In a frenzied race against a looming carbon time bomb, tech behemoths are grappling with the environmental ramifications of their sprawling data centers worldwide. These data centers, essential for powering today’s digital infrastructure, have emerged as greedy consumers of energy, particularly as the demand for artificial intelligence (AI) continues to skyrocket. 

As AI becomes increasingly integral to various industries, the energy demands of data centers are exploding. This, in turn, calls for urgent action to mitigate their massive environmental footprint.

AI’s Energy Appetite: Unleashing Data Center Emissions 

Between 2010 and 2018, there was an estimated 550% increase globally in the number of data center workloads and computing instances.

Data centers and transmission networks collectively contribute up to 1.5% of global energy consumption. They emit a volume of carbon dioxide comparable to Brazil’s annual output. 

Hyperscalers like Google, Microsoft, and Amazon have committed to ambitious climate goals, aiming to decarbonize their operations. Hyperscalers are large-scale, highly optimized, and efficient facilities. 

However, the proliferation of AI poses a huge challenge to these objectives. The energy-intensive nature of graphics processing units (GPUs), essential for AI model training, magnifies the strain on energy resources. 

According to the International Energy Agency (IEA), training a single AI model consumes more power than 100 households in a year.

Per another source, the amount of computing power needed for AI training is doubling every 6 months. Fifty years ago, that happened every 20 months, as seen in the chart below. 

More alarmingly, in just over a decade, the computing power used for AI model development has increased by a staggering factor of 10 billion. And it would not slow down.

Industry estimates forecast that power use can go up to 13% by 2030 while the share of global carbon emissions would be 6% for the same year.

The Cost of AI: Balancing Power and Progress

The climate risks posed by AI-driven computing are profound, with Nvidia CEO Jensen Huang highlighting AI’s significant energy requirements. Jensen projected a doubling of data center costs within 5 years to accommodate the expanding AI ecosystem.

For instance, compute costs for training advanced AI models like GPT-3,  boasting 175B parameters, and potentially GPT-4 are predictably substantial. The final training run of GPT-3 is estimated to have ranged from $500,000 to $4.6 million. 

Training GPT-4 could have incurred costs in the vicinity of $50 million. However, when factoring in the compute required for trial and error before the final training run, the overall training cost likely exceeds $100 million.

On average, large-scale AI models consume approximately 100x more compute resources than other contemporary AI models. If the trend of increasing model sizes continues at its current pace, some estimates project compute costs to surpass the entire GDP of the United States by 2037.

According to computer scientist Kate Saenko, the development of GPT-3 emitted over 550 tons of CO2 and consumed 1,287 MW hours of electricity. In other words, these emissions are equivalent to those generated by a single individual taking 550 roundtrip flights between New York and San Francisco.

Not to mention that such figures account for the emissions directly associated with developing or preparing the AI for use. Other sources of emissions are not included. 

RELEVANT: How Big is the CO2 Footprint of AI Models? ChatGPT’s Emissions

Solutions to Reduce Data Center Carbon Footprints 

To mitigate data center emissions, industry players have pursued various strategies, including investing in renewable energy and using carbon credits. 

While these initiatives have yielded some progress, the escalating adoption of AI requires additional measures to achieve meaningful emission reductions.

Google’s load-shifting strategy exemplifies a promising approach to addressing this challenge. It synchronizes data center operations with renewable energy availability on an hourly basis.

By deploying sophisticated software algorithms, Google identifies regions with surplus solar and wind energy on the grid and strategically ramps up data center operations in these areas. 

The logic behind the approach is simple: Reduce emissions by upending the way data centers work. 

The tech giant has also initiated the first initiative to align the power consumption of certain data centers with zero-carbon sources on an hourly basis. The goal is to power the machines with clean energy 24/7.

Google’s data centers are powered by carbon-free energy approximately 64% of the time, with 13 regional sites achieving an 85% reliance on such sources and seven sites globally surpassing the 90% mark, according to Michael Terrell, who spearheads Google’s 24/7 carbon-free energy strategy.

Cirrus Nexus actively monitors global power grids to identify regions with abundant renewable energy. Then they strategically allocates computing loads to minimize carbon emissions. By leveraging renewable energy sources and optimizing data center operations, significant reductions in carbon emissions were achieved. 

The company was able to cut computing emissions for some workloads and the clients by 34%. It uses cloud services offered by Amazon, Microsoft, and Google. 

Navigating the AI-Driven Energy Crisis

In recent years, both Google and Amazon have experimented with adjusting data center usage patterns. They do it both for their internal operations and clients using their cloud services. 

Nvidia offers another solution to this AI-driven power crisis – green computing accelerated analytics technology. It can slash computing cost and carbon footprints by up to 80%. 

READ MORE: Nvidia’s Accelerated Analytics Can Cut Computing Cost and CO2 Footprint by 80%

Implementing load shifting necessitates collaboration between data center operators, utilities, and grid operators to mitigate potential grid disruptions. Still, this strategy holds immense promise in advancing sustainability goals within the data center industry.

As the demand for AI soars, addressing the energy requirements of data centers is paramount to mitigating carbon emissions. Innovative strategies such as load shifting offer a pathway towards achieving carbon neutrality while ensuring the reliability and efficiency of data center operations in an increasingly AI-driven landscape.

The post The Carbon Countdown: AI and Its 10 Billion Rise in Power Use appeared first on Carbon Credits.

As the world seeks to reduce carbon emissions and fight climate change, hydrogen emerges as a promising alternative in the global shift towards clean energy solutions. In this context, Nikola Corporation’s advancements in hydrogen represent a significant step in driving the transition within the transportation sector.

Nikola Corporation, a prominent player in zero-emissions transportation and energy supply and infrastructure solutions under the HYLA brand, has released its financial results and business updates for the fourth quarter and full year ending December 31, 2023.

Driving Toward a Hydrogen-Powered Future with $230M Raise in Q4

The reported achievement underscores Nikola’s market-leading position, highlighting the quality of its products and the success achieved by its fleet operations. In July last year, the company received a total of $58.2 million to bolster its hydrogen infrastructure.

READ MORE: Nikola Wins $58M Total Grant for Hydrogen Stations

Here are the company’s Q4 and full year 2023 remarkable results:

Successfully delivered the first production hydrogen fuel cell electric truck available in North America.

Delivered 35 hydrogen fuel cell electric trucks in Q4, resulting in no finished goods inventory at the end of Q4.
Witnessed 225 additional voucher requests submitted in California for hydrogen fuel cell electric trucks from October 2023 through January 31, 2024, all attributed to Nikola.

Launched the first HYLA modular refueling station in Ontario, California, and announced a partnership with FirstElement Fuel in Oakland, California, providing fleets with fueling solutions in both Northern and Southern California.
Raised $230.3 million during Q4, ending the year with $464.7 million of unrestricted cash, the highest since Q4 2021.

Looking forward to 2024, the company’s focus is on optimizing revenue and costs within its business. They commit to securing more modular refueling sites and scaling up the production of their hydrogen fuel cell electric trucks.  

Investing their resources in the direction of hydrogen appears to be a strategic move for the company. 

Hydrogen Fueling the Green Revolution

Amidst the urgent need to reduce carbon emissions worldwide, there’s a surge in innovations focusing on alternative energy sources. Hydrogen stands out among these alternatives, particularly for providing a cleaner option in the transportation sector.

Unlike fossil fuels, which emit planet-warming gases, hydrogen fuel offers the potential to be 100% clean. In hydrogen fuel cell electric vehicles (FCEVs), hydrogen combines with pure oxygen in specialized cells, with the only resulting by-product being water.

Projections also highlight the significant role that hydrogen fuel will play in the coming decades. Experts anticipate that the global hydrogen market will soar to about $231 billion by the year 2030. Low-carbon hydrogen production could significantly reach 38 million metric tons per annum by the same period. 

McKinsey & Company estimated that the total hydrogen production capacity announced by companies by 2030 jumped by 40% as seen below.

Nikola believes that they have introduced the first production Class 8 hydrogen fuel cell truck to the North American market. 

In California, Nikola holds an impressive 99% share of all hydrogen fuel cell electric tractor HVIP vouchers requested between 2023 and January 2024. The number of requests for their fuel cell truck surpasses those for all other truck OEMs combined. This includes both battery and hydrogen fuel cell electric trucks during the same period. 

The promising future of hydrogen and its emission regulation compliance, particularly in California, motivated truckers to embrace this zero-emission technology. Many trucking companies believe that it brings advantages for long-haul trips and quick refueling. Plus, hydrogen-powered trucks can move heavier loads because they don’t need large batteries. 

READ MORE: Truck Companies Are Shifting to Hydrogen Fuel for Long-Haul Trips

Powering up the Hydrogen Economy

What further ignites the growing demand for hydrogen is the implementation of the largest and most aggressive investment taken by the US government for climate, the $369 billion Inflation Reduction Act of 2022.

The IRA has caused a significant shift in hydrogen economics, particularly impacting green hydrogen. This type of hydrogen, produced through the process of electrolysis using renewable electricity and water, has now become cost-competitive with its natural gas-derived counterpart.

Under the Act’s provisions, production tax credits are offered for a duration of 10 years to “clean hydrogen” production facilities. These incentives are structured based on the carbon capture rates during the production process.

Initially, the incentives start at $0.60 per kilogram (kg) for hydrogen produced with a carbon capture rate that exceeds half of the emissions from the Steam Methane Reforming (SMR) process, subject to meeting workforce development and wage requirements. But as the carbon capture rates increase, the value of the production tax credit rises to $1.00/kg. Eventually, for hydrogen produced with minimal to no emissions, the production tax credit reaches $3.00/kg.

The carbon capture rate estimates assume an emissions rate of 9.00 kg CO2e / kg H2 from producing gray hydrogen. Source: Utility Drive

Alongside the IRA is the bipartisan Infrastructure Investment and Jobs Act that helps the U.S. unleash clean energy. The latter law provided a $7 billion grant to seven regional clean hydrogen hubs (H2Hubs) under the Department of Energy. 

The program is part of a strategic move to accelerate the deployment of clean hydrogen across the country. 

Collectively, the 7 chosen hydrogen hubs will cut about 25 million metric tons of carbon dioxide from end-users annually. They will share the cost of developing the network, located in carbon-producing centers, including Appalachia, the Gulf States, and the Midwest. Read more about them here.

In California, Nikola hydrogen infrastructure brand HYLA seeks to establish a comprehensive zero-emission transportation solution to help fleets achieve their climate goals. The company recently unveiled the opening of its inaugural HYLA modular refueling station in Ontario, California. 

The initiative enables fleets to use the refueling station that facilitates freight transport between Southern and Northern California. The HYLA team plans to secure 9 additional fueling sites across the state throughout 2024. 

RELEVANT: Indian Government Announces Massive New Green Hydrogen Project

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Canada’s federal carbon pricing policy is a pivotal component of the nation’s efforts to combat climate change. The Parliamentary Budget Officer’s latest estimates show that it will yield over $5 billion in revenue from federal sales tax over the next 7 years. 

However, concerns are raised as to why there are no specific plans to channel the revenue to climate programs. The federal government also scaled back carbon tax rebates for small businesses. 

The estimated figures come from a private member’s bill put forward last fall by Conservative MP Alex Ruff, aiming to entirely remove the sales tax from carbon pricing.

RELATED: Saskatchewan to End Carbon Tax on Natural Gas & Electric Heating

Canada’s Carbon Tax Revenue and Redistribution Framework

In an era increasingly characterized by environmental responsibility, Canada’s carbon pricing policy was initially hailed as a bold stride toward fostering a sustainable future. However, the revelation that the revenue from the tax lacks specific earmarks for environmental initiatives has sparked widespread concern. 

Critics argue that without a targeted focus on climate action represents a missed opportunity in the fight against global warming. 

According to law, revenue generated from the carbon price must be redistributed to households and businesses through rebates and granting programs. 

The PBO projected that the redistribution will amount to about $600 million in 2024-25, growing to $1 billion annually by 2030-31, alongside the increase in the carbon price itself. Over the period from April 2022 to March 2031, this could accumulate to $5.7 billion.

These projections include revenue from the 8 provinces and 2 territories subject to the federal carbon pricing system. They also include British Columbia, Quebec, and Northwest Territories, which have their own systems. Thus, the federal carbon pricing system do not apply in those 3 jurisdictions.

Source: Environment and Climate Change Canada (ECCC)

Directing these funds towards climate action can help the country achieve its 2030 greenhouse gas emissions targets.

The carbon pricing framework was structured with the intention that 90% of the funds collected from consumers and smaller businesses would be allocated to individual households in the form of rebates. 

The remainder of the funds was designated for Indigenous communities, municipalities, hospitals, and schools. The ultimate goal is to facilitate energy efficiency upgrades through a range of programs.

To date, over $100 million has been disbursed through these programs. Approximately $35 million was allocated to small businesses, $60 million to schools, and around $6 million to Indigenous communities.

Scrutiny Over Carbon Tax Rebates for Small Businesses

But the scrutiny over the $5 billion income from the carbon price continues to intensify. It is further compounded by recent developments, particularly the reduction of carbon tax rebate percentages for small and medium-sized enterprises (SMEs). It sparked strong reactions from business communities nationwide. 

The Canadian Federation of Independent Business (CFIB) has been particularly vocal in its opposition, launching a petition against these alterations and advocating for immediate measures to support affected businesses.

The CFIB estimates that small businesses contribute up to 40% of the government’s total carbon price revenues. However, Clean Prosperity, an economic and climate change think tank, suggests a lower estimate, placing it closer to 25%.

Small businesses were never slated to receive more than 7% of the carbon price revenues back. Moreover, this allocation is now diminishing further, dropping to 5%.

The incentives were intended to assist businesses in covering a portion of the expenses associated with acquiring energy-efficient equipment. They also cover initiatives on upgrading buildings and operations to reduce fuel consumption. The targeted businesses are in emissions-intensive and trade-exposed sectors, but these haven’t yet been defined. 

Clean Prosperity’s executive director, Michael Bernstein, commented on the issue:

“Even two years ago, we calculated that there was enough money within the HST [Harmonized Sales Tax] on the carbon tax to fund a one-percentage-point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein further noted that SME businesses contribute around one-quarter of Canada’s carbon price revenue, according to their estimates. Since 2019, the government has yet to disburse about $2.5 billion from this income owed to small businesses. 

Perspectives and Proposed Solutions

Dan Kelly, CFIB President and CEO, argued that businesses require assistance to mitigate the financial impact of carbon pricing. He particularly remarked that:

“The whole principle of a carbon tax is you tax carbon-based activities and you give the money back so that then people make decisions to use those dollars in lower-carbon activities.”

Conservative spokesperson Sebastian Skamski affirmed the party’s commitment to eliminating carbon pricing. While Conservative MP Alex Ruff’s proposal to remove the sales tax from carbon pricing serves as an interim measure, the party advocates for broader exemptions and reductions to alleviate the burden on businesses.

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

However, Minister of Finance Chrystia Freeland’s office didn’t express openness to utilizing GST and HST revenues to bolster rebates. Katherine Cuplinskas, a spokesperson for Freeland, said that the government promises a portion of carbon price revenues to be returned to businesses. However, no specific details were provided. 

Canada’s carbon pricing policy generates significant revenue but lacks specific allocations for climate programs. Reductions in rebates for small businesses raise concerns. Balancing revenue generation, fair redistribution, and business support is crucial. Transparent communication and flexible policy frameworks are needed for effective climate action and economic stability.

The post Canada’s $5 Billion Carbon Pricing Revenue Sparks Debate appeared first on Carbon Credits.

India made a bold move in 2024 by revamping its Carbon Credit Trading Scheme (CCTS), allowing non-obligated entities to participate in the tradable carbon credits market. That means companies and individuals can voluntarily use carbon credits to address their planet-warming emissions. 

This significant revision introduces an offset mechanism, enabling these entities to register projects and obtain tradable carbon credit certificates (CCCs). Each credit represents one tonne of carbon dioxide equivalent (tCO2e). The aim is to efficiently price emissions through CCC trading and expand the voluntary carbon market.

India Opens Doors for Voluntary Carbon Credit Buyers 

In 2023, India introduced the 2023 Carbon Credit Trading Scheme (CCTS), encompassing both compliance and voluntary sectors. However, while the compliance segment is scheduled to commence in 2025-26, there is no set timeline for the launch of the voluntary carbon market. 

Under India’s revised carbon market scheme, obligated entities have the flexibility to purchase additional credits or sell surplus ones. Meanwhile, businesses can trade CCCs to offset their emissions. 

RELATED: Indian State Inks Three Deals Worth $266M in Carbon Credits

However, sectors facing challenges in meeting reduction targets, particularly those with hard-to-abate emissions, are exploring the possibility of trading energy-saving certificates (ESCerts) and renewable energy certificates (RECs) as offsets.

India emerged as a favorable destination for energy transition investments after successfully hosting the G20 Summit last year. During the same year, the country added about 17 GW of capacity, with non-fossil additions accounting for 13.8 GW. 

As seen below, renewable energy has the largest growth in terms of electricity supply capacity in the South Asian country. 

Chart from Reuters

Moreover, India increased its financial support to propel the green hydrogen ecosystem and initiated preparations for its domestic carbon markets.

Key decisions regarding international participation in the carbon credit market are expected in 2024, setting the trajectory for India’s engagement. Additionally, discussions on the scope, design, and procedures of the scheme, including linkages with international standards and registries, are anticipated to be addressed.

India’s Energy Transition Priorities to Drive Climate Action

India’s move reflects its commitment to combating climate change and aligning with global efforts towards decarbonization. This year, the super-emitter is anticipated to intensify its efforts in implementing its energy transition strategy while navigating challenges related to energy security and affordability. 

India’s strategy will prioritize various aspects in power and renewables market, including:

Clean energy transition advancing; coal reliance to remain high:

Electricity demand to grow with GDP growth, driven by local activity due to elections and El-nino impact.
Total capacity addition to grow by 60% YoY; coal share in generation to decrease marginally to 73.2% in 2024.

Improving domestic fuel supply (Coal and Gas) remains top priority:

India expected to surpass 1 billion metric tons of domestic coal production in 2024.
Boost in domestic gas production due to new gas pricing reforms.

Focus on green hydrogen/ammonia:

Shift towards creating local demand and supporting excess costs.
Launch of new schemes to aggregate demand from public sector units and large consumers.

Renewables at the forefront of India’s climate policy:

Highest renewable capacity addition (>20 GW) expected in 2024.
Falling module costs and tender backlog driving record capacity addition.
Increasing prominence of hybrid renewable tenders and stand-alone storage tenders.

Chart from Reuters

Bridging the Gap: Integrity Measures and Global Carbon Markets

The strategy also underscores the importance of integrity measures in bridging the emissions reduction gap and achieving climate goals.

In a recent report by the Carbon Market Institute, global carbon pricing mechanisms have raised an impressive $100 billion in 2022 and now covered 23% of global greenhouse gas emissions. 

Despite these achievements, current government pledges are projected to result in a temperature rise between 2.1°C and 2.8°C. Carbon markets hold considerable potential to bridge the emissions reduction gap necessary to approach a 1.5°C trajectory. 

However, there is still work to be done to bolster integrity measures and accelerate international cooperation in this regard.

In 2023, the global carbon trading markets experienced robust growth, reaching a record value of over $947 billion, representing a 2% increase from the previous year. This growth was primarily driven by higher prices in key markets such as Europe and North America, despite similar permit trading volumes.

The EU’s Emissions Trading System (ETS) maintained its position as the most valuable market, accounting for 87% of the global total. However, weakening demand from industrial buyers and the power sector towards the end of 2023 led to a bearish trend that has persisted into 2024. 

RELATED: Carbon Prices and Voluntary Carbon Markets Faced Major Declines in 2023, What’s Next for 2024?

Conversely, North American prices reached record highs, and China’s national ETS also saw unprecedented price levels in 2023.

India’s revised Carbon Credit Trading Scheme (CCTS) presents a significant step forward in the global effort towards decarbonization. This, combined with the strong growth observed in the global carbon trading market, underscores a promising trajectory towards reducing greenhouse gas emissions. 

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