Tesla, once again, is grabbing attention with its Q1 2023 revenue from the sales of carbon credits alone, not to mention income from selling electric vehicles (EVs).

The automaker recorded a 12% increase from the prior quarter’s sales, with $521 million in this first quarter compared to $467 million in Q4 2022.

Tesla has been earning revenues from the sales of its carbon credits for the previous years, reported a whopping $1.78 billion in 2022 alone.

Carbon credits, also known as carbon allowances or carbon offsets, are a way for companies to offset their footprint by investing in carbon reduction projects. These credits can be sold to other firms that struggle to meet emissions standards set by regulatory bodies like the California Air Resources Board or CARB.

Towering Up: Tesla Carbon Credits Revenue

Though Tesla has managed to improve its bottom line in previous quarters, carbon credit revenue continues to be a significant factor in Tesla’s earnings. In the current tough macro environment, Tesla would be in the red were it not for carbon credits – something that hasn’t happened in the last two years.

Tesla has been selling carbon credits to its peers such as Chrysler. It reportedly bought US$2.4 billion worth of Tesla’s carbon credits, accounting for most of the company’s sales in past years.

In 2019, the company made headlines when it earned a total of $600 million from selling carbon credits to fellow automakers that didn’t meet emissions standards set by CARB. 

Buying credits from Tesla allowed those companies to comply with regulations without making big changes in their own operations.

Reducing GHG emissions requires addressing both energy generation and use. This is what the transportation and energy sectors have been focusing on to slash their emissions.

Same as Tesla, other carmakers such as Audi, Porsche and Chrysler are also ramping up their electrification plans. Audi, for instance, aims to have 30 EV models by 2025 and have a 40% volume share of the EV market by that year.

Tesla has seized the net zero market through various revenue streams including EVs, solar installations, and carbon credits. But the rise of Tesla’s carbon credits sales over the years has significantly contributed to its revenues and profits.

Where Do All Tesla Carbon Credits Come From?

Tesla’s carbon credit income is all thanks to its EV production, which the company has also been the industry leader. The carmaker has been the top producer of innovative and eye-catching EV models since it started operating 20 years ago. 

In the first 3 months of the year, Tesla produced about 441,000 vehicles at four factories. Deliveries came in at about 423,000, representing a 36% increase year-over-year.

Tesla’s mission is to speed up the world’s transition to sustainable energy by electrifying transportation and the global economy.

Last month, Tesla proposed a path to reach a sustainable global energy economy through end-use electrification and sustainable electricity generation and storage. It’s outlined in the company’s paper “Master Plan Part 3 – Sustainable Energy for All of Earth”, with assumptions and calculations behind the proposal.

According to its analysis, the electricity sector gets 65 PWh per year of primary energy, including 46 PWh/year of fossil fuels. If the grid sources its power from renewable energy, the sector would need only 26 PWh/year of sustainable electricity generation.

In addition to producing EVs, Tesla also runs a solar panel installation business and sells energy storage systems. These operations are part of its quest for sustainability, which all generate carbon credits by avoiding carbon emissions.

Turning on the Switch of EVs

Electric vehicles are about 4x more efficient than internal combustion engine (ICE) vehicles, as per Tesla calculation. That’s mainly due to EVs’ higher powertrain efficiency, regenerative braking capability, and optimized platform design. 

The figure holds true across vehicle types – passenger vehicles, light-duty trucks, and Class 8 semis as shown in the table. 

For example, Tesla’s Model 3 energy consumption is 131MPGe compared with a Toyota Corolla with 34MPG, or 3.9x lower. The ratio is even more when factoring in upstream losses such as those from extracting refining fuel energy use. 

TESLA MODEL 3 vs. TOYOTA COROLLA ENERGY USE

Electrifying the transportation sector globally will reduce use of fossil fuels by 28 PWh each year. Applying the 4x efficiency factor for EVs, there will be an additional demand of ~7 PWh a year for electricity. 

According to a research body, the global EV market size accounted for US$205 billion in 2022 and will grow to around US$1.7 trillion by 2032.

Source: Precedence Research

In 2021, global EV purchases grew to 6.6 million, up from 3 million a year earlier, according to the International Energy Agency (IEA). EVs got a 9% share of the entire market and represented the total growth in global car sales. 

Tesla still took the lead in the U.S. EV market last year. Its cars are powered solely by the electrical charge stored in batteries. Technically, they’re called Battery Electric Vehicles or BEVs. 

One of the major reasons for Tesla’s dominance in the sector is this: Lithium ion batteries have the highest charge capacity among existing battery formulations. Thus, it makes Tesla EVs practical to have and to drive. 

As the world races to net zero emissions by 2050, electrification not just in transportation but across sectors is critical. Does this mean that demand for lithium will also increase?

The Rise of the “White Gold” 

Lithium is a non-ferrous metal known as “white gold”. It is one of the key components in EV batteries, alongside nickel and cobalt. 

A lithium-ion battery pack for a single EV contains about 8 kg of lithium, according to the US Department of Energy. But it can also depend on the battery size. A Tesla Model S’ battery, for instance, has over 62 kg of lithium.

The leading carmaker used around 42,000 tons of lithium carbonate equivalent in 2021. That’s more than 5x the combined lithium used by Ford and GM, according to BNEF data calculations. 

Global lithium production reached 100,000 tons or over 90 million kg last year. Meanwhile, the worldwide lithium reserves are about 22 million tons – or 20 billion kg, as per the US Geological Survey (USGS).

While China owns 70% to 80% of the entire supply chain for EVs and lithium-ion batteries, Chile has the world’s biggest lithium reserves. The South American nation is one of the so-called “Lithium Triangle” countries, along with Argentina and Bolivia. A little below 60% of Earth’s lithium resources are found in those three American countries.

The IEA’s 2050 Net Zero scenario says the world has to have 2 billion battery electric, plug‐in hybrid and fuel-cell electric light‐duty vehicles on the road by that date.

In Tesla analysis, lithium comprises 20% of the materials needed to deliver the energy storage in batteries for EVs relative to 2023 USGS data.

Statista projected the rising global demand for the white gold until 2030, increasing by over 700% from 2019.

Batteries will account for the bulk of lithium demand by the end of this decade, fueling the EV revolution.

The post Tesla Carbon Credits Revenue Up by 12% appeared first on Carbon Credits.

Apple had doubled its investment up to $200 million to expand its Restore Fund, also doubling the tech giant’s commitment to promoting carbon removal. 

The project, which is between Apple and partners including Conservation International, is funding nature-based carbon removal projects.

What is Apple’s Restore Fund?

Apple’s Restore Fund was launched in 2021 with an initial commitment worth $200 million from the company and its partners, Conservation International and Goldman Sachs.

It was part of Apple’s roadmap to be net zero for its entire supply chain and life cycle of every product by 2030. To achieve that, the company aims to lower all emissions by 75% by the same period and offset any remaining emissions with high-quality carbon removal credits.

The world’s largest tech company created the Fund to encourage investments into protecting and restoring critical ecosystems and scale nature-based carbon removal solutions. Through high-quality carbon credits the projects generate, help businesses deal with their residual emissions that they can’t yet reduce or avoid.

In addition to the initial $200 million, Apple will invest another $200 million in the Fund to expand it. Climate Asset Management, a joint venture of Pollination and HSBC Asset Management, will manage the new investment portfolio.

The new portfolio is also looking to remove 1 million metric tons of CO2 per year while aiming to generate a financial return for investors. 

For company suppliers-turned-partners in the fund, the portfolio will give them the means to decarbonize through high-impact carbon removal projects.

Commenting on the announcement, VP of Environment, Policy, and Social Initiatives, Lisa Jackson noted that:

“The Restore Fund is an innovative investment approach that generates real, measurable benefits for the planet, while aiming to generate a financial return… The path to a carbon neutral economy requires deep decarbonization paired with responsible carbon removal, and innovation like this can help accelerate the pace of progress.”

Apple and its partners are partnering with forestry managers for sustainable forest management for optimal carbon and timber production. Their work creates not just revenue from the timber but also from high-quality carbon credits. 

With the additional $200 million, the Restore Fund is set to grow with a new portfolio of carbon removal projects. 

Advancing a New and Unique Model for Carbon Removal 

Carbon removal is vital to mitigating climate change and reaching global climate goals, as highlighted by the scientific body, IPCC.

Apple and Climate Asset Management are taking a unique approach to prospect projects, pooling two different types of investments: 

nature-forward agricultural projects that yield revenue from sustainably managed farming practices, and 
projects that restore critical ecosystems that remove and store CO2. 

The goal of this unique blended fund structure is to achieve both financial and climate benefits for investors. All the while promoting a new model for carbon removal that addresses the potential for nature-based solutions. 

All investments in the Restore Fund are subject to stringent social and environmental standards.

Carbon Removal Investments for Apple’s Climate Goal

Apple has already achieved carbon neutrality for its corporate operations last year. But the leading tech also called on its suppliers to do the same across its operations by 2030. And that includes both their Scope 1 (direct emissions) and Scope 2 (electricity-related) emissions.

Achieving its ambitious climate goal is possible by offsetting Apple’s unavoidable emissions with high-quality carbon removal credits. 

Suppliers can cut their emissions by abating direct carbon footprint, improving energy efficiency, and shifting to using renewable energy. As progress of this advocacy, Apple revealed that 250+ of its manufacturing partners also pledged to use 100% renewable energy to power their production by 2030. 

The previous investments that the tech firm committed along with Conservation International and Goldman Sachs were in Brazil and Paraguay. Example of a Restore Fund project in Paraguay shown below involves a sustainably managed timber farm on one side of the road, and a preserved natural forest on the other side.

Source: Apple website

These carbon reduction projects will restore 150,000 acres of sustainably certified forests and protect another 100,000 acres of native forests, grasslands, and wetlands. They aim to remove 1 million Mt of CO2 from the atmosphere each year by 2025. 

Monitoring Investments Impact 

For accurate measurements and monitoring of the Restore Fund projects’ impact, Apple is using advanced remote sensing technologies. These include the Upstream Tech’s Lens platform, Maxar’s satellite imagery, and Space Intelligence’s Carbon and Habitat Mapper. Together, they help the company create forest carbon maps of the project areas. 

Apple also explores using LiDAR Scanner on iPhone to further improve monitoring capabilities on the ground. 

The detailed maps those tech produce will help ensure that projects meet Apple’s high standards before investments are made. They’re also important to quantify and verify the carbon removal impact of the projects over time.

The post Apple Invests another $200 Million in Carbon Removal Credits appeared first on Carbon Credits.

Investors were used to looking for companies to cut only their operational emissions and indirect emissions from energy purchases. But now they’re focusing on the entire business supply chain, meaning Scope 3 emissions are becoming more significant. 

This trend puts emissions from the value chain at the spotlight. But why is it important to account for this type of carbon emissions and why its disclosure is a must? 

This article will explain everything you need to know about Scope 3 emissions and the importance of disclosing and accounting for them.

The Importance of Evaluating Scope 3 Emissions

Scope 3 emissions, which include indirect emissions from a company’s value chain, often represent the largest portion of corporate-related emissions. But companies often neglect to disclose these emissions or simply mention them without enough details. 

The lack of transparency leaves investors in the dark when assessing the real climate risk exposure of their portfolios.

Good news for investors in the US, the EU, and New Zealand. Regulators in these countries proposed a mandatory Scope 3 emissions reporting for listed companies. 

Even the central banks are feeling the weight of this matter as they’re starting to take climate exposure into consideration. 

This growing awareness and increasing regulatory interest will likely lead to more Scope 3-related policies in the coming years.

Accounting for Scope 3 emissions is very flexible as they tend to be self-imposed. Yet, it’s still difficult to compare data across companies because of the varying emissions profiles even within sectors. 

Unfortunately for investors, companies often omit significant Scope 3 categories without providing transparent reasons for doing so. This is why stricter rules on disclosure are coming up, prompting large companies to start accounting for value chain emissions. 

Investors can use value chain emissions as an indicator of transition risk and gauge a company’s true climate ambition. 

After all, assessing exposure to carbon-intensive activities in value chains and products is critical for investors. It can help them expect any potential impacts on asset values and operating costs. 

So, it’s just reasonable for investors to demand more comprehensive and transparent Scope 3 disclosures and scrutinize them more closely. Doing so will help them better understand overall climate risk and identify potential greenwashing.

Scope 3 Emissions and the Greenhouse Gas Protocol

Scope 3 emissions, as defined by the Greenhouse Gas Protocol (GHG Protocol), cover all indirect emissions from a company’s value chain that are not owned or controlled by the company itself. These emissions extend beyond the direct operations (Scope 1) and purchased energy (Scope 2) emissions of a company. 

The GHG Protocol is a collaboration between the World Resources Institute and the World Business Council for Sustainable Development. It sets global greenhouse gas accounting and reporting standards, such as The GHG Protocol Corporate Accounting and Reporting Standard and The Corporate Value Chain (Scope 3) Standard. These standards are widely adopted by corporations and regulators. 

In 2016, 92% of Fortune 500 companies responding to the CDP climate questionnaire used GHG Protocol standards either directly or indirectly.

The GHG Protocol breaks down Scope 3 emissions into 15 distinct categories, covering both upstream and downstream activities. 

Source: GHG Protocol

Companies determine their own Scope 3 boundaries and report based on the categories’ relevance and materiality to their business. This can result in varying emissions profiles even among companies in the same sector. 

The differences in emissions profiles present a significant challenge in addressing this type of emissions. For instance, Alphabet considers emissions from downstream leased assets as “not relevant,” while Microsoft includes them in its emissions disclosure, despite their similar business nature.

In essence, it still depends on a company how it would regard a specific category. It’s up to them if the emission is material or not and relevant or irrelevant. In this case, providing enough disclosure details on emissions sources becomes even more important.

The Need for Improved Disclosure

Scope 3 emissions often represent the majority of corporate GHG emissions. 

For example, oil companies’ Scope 1 and 2 emissions are a small fraction of their total emissions, while the consumption and combustion of their products account for most emissions. 

In fact, CDP estimates that Scope 3 emissions make up 75% of related GHG emissions across all sectors. In the financial sector, financed emissions can be over 700 times greater than operational emissions.

Undeniably, emissions from the value chains have substantial impact but they are underreported or ignored most of the time. Large polluters simply claim that they have “no influence or control” over them. It is, thus, not surprising that Scope 3 emissions have lower disclosure rates than the other two emissions types. 

Big companies like those included in the S&P Global 1200 index face more pressure to disclose their sustainability performance. Despite this, the overall Scope 3 disclosure rate across the wider market is likely much lower.

Add to that the fact that many businesses don’t provide a detailed breakdown of their value chain emissions, preventing investors from understanding the full extent of climate risk exposure along value chains.

The number of reported categories may offer some insight into the completeness of corporate disclosure. But there is still significant room for improvement in both the quantity and quality of Scope 3 disclosures. 

Improved reporting will enable investors to better identify sources of emissions and potential solutions, ultimately contributing to a more accurate assessment of climate risks.

Why Net Zero Targets must Include, not Ignore Scope 3

As the momentum for net zero commitments grows at both the national and corporate levels, many companies still fail to address Scope 3 emissions in their climate pledges. 

Over 40% of corporate net zero targets do not cover Scope 3 emissions, even if they often represent the largest share of GHG emissions. Only 18% of companies in Net Zero Tracker’s survey of 2000 large, publicly-traded companies have set Scope 3 reduction targets.

Source: Net Zero Tracker 2022, HSBC

The Science Based Target Initiative requires a Scope 3 target if a company’s relevant Scope 3 emissions are 40% or more of related GHG emissions. This is to ensure that corporate emission reduction targets are in line with the latest climate science. 

Neglecting Scope 3 emissions in climate commitments not only weakens the overall climate strategy but also raises concerns about greenwashing.

For instance, Exxon Mobil faced criticism for its net zero announcement in January 2022, which included Scope 1 and 2 emissions while excluding Scope 3 emissions. 

Similarly, Brazilian meatpacker JBS reported flat emissions over 5 years. But the Institute for Agriculture and Trade Policy disagreed, saying that JBS’ emissions actually increased by 51% during that period. The NGO claimed that JBS ignored its supply chain emissions in its disclosures and commitments, thereby guilty of greenwashing.

Considering the huge impact of these emissions, it is crucial for companies to include them in their net zero targets to effectively address climate risks and avoid greenwashing.

Not to mention the potential legal consequences they may face considering climate policies’ growing focus on value chain emissions.

Including Scope 3 Emissions in Climate Policies

Regulators are increasingly focusing on Scope 3 emissions, with some markets already implementing mandatory disclosure requirements:

US: The SEC requires publicly listed companies to disclose Scope 3 emissions if material or included in their GHG reduction goals. US funds will have to report the GHG footprint of their portfolios.

EU: The EBA plans to require banks to disclose financed Scope 3 emissions starting July 2024. The European Commission proposes all large and listed companies to report in compliance with the European Sustainability Reporting Standards (ESRS), which require Scope 3 emissions disclosure.

New Zealand: The External Reporting Board proposed mandatory Scope 3 disclosure, emphasizing the need to cover the entire value chain.

Singapore: Singapore Exchange requires listed companies to report Scope 1, 2, and 3 emissions when appropriate.

The Disclosure Club and Climate Litigation

More jurisdictions will join the “mandatory disclosure club,” especially as the International Sustainability Standards Board (ISSB) includes Scope 3 emissions in its draft climate-related disclosure requirements. The official standards, expected by the end of 2022, could catalyze wider adoption of reporting standards and policy requirements for Scope 3 emissions.

Moreover, climate stress tests by central banks now include value chain emissions as a climate risk metric. Examples are the European Central Bank (ECB) and the People’s Bank of China (PBoC). Banks with high exposure to climate risks may face higher capital reserve requirements.

Climate change-related litigation is also on the rise, with some cases focusing on Scope 3 emissions. They have been brought into the courts, such as the case with Royal Dutch Shell. The court obliged Shell to reduce emissions relating to its entire energy portfolio, including value chain emissions. 

The case makes it even more important for investors to be aware of the legal risks associated with value chain emissions and their significance in climate risk assessments. 

Carbon pricing mechanisms rarely apply to Scope 3 emissions; but they can impact the costs of companies with high value chain emissions, such as those in the real estate sector.

Accounting for Scope 3 Emissions

Accounting for Scope 3 emissions becomes even more challenging due to the discretion allowed in selecting relevant categories, data availability, and sector applicability. But understanding of Scope 3 emissions is growing, and a more nuanced approach to disclosures will soon evolve.

Despite the more challenging accounting for value chain emissions, it shares the same principles as Scope 1 and 2 emissions. The major difference is the identification of relevant activities and boundary setting.

In general, here’s the overview of the steps involved according to GHG Protocol:

Overview of Steps in Scope 3 Accounting & Reporting

Key points when accounting for emissions from value chain:

Flexibility in selecting relevant  categories can make calculations, analysis, and comparisons challenging. Companies may exclude categories that are actually material to their business.
Timing of emissions adds complexity to Scope 3 accounting, as some emissions occur in the current year, while others may have occurred in the past or are yet to occur.
Double counting may occur as Scope 1 and 2 emissions for one company can be Scope 3 emissions for another. Aggregating Scope 3 emissions across companies or subsidiaries should be avoided.
Scope 3 emissions are more relevant to some sectors than others, and disclosure rates can provide an indication of relevance.

Overall, instead of aggregating across several companies, investors and companies should focus on analyzing Scope 3 emissions at an individual company level to determine exposure. This approach will offer a more complete picture of a business’s overall exposure to potential climate risks and impacts.

The post What are Scope 3 Emissions and Why Disclosure is Important? appeared first on Carbon Credits.

A capital transition company, Martello, launches first UK carbon credits with 32,000 hemp carbon credits, expecting them to trade at $40 per unit (£32.50).

What Does Martello do?

Martello enters the carbon credits market because it believes the market is broken and to challenge the US dominated $7.4 billion carbon market.

The founder of Martello, Jonny Mulligan, noted that:

“The carbon credits market has massive economic and climate potential, but today they are largely broken. This is why Martello is entering the market to challenge the status quo, bring transparency and assurance for Net Zero companies.” 



The UK-based transition capital firm advises companies on the structure and fiduciary risks in the carbon credits market. Doing so is critical so that they know how those risks can impact their net zero strategy.

Martello is also developing and selling high-quality carbon credits that enables companies to offset their carbon emissions. The advisory firm also helps businesses know the trends that shape the global carbon market and the future carbon pricing.

More importantly, they help companies understand the limits of net zero and how they can develop credible plans and strategies. 

Martello is working with the voluntary UK carbon code, the UKCCC, which validates the credits they issue. The firm focuses on triple returns:

Reducing carbon 
Investing in biodiversity
Incentivizing farmers to adopt regenerative farming practices

Their goal is to achieve the targets of net zero, UN sustainable development goals, and the IPCC mitigation.

Addressing Opaque and Junk Credits

Since 2021 the voluntary carbon markets (VCMs), have increased in size by 74% with a value of $7.4 billion. Estimates further show the market would be worth over $50 billion in 2030, with a 100% increase by 2050. Demand for carbon offset credits continue to soar as seen in the chart. 

According to Mulligan, carbon credits are an important tool to cut carbon and meet net zero at speed. Emitters rely on them for up to 80% of their carbon reduction by the end of this decade.

But Martello believes that the VCM is opaque, lacking innovation and transparency. Hence, the company decided to create its own carbon credits to address those concerns, particularly the junk credits that are poorly validated. These credits create problems for the companies with net zero pledges and investors avoiding greenwashing and climate or ESG litigation.  

Recent issues in the market, especially with forest carbon credits, spur major concern in the sector. They affected the major non-profit carbon offsetting standards which are responsible for verifying over 70% of the credits. 

Studies also show that as much as 85% of carbon reduction projects validated junk credits, causing huge concern for investors. 

Mulligan noted that “with little warning, a carbon project promising millions could be worthless, leaving investors with no returns”. And so Martello joined the market and searched the global carbon markets to find the team to create the first global standard for hemp and validate the credits they create.

The company picked the Re-generation Earth because of the robust science and their insistence on data transparency across projects.

Hemp Carbon Credits

There has been a growing number of growers producing industrial hemp in Europe and in Canada. 

Hemp grows very fast like a weed and was a cash crop for centuries. Its versatility and hardiness make it useful in making various biomaterials and resources. It can deliver products such as CBD oil, hempcrete for low-carbon building material, and protein powder for a vegan diet.

Compared to forests that can take years to root, industrial hemp has a much faster growing cycle. This prolific growth allows the plant to sequester a significant amount of CO2.

According to research, a hectare of hemp can absorb about 8 to 15 tonnes of CO2. In comparison, forests capture 2 to 6 tonnes only depending on the type of trees, region, etc.

In Canada, hemp also acts as an essential habitat in the country’s vast plains; it gives many birds and insects food and shelter.

Martello’s project focused on soil carbon sequestration by growing hemp in a regenerative agricultural system. This crop’s annual carbon sequestration into soils is the main reason to cultivate it. 

Growing hemp crops also promotes sustainable land management, circular economy principles, and local food systems while reducing waste.

Martello’s hemp carbon credits project has the following features:

32,179 Regenerative Agriculture Hemp Carbon Credits available for bulk or smaller issuance
15,000tCo2 equivalent, validation UKCCC in the UK
Supports sustainable farming practices that enhance soil health, reduce emissions, and promote biodiversity in Canada
Hemp carbon credits increase land absorption of CO2
Pre-project estimate +60,0000 Actual project issuance
Verified carbon offset certificates
Focus on high assurance, meeting net zero fiduciary duty requirements, and transparency via blockchain smart contracts

Martello will host The Peripatetic Series on the global carbon credits markets in April and May 2023 to boost buying good credits and raise more awareness of greenwashing.

The post Martello Issues First UK Hemp Carbon Credits to Trade at $40/Unit appeared first on Carbon Credits.