The Securities and Exchange Commission (SEC) approved a new rule mandating publicly traded companies to disclose their direct greenhouse gas emissions. The proposal received backing with 3 votes to 2 at a recent SEC meeting. 

The newly passed legislation titled “The Enhancement and Standardization of Climate-Related Disclosures for Investors” also requires US-based companies to disclose details on their use of carbon offsets, including the associated costs if the credits contribute to their emissions reduction targets. They also need to describe how climate change impacts their operations, financial condition, and strategies. 

Moreover, companies must explain the risks and how they’re managing them, such as the impact on revenue and expenses. 

RELEVANT: A Deep Dive into SEC’s Proposed Climate Disclosure Rule for Sustainability

What Emission Scopes Are Mandated?

The original SEC proposal initially required companies to disclose their Scope 1, 2, and 3 emissions. But Scope 3, which garnered controversy, was ultimately excluded in the final rule. 

Scope 1 refers to emissions directly emitted by the company while Scope 2 covers emissions from the fuel and energy purchased by the company. Whereas Scope 3 pertains to emissions generated by customers and suppliers. 

Scope 1 and 2 emissions are mandatory to report on, provided the company considers the information “material” to investors. Having this vital climate-related information will give investors insights to come up with informed decision-making. 

Scope 3 emissions were the subject of significant controversy due to the challenges associated with calculating indirect emissions, which impose the highest compliance costs on companies. Big companies, particularly those in the fossil energy sector, opposed this reporting requirement.

Thus, following an extensive public comment period, which garnered 4,500 letters and 24,000 comments, the requirement to disclose Scope 3 emissions was ultimately dropped.

For the past 2 years, the SEC has been deliberating on formulating standardized requirements for corporate climate disclosure. The goal is to establish a minimum standard for transparency in boardrooms. 

Now, the increased transparency required on the use of offsets would influence future purchases of carbon credits.

According to the final rule, companies will now be obligated to provide a detailed breakdown of the costs associated with carbon credits. Specifically, the approved proposal mandated that:

“The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals, disclosed in a note to the financial statements…”

This disclosure requirement is one of 3 main categories of information mandated in the amendments to the SEC’s final rule. 

Unpacking SEC New Rule’s Key Provisions

While it’s essential for every company to thoroughly understand the SEC’s official rule, spanning almost 900 pages, 3 key provisions stand out:

“Accelerated filers,” which are companies with publicly traded shares valued at $75 million or more, are mandated to disclose Scope 1 and 2 emissions.
Costs stemming from severe weather events and other natural disasters must be disclosed on financial statements.
Companies are obligated to disclose both the actual and potential material impacts of climate-related risks on their strategy, business model, and outlook.

The SEC made a significant revision to its earlier draft by removing a requirement to disclose expenditures related to “general energy transition activities” in financial statements. 

Instead, the final rule focuses specifically on disclosing expenditures related to carbon offsets and RECs, as confirmed by SEC officials.

Go over to SEC’s fact sheet that summarizes the specific rules that a registrant has to disclose.

The Commission estimates that around 2,800 companies have to prepare to report on their climate-related financial risks. That’s 40% of the 7,000 US public companies registered with the SEC.

Meanwhile, about 60% of the 900 SEC-registered foreign private issuers may also be subject to the new rule.

Accelerated filers, in particular, need to start disclosing their Scope 1 and Scope 2 emissions in 2026. Below are the compliance dates companies have to keep in mind based on their filer status:

LAF=Large Accelerated Filers, Non-Accelerated Filer (NAF), Smaller Reporting Company (SRC), or Emerging Growth Company (EGC).

Mixed Reactions: The Impact of SEC’s Climate Disclosure Rule

The new climate disclosure rule received both praise and criticism. Former SEC commissioner Allison Herren Lee commented that:

“The new rule, unfortunately, does little to prevent companies from making vague, untested and, most significantly, unsubstantiated, statements about their carbon footprints.”

On the other hand, supporters of the new rule noted that it’s a great milestone. For Lane Jost, head of ESG advisory at Edelman Smithfield, 

“There is ample room to argue the validity of this rule on all sides, but regardless, this is a historic day for enhancing common, comparable, and credible disclosure rules on climate risks for investors and issuers.”

The SEC rule marks a significant addition to the expanding global regulatory landscape for corporate climate disclosures. International companies gear up to comply with Europe’s Corporate Sustainability Reporting Directive, which mandates climate disclosures. And with California’s carbon emissions disclosure requirements introduced last year, the SEC’s rule further underscores the increasing importance of climate-related transparency in corporate reporting.

READ MORE: California Sets Precedent with New Corporate Climate Disclosure Laws

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The nuclear energy landscape in North America is undergoing a significant transformation, with both the US and Canada making strides to bolster their nuclear capabilities. From reviving uranium enrichment in the US to Canada’s embrace of nuclear financing, the region is on the road to a nuclear energy resurgence.

Breaking U.S. Nuclear Dependence

The US uranium enrichment sector stands to receive a substantial $2.7 billion injection as part of a government funding bill. This initiative reflects a strategic move to reduce reliance on nuclear fuel imported from Russia. 

Proposed by the White House, the funding is integral to President Joe Biden’s broader plan to procure enriched uranium directly from domestic sources. The goal is to revitalize nearly dormant US capabilities by establishing a guaranteed buyer for American-made nuclear reactor fuel.

The move coincides with potential legislative measures to restrict imports of enriched uranium from Russia. The NO RUSSIA bill, National Opportunity to Restore Uranium Supply Services In America Act of 2022, expels Russia’s influence from the U.S. uranium market. 

READ MORE: The US House Passed a Bill that Just Repatriated the Nuclear Cycle from Russia’s Control

The provision of enrichment funding is based upon implementing limitations on the importation of enriched Russian uranium. The fund is from a credit program for domestic nuclear reactors established in the bipartisan infrastructure law of 2022. 

The allocated funding is specially dedicated to cultivating a market for domestically produced enriched uranium. This uranium serves as fuel for the US fleet of over 90 nuclear reactors, as well as for highly enriched uranium used in emerging advanced reactor technologies, currently monopolized by Russia.

In December 2023, after over 50 years, the U.S. issued approval for a groundbreaking nuclear reactor developed by Kairos Power.

The California-based startup has been granted a construction permit by the Nuclear Regulatory Commission (NRC) for its Hermes demonstration reactor in Tennessee. The novel reactor uses molten fluoride salt as a coolant, a more efficient technology than conventional water-cooled nuclear reactors. 

The NRC has also granted certifications to other innovative nuclear developers, e.g. NuScale Power and Centrus Energy Corporation, in collaboration with the Energy Department. Most initiatives involved small nuclear reactors (SMR), generating under 300 MWe capacity.

READ MORE: How Nuclear Energy in the U.S. Got Its Groove Back, Poised to Soar in 2024 

These developments indicate a shifting regulatory stance toward innovative approaches to nuclear power generation in the U.S.

Financing the Canadian Nuclear Renaissance

Over in Canada, the federal government amended its green bond programs. They now permit the financing of nuclear projects and navigated an initial test of investor support for this energy source. 

Notably, about 15% of the country’s electricity comes from nuclear power. Most of the 19 reactors are in Ontario which provides 13.6 GWe of power capacity. 

The sovereign and the province of Ontario issued a combined C$5.5 billion or US$4.1 billion in securities. This marked the first two offerings under the revised Green Bond Framework for green debt that allow funding for nuclear initiatives. Previously, the framework didn’t include nuclear energy from getting financial support.

The recent $4 billion issuance by the Canadian sovereign did not explicitly earmark proceeds for nuclear power projects. Still, the federal government emphasized its commitment to nuclear development. Also, investors have eagerly subscribed to the 10-year debt offering, with orders surpassing $7.4 billion, nearly double the final amount.

Powering Ahead: Canada’s Ambitious Nuclear Expansion Plans

Canada aims to develop both new large-scale nuclear capacity and SMRs. In 2018, Natural Resources Canada (NRCan) unveiled its SMR Roadmap, outlining a strategic plan for the advancement of nuclear technology centered around SMRs. 

In February 2023, the Canadian government initiated the Enabling Small Modular Reactors Program. It allocates about US$22 million to facilitate the advancement and implementation of SMRs. 

Another notable nuclear development in Canada is Ontario’s 2015 decision to greenlight the refurbishment or lifetime extension of 4 nuclear units at Darlington and the remaining 6 units at Bruce (with the initial 2 units already refurbished). This ambitious C$26 billion 15-year program stands as one of the most significant clean energy endeavors in North America.

Bruce Power, an Ontario-based company aiming to construct the world’s largest nuclear power plant, announced that all its future bonds will adhere to green financing principles. The nuclear power developer also introduced at COP28 last year the first carbon offset protocol for nuclear generation. 

James Scongack, Bruce Power’s Chief Development Officer, noted that investor appetite for green securities is shaping their future fundraising strategies. He further noted that:

“With the demand we see for green bonds, we have no doubt all future bonds funding nuclear projects will be green bonds.”

The inclusion of nuclear projects reflects a growing acceptance of nuclear power to decarbonize and enhance energy security. This development signifies a significant shift in green finance and underscores the evolving role of nuclear energy in Canada’s sustainability efforts.

By embracing nuclear power, the US and Canada are paving the way for a sustainable energy landscape while enhancing energy security.

READ MORE: Nuclear Power to Break Global Records in 2025, IEA Predicts

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Friction from the West is Loosening China’s Grip on Rare Earths Elements 

As the world grapples with the urgent need for decarbonization to combat climate change, China’s top position in the production of rare earth elements (REEs) and its growing influence in the carbon credit market have had profound implications for the global energy transition

China currently dominates the market supplying over 80% of the world’s rare earth elements. Considered a monopoly in most political circles, its prominent position has raised concerns among many nations about the vulnerability of their supply chains and the geopolitical implications. But is this tension a sign of possibile future supply limitations that pose a threat to the decarbonized future?

REEs are a set of 17 metallic elements with unique electrical and magnetic properties, playing a crucial role in the mineral supply chain market. Their applications range from magnets powering electric vehicles (EVs) and wind turbines to defense systems using precision missiles, fighter jets, and submarines, energy-efficient lighting systems etc.

All these factors come down to one thing: green energy transition, because:

China leads the production of key materials for EV batteries, refining 68% of the world’s cobalt, 65% of nickel, and 60% of lithium meeting the required grade. Additionally, it holds a significant share of ~ 75% of EV batteries, and the majority of them are manufactured in China.

China maintains its position in the rare earth industry due to its comprehensive control over the entire production chain and a substantial scale in the world economies. China’s advantages extend from mining raw materials to producing high-purity rare earths, facilitated by a cost-effective labor force.

Is this enough to sustain China’s dominance in the long run? It’s indeed a matter of concern and the answer is that there are numerous loopholes in marketing strategies, political scenarios, and supply chain management.

Interdependence of global decarbonization goals and China’s REEs

The concentration of REEs in China raise concerns worldwide. Although, the US Department of Energy once said:

“the US decarbonization goals are reliant on both Chinese firms and the Chinese government”

Yet the current geopolitical scenario is slightly different. The prime issue is that no matter where the REEs are mined, they need to undergo processing in China. This grants China substantial influence over various supply chains. But in this ESG-conscious era, investors, suppliers, and consumers must be more aware of the environmental effects of their purchases.

The extraction of rare earth minerals is a complex process and has raised serious climatic concerns. A study from the Harvard International Review stated,

“Mining to produce one ton of rare earth elements results in nearly 30 pounds of dust, 9,600-12,000 cubic meters of waste gas including substances such as hydrofluoric acid and sulfur dioxide, 75 cubic meters of wastewater, and one ton of radioactive residue—2,000 tons of toxic waste altogether.”

The report also mentioned that the world’s largest rare earth element mine, Bayan-Obo in China, produced over 70,000 tons of radioactive thorium waste which is stored in a tailing pond that has leaked into groundwater.

China, being the prime market for REEs must adopt ways to make large-scale mining more sustainable and greener. Some latest technologies include:

Electrokinetic method is used by many Chinese companies to improve the leaching process and quantity of the extracted minerals. It’s mostly suitable for heavy REE with high atomic numbers like dysprosium and terbium.
Biomining is a highly sustainable process that incorporates microbes to do the leaching process. One such species is the cyanobacteria- it produces organic acid to extract the REE from recycled e-waste, ores, and wastewater.
Agromining – the process incorporates plants that have hyperaccumulation and rapid-growth capacity on REE-rich soil. Researchers say agromining works most efficiently for nickel.

However, all the sustainable alternatives mentioned above are yet to be examined deeply considering their practical values and cost effectiveness.

We can infer that China to remain in the top position in the carbon market and REEs, must operate in socially and environmentally responsible ways. The country further needs to ensure transparent supply chains free from human rights infringement and environmental damage.

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

On the other hand, the West is putting serious efforts to decrease dependence on China for rare earth mineral supply. They are exploring technologies to replace REEs or use fewer REEs.

For example, Tesla recently announced plans for next-generation motors using rare earths-free magnets. There’s a mixed review of this move. While some industry pundits say it would have minimal effect on the market because they believe EVs without rare earth will have a very low success rate. While others consider this to be a revolutionary move. It is further predicted that production of EVs in the coming years won’t experience a slump if they become independent of rare earth minerals. This in turn will directly push the carbon market and mitigate carbon dioxide emissions.

These are just some of the factors responsible for REE’s geopolitical conundrum and have given rise to an important question – does a fair trade agreement exist between China and the West over rare earth elements?

Will Friction from the West Loosen China’s Grip on REEs? 

The US and Europe have shaken hands and signed deals without China. President Biden and his allies prioritize technology and green energy, while Global South nations, like India, push for EV adoption to boost energy independence.

One notable collaboration involves US and European rare earth companies processing monazite sands in Utah, followed by shipping rare earth carbonates to Estonia for further refinement.

In recent news, the United States Department of Defense (DoD) granted a $120 million contract to Australia’s Lynas Rare Earths to construct a heavy rare earths separation facility in Texas. Lynas USA LLC, a subsidiary of Lynas Rare Earths Ltd, will own and operate this facility. The objective of the contract is to bolster domestic industrial capacities for heavy rare earth elements (HREEs), involving metals like gadolinium, dysprosium, and ytterbium.

Japan has also fortified its rare earth supply chain by increasing investments in Lynas, securing a steady supply of heavy rare earths. According to UN Comtrade data, Japan has succeeded in this strategic move to decrease its rare earth dependence on China from over 90% to 58% within a decade.

Source: elements.visualcapitalist.com

The graph above showcases China’s share of global production of REE market is expected to go down from 92% in 2010 to 58% in 2020.

Despite the solid efforts put in by the US, Europe, and Japan, China continues to defend its monopoly. It has aggressively expanded its international market by acquiring stakes in some of the largest mining companies like MP Materials (US) and Vital’s Metals (Australia).

China’s tax system and production quota are highly meticulous. It has imposed 13% VAT on magnets, metals, and oxides. Simply put, domestic rare earth product manufacturers have a 13 % cost advantage in the supply chain over foreign competitors. Thus, if countries decide to diversify their rare earth supply chains away from China, it could result in increased costs for those nations.

Will this Geopolitical Tension be a Roadblock to the Green Energy Transition? 

A survey conducted by The Oregon Group, explains that 2024 is expected to witness persistent volatility and surged prices in major commodities and rare earth minerals. Contributing factors are:

supply constraints
geopolitical tensions
long-term underinvestment

This economic contraction particularly in the US and China can potentially supress demand and supply, especially in the critical mineral sector. It’s foreseeable that in the current year and beyond, a distinct divergence in critical mineral prices between Western nations and China may not manifest. And this leads one to the conclusion that if geopolitical tensions and inefficient strategic planning persist between the leading economies of the world, then energy transition goals for sustainable low-carbon future are most likely to get hindered.

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Amidst a backdrop of growing electric vehicle adoption and shifting dynamics in the lithium market, the landscape of energy storage in the US is rapidly evolving. With record-breaking installations of lithium-ion battery arrays and notable reductions in lithium prices, the sector is poised for significant transformation. 

Unleashing the Power of Energy Storage

Energy storage developers are forging ahead, connecting unprecedented volumes of lithium-ion battery arrays to the US power grid. About 6.8 GW of new large-scale battery capacity was added in 2023, a 59% increase from 2022, according to S&P Global Market Intelligence. 

These projects store electricity primarily for one to four hours and are often co-located with renewable or fossil-fueled power plants. They include over 120 installations, with California, Texas, and the greater Southwest leading the expansion. Together, they bring total non-hydroelectric storage resources to about 17 GW. 

According to Market Intelligence data, California leads with 8,179 MW of operating batteries, followed by Texas with 4,252 MW, as of Feb. 8. Arizona ranks third with 858 MW, trailed by Nevada with 758 MW and New York with 232 MW. The battery storage pipeline is also expanding in states like Oregon, Indiana, and Wisconsin, signaling broader growth beyond the Southwest-centric focus.

In 2024, an impressive 34 GW of big battery resources will come online, with over 10 GW under construction. However, development timelines often need to catch up, with delays throughout the year. 

S&P Global Commodity Insights anticipates 4.2 GW of firm projects in 2024, forecasting a total installed battery power storage capacity of 23 GW by the end of 2025. This robust growth underscores the pivotal role of energy storage in America’s transition to a sustainable energy future.

Breaking Records, Building Resilience 

Despite project delays, developers achieved a record-breaking quarter in the last three months of 2023. They have installed 2,332 MW for that period, doubling the previous year’s figure and surpassing the 3rd quarter’s record. 

The largest completion was Terra-Gen LLC’s Edwards & Sanborn solar-plus-storage complex in Southern California. The project boasts 971 MW/3,287 MWh of storage and 800 MW of solar capacity. Other notable completions include Plus Power’s 300-MW/600-MWh Rodeo Ranch Battery Storage in Texas.

These achievements in lithium-ion battery storage installations go hand-in-hand with the optimistic growth in the plug-in electric vehicle (PEV) market. 

RELEVANT: New Monthly EV Sales Record to Kickstart 2024

January saw PEV sales surge in key markets. China and the Europe-Top 4 markets recorded impressive year-over-year growth of 101.8% and 33.7% respectively. However, this growth pales in comparison to the January 2022 figures. 

European policymakers have scaled back PEV incentives due to fiscal concerns, with Germany ending subsidies earlier than anticipated in 2023. In the US, stricter sourcing requirements have limited models qualifying for the EV tax credit. This negatively impacted best-selling models like the Ford Mustang Mach E and certain versions of the Tesla Model 3.

In response to subsidy cuts, automakers are shouldering subsidy costs themselves. Volkswagen AG is covering all subsidies in Germany until the end of 2024, while Stellantis NV is offering reduced subsidies in Q1 2024. Automakers are also slashing PEV prices to stimulate demand amidst reduced consumer appetite. Tesla Inc. and Ford Motor Co. have implemented price cuts in China, Europe, and the US.

Charged for Change: Challenges and Opportunities in the Lithium Market

Reduced battery costs, stemming from lower metal prices, have facilitated the price reductions. Lithium-iron phosphate cell production costs dropped by around 30% in 2023, with a further 20% reduction expected in 2024. 

RELEVANT: Why Lithium Prices are Plunging and What to Expect

This environment has intensified competition, particularly in China, prompting PEV manufacturers to vie for market share aggressively. As the China Passenger Car Association notes, 2024 is pivotal for new energy vehicle companies, heralding fierce competition ahead.

As lithium prices continued to decline, reports of curtailed lithium mine operations heightened. This particularly affects junior miner-led hard-rock mines in the ramp-up phase. These projects face significant pressure due to the necessity of raising initial capital and maintaining cash flow, leaving little room for high-cost ventures.

Core Lithium halted open-pit mining at Finniss in Australia’s Northern Territory, while Liontown is delaying expansion plans at Kathleen Valley in Western Australia. 

Meanwhile, Sayona Mining is reassessing its North American Lithium project in Quebec. But a junior Canadian lithium company, Li-FT Power (LIFT: LIFFF) works hard to help meet North American lithium demands.

Li-FT specializes in consolidating and advancing hard rock lithium pegmatite projects within Canada while targeting established lithium districts. The company is dedicated to advancing the exploration and development of top-tier lithium assets throughout the country.

Despite limited trading activities and the stabilizing of lithium carbonate prices, bearish sentiment persists over demand and prices. Speculation about further cuts in lepidolite mines in China boosted Australian mining stocks. It also does so with the price of the main lithium carbonate contract on the Guangzhou Futures Exchange.

As the US power grid evolves toward sustainability, the surge in energy storage installations marks a transformative step. With record-breaking battery installations and declining lithium prices, the landscape is ripe for innovation and growth. 

READ MORE: World’s Most Advanced Battery Energy Storage System Replace Hawaii’s Last Coal Plant

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