What are the Effects of Methane Emissions and Why Should We Care?

What are the effects of methane emissions? That’s the multi-million dollar question in the world’s battle over global warming as methane was often overlooked in the climate change conversation for decades. 

And this could be dangerous because the gas is so much more powerful than carbon dioxide in warming the planet. 

Methane is a “short-lived climate forcer” (SLCF), meaning its effect is short-lived, about 12 years, but is particularly destructive. In fact, one ton of methane has about 80x the warming potential heat-trapping ability of a tonne of CO2.

Experts further say that methane emissions are responsible for about 30% of today’s climate change. The gas also poses health hazards to people, which can be deadly. 

Yet, the trends of methane emissions in the U.S. and worldwide are heading in the wrong direction.

The good news is that there’s a growing recognition among the scientific and political communities that reducing methane is critical in fighting climate change. 

Cutting methane emissions is the fastest option we have to slow the pace of global warming right away, even as we decarbonize the world’s energy systems.

It’s an opportunity we shouldn’t miss.

So, how can we address the methane problem and mitigate or reduce its emissions? This article will explain how focusing on the major sources of methane and providing some key players in the space. 

But before that, let’s first get to the basics by tackling what methane emissions do, why it’s bad for the environment, where it comes from, what sectors produce the most methane, plus some projections. 

Why Methane and What Does Its Emissions Do?

Why is methane bad for the environment?

Methane (CH4) is the second most abundant anthropogenic or human-related greenhouse gas (GHG) after CO2. As already explained, methane is a potentially destructive gas that has a more powerful near-term warming effect than CO2.

As a result, methane emissions contributed to about of the increase in today’s GHG warming since pre-industrial times. And it’s growing faster than at any other time ever since record-keeping started in the 1980s.

Global Methane Emissions Trend Since the 1980s

Apart from driving climate change, methane also poses acute and chronic hazards to human health. 

The gas is explosive within certain ranges, presenting a safety hazard for people living in places with high methane concentrations. These particularly include areas around oil and gas facilities, coal mines, and some agricultural settings. 

Methane is also the primary contributor to ground-level ozone, a.k.a. smog formation, another GHG and harmful air pollutant. It’s often linked to various public health impacts such as asthma, weakened lung function, and cardiovascular diseases. 

Alarmingly, exposure to smog causes 1 million premature deaths each year. 

A study found that reducing 1 million tons of methane emissions may lead to a reduction of 240 to 590 premature deaths worldwide.

With these facts, it’s no surprise that individuals living near areas of high methane production have poorer health conditions and poorer quality of life. 

So, what, or we’d rather say, who do we blame for all the planet-warming effects and health dangers of methane? We’ll know by discovering where methane comes from and what sectors in the U.S. emit most of the gas. 

What Produces the Most Methane Emissions?

Over the past 200 years, methane concentrations in the air have more than doubled mainly because of human activities. These emissions have gone up alarmingly, which scientists think may be the biggest threat to keep global temperatures below 1.5°C.

There are two main culprits for releasing CH4 into the atmosphere – natural and anthropogenic sources. 

Natural sources are:

wetlands that are poorly managed are the biggest natural source, releasing methane from microbial decomposing activities 
reservoirs and ponds with high organic matter and low oxygen levels

Other small natural sources of CH4 emissions include oceans, sediments, wildfires, volcanoes, and termites.

Anthropogenic sources are:

Agriculture – livestock raising
Energy – oil and gas systems, coal mining
Waste management activities – landfills and wastewater treatment

The International Energy Agency estimated methane emissions from both sources as shown in the chart from its Global Methane Tracker.

Sources of Methane Emissions, Natural, and Anthropogenic

Source: International Energy Agency (IEA CC BY 4.0)

The largest anthropogenic source is agriculture, responsible for about a quarter of total CH4 emissions. The energy sector follows closely, which includes emissions from coal, oil, natural gas, and biofuels. Emissions from waste are the third biggest anthropogenic source. 

According to the U.S. Environmental Protection Agency (EPA), about 50-65% of total methane emissions come from anthropogenic or human activities. The agency also reported that CH4 accounted for 12% of all anthropogenic emissions in the U.S.

The following pie shows the US CH4 emissions per source, per EPA data.

U.S. Methane Emissions, By Source

Same with global emissions, the largest anthropogenic source of methane emissions in the US are agriculture (33%), combining enteric fermentation and manure management emissions. 

Natural gas and petroleum systems (29%) are the second biggest source of CH4 emissions in the country.

The gas is emitted during the production, processing, storage, transmission, distribution, and use of natural gas; while the production, refinement, transportation, and storage of crude oil releases the gas. Coal mining is also another significant source (6%). 

Methane is generated in landfills as waste decays and in the treatment of wastewater. Landfills are the third largest source of CH4 emissions (15%) in the US from decaying wastes. Domestic and industrial wastewater treatment also emits methane. 

Though CH4 emissions from oil and gas systems come second overall, they’re the largest industrial source of methane. That’s why President Joe Biden directed the EPA to issue regulations under the Clean Air Act to reduce the oil and gas industry’s methane emissions.

Plugging the Super-Emitters

The Biden administration has supercharged existing efforts by pouring billions to address the methane problem. 

The big effort, thus far, is to plug over 4 million abandoned and orphaned oil and gas (AOOG) wells spread across the 26 states. This well-plugging program is worth almost $5 billion under the Infrastructure Investment and Jobs Act 2022.

Most of the abandoned wells, about 22%, are found in Texas, while in Canada, 67% are in Alberta province

These abandoned, unplugged wells are leaking methane, estimated to be equal to burning over 16 million barrels of oil. But several studies reported that these emissions are likely underestimated due to uncertainties in the total number of the wells and their associated CH4 emissions. 

Good thing advanced technologies are now around to help track and detect methane emissions. Satellites, in particular, have helped scientists in detecting and measuring methane releases from leaks in pipes, venting, and other sources. 

These recent technological innovations have discovered sources that may go undetected for years. The recent case of Turkmenistan is a perfect example. 

Before this discovery, the Central Asian country wasn’t part of the countries that are known for being super-emitters of methane. Russia, the US, China, Brazil, India, Indonesia, and Mexico are the most popular super-emitters. No mention of Turkmenistan.

But satellite data analysis by Kayrros, a satellite-based tech company, showed that Turkmenistan has the most CH4 super-emitter events worldwide. The source is the two major leaking oil and gas systems in the country detected by NASA’s satellite monitoring device.

Similarly, in the US, NASA’s satellite program is partnering with a non-profit organization to track methane emissions at individual facilities. Their work produces high-resolution images that can locate sources of CH4 through their plumes. 

Here’s an example of a leaking gas line in an oil field in California detected by NASA’s AVIRIS-NG in 2020. 

Caption: A methane plume detected by NASA’s AVIRIS-NG. Source: NASA/JPL-Caltech

Right after the discovery, the operator confirmed the leak and repaired it right away. Who knows how much methane would continue leaking from the facility should it remain unknown.

And what about the rest of the leaking facilities from all over the world? They’re too many to handle all at once. 

Kayrros detected over 2,400 large CH4 leaks from fossil fuel extraction and landfills since 2019 as shown below.

Where Will the Growing Footprint Take Us?

With more satellite data becoming open to the public, it guides emissions reduction strategies and drives more investments. In most cases, it creates economic incentives for operators to repair leaking systems or plug the inactive ones.

But how about the future CH4 footprint that is projected to even grow bigger? 

Data from the Global Methane Initiative (GMI) shows that emissions from human activities by sector will rise by 2030.

As you can see above, emissions from each sector will grow until 2030. The biggest increase is from coal mine releases (17%) from 2020 to 2030. But the footprint from oil and gas systems is forecasted to also grow by 11% for the same period.

Methane, Can We Plug It In?

The good news? Yes, we can.

In fact, the IEA estimates that the oil and gas sector alone can reduce its methane emissions by 75% using technologies already available today. The better news is that of it the reduction is possible with no net cost. 

The best part? All methane emissions caused by humans can be reduced by as much as 45% within the decade.

So how about literally plugging in those oil and gas wells that were left behind?

The federal government has both its feet on the gas. Its $4.7 billion well-plugging program is on the go in identifying the super-emitters and plugging them in. $30 million of which was used for the research team to develop technologies and best practices for locating the wells.

The team has used drones, field detectors and other remote sensors to look for orphan wells from Pennsylvania to Oklahoma. They have looked on old photos and maps, hiked through creeks, and hacked through brush trying to find the wells. After locating a well, the researchers measure the amount of methane leaking from it and record its GPS coordinates. 

Just to be clear – the idea is not to hunt down each and every well in the country, but to develop tools and methods for states to use in finding the wells and which ones to plug first. 

Government funding programs can also be stretched to allow entities to monetize their methane capture and destruction efforts. And one of those companies that come to government aid in this quest is Zefiro Methane Corporation.

Zefiro, founded in 2018, is a private methane offsets originator that answers the problem of unfunded well-plugging liabilities, turning them into opportunities while moving the upstream energy sector to Net Zero.

The Vancouver-based company is expanding the supply of carbon credits serving as offsets critical for reaching net zero targets. The company’s goal is to reduce methane emissions which aligns with the industry’s objective for a greener future. Zefiro does that in two main ways:

Well decommissioning: Zefiro will cap abandoned wells for a service fee paid by the well owner (up to $150,000). 

Creating offsets: After decommissioning, Zefiro will claim carbon offsets from the programs used by various industries – ex. energy, manufacturing, etc.

To ensure the high quality of their carbon offsets, Zefiro enlists a third-party verifying body to audit and certify each project. This is important to ensure that the project meets all criteria for carbon credit issuance and that it delivers real and actual methane emission reductions.

Investing in the company brings these benefits: 

How About the Cows?

Enteric fermentation, as shown earlier, is one of the largest sources of CH4 emissions – 25%. It’s a natural part of the digestive process in ruminant animals like cattle, sheep, goats, and buffalo. 

To help the livestock or the animal agriculture industry manage its methane pollution, Mootral comes to its rescue. Mootral is a British-Swiss agritech company that developed the world’s first methodology under Verra’s VCS program for quantifying and monitoring methane reductions from ruminants.

Mootral’s methodology is based on a detailed understanding of the biochemical processes in the rumen and of methanogens – the microorganisms within the rumen that produce methane. The company then produces Mootral Ruminant, a natural feed supplement made up of garlic powder and citrus extracts that restricts methanogenic activity and thus reduces methane emissions. 

The company’s mission is to save the climate, one cow at a time through its CowCredit program. Under the program, farmers can convert reductions in methane by feeding Mootral to their raised animals into carbon credits.  

Several scientific studies conducted in the countries of the UK, US, Germany, and the Netherlands have shown significant methane reductions in Mootral’s CowCredit projects. Up to 30% reduction in methane emissions was achieved by dairy cattle on a commercial farm in the UK. As much as 25% reduction has been seen in the studies in the U.S.

CH4 Emission Reduction in UK Dairy Farm

So, what does all this mean for investors? 

Supporting Mootral or buying carbon credits from its projects bring these benefits:

For other major sources of CH4, mitigating emissions is possible through the technologies provided in the GMI report.

Conclusion 

To bring the world to net zero, reducing methane along with carbon emissions is a must. Though mitigating the footprint in the agriculture sector is crucial, addressing emissions caused by oil and gas systems is equally important.

Plugging abandoned oil wells is one of the significant mitigation opportunities available today while other reduction means in other sectors are also feasible. And despite differences in their approach to the problem, they all have one common goal – to prevent methane from escaping into the air.

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JPMorgan to Buy $200 Million Carbon Removal Credits

JPMorgan Chase made one of the largest investments ever on carbon removal credits, agreeing to pay over $200 million on different removal technologies. 

The biggest American bank’s commitment will remove a total of 800,000 metric tons of CO2 as part of its decarbonization goal. 

Betting on the importance of the carbon removal industry, JPMorgan’s head of operational sustainability, Brian DiMarino, stated: 

“We’re jumping in the pool all in. This is us putting our weight and our capital behind something we believe is truly important to bring to market now.” 

Jumping in the Carbon Removal Bandwagon

Carbon dioxide removal (CDR) is getting traction lately as it’s clear that the pace of reducing emissions to stay within the 1.5°C limit remains too slow. Scientists say that the world has to remove 10 billion tons yearly to prevent the worst impact of climate change. 

So while the market for carbon removal is still small right now, estimates suggest that it will be huge. 

Key players in the industry, particularly the startups, are gaining billions of dollars from the government. The U.S. Department of Energy set aside $3.7 billion to help scale up the carbon removal industry. That’s part of the $12 billion funding support from President Biden’s Bipartisan Infrastructure Law.

But critics say that CDR will only allow fossil fuel companies to continue to pollute. As the largest bank in the US, JPMorgan is also among the biggest financiers of both fossil fuels and clean energy. Its close ties with oil and gas firms has raised concerns from climate activists.

Along with other large American banks, JPMorgan financed fossil fuel a total of $382 billion within a 5-year period (2016-2021). But as pressure from climate groups and banks’ shareholders gets stronger, the finance sector is taking a head turn in their financing deals. Climate commitments from major banks, including JPMorgan, by the end of 2022  amounted to $5.5 trillion.

JPMorgan’s Climate Commitment

JPMorgan President and COO, Daniel Pinto noted that:

“We’re working to drive scalable development of carbon removal and storage as commercial solutions and aim to send a strong market signal.”

The chart shows the projected volume and contribution of carbon removal credits up to 2050 as reported by Ernst & Young (EY). The left chart plots the increase in credit volumes needed to meet the emissions reduction commitments, while the right one shows the share of total reductions met through carbon credits.

Carbon removal credits can cost 100x more than conventional carbon credits. The bank will still use some traditional carbon credits as long as they are high quality while the financier grows its removal purchases.

The $200+ million pledge to buy carbon credits is one way for the lender to help fight climate change. It will offset the bank’s carbon footprint. 

JPMorgan will buy carbon removal credits tied to removing 800,000 metric tons of CO2 from various startups. The first $75 million was revealed last month when the bank joined Frontier, a Stripe-owned carbon removal alliance. It makes advance purchases for its members which includes large corporations including Meta, Alphabet, Shopify, and McKinsey. 

JPMorgan’s climate commitment also includes a payment to Climeworks of over $20 million to remove 25,000 metric tons over 9 years. Climeworks is a Swiss CDR company that captures CO2 directly from the air (direct air capture) using giant fans. 

Last year, JPMorgan helped Climeworks raise $650 million from investors to scale its DAC efforts.  

The bank is also buying about 30,000 carbon removal credits from Charm Industrial over 5 years. Charm is a CDR startup that turns biomass (plant waste) into bio-oil and pumps it underground. 

Last week, Frontier separately closed a $53 million carbon removal deal with Charm to capture 112,000 tons of CO2. 

JPMorgan’s Decarbonization with Removal Credits

Large companies are using a mix of emissions reduction and carbon removal means to meet their climate goals. JPMorgan aims to lower its carbon emissions 40% by 2030 from 2017 levels. 

The bank also seeks to match its operational emissions from fuel consumption with carbon removals by 2030. Such a move is one of the first pledges by a large company. 

JPMorgan’s pledge of 800k removal is the 2nd-largest purchase in history, which is equal to removing annual CO2 footprint of about 160,000 passenger cars. The biggest deal so far is made by Microsoft with energy giant Ørsted, which involves removing 2.8 million tons

The majority of the bank’s commitment involves a 15-year deal with CO280, another CO2 removal startup. The company captures CO2 absorbed by plants when they’re used in industrial processes. 

The rest of the 800k tons of removal will come through Frontier wherein JPMorgan will give clients access to $25 million in carbon removal credits while pledging $50 million in purchases to offset its own carbon footprint. 

By willing to pay years in advance, big firms like JPMorgan seek to boost the CDR industry’s growth. They agree to pay hundreds of dollars for every carbon credit that can deliver a ton of removal to help reverse global warming while betting on the credits they need to achieve decarbonization goals. 

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Lafarge Canada to Use Captured Carbon to Make Wax

Lafarge, Canada’s largest cement and building solutions provider, inked a tri-party deal with Dimensional Energy and Svante to produce synthetic wax from captured carbon dioxide. 

The agreement will bring a demonstration of Dimensional Energy’s carbon utilization technology to Lafarge’s cement facility in Richmond, British Columbia. 

The deal is part of Lafarge’ 3-phased carbon capture project. Noting on the project, Stephanie Voysey from Lafarge Canada said:

“Carbon capture is an important lever in our net zero roadmap… If this pilot can be scaled to capture and use all facility emissions, it would be a first of its kind project for Lafarge and advance export and global adoption of this technology.”

Lafarge and Its 3-Phased Carbon Capture Project 

Cement production releases a lot of CO2. Studies say that about 621 kg of CO2 is produced for each metric ton of cement manufactured. 

Emissions from making cement stood at 1.7 billion metric tons of CO2 in 2021. Here’s how the sector’s CO2 emissions grow over the years.

Decarbonizing its cement production in Richmond is a major part of Lafarge’s commitment to sustainable development. By nature, producing cement is an energy-intensive process that leaves few areas for carbon reduction. 

But Lafarge is always finding ways to help decarbonize the sector and reach a net zero future. Capturing carbon and storing or using it is one of those ways.  

In 2019, Lafarge entered into a joint industry deal with Total and Svante that started its CO2MENT Project. It’s a demonstration of a carbon project that aims to capture 1 tonne per day (1TPD) of carbon emissions from Richmond’s cement plant.

The project involves 3 phases: 

Pre-treatment
Carbon Capture
Carbon Utilization  

Lafarge’s major project contribution is in kind-support via the provision of land, operational support, as well as utilities needed for the demonstration.

It also provides a use case for Svante’s patented carbon capture technology with its advanced adsorbent nanomaterial. The novel capture material acts as a sponge with a high CO2 absorbing ability

All throughout the project’s lifeline, the cement producer directed efforts to find an applicable end use for the captured gas. 

Since there’s no carbon sequestration and transport infrastructure available in southern BC, learning how to put the captured carbon into good use is crucial in Lafarge’s net zero journey in the region. 

Some key updates of the CO2MENT project are as follows:

Over 2,400 hours with 90%
CO2 recovery and a CO2 purity of 95%; and 
On-stream factor of more than 75%;

The data will be used in designing a study that will assess the project’s commercial feasibility to capture 1.5 million tonnes of CO2 per year. This initiative is part of Holcim circular economy efforts in the U.S. 

The new tri-party agreement brings the CO2MENT project into its phase 3.

Phase 3: Turning CO2 into Wax

Using CO2 to make products that have commercial value is a choice that Lafarge took in starting Phase 3. 

At this last stage of the project, Lafarge will turn the daily captured carbon to make about 1.5 barrels of synthetic wax every day. This goal would put the carbon utilization expertise of Dimensional Energy into action.

Dimensional Energy Carbon Utilization Process

As seen above, Dimensional Energy’s patented technology converts the captured CO2 with green hydrogen to syngas. This syngas will go through more processes to become liquid hydrocarbons – a premium grade wax. 

Aside from carbon neutral fuels, the waxes can also be used in making other products people use every day. Common examples include cosmetics, plastics, and lubricants, among others. 

Lafarge’s CO2 capture and utilization project will take advantage of Dimensional Energy technology. Once successful, the project will cement the common goal of the three companies involved – reduce carbon emissions. 

Commenting on their ground-breaking initiative, Dimensional Energy’s CEO, Jason Salfi noted that:

“Together, we will transform carbon emissions from one of the world’s most persistent problems of our time to one of our greatest assets to grow a circular economy in better harmony with nature.”

Salfi also said that as tech providers, they’re leveraging existing infrastructure in hard-to-abate sectors like cement to reduce CO2 emissions. 

Other industry players, like Rick Fox’s startup Partanna, for instance, are cutting their carbon footprint by replacing the use of Portland cement with a mixture of natural and recycled ingredients.

Lafarge Canada has pledged a monetary commitment to Dimensional Energy to promote the project’s success for the industry.

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Frontier Fund Closes $53M Carbon Removal Deal With Charm

Frontier, a carbon removal fund backed by Google, Stripe, and other large companies, has closed one of the biggest carbon removal deals in history worth $53 million with Charm Industrial. 

Charm Industrial is a San Francisco-based carbon removal startup that takes waste biomass and transforms it into bio-oil, and then injects it deep underground to store permanently.

Frontier is a coalition backed by the tech giants aiming to spend about $1 billion on advanced buying of carbon removals. Its main goal is to speed up the development of carbon removal technologies and build strong future demand for them.

The $53 million that Charm will receive is in exchange for removing 112,000 tons of CO2 between 2024 and 2030.

Enabling Carbon Removal Startups to Scale

Legally, Frontier is a public benefit LLC wholly owned by Stripe, but is co-founded by other big tech companies including Meta, Shopify, McKinsey, Alphabet, and more. 

The coalition represents the growing interests of major corporations to ramp up the growth of the carbon removal industry. Its offtake deal with Charm is a legal agreement to buy future tons of CO2 removals at a set price.

Though the price per metric ton wasn’t disclosed, a rough estimation would make it into $473/t. Three years ago, Stripe paid Charm $600/t by removing and storing 416 mt of carbon.

Up until the Charm agreement, Frontier had committed only half a million dollars in pre-purchase deals with early-stage startups. But despite the small amount, the funding support helps carbon removal companies to speed up technological development. 

Frontier head, Nan Ransohoff, pointed out that some of these early companies will deliver tons of removals while others won’t. But that’s fine. Most of the carbon removals will come from Frontier’s offtake funding track, which will see more deals coming. 

Ransohoff further said that:

“Over the past three years, Charm has gone from concept to delivering thousands of tons in a relatively short period of time, which is a demonstration of great execution. This team is moving very quickly.”

How Does Charm Remove CO2?

Since it started operating in 2018, Charm managed to remove over 6,000 tons of carbon. The deal with Frontier will prompt Charm to rapidly ramp up its CO2 removal capacity. 

The carbon removal startup pioneers a novel way of removing and storing CO2 underground for good. It takes waste biomass like corn stalks, transforms it into boi-oil, and pumps it underground in EPA-regulated wells. 

What makes Charm’s process unique is how its removal works shown below. That’s through the process that the company’s CEO, Peter Reinhardt, describes as “half-assed gasification”. The gasification process involves pyrolysis – the heating of an organic material like in the absence of oxygen. 

Source: Charm Industrial website

The process produces bio-oil using a pyrolyzer machine that can fit into the back of a semi-trailer. This allows Charm to pull right up to farms and perform the process right at the edge of the fields. 

Reinhardt said that most of their sequestered bio-oil so far has been bought and not created by their own technology. But he believes that with the Frontier deal, they can scale up the process and build more pyrolyzers and mobile facilities. 

Frontier’s team of scientists and technical people will also help Charm and other carbon removal startups gain more traction. The $53M will cover the costs of Charm’s removal projects and the measuring, reporting and verifying (MRV) to ensure quality. 

Commercializing Carbon Removal

The race to net zero requires removing billions of tons of carbon each year by 2050. The carbon removal industry removes only a few thousand tons right now. And this makes offtake deals like Frontier very important to ensure the industry has the runway to take off.

Frontier is not alone in this race of commercializing the industry. A growing number of companies are willing to pay the high cost of removing and storing carbon to balance out their emissions.

Another group formed by Alphabet, Microsoft and Salesforce, called the First Movers Coalition, committed $500 million to removing CO2. The tech coalition aims to decarbonize industry and transport.

Other corporations are also supporting carbon removal initiatives to help the world reach net zero emissions by mid-century. 

Their carbon removal purchases are a part of the voluntary carbon market, where each metric ton of carbon removed earns one credit. 

Charm Industrial said it expects carbon removal prices to go down to $100/ton by 2040 from $600/ton today. The expected price is what many experts believe the industry needs to reach to commercialize and attract more buyers.                  

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US DOE Reveals 1st Winners of $2.25B Carbon Storage Program

The U.S. Department of Energy (DOE) has opened a $2.25 billion funding program for carbon sequestration or CO2 capture and storage projects to more applicants after selecting the first batch of 9 winners with a $242 million funding round.

The $4.9B Funding from Bipartisan Infrastructure Law

In November 2021, President Joe Biden signed the Bipartisan Infrastructure Law, a once-in-a-generation investment to tackle the climate crisis. The law earmarked about $12 billion to carbon management, specifically to carbon capture, storage, and transportation of CO2. 

Under this law, the DOE revealed its $4.9 billion funding for 3 carbon management demonstration and deployment programs. These funding opportunities seek to slash emissions from power generation and sectors that are difficult to decarbonize like steel and cement. 

According to the Energy Secretary, Jennifer Granholm, the series of funding initiatives are crucial in meeting Biden’s goal to reach a net zero economy by 2050. 

The Department also launched four programs with $3.7 billion funding to help scale up the carbon dioxide removal industry. These include the $115 million prize awards to Direct Air Capture technologies to bolster different approaches to DAC. The program also includes building regional DAC hubs in the country. 

DOE’s $2.25B Program for Carbon Capture and Storage

One of the Department’s new funding opportunities is the $2.25 billion for the validation and testing of large-scale, commercial carbon storage projects. Qualifying projects should be capable of storing 50 million tonnes of CO2 and the Department just revealed the winning applicants. 

The agency picked 9 commercial carbon storage projects qualified for federal funding. These winning projects are found in the Midwest, West and on the Gulf Coast. 

The recipients include 4 higher education institutions, BP PLC subsidiary BP Corporation North America, and the Southern States Energy Board.

Pointing out that the funding wisely focuses on carbon storage projects, an executive from the Carbon Capture Coalition stated:

“The US has abundant, well-characterized carbon storage capacity that can safely and permanently store billions of tons of carbon dioxide emissions, but currently lacks the necessary infrastructure and capture facilities to fully utilize this potential”.

Indeed, the recent funding announcement will help address that infrastructure gap. 

Earlier this year, the DOE also rolled out $2.52 billion to fund 2 carbon capture initiatives. These are the “Carbon Capture Large-Scale Pilots” and “Carbon Capture Demonstration Projects Program” seeking to cut emissions from hard-to-abate industries. The main goal is to speed up and boost investment in technologies that capture, transport and store carbon.

All these funds for carbon capture and removal projects are part of the total of $62 billion dedicated by the bipartisan infrastructure law for DOE’s research, development, demonstration, and deployment of clean energy technologies. 

Expanding Carbon Capture and Storage 

Complementing the Bipartisan Infrastructure Law, the Congress expanded the tax credits for carbon capture in the 2022 Inflation Reduction Act. It awards polluters up to $85 for every metric ton of carbon captured and stored safely underground. 

As per DOE’s estimates, actions under the two laws will result in 40% emissions reduction against 2005 levels economy-wide.

The agency further said that the remaining funds for carbon storage are available under a broader scope. The funding program now includes early-stage development projects while expanding the definition of carbon storage to support more offshore projects. Project developers can apply under the program until July 6. 

The Department also selected 3 carbon transportation projects in Texas and Wyoming to receive funding from another program. Together, they’ll get a total of $9 million for engineering and design activities. 

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3M and Svante Join Forces to Produce Carbon Removal Products

3M, a leading manufacturer and science company, has partnered with Svante Technologies, a carbon capture and removal firm known for its expertise in carbon capture and removal. Together, they aim to create Direct Air Capture (DAC) products, designed to capture carbon dioxide directly from the air and permanently remove it

The deal reaffirms the companies’ commitment to providing materials science-based solutions to reach net zero emissions and fight global warming. 

Scaling Up Supply of Carbon Capture and Removal Materials

3M has 120+ years of expertise in producing and supplying materials science-based solutions at unmatched scale. It manufactures a broad range of products, from building materials and adhesives to medical and cleaning supplies. 

The company brings that massive experience and expertise in the carbon dioxide removal (CDR) industry by working with Svante. An executive from 3M, Ray Eby, asserts the company’s commitment to scaling up climate tech solutions, saying that: 

“3M is committed to helping build a low-carbon economy… We are driven by a need to solve the world’s most pressing challenges. and our partnership with Svante to create innovative climate solutions is an exciting prospect for us.” 

Just like how the company tripled the supply of N95 respirators during the early days of COVID-19, 3M is as eager to scale the production of carbon removal materials over the next decade. Through its 51 tech platforms, 3M innovates and creates new technology capabilities to meet the growing needs of the industry.

This is important in meeting the demand for CDR, which climate scientists believe critical in achieving the Paris goal. CDR solutions include bioenergy combined with CCUS (BECCS) and direct air carbon capture with storage (DACCS or DAC). 

That said, the market for carbon removal is expanding rapidly. Investments came pouring in from large companies wanting to help early-stage CDR tech startups scale up and bring costs down. In fact, the industry has its own dedicated venture capital fund called Counteract, while government support reached billions of dollars

Joining the CDR supporters and investors, the venture capital arm of 3M, 3M Ventures, participated in Svante’s Series E fundraising. The said round raised $318 million to accelerate the manufacturing of Svante’s carbon capture and removal technology.

Capturing Millions of Tons of CO2

Svante manufactures solid sorbent-based filters and rotary contactor machines that capture large-scale carbon emissions for storage or further industrial use. Its filters are available for point-source capture from hydrogen, cement, steel, aluminum, pulp & paper plants, and refineries, and DAC applications.

Because of the broad range of markets Svante serves, the company’s CEO Claude Letourneau says Svante’s tech is applicable to 85% of the total carbon capture and removal market. By adding 3M into their global partners, it will further help Svante in capturing millions of tons of CO2 worldwide. 

In order to help meet that goal, 3M has to scale the production of DAC materials over the next few years. It will be the company’s first CDR products in the U.S. for Svante’s DAC applications. 

The joint development agreement between the companies focuses on developing and manufacturing carbon adsorbent technology for the carbon removal industry. This venture is part of 3M’s plans to invest about $1 billion to accelerate new environmental goals and one of them is to be carbon neutral by 2050.

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Methane Offsets Originator, Zefiro, Buys Plants and Goodwin

Zefiro Methane Corporation, a private methane offsets originator, acquired a majority ownership stake in Plants & Goodwin (P&G), an oil well plugging company.

Led by executives from the former carbon market team at J.P. Morgan, Zefiro seeks to reduce methane emissions by plugging orphaned and abandoned oil and gas wells. This then enables the company to produce methane emission offsets, also known as carbon offset credits. 

P&G is a Pennsylvania-based provider of services to plug orphaned oil and gas wells for over 50 years.

Methane Emissions from Abandoned Wells 

Methane (CH4) is the second most abundant greenhouse gas (GHG) after carbon dioxide that’s responsible for about 20% of global emissions. This gas is at least 25x to over 80x more potent as CO2 at trapping heat in the atmosphere. 

Methane concentrations in the air have increased alarmingly since 2007. Scientists said that this rising CH4 emissions may be the biggest threat to keep global temperatures below 1.5C.

Recently, a NASA satellite revealed that Turkmenistan is one of the worst methane ‘super-emitters’ in the world.

The increasing methane pollution is largely because of human-related activities. And one such activity is abandoning oil and gas wells that are causing serious problems to the U.S. 

According to recent estimates, there are more than 4 million orphaned oil and gas wells in the U.S., spreading out across 26 states. Here’s the percentage share of orphaned oil and gas wells in Canada and the US, according to a study published in the American Chemical Society.

These abandoned, unplugged wells spew out methane that can greatly pollute the air that people breathe. The leaking methane is equal to burning over 16 million barrels of oil, per government estimates.

As such, the inactive wells pose as one of the country’s most pressing concerns in advancing a sustainable economic growth. In response, the Infrastructure Investment and Jobs Act 2022 specifically set aside almost $5 billion to help states plug abandoned wells. To date, all 26 states have applied for funding. 

Zefiro comes to the government’s aid by addressing the methane pollution from unplugged oil and gas wells. Its acquisition of P&G shows that commitment. 

In translating that commitment to reality, Zefiro’s Founder & Chairman, Talal Debs, remarked that: 

“Zefiro’s strategy is to integrate real (physical process) innovation with new forms of capital, through the ‘environmental’ credit markets; the result will be a new kind of enterprise. By enlisting veteran operators like Plants & Goodwin, we are taking the first big step to making our unique vision a reality.”

Zefiro’s Methane Emission Reductions and Carbon Credits

Acquiring Plants and Goodwin will position Zefiro as the leader in fixing the environmental and health problems left behind by the oil and gas companies that abandoned the wells, allowing them to emit methane for decades. 

P&G is a family-owned company that has been plugging wells for more than 5 decades. It is focusing on idle wells in shale and sandstone formations across the Appalachian Basin.

They said that their partnership with Zefiro is “a game-changer for finally bringing about a large-scale, nationwide solution to methane emissions from abandoned wells.”

Luke Plants, assuming the CEO role for P&G, further pointed out that with Zefiro, they’ll be among the first to tackle the problem and be a model for other basins across the U.S. 

Zefiro’s methane emission reductions efforts not only align with the industry’s goal of a greener future. The Vancouver-based company is also expanding the supply of carbon credits working as offsets crucial for achieving net zero targets. 

The company primarily trades in the voluntary carbon markets, believing that firms that go “above and beyond” mandated emission reductions bring a higher environmental benefit that aligns with their ESG policy.

How Does Zefiro Generate Carbon Credits?

Every project is unique because of the many variables of an abandoned oil well. But Zefiro’s projects generally follow the six major steps below as described in their website. 

Project Setup. Zefiro measures pre-plugging emissions and prepares the project document outlining emission baselines, project boundaries and activities. 
Engage Third-Party Verifying/Validating Body (VVB). Zefiro enlists a 3rd-party VVB to audit and certify each project, ensuring it meets all criteria for carbon credit issuance. The independent body needs to confirm that the project will indeed achieve the methane emission reductions it claims. 
Undertake Well Decommissioning. Zefiro will plug each well, ensuring that no emissions can escape by using advanced technologies and adhering to applicable standards and regulations. 
Final Emission Assessment. Once decommissioning is over, Zefiro will do the final assessment to make sure that all project deliverables are met. 
Issue Offsets. The applicable standards organization (e.g., Verra, American Carbon Registry, Gold Standard) issues the appropriate number of offsets. 
Retire Offsets. Offsets are retired or removed from circulation for GHG reductions claim toward a net zero goal or other use. Retirement happens in accordance with the program’s registry processes. Once retired, offsets are not transferable and can’t be used again for other environmental claims.

Zefiro will roll-out to different states, deploying staff to decommission wells nationwide. 

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Carbon Credits and the Future of Sustainable Business: Exploring Best Practices

The trading of carbon credits can help entities and the world meet their climate goals by cutting carbon emissions and practicing sustainable business. While some companies have various means to get rid of their footprint, many simply don’t have any at their disposal. And so using carbon credits is a necessity for them.

But how can carbon credits help promote the best practices that ensure the future of sustainable business? How can they be instrumental in advancing both corporate sustainability and global sustainable development? 

This article will explain how by looking into best practices that can scale up the voluntary carbon market and help businesses achieve their climate change goals.

Companies Ally in Conquering Climate Change

The number of businesses pledging to help put an end to climate change by slashing their own GHG emissions continues to grow. Yet many of them find that they cannot fully get rid of their emissions, or even reduce them as fast as they may like. 

The challenge is particularly tough for entities with net zero emissions targets, meaning removing as much carbon as they emit. For them, it helps to use carbon credits to offset emissions they can’t eliminate by other means. 

Voluntary carbon credits, also known as carbon offsets, are bought by companies for reasons other than compliance. These market instruments help direct private financing to climate-related projects and initiatives that won’t otherwise be developed or take off. More importantly, these projects also offer added benefits beyond just carbon reduction like job creation and biodiversity conservation.

Carbon credits also have the potential to bring down the cost of emerging climate technologies by providing startups enough capital. And most importantly, this market tool can help drive investments to places where nature-based emissions reduction projects are most viable. 

How Can Carbon Credits Help Companies Reach Their Climate Goals?

Achieving climate goals seems to be the finish line among organizations these days. But what does it really mean?

Collectively, that means limiting the rise in global temperatures to 2.0°C above pre-industrial levels, and ideally 1.5°C. Putting that in context, it means cutting global GHG emissions by 50% of current levels by 2030 and bringing them to net zero by 2050

More and more businesses are aligning themselves with this global sustainable development agenda. In fact, the number of companies with net zero climate commitments doubled in less than a year – from 500 (2019) to 1,000 (2020).

Among those businesses, reducing carbon emissions to be carbon neutral or net zero has major limitations. For instance, a big part of the pollution of companies operating in the cement industry comes from processes they simply can’t just stop. 

So, how can they reduce their emissions without stopping their business operations? By buying carbon credits. 

Carbon credits work like permissions allowing holders the right to emit a certain amount of carbon under the compliance market. Within the VCM, carbon credits represent the corresponding quantity of carbon that has been reduced or removed by an initiative. 

Remember that each carbon credit is equal to one tonne of carbon removed or prevented from entering the atmosphere.

Carbon credits have been in use for years now, but their voluntary use has grown immensely only in recent years. As seen in the chart from Katusa Research, buyers have retired (claimed the impact of the credit) over 90 million tonnes of CO2 equivalents in 2020

And as global efforts to transition to low-carbon and sustainable practices intensify, demand for carbon credits will also grow. Based on industry estimates, annual global demand for carbon credits can go up to 1.5 to 2.0 gigatons of CO2 by 2030 and up to 7 to 13 GtCO2 by 2050.

That also means the VCM size can be between $30 billion and $50 billion by the end the decade, depending on various factors such as price. 

Source: McKinsey & Company

Per McKinsey analysis, the supply of carbon credits to meet such projected demand will come from these categories:

avoided nature loss (including deforestation); 
nature-based sequestration, such as reforestation; 
avoidance or reduction of emissions such as methane from landfills; and 
technology-based removal of carbon dioxide from the atmosphere.

While the future of sustainable business becomes possible through carbon credits, some challenges exist that may prevent VCM’s scale up. If not addressed fully, these roadblocks can bring down supply from 8-12 GtCO2 per year to 1-5 GtCO2.

Key challenges include:

Most nature-based supply of carbon credits is concentrated in few countries
Difficulty in attracting enough financing
Long lag times between capital raising and selling carbon credits
Carbon accounting and verification methods vary, making supply of high-quality carbon credits
Some confusions in the definition of the credits’ co-benefits (benefits beyond carbon reductions) 
Long lead times in verifying carbon credits quality, which is crucial to achieve market integrity
Other problems include unpredictable demand, low liquidity and limited data availability

Though these challenges are indeed daunting, they are not invincible. By adopting best practices in using and integrating carbon credits into climate change mitigation measures, the VCM can help secure the future of sustainable business. 

Best Practices to Scale Up the VCM

As we have demonstrated, carbon credits can help promote corporate sustainability by helping companies reach their climate goals. And as most of us know, large companies are the most guilty in dumping carbon into the air. 

As long as they are making efforts in cutting their carbon footprint and bringing it to net zero, they can still continue doing business sustainably. But what can these big businesses and other market players do to ensure that the market doesn’t wither but grow? 

Here are the top four ways that could further develop the VCM and scale it up for more carbon reductions.

Having Uniform Principles for Carbon Credit Definition and Verification

The market for voluntary carbon credits still lacks ample liquidity to transact efficient trading. What causes this is the fact that the credit attributes vary a lot, affected mostly by the project generating it. The carbon credit price depends on the specific project type and/or its location.

Each project also delivers a different set of benefits and added values, which value varies as well. This attribute makes the process of matching the buyer and seller quite difficult and time-consuming. 

But with uniform features that define or describe the credits, the match-making process would be easier. One of these features would be the quality of the credit. 

The recent release of the International Council for the VCM of its “Core Carbon Principles” is a good starting point for both suppliers and buyers to refer to. The principles provided offer a good reference in verifying the carbon reductions claim of the credits. 

This is also important when developing reference contracts of carbon credit deals and their corresponding trading prices on the exchanges. In this case, it would make it more efficient for the market to aggregate smaller supplies to match the larger bids of corporate buyers. 

Developing Flexible Trading and After-Trade Infrastructure

A well-functioning VCM requires a flexible trading infrastructure. That function is to facilitate high-volume listing and trading of contracts. In effect, this enables the establishment of structured financing for project developers.  

The top carbon exchanges often have this infrastructure in place, enabling them to support and help scape up the market. 

The same goes for post-trade infrastructure, such as registries and clearinghouses. They must support the creation of futures markets and provide the necessary counterparty default protection. 

Carbon registries, in particular, should be providing necessary services and facilitating the issuance of identification numbers for each project. 

These infrastructures can help promote transparency of data and information in the market, and so, increase trust among buyers and sellers alike. This is currently not the case in the VCM as access is limited, making tracking difficult. Issues in transparency are plaguing the market, putting some projects under query and further investigation. 

Analytics and reports that put together accessible reference data from various registries, like how APIs do, can help advance transparency. This startup that developed the first API for carbon credits seeks to address this task, aiming to improve transparency. 

Building Guidelines for the Correct Use of Credits

Though many companies use carbon credits to offset their emissions, they’re not the automatic option in reducing emissions. Some skeptics said that they deter businesses to offset their footprint instead of reducing them directly. Others argued that they become a tool for greenwashing – claiming to be eco-friendly though the business continue to emit more.

This is why there must be clear and robust principles governing the use of carbon credits to eliminate doubts. 

Specifically, offsetting should be an option for emissions that are too difficult to abate. They should not overtake other climate mitigation measures while ensuring more carbon reductions actually happen.

This best practice requires a business to disclose its carbon emissions first and create a baseline for it. From there, carbon reductions targets and strategies will follow. Only by doing so can the company know how much emissions it needs to offset and buy the corresponding credits. 

Safeguarding Integrity of the VCM

Same with transparency, the VCM is also facing the issue of integrity. The main culprit is the wide differences in the carbon credits’ nature, making them plausible for fraudulent transactions. 

One solution is to have a digital system in place that registers and verifies the credits authenticity before issuance. Verifiers must be able to monitor the project’s impact regularly to confirm their carbon reduction claims.  

That won’t just safeguard the integrity of the carbon credits but can also help developers in cutting down associated costs. Digitization translates to standardization that lowers issuance costs while improving offset credibility in corporate climate commitments. 

Ultimately, a governing body is critical to enhancing integrity by overseeing market players’ behavior and the overall market functions.  

In sum, businesses and other organizations can reduce their carbon footprint by employing clean energy technologies and sources. Still, many need carbon credits to complement their climate change mitigation efforts while aligning them with their corporate sustainability goals. 

By following the four best practices identified, a scaled up voluntary carbon credit market can help secure the future of sustainable business. 

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China’s CO2 Emissions Up 4% in Q1 2023, Hit a Record High

China’s carbon dioxide (CO2) emissions grew 4% in the first quarter of 2023, hitting a record high and is projected to reach an all-time high this year. But the continued expansion of low-carbon energy will bring down the country’s emissions eventually.

The new analysis according to Carbon Brief shows that the rapid expansion in low-carbon energy can make the emissions to peak and decline if the post-Covid recovery plan works out. 

With China focusing on economic growth, the biggest CO2 emitter in the world’s footprint will likely to hit an all-time high in 2023. The country emitted over 10,000 million tonnes of CO2 in 2020, representing about 30% of the world’s carbon emissions. 

China’s Quarterly Carbon Emissions

Compared with a year earlier, China’s carbon emissions jump 4% in this year’s 1st quarter, according to the analysis. It exceeded the previous peak in emissions in the same quarter in 2021. 

Emissions are estimates from China’s National Bureau of Statistics data on production of fossil fuels and cement, China Customs data on imports and exports, and WIND Information data on changes in inventories.

As seen in the chart above, the red bar represents China’s carbon emissions for the first quarter of each year. The rise was due to the growing demand for fossil fuels, with increases in oil consumption (over 5%), coal (more than 3%), gas (over 4%), and cement production (4%). 

What Causes China’s Emissions to Rise?

The key reasons for the super-emitter’s increase in carbon emissions are the following, the analysis reveals:

Economic rebound post-Covid recovery
Financial stimulus measures
Weak hydropower generation 

Breaking down the emissions per sector, the biggest contributor to the increase was power generation, where coal-generated electricity grew by 2%. The coal-power output rose by 3.6% relative to the previous year’s quarter. 

Source: Carbon Brief

The poor hydropower production in China resulted in increased coal power use. Low rainfall and droughts caused the weak hydro output. 

The world’s second largest economy by GDP has been boosting its domestic coal power production since 2021 for energy security. It rose by 11% in 2022 but despite more domestic supply, coal import almost doubled in Q1 2023.

The reason for that is the lower quality of coal produced in the country – each tonne containing less energy.

In terms of electricity, demand grew by over 4% which accounts for about 80% of China’s total carbon emissions increase. This was largely due to the end of the country’s zero-Covid policy, meaning businesses and commercial operations resumed. 

For the same reason, transportation activities got back to normal, increasing the consumption of fossil fuels by more than 6%. Air travel rebounded intensely, in particular.

China Achieves Significant Energy Milestone

Despite increases in CO2 emissions, China managed to hit a meaningful milestone in generating power from clean or non-fossil sources. These include renewables and nuclear which exceeded 50% of the country’s installed power capacity in history. They overtook coal production capacity and other dirty sources of power. 

In particular, solar and wind power installation increased significantly both hitting a record high.

Solar installations grew by almost 3x the previous high of 13GW in the same quarter of 2022 – 34 GW. New wind power installations – 10.4GW – increased by 32%, another record for Q1 2023. The country beats its new wind and solar capacity 120GW target in 2022, achieving 125GW. 

A key element in China’s strategy to ramp up its wind and solar power generation is developing massive clean energy bases in its deserts, abandoned coal mines, and other unused lands. 

Those bases are being built in batches, the first two with 97GW and 200GW capacity will be completed by 2025. If installations in 2023 hit the country’s 160GW goal, 240GW annual capacity will be added in the next two years

China’s nuclear capacity also improved. 

Based on its current nuclear capacity (57GW) and ongoing construction (27GW), the super-emitter is on track to achieve its targets. That’s to have 30GW under construction and 70GW in operation by 2025. Two nuclear reactors have already begun construction and one started producing power this year. 

Demand for electricity is likely to increase this year in China, which will also push coal power production higher. However, the growing low-carbon supplies or energy from clean sources will try to match the demand growth in coal. 

Ultimately, when clean energy surpasses the annual increase in electricity demand, the power sector’s carbon emissions will peak. 

What Do China’s Emissions Look Like in 2023?

The current trends in the 1st quarter and industry estimates suggest that the largest  emitter’s footprint will rise this year. It will likely top the previous peak in 2021 as shown in the chart.

Source: Carbon Brief

The major reason for this outlook is the Chinese government’s pursuit of financial stimulus measures to bolster manufacturing capacity, energy production, and transport infrastructure. 

While increases in emissions vary per sector, overall energy demand will be up 3% in 2023. Taking into account the projected increase in low-carbon energy production, a 1% to 4% increase in China’s CO2 emissions will follow as fossil fuels make up the difference. 

A report from the World Bank said that China would need $17 trillion in investments to achieve its climate goals. These investments are in the power and transport sectors alone.

The super-emitter had rebooted its carbon scheme, the China Certified Emissions Reduction, early this year to reduce its carbon emissions. If the post-Covid recovery works as planned, a sustained expansion in clean energy production will drive emissions to peak and then eventually decline in the coming years. 

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