Cobalt, a key ingredient in the batteries powering our electric vehicles (EVs) and devices, is facing turbulent times. Once a high-flying commodity, cobalt prices have now plummeted to levels not seen in years. 

Cobalt prices have experienced a steeper decline than lithium. The European cobalt metal price hit a seven-year low of $12.75 per pound on August 19, 2024—a level not seen since October 2016. This price drop is largely attributed to weak demand for cobalt sulfate used in traction batteries, leading producers to shift focus to metal production for better profitability.

The increase in China-made cobalt metal exports to Europe has further pressured prices, with a 295.8% year-over-year rise in unwrought cobalt exports during the first half of the year.

Supply Glut: Why Cobalt Prices Are Plummeting

Glencore PLC, one of the top cobalt producers, has led the way in production cuts. The company reduced first-half output by 26.7% year-over-year. These cuts have been driven by lowered run rates at Mutanda and decreased grades and throughput at Kamoto. 

Despite these reductions, the overall impact on the market surplus has been minimal, as companies like CMOC Group. continue to ramp up production, leveraging strong copper prices even if cobalt stocks need to be held until demand improves.

In light of these developments, S&P Global has downgraded its 2024 price forecasts for European cobalt metal by 4.4% to $13.69 per pound. Despite these downward revisions, there are some positive indicators for near-term demand. 

Market players are anticipating a potential interest rate cut by the US Federal Reserve in September, which could lower financing costs for plug-in electric vehicles (PEVs) and improve economic conditions. 

Additionally, China is expected to see a boost in PEV sales due to recently increased subsidies for vehicle trade-ins, offering 20,000 yuan for scrapping internal combustion engine cars in favor of new PEVs.

However, a broader recovery in the PEV market will require more than just these short-term measures. A sustained recovery will depend on improvements in consumer confidence, affordability, policy certainty, and continued investment in new models and infrastructure. 

Glencore’s Gambit: Can Production Cuts Stabilize the Market?

The lithium and cobalt markets could also see divergent paths in the near future. While lithium producers are scaling back output in response to low prices, which may eventually balance supply with demand, cobalt production remains buoyed by high copper prices. This could prolong the market surplus and keep cobalt prices under pressure for a longer period.

READ MORE: Lithium Prices Hit New Lows: Can the Market Survive the EV Slowdown and Price Plunge?

Glencore CEO Gary Nagle has acknowledged the current oversupply in the cobalt market, predicting that it could persist for at least the next two years. This oversupply has been compounded by expanded production in Indonesia and the Democratic Republic of Congo (DRC), where cobalt is extracted as a by-product of nickel and copper mining, respectively. This dynamic limits the impact of low cobalt prices on overall production decisions.

Cobalt’s recent price trajectory has followed a classic pattern of boom and bust, while underscoring the volatility that has come to define the battery metals market. 

Following a dramatic surge in 2017-2018, the market experienced a severe downturn, falling to $26,000 per ton by 2019. A similar pattern emerged this decade: cobalt prices soared to $82,000 per ton in March 2022, only to plummet to the current level of $24,900 per ton.

Chart from Reuters

China’s CMOC Group overtook Glencore as the world’s largest cobalt producer in 2023, with an output of 55,000 tons. CMOC’s expansion plans, particularly at its Tenke Fungurume copper mine in Congo, are expected to drive cobalt production to 100,000 tons by 2028.

How China and Indonesia Are Shaping Cobalt’s Future

Meanwhile, Indonesia has emerged as the second-largest cobalt producer globally, with production surging by 86% to 17,000 tons last year. This rapid increase is attributed to Indonesia’s extensive development of nickel mining and processing facilities. The country boasts a number of nickel-cobalt processing plants rising from 10 in 2023 to nearly 60 in 2024. 

Historically, cobalt was primarily used in super-alloys for the aerospace industry, but demand has shifted towards EV batteries, which accounted for 73% of the 200,000 tons of cobalt consumed in 2023. Despite strong growth in lithium-iron-phosphate battery technology, which reduces the need for cobalt, the metal’s usage in EVs continues to grow, with a 12% year-on-year increase in May 2024.

However, demand growth has not kept pace with the surge in supply from the Congo and Indonesia. The market was oversupplied by 18,300 tons in 2023, following a surplus of 10,700 tons in 2022. Analysts from Macquarie Bank forecast that this surplus will persist until at least 2027, indicating continued downward pressure on prices.

The price decline has created opportunities for strategic buyers. China’s state reserves manager purchased 8,700 tons of cobalt in 2023 and plans to buy an additional 15,000 tons this year. 

Boom and Bust: Cobalt’s Volatile Journey in the Battery Market

The Chicago Mercantile Exchange (CME) cobalt curve is currently in a pronounced contango, meaning that forward prices are higher than spot prices. This situation allows for profitable stock financing trades, though banks prefer to store financed inventory in locations where it can be easily sold, such as terminal markets. 

Whether this marks the beginning of a larger trend remains to be seen. Still, the current market dynamics suggest that there will be a significant amount of cobalt looking for storage and trading opportunities in the coming months. 

The International Energy Agency (IEA) forecasts a substantial increase in cobalt demand over the coming decades. Under its Sustainable Development Scenario, cobalt demand is expected to grow fivefold between 2020 and 2040.

The demand for cobalt, particularly driven by its critical role in electric vehicle batteries, is projected to triple by 2030. This anticipated surge underscores the need for new cobalt mines and deposits to meet the growing demand and support global sustainability goals.

As the market adjusts to these changes, participants will continue to monitor the interplay between supply, evolving battery technologies, and the pace of EV adoption, which will ultimately shape the future trajectory of cobalt prices.

The post Cobalt Crash: Why Prices Hit a 7-Year Low and What’s Next appeared first on Carbon Credits.

The TATAs! Who doesn’t know them? Well, this time their plan is bigger and bolder. They are marching into the nuclear space. Tata Steel, one of the world’s largest steel producers, is exploring nuclear energy to produce green steel.

Small Reactors, Big Ambitions: Tata Reinvents Green Steel

Currently, the steel giant is assessing many factors that would play a pivotal role in green steel production. They aim to install around 200 BSRs, within the atomic energy sector. One unit will have a capacity of 220 MW, which would collectively provide about 45 GW of power.

Although Tata Steel has not officially commented, sources indicate that the company is keen on transitioning to green steel production. This move comes even though Tata Steel does not export significant quantities to Europe, where the ‘carbon border adjustment mechanism‘ (CBAM) is set to begin on January 1, 2026. The CBAM will impose a duty on certain imported goods, including steel, based on their greenhouse gas (GHG) emissions during production. This measure aims to protect European producers from being undercut by imports with higher carbon footprints.

Media reports also reveal that other steel companies are considering BSRs, but Tata Steel appears particularly interested. If the plan proceeds, Tata Steel intends to use the electricity generated by these BSRs to power electrolyzers for green hydrogen production. This hydrogen would then replace coking coal, which is used in steelmaking, significantly reducing carbon emissions. Thus, Tata has etched a clear pathway to decarbonize one of the hardest sectors.

READ MORE: World Bank Fuels India’s Carbon Market and Green Hydrogen with US$1.5B Boost 

The Curious Case of BSRs…

Bharat Small Reactors (BSRs) are nothing but SMRs that the US, Canada, and Russia have huge success. They can address many challenges related to design and innovation that India’s energy sector is currently facing.

BSRs can be installed in remote areas, extending energy access to such regions, and ensuring reliable power for isolated locations. Additionally, BSRs feature faster construction timelines. Their modular design helps in easy construction compared to traditional reactors.

Another significant feature is, they are cost-effective due to their smaller size and modular construction. They lower costs across their entire life cycle—from construction to decommissioning—making nuclear energy more affordable and sustainable for India.

In summary, Bharat Small Reactors are set to transform India’s energy landscape by offering a versatile, cost-effective, and timely solution to the country’s growing energy demand.

source: insightsonindia, BSR

Indian Finance Minister Nirmala Sitharaman elaborated on the government’s plan to partner with the private sector to establish BSRs. She hailed India for being the leader in this area, citing that the Nuclear Power Corporation of India (NPCIL) has operated 15 pressurized heavy water reactors (PHWRs) of 220 MW each for years.

Recently, R.B. Grover, a member of the Atomic Energy Commission, informed the media that these 220-MW PHWRs are being upgraded. The modified versions, known as BSRs, are expected to be licensed to the private sector.

Union Minister Dr. Jitendra Singh also announced that India’s Nuclear Power generation capacity is to increase by around 70 % in the next 5 years. Currently, its installed capacity is 7.48 GWe, which is expected to be 13.08 GWe by 2029.

Tata Steel Pioneering Sustainability in Netherlands

Green steel is steel produced with zero CO2 emissions. By 2030, Tata aims to cut their CO2 emissions by 40% and become 100% CO2-neutral by 2045. Their production process focuses on minimizing environmental impact and boosting circularity. They believe that increasing steel recycling and raising the use of scrap from 17% to 30% by 2030 will significantly enhance sustainability.

Tata Steel’s plant in Ijmuiden, Netherlands has become one of the most CO2-efficient steel facilities globally, ranking among the top three in the Worldsteel Association’s benchmark. The plant’s emissions per tonne of steel are 7% below the European average. Despite this achievement, Tata Steel remains responsible for 8% of all CO2 emissions in the Netherlands. The company is committed to reducing this percentage by all possible means to support the country’s climate goals.

source: Tata Steel sustainability report

To use nuclear power for green steel production, Tata Steel must first see amendments to the Atomic Energy Act. These changes are needed to permit private ownership and operation of nuclear power plants in India. The government is reportedly considering these legislative changes to initiate the project. We will keep you posted with further developments in this buzzing space.

FURTHER READING: India and Japan Strike a Green Ammonia Offtake Deal 

The post A Bold Plan: Tata to Transform Green Steel with Nuclear Power appeared first on Carbon Credits.

Meta Platforms, the company behind Facebook, Instagram, and WhatsApp, isn’t just about connecting people online anymore. It’s taking real, concrete steps to protect the planet, too. 

In a recent move that caught many by surprise, Meta announced a partnership with Sage Geosystems to power its U.S. data centers with geothermal energy. 

This is a calculated part of Meta’s larger plan to hit net zero emissions by 2030. And with the increasing energy demands from artificial intelligence (AI) and data centers, this partnership is more crucial than ever.

Geothermal energy makes perfect sense for Meta. While solar and wind energy depend on the weather, geothermal taps into the Earth’s natural heat and provides a constant, reliable power source.

Sage Geosystems, a Houston-based startup, is bringing some serious innovation to the table with their Geopressured Geothermal System (GGS). This tech is different—it can generate clean energy in places where traditional geothermal methods just couldn’t reach. 

The project kicks off in 2027 with the first phase delivering 150 megawatts of power. That might sound technical, but it means enough clean energy to power around 38,000 homes. 

For Meta, it’s a big step toward reducing the carbon footprint of their data centers. Those data centers are energy hogs, and as Meta continues to grow its AI capabilities, the need for energy will only rise. Geothermal energy helps ensure that this growth doesn’t come with a side of increased emissions.

Geothermal Energy: The Secret Sauce Powering Meta’s Data Centers

Meta’s move to geothermal energy isn’t just about reducing its carbon footprint—it’s also about showing what’s possible. 

Data centers are the beating heart of Meta’s digital empire, supporting everything from your latest Facebook post to the newest Instagram Story. But they’re also energy guzzlers. That’s where geothermal comes in as a savior, providing constant, clean energy to keep those centers running without burning more fossil fuels.

Sage Geosystems’ Geopressured Geothermal System (GGS) is the star here. Traditional geothermal energy is limited by geography—you need naturally occurring underground reservoirs of hot water, which limits its use to places like Nevada or California. But Sage’s technology breaks through those barriers. 

It can tap into geothermal energy in more places, including areas east of the Rocky Mountains where Meta plans to set up the new facility. This opens up new possibilities not just for Meta but for the broader adoption of geothermal power across the U.S.

RELATED STORY: Hot Funds for Cool Tech: Geothermal Company Fervo Energy Raises $244M

The 150-megawatt project is just the start. As technology evolves, Meta could roll out more geothermal projects, cementing its place as a leader in the renewable energy space. Meta is pushing the envelope and setting a new standard for how tech companies approach sustainability.

Meta’s Net Zero Journey: A Comprehensive Carbon Offset Strategy

Meta’s geothermal energy initiative is more than just a green headline—it’s a vital piece of a much bigger puzzle. Since 2020, Meta’s operations have run on 100% renewable energy. But the company’s ambitions are even higher: net zero emissions across its entire value chain by 2030. 

That’s a tall order, especially when you consider that it includes everything from suppliers to employee commutes.

The shift to geothermal energy is a big step in that journey. With AI technologies and data centers consuming more power, Meta must find ways to meet those demands without adding to its carbon footprint. Geothermal energy provides a reliable, scalable solution that fits perfectly with Meta’s goals. 

By integrating this clean energy source, Meta can continue growing while keeping its commitment to sustainability intact.

Meta has also invested in over 12,000 megawatts of renewable energy projects, including solar and wind. 

These efforts are all part of a comprehensive strategy to reduce reliance on fossil fuels and minimize the company’s environmental impact. 

On top of that, Meta is investing in carbon removal projects—initiatives designed to suck carbon dioxide out of the atmosphere, whether through reforestation or cutting-edge technologies like direct air capture. These projects are essential for tackling the emissions that are harder to eliminate.

READ MORE: Meta’s Q2 Triumph: Earnings Soar And Carbon Removal Deals Multiply

Beyond Energy: Meta’s Broader Vision for Emissions Reductions

Meta’s commitment to sustainability isn’t just about energy. It’s rethinking the entire way the company operates, from the materials used in its products to how it manages its supply chain. The company is taking a holistic approach, addressing everything from water use to waste reduction and even biodiversity. 

Take water, for example. Meta is on a mission to become water positive by 2030. That means the company will restore more water to the environment than it consumes in its operations. And it’s not just talk—Meta is investing in real projects that aim to make this goal a reality.

The same goes for waste. Meta is pushing for circular practices across its operations, focusing on reducing waste and reusing materials whenever possible. By extending the lifespan of products and reducing the need for new materials, Meta is cutting costs and reducing its environmental impact at the same time.

And let’s not forget the supply chain. Meta’s responsible supply chain program is all about collaboration. The company is working closely with its suppliers to help them set and meet their own sustainability goals. It’s a win-win situation: suppliers become more sustainable, and Meta reduces its overall carbon footprint.

Meta’s leadership in sustainability is making waves across the tech industry. The company’s commitment to clean energy, water stewardship, and waste reduction sets a new standard for what corporate sustainability can look like.

In the end, Meta’s partnership with Sage Geosystems is a bold step forward. It’s about more than just powering data centers—it’s about shaping a sustainable future for all. 

As Meta continues to innovate and expand, its commitment to the planet remains at the core of everything it does. This is the kind of leadership that’s needed to reduce emissions, and Meta is proving that it’s up to the challenge, one geothermal project at a time.

The post Meta’s Bold Bet on Geothermal Energy and Carbon Footprint Reduction appeared first on Carbon Credits.

Many companies have turned to cheap offsets or junk credits, resulting in a significant portion of their credits being classified as high-risk. So, what makes these offsets low-quality? These credits often come from forest conservation and renewable energy projects, which are prone to issues like over-crediting and exaggerated claims of emission reductions. Let’s deep dive into what’s happening in the era of carbon credits.

Downfall of Industry Standards Amid Rise of Low-Quality Carbon Offsets

Offsets primarily come from two project categories: avoidance and removals. Avoidance projects, such as those focused on forest conservation and renewable energy, make up over 97% of the credits retired by these companies. However, these projects often fail to deliver genuine emissions reductions.

Many offsets come from redundant projects that do not meet the industry standards. This reliance on outdated credits further undermines the credibility of companies’ net-zero claims.

Carbon removal projects, which capture and store CO2, account for only 2.3% of the offsets retired. Companies show little interest in shifting towards these potentially more effective solutions. Only a few firms, like Audi and Takeda, have significantly increased their use of removal credits.

Last year an intriguing article by The New Yorker, exposed some major issues. For example, the Kariba project in Zimbabwe, which claimed to prevent deforestation and earned nearly $100 million, has been criticized for not achieving its goals. A report by Bloomberg also revealed that South Pole, cut ties with the project, potentially leading to its collapse. This situation could undermine the climate claims of big corporations like Volkswagen and Nestlé.

Companies are reconsidering their trust on offsets. A survey from late 2022 found that 40% of corporate respondents were worried about the reputational risks associated with carbon offsets. As a result, firms such as Shell, Nestlé, EasyJet, and Fortescue Metals Group have started to distance themselves from offsets and their associated claims of carbon neutrality.

Study the graphs to understand the absolute volumes of all offsets retired by each company and relative shares of avoidance or removal offsets retired over 2020–2023source: Nature

READ MORE: How Effective Are Carbon Credits in Corporate Net Zero? SBTi Speaks

Are Junk Carbon Offsets Masking Climate Goals?

Interestingly, Bloomberg highlighted the Kyoto study which pointed out that many offsets come from outdated projects. Furthermore, many corporations are fueling the problem with low-quality carbon credits. These offsets, intended to neutralize emissions by investing in projects like forestry and renewable energy, are failing to deliver real climate benefits. Additionally, around 75% of the credits were linked to projects started before 2016, diminishing their credibility. Many companies opted for the cheapest offsets rather than investing in more effective carbon removal strategies.

The study also revealed that between 2020 and 2023, top companies like Shell, Delta Air Lines, and Chevron purchased mostly ineffective offsets. A staggering 87% of these credits were deemed high-risk, often failing to achieve genuine emissions reductions. This marks a significant blow to the carbon offset market, which is already shrinking due to increasing scrutiny and legal challenges.

False Claims and Exaggerated Results 

Forestry projects, which claim to capture carbon by protecting or planting trees, often fall short. Trees can be prone to wildfires, which release stored carbon back into the atmosphere. For instance, Green Diamond’s Forest carbon projects were ravaged by wildfires, releasing millions of metric tons of stored carbon back into the atmosphere. This problem is not isolated, as similar setbacks occurred in other Pacific Northwest forests.

Despite noble intentions, these projects often fail to compensate for fossil fuel emissions, leading to disbelief in their climate benefits. Furthermore, the benefits of these projects are often overstated. Trees may not be at risk of logging in the first place, making it questionable whether offsets for avoided deforestation are truly effective.

Renewable energy credits face similar issues. With clean energy becoming more cost-effective, the carbon credits often fund projects that would have been built regardless of carbon offset purchases. This raises doubts about whether such credits contribute new value to the global carbon balance. The Integrity Council for the Voluntary Carbon Market (ICVM) found that a significant portion of renewable credits failed to meet reliability standards.

MUST READ: ICVCM Axes Renewable Energy Carbon Credits from CCP Label

Corporate Choices Signal Paradigm Shift and a Weak VCM

For real progress, companies need to focus on directly reducing their emissions rather than relying on dubious offsets. While carbon credits might play a role in a future net-zero world, the current market’s flaws hinder meaningful climate action. Without major reforms, the market might continue with its ineffective and even harmful practices.

Global carbon markets are facing growing scrutiny as more companies question the effectiveness of their offsets. Once hailed as a simple solution to balance out greenhouse gas emissions, offsets are now under fire for failing to deliver promised climate benefits. Subsequently, this also digs out a major problem. It shows how the voluntary carbon market (VCM) is weakened by the demand for low-quality offsets. As companies keep choosing cheap, ineffective options, the real impact of their climate efforts is doubtful. To make a real difference, they should shift to higher-quality carbon removal projects and stick to strict standards.

Carbon Direct’s recent report highlights a significant shift. The media firm conveyed good news that the demand for traditional, riskier credits is falling, while interest in high-quality carbon removal projects is rising. Between 2021 and 2023, purchases of quality-focused removal credits multiplied five times.

Embracing Premium Carbon Credits

Moving on, carbon removal strategies like managed reforestation and biochar sequestration can create high-value credits. However, these methods are still niche and face technical and economic hurdles. For now, most companies prioritize directly reducing their emissions, which is more reliable than depending on questionable offsets to mitigate emissions.

As companies continue to rely on cheap, ineffective options, the true impact of their climate strategies becomes doubtful. This graph further illustrates the contraction in the carbon credit market due to these loopholes.

To see real climate benefits, a shift toward higher-quality carbon removal projects and adherence to strict verified standards is crucial.

For instance, projects must prove that their emission reductions or carbon removals are real, measurable, permanent, additional, independently verified, and unique, as per standards like the Gold Standard and Verified Carbon Standard (VCS). Credits are issued only when these criteria are met. This approach ensures low-quality offsets are discarded, leading to more effective climate action.

FURTHER READING: ICVCM Reveals First CCP-Approved Carbon Credits Worth 27M Carbon Credits

The post The Pitfalls of Low-Quality Carbon Offsets: Are They a Threat to Our Planet? appeared first on Carbon Credits.