential impact of CCP labels and other quality frameworks on stratifying the voluntary carbon markets. Around 71% of the market’s total credits are represented by methodologies applied for assessment by the ICVCM.

Abatable, conducting its own evaluation of methodologies based on the ICVCM framework, anticipates that only 6.4% are likely to receive a Core Carbon Principle (CCP) label.

These methodologies, primarily focused on waste management and industrial efficiency, currently offer 32 million credits. This accounts for 3.8% of the existing supply.

A further 36.7% of methodologies are deemed to have a medium likelihood of receiving a CCP label. Meanwhile, the majority of the credits come from renewable energy and cookstove projects.

RELEVANT: Up in Smoke? Study Questions Accuracy of Cookstove Carbon Credits

About 54% of the surplus credits in the market were from methodologies that are currently undergoing review by the CCP, per Abatable report.

Source: Abatable

However, methodologies related to nature-based solutions are less likely to receive a CCP label due to ICVCM’s stringent permanence requirements. For over 2 years, the prices of nature-based carbon credits (NGEO) have been on a never-ending cliff as seen below.

NGEOs, or Nature-Based Carbon Credits, are credits generated by projects implementing nature-based solutions to reduce, remove, or prevent carbon emissions. These projects often involve activities such as forest conservation or restoration, which sequester carbon in trees and soil, or agricultural practices that decrease emissions and enhance carbon storage.

However, despite their potential environmental benefits, the demand for NGEOs has been diminishing. This decline is largely attributed to the absence of standardized regulations governing carbon markets. Recent studies have highlighted concerns about the reliability of the system, particularly emphasizing the lack of clear rules and guidelines.

Navigating the Future of CCP Labels

Coco Chernel, a research associate at Abatable, emphasized that those projections are based on a conservative interpretation of ICVCM’s Assessment Framework. The final determination of CCP labels may depend on the multi-stakeholder working groups’ interpretations of uncertainties and the Assessment Framework.

Simon Jones of Emral Carbon highlighted that CCP labels and other quality initiatives could create multiple tiers within the carbon market, potentially resulting in a four-tiered market structure. He further said that:

“They [CCP labels] can’t be used as a proxy for project-level quality. So, you still need to do your due diligence on individual projects. I think one also has to bear in mind insurability, bankability of projects, and so on.”

Jones also pointed out that the timing of ICVCM’s label announcements could have unforeseen impacts on carbon markets. As ICVCM prioritizes methodologies delivering the highest volume, relying solely on CCP-labeled credits may overlook high-quality projects and credits that are not at the forefront of the queue.

Overall, CCP labels aim to enhance transparency and quality assurance in the voluntary carbon market. Still, stakeholders should remain vigilant and conduct thorough assessments to ensure the credibility and integrity of carbon credits.

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