Etihad And SATAVIA Optimize Vapor Trails

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UAE’s Etihad Airways signed a multi-year deal with UK-based SATAVIA to use advanced data analytics for vapor trail prevention in its daily flight operations.

Etihad will use SATAVIA’s specialized software to optimize flight paths and minimize vapor trails. Etihad had previously run a pilot project to reduce vapor trails on transatlantic flights. The latest partnership with SATAVIA will expand this beyond the demonstration stage.

This could also lead to more partnerships around generating carbon credits from vapor trail management. The generation of the vapor trail avoidance credits will be based on SATAVIA’s climate impact analysis.

What are Vapor Trails?

When flying at high altitudes, aircrafts form white, cloud-like trails behind the body of the plane. 

These trails are actually made up of tiny ice crystals that occur due to condensation. These form under specific atmospheric conditions and like CO2, contribute to the earth’s greenhouse effect.

In addition to CO2 emissions, jet engines also emit water vapor from fuel combustion. At very high cruising altitudes (around 8000 m or 26,000 ft), the air outside is quite cold. 

This means that the water vapor will condense quickly when they encounter this cold external air. The water vapor could be from the engine’s exhaust gases or from the ambient air when the relative humidity is high.

This condensation occurs on dust or sulfur particles that are also emitted from the aircraft. The end result is tiny ice crystals that form cirrus clouds.

The duration of the vapor trail has a huge impact on its global warming effect. Some vapor trails disperse quickly and are not problematic for the climate. However, if the relative humidity is over 100%, the vapor trails are more persistent and last for hours. These will trap heat and contribute to the greenhouse effect.

Vapor Trail Management in Aviation

In recent years, vapor trails have become a huge issue for the aviation industry. Some research has shown that they can contribute even more towards global warming than CO2. 

One 2018 study looked at the contribution of the aviation sector towards climate change between 2000 and 2018. It found that vapor trails were responsible for almost 60% of aviation’s effect on climate change.

Vapor Trails management in aviation requires a multi-aspect approach. Firstly, engine efficiencies would need to be improved, so that they emit fewer sulfur or dust particles. This leaves less room for condensation.

The other strategy is to optimize flight paths so that the flights do not encounter the atmospheric conditions that form vapor trails. For example, minimizing flight paths encountering high relative humidity or avoiding areas that have lots of dust particles in the air.

SATAVIA’s Vapor Trail Management System

SATAVIA is a UK-based data analytics startup founded by volcanologist Adam Durant. Durant has extensive experience studying the links between atmospheric conditions and aircraft function. 

After seeing the aviation industry disrupted by a volcanic eruption in Iceland in 2010, it motivated Durant started his company in 2013. According to Durant, only 5-10% of flights are responsible for 80-90% of vapor trails. Hence, optimizing only a few flight paths could significantly reduce climate impact.

SATAVIA provides a specialized management program to predict vapor trail formation. It uses real-time satellite imagery and atmospheric conditions like temperature and humidity to make accurate predictions. The prediction model could be used up to 36 hours in advance. 

SATAVIA vapor trail prevention deal with Etihad will allow the latter to leverage those technologies.

Etihad’s Commitment to Greener Aviation

This is one of Etihad’s many projects to tackle climate change in the aviation industry. In 2022, the company marked Earth Day by carrying out 42 EcoFlights in five days. This included 22 vapor trail management flights.

Based on the results from the EcoFlights, the company said they saved 40 minutes of flight time and reduced six tonnes of carbon emissions. And for each ton of CO2 reduced, Etihad gets one carbon credit. The airline is trading its vapor trail avoidance credits on a carbon exchange platform.

The flights tested a number of optimization strategies. These included:

Optimized flight paths to reduce fuel consumption and carbon emissions
Vapor Trails prevention to reduce water vapor emissions
Variable cruising speed using specialized software. Etihad claims this translated to 15% fuel savings.
Reduced flaps for landing, which reduces drag and fuel consumption. Etihad claims this saves 30 kgs of fuel for every approach.
Using a single-engine to taxi. Shutting down one engine during taxiing resulted in a 20%-40% saving in carbon emissions, according to the company.

The data collected from these flights would be valuable to optimize future flight paths and other green aviation initiatives. Apart from its Satavia vapor trail deal, Etihad also has established the Greenliner and Sustainable50 programs to achieve its decarbonization goals. These programs were in collaboration with Boeing, GE and Rolls Royce.

The aviation industry has multiple programs in place to bring down emissions. Initiatives such as carbon-offsetting CORSIA, are a major step towards reaching net zero by 2050. However, some major airlines like EasyJet and JetBlue are moving away from carbon offsetting and towards using Sustainable Aviation Fuels (SAFs).

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Who Issues Carbon Credits? (Everything You Need To Know)

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Who issues carbon credits? A question that requires a not-so-straightforward answer… Still, it deserves an answer.

Primarily because slashing emissions and decarbonizing economies are urgently required. But the time is running out and the technology to do that is not always readily available.

Enter carbon credits… 

Individuals and companies buy them to compensate for their unavoidable emissions. They’re from projects or activities that reduce or remove carbon emissions from the air.

How do carbon credits work? And how do they work for farmers or landowners? If you also have the same questions, then let’s get to the bottom of them after we deal with the basics first.

How Do Carbon Credits Work and Who Issues Them?

Carbon credits work like most commodities – they’re tradable units or certificates. To be more specific, they are a permit that gives its holder the right to emit certain amounts of carbon dioxide or its equivalent (CO2e), such as nitrous oxide, methane, etc.

1 carbon credit represents 1 metric tonne of CO2 prevented from entering the atmosphere. 

Why do we need carbon credits, or to put it more appropriately… Can we go about without them? 

If people and companies continue their business as usual, then there’s no place for carbon credits. But if we bravely accept the truth and face the climate crisis head-on, then carbon credits are critical. 

Fast Fact: The world has seen billions of metric tonnes (Mt) of CO2e pumped into the air each year, rising from about 36 billion Mt in 2016 to around 41 billion Mt in 2022. 

That scary fact gave birth to carbon credits; they came about to tackle the need for controlling harmful GHG emissions. They’re particularly meant to slash carbon emissions from industrial activities in carbon-intensive sectors such as steel, power, transportation, and other industries that use fossil fuels. 

Be it coal, oil, or natural gas, they all release detrimental gasses into our atmosphere. They just don’t pollute the air we breathe but they also trap heat from the sun. In other words, they’re the ones to blame for the earth’s rising temperatures. 

So, if we want to stop the planet from getting warmer, we need to have some solutions up our sleeves. And yes, carbon credits are one of them. 

How Do Carbon Credits Work?

Carbon credits are traded in carbon markets, voluntarily (voluntary carbon market) and mandatory (compliance market). 

To help you understand better how these credits work, here’s a sample scenario where they’re used. 

In a regulated market, if a country limits how much carbon companies can emit, then those firms have to abide by the law. So if the government permits company A to release only 100 Mt of CO2e each year, but the latter emits 200 Mt it has to compensate for the excess of 100 Mt.

Company A then buys 100 carbon credits to fully offset the excess. Or it may decide to just pay the fine, which can be more expensive. 

In the VCM, the concept is pretty much the same. The only difference is that company A does it voluntarily for good reasons. It can be that stakeholders pressure it or the officers want to do it as part of its ESG practice. 

Regardless of the reason, one big question rises – who issues carbon credits and does America issue them, too? 

The Kyoto Protocol establishes the carbon credit system. It put in place quotas on how much GHG countries can dump into the air. But only developed countries, known for their huge GHG emissions, have certain emissions limits or caps to meet. 

They operate in an emissions trading system, popularly known as ETS. Carbon credits traded in an ETS are from various projects certified and verified by carbon standards such as Verra, Gold Standard, Puro.earth, American Carbon Registry, among others. 

For developing nations, carbon credits are issued in the form of Certified Emission Reductions (CERs). Each CER is awarded for each tonne of GHG that a project reduces, avoids, or removes. These carbon credits, measured in Mt of CO2e, are issued by UNFCCC. 

Anyone can buy these carbon credits on this platform to offset their emissions. Or they can do so just to support or finance the carbon reduction or removal projects. 

Here’s how the platform looks when searching for a specific project, where it is, and other information about it. 

Credit buyers and sellers can also trade in carbon exchange platforms. They work like a stock exchange for carbon credits. 

How Do Carbon Credits Work In America?

While the carbon credits system has been around in the EU, China, Australia, New Zealand, and South Korea, it’s not available on the same scale in the United States. But California has its own ETS operating since 2012 and it covers the state of California only. 

Emissions standards are set by the California Air Resources Board (CARB).

In a sense, how carbon credits work in America follow the same system that exists in the California ETS. However, entities that want to offset their carbon footprint in other parts of America won’t be covered by the California ETS.   

The California carbon credits system covers several sectors, which includes:

Large industrial facilities (e.g. cement, iron and steel, petroleum refining, hydrogen, etc.)
Electricity generation and electricity imports
Suppliers of carbon dioxide
Suppliers of natural gas, petroleum gas, LNG, LPG, and certain distillate fuel oils
Other stationary combustion

The current price for carbon under the California ETS is USD ~$30 per ton. The carbon trading system has collected $14+ billion since inception, which includes $1.7 in 2020 alone. 

Apart from those regulated sectors, any business entity or individual can take part in trading carbon credits voluntarily. Same as explained earlier, entities can either buy or sell carbon credits or do both, in the VCM. 

You can do the same through different carbon credit marketplaces and carbon exchanges. There are plenty of them available, each has a set of unique features but offers almost the same benefits of trading carbon credits. 

If you want to know the details of how to buy carbon credits, here’s our step-by-step guide to do that. 

Basically, that’s how carbon credits work in America, which is pretty much the same in other parts of the world. 

If you’re wondering who is the largest seller of carbon credit, it’s currently China and India. While the largest buyer of carbon credit is usually the countries in Europe. 

But it’s interesting to note that Tesla is also one of the biggest sellers of carbon credits under CARB. In fact, it earned billions of dollars already from doing it. Its 2022 total carbon credit sales shows that the electric carmaker made a record $1.78 billion. 

In the VCM, the biggest buyer of carbon offset credits is the crypto trading company Toucan Protocol, according to Bloomberg. Toucan is a bridging protocol that turns real-life carbon credits into tokens that can be used on a blockchain. It was the first platform to allow for the tokenization of carbon credits. 

The data analyzed is from Verra, the world’s largest carbon standard. But since data that’s available is limited to what carbon credit buyers and sellers voluntarily disclose, the analysis covers only about half of the global carbon market.

Source: BloombergNEF

Farmers and any landowners can also sell carbon credits because all land can store carbon. So, this makes farmers eligible for earning carbon credits with 1 credit for each ton of CO2 their land sequesters. 

How Do Carbon Credits Work For Farmers?

The idea is simple. If you’re a farmer, prove that your land reduces or removes more carbon than it previously did. But how does that happen? By making some changes in your farming practices, usually with sustainable and regenerative farming. 

The reduction or sequestration of CO2 by regenerative farming leads to the creation of carbon credits. These credits are then brought to market by project developers who sold them to companies that need to offset their own emissions while supporting farmers.

In return, farmers get extra revenue for every ton of CO2 sequestered by their farmlands. 

For instance, if a farmer has a total amount of sequestered GHG of 22,745 metric tons across his acres, he can earn carbon credits worth $341,175 with the price of $15/ton.

Apparently, how carbon credits work for farmers is quite similar to how they do for others who can show they reduce or remove CO2. 

There’s a catch, however. Farmers may falsely claim, intentionally or with an honest mistake, to achieve certain carbon reductions or removal.

This is where an independent, 3rd-party body comes in to measure and verify the carbon reduction claim. This is to ensure that there’s a real carbon reduction or sequestration that happens. 

Soil tests, for example, are one way of carbon credit programs to verify claims. In the US, validation of farming practices is done by way of federal crop records and field data.

On the buyers’ side, investors and businesses like Cargill, General Mills, Mcdonald’s, Shopify, Microsoft, and JPMorgan are committed to supporting farming methods that regenerate the soil to capture more carbon. 

They buy carbon credits from farmers, incentivizing them to continue their farm’s carbon sequestration. They specifically aim to advance regenerative farming practices on millions of acres of North American lands.

The chart below shows the potential of various regenerative farming methods in cutting emissions in million metric tons of CO2e. 

The Growing Climate Solutions Act of 2021 gives authority to the U.S. Department of Agriculture (USDA) to help farmers, ranchers, and forest landowners take part in carbon credit markets. It supports the development of a voluntary market for carbon credits on agricultural lands.

Fast Fact: A study indicated that the potential demand for agriculture carbon credits in the US is 190 million tons per year. It also estimated the size of the US market for carbon credits at $5.2 billion per year.

How Do Carbon Tax Credits Work?

Governments do love taxes. Understandably so because they bring in revenue and they’re easy to administer, at least in theory. Taxes are also a great tool to control purchasing power.

If the government raises the tax on something, the price also increases. With increased prices, fewer people can buy that item or use the service. Adopting the same concept to pricing carbon makes sense. 

Carbon tax credits are the government’s tool to incentivize initiatives that prevent or remove carbon from the atmosphere. 

In the U.S., Pres. Biden’s 45Q tax credit is a perfect example. It particularly incentivizes carbon capture and storage (CCS) projects. Heavy industries like steel and cement where decarbonization is challenging are covered with this carbon tax. 

Projects that capture carbon enjoy the benefit of $85 per metric ton. 

Direct air capture (DAC), in particular, is a popular carbon removal technology that removes carbon and stores it geologically. It’s badly needed for the world to decarbonize. Fortunately, it’s scalable with the right investments and funding.

Enhancing the existing carbon tax credit for carbon sequestration can speed the deployment and innovation of CCS technologies.

And that’s how carbon tax credits work to help companies race towards net zero. 

Carbon credits are for entities to offset their emissions and support carbon reduction/removal efforts. Carbon tax credits are to further incentivize those climate-related actions and encourage carbon reductions. 

Issuing Carbon Credits

Who issues carbon credits depends on two things: mandated or voluntary. But regardless of which market, issuing carbon credits follow the same principles.

The issuer must know all the important information about them, the project that generates the credits, its location, vintage, benefits/co-benefits, and more. This information should then be publicly available for the buyers or investors to access and evaluate.

Only when there’s transparency that the integrity of the credits can be verified. After all, the credits must show that they have indeed done their job of cutting or preventing carbon emissions.

If you want to know more about carbon credits, visit our comprehensive guide here. Or you can go over this article on who verifies carbon credits prior to issuance.

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WEF and Indonesia Join Hand to Boost Blue Carbon Credits

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The World Economic Forum (WEF) and Indonesia have signed a partnership to ramp up the nation’s blue carbon efforts as well as address the growing demand for blue carbon credits. 

The deal, signed in Davos, Switzerland, will help support Indonesia’s national road map on blue carbon. This, in turn, will drive blue carbon credits financing to promote ocean restoration and conservation efforts. 

Indonesia will be the first national government to have this partnership with the WEF, leveraging its blue carbon resources to meet climate goals. Kristian Teleki, Director, Ocean Action Agenda, WEF remarked:

“As a global leader in blue carbon, having Indonesia as the first national partner with the Forum will set an example of how coordinated action can enhance the contributions of blue carbon for climate, biodiversity and societal benefits.”

Meeting the Rising Demand of Blue Carbon Credits

The partnership is the first of a series under the WEF’s initiative “Ocean Action Agenda”. It seeks to connect global blue carbon actors from different sectors.

It will also unlock knowledge, engage champions, build collaborations, and create innovation in these impact areas:

Ocean innovation
Blue food
Climate and resilience
Business and policy transformation

With those initiatives, the end goal is to help meet the rapidly increasing demand for high-quality blue carbon credits and projects worldwide. 

What is Blue Carbon?

Teleki from WEF also noted about blue carbon:

“Blue carbon holds immense potential for marine ecosystem restoration and coastal community resilience, while contributing to climate mitigation and helping raise critical funds to advance the urgent needs for ocean protection and conservation.”

Blue carbon refers to the carbon captured and sequestered by ocean ecosystems. It stores up to 5x more carbon per acre than tropical rainforests.  

Common examples of marine ecosystems are mangrove forests, seagrasses and salt marshes. These ecosystems are among the most intensive carbon sinks in the world.

Here’s how a typical blue carbon ecosystem works in absorbing carbon. 

These marine habitats are also critical in protecting coastlines from storms and other natural disasters. Let alone serving as nurseries for fish stocks while providing food sources and jobs for coastal communities.

Growing and conserving those carbon-absorbing ecosystems produce blue carbon credits. These carbon credits usually trade at a premium. That is because of the large positive second-order effects of blue carbon projects such as the positive effects on corals, algae, and marine biodiversity. 

Market analysis also shows that global demand for carbon credits is growing as businesses are working hard to offset their emissions. Countries are also striving to achieve their carbon reduction goals.

The island nation of The Bahamas is among the first nations to sell blue carbon credits.  

Blue carbon credits help raise critical funds to advance ocean protection and conservation.

WEF and Indonesia Blue Carbon Partnership

Indonesia, the world’s biggest archipelago nation, is a leader in blue carbon and the sustainable ocean economy. It is home to the largest blue carbon resources in the world – about 20% of the world’s remaining mangroves).

It was the president of the G20 last year tasked to fast-track sustainable blue economies in the region. 

Prior to this blue carbon deal, the WEF had launched the Ocean 20 (O20) with the Indonesian government last November 2022. 

Luhut B. Pandjaitan, Indonesia’s Minister for Maritime Affairs and Investment said the country plans to rehabilitate 600,000 hectares of mangroves by 2024. The minister further added that:

“We have the largest and most diverse mangrove forests in the world… Creating this partnership between Indonesia and the Forum to work on blue carbon will really help accelerate our efforts for climate action.”

The blue carbon pact between the WEF and Indonesia will bring together stakeholders across sectors and initiatives in blue carbon. This, in turn, will help drive blue carbon projects financing.

The WEF will continue to promote blue carbon efforts and support countries in achieving their national climate ambitions and initiatives. 

The organization further leads the implementation of the High-Quality Blue Carbon Principles and Guidance that was launched at the United Nations Conference COP27. It’s a product of a collaboration between the WEF and world leaders working on blue carbon. 

It outlines a set of clear principles and guidance that describe what “high-quality” means for blue carbon projects and credits, with the goal of preserving and restoring blue carbon ecosystems.

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T-Mobile Commits to 2040 Net Zero Target

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T-Mobile revealed its net zero emissions target across all Scopes – 1, 2, and 3 – with the Science Based Targets initiative’s (SBTi) approval.

T-Mobile’s net zero pledge is the first among U.S. wireless providers with SBTi validation. The company’s CEO Mike Sievert commented:

“As we know sustainability is important to our customers and stakeholders, T-Mobile has made great progress in reducing our environmental footprint – and now we’re taking even bigger steps to reduce our carbon emissions with a commitment to meeting SBTi’s Net-Zero Standard.”

With a science-based approach, America’s supercharged Un-carrier aims to achieve two major targets.

Near-term target: cut absolute Scope 1, 2, and 3 GHG emissions 55% by 2030.
Long-term target: achieve net zero emissions across all scopes by reducing absolute emissions by 90% by 2040.  

T-Mobile Joins The Climate Pledge

As part of its net zero commitment, the 5G provider also said that it now becomes one of the 400+ members of The Climate Pledge. Co-founded by Amazon and Global Optimism in 2019, the Pledge is a collective commitment to reach net zero 10 years ahead of the Paris climate goal. 

By joining the pact, T-Mobile and other members agree to do these climate actions:

Measure and report GHG emissions regularly;
Implement net zero strategies in line with the Paris Agreement through real business changes and innovations
Offsets any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial carbon offset credits.

Global Lead of The Climate Pledge at Amazon said that they’re “thrilled to see the comprehensive and thoughtful pathway they [T-Mobile] have charted to achieve net zero carbon by 2040”.

Here’s how the path of T-Mobile to 2040 net zero looks like in four scenarios.

Peter Osvaldik, the company’s CFO stated in T-Mobile’s net zero pathway report:

“T-Mobile has led the wireless industry with our commitment to sustainably managing our environmental footprint, and now we’re continuing to raise the bar with this ambitious net-zero emissions goal. Big, bold programs like this will not only have tremendously important positive outcomes on climate–they are also good business.”

Strategies to Curb Carbon Footprint

In 2021, powering its 5G network emits the bulk of T-Mobile’s operational footprint (Scopes 1 & 2). 

5G has the potential to be the most sustainable generation of wireless networks because it uses less energy per data transmitted and supports more devices. But it needs more energy for infrastructure equipment. 

The telecom provider reduces emissions by focusing first on decreasing energy use and investing in energy efficient technologies. The company is employing high-efficiency rectifiers, antennas, lighting controls, and cabinet designs. They can improve cellular equipment performance and boost energy efficiency, too. 

T-Mobile is further cutting its network energy demands with these measures: 

Decommissioning tens of thousands of macro cell sites
Replacing air conditioning units with direct air-cooling fan doors
Optimizing energy consumption via network software 

AI, with its advanced data analytics, can optimize energy use and save power based on traffic and weather. The company is also adopting efficient technologies in its data centers, e.g. smart thermostats and lighting controls. 

The company was able to meet its renewable energy goal to power its business with 100% renewable electricity. It will continue to source renewable energy to keep its operational emissions low.

Beyond Operations: Reducing Scope 3 

T-Mobile includes Scope 3 in its net zero target, which is even a more ambitious move. It accounts for 71% of the company’s total carbon emissions from across its value chain. 

Ironically, the 5G network provider has the least control of this emission source that has the biggest impact. It comprises of the following components:

T-Mobile keeps track and reports on those 10 categories of Scope 3 emissions. That’s crucial to its business leaning on the collaboration with its major suppliers. 

As seen in the chart above, emissions from product transportation and distribution take up a large portion of the firm’s Scope 3 source. This includes both upstream (from suppliers to distribution centers) and downstream (from distribution centers to retail stores) logistics. 

T-Mobile seeks to slash these sources through a more energy-efficient network of logistics and distribution. For example, the company removed 833 trucks and 313 expedite vans from the road in 2021. That’s made possible by optimizing shipping that saves around 2,241 MT of CO2e.

To hit its net zero goal, T-Mobile is further reducing Scope 3 emissions by:

Maximizing the use of space in its vehicles, 
Reducing fuel consumption, and 
Switching to lower-emission fuel sources.

T-Mobile engages with stakeholders throughout its supply chain to identify and address emissions hotspots. Then the company implements the necessary sustainability initiatives.

Lastly, even if end-of-life treatment of sold products and waste make up a tiny share in the wireless provider’s footprint, waste remains a big issue for the planet. 

So, T-Mobile is working with 3rd-party contractors to track and measure their municipal waste, hazardous waste, and wastewater. The company also commits to cut waste by recycling, composting, and digitization. 

With regulations getting tighter and stakeholders more demanding, companies with strong net zero pledges and sustainable climate actions tend to have better reputation and gain a competitive edge. 

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BP’s 2023 Outlook for Global Energy Transition: Key Takeaways

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BP Energy Outlook 2023 unlocks the key trends and insights surrounding the global energy transition out to 2050. 

The 2023 Energy Outlook’s three main scenarios – Net Zero, Accelerated, and New Momentum – are meant to explore possible outcomes for the energy system over the next 3 decades. This will help the oil and gas supermajor to devise a strategy that’s resilient to various ways in which the energy system transitions.

It includes major developments from last year such as the U.S. Inflation Reduction Act and the war between Russia and Ukraine. bp’s chief economist, Spencer Dale, noted: 

“Global energy policy and discussions in recent years have been focused on the importance of decarbonising the energy system and the transition to net zero. The events of the past year have served as a reminder to us all that the transition also needs to take account of the security and affordability of energy. Any successful and enduring energy transition needs to address all three elements of the so-called energy trilemma: secure, affordable and lower carbon.”

2023 Outlook of the Energy Transition

3 Scenarios Exploring the Uncertainties of Energy Transition

The three scenarios are not predictions of what is likely to happen nor what bp would like to happen. Instead, they only capture a wide range of the outcomes possible for global energy transition out until the mid-century. 

Accelerated and Net Zero explore how different elements of the energy system may change to achieve large carbon emissions reductions by 2050, by 75% (relative to 2019 levels) in Accelerated and 95% in Net Zero. Both scenarios assume that there’s a significant tightening in climate policies. 

New Momentum reflects the broad trajectory of the global energy system. It emphasizes substantial increases in climate pledges in recent years. Under this scenario, carbon emissions peak in the 2020s and are around 30% below 2019 levels by 2050.

Net Zero also shows a shift in societal behavior and preferences to support gains in energy efficiency and the adoption of low-carbon energy. The CO2 emissions left in this scenario can be eliminated by either additional changes to the energy system or by deploying carbon dioxide removal (CDR). 

Scenarios in Line with “Paris Consistent” IPCC Scenarios

The pace and extent of decarbonization in Accelerated and Net Zero are broadly in line with IPCC scenarios that are consistent with 2ºC and 1.5ºC.

As seen in the chart above, the fall in fossil fuels and industrial emissions in the IPCC scenario is largely due to a 75% decrease in global coal consumption by 2030. 

The fall in coal consumption in Net Zero by 2030 is smaller compared to the decline in oil and natural gas. This goes to say that coal remains an important fuel in emerging economies where demand for energy is expanding. 

4 Trends Dominating the Future of Energy 

bp’s energy transition outlook for 2023 further reveals the key trends that will dominate future energy demand, including:

A declining role for hydrocarbons
Rapid expansion in renewables 
Increasing electrification
The growing use of low-carbon hydrogen

Key Trends Impacting Future Energy Demand

Consumption of fossil fuels falls down in all three energy transition scenarios in the 2023 Outlook. Their share in primary energy declines from 80% in 2019 to around 55% to 20% by 2050. This is the first in modern history that there’s a continued decrease in any fossil fuel demand. 

Meanwhile, all other three trends show sustained increases in demand. 

Renewable energy includes wind, solar power, bioenergy, and also includes geothermal power. The rise in renewables offsets the falling role of fossil fuels. Their share will go up as much as 65% by 2050 because of stronger policy support for low-carbon energy. 

The big importance of renewables is also driven by the growing electrification of the energy system. The share of electricity in energy use goes up from only 20% to between 35% and 50% by 2050. 

Lastly, the growing use of low-carbon hydrogen in hard-to-abate processes that are difficult or costly to electrify supports the decarbonization of the global energy system. This is particularly true in both Accelerated and Net Zero scenarios. The energy used producing low-carbon hydrogen rises to between 13-21% by 2050 in both scenarios.

CCUS and CDR in Decarbonization Pathways

CCUS Role in Enabling Deep Decarbonization Pathways

Carbon capture, use and storage (CCUS) plays a central role in supporting the transition to a low-carbon energy system by:

Capturing industrial process emissions
Acting as a source of carbon dioxide removal
Abating emissions from the use of fossil fuels

In all 3 scenarios, around 15% of the CCUS operating in 2050 is used to capture and store non-energy process emissions from cement production. CCUS achieves 4 to 6 GtCO2 by 2050 under Accelerated and Net Zero, with only 1 GtCO2 in New Momentum.

By region, the greatest use of CCUS with natural gas is in the US, followed by the Middle East, Russia, and China. In Accelerated and Net Zero, over 70% of the global deployment of CCUS in 2050 is in emerging economies, led by China and India. 

This requires a very rapid scale-up of CCUS in these countries relative to their historical levels of oil and gas production, which can be used as an indicator of the geological suitability and engineering capability to develop industrial-scale CCUS facilities.

CDR is Necessary to Reach the Paris Climate Goals

Climate scientists at IPCC stated that carbon dioxide removal (CDR) is necessary to achieve the Paris climate goals. CDR includes bioenergy combined with CCUS (BECCS), natural climate solutions (NCS), and direct air carbon capture with storage (DACCS). 

BECCS offers the benefit of creating useful energy and negative carbon emissions. But what limits its full potential is the sustainability of the biomass used and its other uses.

NCS conserve, restore or manage forests, wetlands, grasslands and agricultural lands to increase carbon storage or avoid GHG emissions. They can have co-benefits, such as promoting biodiversity, but it can be hard to ensure and monitor their permanence.

DACCS is a process of capturing CO2 directly from ambient air and then storing it. This CDR tech is scalable and offers certainty on additionality and permanence. But their costs are high relative to other forms of CDR. 

The IPCC 1.5ºC scenario includes a rapid scale-up of both NCS and BECCS. Together, they will reach over 7 GtCO2 per year by 2050. 

The 2023 Energy Outlook is to inform bp’s strategy and to contribute to the wider debate about what shapes the energy transition to net zero. But it’s only one source among many when considering the future of global energy markets. And the oil and gas giant is also using other external analysis and information when deciding on its long-term strategy. 

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ArcelorMittal and Microsoft Back MIT Green Steel Firm With $120M

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The green steel technology firm that spun out of Massachusetts Institute of Technology (MIT), Boston Metal, raised $120 million in its latest funding round led by steel giant ArcelorMittal and participated by Microsoft.

The steel industry is raking in about $1.6 trillion in annual revenue. But that’s in exchange for 7% to 9% of the global carbon footprint, says the World Steel Association. 

The industry is, in fact, the largest emitting manufacturing sector because it’s very reliant on coal to produce steel. And bringing it to net zero emissions by 2050 isn’t cheap – costing the industry between $215 to $278 billion. 

But using green solutions to make clean steel can help reduce the cost. This is exactly what the MIT spinout company Boston Metal proposes through its unique electrolysis process. Its technology attracted large companies wanting to decarbonize the industry.

Ramping Up Boston Metal Green Steel 

To meet the Paris Agreement, emissions from steel and other heavy industries have to fall by 93% by 2050. Hence, steel manufacturers need to reduce their emissions in large amounts.  

Good thing MIT technology experts were able to show that it’s possible to make steel without emitting CO2. And that’s when they created a new company to scale the technology in 2013. Four years later, a steel industry veteran with four decades of experience, Tadeu Carneiro, became Boston Metal’s CEO. 

In the next year, the tech company raised a $20 million Series A round led by Bill Gates’ climate investing firm Breakthrough Energy Ventures. In its latest funding, Boston Metal secured $120 million in a round led by steel giant ArcelorMittal. To date, it has raised a total of $220 million to support tech development.

ArcelorMittal’s VP Irina Gorbounova noted the EU Emissions Trading System (ETS) already puts a price on carbon emissions and that they expect other regions to follow. She said that:

“Zero or near-zero carbon emissions steel will become a reality. The only question is how quickly we can make that journey happen. If steel companies don’t decarbonize, they will not stand the test of time.”

Microsoft’s $1 billion investment arm Climate Innovation Fund also took part in the funding round. The fund supports ramping up the development of carbon reduction and removal technologies. The tech giant aims to be carbon negative by 2030 and hit net zero by 2050.

With its Series C funding, Boston Metal seeks to ramp up green steel production at its pilot Woburn, Massachusetts facility. The firm will also use the money in support of building its Brazilian subsidiary where it will manufacture various metals. 

Making Steel Without Carbon Dioxide

In a traditional blast furnace steelmaking process, iron ore is combined with coal that’s baked and converted into coke. This process releases significant CO2 emissions via these ways: 

carbon in coke and limestone creates CO2 as a byproduct
fossil fuels used to heat the blast furnace
coal used to power plants and ovens releases CO2

Approximately 70% of the world’s steel is made that way, which generates 2 tons of CO2 for each ton of steel produced.

Boston Metal will change that with its patented “Molten Oxide Electrolysis” (MOE) process. It takes advantage of clean electricity to transform low-grade iron ore into high-purity molten iron. 

This single-step method eliminates the need for secondary steel processing that emits CO2. So, there’s no CO2 involved but only includes common oxides such as silica, alumina, calcium, and magnesium. These “soup of other oxides” mix with the iron oxide where electricity passes to make iron and oxygen without producing waste. 

But the availability of clean electricity will largely impact how fast the MOE process can be implemented by steelmakers. Otherwise, its purpose of “greening” steel production will be to no avail. 

There are other alternative processes present to make green steel. 

One is the green pig iron production processed using low emission technologies and inputs. It uses renewable input of biomass called biochar. Like MOE, it also eliminates the need for secondary processing like sintering and coking. 

Another steelmaker is greening production by replacing coal with green hydrogen. This process will reduce CO2 emissions by over 90% compared to traditional steelmaking.

The Boston Metal’s CEO remarked:

“We believe in the future, we will have abundant and reliable and green and cheap electricity in order to use this process and manufacture green steel.”

Boston Metal will not be a steel manufacturer itself but will license its green technology to steel companies. Its MOE process has the potential to help steelmakers and the industry reach net zero emissions. 

The company will start building its demonstration steel plant in 2024 and a commercial facility in 2026.

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Wildfires Cost Over $148B and 30% of Emissions

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A new report by Dryad Networks unveiled the hidden costs and impacts of wildfires, its carbon emissions, and how early detection can prevent huge economic losses and save lives. 

Wildfires endanger people’s health and nature, affecting 6.2 million people and causing decades’ worth of damage to biodiversity. They also cost the global economy hundreds of billions of dollars each year. 

More remarkably, the report estimates that wildfires can be a major source of global carbon emissions (30%) by the end of the century. 

Carsten Brinkschulte, CEO of Dryad Networks commented: 

“It is clear from the report findings that the world needs to wake up to the full impact of wildfires and it is time for governments to shift the focus of investment onto detection and prevention – not just suppression.

The Underestimated Impacts of Wildfires

Within just one decade, 8 of the worst wildfires on record have happened. And they’ve become even more widespread, burning about 2x more tree cover today as they did two decades ago. 

Still, the full impact of wildfires is largely underestimated. 

The new report by ultra-early detection IoT firm Dryad, “What lies beneath – the hidden truth about wildfire” – looks closely at the unseen impacts of wildfires. It focuses on these key areas:

full environmental impact 
human health hazards 
financial costs to governments and 
what could be avoided with early wildfire detection.

Hidden Costs: Emissions & Biodiversity

Wildfires account for about 6 to 8 billion tons of carbon emissions, according to estimates. That means it contributes 20% to the total global GHG emissions. It equates to how much the transport sector also emits. 

But more alarmingly, wildfires’ impact on climate change can get worse. They can be the source of 30% of emissions by 2100, the report says.

Wildfires also damage biodiversity significantly. 

In fact, the fires killed or displaced around 3 billion animals in Australia in 2020 alone. While in Europe, wildfires destroyed ⅔ of the Plaine des Maures Nature Reserve during the Gonfaron Fire in France last 2021. 

Unfortunately, it takes decades for fauna and flora to recover from the damages of wildfire.

At the UN COP15 biodiversity conference last year, nations agreed to protect nature and biodiversity hotspots 30% of land by 2030. 

Impacts on Health and Economy

According to the World Health Organization (WHO), “wildfires and volcanic activities affected 6.2 million people between 1998-2017”. This resulted in 2,400 attributable deaths worldwide from suffocation, injuries and burns. 

WHO also says that, since that period, the “size and frequency of wildfires are growing due to climate change”. That means hotter and drier conditions are further increasing the risk of spreading wildfires.

On top of environmental and health damages, the financial impact of wildfires is also very high, worth billions of dollars. 

For instance, a study by University College London stated in the report showed that California’s 2018 wildfires alone cost the U.S. a whopping $148.5 billion. Capital losses and health costs within the state amounted to $59.9 billion. 

The report noted that employing traditional wildfire detection methods fail to reduce the risks of the disaster. Detecting fires through human sight may take up to 6 hours or more. 

Within those hours, a wildfire may have already spread and cost the state or country billions in firefighting. In the U.S., for example, the cost of fighting wildfires is around $3.7 billion in 2022. 

Companies that use carbon credits from forests created a buffer pool in case of wildfires. But the buffer pool is far from being enough to cover the losses. 10-20% of the total credits from forests fill the buffer pool.

California, in particular, has a huge forest carbon offset program that credits carbon stored in forests. These carbon credits are sold for those who seek to offset their emissions. As well, a study suggested that California’s buffer pool also severely lacks capital to keep up with the increasing wildfire events.

Interestingly, insurance giant Swiss Re pointed out how the cost of global insured claims due to wildfires has risen to around $10 billion per year. The insurance giant also projected that figure to go up, from 6% in 2020 to over 13% by 2030 as seen in the chart.

Dryad Early Wildfire Detection Tech

For Dryad’s CEO Carsten: 

“There should be no hidden costs for wildfires. All countries must work together to share data communicating the full impacts of wildfires to ensure the extent of damage caused is fully understood. This will unlock the critical level of investment and attention needed on detection and prevention to address the issue of wildfire once and for all.”

In this regard, the Iot company created an effective technology that can detect a wildfire very early – within the first 60 minutes. That’s before the open fire has even developed. 

Dryad’s early fire detection system “Silvanet” is pending patent. It uses low-cost solar-powered sensors and IoT mesh gateways. It also offers cloud-based big data platform for analytics, monitoring and alerting.

The tech can be placed even in the most remote locations but still transmit the first signs of fire to firefighters. It can detect the exact location of the fire, which substantially enhances response times.

In terms of cost, Dryad’s detection tech can be less than $50. It can help get rid of almost all the impacts of wildfire if deployed on a commercial scale.

Take for example the case of Camp Fire in California in 2018. The company estimates that if early detection happens, their technology could have saved 5.5 million hectares of land, 2,500 homes and 26 lives from harm. Not to mention the expensive firefighting cost of $150 million or more. 

Only with an early detection system in place, billions of tonnes of emissions, billions of dollars of financial losses, millions of hectares burnt, millions of animals, and thousands of lives could have been spared from wildfires. Billions of carbon credits could also be created.

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Tesla Carbon Credit Sales Reach Record $1.78 Billion in 2022

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Tesla’s carbon credit sales are making headlines again as it reached a new record in 2022. The company reported that Q4 carbon credit sales jumped 47% year over year.

Tesla has been generating revenue from the sale of carbon credits for at least 8 consecutive quarters.

These credits, also known as carbon offset credits or carbon allowances, are a way for companies to offset their carbon emissions by investing in renewable energy and other carbon reduction projects. 

Tesla has been selling carbon credits to other automakers. In 2019, the company made headlines when it reportedly earned $357 million from the sale of carbon credits to other car companies that did not meet emissions standards set by the California Air Resources Board (CARB).

This allowed these companies to comply with regulations without having to make significant changes to their own operations.

Tesla has seized the net zero market through many revenue streams including vehicles, solar installations and carbon credits. But the rise of Tesla’s carbon credits sales over the years has proven a steady contribution to revenues and profits.

Rising High: Annual Tesla Carbon Credit Sales

In 2018 Tesla sold $419 million in carbon credits. The big move came in 2020 with $1.58 billion in revenues from the sale of credits. Tesla then stunned the carbon markets with its landmark $679 million credit sales in Q1 of 2022. 

This represents a significant portion of Tesla’s overall revenue and highlights the value of the company’s clean energy operations. Tesla’s carbon credits are generated through its clean energy business.

The company operates a solar panel installation business and also sells energy storage systems. These operations generate carbon offset credits through the reduction of greenhouse gas emissions (GHG’s).

Not Just Carbon Credits, Tesla is a Net Zero Leader 

Tesla has been a leader in the electric vehicle market since its founding in 2003. The company’s mission is to accelerate the world’s transition to sustainable energy.

In addition to producing electric vehicles, Tesla also operates a solar panel installation business and sells energy storage systems. These operations generate carbon offset credits through the reduction of greenhouse gas emissions. These credits can be sold to other firms, such as automakers, that struggle to meet emissions standards set by regulatory bodies like CARB. 

Tesla has sold carbon credits to a number of car manufacturers, including Chrysler, as a way for them to comply with the standards. It’s reported that Chrysler bought US$2.4 billion worth of Tesla’s Carbon Credits, accounting for the majority of the company’s sales in years past. It’s unclear who the major buyers were in 2022.

Credits Help Offset Scope 1, 2 and 3 Emissions

Reducing greenhouse gas emissions requires addressing both energy generation and consumption. This is what the transportation and energy sectors have been prioritizing to directly reduce their emissions.

Companies like Audi, Porsche and Daimler-Chrysler are accelerating their net zero and electrification plans. Audi, for example, aims to have 30 electric vehicle models by 2025 and aims to have 40% volume share of the EV market by the same year.

Tesla designs and manufactures a complete energy and transportation ecosystem, focusing on affordability through research and development, software development and advanced manufacturing capabilities. 

Tesla itself has an emissions footprint that it addresses. Here’s how Tesla’s own Scope 1, 2 and 3 emissions looked from their 2021 Climate Impact Report:

You can read about Tesla’s net zero commitments in their 2021 climate impact report.

Tesla’s Role in the Carbon Credit Market

The carbon credit market is a way for companies to offset their carbon emissions by investing in renewable energy and other carbon reduction projects.

Companies that exceed emissions standards set by regulatory bodies can purchase carbon credits from companies like Tesla that are generating carbon offset credits through the reduction of greenhouse gas emissions. By doing so, they can comply with regulations without having to make significant changes to their own operations.

The sale of carbon credits has been a significant source of revenue for Tesla and highlights the value of the company’s clean energy operations. As the world continues to focus on reducing carbon emissions and fighting climate change, the market for carbon credits is likely to grow. 

Tesla’s leadership in the electric vehicle market and its commitment to sustainable energy position the company well to continue to generate revenue from the sale of carbon credits in the future.

The post Tesla Carbon Credit Sales Reach Record $1.78 Billion in 2022 appeared first on Carbon Credits.

Clean Energy Transition Investment Hits New Record – $1.1 Trillion

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Global low-carbon or clean energy transition investment jumped 31% in 2022 with a total of $1.1 trillion, drawing level with capital for fossil fuels, according to BloombergNEF report. 

Both figures broke new records in global investment in the clean energy transition. These “firsts” are driven by the energy crisis that hit the world last year as well as policy actions that enable the deployment of clean energy technologies much faster.

The research firm accounts each year how much money companies, financial firms, governments, and individuals invest in low-carbon energy transition. BNEF reports the results in its Energy Transition Investment Trends.

Setting New Record: Investment by Sector 

There are 8 sectors covered in the report including:

Renewable energy
Energy storage
Electrified transport
Electrified heat
Carbon capture and storage (CCS)
Hydrogen 
Nuclear power
Sustainable materials

Out of those eight, only investment in the nuclear power sector didn’t set a new record as it stays almost flat. While the rest reached a new record investment level. 

The sector that got the highest investment share is renewable energy – wind, solar, biofuels, and others. It set a record of $495 billion committed in 2022, up 17% from 2021. 

Remarkably, the electrified transport sector (investment in electric vehicles) is almost at par with renewables. The sector received a 54% increase from prior year – $466 billion.

The least achiever is the hydrogen sector, getting only $1.1 billion which represents 0.1% of the total investment. Yet, given the growing interest and strong policy support in the sector, hydrogen is the fastest-growing. It attracted an investment of more than 3x in 2022.

In fact, government subsidy programs this year will help ensure that the global green hydrogen industry will turn into a large-scale renewable power source.

In the U.S., the Inflation Reduction Act offers tax credits to clean hydrogen producers. The second largest emitter has an $8-billion program that will fund regional clean hydrogen hubs in the country.

Other similar programs also exist in the EU, UK, Germany, Canada, India, and China. Their common goal is to promote clean hydrogen industry.

When it comes to clean energy investment share by country, China takes the lead. The largest emitter got almost half of the global total investment in low-carbon energy transition, bagging $546 billion. 

The U.S. took the second slot with $141 billion while Germany secured the 3rd place, again. France took over the UK’s previous 4th slot as the latter fell down to 5th place. 

Closing the Investment Gap: Clean Energy vs. Fossil Fuels

BNEF also reported estimates on global investment in fossil fuels. The figures include every aspect, from top to bottom, of fossil power generation. 

For the first time, the total estimated amount poured into fossil fuels exactly matches that of the clean energy transition – $1.1 trillion. 

Last year, large banks favored fossil fuel financing over decarbonization goals. Three of them have invested a total of $789 billion into fossil fuels from 2016 to 2021, and $199 billion was for 2021 alone.

The new report stirs attention as it seems to turn the tide in global investments. And despite the energy crisis last year, the transition to clean energy appears to catch more eyes. 

According to the Head of Global Analysis at BNEF, Albert Cheung, instead of slowing down, “energy transition investment has surged to a new record as countries and businesses continue to execute on transition plans.” He added that:

“Investment in clean energy technologies is on the brink of overtaking fossil fuel investments, and won’t look back. These investments will drive short-term job creation and help to address medium-term energy security objectives. But much more investment is needed to get on track for net zero in the long term.”

Indeed, under BNEF’s 2050 Net Zero Scenario, the world needs an annual investment on energy transition of $4.55 trillion in this decade. It means the 2022 achievement must triple and more to tackle climate change. 

One notable area that’s part of the $1.1 trillion investment is climate-tech corporate finance. It involves new equity financing raised by climate-tech companies, which is down 29% from 2021.

2022 was not a good year for global equity markets as the report noted. Still, venture capital and private equity funding went up 3%.

Clean Energy Factory Investment

BloombergNEF’s report also shows how much goes to manufacturing facilities for clean energy. The amount went up from $52.6 billion in 2021 to $78.7 billion in 2022. 

As the chart below indicates, facilities for batteries got the biggest share worth $45.4 billion. Solar factories came next with $23.9 billion investment.  

BNEF’s figures only account for successfully commissioned factory projects.

By geography, China remained at the top in manufacturing investments last year – 91%! And that’s despite huge efforts from other nations to attract low-carbon energy investors.

In the US, for instance, there were a series of commitments for new or expanded clean energy factories in the past months. They’re not, however, included in the report.

Looking forward, the research firm said that between 2023 and 2026, clean energy factory investment only needs an annual average of $35 billion to meet the Net Zero Scenario. 

In other words, “manufacturing capacity for clean energy technologies is unlikely to be the major bottleneck to achieving net zero”, said BNEF’s Head of Trade and Supply Chains research. 

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